An American law term referring to a federal court's jurisdiction to hear a case between residents of different states as long as a certain monetary threshold is met as to the amount in dispute, presently $75,000 USD.
The US Federal Judiciary website describes diversity jurisdiction as follows:
"A case also may be filed in federal court based on the "diversity of citizenship" of the litigants, such as between citizens of different states, or between United States citizens and those of another country.
"To ensure fairness to the out-of-state litigant, the Constitution provides that such cases may be heard in a federal court.
"An important limit to diversity jurisdiction is that only cases involving more than $75,000 in potential damages may be filed in a federal court.
"Claims below that amount may only be pursued in state court.
"Moreover, any diversity jurisdiction case regardless of the amount of money involved may be brought in a state court rather than a federal court."
Consider the first paragraph of section 2 of Article 3 of the US Constitution, underlining added:
"The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority;--to all cases affecting ambassadors, other public ministers and consuls;--to all cases of admiralty and maritime jurisdiction;--to controversies to which the United States shall be a party;--to controversies between two or more states;--between a state and citizens of another state;--between citizens of different states;--between citizens of the same state claiming lands under grants of different states, and between a state, or the citizens thereof, and foreign states, citizens or subjects."
A federal court's jurisdiction over a matter which meets the monetary threshhod and which involves citizens of different states is not mandatory; a resident of a state still can bring a case to a Court in it's jurisdiction.
The historical rationale for this diversity jurisdiction of federal courts is to recognize the bias a court might oterwise have towards a litigant resident in its own jurisdiction.
In Bank of the United States v Deveux, the Justice John Marshall of the US Supreme Court (who served on the Court for 34 years; pictured), wrote, in 1809:
"However true the fact may be that the tribunals of the states will administer justice as impartyially as those of the nation, to parties of every description, it is nonetheless true that the Constitution itself either entertains apprehensions on this subject, or views with such indulgence the possible fears and apprehensions of suitors."
References and Further Reading: