In a lawsuit, a necessary party is a person or persons whose interests are affected directly by the outcome of the case. Federal cases such as Shields v. Barrow have distinguished necessary parties from indispensable parties. Following Rule 19 of the Federal Rules of Civil Procedure, necessary parties must be joined unless there is a valid reason for excluding them. One valid reason is if that party is from the same state as any party on the opposing side; this would destroy complete diversity, a requirement for a federal court to have subject matter jurisdiction. Another reason would be if court would be an improper venue for the necessary party. In this context, the inability to join a necessary party would not mean the lawsuit would have to be dismissed, as separate actions could be brought by or against them. Indispensable parties, on the other hand, are so integral to the lawsuit that the action cannot proceed without them. Thus, the lawsuit would have to be dismissed if they could not be properly joined.
In state courts, there is not always a distinction between necessary and indispensable parties. In some states, the terms are used interchangeably and in others–such as Illinois–the term “indispensable” is not used at all. An example of this, can be seen in the Illinois case of Safeco Ins. Co. of Illinois v. Treinis, which enumerated three categories of necessary parties.
For a more in depth discussion of necessary parties versus indispensable parties, please see the article Necessary and Indispensable Parties by Professor Fleming James of Yale Law School.
[Last updated in July of 2020 by the Wex Definitions Team]