Defining Supplemental Jurisdiction for Intervention Claims under 28 U.S.C. § 1367(a): The “Common Nucleus of Operative Fact” Standard

Introduction

In Hamilton Reserve Bank Ltd. v. Democratic Socialist Republic of Sri Lanka, decided April 10, 2025 by the Second Circuit, a trio of would-be intervenors (Jesse Guzman, Ultimate Concrete LLC, and Intercoastal Finance Ltd.) sought to join Hamilton Reserve Bank’s breach-of-contract suit against Sri Lanka. They alleged that Hamilton had misappropriated their $50 million deposit to purchase the defaulted Sri Lankan bonds. The district court denied intervention for lack of subject-matter jurisdiction, applying the “common nucleus of operative fact” test under 28 U.S.C. § 1367(a). On appeal, the Second Circuit affirmed, holding that supplemental jurisdiction over intervention claims is defined by the statute—not by Rule 24—and that the intervenors’ claims did not share a sufficient factual overlap with Hamilton’s bond-default claim.

Summary of the Judgment

The Court of Appeals addressed two central questions:

Whether supplemental jurisdiction over an intervention claim is governed by the “common nucleus” test under 28 U.S.C. § 1367(a) or instead by the intervention-as-of-right standard in Fed. R. Civ. P. 24(a)(2).
Whether the district court erred in finding no “common nucleus of operative fact” between the intervenors’ fraud/conversion claims against Hamilton and Hamilton’s contract claim against Sri Lanka.

Unanimously, the panel held:

Section 1367(a) is the exclusive source of supplemental jurisdiction over intervention claims. Federal Rules of Civil Procedure (including Rule 24) do not enlarge a court’s jurisdiction. (Fed. R. Civ. P. 82.)
The “common nucleus of operative fact” test applies to all supplemental-jurisdiction inquiries under § 1367(a), including interventions. Pre-1990 cases that tie jurisdiction to Rule 24 interests do not withstand the codification of supplemental jurisdiction in § 1367.
The intervenors’ claims—alleging wrongful retention of bank deposits used to invest in Sri Lankan bonds—do not substantially overlap with Hamilton’s sovereign-debt breach-of-contract claim, which centers on Sri Lanka’s moratorium and nonpayment.
Because there is no shared factual core, the district court correctly concluded it lacked § 1367(a) jurisdiction and properly denied intervention.

Analysis

Precedents Cited

Finley v. United States (1989): The Supreme Court held that supplemental jurisdiction did not exist absent a statutory grant, overruling the presumption of jurisdiction for related claims.
Aldinger v. Howard and Owen Equipment & Erection Co. v. Kroger: Early cases recognizing the “common nucleus” concept before codification.
Judicial Improvements Act of 1990 (Pub. L. 101-650, § 310): Codified supplemental jurisdiction in 28 U.S.C. § 1367, explicitly including intervention claims.
Achtman v. Kirby, McInerney & Squire, LLP (2d Cir. 2006) and Royal Canin U.S.A., Inc. v. Wullschleger (2025): Confirmed that § 1367(a) jurisdiction hinges on a “common nucleus of operative fact.”
Fed. R. Civ. P. 82: Rules do not extend or limit district-court jurisdiction.
Fed. R. Civ. P. 24(a)(2): Governs intervention as of right by interest, but cannot expand jurisdiction under § 1367.

Legal Reasoning

The panel began with the principle that federal courts are courts of limited jurisdiction, possessing only the power conferred by the Constitution and statutes. Original jurisdiction arises under 28 U.S.C. § 1330 (suits against foreign states) and § 1331 (federal-question cases). Supplemental jurisdiction, by contrast, was a judge-made doctrine until Finley v. United States, which held that, absent a grant by Congress, federal courts could not hear related claims. Congress answered with § 1367 in 1990, granting supplemental jurisdiction over “claims that form part of the same case or controversy” and specifically including “claims that involve the…intervention of additional parties.”

Under § 1367(a), the test for relatedness is whether the claim “derive[s] from a common nucleus of operative fact” with a claim over which the court has original jurisdiction. That test does not distinguish intervention claims from other supplemental claims. Rule 24(a)(2)’s intervention-as-of-right criteria—timeliness, legal protectability of an interest, and adequacy of representation—govern only the procedural right to intervene, not subject-matter jurisdiction. The Rules cannot expand a court’s statutory jurisdiction (Rule 82).

Applying the “common nucleus” test, the court found that Hamilton’s breach-of-contract claim against Sri Lanka (centered on sovereign bond default and international debt restructuring) shares almost no factual overlap with the intervenors’ conversion and fraud claims (focused on Hamilton’s treatment of their deposit, questions from compliance officers, and failed withdrawal requests). Because the factual cores diverge, § 1367(a) jurisdiction is lacking.

Impact

This decision clarifies the jurisdictional boundaries for intervention claims:

District courts must apply § 1367(a)’s “common nucleus” test to intervention claims, not Rule 24 alone.
Intervenors cannot circumvent the statutory limits of supplemental jurisdiction by satisfying Rule 24’s interest test.
Judges and practitioners should closely analyze factual overlap before granting intervention in federal cases.
The decision reinforces the separation between procedural rules and statutory jurisdiction, guiding future intervention motions.

Complex Concepts Simplified

Supplemental Jurisdiction: Federal courts can hear some related state-law or additional claims even if those claims lack independent federal jurisdiction, but only when Congress explicitly says so (28 U.S.C. § 1367).
Common Nucleus of Operative Fact: A test asking whether different claims arise out of the same events or transactions—if so, they can be decided together.
Intervention as of Right (Rule 24): Allows a third party to join a lawsuit if they have a direct stake that might be harmed by the outcome. This is procedural, not jurisdictional.
Federal-Rule Jurisdictional Limits (Rule 82): The Federal Rules of Civil Procedure cannot create new jurisdictional authority; they only govern procedures within the jurisdiction Congress already gave the courts.

Conclusion

Hamilton Reserve Bank v. Sri Lanka establishes a clear precedent: supplemental jurisdiction over intervention claims is governed exclusively by 28 U.S.C. § 1367(a) and its “common nucleus of operative fact” requirement. Intervention under Rule 24(a)(2) remains a procedural safeguard but cannot expand a court’s subject-matter jurisdiction. This decision sharpens the analysis courts must conduct when third parties seek to intervene, ensuring that only claims with a genuine factual nexus to the underlying litigation can be added to federal dockets.