Caterpillar v. Lewis

519 U.S. 61 (1996)

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Nature of the Case

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Facts

Lewis (P) was injured while operating a bulldozer. P was a resident of Kentucky. P sued Caterpillar (D) in state court for breach of warranty, defective manufacture, negligence in maintenance and a failure to warn. D was a Delaware corporation with its principal place of business in Illinois. P also sued Whayne Supply Company. Whayne’s place of business was in Kentucky and was a Kentucky corporation. The insurance carrier for P’s employer also intervened as a plaintiff seeking subrogation against both Ds for workers’ compensation benefits. A case for personal injury was removed to federal court at a time when complete diversity of citizenship did not exist among the parties. Upon removal, P moved to remand the case to state court, but the District Court denied that motion. Before trial, all claims regarding the nondiverse defendant, Whayne, were settled and that defendant was dismissed as a party to the action. The removal was only done by D because they became aware of a settlement agreement with Whayne, the nondiverse defendant, and knew that Whayne would be eventually dismissed from the lawsuit. D had just one day to spare in the removal pursuant to 1446(b) that removal take place within one year from the lawsuit’s commencement. Complete diversity existed thereafter. Before the court, P argued that Liberty Mutual had not yet settled its subrogation claim against Whayne and that Whayne still remained in the suit and this defeated diversity. Eventually three years later, Whayne and Liberty settled. The case proceeded to judgment. The verdict was rendered in D’s favor. The Court of Appeals vacated the judgment concluding that absent complete diversity at the time of removal, the District Court lacked subject matter jurisdiction.