Article | Civil Procedure
The Political Reality of Diversity Jurisdiction
by Richard D. Freer*
From Vol. 94, No. 5 (2021)
94 S. Cal. L. Rev. 1083 (2021)
Keywords: Diversity Jurisdiction, Politics
Support for diversity of citizenship jurisdiction has ebbed and flowed.[1] From the 1960s through the 1980s, the prevailing wind blew strongly against it.[2] A determined group, led mostly by academics and federal appellate judges, spearheaded an effort to have Congress abolish the general form of federal subject matter jurisdiction.[3] These critics were confident that diversity jurisdiction had outlived its need, which, they said, was to provide a federal court for out-of-state litigants who feared bias in the local state courts. Advances in travel and communication, critics asserted, had homogenized American culture and rid us of any reasonable fear of bias at the hands of local courts.[4] Abolishing diversity jurisdiction would free busy federal judges from the nettlesome requirement of divining and applying state law and allow them more time for limning and developing federal law.[5] The effort was so successful that the House of Representatives overwhelmingly passed a bill abolishing diversity jurisdiction in 1978.[6]
But that effort and another determined frontal assault on diversity jurisdiction in 1990 failed. Now, a generation and more later, one sees little support for abolishing diversity. Even as its place on the federal docket grows—now accounting for more than one-third of the civil cases filed in district courts—one does not find academics or federal judges urging that these state-law-based cases be taken from the federal court docket.[7] On the other hand, diversity is now becoming a topic of increasing scholarly interest. The current commentary, however, is focused mostly on rationalizing diversity doctrine, making it consistent with its presumed purpose, rather than on curtailing it.[8] The accepted wisdom seems to be that diversity jurisdiction is here to stay, but that it might be recalibrated here and there.
What accounts for diversity’s survival and apparent acceptance? In retrospect, those who sought to abolish diversity jurisdiction failed to appreciate three fundamental characteristics about diversity jurisdiction. These characteristics should not be overlooked in our new era; they should guide efforts to rationalize diversity doctrine.
First, critics failed to understand that diversity jurisdiction is not something to be considered in vacuo, as a freestanding grant of judicial authority. It is instead an integral part of the economic engine of interstate commerce. Its function, ultimately, is to support the policies underlying the commerce, full faith and credit, and privileges and immunities clauses of the Constitution.[9] One should alter the availability of diversity jurisdiction only after considering the impact of such a change on this broader constitutional mission.
Second, those who attempted to abolish diversity understated the policy bases for diversity jurisdiction. Though the traditional “bias rationale” was indeed fear of bias against out-of-state litigants in state courts, today diversity jurisdiction is more broadly grounded in at least two ways. One is subtle and based in jurisdictional legislation of 1875: that the fear backing diversity jurisdiction is not state-based bias, but region-based bias.[10] The other, an “efficiency rationale,” developed over time with the Supreme Court’s jurisprudence regarding the Fourteenth Amendment’s restriction on state-court personal jurisdiction. Specifically, it is that diversity jurisdiction facilitates efficient joinder in complex cases in ways that state courts (hemmed in by the Supreme Court’s restrictive interpretation of the Fourteenth Amendment) simply cannot.[11] This rationale led to a resurgence of jurisdictional grants based upon diversity jurisdiction in the early part of this century so that there are now more diversity-based grants of subject matter jurisdiction than ever before.
Third, those who attempted to abolish diversity failed to appreciate that jurisdiction is ultimately a political issue. Whatever the policy bases for diversity jurisdiction, Congress retains it because the practicing bar wants it. The point was demonstrated in 1978. After the House passed its bill to abolish diversity jurisdiction, the organized bar leapt into action and defeated the effort in the Senate.[12] Thus, even if critics can show that diversity jurisdiction has outlived its need, they cannot show that it has overstayed its welcome, at least not in the eyes of the politically powerful group that wants it and uses it.
These characteristics should guide any efforts to make sense of, to render consistent, the various threads of the diversity canon. In addition, these efforts should take into account two other considerations. One, that canon is the result of complex interactions between Congress, which passes jurisdictional statutes, and federal courts, which interpret them. The bench is understandably concerned about docket control and holds considerable power in shaping jurisdiction with that as one consideration. Two, a national legal culture has evolved over our 230 years of experience with diversity jurisdiction. That culture includes the dynamic of intersystemic federalism, by which the federal and state courts engage in an ongoing dialogue about the development of the substantive law and of civil procedure.
It is unlikely that Congress will ever abolish diversity jurisdiction. At most, the legislature will tinker with some aspect of diversity in an effort to ensure that the federal court caseload does not get out of hand. As long as we maintain a rough equilibrium between the practicing bar’s desire to retain diversity jurisdiction and the federal bench’s desire to keep caseloads manageable, the status quo is fine—as a matter of political reality.
* Charles Howard Candler Professor of Law, Emory University. I have benefited from discussions with Tom Arthur, Pat Borchers, Collin Freer, Peter Hay, Dan Klerman, Dale Larrimore, Jonathan Nash, Rafael Pardo, Martin Redish, Robert Schapiro, Joanna Shepherd, and Howard Wasserman, for which I am grateful. I am indebted to the participants of the Federal Diversity Jurisdiction Conference held by the Emory Center on Federalism and Intersystemic Governance, in particular to Brooke Coleman for her insightful review of the Article. I am also grateful to Crystal Lee of the Emory Law Library, who provided invaluable assistance in locating historical materials.
[1]. Congress granted diversity jurisdiction upon the federal trial courts in the original Judiciary Act of 1789. It did not confer general federal question jurisdiction until 1875. Thus, until 1875, diversity cases were the staple of the federal civil docket. In the late nineteenth century, increasing federal caseloads and invocation of diversity jurisdiction by corporations led to some calls for restriction. In the twentieth century, an increasing number of federal judges, including Justices Frankfurter and Jackson, and later Chief Justices Warren and Burger, attacked diversity jurisdiction as wasteful of federal judicial resources. The anti-diversity momentum gathered throughout the 1970s and peaked with the Report of the Federal Court Study Committee (“FCSC”) in 1990 [hereinafter Report, FCSC]. For an outstanding treatment of this history (from which the foregoing is gleaned), see James M. Underwood, The Late, Great Diversity Jurisdiction, 57 Case W. Rsrv. L. Rev. 179, 180–98 (2006). The Report, FCSC is discussed infra Section V.B.
[2]. The American Law Institute’s Study of the Division of Jurisdiction Between State and Federal Courts (1969) was particularly influential. The American Law Institute (“ALI”) undertook the study in response to a 1959 request by Chief Justice Warren. The study concluded that diversity jurisdiction should be curtailed for two general reasons: that local bias was less pronounced than in earlier years and that the limited resources of the federal courts would better be expended on federal question cases. See John W. Reed, The War on Diversity, 18 Int’l Soc’y Barristers Q. 291, 291–92 (1983) (“Over the past decade or more there have been strong pressures to abolish the diversity jurisdiction of the federal courts. . . . The attack on diversity jurisdiction has its most distinguished formulation in a major study sponsored by the American Law Institute.”).
[3]. By the “general form” of diversity jurisdiction, I mean cases invoking § 1332(a)(1). Technically, no one favors the total abolition of federal jurisdiction based on the diversity power. For instance, all support retaining federal interpleader jurisdiction, which is, of course, based upon the diversity power. And no one advocates curtailing alienage jurisdiction under § 1332(a)(2). This Article addresses efforts to abolish or to curtail significantly this general form of diversity jurisdiction. Throughout this Article, my references to diversity are to its general form.
[4]. Such arguments date to the late nineteenth century, with the assertion that the advent of steam and electric power, and the Civil War, had so unified the country as to justify abolition of diversity. Alfred Russell, Avoidable Causes of Delay and Uncertainty in Our Courts, 25 Am. L. Rev. 776, 795–96 (1891). Justice Frankfurter favored abolition in the 1920s, saying “the mobility of modern life has greatly weakened state attachments. Local prejudice has ever so much less to thrive on than it did when diversity jurisdiction was written into the Constitution.” Felix Frankfurter, Distribution of Judicial Power Between United States and State Courts, 13 Cornell L.Q. 499, 521 (1928).
[5]. See, e.g., David Crump, The Case for Restricting Diversity Jurisdiction: The Undeveloped Arguments, from the Race to the Bottom to the Substitution Effect, 62 Me. L. Rev. 1, 5 (2010) (“[A]bolition [of diversity jurisdiction] would preserve a federal forum for those with federal claims.”); Larry Kramer, “The One-Eyed Are Kings”: Improving Congress’s Ability to Regulate the Use of Judicial Resources, 54 L. & Contemp. Probs. 73, 77 (1991) (discussing reducing federal court workload by “reduc[ing] the scope of federal jurisdiction by eliminating unimportant categories of cases so that judges can devote more time to the cases that remain”). Dean Kramer served as a reporter of the FCSC, which concluded that no case had a “weaker claim” on the federal court docket than diversity jurisdiction. See infra note 130.
[6]. H.R. 9622, 95th Cong. (1978) (proposing “to abolish diversity of citizenship as a basis of jurisdiction of Federal district courts”). The measure passed the House by a roll call vote of 266 to 133 on February 28, 1978.
[7]. The most recent calls for abolishing diversity jurisdiction appear to be Debra Lyn Bassett, The Hidden Bias in Diversity Jurisdiction, 81 Wash. U. L.Q. 119, 138–45 (2003) and Crump, supra note 5, at 22 (concluding that “[t]oday, more than ever, there are persuasive arguments for the abolition or retrenchment of the general diversity statute”). For discussion of Professor Bassett’s proposal, see infra note 176 and accompanying text.
[8]. Scott Dodson, Beyond Bias in Diversity Jurisdiction, 69 Duke L.J. 267, 309 (2019) (noting contemporary justification of diversity jurisdiction on efficiency grounds); Steven Gensler & Roger Michalski, The Million Dollar Diversity Docket, 47 BYU L. Rev. (forthcoming 2022) (studying a broad range of docket effects of increasing amount in controversy in diversity cases); Daniel E. Klerman & Jonathan R. Nash, Aligning Diversity Jurisdiction with Its Bias Rationale (2021) (unpublished manuscript on file with author) (calling for rationalization of diversity doctrine in line with its traditional bias rationale); Patrick Woolley, Diversity Jurisdiction and the Common-Law Scope of the Civil Action, 99 Wash. U. L. Rev. (forthcoming 2022) (asserting that diversity doctrine should be understood against the backdrop of common law joinder rules).
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