Opinion ID: 73042
Heading Depth: 3
Heading Rank: 1

Heading: jurisdiction

Text: Ingram first raised the issue of whether federal subject matter jurisdiction exists at oral argument. “Questions of subject matter jurisdiction may be raised . . . at any time during the pendency of the proceedings.” United States v. Ayarza-Garcia, 819 F.2d 1043, 1048 (11th Cir.), cert. denied, 484 U.S. 969 (1987). Indeed, we are “bound to ascertain whether we possess . . . subject-matter jurisdiction whether it is challenged by the litigants or not[.]” Escobedo v. Estelle, 655 F.2d 613, 614 (5th Cir, Unit A 1981). Thus, although “we normally will not address issues raised for the first time at oral argument, ‘[a]ny time doubt arises as to the existence of federal jurisdiction, we are obliged to address the issue before proceeding further.’” Rice v. Ford Motor Co., 88 F.3d 914, 917 n.5 (11th Cir. 1996) (quoting Atlanta Gas Light Co. v. Aetna Cas. and Sur. Co., 68 F.3d 4 409, 414 (11th Cir.1995)). After oral argument, the parties submitted supplemental briefs on the jurisdictional issue. This case involves no federal question. Jurisdiction therefore depends upon diversity of citizenship. It is axiomatic that lack of complete diversity between the parties deprives federal courts of jurisdiction over a lawsuit. Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806). At the time CSX removed this case to federal district court, complete diversity existed–Ingram is an Alabama resident and CSX is incorporated in Virginia and maintains its principal place of business in Florida. After removal, however, Ingram moved to amend her complaint to add the City as an additional defendant. The district court granted the motion and entered an order stating that it had done so “with the EXPRESS UNDERSTANDING that the addition of a non-diverse defendant [would] not destroy [the] court’s diversity jurisdiction which [had] already attached.” The appellees argue that the district court’s diversity jurisdiction was determined at the time CSX filed its notice of removal. The appellees rely on the Supreme Court’s decision in Freeport-McMoRan, Inc. v. K N Energy, Inc., which held that “[d]iversity jurisdiction, once established, is not defeated by the addition of a nondiverse [dispensable] party to the action.” 498 U.S. 426, 428 (1991).2 In Freeport, a gas seller 2 It is undisputed that, as an alleged joint tortfeasor, the City is a “dispensable” party. See Temple v. Synthes Corp., Ltd., 498 U.S. 5, 7 (1990) (citing Advisory Committee Notes to Fed. R. Civ. P. 19(a), which state that “a tortfeasor with the usual ‘joint-and-several’ liability is merely a permissive party to an action against another with like liability”). 5 brought a breach of contract action against a buyer. The seller then assigned its interest in the contract and substituted the nondiverse assignee as a plaintiff pursuant to Fed. R. Civ. P. 25(c). In a per curiam opinion, the Supreme Court held that “diversity of citizenship is assessed at the time the action is filed[,]” and that “if jurisdiction exists at [that] time . . . such jurisdiction may not be divested by subsequent events.” Freeport, 498 U.S. at 428. The court rejected the opposite rule, which it reasoned could “have the effect of deterring normal business transactions during the pendency of what might be lengthy litigation.” 498 U.S. at 428. The appellees assert that, under Freeport, federal diversity jurisdiction attached at the time of removal and was not destroyed when the district court added the City as a defendant. We disagree. CSX and the City construe Freeport’s holding too broadly. Freeport does not stand for the proposition that all additions of nondiverse parties are permissible as long as complete diversity existed at the time of commencement of the lawsuit. Instead, the holding in Freeport relies upon the assignee’s having been substituted as a plaintiff under Fed. R. Civ. P. 25(c). In this case, the City’s addition was unrelated to rule 25. As a result, we find Freeport to be inapplicable. When the district court granted Ingram’s motion to add the City as a defendant, complete diversity no longer existed between the parties, thereby destroying subject matter jurisdiction. Although Ingram styled her motion to add the City as a motion to amend her complaint pursuant to Fed. R. Civ. P. 15(a), this amendment amounted to a joinder, pursuant to Fed. R. Civ. P. 20. We presume that Ingram sought to add the City because 6 her alleged right to relief against it arose out of the same transaction or occurrence as her alleged right to relief against CSX, and because questions of law or fact common to both defendants were likely to arise in the action. See Fed. R. Civ. P. 20(a).3 Thus, in determining whether to grant Ingram’s motion, the district court should have considered 28 U.S.C.A. § 1447(e), which provides: “If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court.” 28 U.S.C.A. § 1447(e) (West 1994). The district court had no discretion to add the City as a defendant, retain jurisdiction and decide the case on the merits. Indeed, section 1447(e)’s legislative history indicates that Congress rejected a proposal that would have allowed district courts to join certain nondiverse parties and still decide the merits of the dispute. H.R. Rep. No. 889, 100th Cong., 2d Sess. 72-73 (1988), reprinted in 1988 U.S.C.C.A.N. 5982, 6033-34 (indicating that the proposal was rejected because it “would [have] provide[d] a small enlargement of diversity jurisdiction”); see also David D. Siegel, Commentary on 1988 Revision of Section 1447, in 28 U.S.C.A. § 1447 (West 1994). Because section 1447(e) was applicable here, the district court was left with only two options: (1) deny joinder; or (2) permit joinder and remand Ingram’s case to state court. The district court chose to 3 Ingram’s supplemental brief assumes, and the appellees do not seem to contest, that the City’s addition may be construed as a joinder. 7 permit the diversity-destroying joinder and, as a result, it should have remanded this action to Alabama circuit court. Ingram urges this court to reverse the summary judgment ruling and remand to the district court with directions to remand this case to Alabama circuit court. We find this course of action unnecessary. In Newman-Green, Inc. v. Alfonso-Larrain, 490 U.S. 826 (1989), the Supreme Court held that federal courts of appeals have the authority–like that given to the district courts in Fed. R. Civ. P. 21–to dismiss dispensable, nondiverse parties to cure defects in diversity jurisdiction.4 Ingram argues that dismissing the City in this case would be inappropriate for two reasons. First, Ingram asserts that this court is as limited in its options as the district court was once it permitted the City to be joined–the district court’s only option under section 1447(e) was to remand the case to state court. Likewise, Ingram claims, section 1447(e) leaves this court with no alternative but to direct the district court to remand this case to state court. Newman-Green’s broad language, however, belies Ingram’s contention that the district court’s joinder ruling absolutely deprives this court of any discretion to retroactively restore subject matter jurisdiction. See, e.g., Casas Office Machs., Inc. v. Mita Copystar Amer., Inc., 42 F.3d 668, 677-78 (1st Cir. 1994) (citing Newman-Green and dismissing dispensable diversity- 4 In relevant part, Fed. R. Civ. P. 21 provides as follows: Misjoinder of parties is not ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just. 8 spoiling defendants who were added as parties to the lawsuit after the case was removed to district court). Second, Ingram emphasizes the Supreme Court’s qualifying language in NewmanGreen, i.e., that appellate courts’ authority to dismiss dispensable nondiverse parties “should be exercised sparingly” and that the appellate court “should carefully consider whether the dismissal . . . will prejudice any of the parties in the litigation.” NewmanGreen, 490 U.S. at 837-38. Ingram claims that she will be prejudiced if we exercise our dismissal power here because the statute of limitations has expired on any claim she may have had against the City. This consideration might be persuasive where a litigant raises the jurisdictional issue at an earlier stage in the proceedings. Ingram, however, waited until her oral argument presentation on appeal–long after the district court’s adverse ruling on the merits of her case. We decline to reward such delay. We therefore exercise our authority, pursuant to Newman-Green, to dismiss the City of Albertville, Alabama. Having retroactively restored complete diversity, we retain subject matter jurisdiction and reach the merits.