Supreme Court To Consider Whether Defect In Diversity Jurisdiction Is Curable

The U.S. Supreme Court has agreed to hear an appeal from a Fifth Circuit case involving diversity jurisdiction.

In Atlas Global Group, L.P. v. Grupo Dataflux, 312 F.3d 168 (5th Cir. 2002), cert granted, No. 02-1689, 2003 WL 21229394 (Oct. 14, 2003), a partnership sued a Mexican corporation in federal court for breach of contract, but diversity jurisdiction was lacking because two partners were residents of Mexico. Before defendants complained, plaintiff dismissed those two partners and "cured" the defect. After a jury verdict for plaintiff, defendant successfully moved to dismiss for lack of jurisdiction arguing diversity is determined at the time the complaint is filed. The Fifth District reversed because plaintiff dismissed its Mexican partners sua sponte before any challenge, and starting over would be wasteful. One judge dissented against the creation of a “new exception” just to save judicial resources.