In granting diversity of citizenship jurisdiction to the federal courts, there is an underlying assumption that federal courts will be less biased toward out-of-state litigants as compared with state courts. While this may be true, the assumption fails to consider an important empirical question: to what extent do federal courts favor home state litigants or disfavor out-of-state litigants when deciding diversity jurisdiction cases? Relying on the Integrated Database (IDB) compiled by the Federal Judicial Center and the Administrative Offices of the U.S. Courts, we present an original, empirical analysis of diversity jurisdiction case outcomes in the U.S. districts courts from 1988 through 2021 to assess whether home state or out-of-state litigant status influences case settlements or case verdicts. The empirical analysis reveals that while diversity jurisdiction cases are more likely to settle than other cases heard in federal courts, these settlements are particularly likely to occur when both parties are out-of-state litigants. In addition, the analysis does not uncover systematic evidence of home state favoritism in judgments for the plaintiff. However, the results provide evidence that corporate litigants—who are most likely to have significant resources and serve as “repeat players” in the judicial system—are most likely to prevail in diversity cases. Given that the empirical results suggest that federal district courts do not systematically advantage or disadvantage litigants based upon in-state or out-of-state status, these findings have important implications for litigation strategy and forum selection
