Docket 24-724
Palmquist
DecidedFeb 24, 2026
9-0decision
Source: CourtListener.
Court rules a trial court's mistaken dismissal of a party cannot create federal jurisdiction
Impact4/10
What it does
The ruling holds that a district court's erroneous dismissal of a party who destroys diversity jurisdiction does not "cure" the jurisdictional defect, meaning the court never had valid authority to hear the case. Because the jurisdictional problem was never properly fixed, any final judgment entered by that court must be vacated. It also holds that a defendant cannot use Federal Rule of Civil Procedure 21 to force dismissal of a properly joined nondiverse defendant over the plaintiff's objection in order to keep a case in federal court.
Who benefits
Plaintiffs who deliberately file suit in state court by joining in-state defendants, and who promptly move to send the case back to state court after a defendant removes it to federal court — their choice of forum is protected.
Who is affected
Defendants who remove cases from state court to federal court and rely on a district court's erroneous dismissal of a nondiverse co-defendant to establish jurisdiction — any favorable verdict they win in federal court can be vacated on appeal if that dismissal is later found to be wrong.
Practical impact
Plaintiffs who file in state court and include an in-state defendant can be more confident that a federal court cannot keep their case simply by wrongly dismissing that defendant — if the dismissal is reversed on appeal, the entire federal judgment falls with it. Defendants who remove cases to federal court now face greater risk that a post-trial appellate reversal of a joinder ruling will wipe out a favorable verdict and send the case back to state court. District courts are encouraged to use procedural tools like Rule 54(b) partial final judgments or interlocutory certification to resolve joinder disputes early and avoid this outcome.
Majority — Sotomayor
Joined by: Roberts, Thomas, Alito, Kagan, Gorsuch, Kavanaugh, Barrett, Jackson
The majority held that federal courts have limited jurisdiction set by Congress, and a court cannot create jurisdiction for itself through its own mistakes. The Court reasoned that the district court's dismissal of Whole Foods was both erroneous and interlocutory — meaning it did not finally resolve the whole case and was subject to reversal on appeal — so it never permanently removed Whole Foods from the lawsuit. When the Fifth Circuit reversed that dismissal, Whole Foods was restored to the case, destroying complete diversity and confirming that the jurisdictional defect had "lingered through judgment" rather than being cured. The Court distinguished this case from Caterpillar Inc. v. Lewis, where a nondiverse party was properly and finally dismissed with all parties' consent before trial, which did cure the defect. The majority also rejected the argument that efficiency concerns justified leaving the judgment in place, explaining that such considerations only apply after a defect has been properly cured — not when it never was.
Constitutional question
When a federal district court erroneously dismisses a nondiverse party to manufacture diversity jurisdiction, and an appeals court later reverses that dismissal, must the trial court's final judgment be thrown out for lack of jurisdiction?
Precedent changed
Extends and clarifies Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996), holding that its allowance for finality and efficiency concerns applies only after a jurisdictional defect has been properly and finally cured — not when the cure itself was erroneous and later reversed.