Why is the case important?
“Defendant James David Lewis, a resident of Kentucky, filed a lawsuit in Kentucky state court on June 22, 1989, after sustaining injuries while operating a bulldozer. He named as Defendants both a Delaware and Kentucky corporation.
Synopsis of Rule of Law. Diversity at the time judgment is entered, rather than at the time the case is removed from state to federal court, is the appropriate time at which to examine whether complete diversity exists permitting federal court jurisdiction.”
Facts of the case
Asserting state law claims, Lewis, a Kentucky native, brought suit in Kentucky state court, for injuries sustained in a construction accident, against Caterpillar Inc. (Caterpillar), a Delaware corporation, and Whayne Supply Company (Whayne), a Kentucky corporation. Liberty Mutual Insurance Group (Liberty Mutual), a Massachusetts corporation, later intervened in the case as a plaintiff. Less than a year after filing his complaint Lewis entered into a settlement with Whayne. Caterpillar immediately moved to remove the action to federal court, arguing that the settlement between Lewis and Whayne meant that there was complete diversity. Lewis protested that complete diversity was not present because Liberty Mutual had not yet settled with Whayne, so that both Whayne and Lewis were still party to the lawsuit. The District Court denied Lewis’ motion to remand, erroneously concluding that complete diversity was present. Five months before the trial, Liberty Mutual and Whayne reached a settlement and the District Court dismissed Whayne from the case. Complete diversity was present for the remainder of the case, including trial and judgment in favor of Caterpillar. The Court of Appeals for the Sixth Circuit vacated the District Court’s judgment, holding that the lower court had lacked subject-matter jurisdiction at the time of removal because there was not complete diversity, and should have remanded the case to state court.
Whether the absence of complete diversity at the time of removal to Federal District Court is fatal to federal court jurisdiction.
No. The Supreme Court of the United States held that Federal jurisdiction is permissible if Federal jurisdiction requirements are met at the time the judgment is entered.
The court reversed the judgment from the court of appeals and remanded the cause. The court held that the district court’s error in failing to remand respondent’s lawsuit after it was improperly removed was not fatal to the subsequent adjudication because the federal jurisdictional requirements were satisfied when the judgment was entered. The court found that the jurisdictional defect of one nondiverse party, which existed when petitioner requested removal, was cured by an intervening settlement agreement reached by the nondiverse party. Thus, the district court had complete diversity before the trial occurred between petitioner and respondent, who were both diverse parties.
- Case Brief: 1996
- Petitioner: Caterpillar Inc.
- Respondent: Lewis
- Decided by: Rehnquist Court
Citation: 519 US 61 (1996)
Argued: Nov 12, 1996
Decided: Dec 10, 1996