What is required for federal diversity jurisdiction to exist?

For federal diversity jurisdiction to exist, one of the essential requirements is that the amount in controversy must exceed $75,000. This threshold is crucial because it establishes the basis for a federal court to intervene in disputes between parties that are citizens of different states. The purpose of this requirement is to ensure that only significant cases are heard in federal court, preventing an overwhelming number of minor disputes from clogging the federal system.

Diversity jurisdiction itself arises when there is complete diversity between parties; this means that no plaintiff can be from the same state as any defendant. Therefore, the correct answer rightly emphasizes the monetary threshold without needing to focus on the citizenship status of the parties involved, which is a separate requirement altogether.

Understanding the amount in controversy is a key aspect of federal jurisdiction, as it reflects the importance of the claim. If the amount does not exceed $75,000, the federal court typically lacks jurisdiction over the matter, directing parties to pursue their claims in state court.