A Texas driver crashes into a California pedestrian in Arizona. Where does the lawsuit go? Federal court, if the California victim wants to avoid potentially biased Arizona state courts.
Diversity jurisdiction lets federal courts hear cases between citizens of different states when more than $75,000 is at stake. The Constitution created this option because the Founders worried that state courts would favor their own citizens over out-of-staters. You still need complete diversity—every plaintiff must be from different states than every defendant. If even one plaintiff and one defendant share a state, the federal courthouse door closes. LLCs complicate this further because you have to trace citizenship through every single member.