Lewis settled his claim against Whayne Supply, which led Caterpillar to seek to remove the case to federal court.

Lewis opposed this effort, arguing that complete diversity did not exist between all plaintiffs and all defendants because Liberty Mutual had not settled its claims against Whayne Supply.

Caterpillar asked the Supreme Court to review the case, stressing that at the time judgment was entered, the jurisdictional defect that had existed at the beginning had been cured.

"Does the District Court's initial misjudgment still burden and run with the case, or is it overcome by the eventual dismissal of the nondiverse defendant?"

But Lewis had preserved his objection to federal jurisdiction by filing a motion to remand the case to state court and then by raising the issue on appeal.

Once a diversity case has been tried in federal court, with rules of decision supplied by state law under the regime of Erie Railroad Co. v. Tompkins,[5] considerations of finality, efficiency, and economy become overwhelming."

If the Court were to require that a case that had proceeded through trial to judgment had to be dismissed afterward for lack of jurisdiction, there would be a tremendous waste of judicial resources.