On February 24, the Supreme Court released its unanimous decision in Hain Celestial Group, Inc. v. Palmquist, affirming the Fifth Circuit’s decision to vacate the post-trial final judgment because the district court’s erroneous dismissal of a nondiverse defendant based on improper joinder resulted in a jurisdictional defect that existed at the time of removal, which was not cured prior to final judgment.
As summarized in Dykema’s December 2025 edition, the Respondents sued two Petitioners—one who is a Texas citizen (Whole Foods)—in a Texas state court. The diverse Petitioner (Hain) unilaterally removed the case on diversity grounds, and successfully argued that Whole Foods should be dismissed under the doctrine of improper joinder because it was joined for the sole purpose of defeating diversity jurisdiction.
The case proceeded through trial, and the district court held that Hain was entitled to judgment as a matter of law. After final judgment, the Respondents appealed to the Fifth Circuit, which held that the district court erred by dismissing Whole Foods, vacated the district court’s final judgment in favor of Hain due to a lack of complete diversity jurisdiction, and ordered the case remanded to state court.
The unanimous opinion, authored by Justice Sotomayor, held that if a court of appeals concludes that the district court lacked jurisdiction over the case when it was removed, and that jurisdictional defect lingered through final judgment, the general rule applies, and the court of appeals must vacate the judgment. The opinion recognized the exception to the general rule that if a district court cures a jurisdictional defect before final judgment, then the court of appeals is not required to vacate the final judgment, but that exception did not apply in this case. Because the errant dismissal was interlocutory and remained uncured through final judgment, the general rule applied.
The Court also rejected Hain’s argument that the Court should dismiss Whole Foods under Fed. R. Civ. Proc. 21, which permits a court to drop a party “on just terms.” The Court reasoned that, because a plaintiff is the “master of the complaint” and has the right to choose whether to proceed in federal or state court, the Respondents would be prejudiced if they were to litigate this case in federal court against their wishes and despite their right to control the forum for their case.
Justice Thomas joined in the opinion but also wrote separately to express his opinion that the doctrine of improper joinder appears to allow federal courts to enlarge their jurisdiction by assessing the merits of claims over which they lack jurisdiction.
Link to Takeaways: Takeaways:
- The Deadline to Cure Jurisdiction Defects in Judgment: Parties should carefully weigh the benefits and risks of allowing the case to progress through final judgment where there is a question as to whether a jurisdictional defect may exist at the time a case is filed in or removed to federal court.
- Carefully Weighing the Advantages and Risks: A removing defendant seeking to dismiss a nondiverse party as improperly joined should carefully consider the likelihood that such dismissal would withstand appellate scrutiny and weigh that risk against the advantages of litigating a case in federal rather than state court.
- Plaintiff is the Master of the Complaint: The Court reaffirmed the importance of a plaintiff’s role as the “master of the complaint,” which has the right to determine the forum in which a case is litigated, and may be significantly prejudiced if that right is infringed.
For more information, please contact Chantel Febus, James Azadian, and Ryan VanOver.