In 2021, there were more civil cases filed in federal court based on diversity of citizenship than any other jurisdictional basis.[1] That means any changes to the rules affecting diversity cases are bound to affect lots of litigants. On December 1, 2022, one such change took effect.
Federal Rule of Civil Procedure 7.1(a)(2) now requires a new kind of disclosure statement in diversity suits. The amended Rule states:
In an action in which jurisdiction is based on diversity under 28 U.S.C. § 1332(a), a party or intervenor must, unless the court orders otherwise, file a disclosure statement. The statement must name—and identify the citizenship of—every individual or entity whose citizenship is attributed to that party or intervenor:
(A) when the action is filed in or removed to federal court, and
(B) when any later event occurs that could affect the court’s jurisdiction under § 1332(a).
In other words, any party to a diversity case must disclose the citizenship of every individual or entity that is attributed to that party under the legal rules that govern subject-matter jurisdiction. The amendment specifies that the party’s citizenship as it stands when the action is filed in or removed to federal court must be disclosed.
This new diversity disclosure statement is “aimed at facilitating the early determination of whether diversity jurisdiction exists under 28 U.S.C. § 1332(a), or whether complete diversity is defeated by the citizenship of a nonparty individual or entity because that citizenship is attributed to a party.”[2]
It seems reasonable to expect that under this new rule, jurisdictional discovery as to a party’s citizenship may be less likely than before. But the comments to the rule indicate that discovery is still possible when “inquiring into such matters as the completeness of a disclosure’s list of persons or the accuracy of their described citizenships.” In short, expect jurisdictional discovery to decrease but not disappear.
In cases involving parties with simple citizenships, such as individuals and single-member LLCs, the new disclosure statement should prove simple enough. Sometimes, however, a party’s citizenship can be quite complicated. The comments state, “This rule does not address the questions that may arise when a disclosure statement or discovery responses indicate that the party or intervenor cannot ascertain the citizenship of every individual or entity whose citizenship may be attributed to it.” Expect courts to weigh in on this issue in future cases.
The new rule also recognizes that a court may limit disclosure under the appropriate circumstances. For example, if a party knows that at least part of its citizenship destroys diversity, disclosure may be cut short. Also, if a party can show a substantial interest in privacy, certain disclosures may be avoided, as the comments to the new rule indicate.
Finally, as for the timing of this new disclosure statement, Rule 7.1(b) requires a party to file the statement “with its first appearance, pleading, petition, motion, response, or other request addressed to the court.”
[1] Federal Judicial Caseload Statistics 2022 | United States Courts (uscourts.gov).
[2] Memorandum from Committee on Rules of Practice and Procedure to Scott S. Harris, Clerk, Supreme Court of the United States (Oct. 18, 2021).