UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT
decided: February 28, 1975.
JOHN W. CARSON AND JOANNA HOLLAND, PLAINTIFFS-APPELLANTS,
ALLIED NEWS CO., AN ILLINOIS CORPORATION; J. L. MARSHALL NEWS CO., A CORPORATION; LUDINGTON NEWS CO., A CORPORATION; PIERCE NEWS CO., A CORPORATION; METROPOLITAN NEWS CO., A CORPORATION; SUNSET NEWS CO., A CORPORATION; WISCONSIN PERIODICAL DISTRIBUTING CO., A CORPORATION; AND NATIONAL INSIDER, INC., AN ILLINOIS CORPORATION, DEFENDANTS-APPELLEES
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division - No. 72 C 1145 Frank J. McGarr, Judge.
Fairchild, Chief Judge, Stevens, Circuit Judge, and Markey, Chief Judge.*fn*
STEVENS, Circuit Judge.
In their original complaint for libel, plaintiffs alleged that they were New York "residents"; in their amended complaint they alleged that they were California "residents." Among the eight defendants are two distributors allegedly citizens, respectively, of New York and California.*fn1 Presumably, though the pleadings are silent on the point, plaintiffs intended to invoke federal jurisdiction under 28 U.S.C. § 1332(a)(1). The absence of complete diversity was apparently unnoticed in the district court, where a summary judgment on the merits was entered for defendants. After we called the parties' attention to the jurisdictional defect, both urged us to decide the merits and to dismiss the nondiverse defendants.*fn2 The question is whether we have such power and, if so, whether this is an appropriate case for its exercise.
At best, our power is extremely doubtful. In a comparable situation in 1942, we held that we must "deal with the record as we find it" and "are powerless" to do anything other than to recognize the jurisdictional defect and remit the case to the district court. Alderman v. Elgin, Joliet & Eastern Ry., 125 F.2d 971, 973. Specifically, we held that we could not allow the plaintiff to amend his pleading by striking dispensable parties in order "to bring the case within federal jurisdiction." Ibid.*fn3
Logically, it might be argued that if the district court has the power to create jurisdiction retroactively by dismissing a nondiverse defendant, see Kerr v. Compagnie De Ultramar, 250 F.2d 860, 862-864 (2d Cir. 1958), we should have like authority. Since the ability of the district court to perfect its jurisdiction in this manner may rest either on its inherent powers or on a liberal construction of Rule 15(a) of the Federal Rules of Civil Procedure, see Kerr, supra, at 864, it is conceivable that 28 U.S.C. § 1653, which was enacted subsequent to our Alderman decision, might be read to give us such jurisdiction.*fn4
Even assuming that the jurisdictional argument is tenable, notwithstanding the unbroken line of authority to the contrary, we are satisfied that this is not an appropriate case in which the appellate court should dismiss a non -diverse party. There is some ambiguity as to whether both the New York and the California distributors, or just one of the two, should be dismissed. Moreover, though plaintiffs have alleged the principal places of business of the other defendants, they have not alleged such defendants' places of incorporation, and, therefore, the allegations of citizenship are insufficient. 28 U.S.C. § 1332(c). Finally, if the case is remanded to the district court, and the pleadings are reframed there, the district judge will have an opportunity to reexamine the merits in the light of an arguably relevant and important intervening decision of the United States Supreme Court. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S. Ct. 2997, 41 L. Ed. 2d 789, 42 U.S.L.W. 5123 (1974).
Accordingly, the judgment of the district court is vacated. On remand, the district court should allow amendments to cure the jurisdictional defects noted and, in the absence of such amendments, shall dismiss the case without prejudice. See Alderman, supra, at 973.