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Sierra sued Atlas Corp. in federal district court for breach of a state-law contract. Sierra and Atlas are both citizens of State Q, and the complaint alleges $40,000 in damages. No federal statute is involved. Atlas answered, litigated for 14 months, completed discovery, and repeatedly stated that it preferred federal court. Two weeks before trial, the judge noticed the citizenship and amount allegations and ordered the parties to brief subject matter jurisdiction.
Both parties ask the court to keep the case, arguing that Atlas consented, that no one objected earlier, and that dismissal would waste effort. Sierra adds that personal jurisdiction and venue defenses would have been waived by now.
Must the court dismiss for lack of subject matter jurisdiction? Discuss.