A plaintiff, a resident of State A, files a negligence lawsuit in federal court against three defendants: one is a resident of State A, the second is a resident of State B, and the third is a corporation incorporated and headquartered in State B. The plaintiff seeks $80,000 in damages. Which of the following BEST describes whether the federal court has subject-matter jurisdiction over this case?
The federal court has subject-matter jurisdiction because the amount in controversy exceeds $75,000.
The federal court has subject-matter jurisdiction because the case involves parties from multiple states.
The federal court has subject-matter jurisdiction under federal question jurisdiction.
The federal court lacks subject-matter jurisdiction because complete diversity of citizenship is not present.
The correct answer is based on the elements required for federal subject-matter jurisdiction. For diversity jurisdiction to exist, there must be (1) complete diversity between all plaintiffs and all defendants, meaning that no plaintiff can share citizenship with any defendant, and (2) the amount in controversy must exceed $75,000. In this case, while the amount in controversy exceeds $75,000, complete diversity does not exist because both the plaintiff and one of the defendants are residents of State A. The presence of a defendant sharing a state with the plaintiff eliminates complete diversity, barring federal jurisdiction based on diversity.
Incorrect answer choices may overlook the need for complete diversity, misinterpret the amount in controversy requirement, or mistakenly suggest that federal question jurisdiction applies even though no federal issue is presented in the complaint.
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