Diversity of Citizenship Subject Matter Jurisdiction: Problems
Directions: For each problem, state the appropriate legal rule completely and clearly, apply it to the
facts to reach your conclusion. Just as in a full FIRAC analysis, do not jump immediately to the
conclusion, but work through the model, showing your work at each step. In reading your answer, I
should see Rule, Application, and Conclusion and be able to see how you got there and how your
answer logically flows from your analysis.
1. Assume Plaintiff (P) is a Georgia resident. While driving through Birmingham, Alabama, P is
involved in an accident with D, an Alabama resident. P alleges more than $75,000 in personal and
property injuries. Does a federal court in Georgia have subject matter jurisdiction over this
dispute based on the diversity of citizenship of the parties? (In other words, can P sue D in federal
court in Georgia?)
Facts:
P is resident of Georgia.
D is a resident of Alabama.
P and D were involved in an automobile accident in Alabama.
P is suing D for $75,000+ in personal and property injuries.
Issue:
Does a federal court in Georgia have subject matter jurisdiction over this
dispute based on the diversity of citizenship of the parties?
Rule:
Yes, the Georgia federal courts do have subject matter jurisdiction over this dispute
based on Diversity of Citizenship.
Analysis:
According to Diversity of Citizenship:
Federal courts can hear cases based on state laws if all plaintiffs are citizens of states
different from every defendant and the jurisdictional amount is $75,000 or more.
Conclusion:
In conclusion, P can sue D in a Georgia federal court because the conditions of his case
meet requirements for Diversity of Citizenship.
2. Again, assume that P is a GA resident, who was involved in an accident with B, an Alabama
resident, while driving through Birmingham. When P was struck by D, D was driving a delivery
truck for Coca Cola, a Georgia corporation. Can P sue both D (the Alabama driver) and Coke (the
GA corporation) in federal court based on diversity jurisdiction? After you conduct the modified
FIRAC to show how you reached your conclusion, please discuss the following question in 1-2
sentences: Would it be practical for a plaintiff to sue one defendant in federal court and another
defendant in state court? Why or why not?
Facts:
P is resident of Georgia.
D is a resident of Alabama.
P and D were involved in an automobile accident in Alabama.
D is employed by Georgia-based Coca Cola™ and was driving their delivery truck at the
time of the accident.
Issue:
Can P sue both D (the Alabama driver) and Coke (the GA corporation) in federal court
based on diversity jurisdiction?
Rule:
Yes, P sue both D (the Alabama driver) and Coca Cola™ (the GA corporation) in federal
court based on diversity jurisdiction.
Analysis:
As stated earlier, federal courts have jurisdiction when there is Diversity of Citizenshipwhich applies between both P and D.
In the matter of Coca Cola™, while it was incorporated in Georgia, it also does business
in in the rest of the country, which includes Alabama. If a corporation conducts business
in any other states this makes them subject to federal court’s Long-Arm jurisdiction.
Conclusion:
In conclusion, P can sue both D and Coca Cola™ in a federal court based on Diversity of
Citizenship and Long-Arm jurisdictions.
I would not think it practical to sue the two defendants in two separate courtrooms. Coca Cola™ has
the money and legal prowess to tie up an individual until their personal finances are depleted, it does
not seem practical to spend both time and money chasing down two individual cases, especially when
they are tied to the same event.
3. P is an Ohio resident who owns an office supply store in Cincinnati, Ohio. Sixteen months ago, P
sold $104,000 in office furniture to D, a Kentucky corp. D made regular payments for several
months, dropping the balance due to $64,000, but has not paid for 3 months. Can P sue D in
federal court to recover the balance due? Why or why not? State and apply the rule to reach and
explain your conclusion!
Facts:
P owns an office supply store in Ohio.
D owns a corporation in Kentucky.
D is in arrears to P for a balance of $64,000 for the past three months.
Issue:
Can P sue D in federal court to recover the balance due?
Rule:
No, P cannot sue D in federal court to recover the balance due.
Analysis:
Under Diversity of Citizenship, corporations are considered citizens in the state of their
incorporation. Unfortunately, the remaining balance of $64,000 falls short of the
$75,000 requirement needed to bring this matter to a federal level. P would have to
take this matter up at a state level from either Ohio or Kentucky.
Conclusion:
In conclusion, P cannot sue D in federal court to recover the balance due.
4. P (an Oregon resident) and S (a California resident) recently purchased a fast-food franchise in
Oregon from Day, Inc. Day is incorporated in Delaware and has its principal place of business in
Chicago. After P and S equipped the restaurant, hired the staff and began advertising their grand
opening, Day backed out of the franchise agreement. Assuming that P and S claim more than
$75,000 in a lawsuit against D for breach of contract, can they sue D in federal district court?
Why or why not? State the legal rule fully before applying it to the facts to reach your conclusion.
Facts:
P is an Oregon resident
S is a California resident.
Day, Inc. is a Delaware-incorporated business based out of Chicago, Illinois.
Both P and S are suing Day, Inc. for breach of contract.
Damages are assumed to be over $75,000.
Issue:
If P and S claim more than $75,000 in a lawsuit against D for breach of contract, can they
sue D in federal district court?
Yes, P and S can sue Day, Inc. for breach of contract in a federal district court.
Rule:
Analysis:
Diversity of Citizenship states:
Federal courts can hear cases based on state laws if all plaintiffs are citizens of states
different from every defendant and the jurisdictional amount is $75,000 or more.
The plaintiffs are from Oregon and California respectively, the defendant’s state of
incorporation is Delaware and is based out of Chicago, Illinois.
The damages here assumed to be over $75,000.
All requirements needed to meet Diversity of Citizenship have been met, allowing this
case to go forward on a federal level.
Conclusion:
In conclusion, P and S can sue Day, Inc. for breach of contract in a federal district court.
5. Assume the same parties as in DJ # 4, except that D’s principal place of business is Los Angeles, not
Chicago. Can P and S sue D in federal district court, based on diversity of citizenship? Why or
why not?
P and D will not be able to sue in this instance because the requirements for Diversity of Citizenship
will no longer be met.
Corporations are granted dual citizenship:
 Location 1 is their state of incorporation.
 Location 2 is the state where their principal place of business (corporate HQ) is based.
With Day, Inc.’s corporate HQ now being in Los Angeles, (CA) the requirements for Diversity of
Citizenship are no longer met because S is also a resident of CA – creating a conflict.