Owen Equipment & Erection Co. v. Kroger

Facts

On January 18, 1972, James Kroger was electrocuted when the boom of a steel crane next to which he was walking came too close to a high-tension power line. His widow, who was the administratrix of his estate, sued the Omaha Public Power District (OPPD) for wrongful death in federal district court in Nebraska. She alleged that OPPD's negligent handling of the power line caused the death. Jurisdiction rested on diversity of citizenship: she was a citizen of Iowa and OPPD was a Nebraska corporation. OPPD filed a third-party complaint under Rule 14(a) against Owen Equipment and Erection Co., alleging that Owen owned and operated the crane and that Owen's negligence caused the death. While OPPD's motion for summary judgment was pending, the widow amended her complaint to name Owen as a defendant. She alleged that Owen's principal place of business was in Nebraska. The court then granted OPPD summary judgment, so the trial was between the widow and Owen alone. On the third day of trial it came out that Owen's principal place of business was in Iowa. Owen and the widow were therefore both citizens of Iowa. Owen moved to dismiss for lack of jurisdiction. The court reserved decision, and the jury returned a verdict for the widow.

Issues

1. In a diversity action, may the plaintiff assert a claim against a third-party defendant when there is no independent basis for federal jurisdiction over that claim?
2. Does the Gibbs test of a common nucleus of operative fact settle whether a federal court may hear a nonfederal claim, or must the statute conferring diversity jurisdiction also permit it?

Holding

In a diversity case, a plaintiff's state-law claim against a third-party defendant who is a citizen of the plaintiff's State, with no independent basis for federal jurisdiction, is not within ancillary jurisdiction. The district court lacked power to hear the widow's claim against Owen, because allowing it would evade the complete-diversity requirement of section 1332.