Which sentence correctly states the relationship between the federal and the state judiciaries?

The correct relationship between the federal and state judiciaries can be described as follows:

The federal judiciary operates independently of the state judiciary, but both systems function simultaneously and have their own distinct jurisdictions. The federal courts have the authority to hear cases involving federal law, constitutional issues, and disputes between states or parties from different states (diversity jurisdiction). On the other hand, state courts typically handle matters involving state laws and local issues.

In terms of hierarchy, the federal judicial system is structured under the authority of the U.S. Constitution and federal laws, while state judicial systems are created and operate under their respective state constitutions and laws. While they are separate entities, cases may sometimes shift between the two systems, notably when federal questions arise in state court or state issues appear in federal court, demonstrating the interactions between them.