To amend title 28, United States Code, to clarify the jurisdiction of the Federal courts, and for other purposes.

Summary: Federal Courts Jurisdiction Clarification Act of 2006 - Amends the federal judicial code with respect to jurisdictional rules and the amount in controversy in civil litigation concerning: (1) denial of district court original jurisdiction of an action between a citizen of a state and a resident alien domiciled in the same state; (2) citizenship rules for corporations and insurance companies with foreign contacts; (4) removal procedures for civil and criminal actions and summary remand; (5) indexing of the amount in controversy; and (6) the use of declarations to specify damages.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Federal Courts 
Jurisdiction Clarification Act of 2006''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Resident alien exception.
Sec. 3. Citizenship of corporations and insurance companies with 
                            foreign contacts.
Sec. 4. Removal and remand procedures.
Sec. 5. Indexing the amount in controversy.
Sec. 6. Facilitating use of declarations to specify damages.
Sec. 7. Effective date.

SEC. 2. RESIDENT ALIEN EXCEPTION.

    Section 1332(a) of title 28, United States Code, is amended--
            (1) by striking the last sentence; and
            (2) in paragraph (2), by inserting after ``foreign state'' 
        the following: ``, except that the district courts shall not 
        have original jurisdiction of an action between a citizen of a 
        State and a citizen or subject of a foreign state admitted to 
        the United States for permanent residence and domiciled in the 
        same State''.

SEC. 3. CITIZENSHIP OF CORPORATIONS AND INSURANCE COMPANIES WITH 
              FOREIGN CONTACTS.

    Section 1332(c)(1) of title 28, United States Code, is amended--
            (1) by striking ``a corporation'' and all that follows 
        through ``, except'' and inserting ``a corporation shall be 
        deemed to be a citizen of every State and foreign state by 
        which it has been incorporated and of the State or foreign 
        state where it has its principal place of business, except''; 
        and
            (2) by striking all that follows ``party-defendant,'' and 
        inserting ``such insurer shall be deemed a citizen of--
                    ``(A) every State and foreign state of which the 
                insured is a citizen;
                    ``(B) every State or foreign state by which the 
                insurer has been incorporated; and
                    ``(C) the State or foreign state where the insurer 
                has its principal place of business; and''.

SEC. 4. REMOVAL AND REMAND PROCEDURES.

    (a) Actions Removable Generally.--Section 1441(c) of title 28, 
United States Code, is amended to read as follows:
    ``(c)(1) If a civil action includes--
            ``(A) a claim arising under the Constitution, laws, or 
        treaties of the United States (within the meaning of section 
        1331), and
            ``(B) a claim not within the original or supplemental 
        jurisdiction of the district court or a claim that has been 
        made nonremovable by statute,
        the entire action may be removed if the action would be 
        removable without the inclusion of the claim described in 
        subparagraph (B).
    ``(2) Upon removal of an action described in paragraph (1), the 
district court shall sever from the action all claims described in 
paragraph (1)(B) and shall remand the severed claims to the State court 
from which the action was removed. Only defendants against whom a claim 
described in paragraph (1)(A) has been asserted are required to join in 
or consent to the removal under paragraph (1).''.
    (b) Procedure for Removal of Civil Actions.--Section 1446 of title 
28, United States Code, is amended as follows:
            (1) The section heading is amended to read as follows:
``Sec. 1446. Procedure for removal of civil actions''.
            (2) Subsection (a) is amended--
                    (A) by striking ``or criminal prosecution''; and
                    (B) by striking ``removal signed pursuant to Rule 
                11 of the Federal Rules of Civil Procedure and 
                containing'' and inserting ``removal. The notice of 
                removal shall be signed in the same manner and with the 
                same effect as a pleading, written motion, or other 
                paper in a civil action in a district court of the 
                United States, and shall contain''.
            (3) Subsection (b) is amended--
                    (A) by inserting ``(1)'' after ``(b)'';
                    (B) by designating the second paragraph as 
                paragraph (3);
                    (C) by inserting after paragraph (1) (as designated 
                by subparagraph (A) of this paragraph) the following:
    ``(2) When a civil action is removed solely under section 1441(a), 
all defendants who have been properly joined and served must join in or 
consent to the removal of the action. A defendant shall have 30 days 
after receipt by or service on that defendant of the initial pleading 
or summons described in subsection (b)(1) to file the notice of 
removal. During the 30-day period before a defendant files a notice of 
removal--
            ``(A) any other defendant served before the beginning of 
        that 30-day period may consent to the removal by the later-
        served defendant even though that earlier-served defendant did 
        not previously initiate or consent to removal; and
            ``(B) any defendant not yet served may join in or consent 
        to the removal.'';
                    (D) in paragraph (3) (as designated by subparagraph 
                (B) of this paragraph), by striking ``action.'' and 
                inserting ``action, unless equitable considerations 
                warrant removal. Such equitable considerations include 
                whether the plaintiff has engaged in manipulative 
                behavior, whether the defendant has acted diligently in 
                seeking to remove the action, and whether the case has 
                progressed in State court to a point where removal 
                would be disruptive.''; and
                    (E) by adding at the end the following:
    ``(4) If removal of a civil action is sought on the basis of the 
jurisdiction conferred by section 1332(a), the sum demanded in good 
faith in the initial pleading shall be deemed to be the amount in 
controversy, except that--
            ``(A) the notice of removal may assert the amount in 
        controversy if the initial pleading seeks--
                    ``(i) non-monetary relief; or
                    ``(ii) a money judgment, but the State practice 
                either does not permit demand for a specific sum or 
                permits recovery of damages in excess of the amount 
                demanded; and
            ``(B) removal of the action is proper on the basis of an 
        amount in controversy asserted under subparagraph (A) if the 
        district court finds, by the preponderance of the evidence, 
        that the amount in controversy exceeds the amount specified in 
        section 1332(a).
    ``(5)(A) In a case to which paragraph (3) applies that is not 
removable solely because the amount in controversy does not exceed the 
amount specified in section 1332(a), information relating to the amount 
in controversy in the record of the State proceeding, or in responses 
to discovery, shall be treated as an `other paper' under paragraph (3). 
If the defendant first receives such a paper, through service or 
otherwise, within 1 year after the commencement of the action and 
during the trial or within 30 days before the date set for trial, 
removal may be had only upon a finding that the plaintiff deliberately 
failed to disclose the actual amount in controversy in order to prevent 
removal.
    ``(B) If a finding is made under subparagraph (A) that the 
plaintiff deliberately failed to disclose the actual amount in 
controversy in order to prevent removal, and the notice of removal is 
filed more than 1 year after commencement of the action, that finding 
shall be deemed to be `equitable considerations' under paragraph (3) 
that warrant removal.''.
            (4) Section 1446 is further amended--
                    (A) by striking subsections (c) and (e); and
                    (B) by redesignating subsections (d) and (f) as 
                subsections (c) and (d), respectively.
    (c) Procedure for Removal of Criminal Actions.--Chapter 89 of title 
28, United States Code, is amended by inserting after section 1446 the 
following new section:
``Sec. 1446a. Procedure for removal of criminal actions
    ``(a) Notice of Removal.--A defendant or defendants desiring to 
remove any criminal prosecution from a State court shall file in the 
district court of the United States for the district and division 
within which such prosecution is pending a notice of removal. The 
notice of removal shall be signed in the same manner and to the same 
effect as a pleading, written motion, or other paper in a criminal 
prosecution in a district court of the United States and contain a 
short and plain statement of the grounds for removal, together with a 
copy of all process, pleadings, and orders served upon such defendant 
or defendants in such action.
    ``(b) Requirements.--(1) A notice of removal of a criminal 
prosecution shall be filed not later than thirty days after the 
arraignment in the State court, or at any time before trial, whichever 
is earlier, except that for good cause shown the United States district 
court may enter an order granting the defendant or defendants leave to 
file the notice at a later time.
    ``(2) A notice of removal of a criminal prosecution shall include 
all grounds for such removal. A failure to state grounds which exist at 
the time of the filing of the notice shall constitute a waiver of such 
grounds, and a second notice may be filed only on grounds not existing 
at the time of the original notice. For good cause shown, the United 
States district court may grant relief from the limitations of this 
paragraph.
    ``(3) The filing of a notice of removal of a criminal prosecution 
shall not prevent the State court in which such prosecution is pending 
from proceeding further, except that a judgment of conviction shall not 
be entered unless the prosecution is first remanded.
    ``(4) The United States district court in which such notice is 
filed shall examine the notice promptly. If it clearly appears on the 
face of the notice and any exhibits annexed thereto that removal should 
not be permitted, the court shall make an order for summary remand.
    ``(5) If the United States district court does not order the 
summary remand of such prosecution, it shall order an evidentiary 
hearing to be held promptly and after such hearing shall make such 
disposition of the prosecution as justice shall require. If the United 
States district court determines that removal shall be permitted, it 
shall so notify the State court in which prosecution is pending, which 
shall proceed no further.
    ``(c) Writ of Habeas Corpus.--If the defendant or defendants are in 
actual custody on process issued by the State court, the district court 
shall issue its writ of habeas corpus, and the marshal shall thereupon 
take such defendant or defendants into custody and deliver a copy of 
the writ to the clerk of such State court.''.
    (d) Conforming Amendments.--The table of sections for chapter 89 of 
title 28, United States Code, is amended--
            (1) in the item relating to section 1446, by inserting ``of 
        civil actions'' after ``removal''; and
            (2) by inserting after the item relating to section 1446 
        the following new item:

``1446a. Procedure for removal of criminal actions.''.

SEC. 5. INDEXING THE AMOUNT IN CONTROVERSY.

    (a) In General.--Section 1332 of title 28, United States Code, is 
amended by adding at the end the following new subsection:
    ``(f)(1) Effective on January 1, 2011, and January 1 of each fifth 
year thereafter, the dollar amount then in effect as the minimum amount 
in controversy applicable under subsection (a) shall be adjusted by an 
amount, rounded to the nearest $5,000 (or, if midway between multiples 
of $5,000, to the next higher multiple of $5,000), equal to the 
percentage of the dollar amount which corresponds to the change in the 
Consumer Price Index for the month of September of the appropriate 
year, over the Consumer Price Index for the month of September of the 
fifth year preceding the appropriate year.
    ``(2) The Director of the Administrative Office of the United 
States Courts shall determine the amount of each adjustment under 
paragraph (1) and, not later than November 15 of the appropriate year, 
shall submit for publication in the Federal Register the amount (and 
the percentage change in the Consumer Price Index that is the basis for 
that amount), and the new minimum amount in controversy to take effect 
on January 1 of the succeeding calendar year.
    ``(3) As used in this subsection--
            ``(A) the `appropriate year' is the year preceding the year 
        in which the adjustment under paragraph (1) is to take effect; 
        and
            ``(B) the term `Consumer Price Index' means the Consumer 
        Price Index for All Urban Consumers published by the Department 
        of Labor.''.
    (b) Conforming Amendment.--Section 1332(a) of title 28, United 
States Code, is amended by inserting ``as adjusted under subsection 
(f),'' after ``$75,000,''.

SEC. 6. FACILITATING USE OF DECLARATIONS TO SPECIFY DAMAGES.

    (a) Removal Generally.--Section 1441(a) of title 28, United States 
Code, is amended by adding at the end the following new sentence: ``If 
the plaintiff has filed a declaration in State court, as part of or in 
addition to the initial pleading, providing that the plaintiff will 
neither seek nor accept an award of damages or entry of other relief 
exceeding the amount specified in section 1332(a), the case may not be 
removed on the basis of the jurisdiction under section 1332(a) as long 
as the plaintiff abides by the declaration and the declaration is 
binding under the laws and practice of the State. If the plaintiff has 
filed such a declaration in State court but thereafter fails to abide 
by that declaration, the defendant or defendants may file a notice of 
removal within 30 days after receiving, through service or otherwise, a 
copy of an amended pleading, motion, order or other paper from which it 
may first be ascertained that the plaintiff seeks or is willing to 
accept an award of damages or other relief exceeding the amount 
specified in section 1332(a).''.
    (b) Procedure After Removal.--Section 1447 of title 28, United 
States Code, is amended by adding at the end the following new 
subsection:
    ``(f) Within 30 days after the filing of a notice of removal of a 
civil action in which the district court's removal jurisdiction rests 
solely on original jurisdiction under section 1332(a), the plaintiff 
may file a declaration with the district court providing that the 
plaintiff will neither seek nor accept an award of damages or entry of 
other relief exceeding the amount specified in section 1332(a) of this 
title. Upon the filing of such a declaration, the district court shall 
remand the action to State court unless equitable circumstances warrant 
retaining the case.''.

SEC. 7. EFFECTIVE DATE.

    (a) In General.--Subject to subsections (b) and (c), the amendments 
made by this Act take effect on the date of enactment of this Act, and 
apply to any action or prosecution commenced on or after such date of 
enactment.
    (b) Applicability of Change in Jurisdictional Amount.--Any change 
in the amount in controversy under section 1332(a) of title 28, United 
States Code, that is made pursuant to the amendments made by section 5 
shall apply to any action or prosecution commenced on or after the date 
such change becomes effective.
    (c) Treatment of Cases Removed to Federal Court.--For purposes of 
subsections (a) and (b ), an action or prosecution commenced in State 
court and removed to Federal court shall be deemed to commence on the 
date the action or prosecution was commenced in State court.