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Courts Must Restore Minimal Diversity to Restore Balance of Justice

Should federal court jurisdiction be expanded, and what effect would an expansion have on the judiciary? Alongside three legal experts, I discussed this question at a panel event hosted by the Federalist Society earlier in June. The discussion kicked off the National Association of Manufacturers’ Center for Legal Action’s Restore Our Courts initiative and centered around the primary criticism of expanding diversity jurisdiction – the impact on federal court caseload.

In my latest study, “Estimating the Impact of a Minimal Diversity Standard on Federal Court Caseloads,” I found that these concerns are largely unfounded. Empirical analysis of almost 3,600 complaints filed in state court shows that replacing complete diversity with a minimal diversity standard would increase existing federal district court caseloads by an estimated 7.7 percent. This translates to an additional 43 cases per year for each judgeship – an inconsequential amount, with great potential to restore the balance in the United States judicial system.

As the Founding Fathers intended, diversity jurisdiction protects out-of-state residents from potentially biased state courts. It is meant to ensure that commercial cases would be heard in an impartial forum to protect foreign litigants from local bias. The traditional diversity statute has been interpreted by the courts to require “complete diversity,” where there cannot exist a common state citizenship between any plaintiff and any defendant. But Article III of the U.S Constitution only requires a “minimal diversity” standard for federal diversity jurisdiction, where at least one plaintiff and one defendant must be diverse in state citizenship. 

State courts operating under a complete diversity standard open the door to harmful bias and costly lawsuits. Empirical evidence indicates that, compared to federal judges, many state judges tend to favor in-state plaintiffs over out-of-state defendants. This could be due to the intensifying politicization of state courts and state judicial elections where state court judges rely on voters for reelection and thus conform to the preferences of in-state litigants who are also voters. 

Countless examples exist of overt bias in state courts, with state judges favoring local litigants and plaintiffs’ attorneys over out-of-state corporate defendants. State courts in Madison County, Illinois have been accused of favoring plaintiffs’ lawyers over out-of-state corporations in asbestos litigation. In fact, approximately one-third of all asbestos injury suits in the United States are brought in this single rural county. 

It is clear that biases against out-of-state and corporate litigants continue to thrive today. Returning to the minimal diversity standard required by the Constitution would extend protection against these biases, enhancing fairness in our civil court justice system and discouraging speculative litigation. Most importantly, to the critics of this effort who cite an increased burden on federal court caseload, I say - an additional 43 cases per year is a small price to pay for equal justice.

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About this Author

Joanna M. Shepherd, Professor, Emory University, School of Law
Professor of Law

Joanna Shepherd teaches Torts, Law and Economics, Analytical Methods for Lawyers, Statistics for Lawyers, and Legal and Economic Issues in Health Policy. Before joining Emory, Professor Shepherd was an assistant professor of economics at Clemson University. In addition to her position at the law school, she currently serves as an Adjunct Professor in the Emory Department of Economics.

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