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Cases, Controversies, and Diversity

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Cases, Controversies, and Diversity Copyright 2015 by F. Andrew Hessick Printed in U.S.A. Vol. 109, No. 1 CASES, CONTROVERSIES, AND DIVERSITY F. Andrew Hessick ABSTRACT—Article III’s diversity jurisdiction provisions extend the federal judicial power to state law controversies between different states or nations and their respective citizens. When exercising diversity jurisdiction, the federal judiciary does not function in its usual role of protecting federal interests or ensuring the uniformity of federal law. Instead, federal courts operate as alternative state courts for resolving disputes between diverse parties. But federal courts often cannot act as alternative state courts because of Article III justiciability doctrines such as standing, ripeness, and mootness. These doctrines define when a federal court may act. But they do not apply to state courts. Rather, states have developed their own justiciability doctrines that substantially diverge from the federal ones. The consequence is that federal courts sitting in diversity cannot hear many claims that can be brought in state court and can hear other claims that state courts lack the power to decide. This Article argues that, instead of applying federal justiciability doctrines, federal courts should apply state justiciability doctrines to state law cases brought under diversity jurisdiction. Following state justiciability doctrines would better achieve the goals of allowing federal courts to function as alternative state courts. Moreover, following state justiciability doctrines in state law cases would not undermine the rationales underlying federal justiciability doctrines because those doctrines were developed to limit the federal judiciary’s ability to interfere with the other branches of the federal government— concerns that are inapplicable in state law disputes. AUTHOR—Professor of Law, S.J. Quinney College of Law, University of Utah. Thanks to Kelli Alces, Lincoln Davies, Heather Elliott, Richard Fallon, William Fletcher, Tara Grove, Zack Gubler, Arthur Hellman, Carissa Hessick, Zak Kramer, Jim Pfander, Bob Pushaw, Tom Rowe, John Siegel, Max Stearns, Malcolm Stewart, and Ernie Young for comments and suggestions. Kyle La Rose, Chris Mitchell, and Andrew Wojciechowski provided excellent research assistance. 57 N O R T H W E S T E R N U N I V E R S I T Y L A W R E V I E W INTRODUCTION ............................................................................................................... 58 I. JUSTICIABILITY IN FEDERAL AND STATE COURTS ..................................................... 62 A. Federal Justiciability Doctrines ................................................................... 62 B. Variance Between State and Federal Justiciability ...................................... 65 C. Justiciability in Diversity .............................................................................. 75 II. FOLLOWING STATE JUSTICIABILITY DOCTRINES IN DIVERSITY ................................ 77 A. History and Text of the Diversity Provisions ................................................ 78 B. Promoting the Purpose for Diversity Jurisdiction ........................................ 81 C. Parity Between Federal and State Courts ..................................................... 86 III. THE REASONS FOR FEDERAL JUSTICIABILITY ........................................................... 90 A. Separation of Powers .................................................................................... 91 B. Institutional Competence .............................................................................. 95 C. Fairness ....................................................................................................... 98 D. Judicial Resources ........................................................................................ 98 IV. FEDERALISM AND DISPARITY OBJECTIONS .............................................................. 99 A. Federalism .................................................................................................. 100 B. Inconsistent Justiciability Doctrines ........................................................... 104 CONCLUSION ................................................................................................................ 106 INTRODUCTION Every year, tens of thousands of suits are filed in federal court based on diversity jurisdiction.1 The primary reason for federal diversity jurisdiction is to provide an alternative forum for resolving state law claims free from the bias that state courts might harbor against out-of-state litigants.2 Thus, when exercising diversity jurisdiction, the federal judiciary 1 See U.S. District Courts, U.S. COURTS, http://www.uscourts.gov/Statistics/JudicialBusiness/2012/ us-district-courts.aspx [http://perma.cc/87ZZ-5NUX] (noting that in 2012, 85,742 suits were filed based on diversity of citizenship). Diversity of citizenship is the most common basis for federal jurisdiction after “Federal Question” jurisdiction. Id. This number includes only suits between citizens of different states; it does not include suits presenting other forms of diversity, such as suits between a state and a citizen of another state. 2 See Martin v. Hunter’s Lessee, 14 U.S. (1 Wheat.) 304, 347 (1816) (justifying diversity jurisdiction on the ground that “state attachments . might sometimes obstruct, or control, or be supposed to obstruct or control, the regular administration of justice”); THE FEDERALIST NO. 80, at 534 (Alexander Hamilton) (Jacob E. Cooke ed., 1961) (describing diversity jurisdiction as necessary because the “state tribunals cannot be supposed to be impartial and unbiased” against out-of-state litigants). According to some, the fear of bias was limited not only to state judges, but also included state juries. See Robert L. Jones, Finishing a Friendly Argument: The Jury and the Historical Origins of Diversity Jurisdiction, 82 N.Y.U. L. REV. 997, 997 (2007). 58 109:57 (2015) Cases, Controversies, and Diversity does not function in its usual capacity as a coequal branch of the federal government. Instead, federal courts operate as an alternative forum to the state courts, resolving disputes between different states or nations and their respective citizens.3 In that role, as the Supreme Court has explained, the federal court is simply “another court of the State.”4 Its function is to interpret and enforce state law as any other court of that state would.5 But federal courts sitting in diversity often cannot act as alternative forums to state courts because of federal justiciability doctrines.6 Deriving from the “case” or “controversy” language from Article III,7 these doctrines include standing, mootness, ripeness, the political question doctrine, and the prohibitions on hearing collusive suits and issuing advisory opinions.8 They define the circumstances under which a federal court has the power under Article III to hear a dispute9—including a dispute brought under diversity jurisdiction.10 Imposing federal justiciability requirements in diversity cases impairs the federal courts’ ability to serve as an alternative state forum. Article III does not apply to state courts, and state courts consequently need not follow federal justiciability doctrines.11 Instead, states have developed their own justiciability doctrines that substantially differ from the federal ones. The application of federal justiciability doctrines to suits in diversity thus causes a divergence between state courts and federal courts: Although federal courts sitting in diversity are supposed to function as state courts, they cannot hear some claims that a state court can hear, and they can hear other claims that a state court cannot. 3 For purposes of this Article, the term “diversity jurisdiction” refers to the federal courts’ power under Article III to hear “Controversies . between a State and Citizens of another State; . between Citizens of different States; . and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.” U.S. CONST. art. III, § 2, cl. 1. 4 Guar. Trust Co. v. York, 326 U.S. 99, 108–09 (1945). 5 See Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996) (“Under the Erie doctrine, federal courts sitting in diversity apply state substantive law . .”). 6 See infra note 132 (collecting examples). 7 See DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006) (“The doctrines of [justiciability] originate in Article III’s ‘case’ or ‘controversy’ language . .”). 8 See Jonathan R. Siegel, A Theory of Justiciability, 86 TEX. L. REV. 73, 76–77 (2007) (cataloguing doctrines). 9 Franks v. Bowman Transp. Co., 424 U.S. 747, 754 (1976) (“[A]ll concepts of justiciability . derive[] from . the ‘cases or controversies’ limitation imposed by Art. III.”). 10 See, e.g., Lee v. Am. Nat’l Ins. Co., 260 F.3d 997, 1000–02 (9th Cir. 2001) (dismissing claim brought under diversity because plaintiff failed to demonstrate federal standing); see also Robert J. Pushaw, Jr., Article III’s Case/Controversy Distinction and the Dual Functions of Federal Courts, 69 NOTRE DAME L. REV. 447, 448 & n.6 (1994) (noting that federal courts apply federal justiciability doctrines to suits brought under diversity jurisdiction). 11 See, e.g., ASARCO Inc. v. Kadish, 490 U.S. 605, 617 (1989) (“We have recognized often that . state courts are not bound by . federal rules of justiciability . .”). 59 N O R T H W E S T E R N U N I V E R S I T Y L A W R E V I E W Although scholars have written extensively on federal justiciability doctrines,12
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