Opinion ID: 474501
Heading Depth: 3
Heading Rank: 2

Heading: The Motive/Function Test

Text: 22 Here, the district court relied heavily on McSparran v. Weist, 402 F.2d 867 (3d Cir.1968) (en banc), cert. denied, 395 U.S. 903, 89 S.Ct. 1739, 23 L.Ed.2d 217 (1969), which constitutes the paradigmatic statement of the motive/function test. See 621 F.Supp. at 766-69. McSparran departed from the Third Circuit's prior reading of improperly or collusively, as used in section 1359, and held that [t]he impropriety is not any conduct between the plaintiff and the defendant, but that collusion exists when the fiduciary and the applicant for his appointment seek an artificial appointment for the purpose of creating diversity jurisdiction. 402 F.2d at 873. The Third Circuit rejected the notion that courts should not inquire into the motives for appointment of the guardian or other representative: 23 While, of course, the desire to obtain diversity jurisdiction is not in itself improper, nevertheless it is not irrelevant in the determination of the question whether the fiduciary is in fact a straw fiduciary whose citizenship is to be disregarded. Moreover, it is difficult to see how motive can be entirely ignored in ascertaining the purpose for which the representative is selected in view of the language of Sec. 1359. The statute outlaws the creation of jurisdiction where a party has been improperly or collusively made or joined to invoke the jurisdiction of the court. While the statute does not ban the appointment of non-resident fiduciaries, the artificial selection of a straw representative who has no duty or function except to offer the use of his citizenship to create diversity in contemplated litigation is a violation of its provisions. 24 Id. at 874-75 (footnote omitted). In McSparran, the court found nothing more than a naked arrangement for the selection of an out-of-state guardian in order to prosecute a diversity suit, id. at 875, and emphasized that the essentially local nature of the controversy stemming from an automobile accident removed one of the conceptual underpinnings of diversity jurisdiction--preventing discrimination against out-of-state litigants, id. at 876. 14 25 McSparran has been quite influential. 15 See, e.g., Gross v. Hougland, 712 F.2d 1034, 1038 (6th Cir.1983) (plaintiff must show primary purpose for appointment of fiduciary is not to manufacture diversity; citing McSparran ), cert. denied, 465 U.S. 1025, 104 S.Ct. 1281, 79 L.Ed.2d 684 (1984); 16 Bass v. Texas Power & Light Co., 432 F.2d 763, 767 (5th Cir.1970) (courts can no longer apply the mechanically efficient rule of Corabi v. Auto Racing, Inc., 264 F.2d 784 (3d Cir.1959) (en banc), and cannot yet apply the equally efficient ALI proposal, but must work the matter out under Kramer and McSparran ), cert. denied, 401 U.S. 975 (1971); O'Brien v. AVCO Corp., 425 F.2d 1030, 1036 (2d Cir.1969) (former Second Circuit rule of Lang v. Elm City Construction Co., 324 F.2d 235, 236 (2d Cir.1963) (per curiam), which relied on Corabi, is vitiated by Kramer and McSparran ). 26 The motive/function test seems intuitively correct, because it attempts to weed out cases that have found their way into federal court solely because of artifice. Unfortunately, the subjectivity of the test will often require extensive factfinding, 17 and the test may fail to promote the purposes of diversity jurisdiction insofar as it expels from federal court litigants from different states who have a real, substantial controversy, Mullenix, 70 Cornell L.Rev. at 1033-34.