In Caterpillar Inc. v. James David Lewis, the Supreme Court ruled in favor of Caterpillar, reversing a decision by the Ninth Circuit Court of Appeals. The case revolved around whether federal courts had jurisdiction over a lawsuit filed by Lewis against his former employer, Caterpillar Inc., for wrongful termination and violation of state labor laws after he was fired while on disability leave. The lower court dismissed the case because it lacked subject-matter jurisdiction due to incomplete diversity among parties at time of filing; however, complete diversity was achieved before trial commenced when one defendant settled out-of-court with plaintiff and dropped from suit. The Supreme Court held that although federal courts generally must have subject-matter jurisdiction at time complaint is filed (and cannot be cured retroactively), an exception exists if all matters related to non-diverse party are resolved prior to trial and judgment - as happened here when settling defendant left only diverse parties remaining in action. This ruling clarified that under certain circumstances, post-filing changes can cure defects in initial establishment of diversity jurisdiction.

In the dissenting opinion for Caterpillar Inc. v. James David Lewis, Justice Ginsburg argued that the case should have been remanded to state court because there was no diversity of citizenship at the time of removal and therefore federal jurisdiction did not exist. She emphasized that a strict adherence to procedural rules is necessary in order to maintain fairness and predictability in legal proceedings. In her view, allowing cases like this one to proceed in federal court despite clear jurisdictional defects undermines these principles and encourages gamesmanship by defendants seeking a more favorable forum. Furthermore, she disagreed with the majority's assertion that complete diversity existed at trial; instead, she believed it only mattered whether such diversity existed when the case was removed from state court.