If you are like me, you just can’t read enough decisions about diversity jurisdiction. OK, hopefully you are not like me in that regard, but you might still find a recent decision from the Third Circuit interesting. In it, the Third Circuit discussed what it means to be a “stateless person” for purposes of diversity jurisdiction -- the so-called “statelessness doctrine” -- and ultimately questioned the rationale behind the entire concept.
In Freidrich v. Davis, plaintiff and defendant, both American citizens, were passengers on a flight from Philadelphia to Germany. While plaintiff was standing in line for the bathroom, she claims that defendant fell on her and broke her arm. Plaintiff sued in federal court, claiming diversity jurisdiction, and defendant moved to dismiss for lack of subject matter jurisdiction. Defendant argued that, although he was a citizen of Pennsylvania, he was domiciled in Germany, and therefore was “stateless” for purposes of diversity jurisdiction and thus could be sued under the diversity jurisdiction statute. The district court granted the motion and the Third Circuit affirmed.
Under the diversity jurisdiction statute, district courts have jurisdiction over matters between: citizens of different states; citizens of a state and citizens of a foreign state; citizens of different states in which citizens of a foreign state are additional parties; and a foreign state, as plaintiff, and citizens of a state or different states. But, as the Freidrich court observed, for purposes of diversity jurisdiction, courts have explained that citizenship is synonymous with domicile, and domicile is the: “true, fixed and permanent home and place of habitation. It is the place to which, whenever he is absent, he has the intention of returning.” Under this rationale, the Supreme Court has held that citizenship for diversity purposes requires that an individual be both a citizen of the United States and domiciled within a state. If the individual is a U.S. citizen but domiciled in a foreign state, that person is considered “stateless” and a federal court cannot obtain jurisdiction over the person under the diversity jurisdiction statute.
In Friedrich , the district court concluded that defendant was an American citizen domiciled in Germany, and was, therefore, “stateless.” Among other things, the district court relied on the fact that defendant has continuously resided in Germany since 1996, sold his home in Pennsylvania in 1999 and currently owns no property in the state, purchased a home in Germany, owns and operates a business that caters exclusively to German customers , holds a German driver’s license, pays taxes in Germany, and has held a German residency permit since 2003. The Third Circuit affirmed this decision, but found the conclusion “troubling because it closes the doors of the federal court to a citizen of a State who wishes to sue another citizen based on diversity.” The Third Circuit further observed that “this ‘stateless person’ doctrine is an unintended consequence flowing from Congress’ now possibly outdated assumption that U.S. citizens generally reside in the United States.” Accordingly, although the Third Circuit applied the “stateless person” doctrine as it now exists, it did so reluctantly and invited Congress to consider taking another look at whether it is still appropriate or applicable.
(Incidentally, I tried to think of a way to work a reference to two of my favorite movies into this post -- Airplane (since the injury occurred on a plane) and Young Frankenstein (the part about how to pronounce Frederick Frankenstein's name) -- but just could not figure out how to do it.)