519 U.S. 61 (1996)
In June 1989, James David Lewis, a Kentucky resident, filed a personal injury lawsuit in Kentucky state court against Caterpillar Inc., a Delaware corporation with its principal place of business in Illinois, and Whayne Supply Company, a Kentucky corporation.1 Lewis asserted state-law claims arising from injuries sustained while operating a bulldozer.2 Liberty Mutual Insurance Group, a Massachusetts corporation, later intervened as a plaintiff asserting subrogation claims against both defendants for workers' compensation benefits paid to Lewis.3
Less than a year after filing, Lewis settled his claims against Whayne Supply.4 On June 21, 1990, Caterpillar filed a notice of removal to the United States District Court for the Eastern District of Kentucky, asserting diversity jurisdiction based on the settlement.5 Lewis moved to remand, noting that Liberty Mutual had not settled its subrogation claim against Whayne Supply, so complete diversity was lacking.6 The District Court denied the motion on September 24, 1990.7
In June 1993, Liberty Mutual settled its claim with Whayne Supply, leading to the dismissal of Whayne Supply from the case.8 The case proceeded to a six-day jury trial in November 1993 between Lewis and Caterpillar, resulting in a verdict and judgment for Caterpillar on November 23, 1993.9 Lewis moved for a new trial, which the District Court denied on February 1, 1994.10
On appeal, the Court of Appeals for the Sixth Circuit vacated the judgment, determining that diversity was incomplete at the time of removal.11 Caterpillar petitioned for review, and the Supreme Court granted certiorari in 1996.12
Whether the absence of complete diversity at the time of removal is fatal to federal-court adjudication?13
A district court's error in failing to remand a case improperly removed is not fatal to the ensuing adjudication if federal jurisdictional requirements are met at the time judgment is entered.14 This rule follows from the recognition that once a diversity case has been tried in federal court with rules of decision supplied by state law, considerations of finality, efficiency, and economy become overwhelming.15
No. The established facts establish that Lewis filed suit in Kentucky state court in June 1989 against both Caterpillar and Whayne Supply, with Liberty Mutual later intervening.16 Caterpillar removed the action on June 21, 1990, at a moment when complete diversity was lacking because Whayne Supply remained a defendant owing to Liberty Mutual's unsettled subrogation claim.17 The District Court denied Lewis's timely remand motion on September 24, 1990.18
By June 1993 Whayne Supply had been dismissed following settlement, so that complete diversity existed between the remaining parties when the case proceeded to a six-day jury trial in November 1993.19 Judgment was entered for Caterpillar on November 23, 1993.20 Because federal jurisdictional requirements were satisfied at the time of judgment, the initial removal defect does not invalidate the adjudication that followed.21
The rule therefore requires that the statutory flaw in removal be treated as cured once the nondiverse party is eliminated and the case is tried to final judgment under state-law rules of decision.22 Vacating that judgment on appeal would impose an exorbitant cost on the dual court system.23 It would force relitigation of a matter already fully adjudicated in a forum that possessed subject-matter jurisdiction at the critical moment of judgment entry.24
The absence of complete diversity at the time of removal is not fatal to federal-court adjudication when complete diversity exists at the time of judgment.25