What is diversity jurisdiction?

Diversity jurisdiction refers to the ability of federal courts to hear cases in which the parties are residents of different states. This jurisdiction is established to provide a neutral forum for parties who may feel biased by local courts in cases involving parties from different jurisdictions. The aim is to minimize the risk of prejudice that might arise if the case were heard in one party's home state court.

In such cases, the federal court has the opportunity to adjudicate disputes where there may be diverse interests, thus promoting fairness and impartiality. For diversity jurisdiction to apply, it is also essential that the amount in controversy exceeds a certain threshold, currently set at $75,000, and that there is complete diversity between the parties—meaning that no plaintiff can be from the same state as any defendant.

This concept is crucial in federal civil procedure as it helps determine the appropriate venue for legal disputes, ensuring that parties can access a judicial system that is divorced from localized biases that could affect the outcome of the case.