A recent comment by calgary411 reminds us of a truly bizarre problem in U.S. diaspora policy. Much unlike the problems with tax paperwork and FATCA-related bank account denials — which could be largely ameliorated by mere executive fiat, and totally resolved by ordinary House bills — this problem might not be fixable by anything short of a constitutional amendment.
The U.S. Constitution gives the federal courts original jurisdiction in cases involving disputes between Americans from different U.S. states, or between Americans and foreigners. This is commonly known as “diversity jurisdiction”. In Guaranty Trust Co. v. York, 326 U.S. 99 (1945), the Supreme Court concisely stated the reason why the U.S.’ Founding Fathers wanted federal courts rather than local courts to have jurisdiction in such cases:
Diversity jurisdiction is founded on assurance to nonresident litigants of courts free from susceptibility to potential local bias. The Framers of the Constitution, according to Marshall, entertained “apprehensions” lest distant suitors be subjected to local bias in State courts, or, at least, viewed with “indulgence the possible fears and apprehensions” of such suitors … And so Congress afforded out-of-State litigants another tribunal, not another body of law.
The Supreme Court has held that this “benefit of citizenship” does not extend to U.S. citizens abroad — the rights of the diaspora in this regard are thus inferior to those of both Homelanders and foreigners. However, if Homelanders are trying to sue you in federal court, you can turn this against them. The most recent example of this is explained in a new Baker & MacKenzie article about a Third Circuit decision from last September. An Ohio resident attempted to sue an American citizen in Germany in a U.S. federal court; however:
The Third Circuit affirmed the decision, dismissing the dispute for lack of subject matter jurisdiction. For purposes of diversity jurisdiction, “citizenship is synonymous with domicile.” Domicile is an individual’s “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.” The court further cited Supreme Court doctrine implying that an American citizen not domiciled in a particular state is essentially “stateless” under 28 U.S.C. § 1332(a). These individuals cannot litigate in federal court based on diversity jurisdiction since they are not “citizens of a State,” or “citizens or subjects of a foreign state.”
