Diversity Jurisdiction Flashcards
(22 cards)
Definition: diversity jurisdiction
Federal district courts have original jurisdiction over matters involving litigants who:
(a) are citizens of different states,
(b) U.S. citizens and citizens of a foreign country, or
(c) a foreign state and a U.S. citizen,
BUT ONLY IF the amount in controversy is more than $75,000
Amount in controversy requirement
The amount in controversy between the litigants must exceed $75,000, exclusive of the costs and expenses associated with the litigation
A suit in which the amount in controversy is exactly $75,000 does not meet the diversity jurisdiction requirement.
Attorney’s fees & amount in controversy
If the suit is based on a contract or statute that allows a winning party to collect attorney’s fees, the amount in controversy includes the likely amount of those fees.
Burden of proof for amount in controversy
An action based on diversity will be dismissed if it appears “to a legal certainty” that the plaintiff’s claim does not exceed $75,000.
The burden falls on the defendant to prove that the amount in controversy is not more than $75,000.
Conflicting rules for determining amount in controversy
Under the “plaintiff’s viewpoint rule” (majority rule), the amount in controversy is determined according to the amount sought by the plaintiff.
Under the “either viewpoint rule” (minority rule), the amount in controversy is not necessarily the amount sought or recovered, but it is the value of the consequences which may result from the litigation.
Aggregating claims rule for amount in controversy
A plaintiff may meet the amount in controversy requirement by combining or aggregating the total claims against the defendant.
Claims against multiple defendants may NOT be aggregated to meet the threshold unless the claims are common and undivided.
Amount in controversy for injunctive claims
If the suit seeks an injunction, the amount in controversy is either the injunction’s worth to the plaintiff, or the cost of the injunction to the defendant
Complete diversity rule
Diversity jurisdiction requires complete diversity, meaning a dispute that involves citizens of different states.
There will be no diversity jurisdiction if any plaintiff and any defendant share citizenship of the same state
How moving affects diversity
Diversity must be met only at the time the suit is filed. If a defendant moves to the same state as the plaintiff after the suit has been
commenced, diversity will not be destroyed.
However, if a complaint is amended to add or dismiss a party, this can affect jurisdiction.
Citizenship for diversity
A party is considered to be a citizen of her state of domicile.
Domicile is not the same as residence.
Domicile definition
Domicile requires BOTH a physical presence
in the state and the intent to remain in that state indefinitely.
Intent to remain for domicile purposes
The intent to remain in the new state includes the intent to abandon the former domicile permanently or indefinitely.
If a person moves to a new residence but intends to return to his previous residence at a later date and stay there permanently
or indefinitely, he does not demonstrate an intent to remain in the new state sufficient to establish a new domicile.
Conditional intent to remain
The intent to remain in the new state cannot be conditioned upon the happening of a future event or be contingent on the permanency of employment.
Floating intent to remain
A “floating” intention to return to a former home at some indefinite future time will not defeat the establishment of a new domicile, provided that the person has actually moved to a new state and intends to remain there indefinitely.
Purpose of change in domicile
The purpose of the change in domicile is irrelevant. While the person’s motivation may impact a determination of whether she intends to remain in the new state indefinitely, as long as the person demonstrates the intent to remain in the new state indefinitely, her reason for moving does not matter, even if she was motivated by self-interest.
Courts have found that people changed their domicile despite the fact that their reason for moving was motivated by defeating or creating federal diversity jurisdiction
Green card holders and diversity
For diversity purposes, if a noncitizen is admitted to permanent residence in the United States (i.e., that person has a green card), he is a citizen of the state in which he is domiciled.
Therefore, diversity is improper if a legal permanent resident is a resident of
the same state of the citizen whom he is suing or is being sued by. In such a situation, there is no diversity jurisdiction.
Corporate citizenship for diversity
A corporation is a citizen of both the state or foreign country of its incorporation and the state or foreign country where it has its principal place of business.
Principal place of business
A corporation may only have one principal
place of business. The principal place of business is the state in which the corporation has its “nerve center,” or the place from which the corporation’s high-level officers direct, control, and coordinate the corporation’s activities
Citizenship of unincorporated associations
The citizenship of an unincorporated association, such as a partnership or limited liability company, is the citizenship of all of the members of the association.
Citizenship of unincorporated associations subject to class actions
For purposes of class actions, however, an unincorporated association is a citizen of the state under whose laws the association is organized, and the state in which it has its principal place of business.
Class actions and complete diversity
There is an exception to the complete diversity requirement for class actions. In class actions where the class contains over 100 persons and the amount in controversy exceeds $5,000,000, diversity need only be “minimal,” meaning that federal jurisdiction exists if any single member of the class is diverse from any single defendant.
Exceptions to otherwise valid diversity jurisdiction
(1) probate exception: federal courts will typically not exercise jurisdiction over probate matters, such as the validity of a will and the administration of an estate.
(2) family law exception: Federal courts will also decline jurisdiction in family law matters, such as divorce, child custody, and child support proceedings.
