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Thursday, January 4, 2018

The Diversity Jurisdiction Gambit

by Gregory Williams, Esq. | Under 28 U.S.C. § 1332, is a plaintiff that files an employment discrimination case originally in Federal court, based on diversity jurisdiction, entitled to costs when the court finally adjudges that Plaintiff is entitled to recover less than the sum or value of $75,000? Here’s my point of view (NOTE: please read our DISCLAIMER before proceeding).


As an initial matter, United States District Courts have original jurisdiction (Diversity Jurisdiction) of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States; there are additional provisionsSee 28 U.S.C. § 1332(a). Further, in any civil action of which the district courts have original jurisdiction, the district courts shall have Supplemental Jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution; but, there are exceptions. See 28 U.S.C. § 1367(a)-(b). Employment discrimination cases typically involve these two jurisdictional bases.  


However, there may be risks for the plaintiff-employee in using Federal court, based on Diversity Jurisdiction, to originally file the employment discrimination lawsuit.  The relevant law is 28 U.S.C. § 1332(b) and, as of the date of this article, states as follows:

(b)  Except when express provision therefor is otherwise made in a statute of the United States, where the plaintiff who files the case originally in the Federal courts is finally adjudged to be entitled to recover less than the sum or value of $75,000, computed without regard to any setoff or counterclaim to which the defendant may be adjudged to be entitled, and exclusive of interest and costs, the district court may deny costs to the plaintiff and, in addition, may impose costs on the plaintiff.


Thus, subject to exceptions, a plaintiff that files an employment discrimination case originally in Federal court based on diversity jurisdiction must, arguably, recover $75,000 or more, or the court may deny costs authorized by statute to the plaintiff; moreover, the court may also impose costs on the plaintiff.  But this law may be superseded by an express provision in a statute of the United States.

In any event, this is a gambit that some plaintiffs may not want to take – proceed with caution.

If you would like to learn more, then consider contacting an experienced attorney as soon as possible to discuss your case. Please note: the information contained in this article is not offered as legal advice and will not form an attorney-client relationship with either this author or Williams Law Group, PS; please see our DISCLAIMER.

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