134 F.4th 73
2d Cir.2025Background
- Hamilton Reserve Bank sued the Democratic Socialist Republic of Sri Lanka for nonpayment of $250+ million in sovereign bonds upon maturity.
- Appellants (Guzman, Ultimate Concrete LLC, Intercoastal Finance Ltd.) attempted to intervene, alleging Hamilton used their $50 million deposit to purchase Sri Lankan bonds and later refused to return their funds.
- Appellants claimed a property interest in the Sri Lankan bonds via the deposited funds.
- The district court denied intervention, finding no supplemental jurisdiction under 28 U.S.C. § 1367(a) because appellants' claims lacked a "common nucleus of operative fact" with Hamilton’s contract claim against Sri Lanka.
- Appellants argued for a different standard, asserting that meeting Rule 24(a)(2) intervention requirements was sufficient for supplemental jurisdiction; the district court disagreed.
- Appellants appealed; the Second Circuit reviewed de novo the district court's jurisdictional finding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Correct standard for supplemental jurisdiction | Rule 24(a)(2) intervention suffices for supplemental jurisdiction | Section 1367(a)’s "common nucleus" governs | Section 1367(a) “common nucleus” is the standard |
| Whether claims share a “common nucleus” | Deposits were used to purchase bonds; claims overlap | Claims about deposits and nonpayment are unrelated | No substantial factual overlap; no shared nucleus |
| Prior case law and Rule 24(a)(2) implications | Courts recognize supplemental jurisdiction upon right to intervene | Pre-1990 cases don’t override Section 1367's text | No special rule for intervenor claims post-1990 |
| District court’s application of standard | District court applied incorrect/too narrow test | District court properly applied correct legal test | District court applied correct test; denial affirmed |
Key Cases Cited
- Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005) (federal courts have only jurisdiction authorized by Constitution/statute; supplemental jurisdiction must be affirmatively granted)
- Achtman v. Kirby, McInerney & Squire, LLP, 464 F.3d 328 (2d Cir. 2006) (supplemental jurisdiction requires claims derive from a "common nucleus of operative fact")
- Royal Canin U.S.A., Inc. v. Wullschleger, 604 U.S. 22 (2025) (supplemental jurisdiction extends only to state-law claims sharing a common nucleus with federal claims)
- Gualandi v. Adams, 385 F.3d 236 (2d Cir. 2004) (legal conclusions regarding existence of jurisdiction are reviewed de novo)