(Bench Opinion)

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

CATERPILLAR INC. v. LEWIS

certiorari to the united states court of appeals for the sixth circuit

No. 95–1263. Argued November 12, 1996—Decided December 10, 1996

Respondent Lewis, a Kentucky resident, commenced this civil action in Kentucky state court after sustaining personal injuries while operating a bulldozer. Asserting state-law claims, Lewis named as defendants both the manufacturer of the bulldozer—petitioner Caterpillar Inc., a Delaware corporation with its principal place of business in Illinois—and the company that serviced the bulldozer—Whayne Supply Company, a Kentucky corporation with its principal place of business in Kentucky. Liberty Mutual Insurance Group, a Massachusetts corporation with its principal place of business in that State, intervened as a plaintiff, asserting subrogation claims against both Caterpillar and Whayne Supply for workers' compensation benefits Liberty Mutual had paid to Lewis on behalf of his employer. Shortly after learning of a settlement agreement between Lewis and Whayne Supply, Caterpillar filed a notice of removal in Federal District Court, grounding federal jurisdiction on diversity of citizenship, see 28 U. S. C. §1332. The notice explained that the case was nonremovable at the lawsuit's start: Complete diversity was absent then because plaintiff Lewis and defendant Whayne Supply shared Kentucky citizenship. Caterpillar assumed that the settlement agreement between these two parties would result in Whayne Supply's dismissal from the lawsuit, yielding complete diversity and rendering the case removable. Lewis promptly moved to remand the case to state court, asserting that diversity was defeated by Whayne Supply's continuing presence as a defendant due to Liberty Mutual's subrogation claim against it. The District Court denied the motion, erroneously concluding that diversity had become complete. Before trial, however, Liberty Mutual's subrogation claim against Whayne Supply was settled, and that defendant was dismissed as a party. Complete diversity thereafter existed. The case proceeded to trial, jury verdict, and judgment for Caterpillar. The Sixth Circuit vacated the judgment, concluding that, absent complete diversity at the time of removal, the District Court lacked subject-matter jurisdiction.

Held: A district court's error in failing to remand a case improperly removed is not fatal to the ensuing adjudication if federal jurisdictional requirements are met at the time judgment is entered. Pp. 5–16.

(a) The general-diversity statute, §1332(a), authorizes federal court jurisdiction over cases in which the citizenship of each plaintiff is diverse from the citizenship of each defendant. See Carden v. Arkoma Associates, 494 U. S. 185, 187. When a plaintiff files a state-court civil action over which the federal district courts would have original jurisdiction based on diversity of citizenship, the defendant or defendants may remove the action to federal court, §1441(a), provided that no defendant "is a citizen of the State in which such action is brought," §1441(b). In a case not originally removable from state court, a defendant who receives a pleading or other paper indicating the post-commencement satisfaction of federal jurisdictional requirements—e.g., by reason of a nondiverse party's dismissal—may remove the case to federal court within 30 days. §1446(b). No case, however, may be removed based on diversity "more than 1 year after commencement of the action." Ibid. Once a defendant has filed a notice of removal in the federal court, a plaintiff objecting to removal "on the basis of any defect in removal procedure" may, within 30 days, file a motion to remand the case to state court. §1447(c). This 30–day limit does not apply, however, to jurisdictional defects: "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." Ibid. Pp. 5–7.

(b) American Fire & Casualty Co. v. Finn, 341 U. S. 6, and Grubbs v. General Elec. Credit Corp., 405 U. S. 699, are key cases in point and tend in Caterpillar's favor. Each suggests that the existence of subject-matter jurisdiction at time of judgment may shield a judgment against later jurisdictional attack despite an improper removal. Finn, 341 U. S., at 16; Grubbs, 405 U. S., at 700. However, neither decision resolves dispositively a controversy of the kind here at issue, for neither involved a plaintiff who moved promptly, but unsuccessfully, to remand a case improperly removed from state court to federal court, and then challenged on appeal a judgment entered by the federal court. Pp. 8–11.

(c) Beyond question, as Lewis acknowledges, diversity became complete in this case when Whayne Supply was formally dismissed as a party. Nevertheless, Caterpillar moves too quickly in claiming that elimination of the jurisdictional defect before trial also cured a statutory flaw—Caterpillar's failure to meet the §1441(a) requirement that the case be fit for federal adjudication at the time the removal petition was filed. By timely moving for remand, Lewis did all that was necessary to preserve his objection to removal. An order denying a motion to remand, ``standing alone,'' is ``obviously . . . not final and [immediately] appealable'' as of right, Chicago, R. I. & P. R. Co. v. Stude, 346 U. S. 574, 578, and a plaintiff is not required to take an interlocutory appeal pursuant to 28 U. S. C. §1292(b) in order to avoid waiving whatever ultimate appeal right he may have. Having preserved his objection, Lewis urges that ultimate satisfaction of the subject-matter jurisdiction requirement ought not swallow up antecedent statutory violations. Lewis' arguments in support of this position are hardly meritless, but they run up against an overriding consideration. Once a diversity case has been tried in federal court, with rules of decision supplied by state law under the regime of Erie R. Co. v. Tompkins, 304 U. S. 64, considerations of finality, efficiency, and economy become overwhelming. Cf., e.g., Newman-Green, Inc. v. Alfonzo-Larrain, 490 U. S. 826, 836. This view is in harmony with a main theme of the removal scheme devised by Congress, which calls for expeditious superintendence by district courts. In this case, no jurisdictional defect lingered through judgment in the District Court. To wipe out the adjudication post-judgment, and return to state court a case now satisfying all federal jurisdictional requirements, would impose an exorbitant cost on our dual court system, a cost incompatible with the fair and unprotracted administration of justice. Pp. 11–15.

(d) Lewis' prediction that rejection of his petition will provide state-court defendants with an enormous incentive to attempt unlawful removals rests on an assumption this Court does not indulge—that federal district courts generally will not comprehend, or will balk at applying, the removal rules Congress has prescribed. The prediction furthermore assumes defendants' readiness to gamble that any jurisdictional defect, for example, the absence of complete diversity, will first escape detection, then disappear prior to judgment. This Court is satisfied that the well-advised defendant will foresee the likely outcome of an unwarranted removal—a swift, and nonreviewable remand order, see §§1447(c), (d), attended by the displeasure of a district court whose authority has been improperly invoked. Pp. 15–16.

Reversed and remanded.

Ginsburg, J., delivered the opinion for a unanimous Court.