Owen Equipment & Erection Co. v. Kroger

Brief Fact Summary.

Respondent filed a wrongful death claim against Defendant in federal court. Defendant filed a third-party complaint against Petitioner, alleging their negligence was the cause of death. Respondent changed her complaint to include Petitioner, Defendant moved for summary judgment, and Petitioner filed a motion to dismiss for lack of diversity jurisdiction.

Synopsis of Rule of Law.

A federal court does not have diversity jurisdiction over a state law claim when the parties lack complete diversity of citizenship, even when the state law claim is paired with a federal claim arising out a common nucleus of operative facts.

Facts.

James Kroger was electrocuted when a crane touched an electric power line. His wife (Respondent), a citizen of Iowa, sued Omaha Public Power District (Defendant), a Nebraska company, for wrongful death in the District Court for the District of Nebraska. Defendant filed a third-party complaint against Owen Employment and Erection Co. (Petitioner), alleging Petitioner’s negligent operation of its crane caused Kroger’s death. Respondent amended her complaint naming Petitioner as an additional defendant. Defendant moved for summary judgment. Petitioner filed a motion to dismiss for lack of diversity jurisdiction, because its principal place of business was in Iowa.

Issue.

Did the District Court have diversity jurisdiction over the lawsuit once Petitioner was added through a third-party complaint?

Held.

No, the District Court no longer had diversity jurisdiction because Respondent and Petitioner were both citizens of Iowa. The judgment of the Court of Appeals is reversed.

Dissent.

Justice White

Justice White rejected the Court’s rigid interpretation of complete diversity of citizenship and limit to ancillary jurisdiction, because the Court overlooked matters of judicial economy and fairness.

Discussion.

The Court determined that the District Court lost diversity jurisdiction when Petitioner was added through a third-party complaint because Respondent and Petitioner were both citizens of Iowa. The Court relied on Congress’ intent for complete diversity of citizenship to reject the argument that the requirement could be circumvented by a third-party complaint. Additionally, the Court rejected the applicability of ancillary jurisdiction in this case because Respondent’s original claim was entirely separate from the amended complaint against Petitioner.