What does the term "diverse jurisdiction" mean in the context of a lawsuit between citizens of different states?

Diverse jurisdiction refers specifically to a situation in which a federal court has the authority to hear a case involving parties from different states, typically to ensure an impartial forum when there may be concerns about state bias in cases involving parties from different jurisdictions. The reasoning behind this principle is to reduce the potential for prejudice against an out-of-state litigant who might face disadvantages in a local court due to local biases.

This type of jurisdiction occurs when a plaintiff and a defendant are citizens of different states, and it is a foundation of federal jurisdiction as outlined in the U.S. Constitution and federal laws. The ability of federal courts to hear these cases is significant because it promotes fairness and neutrality, allowing parties to litigate their disputes in a venue that they perceive as more impartial than perhaps the courts of the other party's state.

The requirement for federal jurisdiction often includes a monetary threshold for damages, meaning that cases involving diverse parties usually need to meet a minimum amount in controversy. However, the primary essence of diverse jurisdiction is established by the parties' citizenship across state lines, which ultimately supports the case being heard in federal court rather than state courts.

Diverse jurisdiction does not allow for the trial to take place solely in the defendant's home state, as the default is