Diversity Jurisdiction Threshold Increase

Full Title:
Diversity Jurisdiction Inflation Adjustment Act

Summary#

The bill raises and indexes the dollar threshold for federal diversity jurisdiction (when federal courts can hear cases between citizens of different states). It replaces the fixed $75,000 amount with a new base of $150,000 and requires periodic inflation adjustments tied to the Consumer Price Index. The bill also keeps the rule allowing a court to deny or impose costs on a plaintiff who recovers less than the required amount.

  • Main change: The minimum “amount in controversy” for diversity cases is set at $150,000 (exclusive of interest and costs), replacing the old $75,000 figure.
  • Indexing: Beginning January 1, 2030, and every 10 years after that, the threshold will be adjusted for inflation using the Consumer Price Index for All Urban Consumers (CPI-U), based on the September CPI of the relevant year.
  • Rounding and publication: Adjustments are rounded to the nearest $25,000 (with midway amounts rounded up). The Administrative Office of the U.S. Courts must publish the new amount and the CPI change by November 15 of the appropriate year.
  • Cost-shifting rule retained: If a plaintiff who originally filed in federal court recovers less than the threshold, the district court may deny costs to that plaintiff and may impose costs on them.

What it means for you#

  • Plaintiffs (people bringing lawsuits):
    • If your case is between citizens of different states, you generally now need at least $150,000 at stake to file in federal court under diversity jurisdiction.
    • If you file in federal court and later win less than the required amount, the court may deny you costs or require you to pay the defendant’s costs.
  • Defendants (people being sued):
    • Fewer out-of-state disputes may be removable to federal court because the higher threshold excludes lower-value claims.
    • Defendants facing suits in federal court may see fewer cases transferred into federal courts overall.
  • Businesses and insurers:
    • Companies that frequently litigate across state lines may see more cases remain in state court for disputes under the higher threshold.
  • Lawyers:
    • Lawyers will need to reassess whether a case qualifies for federal court based on the new threshold and upcoming 10-year adjustments.
  • Federal courts:
    • Federal courts may hear fewer diversity cases involving lower-dollar claims.
  • State courts:
    • State courts could see more diversity disputes that fall below the federal threshold.
  • General public:
    • The bill changes where some lawsuits are heard but does not change the legal rights or claims themselves.

Expenses#

No publicly available information.

  • The bill assigns the Administrative Office of the U.S. Courts the duty to calculate and publish the adjusted amount. This creates some administrative work and minor costs for that office, but the bill does not include a fiscal note or an explicit budget estimate.
  • There is no explicit estimate in the bill of effects on federal or state court caseloads, which could change court operating costs indirectly if caseloads shift between systems.

Proponents' View#

  • The bill appears intended to update the dollar threshold for diversity jurisdiction to reflect inflation since the old $75,000 figure.
  • Supporters may argue that a higher, inflation-adjusted threshold keeps federal courts focused on larger disputes and reduces federal caseloads for lower-value matters.
  • Automatic indexing (every 10 years) could reduce the need for future legislation to change the threshold.

Opponents' View#

  • One concern is that raising the threshold to $150,000 will limit access to federal courts for many out-of-state plaintiffs with moderate claims.
  • The 10-year spacing between adjustments could allow the threshold to lag or jump in ways that do not match year-to-year inflation trends.
  • Rounding to the nearest $25,000 could create comparatively large step changes in the threshold.
  • The bill does not provide a fiscal estimate of how shifting cases from federal to state courts would affect state court workloads and budgets.
  • It is not clear from the bill how related rules (for example, aggregation rules or class-action thresholds) will interact with the new minimum; those rules are not changed by this text unless specifically amended elsewhere.