Brief Fact Summary. The Respondent-Plaintiff, Kroger (Plaintiff), a citizen of Iowa, filed suit against Omaha Public Power district, a Nebraska citizen, in federal district court. The basis of federal court jurisdiction was diversity. Respondent amended the complaint naming the Petitioner-Defendant, Owen Equipment & Erection Co. (Defendant), an Iowa corporation, as an additional defendant.
Synopsis of Rule of Law. Diversity jurisdiction does not exist unless each defendant is a citizen of a different state from each plaintiff, even where the non-diverse defendant is impleaded through ancillary jurisdiction.
Issue. Whether a federal court has ancillary jurisdiction over a third-party defendant named in an amended complaint in a suit in which complete diversity exists between the plaintiff and the original defendant, but where the newly named third-party defendant is a citizen of the same state that the plaintiff is.
Held. No. The judgment of the court of appeals was reversed. The relevant statute in this case, 28 U.S.C. Section: 1332(a)(1), confers upon federal courts jurisdiction over civil actions where the matter in controversy exceeds $75,000 and is between citizens of different states. This statute and its predecessors have consistently been held to require complete diversity of citizenship. That is, diversity jurisdiction does not exist unless each defendant is a citizen of a different state from each plaintiff. When the Plaintiff amended her complaint to assert a claim against the Defendant, complete diversity was destroyed just as surely as if she had sued Defendant initially. If a common nucleus of operative facts were the only requirement for ancillary jurisdiction in a diversity case, there would be no principled reason why the Plaintiff in this case could not have joined her cause of action against Defendant in her original complaint as ancillary to her claim against Omaha.
The fact that nonfederal claims arise from a common nucleus of operative fact alone, however, does not end the inquiry into whether a federal court has power to hear the nonfederal claims along with the federal ones.View Full Point of Law
Discussion. This case was decided primarily out of respect for the limits of the reach of the federal government, particularly federal court jurisdiction. In reaching its decision the Supreme Court of the United States (Supreme Court) recognized that federal courts are courts of limited jurisdiction and that these limits must neither be disregarded nor evaded. Thus, by requiring complete jurisdiction between all parties, whether initial parties or third-parties later impleaded under ancillary jurisdiction, the Supreme Court is staying true that premise.