Respondents Sarah and Grant Palmquist sued Hain Celestial Group, Inc., and Whole Foods Market, Inc., in Texas state court alleging product liability and negligence claims after their young son suffered developmental disorders allegedly caused by heavy metals in baby food. Hain removed the case to federal court based on diversity of citizenship, arguing that Whole Foods had been improperly joined and should be dismissed to establish complete diversity. The District Court agreed, dismissed Whole Foods, and proceeded to trial against Hain alone, eventually granting judgment as a matter of law for Hain. The Fifth Circuit reversed, holding that Whole Foods had been properly joined, meaning the District Court lacked diversity jurisdiction from the outset. Because the jurisdictional defect was not cured, the Fifth Circuit vacated the federal judgment and remanded the case to state court.
The Court, in an opinion by Justice Sotomayor, reaffirmed that federal courts are courts of limited jurisdiction and must assess jurisdiction based on the facts existing at the time of filing or removal. While the Court recognized an exception established in Caterpillar Inc. v. Lewis, where a jurisdictional defect can be cured if a non-diverse party is properly dismissed before final judgment, this exception did not apply here. The District Court's dismissal of Whole Foods was erroneous and interlocutory, meaning it did not dispose of the whole case and merged into the final judgment for appellate review. When the Fifth Circuit reversed that dismissal, Whole Foods was restored to the case, destroying complete diversity and leaving the jurisdictional defect to linger through judgment. The Court rejected Hain's argument that efficiency considerations justified the judgment, noting that efficiency only excuses noncompliance after a defect has been properly cured, not when the defect remains uncured. Furthermore, the Court held that Federal Rule of Civil Procedure 21 could not be used to dismiss Whole Foods at the appellate stage to cure the defect, as doing so would override the plaintiff's right to choose the forum by properly joining a non-diverse defendant.
The federal judgment in favor of Hain Celestial Group is voided, and the product liability claims must proceed in Texas state court. This decision clarifies that federal courts cannot create jurisdiction through their own mistakes and reinforces the principle that plaintiffs control the forum by joining non-diverse defendants. It resolves a circuit split by requiring vacatur whenever a jurisdictional defect lingers through judgment, regardless of the efficiency costs of a new trial in state court.