Case: Kroger v. Omaha Public Power District (1975, 8th) [523 F.

2d 161]

Facts: Kroger was employed by a steel company. They were moving a crane, and he
got electrocuted and he died. The widow, Mrs. Kroger, sues for wrongful death.
She could sue the Omaha Public Power District, which owns the lines and sold them.
Then there’s the people who leased the crane, Owen (cant sue employer b/c of
workers comp). The plaintiff’s lawyer chose to sue Omaha Power. Omaha then
implead Owen. The suit was filed as a diversity action. Omaha and Kroger were
from different states. There was no subject matter jurisdiction problem. Owen
gets involved under Rule 14. The idea is that if OPPD has any liability at all,
it will pass through to the crane operator, who is ultimately liable for the
injury caused. At the time the impleader action was filed, everyone thought that
Owen was a corporate citizen of Nebraska. Problem: once Owen gets brought in, the
plaintiff amends to add a claim directly against Owen. Owen responds to the third
party complaint, admits that they are a Nebraska corporation, but they deny every
other allegation. It’s a truthful but not forthcoming answer. Two years later,
it’s discovered at trial that Owen has its principal place of business in Iowa.

Notes

Kroger (citizen of Iowa) sues OPPD (citizen of Nebraska) negligently maintained

power lines that electrocuted her husband.
Owen, which made the crane. Everyone believed at that time was a nebraska corp. no
problem b/c ancillary jurisdiction covers this cross claim. (this is before rule
14).
• Turns out that Owen actually is a citizen of Iowa.
• D's lawyers were dishonest, and the complaint very properly alleged that Owen is
a corp of Nebraska, with its principle place of business in Nebraska. This wasn’t
true - principle place of business was in Iowa. Owen wanted o be in fed court, so
rather than denying it, they admitted they were a Nebraska corporation and denied
everything else.
○ Problem - they mislead P. Truthful but deceptive. FRCP 8 says answers
should fairly admit the averments intended. Wasted court's time and likely to get
court upset at you, and likely to get ruling as in court's below, which is that
you cant get away with what happened here
§ Owen (on 3rd day), moves to dismiss for lack of SMJ. Lower courts
were outraged. Looked for way to sustain SMJ.
§ So they kept SMJ through ancillary jurisdiction. This supports P's
complaint against Owen in fed court. But claim against D dismissed, so the only
claim is btwn Kroger and Owen, which are citizens of the same state.
§ Is Kroger's case against Owen within common nucleus of operative
facts? Yes, meets the constitutional requirement.
§ Is Kroger's complaint against Owen ok under the FRCP? - yes, Rule
14a. Once 3rd party d brought in, P can assert claims against them.
§ Problem - doesn’t meet the statute
□ Statute requires complete diversity.
• Dissent says: concerned with keeping fed courts in bounds is only half the
equation. The other half is judicial efficiency. Too bad that in this particular
case, cross-claim is dismissed. We would want all these parties claims to be
resolved together in same lawsuit.
• When, as a D, seek to assert claim against 3rd party, must have first valid
claim against that D, before they can add other claims
• Would it be constitutional for congress to change this? Yes. They could have
changed the result by writing a supplemental jurisdiction statute that does it.
○ Strawbridge v Curtis - the case which instituted the complete diversity
requirement, which is an interpretation of the statute only, not constitution, so
congress could make a statute otherwise based on minimal diversity)
 ○ Congress could have said that once there is a good diversity lawsuit, then
there is also jurisdiction over P's claim over 3rd party, but congress didn’t. in
1367b, they specifically wrote that claims by P against persons made parties under
Rule 14 (3rd party), are no good if inconsistent with requirements of diversity.
Why did they do this?
§ There is a feeling that we are talking about substantially a
different dispute, and one that has no business in being in fed court anyway (only
here in first place on diversity)
□ Drawing the boundary btwn getting dispute resolved in one
action and clogging up fed courts with disputes shouldn’t be there, we decide to
draw the line at Kroger. Illustration of the competing underlying policy concerns.