S 4850: Diversity Jurisdiction Inflation Adjustment Act

S 4850 in plain English: This bill would raise the minimum dollar amount required for a case to qualify for federal court jurisdiction based on diversity of citizenship, doubling the threshold from $75,000 to $150,000 and indexing it to inflation going forward using the Consumer Price Index.

Stated purpose

This bill raises the minimum dollar amount required for a civil lawsuit between citizens of different states to be heard in federal court, and sets up automatic inflation adjustments to that threshold every ten years going forward.

Key points

• Raises the diversity jurisdiction threshold from $75,000 to $150,000, limiting which civil cases can be heard in federal court
• Adjusts the $150,000 threshold automatically for inflation using the Consumer Price Index, rounded to the nearest $25,000
• Fewer disputes would qualify for federal court as the inflation-adjusted threshold rises over time

Arguments supporters make

• The $75,000 threshold has not been updated since 1996, so inflation has already eroded its real value; raising it restores the original intent of keeping only genuinely significant disputes in federal court.
• Automatic inflation adjustments every ten years prevent Congress from having to repeatedly revisit the issue and keep the threshold from becoming outdated again.
• Reducing the number of smaller cases in federal courts could ease crowded federal dockets and let federal judges focus on cases that truly belong there.

Arguments opponents make

• Doubling the threshold to $150,000 could block ordinary people with legitimate but mid-sized claims from accessing federal court, which may offer more consistent or impartial treatment than some state courts.
• People from different states who have real disputes worth between $75,000 and $150,000 would lose their current federal court option, even though Congress originally gave them that right to avoid potential home-state bias.
• Adjustments only every ten years still allows the threshold to fall significantly behind inflation between cycles, meaning the problem the bill tries to fix will keep recurring.

Tradeoffs

Raising the threshold reduces the federal court caseload and aligns the dollar amount with inflation, but it also narrows access to federal court for people with claims in the $75,000–$150,000 range who currently qualify, shifting those disputes to state courts whether they want that or not.

Current status in Congress: Passed Senate.

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