Complete Diversity Jurisdiction: Strawbridge, CAFA, and Exceptions

Complete diversity jurisdiction is the rule that a federal district court can hear a state-law civil case under 28 U.S.C. § 1332 only when every plaintiff is a citizen of a different state from every defendant, and the amount in controversy exceeds $75,000.¹ One shared state of citizenship anywhere on the caption, and the entire case stays out of federal court. The rule exists to give out-of-state parties a neutral forum when a state court might favor its own residents, and to keep federal dockets reserved for disputes that genuinely cross state lines.

The All-or-Nothing Rule from Strawbridge

The Supreme Court set the standard in Strawbridge v. Curtiss in 1806.² No plaintiff may share a state of citizenship with any defendant. Congress later codified diversity jurisdiction in § 1332, which grants federal district courts authority over civil actions between citizens of different states above the dollar threshold.¹

A short example makes the rule concrete. Three Texas plaintiffs sue two California defendants and one Texas defendant. Diversity is destroyed. That single Texas defendant shares citizenship with the Texas plaintiffs, so the federal court has no jurisdiction over any part of the case. The two perfectly diverse California defendants do not save it.

The strictness is the point. If federal courts allowed partial diversity, parties could bolt a diverse defendant onto what is really a local dispute just to escape state court. Complete diversity closes that door.

How Each Party’s Citizenship Is Fixed

Every diversity analysis turns on where each party is a citizen, and the test is different depending on what kind of party you are dealing with.

Individuals

For an individual, citizenship means domicile, not just current residence. Domicile is the state where a person is physically present and intends to remain indefinitely. A college student from Ohio studying in Pennsylvania is still an Ohio citizen. A traveling nurse on a six-month contract in Florida does not become a Florida citizen by showing up for the job.

Courts look at objective evidence to find the true home: voter registration, the state that issued the driver’s license, where income taxes are filed, where bank accounts and property sit, professional license registrations. No single factor decides it, but together they show intent.

One important consequence of the domicile rule is that every person has exactly one state of citizenship at any given time. You keep your existing domicile until you both move to a new state and form a genuine intent to stay. Nobody gets to claim two states at once.

Estate, Minor, and Incompetent-Person Representatives

When someone sues on behalf of a person who cannot sue on their own, § 1332(c)(2) attributes the citizenship of the represented person, not the representative.¹ The legal representative of a decedent’s estate is treated as a citizen of the state where the decedent was domiciled. The same rule covers representatives of minors and legally incompetent adults. This blocks a common workaround of picking a strategically located representative to build or break diversity.

Corporations

A corporation has dual citizenship under § 1332(c)(1). It is a citizen of every state where it is incorporated and the one state where it maintains its principal place of business.¹ A company incorporated in Delaware with headquarters in New York is a citizen of both states, and sharing citizenship with a party in either one destroys diversity.

To find the principal place of business, courts apply the “nerve center” test from Hertz Corp. v. Friend (2010).³ The nerve center is the single location where high-level officers actually direct, control, and coordinate the corporation’s activities. Usually that is the headquarters. A corporation with offices in every state still has one nerve center, and one only.

National banks chartered under federal law follow a separate rule. Under 28 U.S.C. § 1348, a national bank is a citizen of the state in which it is located.⁴

LLCs, Partnerships, and Other Unincorporated Entities

This is where diversity analysis becomes painful. Limited liability companies, general partnerships, and limited partnerships do not get the tidy dual-citizenship treatment. An unincorporated entity carries the citizenship of every one of its members or partners. An LLC with fifty members in thirty states is a citizen of all thirty.

The practical result is that unincorporated entities have a much harder time establishing complete diversity than corporations do. One member who happens to share citizenship with the opposing party takes down federal jurisdiction for the entire case. Many business owners assume their LLC will be treated like a corporation in federal court. It will not.

A narrow statutory carve-out exists under the Class Action Fairness Act: for CAFA purposes only, an unincorporated association is treated as a citizen of the state where it has its principal place of business and the state under whose laws it is organized.¹ Outside class actions, the all-members rule controls.

Foreign Citizens and Permanent Residents

Federal courts also have jurisdiction over suits between a U.S. state citizen and a citizen of a foreign country, called alienage jurisdiction under § 1332(a)(2), subject to the same $75,000 threshold.¹

Green card holders are a wrinkle. The statute strips federal jurisdiction over an action between a state citizen and a lawful permanent resident domiciled in that same state.¹ A French national with permanent residence in Ohio who sues an Ohio citizen cannot use diversity jurisdiction. For this purpose, that person is effectively treated as an Ohio citizen.

The $75,000 Amount in Controversy

Diverse citizenship is only half of the test. The plaintiff must also show that the amount in controversy exceeds $75,000, exclusive of interest and costs.¹ “Exceeds” is literal. A dispute over exactly $75,000 does not qualify; the claim has to reach at least $75,000.01.

Courts give the plaintiff the benefit of the doubt on the number. Under the legal-certainty standard from St. Paul Mercury Indemnity Co. v. Red Cab Co., a judge accepts the plaintiff’s stated amount unless it appears to a legal certainty that the claim cannot reach the threshold.⁵ A plaintiff claiming $100,000 in a personal-injury case will not be second-guessed at the outset just because the defendant thinks the injuries are minor. A contract dispute involving a fixed $50,000 debt with no plausible basis for anything more will be dismissed for failing the threshold.

A single plaintiff can add together all claims against a single defendant to clear the bar. Two unrelated claims of $40,000 each against the same defendant reach $80,000 and qualify. Multiple plaintiffs generally cannot pool claims, unless they are enforcing a single, undivided interest shared among them.

Contractual or statutory attorney fees can count toward the amount when the underlying law entitles the plaintiff to recover them, but the expected fee award has to be attributed to the specific plaintiff’s claim, not spread across a group of claimants.

Citizenship Is Measured at Filing

Jurisdiction locks in the moment the complaint is filed. In Grupo Dataflux v. Atlas Global Group, the Supreme Court held that a party’s change in citizenship after filing cannot cure a diversity defect that existed at the start.⁶ The rule cuts both ways: if diversity existed at filing, a party moving into the opponent’s state later does not destroy jurisdiction.

Without this rule, a losing defendant could pack up and move across a state line to blow up the case. The time-of-filing rule prevents that, and it also means lawyers need to nail down every party’s citizenship before filing, because a defect at that moment cannot be patched later.

Class Actions Under CAFA

The Class Action Fairness Act of 2005 built a major exception into § 1332 for large class actions. Under § 1332(d), a class action qualifies for federal jurisdiction if any single member of the plaintiff class is a citizen of a different state from any defendant and the aggregate amount in controversy exceeds $5 million.¹ This is called minimal diversity: one cross-state pairing is enough.

The dollar rule shifts as well. Class members aggregate their claims to hit the $5 million floor rather than each clearing $75,000 on their own.¹ A class of 10,000 consumers each claiming $600 in overcharges totals $6 million and qualifies, even though no individual claim comes close to the ordinary threshold. Congress designed CAFA to channel large, multistate class actions into federal court.

Cases Diversity Cannot Reach

Two categories of disputes stay in state court no matter how cleanly the parties’ citizenships line up. Federal courts have long declined to hear divorce, child custody, and alimony matters. State courts have specialized expertise in family law, and these cases often need ongoing supervision that federal courts are not set up to provide.

Federal courts also will not probate wills or administer estates. In Marshall v. Marshall (2006), the Supreme Court explained that the probate exception rests on prior exclusive jurisdiction: once a state probate court takes control of a decedent’s estate, a federal court will not assume competing authority over the same property. Related tort or contract claims that only touch on a family or probate matter can still proceed in federal court, so long as the court is not being asked to grant a divorce or distribute estate assets.

Manufactured Diversity Gets Thrown Out

Because so much rides on who is in the caption and where they are from, the statute polices manipulation. Under 28 U.S.C. § 1359, a federal court lacks jurisdiction over any case in which a party has been “improperly or collusively made or joined” to create diversity.⁷ Assigning a claim to an out-of-state friend so the case looks diverse, or naming a defendant from another state who has no real stake in the dispute, will get the case dismissed. The federal courthouse is open for genuine cross-state disputes, not manufactured ones.

1
Office of the Law Revision Counsel. 28 USC 1332 – Diversity of Citizenship; Amount in Controversy; Costs
2
Justia. Strawbridge v. Curtiss, 7 U.S. 267 (1806)
3
Justia. Hertz Corp. v. Friend, 559 U.S. 77 (2010)
4
Office of the Law Revision Counsel. 28 USC 1348 – Citizenship of National Banks for Diversity Purposes
5
Legal Information Institute. St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (1938)
6
Justia. Grupo Dataflux v. Atlas Global Group L.P., 541 U.S. 567 (2004)
7
Office of the Law Revision Counsel. 28 USC 1359 – Parties Collusively Joined or Made