Complete Diversity Does Not Mean a State Court Lacks Subject Matter Jurisdiction
One way for a federal court to assert subject matter jurisdiction is based on diversity. In most cases, a federal court will be able to assert subject matter jurisdiction if there is complete diversity among the parties – – meaning that no plaintiff is a citizen of the same state as any defendant. See 28 USC § 1332. But this does not mean that a state court lacks subject matter jurisdiction. If the plaintiff chooses, he can sue the defendants in state court even though there is complete diversity. The plaintiff, in this example, has a choice between suing in federal or state court.
But if the parties are diverse, defendants may be able to remove the case to federal court.
As discussed in the accompanying video, even if the plaintiff chooses state court, a case may still end up in federal court. For example, if a plaintiff from New York sues a defendant from New Jersey in New York state court, the defendant should be able to remove the case to federal court based on diversity. That is, the defendant simply informs the state court and the plaintiff that he is removing the case based on diversity, and then files plaintiff’s complaint in federal court in New York. Now the case will continue in federal court, assuming the parties really are diverse.
There is an exception to removal, which is…
A defendant cannot remove a case based on diversity if he is sued in his home state
Defendants may only remove a case if they are sued in a state court outside their home state. For example, if a plaintiff from New York sues a citizen of New Jersey in New Jersey state court, the defendant cannot remove the case based on diversity. New Jersey is his home state and he will need to litigate in state court. If the New Jersey defendant had been sued in New York, he would have the right to remove the case.
The video below discusses diversity subject matter jurisdiction.