S. 4850: Diversity Jurisdiction Inflation Adjustment Act

This bill would change the dollar threshold for certain diversity jurisdiction cases in federal court. Diversity jurisdiction is the rule that lets people or businesses from different states sue each other in federal court when enough money is at stake.

What changes

• It would replace the current fixed threshold of $75,000 with a new baseline threshold of $150,000, before inflation adjustments.
• Starting January 1, 2030, and then every 10 years after that, the threshold would be automatically adjusted for inflation.
• The adjustment would be based on the Consumer Price Index for Urban Consumers (CPI-U), using September data.
• The adjusted amount would be rounded to the nearest $25,000 (or up to the next $25,000 if it falls midway).
• The Director of the Administrative Office of the U.S. Courts would calculate the new amount and publish it in the Federal Register before it takes effect.

What this means in practice

If passed, fewer lower-value lawsuits between citizens of different states would qualify to be filed in federal court. Cases would generally need to involve at least the new minimum amount, as adjusted over time, not counting interest and costs.

The bill also keeps a related rule allowing federal courts, in some cases, to deny costs to a plaintiff or require the plaintiff to pay costs if the plaintiff ultimately recovers less than the required amount.

Relevant Companies

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