Owen Equipment & Erection Co. v. Kroger

Mr. Justice White,

with whom Mr. Justice Brennan joins, dissenting.

The Court today states that “[i]t is not unreasonable to assume that, in generally requiring complete diversity, Congress did not intend to confine the jurisdiction of federal courts so *378 inflexibly that they are unable . . . effectively to resolve an entire, logically entwined lawsuit.” Ante, at 377. In spite of this recognition, the majority goes on to hold that in diversity suits federal courts do not have the jurisdictional power to entertain a claim asserted by a plaintiff against a third-party defendant, no matter how entwined it is with the matter already before the court, unless there is an independent basis for jurisdiction over that claim. Because I find no support for such a requirement in either Art. Ill of the Constitution or in any statutory law, I dissent from the Court’s “unnecessarily grudging” 1 approach.

The plaintiff below, Mrs. Kroger, chose to bring her lawsuit against the Omaha Public Power District (OPPD) in Federal District Court. No one questions the power of the District Court to entertain this claim, for Mrs. Kroger at the time was a citizen of Iowa, OPPD was a citizen of Nebraska, and the amount in controversy was greater than $10,000; jurisdiction therefore existed under 28 U. S. C. § 1332 (a). As permitted by Fed. Rule Civ. Proc. 14 (a), OPPD impleaded petitioner Owen Equipment & Erection Co. (Owen). Although OPPD’s claim against Owen did not raise a federal question and although it was alleged that Owen was a citizen of the same State as OPPD, the parties and the court apparently believed that the District Court’s ancillary jurisdiction encompassed this claim. Subsequently, Mrs. Kroger asserted a claim against Owen, everyone believing at the time that these two parties were citizens of different States. Because it later came to light that Mrs. Kroger and Owen were in fact both citizens of Iowa, the Court concludes that the District Court lacked jurisdiction over the claim.

In Mine Workers v. Gibbs, 383 U. S. 715, 725 (1966), we held that once a claim has been stated that is of sufficient substance to confer subject-matter jurisdiction on the federal dis *379 trict court, the court has judicial power to consider a non-federal claim if it and the federal claim 2 are derived from “a common nucleus of operative fact.” Although the specific facts of that case concerned a state claim that was said to be pendent to a federal-question claim, the Court’s language and reasoning were broad enough to cover the instant factual situation: “[I]f, considered without regard to their federal or state character, a plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.” Ibid, (footnote omitted). In the present case, Mrs. Kroger’s claim against Owen and her claim against OPPD derived from a common nucleus of fact; this is necessarily so because in order for a plaintiff to assert a claim against a third-party defendant, Fed. Rule Civ. Proc. 14 (a) requires that it “aris[e] out of the transaction or occurrence that is the subject matter of the plaintiff’s claim against the third-party plaintiff . . . .” Furthermore, the substantiality of the claim Mrs. Kroger asserted against OPPD is unquestioned. Accordingly, as far as Art. Ill of the Constitution is concerned, the District Court had power to entertain Mrs. Kroger’s claim against Owen.

The majority correctly points out, however, that the analysis cannot stop here. As Aldinger v. Howard, 427 U. S. 1 (1976), teaches, the jurisdictional power of the federal courts may be limited by Congress, as well as by the Constitution. In Aldinger , although the plaintiff’s state claim against Spokane County was closely connected with her 42 U. S. C. § 1983 claim against the county treasurer, the Court held that the District Court did not have pendent jurisdiction over the state claim, for, under the Court’s precedents at that time, it was thought that Congress had specifically determined not to confer on the federal courts jurisdiction over civil rights *380 claims against cities and counties. That being so, the Court refused to allow “the federal courts to fashion a jurisdictional doctrine under the general language of Art. Ill enabling them to circumvent this exclusion . . . 427 U. S., at 16 . 3

In the present case, the only indication of congressional intent that the Court can find is that contained in the diversity jurisdictional statute, 28 U. S. C. § 1332 (a), which states that “district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000 . . . and is between . . . citizens of different States . . . Because this statute has been interpreted as requiring complete diversity of citizenship between each plaintiff and each defendant, Strawbridge v. Curtiss, 3 Cranch 267 (1806), the Court holds that the District Court did not have ancillary jurisdiction over Mrs. Kroger’s claim against Owen. In so holding, the Court unnecessarily expands the scope of the complete-diversity requirement while substantially limiting the doctrine of ancillary jurisdiction.

The complete-diversity requirement, of course, could be viewed as meaning that in a diversity case, a federal district court may adjudicate only those claims that are between parties of different States. Thus, in order for a defendant to implead a third-party defendant, there would have to be diversity of citizenship; the same would also be true for cross-claims between defendants and for a third-party defendant’s claim against a plaintiff. Even the majority, however, refuses to read the complete-diversity requirement so broadly; it *381 recognizes with seeming approval the exercise of ancillary jurisdiction over nonfederal claims in situations involving impleader, cross-claims, and counterclaims. See ante, at 375. Given the Court’s willingness to recognize ancillary jurisdiction in these contexts, despite the requirements of § 1332 (a), I see no justification for the Court’s refusal to approve the District Court’s exercise of ancillary jurisdiction in the present case.

It is significant that a plaintiff who asserts a claim against a third-party defendant is not seeking to add a new party to the lawsuit. In the present case, for example, Owen had already been brought into the suit by OPPD, and, that having been done, Mrs. Kroger merely sought to assert against Owen a claim arising out of the same transaction that was already before the court. Thus the situation presented here is unlike that in Aldinger, supra, wherein the Court noted:

“[I]t is one thing to authorize two parties, already present in federal court by virtue of a case over which the court has jurisdiction, to litigate in addition to their federal claim a state-law claim over which there is no independent basis of federal jurisdiction. But it is quite another thing to permit a plaintiff, who has asserted a claim against one defendant with respect to which there is federal jurisdiction, to join an entirely different defendant on the basis of a state-law claim over which there is no independent basis of federal jurisdiction, simply because his claim against the first defendant and his claim against the second defendant 'derive from a common nucleus of operative fact.’ . . . True, the same considerations of judicial economy would be served insofar as plaintiff’s claims 'are such that he would ordinarily be expected to try them all in one judicial proceeding . . . .’ [Gibbs, 383 U. S., at 725 .] But the addition of a completely new party would run counter to the well-established principle that federal courts, as opposed to state trial courts of *382 general jurisdiction, are courts of limited jurisdiction marked out by Congress.” 427 U. S., at 14-15 .

Because in the instant case Mrs. Kroger merely sought to assert a claim against someone already a party to the suit, considerations of judicial economy, convenience, and fairness to the litigants — the factors relied upon in Gibbs — support the recognition of ancillary jurisdiction here. Already before the court was the whole question of the cause of Mr. Kroger’s death. Mrs. Kroger initially contended that OPPD was responsible; OPPD in turn contended that Owen’s negligence had been the proximate cause of Mr. Kroger’s death. In spite of the fact that the question of Owen’s negligence was already before the District Court, the majority requires Mrs. Kroger to bring a separate action in state court in order to assert that very claim. Even if the Iowa statute of limitations will still permit such a suit, see ante, at 376-377, n. 20, considerations of judicial economy are certainly not served by requiring such duplicative litigation. 4

The majority, however, brushes aside such considerations of convenience, judicial economy, and fairness because it concludes that recognizing ancillary jurisdiction over a plaintiff’s claim against a third-party defendant would permit the plaintiff to circumvent the complete-diversity requirement and thereby “flout the congressional command.” Since the plain *383 tiff in such a case does not bring the third-party defendant into the suit, however, there is no occasion for deliberate circumvention of the diversity requirement, absent collusion with the defendant. In the case of such collusion, of which there is absolutely no indication here, 5 the court can dismiss the action under the authority of 28 U. S. C. § 1359 . 6 In the absence of such collusion, there is no reason to adopt an absolute rule prohibiting the plaintiff from asserting those claims that he may properly assert against the third-party defendant pursuant to Fed. Rule Civ. Proc. 14 (a). The plaintiff in such a situation brings suit against the defendant only, with absolutely no assurance that the defendant will decide or be able to implead a particular third-party defendant. Since the plaintiff has no control over the defendant’s decision to im-plead a third party, the fact that he could not have originally sued that party in federal court should be irrelevant. Moreover, the fact that a plaintiff in some cases may be able to foresee the subsequent chain of events leading to the impleader does not seem to me to be a sufficient reason to declare that a district court does not have the 'power to exercise ancillary jurisdiction over the plaintiff’s claims against the third-party defendant. 7

*384 We have previously noted that “[subsequent decisions of this Court indicate that Strawbridge is not to be given an expansive reading.” State Farm Fire & Cas. Co. v. Tashire, 386 U. S. 523 , 531 n. 6 (1967). In light of this teaching, it seems to me appropriate to view § 1332 as requiring complete diversity only between the plaintiff and those parties he actually brings into the suit. Beyond that, I would hold that in a diversity case the District Court has power, both constitutional and statutory, to entertain all claims among the parties arising from the same nucleus of operative fact as the plaintiff’s original, jurisdiction-conferring claim against the defendant. Accordingly, I dissent from the Court’s disposition of the present case.

See Mine Workers v. Gibbs, 383 U. S. 715, 725 (1966).

1 use the terms “federal claim” and “nonfederal claim” in the same sense that the majority uses them. See ante, at 372 n. 11.

We were careful in Aldinger to point out the limited nature of our holding:

“There are, of course, many variations in the language which Congress has employed to confer jurisdiction upon the federal courts, and we decide here only the issue of so-called 'pendent party’ jurisdiction with respect to a claim brought under §§ 1343 (3) and 1983. Other statutory grants and other alignments of parties and claims might call for a different result.” 427 U. S., at 18 .

It is true that prior to trial OPPD was dismissed as a party to the suit and that, as we indicated in Gibbs , the dismissal prior to trial of the federal claim will generally require the dismissal of the nonfederal claim as well. See 383 U. S., at 726 . Given the unusual facts of the present case, however — in particular, the fact that the actual location of Owen’s principal place of business was not revealed until the third day of trial — fairness to the parties would lead me to conclude that the District Court did not abuse its discretion in retaining jurisdiction over Mrs. Kroger’s claim against Owen. Under the Court’s disposition, of course, it would not ■ matter whether or not the federal claim is tried, for in either situation the court would have no jurisdiction over the plaintiff’s nonfederal claim against the third-party defendant.

When Mrs. Kroger brought suit, it was believed that Owen was a citizen of Nebraska, not Iowa. Therefore, had she desired at that time to make Owen a party to the suit, she would have done so directly by naming Owen as a defendant.

Section 1359 states: “A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.”

Under the Gibbs analysis, recognition of the district court’s power to •hear a plaintiff’s nonfederal claim against a third-party defendant in a diversity suit would not mean that the court would be required to entertain such claims in all cases. The district court would have the discretion to dismiss the nonfederal claim if it concluded that the interests of judicial economy, convenience, and fairness would not be served by the retention of the claim in the federal lawsuit. See Gibbs, 383 U. S., at 726 . Ac *384 cordingly, the majority’s concerns that lead it to conclude that ancillary jurisdiction should not be recognized in the present situation could be met on a case-by-case basis, rather than by the absolute rule it adopts.