Court Opinion

ID: 9491085
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:03:19.67216+00
Date Added: 2024-06-11T17:54:30.006870
License: Public Domain

EVANS, Circuit Judge,
dissenting.
Good lawyers—and Mark Levy, the attorney for the Indiana Gas Company, is certainly nothing if not a mighty good lawyer1— *320often spend the evening before an appellate oral argument trying to anticipate the sort of questions they may be asked by the judges the next morning. This case undoubtedly got Levy thinking about esoteric things like the fine points of hydrology and mundane things like pollution exclusions in insurance policies.
But surprise surprise. Forty-five seconds into Mr. Levy’s argument, a question arrived from deep in the left field corner: “How do we know there is subject matter jurisdiction in this case?” Today the court answers its own question: There is no federal jurisdiction. So, despite the fact that the complaint alleged an arguable basis for diversity jurisdiction, the answers conceded jurisdiction, the district judge nurtured the case for three years and the parties came here looking for answers to questions on the merits of this complex litigation, we tell everyone they wasted their time. The district court, we hold, didn’t have jurisdiction from the get-go, so close the hymnals because mass is over. Go home. Case dismissed. Three years of work in the district court getting the case to this point are washed down the drain. Because this result is unacceptable, I dissent.
The majority correctly notes that we have “a duty to ensure that subject-matter jurisdiction is present even if the parties disregard the issue____” Op. at p. 316. But having a duty and going so far beyond its call are not the same thing.
In establishing the requirement of “complete diversity” and finding it lacking 190 years ago in Stmwbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806), Chief Justice Marshall did no more than look at the complaint which showed Massachusetts plaintiffs suing Massachusetts defendants plus someone (Curtiss) from Vermont. Today, in finding “complete diversity” to be absent, our court goes through a very elaborate academic exercise. First it pooh-poohs the unchallenged allegation in the complaint that none of the various entities (Certain Underwriters at Lloyd’s, London and Certain London Market Insurers) are, for diversity purposes, from Indiana. Next, it pays no heed to the fact that many federal courts, including ours in Certain Underwriters of Lloyd’s v. General Accident Insurance Co., 909 F.2d 228 (7th Cir.1990) (Bauer, J.), have resolved litigation on the merits in similar diversity cases against London syndicates. Finally, the court goes out of its way to distinguish Certain Interested Underwriters at Lloyd’s v. Layne, 26 F.3d 39 (6th Cir. 1994)—where a jurisdictional objection was raised and rejected-while on its way to creating a conflict among the circuits.
I prefer to do none of these things. I would follow, at this time, the holding of Layne and resolve this dispute on the merits. To do otherwise makes the professionals in this case—a bevy of top-notch lawyers and an experienced and able district judge—look, unfairly, as if they were slipshod in discharging their responsibilities for failing to note that for over a thousand days this ease had no business being in a federal court.
On Petition for Rehearing May 13, 1998.
EASTERBROOK, Circuit Judge.
Our opinion in this ease concludes that underwriting syndicates at Lloyd’s of London must be treated like limited partnerships for purposes of determining their citizenship when jurisdiction depends on 28 U.S.C. § 1332. This means that each syndicate has the citizenship of each participating “name”. Because at least one name in one of the defendant syndicates was domiciled in Indiana when the case began, the complete diversity essential to jurisdiction under § 1332 was missing. The London Market Insurers, alone among the many parties to *321the ease, have filed a petition for rehearing. The London Market Insurers now advance an argument omitted from the jurisdictional memorandum submitted before our initial decision: that, as unincorporated associations, the underwriting syndicates could be sued as defendant classes under Fed. R.Civ.P. 23.2, with the names’ citizenships ignored. An argument made for the first time in a petition for rehearing has been forfeited, and the London Market Insurers confront the further problem that the complaint did not use Rule 23.2. Plaintiffs have several ways to bring partnerships and other unincorporated associations into litigation— such as suing the entity in its own name, suing every partner or member, suing one member of the association as representative of the others, and suing one partner as an individual while allowing that partner to seek indemnity from others. The choice of device may affect “service of process, venue, subject matter jurisdiction, and the enforceability of the judgment.” Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, 7C Federal Practice and Procedure § 1861 at 215 (2d ed.1986). Rule 23.2 was not used in this ease, and that is that.
Lest this invite another round of litigation in which Indiana Gas tries out Rule 23.2, we add that the London Market Insurers are mistaken in thinking that the Supreme Court’s cases treating unincorporated associations as citizens of every state of which any member is a citizen may be avoided by suing one partner or member as a “representative” of the rest. The complete-diversity requirement cannot be transmuted into a minimal-diversity requirement so easily. Recall that the names are not parties in the first place. This is representative litigation. Indiana Gas correctly concluded that Fed.R.Civ.P. 17(b) permits suit against the syndicates through their lead underwriters, because the law of the United Kingdom permits the lead underwriters to represent the other names’ interests—indeed, English law forbids suits by insureds directly against the names. Thus we had to decide what eitizenship(s) should be attributed to the lead underwriters or other representatives of the syndicates. These representatives would have the same citizenships whether Rule 17(b) or Rule 23.2 was invoked. See also Northern Trust Co. v. Bunge Corp., 899 F.2d 591 (7th Cir.1990).
According to the London Market Insurers, “Fed.R.Civ.P. 23.2 provides a jurisdictional basis for this action.” Yet how can a rule of procedure expand the subject-matter jurisdiction of the federal courts? Rule 82, which the London Market Insurers do not mention, is emphatic that it cannot: “These rules shall not be construed to extend or limit the jurisdiction of the United States district courts or the venue of actions therein.” Supreme Tribe of Ben-Plur v. Cauble, 255 U.S. 356, 41 S.Ct. 338, 65 L.Ed. 673 (1921), on which the London Market Insurers rely, does not imbue Rule 23.2 with jurisdictional consequences. The Court held in Cauble that if there is complete diversity between named class representatives and the adverse parties, the district court may adjudicate the rights of other class members under its supplemental jurisdiction. In this sense the citizenship of class members who are not parties is irrelevant. Cauble deals with a situation in which the parties have independent claims, which could be fully resolved if other persons similarly situated were unaffected by the case. When the litigant comes to court only as a representative, without claims of his own, then it is essential to know what citizenship(s) this person has as representative. Otherwise all of the rules discussed in our initial opinion would collapse. Suppose a big Chicago law firm wanted to sue its landlord, a real estate partnership, under the diversity jurisdiction. A partner of the law firm who is a- citizen of Indiana would sue as “representative” of the firm under Rule 23, naming a partner of the real estate syndicate who lives in Illinois as “representative” under Rule 23.2, and ask the judge to ignore the citizenships of the other partners on both sides. Yet that could not be described as a use of the supplemental jurisdiction: the only claim would be a representative one, on which complete diversity could not be established. Just so with suits by and against unincorporated- insurance syndicates. Indiana Gas does not have claims against the lead underwriters, to which claims against names might be appended using 28 U.S.C. § 1367. It has claims against the underwrit*322ers of the.policies of insurance, which is to say the syndicates as entities. So Rule 23.2 and Cauble are irrelevant, and the petition for rehearing is denied.
Circuit Judge Evans votes to deny the petition for rehearing but does not join this opinion.

. Mr. Levy, a former Deputy Assistant Attorney General for appellate matters in the Civil Division of the Justice Department and presently a *320partner at Washington, D.C.’s Howrey & Simon, is one of the country’s premier appellate litigators. See The National Law Journal, July 31, 1995. But by highlighting Mr. Levy, I don’t mean to slight the other attorneys who argued this case before our panel. Harry Lee, Stephen Roberts, and Sonia Waisman, from powerhouse law firms (Steptoe St Johnson LLP, Washington, D.C.; Mendes & Mount, LLP, New York, New York; and Luce, Forward, Hamilton & Scripps, LLP, San Diego, California, respectively) all appear to be top-notch lawyers. And obviously the district judge, William Lee (Yale University, B.A., 1959; University of Chicago Law, J.D., 1962), a grizzled veteran of 17 years on the district court bench, is no slouch as well.