Facts
- Geraldine Kroger, an Iowa citizen and estate administratrix, brought a state-law wrongful death action after her husband was electrocuted near a crane that contacted a high-tension power line.
- Kroger sued Omaha Public Power District (OPPD), a Nebraska corporation, in federal court based on diversity jurisdiction.
- OPPD impleaded Owen Equipment & Erection Co. under Rule 14, alleging Owen owned and operated the crane and caused the death.
- Kroger amended her complaint to assert a direct claim against Owen, alleging Owen was a Nebraska citizen.
- OPPD obtained summary judgment and was dismissed, leaving Kroger’s claim against Owen as the only claim for trial.
- At trial, it emerged that Owen was incorporated in Nebraska but had its principal place of business in Iowa, making Owen an Iowa citizen for diversity purposes.
- Owen moved to dismiss for lack of subject-matter jurisdiction because Kroger and Owen were both Iowa citizens; the district court denied dismissal after the jury returned a verdict for Kroger.
Issues
- In a diversity-only action, may a plaintiff assert a direct claim against a nondiverse third-party defendant impleaded under Rule 14 when no independent basis for federal jurisdiction exists over that claim?
- Does ancillary jurisdiction allow a plaintiff to bypass the complete-diversity requirement of 28 U.S.C. § 1332 by suing a nondiverse third-party defendant?
- Can alleged concealment or delay by a party create subject-matter jurisdiction where complete diversity is lacking?
Decision
- The Supreme Court reversed the judgment for Kroger and held the district court lacked subject-matter jurisdiction over Kroger’s direct claim against Owen.
- The Court held that § 1332 requires complete diversity between all plaintiffs and all defendants, and that requirement was destroyed once Kroger asserted a claim against Owen, an Iowa citizen.
- The Court rejected the court of appeals’ reliance on the “common nucleus of operative fact” approach as sufficient to support jurisdiction in a diversity-only case.
- The Court held that no conduct of the parties, including alleged concealment of citizenship, can confer subject-matter jurisdiction on a federal court.
Legal Principles
- Diversity jurisdiction under 28 U.S.C. § 1332 requires complete diversity: each plaintiff must be a citizen of a different state from each defendant.
- Even if Article III would permit adjudication of related state-law claims, federal courts must also have statutory authorization; jurisdictional statutes may limit the availability of ancillary (supplemental) jurisdiction.
- In a diversity-only case, a plaintiff may not use ancillary jurisdiction to assert a direct claim against a Rule 14 third-party defendant whose citizenship defeats complete diversity.
- Traditional ancillary jurisdiction more readily supports certain defendant-initiated claims (such as impleader) than plaintiff-initiated efforts to add nondiverse parties.
- Subject-matter jurisdiction cannot be created by consent, waiver, litigation conduct, or equitable considerations.
Conclusion
Because Kroger and Owen were citizens of the same state, the federal court lacked diversity jurisdiction over Kroger’s direct claim against Owen, and ancillary jurisdiction could not be used to circumvent § 1332’s complete-diversity requirement.