If the plaintiff and a defendant are citizens of the same state and the amount in controversy exceeds $75,000, which statement is most accurate about federal jurisdiction?

• A. Complete diversity exists, so federal jurisdiction is automatic.
• B. Diversity jurisdiction exists only if all plaintiffs are diverse from all defendants.
• C. Diversity jurisdiction may be defeated by lack of complete diversity, and federal courts may still exercise jurisdiction only through supplemental jurisdiction if applicable.
• D. Diversity jurisdiction exists irrespective of citizenship of all parties.

Answer: (C)

Diversity jurisdiction hinges on complete diversity: every plaintiff must be from a different state than every defendant, and the amount in controversy must exceed $75,000. If the plaintiff and a defendant share the same state, complete diversity is not present, so diversity-based federal jurisdiction does not attach—even if the amount in controversy is over $75,000. The dollar amount matters only when complete diversity exists.

There can still be federal jurisdiction if there is another basis, such as a federal-question claim. In that situation, the federal court may hear the case and may exercise supplemental jurisdiction over related nondiverse claims under 28 U.S.C. § 1367, but only because there is an anchor for jurisdiction already in place. Without another basis for federal jurisdiction, lack of complete diversity means no federal jurisdiction.

So the statement that best captures the rule is that diversity jurisdiction is defeated by lack of complete diversity, and any federal jurisdiction over the remaining claims would have to come through supplemental jurisdiction if applicable.