FREEPORT-McMoRAN INC. v. K N ENERGY, INC.
No. 90-655.
Decided February 19, 1991
Per Curiam.
Petitioners seek review of a decision of the United States Court of Appeals for the Tenth Circuit, holding that a Federal District Court lacked jurisdiction to entertain their diversity action because they added a nondiverse party after filing their complaint. We grant certiorari and reverse the decision of the Court of Appeals.
Petitioners, McMoRan Oil and Gas Company (McMoRan) and its parent company, Freeport-McMoRan Inc. (Freeport), sued respondent K N Energy, Inc. (K N) for breach of contract in the United States District Court for the District of Colorado. Petitioners claimed that respondent had failed to pay the price for natural gas agreed upon in their contract, and sought both declaratory relief to establish the contract price and damages for past underpayments. Petitioners based federal jurisdiction upon diversity of citizenship. At all times up to and including the filing of the complaint, Free-port and McMoRan were Delaware corporations with their principal places of business in Louisiana. K N was and is a Kansas corporation with its principal place of business in Colorado.
After suit was filed, petitioner McMoRan transferred its interest in the contract with respondent to a limited partnership, FMP Operating Company (FMPO), for business reasons unrelated to the instant litigation. FMPO’s limited partners included citizens of Kansas and Colorado. Accordingly, before trial commenced, petitioners sought leave to amend their complaint to substitute FMPO as a plaintiff under Rule 25(c) of the Federal Rules of Civil Procedure. The District Court permitted petitioners to add FMPO as a party but did not remove McMoRan as a party. After a bench trial, the District Court held in favor of petitioners, and respondent appealed. The Court of Appeals reversed and directed that the suit be dismissed for want of jurisdiction. The court held that “although complete diversity was present when the complaint was filed,” the addition of FMPO as a plaintiff destroyed jurisdiction. 907 F. 2d 1022, 1024 (1990). The court based its holding upon our decision in Carden v. Arkoma Associates, 494 U. S. 185 (1990). The court explained that “Carden establishes that [FMPO’s] addition as the real party in interest destroys the district court’s diversity jurisdiction.” 907 F. 2d, at 1025.
Our decision last Term in Carden considered whether the citizenship of limited partners must be taken into account in determining whether diversity jurisdiction exists in an action brought by a limited partnership. The original plaintiff in Carden was the limited partnership; diversity jurisdiction, then, depended upon whether complete diversity of citizenship existed at the time the action was commenced. But nothing in Carden suggests any change in the well-established rule that diversity of citizenship is assessed at the time the action is filed. We have consistently held that if jurisdiction exists at the time an action is commenced, such jurisdiction may not be divested by subsequent events. Mollan v. Torrance, 9 Wheat. 537 (1824); Clarke v. Mathewson, 12 Pet. 164, 171 (1838); Wichita Railroad & Light Co. v. Public Util. Comm’n of Kansas, 260 U. S. 48, 54 (1922) (“Jurisdiction once acquired ... is not divested by a subsequent change in the citizenship of the parties. Much less is such jurisdiction defeated by the intervention, by leave of the court, of a party whose presence is not essential to a decision of the controversy between the original parties” (citations omitted)).
The opinions of the District Court and the Court of Appeals establish that the plaintiffs and defendant were diverse at the time the breach-of-contract action arose and at the time that federal proceedings commenced. The opinions also confirm that FMPO was not an “indispensable” party at the time the complaint was filed; in fact, it had no interest whatsoever in the outcome of the litigation until sometime after suit was commenced. Our cases require no more than this. Diversity jurisdiction, once established, is not defeated by the addition of a nondiverse party to the action. A contrary rule could well have the effect of deterring normal business transactions during the pendency of what might be lengthy litigation. Such a rule is not in any way required to accomplish the purposes of diversity jurisdiction.
Respondent relies on our decision in Owen Equipment & Erection Co. v. Kroger, 437 U. S. 365 (1978), to support the result reached by the Court of Appeals. There we held that the ancillary jurisdiction of a District Court did not extend to the entertaining of a claim by an original plaintiff in a diversity action against a nondiverse third-party defendant im-pleaded by the original defendant pursuant to Federal Rule of Civil Procedure 14(a). Owen casts no doubt on the principle established by the cases previously cited that diversity jurisdiction is to be assessed at the time the lawsuit is commenced.
The motion of American Mining Congress for leave to file a brief as amicus curiae is granted. The petition for a writ of certiorari is granted, and the judgment of the Court of Appeals is
Reversed.
Justice Souter took no part in the consideration or decision of this motion and case.
What follows is an opinion from the Supreme Court of the United States. Your task is to determine whether the decision of the court whose decision the Supreme Court reviewed was itself liberal or conservative. In the context of issues pertaining to criminal procedure, civil rights, First Amendment, due process, privacy, and attorneys, consider liberal to be pro-person accused or convicted of crime, or denied a jury trial, pro-civil liberties or civil rights claimant, especially those exercising less protected civil rights (e.g., homosexuality), pro-child or juvenile, pro-indigent pro-Indian, pro-affirmative action, pro-neutrality in establishment clause cases, pro-female in abortion, pro-underdog, anti-slavery, incorporation of foreign territories anti-government in the context of due process, except for takings clause cases where a pro-government, anti-owner vote is considered liberal except in criminal forfeiture cases or those where the taking is pro-business violation of due process by exercising jurisdiction over nonresident, pro-attorney or governmental official in non-liability cases, pro-accountability and/or anti-corruption in campaign spending pro-privacy vis-a-vis the 1st Amendment where the privacy invaded is that of mental incompetents, pro-disclosure in Freedom of Information Act issues except for employment and student records. In the context of issues pertaining to unions and economic activity, consider liberal to be pro-union except in union antitrust where liberal = pro-competition, pro-government, anti-business anti-employer, pro-competition, pro-injured person, pro-indigent, pro-small business vis-a-vis large business pro-state/anti-business in state tax cases, pro-debtor, pro-bankrupt, pro-Indian, pro-environmental protection, pro-economic underdog pro-consumer, pro-accountability in governmental corruption, pro-original grantee, purchaser, or occupant in state and territorial land claims anti-union member or employee vis-a-vis union, anti-union in union antitrust, anti-union in union or closed shop, pro-trial in arbitration. In the context of issues pertaining to judicial power, consider liberal to be pro-exercise of judicial power, pro-judicial "activism", pro-judicial review of administrative action. In the context of issues pertaining to federalism, consider liberal to be pro-federal power, pro-executive power in executive/congressional disputes, anti-state. In the context of issues pertaining to federal taxation, consider liberal to be pro-United States and conservative pro-taxpayer. In miscellaneous, consider conservative the incorporation of foreign territories and executive authority vis-a-vis congress or the states or judcial authority vis-a-vis state or federal legislative authority, and consider liberal legislative veto. The lower court's decision direction is unspecifiable if the manner in which the Supreme Court took jurisdiction is original or certification; or if the direction of the Supreme Court's decision is unspecifiable and the main issue pertains to private law or interstate relations