Scott Dodson on Beyond Bias in Diversity Jurisdiction

Published on: Author: Chimene Keitner

The creation of the federal courts was an exercise in nation-building. Delegates to the Constitutional Convention worried that unduly expansive federal jurisdiction would suggest mistrust of, and eventually eclipse, state courts. An elusive quest to ensure impartiality pulled in the opposite direction, with the specter of state-court bias against out-of-state defendants animating the desire to enable such cases to be heard in federal court. The Constitution ultimately included a Diversity Clause, which was operationalized in the First Judiciary Act of 1789. As early as 1809, Chief Justice John Marshall expressed skepticism about the factual basis for the bias rationale in United States v. Deveaux. Whether created to promote impartiality or to ensure a sufficient caseload for the newly established federal courts, domestic diversity seems to have been the black sheep of federal-court jurisdiction from its birth.

Scott Dodson’s “Beyond Bias in Diversity Jurisdiction,” forthcoming in the Duke Law Journal, examines the historical rationale for domestic diversity jurisdiction and asks whether the erosion of the factual predicate for creating domestic diversity jurisdiction warrants restricting or abolishing it. Unlike some other scholars, his answer to that question is “no.”

Professor Dodson’s analysis proceeds in five parts. He reviews the origin and entrenchment of the bias rationale for diversity jurisdiction, the centrality of that rationale to creating this basis for federal jurisdiction, the “marginalization” of that rationale as presumed state-court bias towards out-of-state parties has proved absent or inconsequential, how to refocus the debate over diversity jurisdiction, and some proposals for reforming diversity jurisdiction.

Professor Dodson catalogues persuasively how the bias rationale influenced the answers to questions associated with the implementation of diversity jurisdiction, such as the requirement of complete diversity, definitions of corporate citizenship, and the forum-defendant bar to removal. By 1978, this rationale had come to strike some as so thin that the House passed a bill eliminating diversity jurisdiction altogether. This legislative effort, and others, failed to gain support in the Senate—at least in part, Professor Dodson recounts, because of the persistence of belief in the bias rationale.

In 1986, Thomas Rowe and Kenneth Sibley suggested that diversity jurisdiction was best suited to solving aggregation problems, independent of the bias rationale. In Professor Dodson’s view, focusing on aggregation issues enables an “honest” conversation about diversity jurisdiction unencumbered by the “long and omnipresent” shadow of debates about out-of-state bias. In Professor Dodson’s view, the Supreme Court should “lift personal jurisdiction’s obstacles to aggregation in federal court” to maximize the potential of federal courts to serve this aggregation function. One wonders whether a similarly expansive view of personal jurisdiction in state courts could enable states to shoulder some of the burden of aggregate litigation, or whether there is something beyond the out-of-state bias rationale that would counsel against this arrangement. Professor Dodson notes that other biases sometimes attributed to state courts might point towards a federal forum as preferable where one is available, but he does not unpack these issues or seek to assess whether or not the available evidence supports other bias narratives. Rather, his core purpose is clearing the brush from diversity jurisdiction debates so that jurists can engage in such analyses and assessments without being “waylaid by the [out-of-state] bias rationale.”

The final section of the article suggests some promising areas of consideration for reform of diversity jurisdiction, unshackled from the confines of the bias rationale. Professor Dodson argues that there is no constitutional barrier to alternative configurations of diversity jurisdiction, based on a literal reading of the Diversity Clause. Ultimately, the design of our judicial system reflects understandings about the meaning of federalism. The very idea of diversity jurisdiction—and, indeed, of the division of adjudicatory authority between state and federal courts—goes to the core of what it means to live in a federal system. Whether parties end up having their day in state or in federal court, the legitimacy and viability of the judicial system will rest on the parties’ continued confidence in the impartiality and fairness of decisionmakers, whoever they may be.