This concept is called “diversity jurisdiction” and allows any party sued in the courts of a foreign state to immediately petition to “remove” the case from the foreign state court to the federal court located in that state. There are restrictions. For diversity jurisdiction to apply, all the defendants sued must be out of state.
This is termed, “complete diversity.” Realizing that doctrine, plaintiffs can seek to avoid removal to federal court by including defendants that are located within the home state. If even only one defendant is “local” then diversity will not apply.
The typical vesting of jurisdiction for a federal court arises if a federal statute or Constitutional right is at issue or if there is “diversity” jurisdiction, the subject of this article. In its most basic form, diversity jurisdiction arises when a party from one state is sued in the state courts of a different state.
A basis of federal subject matter jurisdiction that allows federal courts to preside over civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between: Citizens of different states.
“Diversity jurisdiction” in federal court under 28 U.S.C. § 1332 exists when two conditions are met. First, the amount in controversy must exceed $75,000. Second, all plaintiffs must be of different citizenship than all defendants.
Diversity jurisdiction applies when the plaintiff and defendant are from different states and the amount in controversy is more than $75,000. If there are multiple plaintiffs and multiple defendants, no plaintiff can be from the same state as any defendant.
To have diversity jurisdiction, there are two requirements:Jurisdictional Amount Requirement. the jurisdictional amount exceeds $75,000.Complete Diversity Requirement. no plaintiff shares a state of citizenship with any defendant.
STUDY. Article III § 3. Authorizes Federal Courts to hear cases between states, between citizens of different states, between citizens and aliens, cases involving foreign ministers and consuls, admiralty an maritime cases. Thus requiring minimum diversity.
Federal courts, however, have limited exclusive jurisdiction such as cases involving bankruptcy, patent law, copyright, maritime, and cases with a sufficient federal question. Unless a case is one of the few types that are exclusive to federal jurisdiction, it may be brought in state court.
Diversity of citizenship is a requirement for diversity jurisdiction because the purpose of such jurisdiction is to provide out-of-state litigants with the opportunity to defend themselves in an unbiased court.
The Erie Doctrine is a binding principle where federal courts exercising diversity jurisdiction apply federal procedural law of the Federal Rules of Civil Procedure, but must also apply state substantive law. Pre-Erie Doctrine: The Erie Doctrine derives from the landmark 1938 U.S. Supreme Court case, Erie Railroad Co.