Comments on Alienage Jurisdiction

     1. Special Issues With Alienage Jurisdiction. Alienage jurisdiction often is lumped in with diversity jurisdiction without a detailed consideration of the differences, but in a transnational setting we think it is worth taking a bit more of a look.  The Constitution refers to suits "between a state, or the citizens thereof, and foreign states, citizens or subjects." Section 1332(a)(2) makes the grant parallel to the clause before, which allows jurisdiction for suits between citizens of different states, by allowing suits between "citizens of a State and citizens or subjects of a foreign state." As Judge Weinstein notes, this was originally adopted as a concession to foreign investors, who wanted access to a US forum. 

          Citizens vs. Subjects. One question that sometimes arises in the minds of students is what difference, if any, there between a citizen of a  foreign state and a subject of a foreign state? As a practical matter, there is no difference - in either case, someone is treated as belonging to a foreign country. Historically, the difference seems to be one between monarchies and empires - such as China was in 1789, where those living in the state are the subjects of the king or emperor - and republics, such as China is today, where the state is made of its citizens.

          Alien vs US State Citizen. The alienage clause allows lawsuits between a foreign national and a citizen of a state to go forward with federal subject matter jurisdiction. For example, if a person resident in Shenzhen who is a citizen of the People's Republic of China brings a lawsuit for more than $75,000 against a resident of California, the alienage clause as implemented by Section 1332 provides a basis for federal subject matter jurisdiction.

          Alien vs Alien.  Note that nowhere in the Constitution or Section 1332 is there a provision for suits exclusively between citizens of foreign nations, even if those are different nations. Put differently, if a citizen of China wants to sue a citizen of Japan in US federal court on a state law claim, there will be no federal subject matter jurisdiction.

          Aliens With US Permanent Residency. The second part of Section 1332 (a)(2) addresses the situation where a foreign national has acquired permanent residency status (but not citizenship) in the United States and is domiciled in a particular US state. This happens not infrequently in the United States, where at our last look there were somewhere above 13 million foreign citizens holding permanent resident 'green cards.' In such situations, the alien is treated effectively as both an alien and a resident of a state in terms of duplications that would defeat federal jurisdiction. Some examples may help make this clear. Assume that a citizen of China has acquired permanent residency in California. This person - let's call her Zhang - wants to bring a lawsuit against a citizen of Canada. She cannot establish federal subject matter jurisdiction, because the court would treat that a suit between aliens, for which there is no provision for subject matter jurisdiction. Now, let's assume that Zhang wants to sue Evil, a resident of California. Once again, she cannot, because even though this is a lawsuit between a citizen of a foreign state and a resident of a US state, the language in section 1332 makes clear that there is no federal subject matter jurisdiction between a permanent resident alien living in California and resident of California. What if Zhang wants to sue Evil's cousin, Wicked, a US citizen who lives in New York? In that case, on these facts, there would be alienage subject matter jurisdiction.

          Incomplete Alienage Diversity. What if alienage jurisdiction exists, but an additional alien is added to one side of the case or the other? Judge Weinstein indicates that would defeat the necessary complete diversity. While this is parallel to the normal diversity rule, and while we suspect Judge Weinstein is correct, this is not something the Supreme Court has ever ruled on.

          Diversity Between State Citizens With Additional Aliens. Section 1332 (a)(3) addresses a different situation, where a diversity suit exists between citizens of different states, to which suit aliens are added. According to Wright and Miller, the language of this statute allows aliens on both sides of the case so long as the required diversity between states exists. Wright & Miller, Federal Practice and Procedure: Jurisdiction 2d § 3661.

          One issue remains unclear, however. What if one of the aliens is a permanent resident from the same state as one of the parties on the other side of the case? For example, imagine a Texan and a California resident alien bring a lawsuit against a Californian. Would there be subject matter jurisdiction? Section 1332(a)(2) indicates not, but Section 1332(a)(3) suggests so. We don't know.

          Citizens of a Foreign State and Foreign Sovereign Entities. Another issue that arises, particularly with respect to China, is whether certain corporations are corporate citizens of a foreign state or branches of the foreign state itself. This issue is beyond the scope of this course but may arise in the course of US litigation involving Chinese state-owned enterprises. Some such enterprises have asserted sovereign immunity as a defense against civil claims. If they are branches of sovereign states, that would impact the basis for federal jurisdiction. Whether a party is private or a foreign state entity also will affect issues such as venue and whether, absent a waiver, liability can be established. Addressing these issues in depth is beyond the scope of this course, but might be relevant to some practice situations someday, so if you are representing a Chinese state-owned enterprise in litigation in the United States just be aware that this is an issue you should look into.

     2. Realignment. In both diversity and alienage situations, realignment can be an issue. In the Hebei case, there was a dispute about where one of the parties belonged with regard to being on the same or different sides of the V. The defendant argued that the company, a New York resident, should be aligned as a plaintiff since the derivative suit was technically on the company's behalf. If this had been accepted, there would have been New York residents on both sides of the V, defeating alienage. Judge Weinstein found the company was under the de facto control of the other defendant, making it antagonistic to the plaintiff, and positioned it as a defendant. As a result, alienage jurisdiction existed. It's not unusual for defendants to claim that plaintiffs have manipulated the positioning of parties to create or defeat federal jurisdiction, and seek to have the parties realigned. As Wright & Miller notes:

In determining whether diversity of citizenship jurisdiction exists, the federal court is not bound by the way the plaintiff formally aligns the parties in his or her original pleading.1 It is the district judge's duty to “look beyond the pleadings, and arrange the parties according to their sides in the dispute,” and that is precisely what federal courts do.

Federal Practice and Procedure, Section 3607, Realignment of Parties.