JUSTICE MARSHALL delivered the opinion of the Court.
We decide today that a court of appeals may grant a motion to dismiss a dispensable party whose presence spoils statutory diversity jurisdiction.
Petitioner Newman-Green, Inc., an Illinois corporation, brought this state-law contract action in District Court against a Venezuelan corporation, four Venezuelan citizens, and William L. Bettison, a United States citizen domiciled in Caracas, Venezuela. Newman-Green's complaint alleged that the Venezuelan corporation had breached a licensing agreement, and that the individual defendants, joint and several guarantors of royalty payments due under the agreement, owed money to Newman-Green. Several years of discovery and pretrial motions followed. The District Court ultimately granted partial summary judgment for the guarantors and partial summary judgment for Newman-Green. 590 F.Supp. 1083 (ND Ill. 1984). Only Newman-Green appealed.
At oral argument before a panel of the Seventh Circuit Court of Appeals, Judge Easterbrook inquired as to the statutory basis for diversity jurisdiction, an issue which had not been previously raised either by counsel or by the District Court Judge. In its complaint, Newman-Green had invoked 28 U. S. C. § 1332(a)(3), which confers jurisdiction in the District Court when a citizen of one State sues both aliens and citizens of a State (or States) different from the plaintiff's. In order to be a citizen of a State within the meaning of the diversity statute, a natural person must both be a citizen of the United States and be domiciled within the State. See Robertson v. Cease, 97 U.S. 646, 648-649 (1878); Brown v. Keene, 8 Pet. 112, 115 (1834). The problem in this case is that Bettison, although a United States citizen, has no domicile in any State. He is therefore "stateless" for purposes of § 1332(a)(3). Subsection 1332(a)(2), which confers jurisdiction in the District Court when a citizen of a State sues aliens only, also could not be satisfied because Bettison is a United States citizen.
The Court of Appeals granted the remaining guarantors' motion for rehearing en banc and reversed the panel decision. 854 F.2d 916 (1988). Writing for the en banc majority, Judge Posner concluded that neither § 1653 nor Rule 21 empowers appellate courts to dismiss a dispensable party whose presence spoils statutory diversity jurisdiction. The court
Unlike the Seventh Circuit, the Courts of Appeals for the Second, Third, Ninth, and District of Columbia Circuits have held that appellate courts have the power to dismiss jurisdictional spoilers like Bettison.
The existence of federal jurisdiction ordinarily depends on the facts as they exist when the complaint is filed. See, e. g., Smith v. Sperling, 354 U.S. 91, 93, n. 1 (1957). Like most general principles, however, this one is susceptible to exceptions, and the two that are potentially applicable here are reflected in 28 U. S. C. § 1653 and Rule 21 of the Federal Rules of Civil Procedure. We discuss each potential exception in turn.
Title 28 U. S. C. § 1653, enacted as part of the revision of the Judicial Code in 1948, provides that "[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts." At first blush, the language of this provision
This interpretation of § 1653 is consistent with the language of its predecessor statute, enacted in 1915, which expressly limited jurisdictional amendments to cases in which diversity jurisdiction "in fact existed at the time the suit was brought or removed, though defectively alleged." § 274(c), Act of Mar. 3, 1915, 38 Stat. 956, 28 U. S. C. § 399 (1946 ed.). There is nothing in the 1948 legislative history to indicate that, in changing the wording of this statute, Congress intended to abandon the limitation just quoted. On the contrary, the only legislative guide available — the Revision Note to § 1653 — explains that the predecessor statute was changed solely to expand the power to cure defective allegations of jurisdiction from diversity cases to all cases. Historical and Revision Notes to 28 U. S. C. § 1653. Other than that, "[c]hanges were made in phraseology." Ibid. Surely a change that would empower federal courts to amend a complaint so as to produce jurisdiction where none actually existed before is much more than a change in phraseology.
We turn next to the other source of authority discussed by the Court of Appeals, Rule 21 of the Federal Rules of Civil Procedure, which provides that "[p]arties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just." As both the en banc majority and dissent recognized below, it is well settled that Rule 21 invests district courts with authority to allow a dispensable nondiverse party to be dropped at any time, even after judgment has been rendered.
Almost every modern Court of Appeals faced with this issue has concluded that it has the authority to dismiss a dispensable nondiverse party by virtue of Rule 21.
The motion granted in Mullaney represented the exercise of an appellate power that long predates the enactment of the Federal Rules. In Anonymous, 1 F. Cas. 996, 997 (No. 444) (CC Mass. 1812), Justice Story, sitting as Circuit Justice, wrote that "[t]here is then, in the nature of an appellate jurisdiction, nothing which forbids the granting of amendments." Justice Story derived this appellate power from "the course of the common law," which permitted " `the superior court. . . [to] make such amendments, as the court below may.' " Ibid., quoting King v. Ponsonby, 1 Wils. 303, 95 Eng. Rep. 631 (K. B. 1751); see also 1 F. Cas, at 997, citing Pease v. Morgan, 7 Johns. 468, 469 (N. Y. 1811). He also looked to § 32 of the Judiciary Act of 1789, which provided that a federal court "may at any time permit either of the parties to amend any defect in the process or pleadings, upon such conditions as the said courts respectively shall in their discretion and by their rules prescribe." 1 Stat. 91, formerly codified at 28 U. S. C. § 777 (1946 ed.).
While Justice Story's opinion dealt generally with the amendment power of appellate courts, Chief Justice Marshall's opinion for this Court in Carneal v. Banks, 10 Wheat. 181 (1825), dealt with the issue at hand — the power of appellate courts to grant motions to dismiss dispensable nondiverse
By contrast, Horn v. Lockhart, 17 Wall. 570 (1873), clearly involved a trial court's decision to dismiss dispensable nondiverse parties. In approving such action, however, the Court used language that is strikingly reminiscent of that employed in Carneal: "[T]he question always is, or should be, when objection is taken to the jurisdiction of the court by reason of the citizenship of some of the parties, whether . . . they are indispensable parties, for if their interests are severable and a decree without prejudice to their rights can be made, the jurisdiction of the court should be retained and the suit dismissed as to them." 17 Wall., at 579. This similarity of language is not surprising; the considerations implicit in a trial court's exercise of this power are equally applicable when an appellate court exercises the same power. Moreover, once it is recognized that trial courts have this amendment power, it is exceedingly difficult to argue that a similar
Although these 19th-century cases were decided in a procedural era different from our own, it is apparent that the weight of authority favored the view that appellate courts possessed the authority to grant motions to dismiss dispensable nondiverse parties.
In this case, the practicalities weigh heavily in favor of the decision made by the Court of Appeals panel to grant Newman-Green's motion to dismiss Bettison as a party. If the entire suit were dismissed, Newman-Green would simply refile in the District Court against the Venezuelan corporation and the four Venezuelans and submit the discovery materials already in hand. The case would then proceed to a preordained judgment. See id., at 932, 939-940 (Easterbrook, J., dissenting).
Although we hold that the courts of appeals have the authority to dismiss a dispensable nondiverse party, we emphasize that such authority should be exercised sparingly. In
In the instant case, it is evident that none of the parties will be harmed by Bettison's dismissal. First, Bettison's presence did not provide Newman-Green with a tactical advantage. Discovery directed to Bettison while he was a party would have been available even if he had not been a party. See, e. g., Fed. Rule Civ. Proc. 30(a); 28 U. S. C. § 1783. Second, given that all of the guarantors (including Bettison) are jointly and severally liable, it cannot be argued that Bettison was indispensable to the suit. Fed. Rule Civ. Proc. 19(b); see 854 F. 2d, at 938 (Easterbrook, J., dissenting). The only person who faces any prejudice is Bettison himself, who has participated in this litigation from the start, and who would face the possibility of suit in a state or Venezuelan court. The panel solved this problem by terminating the litigation against Bettison with prejudice, thus leaving the other guarantors with the burden of pursuing Bettison to obtain contribution or indemnity. 832 F. 2d, at 420. The panel's disposition was entirely appropriate. Nothing but a waste of time and resources would be engendered by remanding to the District Court or by forcing these parties to begin anew.
For the reasons stated, the judgment of the Court of Appeals is reversed, and the case is remanded for proceedings consistent with this opinion.
It is so ordered.
Our colleagues on the Court of Appeals disagree about whether 28 U. S. C. § 1653, which provides that "[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate court[,]" empowers a court of appeals to dismiss a party who spoils complete diversity. The Court holds today that § 1653 does not give an appellate court the power to cure actual defects in jurisdiction, but extends only to defects in its allegation. See ante, at 830. I agree that this is the correct interpretation of § 1653.
That should end the case. For if Congress thought it necessary to provide by affirmative statutory grant the rather ministerial power to cure defective allegations in jurisdiction, the more awesome power of curing actual defects in jurisdiction ought not be presumed, absent a statutory grant just as explicit. The balance of the Court's opinion in effect demonstrates that no such clear source of authority can be found to rebut the strong negative implication from the Court's interpretation of § 1653. The Court nevertheless holds that the power in question exists, though it cannot provide us with its precise location.
As an initial matter, it is disturbing that the Court does not address in a substantive way the grave, brooding question whether Federal Rule of Civil Procedure 21 affords even the district courts the power to confer jurisdiction retroactively by dismissing a nondiverse party. On this critical point, the Court states only that this question is "well settled" in the lower courts. See ante, at 832. But it has never been the rule that federal courts, whose jurisdiction is created and limited by statute, see Finley v. United States, ante, at 547-548, acquire power by adverse possession. Indeed, I have some doubts that Rule 21 provides this power to district courts. For one thing, it is important to note that Rule 21 governs only misjoinder and nonjoinder. But that is not what is at issue in this case. There is no claim here that
Even on the assumption, however, that Rule 21 provides the district courts with the necessary authority to dismiss a nondiverse party at any stage of the litigation for the sole purpose of creating jurisdiction where none existed before, it is just not possible to rely on that Rule as the source of authority for appellate courts. For notwithstanding some rather odd language to the contrary in Mullaney v. Anderson, 342 U.S. 415, 417 (1952) ("Rule 21 will rarely come into play at this [i. e., in the Supreme Court] stage of a litigation") (emphasis added), it is well settled that "the Federal Rules of Civil Procedure . . . apply only in the federal district courts." Automobile Workers v. Scofield, 382 U.S. 205, 217, n. 10 (1965).
The two 19th-century cases relied upon by the Court, Horn v. Lockhart, 17 Wall. 570 (1873), and Carneal v. Banks, 10 Wheat. 181 (1825), do not establish the authority of an appellate court to dismiss a nondiverse party to preserve jurisdiction. Both the majority and the dissent in the Court of Appeals recognized that, at most, Horn speaks of the powers of a trial court, see 854 F.2d 916, 921 (1988) (Posner, J.); id., at
The majority's reliance on Carneal proceeds from a premise that is most questionable. It assumes that Carneal involved a single action in which this Court dismissed on its own the nondiverse parties. Judge Posner, however, observed that the Court in Carneal may have in fact "treated the suit as if it were two suits, one satisfying the requirement of complete diversity, the other dismissable and dismissed." 854 F. 2d, at 921. Judge Posner, perhaps, understated his own case. Carneal involved a contract in which the plaintiff, Banks, "agreed to transfer to Carneal the right of the said Banks in 30,000 acres of land purchased by him from John Harvie," in exchange for which Carneal promised to convey to Banks "a tract of 2,000 acres of land on Green River." 10 Wheat., at 182. Banks claimed that "Carneal was guilty of fraud in pretending to have a good title to the said 2,000 acres of land." Id., at 182-183. Because the contract involved a conveyance of the 30,000 acres from Harvie to Carneal, in order for Banks to obtain complete relief, he prayed both "that the contract [between Carneal and Banks] . . . be rescinded" and "that the heirs of John Harvie . . . , in whom the legal title to the said 30,000 acres remains, . . . be decreed to convey the same to [Banks]." Id., at 183. The jurisdictional problem was that, although there was complete diversity between Banks and Carneal's heirs, there was no diversity between Banks and Harvie's heirs. See id., at 187-188. The Court appears to have treated the claims against Harvie's heirs (the nondiverse parties) as a separate suit which in no way affected jurisdiction over Banks' suit against Carneal's heirs. The Court stated: "If the validity of this objection [the lack of diversity], so far as respects Harvie's heirs, be unquestionable, it cannot affect the suit
There is, moreover, a more basic reason not to place heavy reliance on Carneal and Horn. As the Court concedes, these cases "were decided in a procedural era different from our own," ante, at 836. The powers of the district courts and courts of appeals are now governed by Federal Rules of Procedure and various other provisions in Title 28. In my view, these cases do not establish an authority in the appellate courts so clear that it survives the plain negative implication from the one statutory provision on point (§ 1653). Whatever may be implied from Carneal, the present statutory authority permits appellate courts to cure only defective allegations of jurisdiction and not jurisdictional flaws.
I am not at all persuaded, either, that practical considerations in the case warrant our holding that courts of appeals have the power to dismiss nondiverse parties. The dissent in the Court of Appeals, and the opinion for the Court here, each assume it would be quite a waste to remand the case to the District Court so that it may determine whether an amendment to the complaint ought to be allowed. But if, as the Court and the dissent below contend, there would be no
For these reasons, and with all due respect, I dissent from the opinion and judgment of the Court.
"After the panel of our court flagged the jurisdictional problem, [Newman-Green] had to decide what it wanted to do. [Newman-Green] had lost the bulk of its case in the district court (although it had won some $200,000 on a portion of the case no longer in dispute). It was guaranteed a new run at the subject in state court, against all defendants, by retaining Bettison as a defendant. [Newman-Green] instead filed a motion to dismiss Bettison and take its chances on the merits. If it was willing to pursue this suit in federal court without Bettison when all it had to show for itself was a loss, and to abandon any hope of reaching Bettison's assets if it should prevail, what is it going to do now that it has an opinion in its favor on the merits? Go to state court, where things could get worse but are not likely to get better? If this suit is dismissed, it will be refiled in federal court. The only question is just how much time will be lost along the way." Ibid.