Rule 23 of the Rules of Civil Procedure does not enhance or limit the jurisdiction of district courts in class actions. The jurisdiction of the federal courts is defined by the United States Constitution and federal statutes. Federal courts are courts of limited jurisdiction and the burden is on the plaintiff to demonstrate jurisdiction. As a general rule, litigants cannot, by their own act or admission, invoke the jurisdiction of a federal court where there is no “case or controversy.”[i]
Title 28 U.S.C. § 1332 provides the basis for federal court jurisdiction based on diversity of citizenship-
(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–
(1) citizens of different States;
(2) citizens of a State and citizens or subjects of a foreign state;
(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and
(4) a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States.
Generally, class representatives must meet the requirements of diversity and venue in federal class actions but passive class members need not.
In Zahn v International Paper Co. [ii] it was held that each member of a class must meet the federal jurisdictional amount in controversy for the court to have jurisdiction. In federal court that amount is $75,000, exclusive of interest and costs. It is well settled that members of a diversity-based class action may not generally aggregate their claims to reach the amount in controversy. Although absent class members must meet the amount in controversy requirements, their domiciliary is simply irrelevant in determining whether diversity jurisdiction is established.
However, there is no consensus of opinion on the question of whether each class member in a diversity action must satisfy the amount-in-controversy. Though in Zahn’s case the Supreme Court ruled that all class members possessing a separate and distinct claim must satisfy the amount-in-controversy, some courts have interpreted the supplemental jurisdiction statute to make the ruling in Zahn obsolete.
Another requirement in class action proceeding is that the citizenship of each named plaintiff must be diverse from the citizenship of each named defendant. However, the citizenship of absent class members need not be diverse.[iii]
As far as determination of venue is concerned, the venue principles that govern federal litigation in general govern class actions as well. Therefore in class actions, only the named plaintiffs must satisfy venue requirements of the forum where suit is filed.[iv]
Individual members of a plaintiff-class, aside from named representatives, need not satisfy the “minimum contacts” test in order for the forum state court to exercise personal jurisdiction over them.[v]
[i] Memphis Light, Gas & Water Division v Craft, 436, U.S. 1, 7-8, 98 S.Ct 1554, 56 L.Ed 2d 30 (1978); Brady v Thurston Motor Lines, 726 F.2d 136, 146 (4th Cir. 1984).
[ii] 414 U.S. 291, 94 S.Ct 505, 38 L.Ed 2d 511 (1973)
[iii] Snyder v Harris, 394 U.S. 332, 340, 89 S.Ct 1053, 22 L.Ed 2d 319 (1969); Central Wesleyan College v. W. R. Grace & Co., 6 F.3d 177, 186 n.3 (4th cir. 1993).
[iv] Research Corp. v Pfister Associated Growers, Inc., 301 F. Supp 497 (ND Ill 1969).
[v] Phillips Petroleum Company v. Shutt, 472 U.S. 797 (1985)