In the case of Owen Equipment & Erection Co. v. Kroger, 1977, the U.S Supreme Court ruled that federal courts do not have jurisdiction over a non-diverse third-party defendant in a diversity action even if it is related to the main claim. The plaintiff, Mrs. Kroger filed suit against Omaha Public Power District (OPPD) for wrongful death of her husband due to electrocution while working on their property and OPPD cross-claimed against Owen Equipment who owned the crane involved in this incident as they were an independent contractor hired by OPPD. Later, Mrs.Kroger amended her complaint to include Owen as well but since both parties were from Iowa there was no diversity of citizenship between them which is required under Article III for federal court's jurisdiction in civil cases.The Supreme Court held that ancillary jurisdiction did not extend to claims by a plaintiff against third-party defendants when original jurisdiction was based solely on diversity.

In the dissenting opinion for Owen Equipment & Erection Co. v. Kroger, Justice William Rehnquist argued that the majority's decision to dismiss a case due to lack of diversity jurisdiction was incorrect and inconsistent with previous court rulings. He contended that once federal jurisdiction has been properly invoked based on a substantial claim arising under federal law, it should not be defeated by later developments in the lawsuit such as an amendment adding non-diverse parties or claims. Furthermore, he pointed out that there is no constitutional requirement for complete diversity among all defendants and plaintiffs; rather, this rule is statutory and can be modified by Congress if deemed necessary. Therefore, he believed that dismissing cases because of incomplete diversity would unnecessarily complicate litigation procedures without providing any clear benefits.