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Field v. Volkswagenwerk AG and Volkswagen of America Inc.

decided: July 10, 1980.



Before Seitz, Chief Judge, and Adams and Weis, Circuit Judges.

Author: Adams



This appeal arises out of a motor vehicle accident that occurred in Italy on August 13, 1975. The single vehicle involved in the accident was a 1974 Volkswagen van manufactured by the defendant-appellee, Volkswagenwerk Aktiengesellschaft (VWAG), a West German corporation. At the time of the accident, Ivana Field, one of the plaintiff-appellants, was driving the van. Riding with her were Arthur Field, her husband, and Michael Field, her stepson. As a result of the accident, Arthur Field was killed and Ivana and Michael Field suffered injuries.

On August 12, 1977, this action was instituted against VWAG in the United States District Court for the District of New Jersey. Individually, Ivana Field sought damages for loss of consortium, mental distress, and personal injuries. In her capacity as administratrix of Arthur Field's estate, she also made a claim for his wrongful death. In addition, Lucille Field, the decedent's former spouse and Michael's natural mother, asserted a claim in her capacity as Michael's guardian, and sought damages for injuries suffered by him in the accident.

The plaintiffs alleged the diversity jurisdiction of the federal courts under 28 U.S.C. § 1332 (1976), and pleaded the jurisdictional prerequisites. As a West German corporation, VWAG is considered to be a foreign citizen. Both Lucille and Michael Field were, at the time suit was filed, and are now, citizens of Rhode Island. Arthur Field, at the time of his death, was a citizen of the State of New York. Discovery disclosed, however, that Ivana Field, contrary to her allegation of New York citizenship, was at the time of the accident and remains to this day a citizen of Czechoslovakia.

Upon learning of Ivana Field's Czechoslovakian citizenship, VWAG filed a motion to dismiss all claims because Ivana's presence violated the complete diversity requirement of 28 U.S.C. § 1332(a)(2). In response to VWAG's motion, the plaintiffs requested a voluntary dismissal without prejudice of Ivana Field's individual claim; took the necessary legal steps in New York State to have Lucille Field substituted for Ivana Field as administratrix of Arthur Field's estate; and sought permission to file a second amended complaint to reflect this change. The district court declined to dismiss Ivana Field's individual claim, on the ground that she was an "indispensable party" to this suit. It also refused to allow the proposed amendment to the complaint substituting Lucille Field as administratrix of Arthur Field's estate on the basis that diversity jurisdiction is determined on the basis of the citizenship of the parties at the time the complaint is filed, and accordingly granted VWAG's motion for dismissal without prejudice for lack of subject matter jurisdiction. This appeal followed. We affirm the district court's dismissal of the claims brought by Ivana Field in her individual capacity and in her capacity as administratrix of Arthur Field's estate, but we reverse the portion of the judgment dismissing the separate and individual claim brought by Lucille Field on behalf of Michael Field.


Although the Judiciary Act of 1789 purported to extend federal jurisdiction to all suits in which an alien is a party, the Supreme Court determined at an early date that the Constitution authorizes alienage jurisdiction only of suits between a citizen of a state and an alien.*fn1 Since then, the federal courts consistently have denied jurisdiction over suits between aliens.*fn2 In 1875, the statute dealing with diversity jurisdiction was amended to conform to the language of the Constitution,*fn3 and the current version of the Judicial Code now specifically limits the diversity jurisdiction of federal courts to suits between "citizens of a State and citizens or subjects of a foreign state."*fn4

That diversity jurisdiction exists under this statute only when there is complete diversity between the parties is a firmly rooted principle, first established in the venerable case of Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 2 L. Ed. 435 (1806), and recently reaffirmed by the Supreme Court in Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 98 S. Ct. 2396, 57 L. Ed. 2d 274 (1978). This requirement pertains to suits between aliens as well as to suits between citizens. Thus, the principle has been applied to deny jurisdiction in an action by an alien against citizens of a state and another alien. Ed & Fred, Inc. v. Puritan Marine Insurance Underwriters, Inc., 506 F.2d 757 (5th Cir. 1975); Ex parte Edelstein, 30 F.2d 636 (2d Cir. 1929). Inasmuch as Ivana Field is a citizen of Czechoslovakia and VWAG is a corporate citizen of West Germany, the district court here determined that Ivana's presence deprived the court of subject matter jurisdiction over Ivana's individual cause of action, as well as over the claims alleged on behalf of Michael Field and Arthur Field's estate.

Appellants do not contest, indeed they concede, that Ivana's presence as a party in this suit violates the complete diversity requirement. They contend, however, that she is not an indispensable party to the remaining claims in the suit, and that the district court erred, therefore, in denying the request to dismiss the individual claim of Ivana Field so as to preserve subject matter jurisdiction.

The authority of a district court to drop non-diverse parties whose presence is not essential to the suit in order to preserve and perfect its diversity jurisdiction is well-established, Horn v. Lockhart, 84 U.S. (17 Wall.) 570, 21 L. Ed. 657 (1873); Ralli-Coney, Inc. v. Gates, 528 F.2d 572 (5th Cir. 1976); Kerr v. Compagnie De Ultramar, 250 F.2d 860 (2nd Cir. 1958).*fn5 As Professor Moore has written, in cases where the presence of an allegedly misjoined party will deprive a court of jurisdiction, "there is a clear federal commitment to allow relation back of amendments dropping parties to uphold subject matter jurisdiction."*fn6 Whether a party may be dropped depends on whether the party is "indispensable" to a just and meaningful litigation of the claims remaining in the suit. As early as 1873, the Supreme Court instructed:

"And the question always is, or should be, when objection is taken to the jurisdiction of the court by reason of the citizenship of the parties, whether to a decree authorized by the case presented, they are indispensable parties, for if their interests are severable and a decree without prejudice to their rights can be made, the jurisdiction of the court should be retained and the suit dismissed as to them."

Horn v. Lockhart, 84 U.S. (17 Wall.) at 579.

Although the district court's authority to dismiss non-diverse parties who are not indispensable derives from Fed.R.Civ.P. 21, the primary factors to be considered by the district court in determining whether a party is indispensable are listed in Fed.R.Civ.P. 19, which provides in part:

(a) Persons to be Joined if Feasible. A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party. If he should join as a plaintiff but refuses to do so, he may be made a defendant, or in a proper case, an involuntary plaintiff. If the joined party objects to venue and his joinder would render the venue of the action improper, he shall be dismissed from the action.

(b) Determination by Court Whenever Joinder not Feasible. If a person is described in sub-division (a)(1)-(2) hereof cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable. The factors to be considered by the court include: first, to what extent a judgment rendered in the person's absence might be prejudicial to him or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person's absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.

Ostensibly guided by these criteria, the district court determined that Ivana Field was in fact indispensable to the litigation and accordingly denied the appellants' request to dismiss her individual claim against VWAG thus requiring a dismissal of the entire lawsuit. In concluding that Ivana was indispensable, the district court began with the assumption that Ivana's possible negligence in operating the van when the accident occurred was an issue in the case. From this assumption, the court reasoned that, if proven, Ivana's negligence might relieve VWAG of liability on all three claims. As a result, the court concluded that permitting the action to proceed in Ivana's absence would prejudice VWAG's rights, apparently because VWAG would then be unable to assert Ivana's negligence against the claims of the remaining parties. Because we are unable to agree with the district court's finding that Ivana Field's dismissal would be prejudicial to VWAG, we hold that its refusal to dismiss the claim was error.

Regardless whether Ivana's contributory negligence would constitute a valid defense by VWAG to Ivana's individual claim, it is unlikely that any negligence on Ivana's part could be attributed to either Arthur or Michael Field. And if the facts should establish a joint culpability for negligence, VWAG and Ivana would appear to be jointly and severally liable for the commission of the tort. At most, then, VWAG may have some substantive right of reimbursement, indemnity, or contribution against Ivana, as a joint tort-feasor, for all or part of Arthur and Michael Field's claims against it.*fn7

But the possibility that VWAG may have a right of reimbursement, indemnity, or contribution against Ivana is not sufficient to make Ivana indispensable to the litigation. This is so because under Fed.R.Civ.P. 14(a) a defendant is authorized to bring into a lawsuit any person "not a party to the action who is or may be liable to him for all or part of the plaintiff's claim against him."*fn8 VWAG thus would not appear to suffer prejudice from Ivana's dismissal in her individual capacity, because it could then implead her as a third-party defendant to the remaining allegations. Indeed, dropping Ivana as a party-plaintiff would seem to impose no greater hardship upon VWAG than it would have faced if Ivana's presence did not violate the diversity requirement, and the action had been permitted to proceed with Ivana as an individual plaintiff. In either case, the employment of third-party procedures would be necessary if the rights of all the parties were to be resolved in one action.*fn9

As is true of all actions in federal courts, a third-party claim must satisfy the requirement of subject matter jurisdiction. VWAG denies that it could implead Ivana as a third-party defendant because, it claims, there would be no independent jurisdictional basis for such a claim. In support of its argument, the defendants rely on the Supreme Court's recent decision in Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 98 S. Ct. 2396, 57 L. Ed. 2d 274 (1978). There, the Court ruled that, in an action based on diversity of citizenship any claim asserted by the original plaintiff against a third-party defendant must present an independent jurisdictional ground. But that situation is distinguishable from that which would exist here should VWAG implead Ivana on an allegation that she is or may be liable to VWAG. As Professors Wright & Miller point out, the "cases on point almost all hold that defendant's claim against a third-party defendant is within the ancillary jurisdiction of the federal courts. Thus, it is well-settled that there need be no independent jurisdictional basis for such a claim if diversity of citizenship exists between the original parties."*fn10 Assuming then that diversity jurisdiction obtains here over one of the original claims, a third-party claim against Ivana Field should be regarded as ancillary to it.

Although it was not specifically raised by VWAG on appeal, the district court did offer, as an additional reason for its finding that Ivana is an indispensable party, the argument that Ivana's dismissal "would force VWAG to defend the same claim in two different actions." It is true, of course, that courts and the public have an interest in promoting trial convenience, expediting the settlement of disputes, and preventing multiple lawsuits. To this end, Fed.R.Civ.P. 20 expressly provides for the joinder in a single action of all persons asserting a joint, several, or alternative right to relief that arises out of the same transaction or occurrence, and presents a common question of law or fact. Under this rule, the joinder of a person who has some interest in an action is permitted, even when that interest is not so strong as to require his joinder as a necessary or indispensable party under Rule 19.

Joinder of plaintiffs under Rule 20, "has been freely allowed in cases involving vehicular collisions, both when all plaintiffs were directly involved in the accident and when one or more of them were not present at the scene but suffered some type of injury as a result of the event."*fn11 Rule 20, however, unlike its counterpart Rule 19, prescribes permissive, not necessary or mandatory, joinder of parties. Barr Rubber Products Co. v. Sun Rubber Co., 425 F.2d 1114, 1126-27 (2d Cir.), cert. denied 400 U.S. 878, 91 S. Ct. 118, 27 L. Ed. 2d 115 (1970). As Professor Moore has observed, "(a) person whose rights have been infringed need not join as plaintiffs others whose rights have been "infringed' by the same conduct," though he may if he so chooses.*fn12 Under Rule 20, moreover, joinder of plaintiffs "is at the option of the plaintiffs;" it cannot be demanded as a matter of right by the defendant."*fn13

Joinder of parties falling within the circumstances contemplated by Rule 20 is required only when the person in question comes within the scope of compulsory joinder as prescribed by Rule 19. In contrast to Rule 20, under which proper parties may be joined in certain circumstances because of a common interest in a question of law or fact, even though they have no substantive right to compel joinder, Rule 19 refers only to those parties who should be joined because they are either necessary or indispensable parties to the litigation. Rule 19 thus embodies the ...

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