Clarifying Limits of Supplemental Jurisdiction for Intervenors under 28 U.S.C. § 1367(a)

Introduction

The Second Circuit’s decision in Hamilton Reserve Bank Ltd. v. Democratic Socialist Republic of Sri Lanka (24-1459-cv) addresses a foundational question of federal procedure: what standard governs a district court’s supplemental jurisdiction over claims brought by would-be intervenors? Hamilton Reserve Bank sued Sri Lanka for nonpayment on sovereign bonds. More than a year into that litigation, Jesse Guzman, Ultimate Concrete LLC, and Intercoastal Finance Ltd. sought to intervene against Hamilton, alleging fraud and conversion based on deposited funds. The district court denied intervention for lack of supplemental jurisdiction under 28 U.S.C. § 1367(a). The appellants argued that meeting Rule 24(a)(2) intervention-as-of-right requirements automatically conferred supplemental jurisdiction. The Second Circuit rejected that argument, holding that Section 1367(a)—not Rule 24—defines the jurisdictional boundary for intervenor claims, which must share a “common nucleus of operative fact” with an existing claim.

Summary of the Judgment

A unanimous panel affirmed the district court’s denial of intervention. The key holdings were:

Section 1367(a) grants supplemental jurisdiction only over claims sharing a “common nucleus of operative fact” with a claim invoking original jurisdiction.
Federal Rule of Civil Procedure 24 establishes procedural criteria for intervention but does not extend federal jurisdiction.
The appellants’ claims (conversion and fraud) lacked the requisite factual overlap with Hamilton’s breach-of-contract claim against Sri Lanka.

Because the intervenors’ claims arose from banking-deposit disputes rather than Sri Lanka’s bond default, the court held there was no basis for supplemental jurisdiction and affirmed.

Analysis

Precedents Cited

Finley v. United States (490 U.S. 545, 1989): Held that supplemental jurisdiction requires an explicit statutory grant, overruling the earlier common‐law presumption.
28 U.S.C. § 1367 (Judicial Improvements Act of 1990): Codified Congress’s affirmative grant of supplemental jurisdiction over all claims forming part of the same Article III case or controversy.
Promisel v. First American Artificial Flowers, Inc. (943 F.2d 251, 2d Cir. 1991): Adopted the “common nucleus of operative fact” test for supplemental jurisdiction.
Achtman v. Kirby, McInerney & Squire, LLP (464 F.3d 328, 2d Cir. 2006): Reaffirmed that Section 1367(a) jurisdiction adheres to the common-nucleus standard.
Royal Canin U.S.A., Inc. v. Wullschleger (604 U.S. 22, 2025): Emphasized that Section 1367’s “same case or controversy” analysis mirrors the historic test.
Exxon Mobil Corp. v. Allapattah Services, Inc. (545 U.S. 546, 2005): Directed courts to interpret Section 1367’s text, context, and structure instead of assuming mere codification of pre-existing law.

Legal Reasoning

Statutory Foundation: Federal courts possess only the jurisdiction granted by the Constitution and Congress (28 U.S.C. §§ 1331, 1332). Historically, supplemental jurisdiction evolved by judicial decision, presumed available when claims were factually related.
Finley and the Legislative Response: Finley held that no presumption of supplemental jurisdiction survives without a statutory grant. Congress promptly enacted Section 1367, providing that, in any case of original jurisdiction, courts “shall have supplemental jurisdiction” over related claims.
Uniform Application of § 1367(a): Section 1367(a) covers all “claims that form part of the same case or controversy,” including claims by intervenors. Rule 24’s text confirms that federal rules cannot extend jurisdiction (Fed. R. Civ. P. 82).
Common Nucleus Test: Under Promisel and Achtman, a claim has supplemental jurisdiction only if it “derive[s] from a common nucleus of operative fact” with a claim invoking original jurisdiction.
Factual Disaggregation: Hamilton’s breach-of-contract claim rests on Sri Lanka’s sovereign-debt default. Appellants’ claims rest on Hamilton’s alleged refusal to return deposited funds. The two sets of facts do not substantially overlap, nor does one necessarily implicate the other.

Impact

This decision reaffirms that:

Intervention under Rule 24(a) does not, by itself, justify federal adjudication; supplemental jurisdiction depends exclusively on Section 1367(a).
District courts must rigorously assess whether intervenor claims share the same operative facts as existing federal-jurisdiction claims.
Future litigants should align any proposed intervenor claims closely with the facts of the underlying federal or diversity action to satisfy the common-nucleus requirement.

Complex Concepts Simplified

Supplemental Jurisdiction: The power of a federal court to decide additional claims that lack an independent basis for federal jurisdiction, provided they are factually connected to a claim that does.
Common Nucleus of Operative Fact: A test asking whether different claims rely on the same core events or transactions—if so, they can be litigated together in federal court.
Intervention vs. Jurisdiction: Rule 24 sets procedural rules for who may join a lawsuit. Section 1367 determines if the court has power over those new claims.
Rule 82: Clarifies that the Federal Rules of Civil Procedure cannot create or expand subject-matter jurisdiction.

Conclusion

In Hamilton Reserve Bank v. Sri Lanka, the Second Circuit reasserted that Section 1367(a), not Rule 24, sets the jurisdictional boundaries for intervenor claims. By applying the “common nucleus of operative fact” standard, the court preserved the statutory balance between efficient case management and limited federal-court jurisdiction. Going forward, attorneys seeking to intervene must demonstrate not only procedural entitlement under Rule 24 but also a direct factual nexus with an existing federal claim to invoke supplemental jurisdiction.