UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-60743
Summary Calendar
PAULA JO WHITMIRE
Plaintiff-Appellant,
V.
VICTUS LIMITED T/A
MASTER DESIGN FURNITURE,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Mississippi
June 2, 2000
Before SMITH, BARKSDALE and PARKER, Circuit Judges.
ROBERT M. PARKER, Circuit Judge.
Plaintiff-Appellant brought suit in federal district court
asserting causes of action under federal statute and state common
law. Plaintiff asserted that subject matter jurisdiction was
proper under the court’s grant to hear questions of federal law
and supplemental authority over pendent state law claims. The
district court granted defendant’s motion for summary judgment on
plaintiff’s federal claims and dismissed plaintiff’s state law
claims without prejudice. Plaintiff sought to preserve her case
in federal court by amending her pleadings to properly allege
that all requirements of diversity jurisdiction were satisfied
from the inception of her case and that diversity could serve as
an alternative basis for jurisdiction. The district court denied
plaintiff’s motion, and she appeals.
The issues on appeal are narrow and based upon a clear and
complete record from the district court, and neither party seeks
oral argument. Consequently, we believe this case to be best
suited for resolution on summary calendar. Specifically, we are
asked to decide whether the failure to state that the
requirements of diversity jurisdiction were satisfied at the time
this case was filed is correctable pursuant to federal statute
which authorizes the correction of “defective allegations of
jurisdiction,” and whether the district court abused its
discretion by denying plaintiff leave to make such amendments.
As we answer both questions in the affirmative, we REVERSE and
REMAND.
I.
On October 6, 1997, Paula Jo Whitmire brought suit in
federal district court alleging violations of the Family Medical
Leave Act and the Americans with Disabilities Act. In addition,
Whitmire asserted state law claims for intentional infliction of
emotional distress, breach of “an implied duty of good faith in
an employment relationship,” and violation of “Mississippi law
protection against assault.” In her complaint, Whitmire asserted
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that the court had federal question jurisdiction over her federal
statutory claims, see 28 U.S.C. § 1333 (1994), and supplemental
jurisdiction over her state law claims. See 28 U.S.C. § 1367
(1994). Although jurisdiction was also proper from the inception
of the case pursuant to the court’s jurisdiction to hear
diversity cases, Whitmire made no such allegation in her
complaint. Also, Whitmire, a citizen of the State of
Mississippi, failed to state that the defendant was not a citizen
of Mississippi or that the amount in controversy exceeded the
statutory minimum. See 28 U.S.C. § 1332 (1994).1
On December 11, 1998, defendant filed a motion for summary
judgment challenging all of plaintiff’s claims, and the district
court granted summary judgment to the defendant on the federal
claims. The court dismissed the federal claims with prejudice,
and dismissed the state law claims without prejudice.
Immediately thereafter, Whitmire moved for leave to amend her
complaint by alleging diversity jurisdiction. Whitmire did not
propose to add any new causes of action or new parties, nor did
she seek to introduce any new substantive facts to the case. The
district court denied her motion for leave to amend. Whitmire
appeals.
II.
1
The fact that diversity jurisdiction existed from the
outset of this litigation does not appear to be in dispute.
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A grant or denial of a motion to amend pleadings is an
exercise of discretion by the district court; we review only for
abuse of that discretion. See Hypes v. First Commerce Corp., 134
F.3d 721, 728 (5th Cir. 1998).
III.
A.
When prosecuting a suit in federal court, “[t]he plaintiff
has the burden of pleading the existence of the court’s
jurisdiction, and, in a diversity action, the plaintiff must
state all parties’ citizenships such that the existence of
complete diversity can be confirmed.” Chemical Leaman Tank
Lines, Inc. v. Aetna Casualty and Surety Co., 177 F.3d 210, 222
n.13 (3d Cir. 1999); see FED. R. CIV. P. 8. Nevertheless, “[a]
failure to allege facts establishing jurisdiction need not prove
fatal to a complaint.” Canedy v. Liberty Mutual Ins. Co., 126
F.3d 100, 103 (2d Cir. 1997). A plaintiff may correct a failure
to set forth diversity as an alternate basis for jurisdiction by
amending her complaint pursuant to 28 U.S.C. § 1653 (1994). This
statutory provision, titled “Amendment of pleadings to show
jurisdiction,” provides:
Defective allegations of jurisdiction may be amended,
upon terms, in the trial or appellate courts.
28 U.S.C. § 1653 (1994). Section 1653 was enacted as part of the
Judicial Code revisions of 1948. Its predecessor, enacted 35
years earlier, “expressly limited jurisdictional amendments to
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cases in which diversity jurisdiction ‘in fact existed at the
time the suit was brought or removed, though defectively
alleged.’" Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826,
831 (1989). According to the revision notes to § 1653, the
statute was amended “solely to expand the power to cure defective
allegations of jurisdiction from diversity cases to all cases.”
Id. (citing Historical and Revision Notes to 28 U.S.C. § 1653);
see also Mobil Oil Corp. v. Kelley, 493 F.2d 784, 788 (5th Cir.
1974).
We have repeatedly noted that § 1653 is to be broadly
construed to avoid dismissals of actions on purely “technical” or
“formal” grounds. See Miller v. Stanmore, 636 F.2d 986, 990 (5th
Cir. 1981); see also Goble v. Marsh, 684 F.2d 12, 17 (D.C. Cir.
1982) (in enacting § 1653 "Congress intended to permit amendment
broadly to avoid dismissal of suits on technical grounds").
Furthermore, technical defects or failure to specifically allege
the citizenship of a party can be cured even in the appellate
courts. See D.J. McDuffie Inc. v. Old Reliable Fire Ins. Co.,
608 F.2d 145, 146 (5th Cir. 1979). In general, a motion for
leave to amend should be granted if it would do nothing “more
than state an alternative jurisdictional basis for recovery upon
the facts previously alleged.” Miller, 636 F.2d at 990. Our
sister courts are no less charitable in their interpretation of §
1653. See, e.g., Canedy, 126 F.3d at 103 (“Unless the record
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clearly indicates that complaint could not be saved by any
truthful amendment, we generally afford opportunity for
amendment.”) (citation omitted); Scattergood v. Perelman, 945
F.2d 618, 626 (3d Cir. 1991); see also Quinn v. McGraw-Hill
Companies, Inc., 168 F.3d 331, 334 n.1 (7th Cir. 1999).
“[A] district court's power to authorize amendments to cure
a competence problem under section 1653, and by extension under
Rule 15(a), turns on the nature of the jurisdictional defect.”
Falaise v. American Tobacco Co., 241 B.R. 63, 65 (E.D.N.Y. 1999)
(Weinstein, J.). While a district court can "remedy inadequate
jurisdictional allegations,” it cannot remedy “defective
jurisdictional facts." Newman-Green, 490 U.S. at 831, 832 n.5
(citing Pressroom Unions-Printers League Income Security Fund v.
Continental Assurance Co., 700 F.2d 889, 893 (2d Cir.1983));
Aetna Casualty & Surety Co. v. Hillman, 796 F.2d 770, 775-776
(5th Cir. 1986); Boelens v. Redman Homes, Inc., 759 F.2d 504,
512 (5th Cir. 1985). The danger against which a court must guard
is that a party will attempt to use § 1653 to retroactively
create subject matter jurisdiction. See MOORE ET AL., MOORE'S
FEDERAL PRACTICE § 15.14[3], at 15-34 (3d ed. 1999) ("Essentially,
a plaintiff may correct the complaint to show that jurisdiction
does in fact exist; however, if there is no federal jurisdiction,
it may not be created by amendment."). The cause for this
concern is readily apparent: “never having had power to act in
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the matter, the court never had authority to permit an amendment
to the complaint.” Falaise, 241 B.R. at 66.2
Accordingly, courts have rejected attempts to add new claims
to satisfy the amount in controversy necessary for diversity
jurisdiction, see State Farm Mutual Automobile Ins. Co. v.
Narvaez, 149 F.3d 1269, 1272 (10th Cir. 1998), or add new parties
to their case to preserve a federal forum, see Mills v. State of
Maine, 118 F.3d 37, 53-54 (1st Cir. 1997) (rejecting attempt to
add party in an effort to come within scope of Ex Parte Young
doctrine). Similarly, we rejected arguments that § 1653 could
properly be invoked to reassert causes of action to serve as
statutory bases for federal question jurisdiction when they had
been previously dropped from the complaint. See Boelens, 759
F.2d at 512.
Since Whitmire’s jurisdictional problems are of the
2
As Judge Weinstein explained when petitioned to allow an
amendment adding entirely new causes of action and substantive
facts in Falaise:
Plaintiffs here do not seek to remedy a technical
defect in their original jurisdictional allegations.
Rather, they seek to create an entirely new
jurisdictional basis to provide competence in a court
which lacked authority over the case ab initio. This
tactic is prohibited by section 1653 and by Rule 15(a),
as these provisions have consistently been interpreted.
There is simply no power in the court to allow
plaintiffs to amend their complaint.
Falaise, 241 B.R. at 67.
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“technical” or “formal” variety, they fall squarely within the
ambit of § 1653. There can be no question that allowing Whitmire
to cure her jurisdictional defect by stating the requisite facts
showing that diversity jurisdiction exists as an alternative
basis for subject matter jurisdiction would not create
jurisdiction where it did not previously exist. Having
determined that § 1653 is the proper tool to employ in this
situation and that the district court was authorized by statute
to allow such an amendment, we now address whether the district
court committed an abuse of discretion when it denied Whitmire’s
motion for leave to amend.
B.
Leave to amend pleadings “shall be freely given when justice
requires.” FED. R. CIV. P. 15(a). We have explained that the
propriety of allowing amendment to cure jurisdictional defects
should be governed by the same standard as other amendments to
pleadings, namely the standard set forth by the Supreme Court:
In the absence of any apparent or declared reason--such
as undue delay, bad faith or dilatory motive on the
part of the movant, repeated failures to cure
deficiencies by amendments previously allowed, undue
prejudice to the other party by virtue of allowance of
the amendment, futility of amendment, etc. -- the leave
sought should, as the rules require, be "freely given."
Foman v. Davis, 371 U.S. 178, 182 (1962); see also Scattergood,
945 F.2d at 627 (listing Foman factors); Averbach v. Rival
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Manufacturing Co., 879 F.2d 1196, 1203 (3d Cir.1989)(same);
Miller, 636 F.2d at 990 (same). With the proper standard in
mind, we turn now to the denial of Whitmire’s motion.
In the instant case, diversity jurisdiction existed at the
time Whitmire filed suit in district court and was not destroyed
by any subsequent amendment. Whitmire was properly in federal
court and had been prosecuting her case there for more than 18
months. Less than 10 days after the jurisdictional basis of her
complaint was eliminated, Whitmire sought leave to inform the
court that the parties remained properly before the court because
subject matter jurisdiction still existed.
Plaintiff points us to Scattergood v. Perelman, in which the
Third Circuit, presented with an almost identical factual
situation, reversed a district court’s denial of motion for leave
to amend. See 945 F.2d 618 (3d Cir. 1991). In rendering its
decision, the Third Circuit explained:
The district court was correct that most of the
proposed amendments could have and should have been
presented in the earlier amended complaint; as to the
jurisdictional allegation of diversity, however, the
district court's reasoning loses force. Diversity did
not become a necessary basis for federal jurisdiction
over the state law claims until the federal claims were
dismissed on July 24. The plaintiffs had no reason to
allege diversity until the July 24 dismissal because,
before that date, the court had federal question
jurisdiction over the federal claims and pendent
jurisdiction over the state claims.
We conclude that the district court abused its
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discretion in not allowing the plaintiffs to amend
their complaint to allege diversity.
Scattergood, 945 F.2d at 627.3
In our view, Whitmire is able to satisfy each of the Foman
factors. There is no evidence in the record, and defendant does
not argue, that Whitmire has acted in bad faith or with dilatory
motive. Nor is this a case in which a party refused or failed to
amend when given repeated opportunities to do so; to the
contrary, as soon as the defect in her pleadings was exposed, she
promptly moved to amend. Also, the amendment would not be
futile. Finally, we are skeptical that defendant could have
suffered any prejudice by virtue of the 10-day delay and the
3
Defendant challenges the persuasive force of Scattergood,
arguing that the Third Circuit would not decide the case the same
today given the mandate from the Civil Justice Reform Act of
1990, 28 U.S.C. § 471 et seq., that all district courts put into
effect plans aimed at reducing the expense and delay of civil
litigation. Essentially, defendant argues that even if § 1653 is
to be read broadly, it must yield to the local case management
plan. We disagree. First, the Third Circuit has not overrruled
Scattergood, and as plaintiff points out, lower courts within the
circuit continue to apply it. See Freedom Int’l Trucks, Inc. v.
Eagle Enter., Inc., 182 F.R.D. 172, 174 (E.D. Pa. 1998). Second,
as we discussed above, Scattergood is well within the mainstream
of case law on this issue. Even if the Third Circuit were to
overrule its earlier decision, that would not change the rule in
this circuit as explained in Miller, nor change the rule for the
other courts of appeal that apply the same standard. See, e.g.,
Canedy v. Liberty Mutual Ins. Co., 126 F.3d 100, 103 (2d Cir.
1997). Third, the purpose of § 1653, to cure unintended defects
in jurisdictional pleadings, is not in conflict with the purpose
of the Civil Justice Reform Act, to "ensure just, speedy, and
inexpensive resolution of civil disputes." See 28 U.S.C. § 471.
We simply do not believe that the type of issue presented here is
sufficiently common for efficiency concerns to be determinative.
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likelihood of a bifurcated ruling on its summary judgment motion.
Defendant has completed discovery and plaintiff’s amendment does
not seek to inject any new facts or causes of action into the
case, merely to see it through to its conclusion in the same
forum in which it started.4 The alternative course requires one
of our state court brethren to take on the case -- which has
already consumed more than 18 months of the district court’s time
-- and begin the case anew, minus only the federal claims.
Defendant’s main counter argument is that the district
courts within this circuit, following our lead, have recognized a
clear distinction between amendments to cure technical defects
and amendments to add new jurisdictional grounds. Although the
cases cited by defendant support this general proposition, they
do not support defendant’s position in this case. See, e.g.,
Energy Catering Servs., Inc. v. Burrow, 911 F. Supp. 221 (E.D.
La. 1995); Zaini v. Shell Oil, Co., 853 F. Supp. 960 (S.D. Tex.
1994). Rather these cases highlight our prime concern when
dealing with § 1653 -- avoiding attempts to retroactively create
jurisdiction. These cases do not support the proposition that
4
That is not to say that plaintiffs should not be expected
to plead all possible jurisdictional grounds from the outset of
the case. Although Whitmire violated a specific court order
imposing reasonable time constraints on amendment, we believe
judicial economy is ultimately served by allowing these
amendments. Nevertheless, while it is not clear how § 1653 could
be put to nefarious use, courts should not hesitate to refuse
amendments if the party has displayed bad faith or dilatory
motive.
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allowing a party to amend its pleadings to inform the court of an
existing basis for subject matter jurisdiction is anything more
than the “technical” or “formal” amendment for which § 1653 was
crafted and we in the past have allowed.5
In conclusion, we hold that the requested amendments, which
add neither new causes of action, new parties, nor new
substantive facts to the case, but merely state and support an
alternative pre-existing jurisdictional base, fall within the
ambit of § 1653. In addition, in the absence of any evidence of
bad faith, dilatory motive, or undue prejudice, the district
court abused its discretion by not allowing plaintiff an
opportunity to amend. See Foman v. Davis, 371 U.S. 178, 182
(1962).
IV.
5
Defendant quotes language from these cases to the effect
that § 1653 “cannot be invoked to claim an entirely new and
distinct jurisdictional basis.” Energy Catering, 911 F. Supp. at
223. Importantly, both Energy Catering and Zaini relied upon our
interpretation in Hillman and Boelens in which we stated the rule
we adhere to today, namely that § 1653 “provides a method for
curing defective allegations of jurisdiction. It is not to be
used to create jurisdiction retroactively where it did not
previously exist.” Aetna v. Casualty and Surety Co. v. Hillman,
796 F.2d 770, 776 (5th Cir. 1986)(emphasis added). See Boelens
v. Redman Homes, Inc., 759 F.2d 504, 512 (5th Cir. 1985) (§ 1653
applies to technically inadequate allegations of jurisdiction,
not new causes of action). The phrase “entirely new and distinct
jurisdictional basis” must be read in conjunction with the
surrounding text, which invariably emphasizes the need to guard
against the retroactive creation of jurisdiction. This phrase
was never intended as a means of undermining the liberal
construction we always give § 1653.
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For the reasons set forth above, we REVERSE and REMAND this
case to the district court for further proceedings consistent
with this opinion.
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