My log shows someone making their way to the blog via an interesting google search: ethical for a plaintiff to inflate the amount of damages requested in order to obtain federal diversity jurisdiction?
Short answer is: though it’s unethical to "inflate" anything in a complaint, in establishing federal diversity jurisdiction the plaintiff may claim any amount of damages unless is it "legally certain" they cannot obtain them.
That said, it’s unusual for a plaintiff to deceive their way into federal court, since federal court is generally perceived as more friendly to defendants.
The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between—
(1) citizens of different States;
(2) citizens of a State and citizens or subjects of a foreign state;
(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and
(4) a foreign state, defined in section 1603 (a) of this title, as plaintiff and citizens of a State or of different States.
28 U.S.C. § 1332(a).
The rule for determining "amount in controversy" when the plaintiff requests federal court is well-settled:
The intent of Congress drastically to restrict federal jurisdiction in controversies between citizens of different states has always been rigorously enforced by the courts. The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim. But if, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed. Events occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction.
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 82 L. Ed. 845, 58 S. Ct. 586 (1938). The standard is more stringent if the defendant is the one trying to get into federal court through removal.
The rule lines up with ordinary principles of professional ethics and wrongful use of civil proceedings: a lawyer has a duty to zealously advocate for their client, but can’t make claims for damages the law "certainly" does not allow.