Grupo Dataflux v. Atlas Global Group, L.P.

541 U.S. 567 (2004)

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Nature of the Case

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Facts

Atlas (P) filed a state lawsuit against Grupo Dataflux (D), a Mexican corporation, in the United States District Court for the Southern District of Texas. The complaint contained claims for breach of contract and in quantum meruit, seeking over $1.3 million in damages. It alleged that 'federal jurisdiction is proper based upon diversity jurisdiction pursuant to 28 U.S.C. § 1332(a), as this suit is between a Texas citizen and a citizen or subject of Mexico.' Pretrial motions and discovery consumed almost three years. In October 2000, the parties consented to a jury trial presided over by a Magistrate Judge. After a 6-day trial, the jury returned a verdict in favor of P awarding $750,000 in damages. Before entry of the judgment, D filed a motion to dismiss for lack of subject matter jurisdiction because the parties were not diverse at the time the complaint was filed. The Magistrate Judge granted the motion. The dismissal was based upon the accepted rule that, as a partnership is a citizen of each state or foreign country of which any of its partners is a citizen. Carden v. Arkoma Associates. P had two partners who were Mexican citizens at the time of filing, the partnership was a Mexican citizen. D was a Mexican corporation, which meant aliens were on both sides of the case, and the requisite diversity was therefore absent. P urged the Court of Appeals to disregard this failure and reverse dismissal because the Mexican partners had left the partnership in a transaction consummated the month before trial began. P argued that since diversity existed when the jury rendered its verdict, dismissal was inappropriate. The Fifth Circuit agreed relying on Caterpillar Inc. v. Lewis.