4. Should the motion to dismiss be granted?

The power to adjudicate a certain kind of controversy is known as subject-matter jurisdiction. In the federal courts, there are two basic kinds of cases where federal subject-matter jurisdiction applies: suits between citizens of different states, and suits involving a federal question. The party seeking to invoke the jurisdiction of a federal court must affirmatively show that the case is within the jurisdiction of that court.

Supplemental jurisdiction is the legal mechanism that allows additional claims and parties to be brought into a federal case without independently satisfying subject-matter jurisdiction, once there is a basic controversy that does have subject-matter jurisdiction. 28 U.S.C. §1367 states that in any civil action which the federal district court has original jurisdiction, the district court will 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.

When the core claim is based solely on diversity, the statute is less generous. It eliminates the requirement for diversity and amount-in-controversy for supplemental claims. However, this grant of jurisdiction only covers (i) compulsory counterclaims, (ii) joinder of additional parties to compulsory counterclaims, (iii) cross-claims, (iv) joinder of multiple plaintiffs under FRCP 20, (v) and FRCP 23 joinder of plaintiffs.

B is correct. In an action in federal court, brought under diversity jurisdiction, a defendant may implead a third-party defendant who may be liable to the original defendant for all or part of the plaintiff's claim. Impleader allows the defendant to join a third-party defendant, as long as there is a basis of subject-matter jurisdiction for the claim. Here, the distributor and the wholesaler are not diverse and the amount in controversy does not exceed $75,000. However, the claim can still be added through supplemental jurisdiction because the claim arises from the same common nucleus of operative fact as the underlying case.

The wholesaler, a co-defendant, can add a counterclaim against the original defendant as long as the claim also has a basis for subject-matter jurisdiction. The wholesaler's counterclaim would also meet supplemental jurisdiction because it concerns payment for the goods at issue and so arises out of the same nucleus of operative fact.

A is incorrect. This is the correct conclusion, but incorrect reasoning. Although the wholesaler's and the distributor's principal places of business are diverse, they are both incorporated in the same state. Therefore, there is not complete diversity between the parties. However, the claim can still be added through supplemental jurisdiction.

C is incorrect. Although there is not complete diversity between the distributor and the wholesaler, the claim can still be brought as long as there is a basis for the claim in subject-matter jurisdiction. Here, the claim can be brought under supplemental jurisdiction because it arises out of the same common nucleus of operative fact.

D is incorrect. The FRCP limits the use of supplemental jurisdiction to join parties when a case is solely based on diversity jurisdiction. However, these rules apply to plaintiffs, not defendants. Although a plaintiff cannot use supplemental jurisdiction to overcome a lack of diversity, a defendant may through impleader. Therefore, it does not matter that the shop owner and the wholesaler are not completely diverse.