Caterpillar Inc. v. Lewis

136 L. Ed. 2d 437 · Supreme Court of the United States · 1996

Facts

Lewis, a Kentucky resident, sued Caterpillar (DE/IL) and Whayne Supply (KY) in state court. Caterpillar removed the case to federal court based on diversity, but complete diversity was lacking at removal because Lewis and Whayne Supply were both Kentucky citizens. The District Court denied Lewis's motion to remand. Whayne Supply was later dismissed, establishing complete diversity, and the case proceeded to a jury verdict and judgment for Caterpillar. The Court of Appeals vacated the judgment due to the initial lack of diversity.

Procedural history

James David Lewis filed a lawsuit in Kentucky state court, which Caterpillar Inc. removed to the United States District Court for the Eastern District of Kentucky. Lewis moved to remand the case, but the District Court denied the motion. After Whayne Supply was dismissed from the case, the District Court proceeded to trial and entered judgment for Caterpillar. The Court of Appeals for the Sixth Circuit vacated the judgment, finding that complete diversity was lacking at the time of removal, thus the District Court lacked subject-matter jurisdiction. Caterpillar then petitioned the Supreme Court for review.

Issue

Is the absence of complete diversity at the time a case is removed to federal court fatal to the ensuing federal-court adjudication, even if complete diversity exists by the time judgment is entered and the plaintiff timely objected to the removal?

Holding

No. A district court's error in failing to remand a case improperly removed is not fatal to the ensuing adjudication if federal jurisdictional requirements, such as complete diversity, are met at the time judgment is entered.

Rule

When a case is improperly removed due to a lack of complete diversity, but the jurisdictional defect is cured before judgment, and federal jurisdictional requirements are met at the time judgment is entered, the judgment will not be vacated on appeal, even if the plaintiff timely objected to the removal. Considerations of finality, efficiency, and economy outweigh the initial procedural error.

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