The diversity jurisdiction rules in plain English
Diversity jurisdiction (28 USC § 1332) gives federal courts subject matter jurisdiction over state-law claims when (1) the parties are citizens of different states or one is a foreign national, and (2) the amount in controversy exceeds $75,000. The doctrine exists because the framers worried about state courts favoring local parties over out-of-state ones.
The rule sounds simple, but the citizenship piece is where most students lose points on exams. Three traps come up over and over:
1. The complete diversity rule
From Strawbridge v. Curtiss (1806): no plaintiff may share citizenship with any defendant. One overlap kills the entire case for diversity purposes. This is the rule that prevents diversity jurisdiction in multi-party cases more often than anything else.
2. Corporate dual citizenship
A corporation is a citizen of both its state of incorporation AND its principal place of business (the "nerve center" under Hertz Corp. v. Friend, 2010). A Delaware corporation headquartered in California is a citizen of both Delaware and California. Forget either and you'll miss a potential overlap.
3. LLCs are not corporations
Under Carden v. Arkoma Associates (1990), a limited liability company takes the citizenship of every single one of its members. A 50-member LLC is a citizen of every state where any member is domiciled. This makes diversity nearly impossible to establish for many modern business entities — a fact that exam writers exploit ruthlessly.
Edge cases worth knowing
- Stateless parties (US citizens domiciled abroad) destroy diversity. Per Newman-Green v. Alfonzo-Larrain, they are neither citizens of any state nor aliens for § 1332 purposes.
- Permanent residents are treated as aliens only (post-2011 amendments). They are not citizens of the state where they reside for diversity purposes — even though they used to be under earlier law.
- Aliens vs. aliens: § 1332(a)(2) does not provide jurisdiction over disputes solely between aliens. There must be a US citizen on at least one side (or alienage layered on top of interstate diversity per § 1332(a)(3)).
What this calculator does and does not do
This calculator handles the citizenship-overlap analysis and the $75,000 threshold check. It does not handle every § 1332 nuance — e.g. the home-state defendant rule for removal, supplemental jurisdiction over related claims, the legal-certainty test for aggregating amounts, or the class-action mass-action rules under § 1332(d). For the standard exam fact pattern (a few individuals, maybe a corporation, maybe an LLC, maybe an alien), the rules coded here cover the analysis.