Source: https://supreme.justia.com/cases/federal/us/490/826/case.html
Timestamp: 2018-02-21 11:36:22
Document Index: 770327380

Matched Legal Cases: ['§ 1653', '§ 1653', '§ 1653', '§ 1332', '§ 1332', '§ 1332', '§ 1332', '§ 1332', '§ 1653', '§ 1653', '§ 1653', '§ 1653', '§ 274', '§ 399', '§ 1653', '§ 1653', '§ 1653', '§ 32', '§ 1783', 'art, 17']

Newman-Green v. Alfonzo-Larrain, (full text) :: 490 U.S. 826 (1989) :: Justia US Supreme Court Center
Justia › US Law › US Case Law › US Supreme Court › Volume 490 › Newman-Green v. Alfonzo-Larrain › Case
Newman-Green v. Alfonzo-Larrain,
(a) Since § 1653 speaks of amending jurisdictional allegations, it would apply if petitioner had made an incorrect statement about jurisdiction that actually existed, but it does not apply where, as here, there are defects in the jurisdictional facts themselves. This interpretation is consistent with § 1653's legislative history and the language of its predecessor statute, as well as the view of every Court of Appeals that has considered § 1653's scope. Pp. 490 U. S. 830-832.
At oral argument before a panel of the Seventh Circuit Court of Appeals, Judge Easterbrook inquired as to the statutory basis for diversity jurisdiction, an issue which had not been previously raised either by counsel or by the District Court Judge. In its complaint, Newman-Green had invoked 28 U.S.C. § 1332(a)(3), which confers jurisdiction in the District Court when a citizen of one State sues both aliens and citizens of a State (or States) different from the plaintiff's. In order to be a citizen of a State within the meaning of the diversity statute, a natural person must both be a citizen of the United States and be domiciled within the State. See Robertson v. Cease, 97 U. S. 646, 97 U. S. 648-649 (1878); Brown v. Keene, 8 Pet. 112, 33 U. S. 115 (1834). The problem in this case is that Bettison, although a United States citizen, has no domicile in any State. He is therefore "stateless" for purposes of § 1332(a)(3). Subsection 1332(a)(2), which confers jurisdiction in the District Court when a citizen of a State sues aliens only, also could not be satisfied because Bettison is a United States citizen.
When a plaintiff sues more than one defendant in a diversity action, the plaintiff must meet the requirements of the diversity statute for each defendant or face dismissal. Strawbridge v. Curtiss, 3 Cranch 267 (1806). [Footnote 1] Here, Bettison's "stateless" status destroyed complete diversity under § 1332(a)(3), and his United States citizenship destroyed complete diversity under § 1332(a)(2). Instead of dismissing the case, however, the Court of Appeals panel granted Newman-Green's motion, which it had invited, to amend the complaint to drop Bettison as a party, thereby producing complete diversity under § 1332(a)(2). 832 F.2d 417 (1987). The panel, in an opinion by Judge Easterbrook, relied both on 28 U.S.C. § 1653 and on Rule 21 of the Federal Rules of Civil Procedure as sources of its authority to grant this motion. The panel noted that, because the guarantors are jointly and severally liable, Bettison is not an indispensable party, and dismissing him would not prejudice the remaining guarantors. 832 F.2d at 420, citing Fed.Rule Civ.Proc. 19(b). The panel then proceeded to the merits of the case, ruling in Newman-Green's favor in large part, but remanding to allow the District Court to quantify damages and to resolve certain minor issues. [Footnote 2]
The Court of Appeals granted the remaining guarantors' motion for rehearing en banc, and reversed the panel decision. 854 F.2d 916 (1988). Writing for the en banc majority, Judge Posner concluded that neither § 1653 nor Rule 21 empowers appellate courts to dismiss a dispensable party whose presence spoils statutory diversity jurisdiction. The court
Title 28 U.S.C. § 1653, enacted as part of the revision of the Judicial Code in 1948, provides that "[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts." At first blush, the language of this provision
This interpretation of § 1653 is consistent with the language of its predecessor statute, enacted in 1915, which expressly limited jurisdictional amendments to cases in which diversity jurisdiction "in fact existed at the time the suit was brought or removed, though defectively alleged." § 274(c), Act of Mar. 3, 1915, 38 Stat. 956, 28 U.S.C. § 399 (1946 ed.). There is nothing in the 1948 legislative history to indicate that, in changing the wording of this statute, Congress intended to abandon the limitation just quoted. On the contrary, the only legislative guide available -- the Revision Note to § 1653 -- explains that the predecessor statute was changed solely to expand the power to cure defective allegations of jurisdiction from diversity cases to all cases. Historical and Revision Notes to 28 U.S.C. § 1653. Other than that, "[c]hanges were made in phraseology." Ibid. Surely a change that would empower federal courts to amend a complaint so as to produce jurisdiction where none actually existed before is much more than a change in phraseology. [Footnote 4]
As both the en banc majority and dissent recognized below, it is well settled that Rule 21 invests district courts with authority to allow a dispensable nondiverse party to be dropped at any time, even after judgment has been rendered. [Footnote 6] Although the Federal Rules of Civil Procedure strictly apply only in the district courts, Fed.Rule Civ.Proc. 1, the policies informing Rule 21 may apply equally to the courts of appeals. The narrow question before us, therefore, is whether a court of appeals may do what a district court can do and dismiss a dispensable nondiverse party itself, or whether a court of appeals must remand the case to the district
Almost every modern Court of Appeals faced with this issue has concluded that it has the authority to dismiss a dispensable nondiverse party by virtue of Rule 21. [Footnote 7] As with § 1653, we are reluctant to disturb this well-settled judicial construction, particularly when there is no evidence that this authority has been abused by the courts of appeals (or the district courts, for that matter). Furthermore, we have ourselves exercised a similar authority under Rule 21. In Mullaney v. Anderson, 342 U. S. 415 (1952), the defendant first questioned the plaintiff union's standing to bring suit when the case reached this Court. Relying explicitly on Rule 21, we avoided deciding the standing issue by granting the union's motion to add as parties two of its members. Although we did not discuss extensively Rule 21's applicability in the appellate setting, we did note that the change in the parties would not have "affected the course of the litigation" if it had occurred at some earlier point, and would not "embarrass the defendant." Id. at 342 U. S. 417. The Court further remarked that dismissing the petition and thereby requiring the plaintiffs to start over in the District Court "would entail needless waste, and runs counter to effective judicial administration." Ibid. Finally, the Court expressed confidence that amendments at such a late stage "will rarely come into
While Justice Story's opinion dealt generally with the amendment power of appellate courts, Chief Justice Marshall's opinion for this Court in Carneal v. Banks, 10 Wheat. 181 (1825), dealt with the issue at hand -- the power of appellate courts to grant motions to dismiss dispensable nondiverse
17 Wall. at 84 U. S. 579. This similarity of language is not surprising; the considerations implicit in a trial court's exercise of this power are equally applicable when an appellate court exercises the same power. Moreover, once it is recognized that trial courts have this amendment power, it is exceedingly difficult to argue that a similar
Although these 19th-century cases were decided in a procedural era different from our own, it is apparent that the weight of authority favored the view that appellate courts possessed the authority to grant motions to dismiss dispensable nondiverse parties. [Footnote 11] Courts relied then on § 32 of the Judiciary Act of 1789 or on the inherent power of appellate courts. Today courts rely on Mullaney or Federal Rule 21. We decline to disturb that deeply rooted understanding of appellate power, particularly when requiring dismissal after years of litigation would impose unnecessary and wasteful burdens on the parties, judges, and other litigants waiting for judicial attention. See Mullaney, 342 U.S. at 342 U. S. 417. Appellate-level amendments to correct jurisdictional defects may not be the most intellectually satisfying approach to the
spoiler problem, but, as Judge Posner eloquently noted, because "law is an instrument of governance, rather than a hymn to intellectual beauty, some consideration must be given to practicalities." 854 F.2d at 925.
Although we hold that the courts of appeals have the authority to dismiss a dispensable nondiverse party, we emphasize that such authority should be exercised sparingly. In
In the instant case, it is evident that none of the parties will be harmed by Bettison's dismissal. First, Bettison's presence did not provide Newman-Green with a tactical advantage. Discovery directed to Bettison while he was a party would have been available even if he had not been a party. See, e.g., Fed.Rule Civ.Proc. 30(a); 28 U.S.C. § 1783. Second, given that all of the guarantors (including Bettison) are jointly and severally liable, it cannot be argued that Bettison was indispensable to the suit. Fed.Rule Civ.Proc. 19(b); see 854 F.2d at 938 (Easterbrook, J., dissenting). The only person who faces any prejudice is Bettison himself, who has participated in this litigation from the start, and who would face the possibility of suit in a state or Venezuelan court. The panel solved this problem by terminating the litigation against Bettison with prejudice, thus leaving the other guarantors with the burden of pursuing Bettison to obtain contribution or indemnity. 832 F.2d at 420. The panel's disposition was entirely appropriate. Nothing but a waste of time and resources would be engendered by remanding to the District Court or by forcing these parties to begin anew.
See, e.g., Long, 820 F.2d at 416-417; Ross v. Int'l Brotherhood of Electrical Workers, 634 F.2d 453, 456-457 (CA9 1980); Fidelity & Casualty Co. v. Reserve Ins. Co., 596 F.2d 914, 918 (CA9 1979); Underwood, 256 F.2d at 339; cf. Caspary, 725 F.2d at 191-192 (relying on Fed.Rule Civ.Proc. 15). Other courts have remanded the case to the district court with mandatory instructions to allow an amendment dismissing the nondiverse party in order to preserve diversity jurisdiction. See, e.g., Jaser v. New York Property Ins. Underwriting Assn., 815 F.2d 240, 244 (CA2 1987). The cases holding that appellate courts are powerless to remedy such jurisdictional defects are few and far between. See, e.g., Field, supra, at 306; Dollar S.S. Lines, Inc. v. Merz, 68 F.2d 594, 595 (CA9 1934).
As an initial matter, it is disturbing that the Court does not address in a substantive way the grave, brooding question whether Federal Rule of Civil Procedure 21 affords even the district courts the power to confer jurisdiction retroactively by dismissing a nondiverse party. On this critical point, the Court states only that this question is "well settled" in the lower courts. See ante at 490 U. S. 832. But it has never been the rule that federal courts, whose jurisdiction is created and limited by statute, see Finley v. United States, ante at 490 U. S. 547-548, acquire power by adverse possession. Indeed, I have some doubts that Rule 21 provides this power to district courts. For one thing, it is important to note that Rule 21 governs only misjoinder and nonjoinder. But that is not what is at issue in this case. There is no claim here that
The two 19th-century cases relied upon by the Court, Horn v. Lockhart, 17 Wall. 570 (1873), and Carneal v. Banks, 10 Wheat. 181 (1825), do not establish the authority of an appellate court to dismiss a nondiverse party to preserve jurisdiction. Both the majority and the dissent in the Court of Appeals recognized that, at most, Horn speaks of the powers of a trial court, see 854 F.2d 916, 921 (1988) (Posner, J.); id. at
Page 490 U. S. 841
931 (Easterbrook, J.), and the Court concedes as much, see ante at 490 U. S. 835-836. Nor does Carneal establish in any explicit way, or even by necessary inference, the authority of an appellate court to preserve jurisdiction by dismissing a nondiverse party who defeats complete diversity.
The majority's reliance on Carneal proceeds from a premise that is most questionable. It assumes that Carneal involved a single action in which this Court dismissed on its own the nondiverse parties. Judge Posner, however, observed that the Court in Carneal may have in fact "treated the suit as if it were two suits, one satisfying the requirement of complete diversity, the other dismissable and dismissed." 854 F.2d at 921. Judge Posner, perhaps, understated his own case. Carneal involved a contract in which the plaintiff, Banks, "agreed to transfer to Carneal the right of the said Banks in 30,000 acres of land purchased by him from John Harvie," in exchange for which Carneal promised to convey to Banks "a tract of 2,000 acres of land on Green River." 10 Wheat. at 23 U. S. 182. Banks claimed that "Carneal was guilty of fraud in pretending to have a good title to the said 2,000 acres of land." Id. at 23 U. S. 182-183. Because the contract involved a conveyance of the 30,000 acres from Harvie to Carneal, in order for Banks to obtain complete relief, he prayed both "that the contract [between Carneal and Banks] . . . be rescinded" and "that the heirs of John Harvie . . in whom the legal title to the said 30,000 acres remains, . . . be decreed to convey the same to [Banks]." Id. at 23 U. S. 183. The jurisdictional problem was that, although there was complete diversity between Banks and Carneal's heirs, there was no diversity between Banks and Harvie's heirs. See id. at 23 U. S. 187-188. The Court appears to have treated the claims against Harvie's heirs (the nondiverse parties) as a separate suit which in no way affected jurisdiction over Banks' suit against Carneal's heirs. The Court stated:
I am not at all persuaded, either, that practical considerations in the case warrant our holding that courts of appeals have the power to dismiss nondiverse parties. The dissent in the Court of Appeals, and the opinion for the Court here, each assume it would be quite a waste to remand the case to the District Court so that it may determine whether an amendment to the complaint ought to be allowed. But if, as the Court and the dissent below contend, there would be no