Owen Equipment and Erection Co. v. Kroger

U.S. Supreme Court Owen Eqpt. & Erection Co. v.
Kroger, 437
U.S. 365 (1978) Owen Equipment & Erection Co. v.
Kroger No. 77-677 Argued April 18, 1978 Decided June 21, 1978 437
U.S. 365 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE EIGHTH
CIRCUIT 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 citizenship 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 , 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. 437 U. S.
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 Page 437 U. S. 366 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 ; Zahn v. International Paper Co., 414 U.
S. 291 . Pp. 437 U. S.
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. 437 U. S.
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. 437 U. S.
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 defending 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. 437 U. S.
375 -376.

															558 F.2d 417, reversed.

															STEWART, J., delivered the opinion of the Court, in which
BURGER, C.J., and MARSHALL, BLACKMUN, POWELL, REHNQUIST, and
STEVENS, JJ., joined. WHITE, J., filed a dissenting opinion, in
which BRENNAN, J., joined, post, p. 437 U. S.
377 . Page 437 U. S. 367 MR. JUSTICE STEWART delivered 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, because this decision conflicts with
several recent decisions of other Courts of Appeals. [ Footnote 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) [ Footnote 2 ]
against the petitioner, Owen Equipment Page 437 U. S. 368 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. [ Footnote
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. [ Footnote 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 business Page 437 U. S. 369 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, [ Footnote 5 ] and that the petitioner and
the respondent were thus both citizens of Iowa. [ Footnote 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 , 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. Page 437 U. S.
370 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. [ Footnote 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.
Nonetheless, 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? [ Footnote 8 ] But we
believe that the Court of Appeals failed to understand the scope of
the doctrine of the Gibbs case.

															The plaintiff in Gibbs alleged that the defendant union
had violated the common law of Tennessee as well as the federal Page 437 U. S. 371 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 of the United States, and Treaties made, or which shall be
made, under their Authority . . . ,' U.S.Const., Art. III, § 2, and
the relationship between that claim and the state claim permits the
conclusion that the entire action before the court comprises but
one constitutional 'case.' . . . The state and federal claims must
derive from a common nucleus of operative fact. But if, considered
without regard to their federal or state character, a plaintiff's
claims are such that he would ordinarily be expected to try them
all in one judicial proceeding, then, assuming substantiality of
the federal issues, there is power in federal courts to
hear the whole."

															383 U.S. at 383 U. S. 725 (emphasis in original). [ Footnote
9 ]

															It is apparent that Gibbs delineated the constitutional
limits of federal judicial power. But even if it be assumed that
the District Court in the present case had constitutional power to
decide the respondent's lawsuit against the petitioner, [ Footnote 10 ] it does not follow that
the decision of the Court of Appeals Page 437 U. S. 372 was correct. Constitutional power is merely the first hurdle
that must be overcome in determining that a federal court has
jurisdiction over a particular controversy. For the jurisdiction of
the federal courts is limited not only by the provisions of Art.
III of the Constitution, but also by Acts of Congress. Palmore
v. United States, 411 U. S. 389 , 411 U. S. 401 ; Lockerty v. Phillips, 319 U. S. 182 , 319 U. S. 187 ; Kline v. Burke Constr. Co., 260 U.
S. 226 , 260 U. S. 234 ; Cary v.
Curtis , 3 How. 236, 44 U. S.
245 .

															That statutory law as well as the Constitution may limit a
federal court's jurisdiction over nonfederal claims [ Footnote 11 ] is well illustrated by two
recent decisions of this Court, Aldinger v. Howard, 427 U. S. 1 , and Zahn v. International Paper Co., 414 U.
S. 291 . In Aldinger, the Court held that a
Federal District Court lacked jurisdiction over a state law claim
against a county, even if that claim was alleged to be pendent to
one against county officials under 42 U.S.C. § 1983. In Zahn, the Court held that, in a diversity class action
under Fed.Rule Civ.Proc. 23(b)(3), the claim of each member of the
plaintiff class must independently satisfy the minimum
jurisdictional amount set by 28 U.S.C. § 1332(a), and rejected the
argument that jurisdiction existed over those claims that involved
$10,000 or less as ancillary to those that involved more. In each
case, despite the fact that federal and nonfederal claims arose
from a "common nucleus of operative fact," the Court held that the
statute conferring jurisdiction over the federal claim did not
allow the exercise of jurisdiction over the nonfederal claims.
[ Footnote 12 ] Page 437 U. S. 373 The Aldinger and Zahn cases thus make clear
that a finding that federal and nonfederal claims arise from a
"common nucleus of operative fact," the test of Gibbs, does not end the inquiry into whether a federal court has power to
hear the nonfederal claims along with the federal ones. Beyond this
constitutional minimum, there must be an examination of the posture
in which the nonfederal claim is asserted and of the specific
statute that confers jurisdiction over the federal claim, in order
to determine whether "Congress in [that statute] has . . .
expressly or by implication negated" the exercise of jurisdiction
over the particular nonfederal claim. Aldinger v. Howard,
supra, at 427 U. S. 18 . III The relevant statute in this case, 28 U.S.C. § 1332(a)(1),
confers upon federal courts jurisdiction over "civil actions where
the matter in controversy exceeds the sum or value of $10,000 . . .
and is between . . . citizens of different States." This statute
and its predecessors have consistently been held to require
complete diversity of citizenship. [ Footnote 13 ] That is, diversity jurisdiction does not
exist unless each defendant is a citizen of a different
State from each plaintiff. Over the years, Congress has
repeatedly reenacted or amended the statute conferring diversity
jurisdiction, leaving intact this rule of complete diversity.
[ Footnote 14 ] Whatever may
have been the original Page 437 U. S. 374 purposes of diversity of citizenship jurisdiction, [ Footnote 15 ] this subsequent history
clearly demonstrates a congressional mandate that diversity
jurisdiction is not to be available when any plaintiff is a citizen
of the same State as any defendant. Cf. Snyder v. Harris, 394 U. S. 332 , 394 U. S.
338 -339. [ Footnote
16 ]

															Thus, it is clear that the respondent could not originally have
brought suit in federal court naming Owen and OPPD as codefendants,
since citizens of Iowa would have been on both sides of the
litigation. Yet the identical lawsuit resulted when she amended her
complaint. Complete diversity was destroyed just as surely as if
she had sued Owen initially. In either situation, in the plain
language of the statute, the "matter in controversy" could not be
"between . . . citizens of different States."

															It is a fundamental precept that federal courts are courts of
limited jurisdiction. The limits upon federal jurisdiction, whether
imposed by the Constitution or by Congress, must be neither
disregarded nor evaded. Yet under the reasoning of the Court of
Appeals in this case, a plaintiff could defeat the statutory
requirement of complete diversity by the simple expedient of suing
only those defendants who were of diverse citizenship and waiting
for them to implead nondiverse defendants. [ Footnote 17 ] If, as the Court of Appeals
thought, a "common Page 437 U. S. 375 nucleus of operative fact" were the only requirement for
ancillary jurisdiction in a diversity case, there would be no
principled reason why the respondent in this case could not have
joined her cause of action against Owen in her original complaint
as ancillary to her claim against OPPD. Congress' requirement of
complete diversity would thus have been evaded completely.

															It is true, as the Court of Appeal noted, that the exercise of
ancillary jurisdiction over nonfederal claims has often been upheld
in situations involving impleader, cross-claims or counterclaims.
[ Footnote 18 ] But, in
determining whether jurisdiction Page 437 U. S. 376 over a nonfederal claim exists, the context in which the
nonfederal claim is asserted is crucial. See Aldinger v.
Howard, 427 U.S. at 427 U. S. 14 . And
the claim here arises in a setting quite different from the kinds
of nonfederal claims that have been viewed in other cases as
falling within the ancillary jurisdiction of the federal
courts.

															First, the nonfederal claim in this case was simply not
ancillary to the federal one in the same sense that, for example,
the impleader by a defendant of a third-party defendant always is.
A third-party complaint depends at least in part upon the
resolution of the primary lawsuit. See n 3, supra. Its relation to the original
complaint is thus not mere factual similarity, but logical
dependence. Cf. Moore v. New York Cotton Exchange, 270 U. S. 593 , 270 U. S. 610 .
The respondent's claim against the petitioner, however, was
entirely separate from her original claim against OPPD, since the
petitioner's liability to her depended not at all upon whether or
not OPPD was also liable. Far from being an ancillary and dependent
claim, it was a new and independent one.

															Second, the nonfederal claim here was asserted by the plaintiff,
who voluntarily chose to bring suit upon a state law claim in a
federal court. By contrast, ancillary jurisdiction typically
involves claims by a defending 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 a federal
court. [ Footnote 19 ] A
plaintiff cannot complain if ancillary jurisdiction does not
encompass all of his possible claims in a case such as this one,
since it is he who has chosen the federal, rather than the state,
forum, and must thus accept its limitations. "[T]he efficiency
plaintiff seeks so avidly is available without question in the
state courts." Kenrose Mfg. Co. v. Fred Whitaker Co., 512
F.2d 890, 894 (CA4). [ Footnote
20 ] Page 437 U. S. 377 It is not unreasonable to assume that, in generally requiring
complete diversity, Congress did not intend to confine the
jurisdiction of federal courts so inflexibly that they are unable
to protect legal rights or effectively to resolve an entire,
logically entwined lawsuit. Those practical needs are the basis of
the doctrine of ancillary jurisdiction. But neither the convenience
of litigants nor considerations of judicial economy can suffice to
justify extension of the doctrine of ancillary jurisdiction to a
plaintiff's cause of action against a citizen of the same State in
a diversity case. Congress has established the basic rule that
diversity jurisdiction exists under 28 U.S.C. § 1332 only when
there is complete diversity of citizenship. "The policy of the
statute calls for its strict construction." Healy v.
Ratta, 292 U. S. 263 , 292 U. S. 270 ; Indianapolis v. Chase Nat. Bank, 314 U. S.
63 , 314 U. S. 76 ; Thomson v. Gaskill, 315 U. S. 442 , 315 U. S. 446 ; Snyder v. Harris, 394 U.S. at 394 U. S. 340 .
To allow the requirement of complete diversity to be circumvented
as it was in this case would simply flout the congressional
command. [ Footnote 21 ]

															Accordingly, the judgment of the Court of Appeals is
reversed. It is so ordered. [ Footnote 1 ] Fawvor v. Texaco, Inc., 546 F.2d 636 (CA5); Saalfrank v. O'Daniel, 533 F.2d 325 (CA6); Parker v.
W. W. Moore & Sons, 528 F.2d 764 (CA4); Joseph v.
Chrysler Corp., 513 F.2d 626 (CA3), aff'g 61 F.R.D.
347 (WD Pa.); Kenrose Mfg. Co. v. Fred Whitaker Co., 512
F.2d 890 (CA4).

															[ Footnote 2 ]

															Rule 14(a) provides in relevant part:

															"At any time after commencement of the action a defending party,
as a third-party plaintiff, may cause a summons and complaint to be
served upon a person not a party to the action who is or may be
liable to him for all or part of the plaintiff's claim against him.
. . . The person served with the summons and third-party complaint,
hereinafter called the third-party defendant, shall make his
defenses to the third-party plaintiff's claim as provided in Rule
12 and his counterclaims against the third-party plaintiff and
cross-claims against other third-party defendants as provided in
Rule 13. The third-party defendant may assert against the plaintiff
any defenses which the third-party plaintiff has to the plaintiff's
claim. The third-party defendant may also assert any claim against
the plaintiff arising out of the transaction or occurrence that is
the subject matter of the plaintiff's claim against the third-party
plaintiff. The plaintiff may assert any claim against the
third-party defendant arising out of the transaction or occurrence
that is the subject matter of the plaintiff's claim against the
third-party plaintiff, and the third-party defendant thereupon
shall assert his defenses as provided in Rule 12 and his
counterclaims and cross-claims as provided in Rule 13."

															[ Footnote 3 ]

															Under Rule 14(a), a third-party defendant may not be impleaded
merely because he may be liable to the plaintiff. See n 2, supra; see also Advisory Committee's Notes on 1946 Amendment to Fed.Rule Civ.Proc.
14, 28 U.S.C.App. pp. 7752-7753. While the third-party complaint in
this case alleged merely that Owen's negligence caused Kroger's
death, and the basis of Owen's alleged liability to OPPD is nowhere
spelled out, OPPD evidently relied upon the state common law right
of contribution among joint tortfeasors. See Dairyland Ins. Co.
v. Mumert, 212 N.W.2d 436 ,
438 (Iowa); Best v. Yerkes, 247 Iowa 800, 77 N.W.2d 23 . The
petitioner has never challenged the propriety of the third-party
complaint as such.

															[ Footnote 4 ]

															Judgment was entered pursuant to Fed.Rule Civ.Proc. 54(b), and
the Court of Appeals affirmed. Kroger v. Omaha Public Power
Dist., 523 F.2d 161 (CA8).

															[ Footnote 5 ]

															The problem apparently was one of geography. Although the
Missouri River generally marks the boundary between Iowa and
Nebraska, Carter Lake, Iowa, where the accident occurred and where
Owen had its main office, lies west of the river, adjacent to
Omaha, Neb. Apparently the river once avulsed at one of its bends,
cutting Carter Lake off from the rest of Iowa.

															[ Footnote 6 ]

															Title 28 U.S.C. § 1332(c) provides that,

															"[f]or the purposes of [diversity jurisdiction] . . . , a
corporation shall be deemed a citizen of any State by which it has
been incorporated and of the State where it has its principal place
of business."

															[ Footnote 7 ]

															Fed.Rule Civ.Proc. 82; see Snyder v. Harris, 394 U. S. 332 ; Sibbach v. Wilson & Co., 312 U. S.
1 , 312 U. S. 10 .

															[ Footnote 8 ]

															No more than in Aldinger v. Howard, 427 U. S.
1 , is it necessary to determine here

															"whether there are any 'principled' differences between pendent
and ancillary jurisdiction; or, if there are, what effect Gibbs had on such differences." Id. at 427 U. S. 13 .

															[ Footnote 9 ]

															The Court further noted that, even when such power exists, its
exercise remains a matter of discretion based upon "considerations
of judicial economy, convenience and fairness to litigants," 383
U.S. at 383 U. S. 726 ,
and held that the District Court had not abused its discretion in
retaining jurisdiction of the state law claim.

															[ Footnote 10 ]

															Federal jurisdiction in Gibbs was based upon the
existence of a question of federal law. The Court of Appeals in the
present case believed that the "common nucleus of operative fact"
test also determines the outer boundaries of constitutionally
permissible federal jurisdiction when that jurisdiction is based
upon diversity of citizenship. We may assume without deciding that
the Court of Appeals was correct in this regard. See also n 13, infra. [ Footnote 11 ]

															As used in this opinion, the term "nonfederal claim" means one
as to which there is no independent basis for federal jurisdiction.
Conversely, a "federal claim" means one as to which an independent
basis for federal jurisdiction exists.

															[ Footnote 12 ]

															In Monell v. New York City Dept. of Social Service, 436 U. S. 658 , we
have overruled Monroe v. Pape, 365 U.
S. 167 , insofar as it held that political subdivisions
are never amenable to suit under 42 U.S.C. § 1983 -- the basis of
the holding in Aldinger that 28 U.S.C. § 1343(3) does not
allow pendent jurisdiction of a state law claim against a county.
But Monell in no way qualifies the holding of Aldinger that the jurisdictional questions presented in a
case such as this one are statutory, as well as constitutional, a
point on which the dissenters in Aldinger agreed with the
Court. See 427 U.S. at 427 U. S. 22 n. 3
(BRENNAN, J., joined by MARSHALL and BLACKMUN, JJ.,
dissenting).

															[ Footnote 13 ] E.g., 7 U. S. Curtiss, 3 Cranch 267; Coal Co. v.
Blatchford , 11 Wall. 172; Indianapolis v. Chase
Nat. Bank, 314 U. S. 63 , 314 U. S. 69 ; American Fire & Cas. Co. v. Finn, 341 U. S.
6 , 341 U. S. 17 . It
is settled that complete diversity is not a constitutional
requirement. State Farm Fire & Cas. Co. v. Tashire, 386 U. S. 523 , 386 U. S.
530 -531.

															[ Footnote 14 ]

															The various Acts are enumerated and described in 1 J. Moore,
Federal Practice � 0.71[4] (2d ed.1977).

															[ Footnote 15 ] See C. Wright, Law of Federal Courts § 23 (3d ed.1976),
for a discussion of the various theories that have been advanced to
explain the constitutional grant of diversity of citizenship
jurisdiction.

															[ Footnote 16 ]

															Notably, Congress enacted § 1332 as part of the Judicial Code of
1948, 62 Stat. 930, shortly after Rule 14 was amended in 1946. When
the Rule was amended, the Advisory Committee noted that,

															"in any case where the plaintiff could not have joined the third
party originally because of jurisdictional limitations such as lack
of diversity of citizenship, the majority view is that any attempt
by the plaintiff to amend his complaint and assert a claim against
the impleaded third party would be unavailing."

															28 U.S.C. App., p. 7752. The subsequent reenactment without
relevant change of the diversity statute may thus be seen as
evidence of congressional approval of that "majority view."

															[ Footnote 17 ]

															This is not an unlikely hypothesis, since a defendant in a tort
suit such as this one would surely try to limit his liability by
impleading any joint tortfeasors for indemnity or contribution.
Some commentators have suggested that the possible abuse of
third-party practice could be dealt with under 28 U.S.C. § 1359,
which forbids collusive attempts to create federal jurisdiction. See, e.g., 3 J. Moore, Federal Practice � 14.27 [1], p.
14-571 (2d ed.1974); 6 C. Wright & A. Miller, Federal Practice
and Procedure § 1444, pp. 231-232 (1971); Note, Rule 14 Claims and
Ancillary Jurisdiction, 57 Va.L.Rev. 265, 274-275 (1971). The
dissenting opinion today also expresses this view. Post at 437 U. S. 383 .
But there is nothing necessarily collusive about a plaintiff's
selectively suing only those tortfeasors of diverse citizenship, or
about the named defendants' desire to implead joint tortfeasors.
Nonetheless, the requirement of complete diversity would be
eviscerated by such a course of events.

															[ Footnote 18 ]

															The ancillary jurisdiction of the federal courts derives
originally from cases such as Freeman v.
Howe , 24 How. 450, which held that, when federal
jurisdiction

															"effectively controls the property or fund under dispute, other
claimants thereto should be allowed to intervene in order to
protect their interests, without regard to jurisdiction." Aldinger v. Howard, 427 U.S. at 427 U. S. 11 .
More recently, it has been said to include cases that involve
multiparty practice, such as compulsory counterclaims, e.g.,
Moore v. New York Cotton Exchange, 270 U.
S. 593 ; impleader, e.g., H. L. Peterson Co. v.
Applewhite, 383 F.2d 430, 433 (CA5); Dery v. Wyer, 265 F.2d 804 (CA2); cross-claims, e.g., LASA Per L'lndustria
Del Marmo Soc. Per Azioni v. Alexander, 414 F.2d 143 (CA6); Scott v. Fancher, 369 F.2d 842, 844 (CA5); Glen Falls
Indemnity Co. v. United States ex rel. Westinghouse Electric Supply
Co., 229 F.2d 370, 373-374 (CA9); or intervention as of right, e.g., Phelps v. Oaks, 117 U. S. 236 , 117 U. S. 241 ; Smith Petroleum Service, Inc. v. Monsanto Chemical Co., 420 F.2d 1103, 1113-1115 (CA5).

															[ Footnote 19 ] See n 18, supra. [ Footnote 20 ]

															Whether Iowa's statute of limitations would now bar an action by
the respondent in an Iowa court is, of course, entirely a matter of
state law. See Iowa Code § 614.1 (1977). Compare 558 F.2d at 420, with id. at 432 n. 42 (Bright, J.,
dissenting); cf. Burnett v. New York Central R. Co., 380 U. S. 424 , 380 U. S.
431 -432, and n. 9.

															[ Footnote 21 ]

															Our holding is that the District Court lacked power to entertain
the respondent's lawsuit against the petitioner. Thus, the asserted
inequity in the respondent's alleged concealment of its citizenship
is irrelevant. Federal judicial power does not depend upon "prior
action or consent of the parties." American Fire & Cas. Co.
v. Finn, 341 U.S. at 341 U. S.
17 -18.

															MR. JUSTICE WHITE, with whom MR. JUSTICE BRENNAN joins,
dissenting.

															The Court today states that

															"[i]t is not unreasonable to assume that, in generally requiring
complete diversity, Congress did not intend to confine the
jurisdiction of federal courts so Page 437 U. S. 378 inflexibly that they are unable . . . effectively to resolve an
entire, logically entwined lawsuit." Ante at 437 U. S. 377 .
In spite of this recognition, the majority goes on to hold that in
diversity suits federal courts do not have the jurisdictional power
to entertain a claim asserted by a plaintiff against a third-party
defendant, no matter how entwined it is with the matter already
before the court, unless there is an independent basis for
jurisdiction over that claim. Because I find no support for such a
requirement in either Art. III of the Constitution or in any
statutory law, I dissent from the Court's "unnecessarily grudging"
[ Footnote 2/1 ] approach.

															The plaintiff below, Mrs Kroger, chose to bring her lawsuit
against the Omaha Public Power District (OPPD) in Federal District
Court. No one questions the power of the District Court to
entertain this claim, for Mrs. Kroger at the time was a citizen of
Iowa, OPPD was a citizen of Nebraska, and the amount in controversy
was greater than $10,000; jurisdiction therefore existed under 28
U.S.C. § 1332(a). As permitted by Fed. Rule Civ.Proc. 14(a), OPPD
impleaded petitioner Owen Equipment & Erection Co. (Owen).
Although OPPD's claim against Owen did not raise a federal
question, and although it was alleged that Owen was a citizen of
the same State as OPPD, the parties and the court apparently
believed that the District Court's ancillary jurisdiction
encompassed this claim. Subsequently, Mrs. Kroger asserted a claim
against Owen, everyone believing at the time that these two parties
were citizens of different States. Because it later came to light
that Mrs. Kroger and Owen were, in fact, both citizens of Iowa, the
Court concludes that the District Court lacked jurisdiction over
the claim.

															In Mine Workers v. Gibbs, 383 U.
S. 715 , 383 U. S. 725 (1966), we held that, once a claim has been stated that is of
sufficient substance to confer subject matter jurisdiction on the
federal district Page 437 U. S. 379 court, the court has judicial power to consider a nonfederal
claim if it and the federal claim [ Footnote 2/2 ] are derived from "a common nucleus of
operative fact." Although the specific facts of that case concerned
a state claim that was said to be pendent to a federal question
claim, the Court's language and reasoning were broad enough to
cover the instant factual situation:

															"[I]f, considered without regard to their federal or state
character, a plaintiff's claims are such that he would ordinarily
be expected to try them all in one judicial proceeding, then,
assuming substantiality of the federal issues, there is power in
federal courts to hear the whole." Ibid. (footnote omitted). In the present case, Mrs.
Kroger's claim against Owen and her claim against OPPD derived from
a common nucleus of fact; this is necessarily so because, in order
for a plaintiff to assert a claim against a third-party defendant,
Fed.Rule Civ.Proc. 14(a) requires that it "aris[e] out of the
transaction or occurrence that is the subject matter of the
plaintiff's claim against the third-party plaintiff. . . ."
Furthermore, the substantiality of the claim Mrs. Kroger asserted
against OPPD is unquestioned. Accordingly, as far as Art. III of
the Constitution is concerned, the District Court had power to
entertain Mrs. Kroger's claim against Owen.

															The majority correctly points out, however, that the analysis
cannot stop here. As Aldinger v. Howard, 427 U. S.
1 (1976), teaches, the jurisdictional power of the
federal courts may be limited by Congress, as well as by the
Constitution. In Aldinger, although the plaintiff's state
claim against Spokane County was closely connected with her 42
U.S.C. § 1983 claim against the county treasurer, the Court held
that the District Court did not have pendent jurisdiction over the
state claim, for, under the Court's precedents at that time, it was
thought that Congress had specifically determined not to confer on
the federal courts jurisdiction over civil rights Page 437 U. S. 380 claims against cities and counties. That being so, the Court
refused to allow

															"the federal courts to fashion a jurisdictional doctrine under
the general language of Art. III enabling them to circumvent this
exclusion. . . ."

															427 U.S. at 427 U. S. 16 .
[ Footnote 2/3 ]

															In the present case, the only indication of congressional intent
that the Court can find is that contained in the diversity
jurisdictional statute, 28 U.S.C. § 1332(a), which states that

															"district courts shall have original jurisdiction of all civil
actions where the matter in controversy exceeds the sum or value of
$10,00 . . . and is between . . . citizens of different States. . .
."

															Because this statute has been interpreted as requiring complete
diversity of citizenship between each plaintiff and each defendant, Strawbridge v.
Curtis , 3 Cranch 267 (1806), the Court holds that
the District Court did not have ancillary jurisdiction over Mrs.
Kroger's claim against Owen. In so holding, the Court unnecessarily
expands the scope of the complete diversity requirement while
substantially limiting the doctrine of ancillary jurisdiction.

															The complete diversity requirement, of course, could be viewed
as meaning that in a diversity case, a federal district court may
adjudicate only those claims that are between parties of different
States. Thus, in order for a defendant to implead a third-party
defendant, there would have to be diversity of citizenship; the
same would also be true for cross-claims between defendants and for
a third-party defendant's claim against a plaintiff. Even the
majority, however, refuses to read the complete diversity
requirement so broadly; it Page 437 U. S. 381 recognizes with seeming approval the exercise of ancillary
jurisdiction over nonfederal claims in situations involving
impleader, cross-claims, and counterclaims. See ante at 437 U. S. 375 .
Given the Court's willingness to recognize ancillary jurisdiction
in these contexts, despite the requirements of § 1332(a), I see no
justification for the Court's refusal to approve the District
Court's exercise of ancillary jurisdiction in the present case.

															It is significant that a plaintiff who asserts a claim against a
third-party defendant is not seeking to add a new party to the
lawsuit. In the present case, for example, Owen had already been
brought into the suit by OPPD, and, that having been done, Mrs.
Kroger merely sought to assert against Owen a claim arising out of
the same transaction that was already before the court. Thus, the
situation presented here is unlike that in Aldinger,
supra, wherein the Court noted:

															"[I]t is one thing to authorize two parties, already present in
federal court by virtue of a case over which the court has
jurisdiction, to litigate in addition to their federal claim a
state law claim over which there is no independent basis of federal
jurisdiction. But it is quite another thing to permit a plaintiff,
who has asserted a claim against one defendant with respect to
which there is federal jurisdiction, to join an entirely different
defendant on the basis of a state law claim over which there is no
independent basis of federal jurisdiction, simply because his claim
against the first defendant and his claim against the second
defendant 'derive from a common nucleus of operative fact.' . . .
True, the same considerations of judicial economy would be served
insofar as plaintiff's claims 'are such that he would ordinarily be
expected to try them all in one judicial proceeding. . . .'
[ Gibbs, 383 U.S. at 383 U. S.
725 .] But the addition of a completely new party would
run counter to the well established principle that federal courts,
as opposed to state trial courts of Page 437 U. S. 382 general jurisdiction, are courts of limited jurisdiction marked
out by Congress."

															427 U.S. at 427 U. S.
115 .

															Because in the instant case Mrs. Kroger merely sought to assert
a claim against someone already a party to the suit, considerations
of judicial economy, convenience, and fairness to the litigants --
the factors relied upon in Gibbs -- support the
recognition of ancillary jurisdiction here. Already before the
court was the whole question of the cause of Mr. Kroger's death.
Mrs. Kroger initially contended that OPPD was responsible; OPPD, in
turn, contended that Owen's negligence had been the proximate cause
of Mr. Kroger's death. In spite of the fact that the question of
Owen's negligence was already before the District Court, the
majority requires Mrs. Kroger to bring a separate action in state
court in order to assert that very claim. Even if the Iowa statute
of limitations will still permit such a suit, see ante at 437 U. S.
376 -377, n. 20, considerations of judicial economy are
certainly not served by requiring such duplicative litigation.
[ Footnote 2/4 ]

															The majority, however, brushes aside such considerations of
convenience, judicial economy, and fairness because it concludes
that recognizing ancillary jurisdiction over a plaintiff's claim
against a third-party defendant would permit the plaintiff to
circumvent the complete diversity requirement, and thereby "flout
the congressional command." Since the plaintiff Page 437 U. S. 383 in such a case does not bring the third-party defendant into the
suit, however, there is no occasion for deliberate circumvention of
the diversity requirement, absent collusion with the defendant. In
the case of such collusion, of which there is absolutely no
indication here, [ Footnote 2/5 ] the
court can dismiss the action under the authority of 28 U.S.C. §
1359. [ Footnote 2/6 ] In the absence
of such collusion, there is no reason to adopt an absolute rule
prohibiting the plaintiff from asserting those claims that he may
properly assert against the third-party defendant pursuant to
Fed.Rule Civ.Proc. 14(a). The plaintiff in such a situation brings
suit against the defendant only, with absolutely no assurance that
the defendant will decide or be able to implead a particular
third-party defendant. Since the plaintiff has no control over the
defendant's decision to implead a third party, the fact that he
could not have originally sued that party in federal court should
be irrelevant. Moreover, the fact that a plaintiff in some cases
may be able to foresee the subsequent chain of events leading to
the impleader does not seem to me to be sufficient reason to
declare that a district court does not have the power to exercise
ancillary jurisdiction over the plaintiff's claims against the
third-party defendant. [ Footnote
2/7 ] Page 437 U. S. 384 We have previously noted that "[s]ubsequent decisions of this
Court indicate that Strawbridge is not to be given an
expansive reading." State Farm Fire & Cas. Co. v.
Tashire, 386 U. S. 523 , 386 U. S. 531 n. 6 (1967). In light of this teaching, it seems to me appropriate
to view § 1332 as requiring complete diversity only between the
plaintiff and those parties he actually brings into the suit.
Beyond that, I would hold that, in a diversity case, the District
Court has power, both constitutional and statutory, to entertain
all claims among the parties arising from the same nucleus of
operative fact as the plaintiff's original, jurisdiction-conferring
claim against the defendant. Accordingly, I dissent from the
Court's disposition of the present case.

															[ Footnote 2/1 ] See Mine Workers v. Gibbs, 383 U.
S. 715 , 383 U. S. 725 (1966).

															[ Footnote 2/2 ]

															I use the terms "federal claim" and "nonfederal claim" in the
same sense that the majority uses them. See ante at 437 U. S. 372 n. 11.

															[ Footnote 2/3 ]

															We were careful in Aldinger to point out the limited
nature of our holding:

															"There are, of course, many variations in the language which
Congress has employed to confer jurisdiction upon the federal
courts, and we decide here only the issue of so-called 'pendent
party' jurisdiction with respect to a claim brought under §§
1343(3) and 1983. Other statutory grants and other alignments of
parties and claims might call for a different result."

															427 U.S. at 427 U. S. 18 .

															[ Footnote 2/4 ]

															It is true that, prior to trial, OPPD was dismissed as a party
to the suit, and that, as we indicated in Gibbs, the
dismissal prior to trial of the federal claim will generally
require the dismissal of the nonfederal claim as well. See 383 U.S. at 383 U. S. 726 .
Given the unusual facts of the present case, however -- in
particular, the fact that the actual location of Owen's principal
place of business was not revealed until the third day of trial --
fairness to the parties would lead me to conclude that the District
Court did not abuse its discretion in retaining jurisdiction over
Mrs. Kroger's claim against Owen. Under the Court's disposition, of
course, it would not matter whether or not the federal claim is
tried, for, in either situation, the court would have no
jurisdiction over the plaintiff's nonfederal claim against the
third-party defendant.

															[ Footnote 2/5 ]

															When Mrs. Kroger brought .suit, it was believed that Owen was a
citizen of Nebraska, not Iowa. Therefore, had she desired at that
time to make Owen a party to the suit, she would have done so
directly by naming Owen as a defendant.

															[ Footnote 2/6 ]

															Section 1359 states:

															"A district court shall not have jurisdiction of a civil action
in which any party, by assignment or otherwise, has been improperly
or collusively made or joined to invoke the jurisdiction of such
court."

															[ Footnote 2/7 ]

															Under the Gibbs analysis, recognition of the district
court's power to hear a plaintiff's nonfederal claim against a
third-party defendant in a diversity suit would not mean that the
court would be required to entertain such claims in all cases. The
district court would have the discretion to dismiss the nonfederal
claim if it concluded that the interests of judicial economy,
convenience, and fairness would not be served by the retention of
the claim in the federal lawsuit. See Gibbs, 383 U.S. at 383 U. S. 726 .
Accordingly, the majority's concerns that lead it to conclude that
ancillary jurisdiction should not be recognized in the present
situation could be met on a case-by-case basis, rather than by the
absolute rule it adopts.