S-4850-119
Held at the desk.
Sponsored by John Kennedy (R-LA)
What it does
This bill would raise the minimum amount in controversy required to bring a "diversity jurisdiction" lawsuit in federal court (cases between citizens of different states) from $75,000 to $150,000. It would also require this threshold to be automatically adjusted for inflation every ten years starting in 2030, based on the Consumer Price Index, and it would let judges deny or impose court costs on plaintiffs who win less than the required amount.
Who benefits
Federal courts and judges, who would see a reduction in diversity caseload and administrative burden from smaller-dollar suits. State courts, which would likely absorb cases that no longer qualify for federal diversity jurisdiction. Defendants (often larger businesses or out-of-state corporations) may benefit from litigating lower-value claims in state court systems seen as less favorable to plaintiffs in some jurisdictions.
Who is hurt
Plaintiffs with claims between $75,000 and $150,000 who currently can access federal court based on diverse citizenship would lose that option and be required to sue in state court instead. Out-of-state plaintiffs who sought federal court specifically to avoid perceived local bias in state courts would lose that protection for mid-sized claims. Attorneys who rely on federal diversity jurisdiction for these cases may see reduced access to that venue, and plaintiffs who recover less than $150,000 after filing in federal court could face new cost penalties.
Supporters argue
Supporters argue that the $75,000 threshold, set in 1996, has lost significant value to inflation and no longer reflects its original purpose of reserving federal courts for genuinely substantial disputes between citizens of different states. They contend raising the threshold to $150,000 and indexing it going forward would reduce unnecessary federal caseloads, allow federal judges to focus on cases warranting national forums, and prevent the threshold from eroding again over time.
Opponents argue
Opponents argue that doubling the threshold would abruptly cut off federal court access for many plaintiffs with legitimate claims between $75,000 and $150,000, forcing them into state courts that diversity jurisdiction was originally designed to let them avoid due to concerns about local bias against out-of-state parties. They contend the new cost-shifting provision, which lets judges penalize plaintiffs who recover less than the threshold, could discourage meritorious claims and disproportionately affect individual plaintiffs and small businesses with less resources to absorb litigation risk compared to well-resourced corporate defendants.
Constitutional context
Congress has broad authority under Article III, Section 1 and Article I to define and limit the jurisdiction of federal courts, including diversity jurisdiction under 28 U.S.C. § 1332; this bill raises no significant constitutional question, as courts have long recognized that Congress may set and adjust amount-in-controversy thresholds for federal jurisdiction.
Checks and balances
Congress exercises its constitutional authority to define federal court jurisdiction, while the Administrative Office of the U.S. Courts (a judicial branch entity) is delegated the technical task of calculating future inflation adjustments, with the changes taking effect through Federal Register publication rather than further congressional action.
Historical precedent
Congress has periodically raised the diversity jurisdiction amount-in-controversy threshold before, most recently from $50,000 to $75,000 in 1996, though this bill's automatic decennial inflation-indexing mechanism is a new feature.