COMMITTEE ON THE JUDICIARY JAMES O. EASTLAND, Mississippi, Chairman JOHN L. MCCLELLAN, Arkansas EDWARD M. KENNEDY, Massachusetts QUENTIN N. BURDICK, North Dakota ROMAN L. HRUSKA, Nebraska STROM THURMOND, South Carolina CHARLES MCC. MATHIAS, JR., Maryland JOHN H. HOLLOMAN III, Chief Counsel and Staff Director SUBCOMMITTEE ON IMPROVEMENTS IN JUDICIAL MACHINERY JOHN L. MCCLELLAN, Arkansas ROMAN L. HRUSKA, Nebraska WILLIAM P. WESTPHAL, Chief Counsel (II) CONTENTS Hruska, Hon. Roman N., U.S. Senator from Nebraska.. Wechsler, Herbert, professor, Columbia University Law School, Director Weckstein, Donald T., professor, University of Connecticut Law School.... Fink, Howard F., professor, Ohio State University Law School__ Van Dercreek, William, professor, Florida State University Law School. Pelaez, Alfred, professor, Duquesne University Law School.. Kennedy, John E., visiting professor, Southern Methodist University Smith, Wayne C., Esquire, Springfield, Missouri, chairman of the Judicial Administration Section of the American Trial Lawyers Association.... Burdick, Hon. Quentin N., U.S. Senator from North Dakota.. Mishkin, Paul J., professor, University of Pennsylvania Law School - Cavers, David F., Fessenden professor emeritus, Harvard Law School... APPENDICES Field, "Jurisdiction of Federal Courts-A Summary of American Law Institute Proposals," 46 F.R.D. 141 (1969) – – Wright. "Restructuring Federal Jurisdiction: The American Law Institute Proposals," 26 Wash. & Lee L. Rev. 185 (1969) - - . Burdick, "Diversity Jurisdiction under the American Law Institute Proposals: Its Purpose and Effect on State and Federal Courts," THE DIVISION OF JURISDICTION BETWEEN STATE AND FEDERAL COURTS TUESDAY, SEPTEMBER 28, 1971 U.S. SENATE, SUBCOMMITTEE ON IMPROVEMENTS IN JUDICIAL MACHINERY OF THE COMMITTEE ON THE JUDICIARY, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 2228, New Senate Office Building, Senator Quentin N. Burdick (Chairman of the Subcommittee) presiding. Present, Senators Burdick, Hruska, and Gurney. Also present: Williams P. Westphal, Chief Counsel; Michael J. Mullen, Assistant Counsel; Kathryn M. Coulter, Chief Clerk. Senator BURDICK. The subcommittee will come to order. Today we begin hearings on S. 1876, the Federal Court Jurisdiction Act of 1971. This bill is the result of a 10-year study of jurisdiction of Federal courts by the American Law Institute made at the suggestion of the then Chief Justice Earl Warren. In proposing this study, Chief Justice Warren stated: It is essential that we achieve a proper jurisdictional balance between the Federal and State court systems, assigning to each system those cases most appropriate in light of basic principles of federalism. The American Law Institute pursued this suggestion and has produced what is to my knowledge only the third comprehensive review of Federal court jurisdiction since the inception of our lower Federal courts under the Judiciary Act of 1789. The bill covers six broad areas of Federal jurisdiction: diversity, Federal question jurisdiction, jurisdiction of the United States as a party, admiralty jurisdiction, jurisdiction of three-judge courts, and multiparty-multistate litigation. It will be helpful to briefly summarize the changes in the present law which would be made by the ALI recommendation in each of these six major areas: I. Federal question jurisdiction: The bill would abolish the $10,000 jurisdictional amount presently required and original actions could be brought based upon the existence of a federally created right regardless of the amount in controversy. The same rationale would permit removal of a case from State to Federal court if a counterclaim based on a Federal right is interposed. But where the Federal right is asserted as a defense, removal could not be had unless the amount in controversy met the $10,000 requirement. II. United States as party: The bill makes certain technical changes in this category of jurisdiction by clarifying the existing law relating to counterclaims and setoffs which can be asserted in an action brought by the United States. It would increase from $10,000 to $50,000 the jurisdiction of the district courts in Tucker Act suits based on contract (1) claims against the United States. Jurisdiction is also extended to any action brought against an officer or employee of the United States arising out of performance of his official duties. III. Three-judge courts: The bill would limit the occasions when convening of a three-judge court would be required. None would be required if the issue is the constitutionality of an act of Congress. Three judges would hear a similar case involving validity of a State statute, but only if requested by the State official being sued. The circumstances when a Federal court should abstain from passing upon the constitutionality of State legislation or action is clarified. IV. The admiralty and maritime jurisdiction of the Federal courts is not significantly changed. Rather, the bill seeks to clarify existing statutory law and codify existing case law in admiralty cases. V. In the area of multiparty-multistate litigation, it is proposed to extend the jurisdiction of Federal courts to cover those few situations where necessary parties are not subject to the jurisdiction of any one court, but are scattered in several States, and there exists diversity of citizenship among adverse parties. VI. Finally, diversity jurisdiction-the subject of our initial series of hearings is one which may be the most controversial. The rationale adopted for diversity jurisdiction in this bill is that the function of this jurisdiction is to provide an even level of justice to the traveler or visitor from another State. However, when a person's involvement with a State is such as to eliminate any real risk of prejudice against him as a stranger and make it unreasonable to heed any objection he might make to the quality of its judicial system, the bill would not permit him to choose a Federal forum. In accordance with this principle, this bill bars a plaintiff from bringing suit in Federal court in his own State simply because his opponent is a citizen of another State. On a similar basis, a corporation or other business enterprise with a local establishment maintained for more than 2 years in a State would be prohibited from invoking, either originally or on removal, the diversity jurisdiction of a Federal court in that State in any action. arising out of the activities of that establishment. Similarly, a natural person would be denied access to the Federal court in the State where he had his principal place of business or employment. These provisions are in line with the policy of the present provision regarding removal-28 U.S.C. 1441 (b)-which does not allow removal when the defendant is a citizen of the State in which such action is brought. There is not likely to be prejudice in a court in his own State and thus the law now provides no removal. What this bill does is to treat plaintiffs the same way and deny them original diversity jurisdiction in Federal court in their own State. The policy with regard to commuters and corporations is the same as with natural persons: that is, when they are strongly established in the State, their case as plaintiff or defendant can be heard in State court without fear of local bias. Other provisions are designed to reinforce the prohibition against the artificial creation or destruction of diversity either by assignment or the appointment of a fiduciary. An important change, in light of the number of cases involved, would allow an out-of-State defendant to remove an action to Fed |