In the case of Newman-Green, Inc. v. Alfonzo-Larrain et al., 1988, the U.S Supreme Court ruled that federal courts have discretionary power to dismiss a dispensable non-diverse party to preserve jurisdiction in a diversity action. The plaintiff, Newman-Green Inc., an Illinois corporation sued several defendants including one U.S citizen residing abroad for breach of contract and fraud under diversity jurisdiction. However, because there was no complete diversity between plaintiffs and defendants due to the presence of one defendant who was also a US citizen (although living abroad), it threatened the court's ability to hear the case as per Article III of Constitution which requires "complete" diversity for federal jurisdiction in such cases. The Supreme Court held that under Rule 21 Federal Rules Civil Procedure (FRCP), district courts can drop or dismiss nondiverse parties if their role is not indispensable thus preserving subject matter jurisdiction over remaining diverse parties.

In the dissenting opinion for Newman-Green, Inc. v. Alfonzo-Larrain et al., Justice Scalia argued against the majority's decision to grant federal courts the power to dismiss a dispensable party in order to maintain diversity jurisdiction. He contended that this was an overreach of judicial authority and not within their constitutional purview. According to him, it is Congress' role, not the court's, to determine whether or how federal courts can cure defective diversity jurisdiction by dismissing a non-diverse party from a case after it has commenced. The Constitution does not provide such powers directly nor implicitly and thus should be left solely under legislative control as per Article III of the U.S constitution which limits judicial power only on cases where there is complete diversity among parties involved.