Legal Definitions - complete diversity

Complete Diversity is a crucial requirement for a federal court to hear a case based on "diversity of citizenship" jurisdiction. Diversity of citizenship is a type of jurisdiction that allows federal courts to handle certain disputes between parties from different states, even if the case doesn't involve federal law.

For a federal court to have diversity jurisdiction, two main conditions must be met:

• The amount of money or value in dispute must exceed a specific threshold (currently over $75,000).
• There must be "complete diversity" among the parties.

Complete diversity means that no plaintiff (the party bringing the lawsuit) can be a citizen of the same state as any defendant (the party being sued). If even one plaintiff shares citizenship with one defendant, then complete diversity is absent, and the case generally cannot be heard in federal court based on diversity jurisdiction.

For individuals, citizenship is typically determined by their state of residence. For corporations, citizenship is determined by both the state where they are incorporated and the state where they have their "principal place of business" (often considered their corporate headquarters or nerve center).

Here are some examples to illustrate complete diversity:

• Example 1: Complete Diversity Exists

  Imagine a person living in California (Plaintiff) sues a company incorporated in Delaware with its main operations in New York (Defendant). In this scenario, the California plaintiff is a citizen of California. The defendant company is considered a citizen of both Delaware and New York. Since California is different from both Delaware and New York, there is no overlap in citizenship between the plaintiff and the defendant. Therefore, complete diversity exists, and a federal court could potentially hear the case if the amount in dispute meets the financial threshold.

• Example 2: Complete Diversity Does Not Exist (Individual Parties)

  Consider a lawsuit where a resident of Texas (Plaintiff A) and a resident of Florida (Plaintiff B) jointly sue a resident of Texas (Defendant C) and a resident of Georgia (Defendant D). Here, Plaintiff A is a citizen of Texas, and Defendant C is also a citizen of Texas. Because one plaintiff (Plaintiff A) shares citizenship with one defendant (Defendant C), complete diversity does not exist. Even though Plaintiff B and Defendant D are from different states, the shared citizenship between Plaintiff A and Defendant C prevents the case from being heard in federal court under diversity jurisdiction.

• Example 3: Complete Diversity Does Not Exist (Corporate Parties)

  Suppose a small business incorporated in Arizona with its principal place of business in Nevada (Plaintiff) sues a large corporation incorporated in Delaware but with its principal place of business in Nevada (Defendant). The plaintiff business is a citizen of both Arizona and Nevada. The defendant corporation is a citizen of both Delaware and Nevada. Since both the plaintiff and the defendant are considered citizens of Nevada (due to their principal places of business), there is an overlap in citizenship. Consequently, complete diversity does not exist, and a federal court would typically not have diversity jurisdiction over this case.