Article III, Section 2, Clause 1:

The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;—to all Cases affecting Ambassadors, other public Ministers and Consuls;—to all Cases of admiralty and maritime Jurisdiction; to Controversies to which the United States shall be a Party;—to Controversies between two or more States; between a State and Citizens of another State, between Citizens of different States,—between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.

The constitutional grant of diversity jurisdiction extends to controversies between “Citizens of different States.” Since Congress first exercised its constitutional prerogative to vest diversity jurisdiction in the federal courts in the Judiciary Act of 1789, the Supreme Court has considered the meaning of “Citizens of different States,” and the constitutional reach of diversity jurisdiction, on numerous occasions.

In Hepburn v. Ellzey,1 Chief Justice John Marshall confined the meaning of the word “state” as used in the Constitution to “the members of the American confederacy,” ruling that a citizen of the District of Columbia thus could not maintain a suit against a citizen of Virginia in federal court on the basis of diversity jurisdiction. Chief Justice Marshall noted that it was “extraordinary that the courts of the United States, which are open to aliens, and to the citizens of every state in the union, should be closed upon [citizens of the District of Columbia].—But this is a subject for legislative not for judicial consideration.” 2 The Court subsequently applied the same rule to citizens of the U.S. territories.3

Whether the Chief Justice had in mind a constitutional amendment or a statute when he spoke of legislative consideration remains unclear. Congress addressed the issue in 1940 by statutorily conferring on federal district courts jurisdiction over civil actions, not involving federal questions, “between citizens of different States, or citizens of the District of Columbia, the Territory of Hawaii, or Alaska and any State or Territory.” 4 In National Mutual Ins. Co. v. Tidewater Transfer Co.,5 the Court upheld that amendment in a 5-4 decision, but a majority of Justices could not agree on the reasoning. Two Justices thought that Chief Justice Marshall’s 1804 decision should be overruled, but the other seven Justices disagreed. Three of the seven Justices thought the statute could be sustained under Congress’s power to enact legislation for District of Columbia inhabitants, but the remaining four plus the other two rejected this theory. The statute was upheld because a total of five Justices voted to sustain it, although of the two theories relied upon, seven Justices rejected one and six the other. The result, attributable to “conflicting minorities in combination,” 6 means that Hepburn v. Ellzey is still good law insofar as it holds that the District of Columbia is not a state for purposes of Article III, but is overruled insofar as it holds that District citizens may not invoke federal diversity jurisdiction.7

In a typical two-party case, “diversity” exists if a citizen of one state sues a citizen of another state. In a multiparty case, Chief Justice Marshall established in an early case, Strawbridge v. Curtiss, that there must be complete diversity—that is, no party on one side could be a citizen of any state of which any party on the other side was a citizen.8 In State Farm Fire & Casualty Co. v. Tashire, the Court clarified that this complete diversity requirement flows from the diversity jurisdiction statute, rather than from the constitutional grant of authority,9 noting that Chief Justice Marshall, in Strawbridge, “purported to construe only '[t]he words of the act of congress.’” 10 Article III’s diversity requirement, the Court held in Tashire, requires only that “any two adverse parties are not co-citizens” and thus “poses no obstacle to the legislative extension of federal jurisdiction” by requiring only minimal diversity.11

Footnotes

1

6 U.S. (2 Cr.) 445 (1805).

2

Id. at 453.

3

City of New Orleans v. Winter, 14 U.S. (1 Wheat.) 91 (1816).

4

Pub. L. No. 76–463, 54 Stat. 143 (1940). The relevant provision was later revised to read “The word ‘States,’ as used in this section, includes the Territories and the District of Columbia.” See 28 U.S.C. § 1332(b) (1948).

5

337 U.S. 582 (1949).

6

Id. at 655 (Frankfurter, J., dissenting).

7

See id. The statute’s provision allowing citizens of Puerto Rico to sue in diversity was sustained in Americana of Puerto Rico, Inc. v. Kaplus, 368 F.2d 431 (3d Cir. 1966), cert. denied, 386 U.S. 943 (1967), under Congress’s power to make rules and regulations for U.S. territories. Cf. Examining Bd. v. Flores de Otero, 426 U.S. 572, 580–97 (1976) (discussing congressional acts with respect to Puerto Rico).

8

7 U.S. (3 Cr.) 267 (1806).

9

386 U.S. 523, 530 (1967).

10

Id. at 530.

11

Id. When Congress enacted the Class Action Fairness Act of 2005 (CAFA), for instance, it expanded federal courts’ jurisdiction over class actions by requiring only minimal diversity between plaintiffs and defendants. See 28 U.S.C. § 1332(d); see also ArtIII.S2.C1.16.1 Overview of Diversity Jurisdiction.