Why Do In-State Plaintiffs Invoke Diversity Jurisdiction?

Abstract

The traditional rationale of federal diversity jurisdiction is to protect out-of-state parties from the risk of an appearance of state-court bias in favor of an in-state adversary. Yet a strikingly high percentage—more than 50 percent—of original domestic-diversity cases are filed by in-state plaintiffs. Why these in-state plaintiffs invoke diversity jurisdiction is a question that has largely been ignored in the literature. Drawing on docket data and an original dataset based on responses to a survey sent to more than twelve thousand attorneys who represented in-state plaintiffs in domestic-diversity cases, I find that these plaintiffs can be grouped into roughly three categories. The first category is composed of tort cases, filed by individual plaintiffs against corporate defendants, that are eligible for consolidation with an existing federal multi-district litigation. The second category is composed of in-state corporate plaintiffs represented by attorneys who tend to represent defendants in federal court and who invoke diversity jurisdiction primarily based on perceptions of advantages of federal procedure, efficiencies and conveniences of federal practice, and superior quality of federal court. The third category is composed of in-state plaintiffs represented by attorneys who tend to represent plaintiffs in state court and who invoke diversity jurisdiction to preempt the defendant’s likely removal of the case. My findings offer grounds for reforming diversity jurisdiction in more tailored and nuanced ways than have previously been proposed.