The plaintiff, an Iowa citizen acting as the administratrix of her husband's estate, filed a wrongful death action in federal court based on diversity jurisdiction under 28 U.S.C. § 1332 against Omaha Public Power District (OPPD), a Nebraska citizen. OPPD then impleaded Owen Equipment & Erection Co. (Owen) as a third-party defendant under Federal Rule of Civil Procedure 14, alleging that Owen's negligence was responsible for the fatal accident. Believing diversity would persist, the plaintiff amended her complaint to assert a direct negligence claim against Owen. After discovery, OPPD obtained summary judgment and was dismissed from the case, leaving only the plaintiff's direct claim against Owen. It later emerged that while Owen was incorporated in Nebraska, its principal place of business was in Iowa, making Owen an Iowa citizen for § 1332 purposes—the same as the plaintiff—thus defeating complete diversity had the claim been brought originally. The district court nonetheless exercised ancillary jurisdiction over the plaintiff's claim against Owen and entered judgment for the plaintiff after a jury trial. The Eighth Circuit affirmed. The Supreme Court granted certiorari.
In a diversity-only case, may a federal court exercise ancillary jurisdiction over a plaintiff's claim against a third-party defendant impleaded under Rule 14 when that claim would destroy complete diversity if brought independently?
Complete diversity is required in cases premised solely on 28 U.S.C. § 1332. Ancillary (now supplemental) jurisdiction cannot be used by a plaintiff to assert a claim against a nondiverse third-party defendant impleaded under Rule 14 when doing so would contravene the complete diversity requirement. The efficiencies of resolving factually related claims in a single action do not expand the statutory grant of federal subject-matter jurisdiction.
No. The district court lacked subject-matter jurisdiction over the plaintiff's direct claim against Owen because both were citizens of Iowa. Ancillary jurisdiction does not extend to a plaintiff's claim against a nondiverse third-party defendant in a diversity action. The judgment was reversed and the case remanded with instructions to dismiss for lack of jurisdiction.
The Court reaffirmed the principle from Strawbridge v. Curtiss that § 1332 requires complete diversity. While ancillary jurisdiction permits federal courts to hear certain claims appended by defending parties (for example, indemnity or contribution claims asserted by defendants under Rule 14) to avoid piecemeal litigation, those doctrines cannot be used to circumvent Congress's limitations on diversity jurisdiction. The plaintiff is the master of the complaint and chooses the federal forum; with that choice comes the obligation to respect jurisdictional restrictions. The Court distinguished between claims asserted by defendants (who are haled into court and may need ancillary jurisdiction to protect their interests) and claims newly asserted by plaintiffs against additional parties. Permitting plaintiffs to leverage ancillary jurisdiction to add nondiverse third-party defendants would allow an end-run around § 1332, enabling plaintiffs to achieve indirectly what they could not do directly. The Court's earlier decisions in Aldinger v. Howard and Zahn v. International Paper underscored that efficiency and factual overlap (a "common nucleus of operative fact") cannot justify expanding statutory jurisdiction beyond congressional limits. The Court also rejected arguments that the presence of the diverse original defendant at the time of amendment could cure the defect; once the claim against Owen stood on its own, it lacked an independent jurisdictional basis. Moreover, the plaintiff's lack of knowledge about Owen's true citizenship was immaterial, as subject-matter jurisdiction cannot be created by mistake, consent, or waiver.
This case is a bedrock authority on the limits of supplemental jurisdiction in diversity cases and directly prefigures 28 U.S.C. § 1367(b), which bars supplemental jurisdiction over certain claims by plaintiffs against parties joined under Rules 14, 19, 20, or 24 when jurisdiction is founded solely on diversity. For students, it clarifies why courts treat plaintiffs and defendants differently in the supplemental-jurisdiction analysis, how Rule 14 interacts with jurisdictional statutes, and why procedural efficiency never overrides the statutory prerequisites for federal jurisdiction.
Owen Equipment & Erection Co. v. Kroger is a foundational decision constraining federal courts from exercising jurisdiction over a plaintiff's claim against a nondiverse third-party defendant in diversity-only cases. By prioritizing the statutory requirement of complete diversity over judicial economy, the Court reinforced that joinder rules cannot be deployed to enlarge federal jurisdiction beyond Congress's grant.