In Erickson v. Johnson Controls, Inc., 2012 WL 3597204 (D. Mass. Aug. 17, 2012), plaintiff was injured when an airconditioning unit fell on him while he was trying to remove its shrink wrap. Plaintiff sued the manufacturer in Massachusetts Superior Court for negligence, breach of the implied warranty of merchantability (the Massachusetts near-equivalent of strict liability) and violation of Mass. Gen. L. ch. 93A (the Massachusetts unfair and deceptive practices statute), alleging the unit and shrink wrap were defectively designed and the manufacturer failed to warn of the risks. The manufacturer, a Wisconsin corporation, removed the case to the United States District Court for the District of Massachusetts based on diversity jurisdiction, and shortly thereafter filed a thirdparty complaint for contribution and indemnification against the general contractor and subcontractors overseeing the construction, which were all Massachusetts corporations. The third-party defendants filed cross-claims against one another and a fourth-party complaint against plaintiff’s employer, also a Massachusetts corporation. A year later, the court allowed plaintiff to amend his complaint to add direct claims against the third-party contractors and subcontractors. While the subcontractors answered the amended complaint, the general contractor moved to dismiss on the ground that diversity jurisdiction had been destroyed when plaintiff, a Massachusetts resident, asserted direct claims against third-party defendants also based in Massachusetts.
Under long-established precedent, a federal court has diversity jurisdiction only where there is complete diversity of citizenship of the parties – i.e., no plaintiff can be a citizen of the same state as any defendant – and the addition of a non-diverse defendant through an amended complaint would defeat jurisdiction. In such a circumstance, if the newly added non-diverse defendant is not legally indispensable, the court has two options – it may either (i) remand the case to state court, or (ii) preserve diversity jurisdiction by dismissing the new defendant. In considering the second option, the court must consider the extent to which dismissal would prejudice any of the parties to the litigation.
Here, plaintiff’s addition of the new non-diverse parties in his amended complaint defeated diversity, and because each was merely a potentially liable joint tortfeasor, they were not indispensable parties. In allowing the motion to dismiss, the court found that, although the possibility of piecemeal litigation is generally vexing to the parties and judicial system, here there would be no substantial prejudice to the parties because the litigation was in its early stages and both of the newly added defendants would remain in the action as third-party defendants. Accordingly, the time and effort already expended by those defendants and plaintiff would not be for naught.