Erroneous Dismissal of a Nondiverse Defendant Does Not Cure an Improper Removal: Vacatur Required; Rule 21 Cannot Defeat Plaintiff’s Forum Choice

I. Introduction

Hain Celestial Group, Inc. v. Palmquist (607 U. S. ___ (2026)) addresses a recurring procedural problem in diversity cases removed from state court: what happens when the case was never properly within federal diversity jurisdiction at removal, yet the federal court proceeds to judgment after dismissing the nondiverse defendant—only for that dismissal to later be found erroneous on appeal.

Respondents Sarah and Grant Palmquist sued (in Texas state court) Hain Celestial Group, Inc. (an out-of-state manufacturer) and Whole Foods Market, Inc. (a Texas citizen like the Palmquists), alleging state-law claims tied to alleged heavy-metal exposure from baby food. Hain removed on diversity grounds and argued Whole Foods was “improperly joined.” The District Court agreed, dismissed Whole Foods, denied remand, tried the case against Hain, and entered judgment for Hain. The Fifth Circuit reversed the improper-joinder dismissal, concluded diversity had never existed, vacated the merits judgment, and ordered remand.

The Supreme Court granted certiorari to resolve a circuit division on whether vacatur is required when a nondiverse party is dismissed before judgment, but that dismissal is later found erroneous—meaning the jurisdictional defect persisted through judgment.

Key Issue

Can a district court’s erroneous pre-judgment dismissal of a nondiverse defendant “cure” a lack of diversity jurisdiction that existed at the time of removal, allowing the federal merits judgment to stand?

II. Summary of the Opinion

The Court (Sotomayor, J., unanimous) held that an erroneous, interlocutory dismissal of the nondiverse defendant does not cure the jurisdictional defect that existed at removal. When the court of appeals reverses that dismissal, the nondiverse defendant is restored and complete diversity is destroyed; the defect therefore “lingered through judgment,” requiring vacatur of the federal merits judgment and remand to state court.

The Court also rejected Hain’s fallback attempt to use Federal Rule of Civil Procedure 21 to drop Whole Foods after the fact to preserve jurisdiction. Rule 21 cannot be used—over the plaintiffs’ consistent objection—to override the plaintiffs’ forum choice where they properly joined a nondiverse defendant in the original state-court complaint and timely sought remand.

III. Analysis

A. Precedents Cited

1. Appellate duty to ensure jurisdiction; “time-of-filing” baseline

  • Mitchell v. Maurer, 293 U. S. 237, 244 (1934): appellate courts must confirm not only their own jurisdiction but also the district court’s jurisdiction. This principle underpins the Court’s insistence that jurisdictional defects cannot be ignored merely because the case proceeded to a merits judgment.
  • Grupo Dataflux v. Atlas Global Group, L. P., 541 U. S. 567, 571 (2004): jurisdiction is generally assessed based on “the state of facts that existed at the time of filing” (or, in removal cases, at removal). The Court uses this rule to frame the default consequence: if jurisdiction was lacking at the relevant time, judgments on the merits ordinarily cannot stand.
  • Williams v. Zbaraz, 448 U. S. 358, 368 (1980) and American Fire & Casualty Co. v. Finn, 341 U. S. 6, 17-18 (1951): reinforce the general requirement of vacatur when jurisdiction was absent.
  • Kempe's Lessee v. Kennedy, 5 Cranch 173, 185 (1809): early articulation that proceedings are erroneous if jurisdiction is not shown.

2. The “cure” exception and its limits

  • Caterpillar Inc. v. Lewis, 519 U. S. 61 (1996): the central comparator. There, removal was defective because a nondiverse party remained, but the defect was properly and finally cured before trial by dismissal of the nondiverse party (via Rule 54(b) and with the parties’ consent), leaving complete diversity before trial began. The Court allowed the verdict to stand due to finality/efficiency concerns—but only because the defect did not “linger through judgment.”

How Caterpillar controlled the outcome: The Court read Caterpillar Inc. v. Lewis as drawing a bright line: finality and efficiency can excuse noncompliance with removal procedure only after jurisdiction has been actually cured. If the defect remains (or is only “cured” by an error later corrected on appeal), vacatur is mandatory.

3. Interlocutory orders, merger, and appellate review

  • Dupree v. Younger, 598 U. S. 729, 734, 735 (2023): defines “interlocutory” and explains that interlocutory orders generally “merge into the final judgment” and are reviewable on appeal from that judgment. The Court uses this to explain why the erroneous dismissal of Whole Foods did not provide a stable, final cure: it was reversible and therefore only temporarily removed Whole Foods from the case.
  • Quackenbush v. Allstate Ins. Co., 517 U. S. 706, 712 (1996): quoted via Dupree v. Younger for the “general rule” against immediate appeal of interlocutory orders.

4. Statutory limits on federal jurisdiction; courts cannot create jurisdiction by mistake

  • Kokkonen v. Guardian Life Ins. Co. of America, 511 U. S. 375, 377 (1994): federal courts possess only the power authorized by Constitution and statute, not to be expanded by judicial decree. This supports the Court’s rejection of Hain’s argument that jurisdiction existed because, by final judgment, the docket (erroneously) contained only diverse parties.

5. Plaintiff control of forum and Rule 21 limits

  • Newman-Green, Inc. v. Alfonzo-Larrain, 490 U. S. 826, 833, 837-838 (1989): recognizes that Rule 21 may be used to dismiss a “dispensable nondiverse party” in appropriate circumstances, but only after careful consideration of prejudice and tactical advantage. The Court distinguished Newman-Green because there the plaintiff sought dismissal; here, a defendant sought to drop another defendant over plaintiffs’ objection.
  • Royal Canin U. S. A., Inc. v. Wullschleger, 604 U. S. 22, 33, 35-36 (2025): emphasizes that the plaintiff is “the master of the complaint” and generally controls whether to proceed in federal or state court; also supplies the Court’s phrasing that an erroneously dismissed party is not “gone for good.”
  • Atlantic Marine Constr. Co. v. United States Dist. Court for Western Dist. of Tex., 571 U. S. 49, 63 (2013): underscores that plaintiffs ordinarily select the forum they consider most advantageous; used to identify prejudice in forcibly keeping plaintiffs in federal court.

6. Background diversity principles and improper-joinder test in the Fifth Circuit

  • Lincoln Property Co. v. Roche, 546 U. S. 81, 89 (2005): reiterates the “complete diversity” requirement—no plaintiff may share citizenship with any defendant.
  • Smallwood v. Illinois Central R. Co., 385 F. 3d 568, 573 (2004) (en banc): cited for the Fifth Circuit’s improper-joinder framework that was applied by the District Court (and later found misapplied to Whole Foods).

7. Circuit-split cases on vacatur in this setting

  • Junk v. Terminix Int'l Co., 628 F. 3d 439, 447, 450-451 (CA8 2010): identified as taking the position that vacatur is not required in these circumstances.
  • Henderson v. Washington Nat. Ins. Co., 454 F. 3d 1278, 1284-1285 (CA11 2006): identified as aligning with the Fifth Circuit that vacatur is required.

8. Concurrence: questioning the modern “improper joinder” doctrine

Justice Thomas concurred fully but flagged a deeper structural concern: whether “improper joinder” (often called “fraudulent joinder”) is consistent with the requirement that federal courts establish jurisdiction before reaching merits issues.

  • Steel Co. v. Citizens for Better Environment, 523 U. S. 83, 94-95, 101-102 (1998): jurisdiction must be established as a threshold; acting on the merits without jurisdiction is ultra vires.
  • Ex parte McCardle, 7 Wall. 506, 514 (1869): if jurisdiction is lacking, the only function is to announce that fact and dismiss.
  • Lance v. Coffman, 549 U. S. 437, 439 (2007) (per curiam): reiterates the threshold requirement.
  • Carden v. Arkoma Associates, 494 U. S. 185, 187 (1990) (citing Strawbridge v. Curtiss, 3 Cranch 267 (1806)): complete diversity requirement.
  • Federated Department Stores, Inc. v. Moitie, 452 U. S. 394, 399, n. 3 (1981): Rule 12(b)(6) dismissals are merits determinations—relevant to the critique that improper-joinder analysis resembles merits adjudication.
  • Early “fraudulent joinder” authorities as Thomas reads them: Alabama Great Southern R. Co. v. Thompson, 200 U. S. 206, 217-218 (1906); Illinois Central R. Co. v. Sheegog, 215 U. S. 308, 316 (1909); Mecom v. Fitzsimmons Drilling Co., 284 U. S. 183, 190 (1931). Thomas suggests these cases focused on bad faith or actual fraud, not predictive merits screening.
  • Lower-court practice he cites as merits-like: International Energy Ventures Mgmt., L.L.C. v. United Energy Group, Ltd., 818 F. 3d 193, 205-209 (CA5 2016); Johnson v. Midwest Div.-RBH, LLC, 88 F. 4th 731, 735-736 (CA8 2023); Jerome-Duncan, Inc. v. Auto-By-Tel, L. L. C., 176 F. 3d 904, 907-909 (CA6 1999); Legg v. Wyeth, 428 F. 3d 1317, 1324, 1320-1325 (CA11 2005).
  • Separation-of-powers concern: Monsalvo Velazquez v. Bondi, 604 U. S. 712, 737 (2025) (THOMAS, J., dissenting).

Although the majority did not reconsider improper joinder, the concurrence signals potential future scrutiny of the doctrine’s legitimacy and scope.

B. Legal Reasoning

1. The jurisdictional defect was never actually cured

The Court’s reasoning turns on a distinction between (i) a valid, final cure of a jurisdictional defect and (ii) an apparent cure created only by an interlocutory error. The dismissal of Whole Foods did not “dispose of the whole case,” was interlocutory, and therefore was subject to post-judgment appellate review and reversal under Dupree v. Younger. Once reversed, Whole Foods was restored, and complete diversity evaporated.

2. Caterpillar’s efficiency rationale is conditional, not free-standing

Hain’s central plea was pragmatic: because the federal trial had occurred and the parties were (erroneously) diverse at final judgment, the verdict should stand for efficiency and finality. The Court answered that Caterpillar Inc. v. Lewis does not authorize courts to preserve judgments where jurisdiction was never properly secured. Efficiency considerations mattered in Caterpillar only because jurisdiction had been truly cured before trial; they cannot substitute for jurisdiction.

3. A district court cannot “create” jurisdiction through mistake

Accepting Hain’s position would mean that federal jurisdiction could be manufactured by erroneous dismissals that temporarily cleanse the docket of nondiverse parties. That would invert the rule that jurisdiction is granted by Congress, not by judicial happenstance, and would risk expanding federal power “by judicial decree” contrary to Kokkonen v. Guardian Life Ins. Co. of America.

4. Rule 21 cannot be used to override a proper forum choice in an improperly removed case

The Court acknowledged Newman-Green, Inc. v. Alfonzo-Larrain and Rule 21’s capacity to drop dispensable parties, but emphasized the equitable, prejudice-sensitive nature of that power and the importance of who seeks it. Here, plaintiffs chose state court by properly naming a nondiverse defendant in the original complaint and promptly moved to remand. Using Rule 21 at a defendant’s request would forcibly strip plaintiffs of that choice, conflicting with the “master of the complaint” principle stated in Royal Canin U. S. A., Inc. v. Wullschleger and the forum-selection norm reflected in Atlantic Marine Constr. Co. v. United States Dist. Court for Western Dist. of Tex.

C. Impact

1. A clarified vacatur rule for erroneous “cures”

The decision establishes a clear rule: when removal was jurisdictionally defective due to nondiversity, an interlocutory dismissal that is later reversed does not cure the defect, and the federal merits judgment must be vacated. This directly resolves the circuit split identified through Junk v. Terminix Int'l Co. and Henderson v. Washington Nat. Ins. Co..

2. Stronger protection for plaintiffs’ forum choice in removal disputes

The Court’s rejection of a defendant-driven Rule 21 maneuver (in these circumstances) prevents defendants from “salvaging” an improperly removed case by dropping a properly joined nondiverse defendant over plaintiffs’ objections. This makes it harder to convert a state case into a federal case through procedural attrition.

3. Litigation strategy implications

  • Removing defendants: face heightened risk that a federal merits victory will be wiped out if the nondiverse party’s dismissal is later reversed. The opinion also highlights that other mechanisms (e.g., partial final judgment under Rule 54(b) or certification under 28 U. S. C. §1292(b)) may reduce waste by enabling earlier appellate resolution of contested removal/jurisdiction decisions.
  • Plaintiffs: gain stronger assurance that promptly contesting removal preserves their ability to return to state court if nondiverse parties were properly joined.
  • Appellate courts: receive an explicit instruction that finality concerns do not permit affirmance where the jurisdictional defect persisted through judgment.

IV. Complex Concepts Simplified

  • Diversity jurisdiction (28 U. S. C. §1332(a)): federal jurisdiction over certain cases between “citizens of different States” (and meeting the amount-in-controversy threshold).
  • Complete diversity: no plaintiff may share state citizenship with any defendant. One shared state on opposite sides defeats jurisdiction.
  • Removal: a defendant’s transfer of a state-court case to federal court when federal jurisdiction exists.
  • Improper joinder: a removal doctrine invoked to argue that a nondiverse defendant should be ignored/dismissed because the plaintiff cannot plausibly recover from that defendant under state law. (Justice Thomas’s concurrence questions whether this doctrine is consistent with jurisdiction-first principles.)
  • Interlocutory order: a non-final ruling made during the case. It usually cannot be appealed immediately and typically is reviewed after final judgment, having “merged” into that judgment.
  • Vacatur: setting aside the lower court’s judgment, often required when the court lacked jurisdiction.
  • Rule 21: allows courts to add/drop parties “on just terms,” sometimes used to preserve diversity by dropping a dispensable nondiverse party—subject to equitable limits and prejudice considerations.
  • Rule 54(b) / 28 U. S. C. §1292(b): mechanisms for obtaining earlier appellate review in limited circumstances, potentially avoiding a full trial followed by a jurisdictional wipeout.

V. Conclusion

Hain Celestial Group, Inc. v. Palmquist draws a firm boundary around Caterpillar Inc. v. Lewis: a federal judgment in a removed diversity case can survive a defect at removal only when the defect is properly and finally cured before judgment. An erroneous, interlocutory dismissal of a nondiverse defendant does not cure jurisdiction, because it is reversible and cannot serve as a lawful foundation for federal adjudication. When the error is corrected on appeal, the jurisdictional defect is revealed to have persisted through judgment—making vacatur mandatory.

The Court further protects plaintiffs’ forum choice by refusing to let defendants use Rule 21 to drop a properly joined nondiverse defendant over plaintiffs’ objection in an improperly removed case. Justice Thomas’s concurrence, meanwhile, signals potential future reconsideration of the improper-joinder doctrine itself, suggesting that the Court may eventually revisit whether merits-like screening of claims against nondiverse defendants is compatible with jurisdiction-first principles.