In Re Lorazepam & Clorazepate Antitrust Litigation, 631 F.3d 537

Four health insurers sue Mylan and chemical suppliers under state antitrust laws for exclusive licensing effects on self-funded customers who bear the insurance costs.
Self-funded customers are entities that pay benefits directly; plaintiffs sue on their behalf as third-party administrators and as real parties in interest for damages.
Self-funded customers are the real and substantial parties with rights to sue; plaintiffs cannot merely act as agents and must count those customers for diversity purposes.
District court allowed claims to proceed under Rule 17(a)(1) and then attempted a voluntary ratification process by having self-funded customers opt in.
Defendants later argued lack of complete diversity because at least one nondiverse self-funded customer (e.g., 3M) existed, potentially destroying jurisdiction.
The court remanded to permit Rule 21 dismissal of nondiverse parties to restore complete diversity, with possible partial retrial on damages; merits remain undecided.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether self-funded customers count for diversity purposes	Self-funded customers are real parties in interest and must be counted	These customers are not formal parties in the action	Yes, self-funded customers must be counted; their presence can destroy complete diversity
Whether complete diversity exists given a nondiverse self-funded party	Diversity remains under Rule 1367	Nondiverse party destroys jurisdiction under Strawbridge	Nondiverse party destroys diversity; remand for Rule 21 proceedings to drop them
Whether supplemental jurisdiction can salvage the action despite lack of complete diversity	Allapattah supports supplemental jurisdiction over related claims	Allapattah does not override Strawbridge; diversity contamination remains	Supplemental jurisdiction cannot cure lack of complete diversity; case remanded for Rule 21 analysis
Timing of jurisdiction with respect to when self-funded customers become parties	Jurisdiction attaches when suit commenced	Jurisdiction depends on later developments	Jurisdiction under Mollan depends on status at filing; self-funded status established with suit commencement
Appropriate remedy given lack of jurisdiction	Proceed with remaining claims after ratifying/dropping parties	May require dismissal of nondiverse parties	Remand to district court to determine which self-funded customers may be dropped to restore complete diversity

Capron v. Van Noorden, 6 U.S. (2 Cranch) 126 (1804) (jurisdiction cannot be conferred by consent; jurisdiction defects may be raised on appeal)
Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806) (complete diversity required among all plaintiffs and defendants)
Mollan v. Torrance, 22 U.S. (9 Wheat.) 537 (1824) (jurisdiction depends on state of things at time of action brought)
Exxon Mobil Corp. v. Allapattah Servs., 545 U.S. 546 (2005) (§1367 may permit hearing related claims but not overcome lack of complete diversity)
Associated Ins. Mgmt. Corp. v. Ark. Gen. Agency, 149 F.3d 794 (8th Cir. 1998) (treats self-funded customers as real parties for diversity considerations)