Federal diversity jurisdiction appears at first glance to be a straightforward concept: a citizen of one state can sue a citizen of another state in federal court. The grant of jurisdiction is in Article III of the Constitution and codified by statute, 28 U.S.C. §1332, which has been on the books since the first Judiciary Act of 1789. While this rule of jurisdiction is relatively uncontroversial when it concerns just citizens of the United States, add a foreign litigant to the mix, as subsections (a)(2) and (a)(3) of Section 1332 allow, and the legal analysis quickly becomes convoluted. A recent U.S. Court of Appeals for the Second Circuit decision sheds light on an obscure corner of this legal framework and clarifies what has been an open question in the circuit for the past 32 years.

In Tagger v. Strauss Group Ltd., 951 F.3d 124 (2d Cir. 2020), the Second Circuit held that a permanent resident alien domiciled in New York cannot sue an alien corporation in diversity. According to the court, despite the plaintiff's status as a permanent resident he is still deemed an "alien" for purposes of the diversity statute, and therefore cannot be adverse to a foreign corporation. "[B]ecause federal courts do not have diversity jurisdiction over lawsuits between two foreign parties, we conclude that section 1332(a)(2) does not give the district court jurisdiction over a suit by a permanent resident against a non-resident alien."