Caterpillar Inc. v. Lewis
519 U.S. 61 (1996)
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Rule of Law:
A district court's error in failing to remand a case that was improperly removed for lack of complete diversity is not fatal to the ensuing adjudication if federal jurisdictional requirements are met at the time judgment is entered.
Facts:
- James David Lewis, a Kentucky resident, sustained injuries while operating a bulldozer and filed a lawsuit in Kentucky state court.
- Lewis named two defendants: Caterpillar Inc., a Delaware corporation with its principal place of business in Illinois, and Whayne Supply Company, a Kentucky corporation.
- Liberty Mutual Insurance Group, a Massachusetts corporation and the insurer for Lewis's employer, intervened as a plaintiff, asserting claims against both Caterpillar and Whayne Supply.
- Lewis entered into a settlement agreement with the non-diverse defendant, Whayne Supply.
- After Lewis's settlement but before Caterpillar removed the case, Liberty Mutual's claims against Whayne Supply were still pending.
- After the case was in federal court and before trial began, Liberty Mutual also settled its claims with Whayne Supply, which was then formally dismissed from the suit.
- Following Whayne Supply's dismissal, complete diversity existed between the remaining parties: plaintiff Lewis (Kentucky) and defendant Caterpillar (Delaware/Illinois).
Procedural Posture:
- James David Lewis filed a lawsuit against Caterpillar Inc. and Whayne Supply Company in a Kentucky state court (court of first instance).
- Caterpillar filed a notice of removal to the U.S. District Court for the Eastern District of Kentucky, asserting diversity jurisdiction.
- Lewis filed a timely motion to remand the case to state court, arguing that complete diversity was lacking.
- The District Court denied Lewis's motion to remand.
- The case proceeded to a jury trial, which resulted in a verdict for Caterpillar, and the District Court entered final judgment.
- Lewis, as appellant, appealed the judgment to the U.S. Court of Appeals for the Sixth Circuit (intermediate appellate court).
- The Court of Appeals vacated the District Court's judgment, holding that the district court lacked subject-matter jurisdiction at the time of removal, making the removal improper.
- Caterpillar, as petitioner, sought and was granted a writ of certiorari from the U.S. Supreme Court (highest court).
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Issue:
Does a district court's error in failing to remand an improperly removed case for lack of complete diversity require vacatur of the final judgment if federal jurisdictional requirements are met at the time the judgment is entered?
Opinions:
Majority - Justice Ginsburg
No. A district court’s error in failing to remand a case improperly removed for lack of complete diversity is not fatal to the final judgment if federal jurisdictional requirements are met at the time judgment is entered. Although the removal was statutorily defective because complete diversity did not exist at the time of removal, the constitutional requirement of subject-matter jurisdiction was satisfied by the time of trial and judgment. Once a diversity case has been tried on the merits, considerations of finality, efficiency, and economy become overwhelming and weigh against vacating the judgment due to a pre-trial, curable defect. To wipe out the adjudication post-judgment would impose an exorbitant cost on the dual court system, especially when the jurisdictional flaw was cured and the district court possessed jurisdiction over the case when it rendered its final decision.
Analysis:
This decision establishes a significant principle of judicial economy, prioritizing the finality of judgments over strict adherence to the statutory timing requirements for removal. It clarifies that while removal statutes must be followed, a defect in removal jurisdiction at the outset can be 'cured' before final judgment. This holding prevents the waste of judicial resources that would result from nullifying a full trial on the merits due to an initial procedural error, so long as Article III subject-matter jurisdiction is secure at the time of judgment. The ruling distinguishes between non-waivable subject-matter jurisdiction and waivable, statutory procedural defects in removal.
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