Owen Equipment and Erection Company v. Kroger

• Decision Date: 21 June 1978
• Docket Number: No. 77-677,77-677
• Citation: 98 S.Ct. 2396,437 U.S. 365,57 L.Ed.2d 274
• Parties: OWEN EQUIPMENT AND ERECTION COMPANY, Petitioner, v. Geraldine KROGER, Administratrix of the Estate of James D. Kroger, Deceased
• Court: U.S. Supreme Court

437 U.S. 365

98 S.Ct. 2396

57 L.Ed.2d 274

OWEN EQUIPMENT AND ERECTION COMPANY, Petitioner,

v Geraldine KROGER, Administratrix of the Estate of James D. Kroger, Deceased.

No. 77-677.

Argued April 18, 1978.

Decided June 21, 1978.

Syllabus

Respondent, a citizen of Iowa, sued for damages based on the wrongful death of her husband, who was electrocuted when the boom of a steel crane next to which he was walking came too close to a high-tension electric power line. The action was brought in federal court on the basis of diversity of c tizenship against a Nebraska corporation (OPPD), whose negligent operation of the power line was alleged to have caused decedent's death. OPPD then filed a third-party complaint against petitioner company which owned and operated the crane, alleging that petitioner's negligence proximately caused the death. Respondent was thereafter granted leave to amend her complaint by naming petitioner, which she alleged to be a Nebraska corporation with its principal place of business in Nebraska, as an additional defendant. OPPD successfully moved for summary judgment, leaving petitioner as the sole defendant. Though in its answer petitioner admitted that it was a corporation organized and existing under the laws of Nebraska, during trial it was disclosed that petitioner's principal place of business was in Iowa. Since both parties were thus Iowa citizens, petitioner moved to dismiss on the basis of lack of federal jurisdiction. After the jury had returned a verdict for respondent, the District Court denied petitioner's motion to dismiss. The Court of Appeals affirmed, holding that under Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218, the District Court had jurisdictional power, in its discretion, to adjudicate the claim, which arose from the "core of 'operative facts' giving rise to both [respondent's] claim against OPPD and OPPD's claim against [petitioner]," and that the District Court had properly exercised its discretion because petitioner had concealed its Iowa citizenship from respondent. Held: The District Court had no power to entertain respondent's lawsuit against petitioner as a third-party defendant since diversity jurisdiction was lacking. Gibbs, supra, distinguished. Pp. 370-377.

(a) A finding that federal and nonfederal claims arise from a "common nucleus of operative fact," the Gibbs test, does not suffice to establish that a federal court has power to hear nonfederal as well as federal claims, since, though the constitutional power to adjudicate the nonfederal claim may exist, it does not follow that statutory authorization has been granted. Aldinger v. Howard, 427 U.S. 1, 96 S.Ct. 2413, 49 L.Ed.2d 276; Zahn v. International Paper Co., 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511. Pp. 370-373.

(b) Here the relevant statute, 28 U.S.C. § 1332(a)(1), which confers upon federal courts jurisdiction over civil actions where the amount in controversy exceeds $10,000 and is between citizens of different States, requires complete diversity of citizenship, and it is thus congressionally mandated that diversity jurisdiction is not available when any plaintiff is a citizen of the same State as any defendant, a situation that developed in this case when respondent amended her complaint. Pp. 373-374.

(c) Under the Court of Appeals' ancillary-jurisdiction theory a plaintiff could defeat the statutory requirement of complete diversity simply by suing only those defendants of diverse citizenship and waiting for them to implead nondiverse defendants. Pp. 374-375.

(d) In determining whether jurisdiction over a nonfederal claim exists, the context in which that claim is asserted is crucial. Here the nonfederal claim was simply not ancillary to the federal one, as respondent's claim against petitioner was entirely separate from her original claim against OPPD, and petitioner's liability to her did not depend at all upon whether or not OPPD was also liable. Moreover, the nonfederal claim here was asserted by the plaintiff, who voluntarily chose to sue upon a state-law claim in federal court, whereas ancillary jurisdiction typically involves claims by a defendant party haled into court against his will, or by another person whose rights might be irretrievably lost unless he could assert them in an ongoing action in federal court. Pp. 375-376.

558 F.2d 417, reversed.

Emil F. Sodoro, Omaha, Neb., for petitioner.

Warren C. Schrempp, Omaha, Neb., for respondent.

Mr. Justice STEWART deliver d the opinion of the Court.

In an action in which federal jurisdiction is based on diversity of citizenship, may the plaintiff assert a claim against a third-party defendant when there is no independent basis for federal jurisdiction over that claim? The Court of Appeals for the Eighth Circuit held in this case that such a claim is within the ancillary jurisdiction of the federal courts. We granted certiorari, 434 U.S. 1008, 98 S.Ct. 715, 54 L.Ed.2d 749, because this decision conflicts with several recent decisions of other Courts of Appeals.¹

I

On January 18, 1972, James Kroger was electrocuted when the boom of a steel crane next to which he was walking came too close to a high-tension electric power line. The respondent (his widow, who is the administratrix of his estate) filed a wrongful-death action in the United States District Court for the District of Nebraska against the Omaha Public Power District (OPPD). Her complaint alleged that OPPD's negligent construction, maintenance, and operation of the power line had caused Kroger's death. Federal jurisdiction was based on diversity of citizenship, since the respondent was a citizen of Iowa and OPPD was a Nebraska corporation.

OPPD then filed a third-party complaint pursuant to Fed.Rule Civ.Proc. 14(a) ² against the petitioner, Owen Equip- ment and Erection Co. (Owen), alleging that the crane was owned and operated by Owen, and that Owen's negligence had been the proximate cause of Kroger's death.³ OPPD later moved for summary judgment on the respondent's complaint against it. While this motion was pending, the respondent was granted leave to file an amended complaint naming Owen as an additional defendant. Thereafter, the District Court granted OPPD's motion for summary judgment in an unreported opinion.⁴ The case thus went to trial between the respondent and the petitioner alone.

The respondent's amended complaint alleged that Owen was "a Nebraska corporation with its principal place of busi- ness in Nebraska." Owen's answer admitted that it was "a corporation organized and existing under the laws of the State of Nebraska," and denied every other allegation of the complaint. On the third day of trial, however, it was disclosed that the petitioner's principal place of business was in Iowa, not Nebraska,⁵ and that the petitioner and the respondent were thus both citizens of Iowa.⁶ The petitioner then moved to dismiss the complaint for lack of jurisdiction. The District Court reserved decision on the motion, and the jury thereafter returned a verdict in favor of the respondent. In an unreported opinion issued after the trial, the District Court denied the petitioner's motion to dismiss the complaint.

The judgment was affirmed on appeal. 558 F.2d 417. The Court of Appeals held that under this Court's decision in Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218, the District Court had jurisdictional power, in its discretion, to adjudicate the respondent's claim against the petitioner because that claim arose from the "core of 'operative facts' giving rise to both [respondent's] claim against OPPD and OPPD's claim against Owen." 558 F.2d at 424. It further held that the District Court had properly exercised its discretion in proceeding to decide the case even after summary judgment had been granted to OPPD, because the petitioner had concealed its Iowa citizenship from the respondent. Rehearing en banc was denied by an equally divided court. 558 F.2d 417.

II

It is undisputed that there was no independent basis of federal jurisdiction over the respondent's state-law tort action against the petitioner, since both are citizens of Iowa. And although Fed.Rule Civ.Proc. 14(a) permits a plaintiff to assert a claim against a third-party defendant, see n. 2, supra, it does not purport to say whether or not such a claim requires an independent basis of federal jurisdiction. Indeed, it could not determine that question, since it is axiomatic that the Federal Rules of Civil Procedure do not create or withdraw federal jurisdiction.⁷

In affirming the District Court's judgment, the Court of Appeals relied upon the doctrine of ancillary jurisdiction, whose contours it believed were defined by this Court's holding in Mine Workers v. Gibbs, supra. The Gibbs case differed from this one in that it involved pendent jurisdiction, which concerns the resolution of a plaintiff's federal- and state-law claims against a single defendant in one action. By contrast, in this case there was no claim based upon substantive federal law, but rather state-law tort claims against two different defendants. Nonethel ss, the Court of Appeals was correct in perceiving that Gibbs and this case are two species of the same generic problem: Under what circumstances may a federal court hear and decide a state-law claim arising between citizens of the same State? ⁸ But we believe that the Court of Appeals failed to understand the scope of the doctrine of theGibbs case.

The plaintiff in Gibbs alleged that the defendant union had violated the common law of Tennessee as well as the federal prohibition of secondary boycotts. This Court held that, although the parties were not of diverse citizenship, the District Court properly entertained the state-law claim as pendent to the federal claim. The crucial holding was stated as follows:

"Pendent jurisdiction, in the sense of judicial power, exists whenever there is a claim 'arising under [the] Constitution, the Laws...