Diversity Jurisdiction Does Not Extend to Suit Involving Only Alien Parties Despite U.S. Permanent Residence Status

In two companion decisions issued on September 6, 2011,¹ the Southern District of Ohio held that diversity jurisdiction does not extend to suits between aliens (non-U.S. citizens), even when one of the parties is a permanent resident and deemed a “citizen” of the United States for jurisdictional purposes under a provision of the Judicial Improvements Act of 1988. The two cases had been filed in Ohio state court by the personal representatives of the estates of two decedents of a 2008 plane crash. The decedent in the first case was a citizen of the Bahamas and a permanent resident of the U.S., domiciled in Florida at the time of the crash. The decedent in the second case was a citizen of Switzerland and a permanent resident of the U.S., domiciled in Florida at the time of the crash. The defendant, the aircraft’s type certificate holder, was a Canadian company. The defendant removed the action to federal court on the grounds that diversity jurisdiction existed in each case because the plaintiff was a citizen of the U.S. based on his permanent residence status and the defendant was a citizen of Canada.

The court analyzed the relevant provisions of the federal statute governing diversity jurisdiction, 28 U.S.C. § 1332, which provides:

(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between – ...

    (2) citizens of a State and citizens or subjects of a foreign state; ...

For the purposes of this section, ... an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled. ...²

(c) For the purpose of this section and section 1441 of this title – ...

    (2) the legal representative of the estate of a decedent shall be deemed to be a citizen only of the same State as the decedent, ...

Based on its reading of the plain language of the statute, the defendant contended that the plaintiff, the legal representative of the estate, is deemed to be a citizen of the same state as the decedent. In turn, each decedent, as an alien with a permanent residence, is deemed to be a citizen of Florida where he was domiciled at the time of death. According to the defendant, therefore, diversity jurisdiction was satisfied because the case involved a citizen of the state of Florida versus a citizen of Canada. The plaintiff opposed removal on the basis that the defendant’s theory of diversity jurisdiction would result in a grant of subject matter jurisdiction beyond that permitted by the U.S. Constitution because although Article III, § 2 allows for suits “between a State, or the Citizens thereof, and foreign States, Citizens or Subjects,” it does not permit actions between aliens.

The court considered prior case law³ and the legislative history of the Judicial Improvement Act of 1988 in determining that Congress did not intend to expand diversity jurisdiction in cases involving permanent resident aliens. The court stated:

Article III, § 2 does not permit Congress to vest the inferior federal courts with jurisdiction over suits involving aliens. Therefore, the plain meaning of the statute, which Defendant advocates and which serves as the sole possible basis of Defendant’s removal of this action, poses serious constitutional problems. Stated differently, even if the Court were to adopt the plain meaning of the deeming provision as Defendant urges it to do, the constitutionality of the deeming provision would be in doubt when applied to the facts of this case.

This case confirms the well-established rule that suits involving only aliens will not properly lie in federal court. Additionally, it joins other district courts that have declined to extend diversity jurisdiction in similar circumstances. See Gall v. Topcall Int’l, A.G., 2005 WL 664502, at *5 (E.D. Pa. Mar. 21, 2005) (listing cases). More importantly, however, it serves to reiterate that a defendant’s preference for federal court jurisdiction over a case arising out of an aviation accident will not always be satisfied. It is likely that the court’s strongly worded admonition concerning the constitutional overtones will be carefully considered by other federal district courts assessing similar jurisdictional issues.

1 Bastos v. Kelowna Flightcraft, Ltd., No 2:10-cv-946, 2011 WL 3905064 (S.D. Ohio Sept. 6, 2011);
Gardiner v. Kelowna Flightcraft, Ltd., No. 2:10-cv-947, 2011 WL 3904997 (S.D. Ohio Sept. 6, 2011).

2 This clause is known as the deeming provision and courts construe it as prohibiting suits between a permanent resident alien and a U.S. citizen residing in the same state. See, e.g., Saadeh v. Farouki, 107 F.3d 52, 60 (D.C. Cir. 1997).

3 The court distinguished these cases because each involved at least one U.S. citizen on one side of the dispute in addition to the aliens on both sides. See, e.g., Saadeh, 107 F.3d 52; Singh v. Daimler-Benz AG, 9. F.3d 303 (3d Cir. 1993); Intec USA, LLC v. Eagle, 467 F.3d 1038 (7th Cir. 2006). The court stated that the Constitution allows Congress to vest district courts with jurisdiction over suits between citizens of a particular State and aliens.