Opinion
Civil Action No. 97-775 c/w 97-803 Section: "R"(4)
August 1, 2000
ORDER AND REASONS
Before the Court is plaintiffs' motion for partial dismissal without prejudice, which raises several complex issues concerning the Court's jurisdiction over this case. To facilitate a resolution of these issues, the Court held a status conference. After the conference, the parties submitted memoranda addressing: (1) whether there is a jurisdictional defect in this case because some of the plaintiffs are not diverse; (2) if there is a defect, whether this Court may allow plaintiffs to dismiss the named underwriters and the Lloyd's insurance syndicates that they represent (collectively "Lloyd's") and proceed with the diverse corporate plaintiffs, or whether Lloyd's is an indispensable party; and (3) what other relief, if any, can the Court fashion to retain jurisdiction over all the parties. For the following reasons, the Court finds: (1) the citizenship of each Name in the Lloyd's syndicates must be considered for purposes of diversity jurisdiction; (2) the Names are dispensable and may be dismissed; and (3) the Court is unable to fashion any other relief to retain jurisdiction over the Names.
I. Background
A. procedural Posture
This case arises out of a warehouse fire that destroyed MacFrugal's warehouse. On March 18, 1997, plaintiffs, certain corporate insurers and two lead Lloyd's underwriters for themselves and the Lloyd's insurance syndicates they represent, brought this diversity subrogation action against various defendants, seeking recovery of over $27 million that they paid to the insured, West Coast Liquidators, Inc. ("WCL") , for merchandise destroyed in the fire. The corporate insurers are subrogated to about 75% of WCL's claims and Lloyd's to about 25%. The case has proceeded in this Court for the past three years, and the Court has issued substantial rulings, including several orders dismissing various defendants.
On January 4, 2000, plaintiffs filed a motion for partial dismissal without prejudice, alerting the Court and the other parties for the first time that there may be a jurisdictional defect. Specifically, plaintiffs allege that certain "Names" in Lloyd's syndicates share the same citizenship as some of the defendants and that neither of the named underwriters satisfies the jurisdictional amount. As it turns out, only one "Name" satisfies the jurisdictional amount, and it did not sue in its own name.
B. Structure of Lloyd's
Before addressing the jurisdictional issues raised by plaintiffs, however, it is necessary to explain the nature and structure of Lloyd's of London because "the Lloyd's market presents a unique structure for jurisdictional analysis." E.R. Squibb Sons, Inc. v. Accident Cas. Ins. Co., 160 F.3d 925, 930 (2d Cir. 1998). Lloyd's is a part of the London insurance market. In 1871, the members of the Lloyd's underwriting community were united by an act of Parliament into a society and corporation that was incorporated under the name of Lloyd's. The purpose of the Society is to advance and protect the interests of its members in connection with their underwriting business. As a result, the Society of Lloyd's itself neither accepts insurance, nor assumes liability for the business transacted by its underwriting members. Lloyd's underwriters, however, must be members of the Society of Lloyd's, and, with certain limited exceptions, the Society must approve of brokers before they can place business with Lloyd's. The underwriting members of Lloyd's are known as "Names."
The business of insuring risks at Lloyd's is carried on by more than 400 syndicates. Here, nine syndicates subscribed to WCL's policies. These syndicates are not trusts, and they are not incorporated; rather, they consist of member investors (or Names) who hope to share in the underwriting profits generated by the syndicates placement of business. These syndicates are commonly described as annual ventures because "[f]or a given operating year, a group of Names bands together to form `a syndicate year of account.'" John M. Sylvester Roberta D. Anderson, Is It Still Possible to Litigate Against Lloyd's in Federal Court?, 34 TORT INS. L.J. 1065, 1069 (1999). Although the Names do not actively participate in the business, they provide capital to the market through their participation in syndicates. Consequently, they carry the underwriting risk and share the profit or loss on the insurance placed. Like general partners, each Name in a syndicate faces unlimited personal liability for his pro rata share of the risk under any given insurance policy underwritten by the syndicate in which he participates.
See E.R. Squibb Sons , Inc. v. Accident Cas. Ins. Co., 160 F.3d 925, 931 (2d Cir. 1998) ("[A] Lloyd's lead underwriter cannot be deemed a trustee for jurisdictional purposes."); Indiana Gas Co. v. Home Ins. Co., 141 F.3d 314, 318 (7th Cir. 1998) (" English law denies that the syndicates are trusts, or the active underwriters trustees."); Lowsley-Williams v. North River Ins. Co., 884 F. Supp. 166, 169 (D.N.J. 1995) ("The underwriting arrangement, however, is clearly distinguished from a trust.").
The management structure of a syndicate is like a limited partnership. The Names are required to delegate the management and underwriting of their insurance business to the managing agents of the syndicates in which they participate. See Society of Lloyd's v. John Stewart Clementson, 5 Re. L.R. 215, ¶ 76 (1996). Each managing agent, in turn, employs an active underwriter on the certificate of insurance and manages the business of the syndicate, providing general management, accounting, business development, and other services. These management costs are shared among the Names through a charge to the syndicate as a part of the cost of underwriting. The managing agent also deducts from the premium received by the syndicate various shared expenses, charges a fee based on the stamp capacity of the syndicate, and receives a profit commission on the syndicate's profits. Active underwriters and at least two principals of the managing agency are required to participate in the syndicates that they manage. See id. ¶ 173.
This outline of the structure of Lloyd's clarifies that the syndicates are economic entities, which comprise the aggregate of the underwriting capacities allocated to them by the individual Names. While they are economic entities, syndicates do not, however, have a legal personality under English law. See id. ¶ 72.
II. Analysis
A. Jurisdiction over Lloyd's
In order to exercise diversity jurisdiction, all adverse parties in a suit must be completely diverse with regard to citizenship. See Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806). Therefore, the first inquiry in this case is whether only Lloyd's representative lead underwriters must meet the diversity requirement, or whether each Name must be diverse. The majority of courts that have addressed this issue have held that each Name must be diverse. See Squibb, 160 F.3d at 939 ("[E]ach and every Name whom the lead underwriter represents must be completely diverse."); Indiana Gas Co. v. Home Ins. Co., 141 F.3d 314, 319 (7th Cir. 1998) (holding that each Name must be diverse) Transamerica Corp. v. Reliance Ins. Co. of Ill., 884 F. Supp. 133, 139 (D. Del. 1995) (same); Lowsley-Williams v. North River Ins. Co., 884 F. Supp. 166, 173 (D.N.J. 1995) ("[C]itizenship is determined for a Lloyd's syndicate by the sum of its citizenship of all participating Names. . . ."); Bath Iron Works Corp. v. Certain Member Cos. of the Inst. of London Underwriters, 870 F. Supp. 3, 7 (D. Me. 1994) ("[T]he citizenship of each defendant (i.e., each Name) should be considered for diversity purposes."); Queen Victoria Corp. v. Insurance Specialists of Haw., Inc., 711 F. Supp. 553, 554 (D. Haw. 1989) (Lloyd's "citizenship is determined by the citizenship of all its members."). But see Certain Interested Underwriters at Lloyd's v. Layne, 26 F.3d 39, 43 (6th Cir. 1994) (limiting the court's consideration to the underwriters as the "real parties in interest"). The Fifth Circuit has not ruled on this issue.
While the Seventh Circuit and the Second Circuit agree that the citizenship of the Names controls, these courts arrived at this conclusion through different analytical routes. In Indiana Gas, a policyholder sought indemnity from its insurers for liabilities associated with environmental property damage. When the insurers refused to pay, the insured sought a declaratory judgment requiring them to cover environmental cleanup costs. The Seventh Circuit raised the jurisdictional question on appeal. In finding that diversity jurisdiction was lacking, the court relied on the Supreme Court's decision in Carden v. Arkoma Associates, which held that the citizenship of limited partners must be taken into account in determining diversity jurisdiction. Carden v. Arkoma Assocs., 494 U.S. 185, 195-96, 110 S.Ct. 1015, 1021 (1990). In that case, the Supreme Court found that for diversity purposes, only corporations are treated as legal persons and all other common-law entities would be treated like partnerships. Id. at 190, 110 S.Ct. at 1018. Working within the Carden framework, the Seventh Circuit found that the Lloyd's syndicates had "the personal-liability characteristics of a general partnership and the management structure of a limited partnership." Indiana Gas, 141 F.3d at 317. It further reasoned that the syndicates were not incorporated and did not have the structure of a trust. Id. The court concluded: "General partnerships, limited partnerships, joint stock companies, and unincorporated membership associations are all treated as citizens of every state of which any partner or member is a citizen." Id. (citations omitted). Therefore, because it found Lloyd's to be an unincorporated association, the court held that "the underwriting syndicates have the citizenships of every name." Id.
In Squibb, the Second Circuit faced the jurisdictional issue in the context of a case in which plaintiff had litigated against Lloyd's for 16 years and prevailed at a jury trial. Plaintiff had named a representative underwriter who appeared in both his individual capacity and as a representative of all of the Lloyd's underwriters. The court did not analyze the case under Carden. Instead, it held that "[t]he test for determining the existence of diversity jurisdiction is generally `the citizenship of real parties to the controversy.'" Squibb, 160 F.3d at 930 (citing Navarro Say. Ass'n v. Lee, 446 U.S. 458, 461, 100 S.Ct. 1779, 1782 (1980)). The court rejected the argument that it should focus on the citizenship of only the lead underwriter because "the general rule undoubtedly is `that federal courts must look at the individuals being represented rather than their collective representative to determine whether diversity of citizenship exists.'" Id. at 931 (quoting Northern Trust Co. v. Bunge Corp., 899 F.2d 591, 594 (7th Cir. 1990)). Therefore, the court held that when a Lloyd's underwriter was sued in a representative capacity, each and every Name whom he represents must be diverse. Id. at 939. The Second Circuit apparently believed that Carden was not applicable because it did not view the syndicates as entities of any kind, and it viewed Carden as applicable only when an entity such as a partnership or unincorporated association is a party. Id. at 937.
Notwithstanding the Second Circuit's analysis in Squibb, a majority of courts which have considered the diversity question have held that the syndicates fall within the purview of Carden. See, e.g., Indiana Gas, 141 F.3d at 317; Advani Enters., Inc. v. Underwriters at Lloyds, 140 F.3d 157, 160 (2d Cir. 1998); Transamerica Corp., 884 F. Supp. at 139; Lowsley-Williams, 884 F. Supp. at 172; Queen Victoria Corp., 711 F. Supp. at 554. Moreover, this Court believes that the Second Circuit's view in Squibb that Lloyd's is not an artificial entity of any kind, but simply a number of individuals does not comport with the operational reality of the syndicates. The Seventh Circuit's analysis that syndicates combine the features of general and limited partnerships is more on point. At least two principals of the managing agent, as well as the active underwriters appointed by the managing agent, must participate in the syndicates. The managing agents make investment decisions for the syndicates and transact business on their behalf. The syndicate members do not participate in management decisions, but they share expenses and the profits of the underwriting. Like general partners, they are exposed to unlimited personal liability for their pro rata shares of the policies underwritten. The structure of the syndicate is similar to a joint venture for the common purpose of underwriting various policies. Accordingly, at a minimum, a syndicate has enough organizational structure and economic integration to be an unincorporated association, which, although lacking full legal personality, can still be treated as an entity under the law. See Indiana Gas, 141 F.3d at 317. See also Carden, 494 U.S. at 190, 110 S.Ct. at 1018. Further, a majority of courts treat the syndicates as unincorporated associations. See, e.g., Indiana Gas, 141 F.3d at 317-18; Advani Enters., 140 F.3d at 160; Lowsley-Williams, 884 F. Supp. at 171-72; Queen Victoria Corp., 711 F. Supp. at 554. Indeed, Lloyd's so characterized itself in its original motion, (Mem. Supp. Mot. Partial Dismissal Without Prejudice at 1), and it was only when it discovered that this characterization did not support its jurisdictional argument that it sought to shed the cloak of unincorporated association status. ( See Pls.' Reply Mem. Subject Matter Jurisdiction Under 28 U.S.C. § 1332 at 2, 6 n. 4.)
Finally, this Court does not follow the Sixth Circuit's examination in Layne. Like the Second and Seventh Circuits, this Court disagrees with Layne because the court's reasoning was based on peculiar rules of the state agency law that do not apply in this diversity case. See Squibb, 160 F.3d at 930 n. 10; Indiana Gas, 141 F.3d at 319.
Therefore, because certain Names are citizens of the same states as certain defendants, and because all but one of the Names lack the requisite amount in controversy, the Court finds that it does not have jurisdiction over this case in its present posture. Consequently, the Court must inquire next whether Lloyd's is a necessary and indispensable party to the suit.
B. Lloyd's Necessity And Indispensability
A court may dismiss a party from a suit under Federal Rule of Civil Procedure 21. See FED.R.CIV.P. 21 ("Parties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just."). A court may also dismiss a dispensable non-diverse party in order to salvage its diversity jurisdiction. See FED.R.CIV.P. 19. When considering whether to dismiss a party such as Lloyd's, however, the Court must "sparingly" exercise its authority and "carefully consider whether the dismissal of a nondiverse party will prejudice any of the parties in the litigation." Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 838, 109 S.Ct. 2218, 2225 (1989). Moreover, whether a party is "`indispensable,' that is whether a particular lawsuit must be dismissed in the absence of that person, can only be determined in the context of particular litigation." Provident Tradesmens Bank Trust Co. v. Patterson, 390 U.S. 102, 118, 88 S.Ct. 733, 742 (1968). In other words, "the effect on the parties and on the litigation process is to be the fulcrum of [the] decision." Broussard v. Columbia Gulf Transmission Co., 398 F.2d 885, 888 (5th Cir. 1968) ("Rule 19 is designed to ameliorate the catechistic distinction between `necessary' and `indispensable' parties, which had sometimes subordinated logic and reality to historical encrustations. . . . [P]ragmaticals are to be the solvents of joinder problems, replacing former rigid terminological descriptions of the parties.").
Before addressing Lloyd's indispensability, the Court must first determine whether Lloyd's is a party "to be joined if feasible" under Rule 19(a). See Haas v. Jefferson Nat'l Bank of Miami Beach, 442 F.2d 394, 397-98 (5th Cir. 1971). Federal Rule of Civil Procedure 19(a) provides:
A person . . . whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party . . . if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.
Here, Lloyd's and the corporate insurers are co-owners of WCL's tort claims against defendants. As such, plaintiffs are partial subrogees standing in the shoes of their insured, WCL. See, e.g., Potomac Elec. Power Co. v. Babcock Wilcox Co., 54 F.R.D. 486, 489 (D. Md. 1972) ("An insurer which has paid for a loss in whole or in part becomes subrogated to the rights of the insured as holder of the claim and stands in the shoes of such subrogor."). Because a partial subrogee can only sue for its portion of the total damage claimed, Lloyd's and the corporate insurers have independent substantive rights against the tortfeasors. See United States v. Aetna Cas. Sur. Co., 338 U.S. 366, 381, 70 S.Ct. 207, 215 (1949). Thus, as both Lloyd's and the corporate insurers can independently pursue their claims against defendants, complete relief cannot be accorded to defendants if Lloyd's is not retained as a party. See Ramsey v. Bomin Testing, Inc., 68 F.R.D. 335, 337-38 (W.D. La. 1975) ("Defendants cannot be accorded complete relief as, if they are either found or not found to be liable to Plaintiffs, there will still be claims outstanding arising out of the same transaction."). Indeed, pre-Rule 19 cases generally regarded partial subrogees to be necessary parties in suits against a tortfeasor. See, e.g., Turk v. Illinois Cent. R.R. Co., 218 F. 315. 318-19 (6th Cir. 1914). Further, adjudicating this claim once would serve the interests of judicial efficiency and economy and the public interest in avoiding the duplicative costs of piecemeal litigation.
Although Lloyd's should be retained as a plaintiff, if feasible, this Court has already determined that the Names destroy this Court's diversity jurisdiction. Therefore, the Court must determine whether Lloyd's "presence is so vital that `in equity and good conscience the action . . . should be dismissed, [Lloyd's] being thus regarded as indispensable.'" Haas, 442 F.2d at 398 (quoting Rule 19(b)). In making this determination, Rule 19(b) directs the Court to consider the following factors:
first, to what extent a judgment rendered in the person's absence might be prejudicial to the person or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person's absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.
FED.R.Civ.P. 19(b). These factors, however, are "not rigid tests;" rather, they "are guides to the overarching `equity and good conscience' determination. Whalen v. Carter, 954 F.2d 1087, 1096 (5th Cir. 1992). See also Lone Star Indus., Inc. v. Redwine, 757 F.2d 1544, 1551 (5th Cir. 1985) ("Rule 19(b) is not intended to exclude considerations, not enumerated, that are applicable in a particular case.").
Here, having considered Rule 19(b)'s enumerated factors, the Court is convinced that Lloyd's is a dispensable party. First, a judgment rendered in this case without Lloyd's does not prejudice the corporate plaintiffs, Lloyd's, or the defendants. The corporate plaintiffs can obtain complete relief, and the defendants cannot be held liable for more than the corporate insurers' pro rata shares of the risk. Further, both Lloyd's and the defendants will be collaterally estopped from relitigating the issues of defendants' liability to WCL. As a threshold matter, "when a federal court renders a decision in a diversity case, the decision's preclusive effect is measured by federal principles of preclusion." Terrell v. DeConna, 877 F.2d 1267, 1270 (5th Cir. 1989) See also Reeder v. Succession of Palmer, 623 So.2d 1268, 1271 (La. 1993) (noting that it must apply federal law to "determine the preclusive effects of a judgment rendered by a federal court exercising federal question jurisdiction."). And under federal principles, collateral estoppel requires three elements: "(1) the issue at stake must be identical to the one involved in the prior action; (2) the issue must have been actually litigated in the prior action; and (3) the determination of the issue in the prior action must have been a necessary part of the judgment in that earlier action." Recoveredge L.P. v. Pentecost, 44 F.3d 1284, 1290 (5th Cir. 1995) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5, 99 S.Ct. 645, 649 n. 5 (1979)). Some cases, however, also recognize a fourth requirement that there be "no special circumstance that would render preclusion inappropriate or unfair." United States v. Shanbaum, 10 F.3d 305, 311 (5th Cir. 1994). Critically, collateral estoppel, unlike res judicata, does not require mutuality between the parties in the prior action and the parties in the subsequent action. As the United States Supreme Court observed in Allen v. McCurry,
the Court has eliminated the requirement of mutuality in applying collateral estoppel to bar relitigation of issues decided earlier in federal-court suits, and has allowed a litigant who was not a party to a federal case to use collateral estoppel "offensively" in a new federal suit against the party who lost on the decided issue in the first case.Allen v. McCurry, 449 U.S. 90, 94-95, 101 S.Ct. 411, 415 (1980) (citations omitted). See also Parklane Hosiery, 439 U.S. at 331, 99 S.Ct. at 651-52 (mutuality not required for "offensive" collateral estoppel); Blonder-Tongue Lab., Inc. v. University of Ill. Found., 402 U.S. 313, 328-29, 91 S. Ct. 1434, 1442-43 (1971) (mutuality not required for "defensive" collateral estoppel). Accordingly, as Lloyd's and the corporate insurers are partial subrogees of the same tort claim, the issues that the corporate insurers will litigate against defendants are necessarily identical to the issues that confront Lloyd's. The facts and the law to be applied are the same, and the corporate insurers' interest in pursuing the claim is the same as Lloyd's. Furthermore, there is no question that the issue of defendants' liability will be adequately litigated before this Court and that the determination of these issues will be a necessary part of this Court's judgment. Therefore, should Lloyd's pursue its claim in state court, where it already has a dormant action pending, it will only have to prove this Court's judgment as to the percentages of liability of the defendants, if any, and its percentage share of the subrogated claim. If defendants win, there can be no relitigation of liability issues in state court.
Second, the Court is conscious of the substantial investment of time and effort that has already been expended in this case, including several orders dismissing various defendants. To dismiss the case would render this Court's previous orders nugatory and force a state court to reconsider all of the issues anew. Such a result would be contrary to both the judicial and the public interests. While it is true that the entire action could be litigated in state court, the state court would have to plow over ground this Court has already planted. With proper application of the estoppel rules, the state court will have far less to do and the entire matter can be disposed of much faster than by dismissing the entire case. Finally, a number of cases have found that partial subrogees are necessary, but not indispensable. See, e.g., Arkwright-Boston Mfrs. Mutual Ins. Co. v. City of New York, 762 F.2d 205, 209 (2d Cir. 1985); Prudential Lines, Inc. v. General Tire Int'l Co., 74 F.R.D. 474, 475 (S.D.N.Y. 1977); St. Paul Fire Marine Ins. Co. v. Peoples Natural Gas Co., 166 F. Supp. 11, 12 (W.D. Pa. 1958). Therefore, the Court finds that Lloyd's is a dispensable party.
C. Methods to Preserve the Court's Jurisdiction Over the Names
To preserve the Court's jurisdiction over some or all of the Names, despite their dispensability, the parties have proposed the following: (1) suit by a new Name in its individual capacity; (2) the exercise of supplemental jurisdiction under 28 U.S.C. § 1367; (3) the assertion of jurisdiction under 28 U.S.C. § 1332 (a)(3) ; and (4) the certification of a class under Rule 23 or Rule 23.2. The Court will examine and reject each proposal in turn.
1. Suit by Names in individual capacities
First, some parties have suggested that the Court should dismiss the nondiverse plaintiffs and allow plaintiffs to amend their complaint by substituting a Name who satisfies the diversity requirements in its individual capacity. The Court rejects this proposal. First, to substitute a new Name for Ian David McAuslin and John Richard Ludbrooke Youell in their individual capacities "necessarily create [si a new lawsuit" and is prohibited. Aetna Cas. Sur. Co. v. Hillman, 796 F.2d 770, 774 (5th Cir. 1986). Second, to substitute a new Name for McAuslin and Youell in their representative capacity still runs afoul of the requirement that each Name be considered in determining diversity jurisdiction because Lloyd's is treated as an unincorporated association for the purpose of jurisdiction analysis. See id. at 775. As all but one of the Names would still fail to satisfy the diversity requirements, substitution would not cure the jurisdictional defect. Therefore, substituting a new Name for McAuslin and Youell is impossible in their individual capacities and fails to cure the jurisdictional defect in their representative capacities. Consequently, Lloyd's offer to sign an agreement to be bound by any judgments rendered for or against the new Name does not fix the jurisdictional problem.
2. Supplemental jurisdiction under section 1367
Second, plaintiffs and certain defendants argue that this Court can exercise supplemental jurisdiction over the nondiverse claims to preserve subject matter jurisdiction. Title 28, United States Code, Section 1367(a) provides in pertinent part:
Except as provided in subsections (b) and (c) . . . in any civil action in which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to the claims in the action . . . that they form part of the same case or controversy under Article III of the United States Constitution.28 U.S.C. § 1367 (a). Subsection (b) provides that when a court's jurisdiction is founded solely on diversity under 28 U.S.C. § 1332, a district court shall not have jurisdiction over claims by persons proposed to be joined as plaintiffs under Rule 19, when exercising supplemental jurisdiction over those claims would frustrate the jurisdictional requirements of section 1332. See 28 U.S.C. § 1367 (b). Significantly, the "subsection (b) limitations of supplemental jurisdiction are designed to prevent plaintiffs from circumventing the requirements of diversity." United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998) (Congress "did not want plaintiffs to be able to plead a complaint craftily so as to force a nondiverse case into federal court."). See also Viacom Int'l, Inc. v. Kearney, 212 F.3d 721, 726-27 (2d Cir. 2000) ("[Section] 1367 reflects Congress' intent to prevent original plaintiffs . . . from circumventing the requirements of diversity."); Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 221 (3d Cir. 1999) (upholding the complete diversity requirements for plaintiffs under section 1367). As 28 U.S.C. § 1332 provides the jurisdictional basis in this case, any exercise of supplemental jurisdiction over Lloyd's is subject to the provisions of section 1367(b). And section 1367(b) not only militates, in principle, against the exercise of supplemental jurisdiction over Lloyd's as nondiverse plaintiffs, but also explicitly forbids the exercise of supplemental jurisdiction over nondiverse "persons[, such as Lloyd's,] proposed to be joined under Rule 19." 28 U.S.C. § 1367 (b). As this Court has found, Lloyd's is a party that should be joined if feasible under Rule 19. Therefore, the Court cannot exercise supplemental jurisdiction over the nondiverse plaintiffs.
3. Jurisdiction under section 1332(a)(3)
Third, plaintiffs suggest that section 1332(a)(3) does not require the foreign Names to meet the diversity jurisdictional amount if their claims are joined to the insurance corporations' claims. The Court rejects this suggestion. Although the Fifth Circuit has not specifically addressed the relationship between section 1332(a)(3) and the diversity jurisdictional amount, it has explained that "the rationale behind the diversity jurisdiction statute require[s] its strict construction." Fawvor v. Texaco, Inc., 546 F.2d 636, 639 (5th Cir. 1977). By its terms, section 1332(a) requires the matter in controversy to exceed the sum or value of $75,000, and nothing in the language of the statute suggests that the foreign Names are exempt from individually satisfying this requirement. See Humm v. Lombard World Trade, Inc., 916 F. Supp. 291, 299 (S.D.N.Y. 1996) (noting that the Names did not satisfy the jurisdictional amount required by section 1332(a)); Chase Manhattan Bank, N.A. v. Aldridge, 906 F. Supp. 870, 876 (S.D.N.Y. 1995) ("[T]here is not a sufficient jurisdictional amount at issue for any of the Names to pursue the counterclaim individually."); Lizio v. General Dynamics Corp., 1999 WL 6920, at *3 (N.D.N.Y. Jan. 5, 1999) (noting that section 1332(a)(3) requires the amount in controversy to exceed $75,000). Moreover, the jurisdictional amount is an element of diversity jurisdiction, and as the Fifth Circuit has stated: "There is no indication — legislative or judicial — that a deviation from the rule applied in ordinary diversity cases would or ought obtain in a suit brought by an alien." Ed Fred, Inc. v. Puritan Marine Ins. Underwriters Corp., 506 F.2d 757, 758 (5th Cir. 1975) (citations omitted). Accordingly, the Court will not excuse the jurisdictional amount for the foreign Names.
4. Class Action
Fourth, some of the parties suggest recasting this case as a class action under either Federal Rule of Civil Procedure 23 or Rule 23.2. By recasting the suit, plaintiffs claim to remove the obstacles to this Court's subject matter jurisdiction because only the citizenship of the named class representative would be relevant for the purposes of establishing diversity jurisdiction. See Snyder v. Harris, 394 U.S. 332, 340, 89 S.Ct. 1053, 1059 (1969) Moreover, they point out that the Fifth Circuit has held that in the context of a Rule 23 class action only the class representative need satisfy the jurisdictional amount requirement because section 1367 grants the court supplemental jurisdiction over the claims of the unnamed class members whose claims fail to meet the jurisdictional amount. See In re Abbott Labs., 51 F.3d 524, 529 (5th Cir. 1995). See also Aetna Cas. Sur. Co. v. Iso-Tex, Inc., 75 F.3d 216, 218 (analogizing Rule 23.2)
Notwithstanding the apparent advantages of class certification, the Fifth Circuit has never addressed whether a district court can, or should, recast a lawsuit that was not originally filed as a class action in order to preserve jurisdiction. But cf. Iso-Tex, 75 F.3d at 218 (analogizing representative claim to Rule 23.2 class action, contrary to Hillman, 796 F.2d at 774). This Court finds, however, plaintiffs' initial election not to file a class action to be dispositive, especially in light of the numerous judicial opinions issued before Lloyd's even filed its complaint on March 18, 1997, holding that each Name would have to satisfy the diversity requirements. See, e.g., Transamerica Corp., 884 F. Supp. at 139; Lowsley-Williams, 884 F. Supp. at 172; Bath Iron Works Corp., 870 F. Supp. at 7, Queen Victoria Corp., 711 F. Supp. at 554; International Ins. Co. v. Certain Underwriters at Lloyd's London, 1991 WL 693319, at *9 (N.D. Ill. Sept. 16, 1991). To allow plaintiffs to avail themselves of Rule 23 or Rule 23.2 here would extend the limits of statutorily conferred jurisdiction through the expediency of a procedural rule. But federal "jurisdiction is not a game." Squibb, 160 F.3d at 929. And the Court cannot countenance this result because "[t]he complete-diversity requirement cannot be transmuted into a minimal-diversity requirement so easily.". Indiana Gas, 141 F.3d at 321 (categorically rejecting on the merits recharacterization as a Rule 23 or Rule 23.2 class action). See also 900 3rd Ave. Assocs. v. Finkielstain, 758 F. Supp. 928, 932 (S.D.N.Y. 1991) (refusing to "engage in [a] awkward procedural exercise" and "declin[ing] to restructure [the] litigation as a class action."). But see Squibb, 160 F.3d at 933 n. 15 (allowing for the possibility of recharacterization because it had allowed a derivative suit to be recast retroactively before). Such a facile recharacterization by plaintiffs would fly in the face of Rule 82, which admonishes that the Federal Rules of Civil procedure "shall not be construed to extend . . . the jurisdiction of the United States district courts. . . ." FED.R.Civ.P. 82. See Indiana Gas, 141 F.3d at 321 (citing Rule 82)
Moreover, even if this Court were willing to recharacterize this suit, plaintiffs admit that the named representatives do not satisfy the jurisdictional amount requirements. (Pls.' Reply Mem. Subj. Matter Jurisdiction Under 28 U.S.C. § 1332 at 4.) Absent a qualified class representative, creation of a class action is impossible. See Iso-Tex, 75 F.3d at 218 (requiring a class representative to satisfy the jurisdictional amount requirement); In re Abbott Labs, 51 F.3d at 529 (same) And, as the Court has already explained, a new representative plaintiff who does satisfy that requirement cannot be substituted. Therefore, the Court finds that it cannot recharacterize this case as a class action.
III. Conclusion
For the foregoing reasons, plaintiffs' motion to dismiss the actions of the individual Lloyd's underwriters and the members of the Lloyd's insurance syndicates without prejudice is granted. In all other respects plaintiffs' motion is denied. Specifically, the Court dismisses without prejudice Ian David McAuslin and John Richard Ludbrooke Youell individually and in their capacities as representatives of Lloyd's underwriters.