Creative Manipulation of Federal Jurisdiction: Is There Diversity after Death?

Abstract

One of the major purposes of the Supreme Court's decision in Erie Railroad Co. v. Tompkins was to eliminate or drastically curtail the evil of forum shopping. Forum shopping continues, however, notwithstanding the well-known strictures of Erie. Indeed, in recent years, federal courts have been bedeviled by a series of cases involving creative manipulation of diversity jurisdiction in estate-related litigation. Lacking clear guidance from the Supreme Court, district and circuit courts have articulated a confusing array of principles and tests to govern jurisdictional questions in estate-related litigation.

As a consequence, a litigant can manipulate federal diversity requirements effectively in some jurisdictions, but not in others. Thus, some litigants may successfully establish diversity jurisdiction while their counterparts in other states fail to get into federal court on similar facts.6 These inconsistent results produce a discriminatory effect among litigants of different states. The jurisdictional tests are also difficult to apply, easy to manipulate, and not consonant with the purposes underlying diversity jurisdiction.

The use of manipulative tactics to secure a federal forum in estate-related litigation will continue to be a problem. Because of the confusion among the lower federal courts, the rules for determining proper diversity jurisdiction are ripe for reconsideration. Until clearly formulated rules are articulated, the lower federal courts will issue ad hoc, fact-bound decisions amounting to little more than jurisdictional babble. Thus, the Supreme Court and Congress must reconsider the rules for determining jurisdiction in estate-related cases in light of the purposes underlying diversity jurisdiction. To this end, Congress should amend or repeal the collusive joinder statute; this action would alleviate the necessity of engaging in problematic inquiries into parties' motivations in seeking a federal forum. Further, Congress should promulgate a per se rule that the citizenship of the beneficiaries should govern jurisdiction in estate-related litigation. This rule not only is consonant with the purposes of diversity jurisdiction, but also avoids most of the problems that attend other approaches. Lastly, the Court should reject the tests currently utilized by the federal appellate courts and affirm a per se citizenship rule as a prerequisite to access to federal court.

This Article examines the treatment the Supreme Court and Congress have given diversity jurisdiction in estate litigation. Next, it examines different approaches taken by the circuits and discusses the American Law Institute's proposal on this subject. Finally, the Article argues that the citizenship of the beneficiaries should govern jurisdiction in estate-related litigation because such a rule would best effectuate the purposes of diversity jurisdiction.

Keywords: Federal diversity jurisdiction, decedents' estates, appointment of executors, administrators, Erie doctrine, collusive joinder, fraudulent joinder