Before a court can decide who wins, it must have the power to hear the case at all. That power is jurisdiction. A court needs two kinds: power over the kind of case, and power over the defendant. This builds on state courts and the federal courts.
Key idea
Subject-matter jurisdiction: federal courts hear only listed kinds of cases, chiefly federal-question cases (arising under federal law) and diversity cases between citizens of different states where more than \$75,000 is at stake. Personal jurisdiction: the defendant must have enough contacts with the state that a suit there is fair.
| Federal subject-matter jurisdiction | Requirements |
|---|---|
| Federal question (28 U.S.C. § 1331) | the claim arises under the Constitution, a federal statute or a treaty |
| Diversity (28 U.S.C. § 1332) | complete diversity (no plaintiff is a citizen of the same state as any defendant) and an amount in controversy that exceeds \$75,000, not counting interest and costs |
Why it works
State trial courts of general jurisdiction can hear almost any case. Federal courts are courts of limited jurisdiction: Article III lists the kinds of cases they may hear, and Congress decides how much of that list to give them. Diversity jurisdiction exists so that an out-of-state party need not fear a home-town court. The Supreme Court read the statute to require complete diversity in Strawbridge v. Curtiss (1806). If a case could have been filed in federal court but was filed in state court, the defendant may usually remove it to federal court.
Personal jurisdiction protects defendants under the Due Process Clause. In International Shoe Co. v. Washington (1945) the Court held that a state may hear a suit against an out-of-state defendant with "certain minimum contacts" with the state, so that the suit does not offend "traditional notions of fair play and substantial justice" (326 U.S. at 316). A defendant can always be sued where it is "at home": an individual's home state, or a corporation's state of incorporation and principal place of business.
Personal jurisdiction protects defendants under the Due Process Clause. In International Shoe Co. v. Washington (1945) the Court held that a state may hear a suit against an out-of-state defendant with "certain minimum contacts" with the state, so that the suit does not offend "traditional notions of fair play and substantial justice" (326 U.S. at 316). A defendant can always be sued where it is "at home": an individual's home state, or a corporation's state of incorporation and principal place of business.
Worked example: Complete diversity
Ana (Ohio) and Ben (Michigan) sue Carla (Indiana) and DeShawn (Michigan) in federal court for \$200,000 under state contract law. Is there diversity jurisdiction?
- No federal law is involved, so diversity is the only route.
- Amount: \$200,000 exceeds \$75,000. That part is met.
- Citizenship: plaintiff Ben and defendant DeShawn are both from Michigan.
- Complete diversity fails if any plaintiff shares a state with any defendant.
Answer: No. Ben and DeShawn are both Michigan citizens.
Worked example: A corporation's citizenship
Pat (Texas) sues Acme Inc., incorporated in Delaware with its headquarters in Texas, for \$90,000. Diversity?
- A corporation is a citizen of its state of incorporation and the state of its principal place of business.
- Acme is a citizen of Delaware and Texas.
- Pat is from Texas, so a plaintiff and a defendant share a state.
Answer: No diversity. The case belongs in state court unless a federal question appears.
Worked example: Exactly \$75,000
A New Jersey citizen sues a Florida citizen for exactly \$75,000. Diversity?
- The parties are diverse.
- The amount must exceed \$75,000. Exactly \$75,000 does not.
Answer: No. The claim must be more than \$75,000.
Common mistake
Thinking diversity jurisdiction needs only one plaintiff and one defendant from different states. It requires complete diversity: no plaintiff may share citizenship with any defendant. Check by listing every party's state (two for a corporation) and looking for any match across the "v."
This is an educational course, not legal advice.