The Article III 'Party' and the Originalist Case against Corporate Diversity Jurisdiction

Abstract

Federal courts control an outsize share of big-ticket corporate litigation. And that control rests, to a significant degree, on the Supreme Court’s extension of Article III’s Diversity of Citizenship Clause to corporations. Yet, critics have questioned the constitutionality of corporate diversity jurisdiction from the beginning.

In this article and a previous one, we develop the first sustained originalist critique of corporate diversity jurisdiction.

Our previous article demonstrated that corporations are not “citizens” given the original meaning of that word. But we noted this finding alone doesn’t sink general corporate diversity jurisdiction. The ranks of corporate shareholders include many undoubted “citizens.” And so corporate litigants might preserve their access to diversity jurisdiction if that jurisdiction can vest through diverse shareholder citizenship.

In this article, we consider whether corporations can indeed preserve access to diversity jurisdiction via this route. We conclude they cannot. From an originalist perspective, shareholders are not parties to Article III “controversies” that proceed in the corporate name. In such controversies, shareholder citizenship cannot establish diversity jurisdiction.

The result of our analysis is that corporations are not citizens, and they normally can’t use shareholder citizenship to access diversity jurisdiction either. It follows that general corporate diversity jurisdiction is not authorized by the constitutional text.

Keywords: originalism, corporate diversity jurisdiction, corporate personhood, Article III, justiciability, proper parties