Enacted in 1988, its major provision increases the jurisdictional amount for a federal court to hear a diversity of citizenship case from ten thousand to fifty thousand dollars. The provision effected a compromise between those who sought abolition of diversity jurisdiction and those content with the status quo. A secondary provision prevents plaintiffs from appointing nonresidents to represent decedents, infants, or incompetents. Such representatives will be deemed citizens of the state of the represented person.
Abolitionists have argued that reduction in burgeoning federal dockets may best be achieved by revoking the diversity jurisdiction of the federal courts. They allege that the framers' fear, when the Constitution was drafted, that state courts would be biased against out‐of‐state litigants is no longer justified. Abolitionists have also argued that forum shopping by plaintiffs should not extend to the federal courts and that inasmuch as diversity disputes invariably concern matters—tort, contract, and commercial transactions—on which the state, but not the federal, courts are expert, they ought to be resolved there. Those supporting retention of diversity jurisdiction argue that parochialism continues to afflict the state courts and that justice is better served by providing litigants a choice of forums.
Whether the act will reduce federal caseloads remains a matter of dispute. Unless the amount in controversy is a sum certain, as when one is suing on a note, a skillfully drafted complaint should be able to allege credibly damages exceeding fifty thousand dollars in almost all diversity cases.
See also Diversity Jurisdiction; Judicial Power and Jurisdiction.
— Harold J. Spaeth
