Facts
James David Lewis, a resident of Kentucky, sustained injuries while operating a bulldozer. He filed suit in a Kentucky state court, alleging state-law product liability claims of defective manufacture, negligent manufacture, failure to warn, and breach of warranty. Lewis named as defendants Caterpillar and Whayne Supply Company. Caterpillar is a Delaware corporation with its principal place of business in Illinois. Whayne Supply Company, the company that sold the bulldozer, was a Kentucky corporation with its principal place of business in Kentucky. Later, the insurance company for Lewis's employer, Liberty Mutual Insurance Group, intervened as a plaintiff and made its own claims against Caterpillar and Whayne Supply. Liberty Mutual is a Massachusetts corporation with its principal place of business in Massachusetts.
Lewis settled his claim against Whayne Supply, which led Caterpillar to seek to remove the case to federal court. Lewis opposed this effort, arguing that complete diversity did not exist between all plaintiffs and all defendants because Liberty Mutual had not settled its claims against Whayne Supply. The district court ignored Lewis's argument, and allowed the removal because it believed that the fact that Lewis had settled his claim with Whayne Supply was sufficient to create the diversity necessary for federal jurisdiction.
The case proceeded through the discovery phase, during which Liberty Mutual settled with Whayne Supply. This settlement left Caterpillar as the only defendant in the case, such that all plaintiffs were citizens of different states than all defendants. After a six-day jury trial, the district court entered judgment for Caterpillar. Lewis appealed, and the Sixth Circuit vacated the judgment. It believed that diversity did not exist because, at the time of removal, a resident of Kentucky (Lewis) was a plaintiff and another resident of Kentucky (Whayne Supply) was still a defendant, although there was no claim between these two. For this reason, the Sixth Circuit reasoned, the district court lacked jurisdiction to hear the case. Caterpillar asked the Supreme Court to review the case, stressing that at the time judgment was entered, the jurisdictional defect that had existed at the beginning had been cured. The Supreme Court agreed to hear the case.
Read more about this topic: Caterpillar, Inc. V. Lewis
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