Civil Procedure Class Notes 10/20/03


Double class!  I forgot and missed the first five minutes.


28 U.S.C. § 1367


This is not the best drafted statute ever.  § 1367(a) grants supplemental jurisdiction based on Gibbs.  Stuff that arises from the same claim or controversy comes into play under § 1367(a).


Finley v. United States


This is what used to be called a “pendant party” claim.  It’s a plane hitting a power line.  The plaintiffs sue both the FAA for the tort of allowing the plane to hit the power line, and they’re suing the electric company for having the power line that close to a landing strip.  The plaintiff and the power company are non-diverse parties.  The Supreme Court said that Finley barred pendant party jurisdiction unless there was an independent basis for it.  § 1367 tried to undo this result and allow pendant party jurisdiction to go forward on efficiency grounds.  Let’s hear it all as one convenient trial package.


So does § 1367 apply to Finley?  Sure, it involves the “joinder or intervention of additional parties”.


These are two big ways that Congress got it right.  They codified Gibbs and reversed Finley.


Finley was resolved by the Supreme Court, and the Supreme Court said that the state law claim was invalid in federal court.  But when Congress drafted the statute, they tried to undo that result and allow that type of claim to go forward.


So if a similar case would come up today, we would look at § 1367 and see that pendant party jurisdiction is okay under § 1367(a).


But we’ve got problems!


28 U.S.C. § 1367(b)


This is difficult, bad, nasty, and poorly drafted according to Fairman.  What this sub-section tries to do is to protect complete diversity.  It takes away supplemental jurisdiction under certain circumstances.


If jurisdiction is founded solely on diversity, then district courts shall not have supplemental jurisdiction…under certain circumstances.


Owen Equipment & Erection Co. v. Kroger


Kroger sued the Omaha power company, who in turn sued Owen.  Kroger then also sued Owen.  It’s so far, so good on diversity grounds.  We have Iowa v. Nebraska.  But it turns out that Owen isn’t really from Nebraska; it’s from Iowa.


In Owen v. Kroger, the Supreme Court says that the state law negligence claim of Kroger against Owen cannot go forward in federal court against a non-diverse party.


What can Kroger do?  She’s been told that she can’t sue Owen in the same lawsuit with the power company.  She can either file the whole thing in state court, or divide her claim somehow such that her original claim goes forward in federal court while her claim against Owen proceeds in state court.


Would § 1367(b) allow this suit to go forward?  Would the statute deny supplemental jurisdiction?  Yes, because it is a suit by a plaintiff against a party that is joined under Rule 14.  (The power company joins Owen under Rule 14.)


What about the power company’s claim against Owen?  It’s still good.


The drafters create this statute based on claims by a plaintiff, and then they enumerate specific rules.  Thus, they screw up, because they don’t understand how litigants’ positions may change during litigation.




Let’s say an Ohio person sues a West Virginia person.  Let’s say that the Ohio person joins under plaintiff under Rule 20a, and this plaintiff is from West Virginia.  This mustn’t be appropriate, because we have violated complete diversity by having West Virginia on both sides of the controversy.    The problem is that the West Virginia plaintiff was the one who was joined, not the defendant.  The defendant was already there, hanging out.  Bad statute!  Go to your room!  This is described as the “Gaping Hole” in the statute.  The statute doesn’t bar adding non-diverse plaintiffs who then have claims against the defendant.  How could we fix this?


Another example: A plaintiff sues a defendant in state court on a state contract claim.  Let’s say that they’re diverse parties.  The defendant removes to federal court.  Then the defendant makes a counterclaim against the plaintiff.  Against that counterclaim, the plaintiff brings in (sues) a third party under Rule 14a.  Would the statute allow this?  How did we get into federal court?  We used removal.  Does the statute apply given that it was removed?  This argument gets a lot of play in the academic literature, but not a lot of play in the courtroom.


Did we have a claim by a plaintiff against a person made a party under Rule 14?  Yes.  But this doesn’t make sense!  The plaintiff is acting exactly as the defendant acted in Owen v. Kroger.  The plaintiff brought the third party in solely to defend against the counterclaim.  The plaintiff is acting in a defensive posture.


Say we take out the original claim and the “defendant” had filed the lawsuit against the “plaintiff” in the first place, followed by the joinder of a third party by the plaintiff under Rule 14.  This would have been fine!  How is that fair?  So the plaintiff’s defensive claim is barred by § 1367(b), but if just the converse happened, it would be allowed.


What about Zahn?


We talked about the Rule of Zahn in relation to the class action rules.  To have a federal class action, you would have to have every single class member have more than $75,000 in claims.  Does § 1367 change this result?  Yes, because class actions are Rule 23, which isn’t part of the list in § 1367 of kind of joinder-type-stuff to be excluded.


This leads many to say that the Rule of Zahn is now…gone!


Different circuits have taken different positions.  The Supreme Court granted cert, but O’Connor recused herself and there was a 4-4 split.


Fairman says that Congress punted!  All these law professors were writing articles about how the other professors were stupid.


28 U.S.C. § 1367(c)


This is probably the most screwed-up procedural statute.  Congress is fine with this statute, but there are unanswered questions about it and it is controversial.


So the supplement jurisdiction statute is a mess.  But Fairman wants us to know how the statute is supposed to work.  § 1367(a) codifies Gibbs and Finley, and § 1367(b) takes away part of the supplemental jurisdiction based on diversity.  But we won’t need to know the complicated, nitty-gritty weird stuff that we talked about earlier.  They didn’t intend to revoke the Rule of Zahn, but oops, they did.


What about removed cases?  Do they have a place in § 1367(b)?  Something that has been removed is there theoretically based not only on § 1332 (the diversity jurisdiction statute), but also § 1441 (the removal statute).  Some courts believe this, but some don’t.




This is the defendant’s forum selection option.


28 U.S.C. § 1441 is the main statute for granting removal.


(a)   This is the general provision.

(b)  This is the diversity only provision.

(c)  This is the removal of combined state and federal claims.

(d)  This is removal by a foreign state.

(e)   This says that exclusive federal jurisdiction not a bar to removal.


Subsection (a) is the grant of the right itself.  The defendant can take an action that could have been filed in federal court and put it in federal court.


Subsection (b) tells us that when federal court have jurisdiction under a federal question, you don’t have to worry about citizenship.  On the other hand, if the federal basis is diversity, you can’t remove if there is a home state defendant.  Strategically, plaintiffs will try to sue home state defendants to anchor the case in state court if that’s what you desire.


Here are some problems on removal.


1.     If a claim couldn’t have been brought in federal court in the first place, you can’t remove it to federal court.  For example, you can’t remove an action that would fail the well-pleaded complaint rule test.

2.     If you have something like a copyright claim, that’s something that can only be brought in federal court.  Something like this can be easily removed.

3.     What if the plaintiff alleges a violation of civil rights?  That would make the claim a federal question under § 1331.

4.     How about Florida v. New Jersey in New Jersey?  We have an in-state defendant, which makes the case non-removable.  Why would Congress prevent the removal of cases involving in-state defendants?  Well, why does diversity exist?  We want to prevent bias against out-of-state defendants.  The defendant ain’t out of state!

5.     Here, the plaintiff brings in a federal question.  If you look at § 1441(c), the case would be removable because mixed cases are removable.  The court would have the discretion to remand the state part if they wish.

6.     Here, we’re suing in New York, and one of the defendants is from New York.  This is not removable.  You’re not doing a separate claim; you’re actually suing two people on the same claim.


28 U.S.C. § 1446 gives the procedure for removal.  The procedure is fast.  The defendant signs a notice for removal that’s short and sweet.  The “then and now” rule says that you must allege that the amount in controversy is over $75,000 both “then and now”.  The defendant has to file the notice within 30 days of the filing of the lawsuit.  Most of this will be eaten up by the client’s waffling.


If the initial pleading does not show its removability, the clock starts running again as soon as the complaint shows removability.  If the plaintiff amends the complaint such that it becomes removable, you can move for removal at that point.  There is an absolute cap of one year for removal.  That’s a pure efficiency rule.


How about Pennsylvania v. Georgia for $100K?  That can be removable.  What does the removal petition have to say?  It must say that by § 1332, the claim could have been originally brought in federal court.  What if the defendant files a removal petition two months after being served?


How about Pennsylvania v. Georgia for $10K, which is amended six months later to $85K?  That can be removable once the amended complaint is filed.  It’s subject to the one year cap.


The 30 day rule is an equity rule.  It’s either 30 days after the complaint is filed or 30 days after it is amended (or anything else happens that makes the case removable all of the sudden).  Then one year is a hard cap.


Caterpillar, Inc. v. Lewis


Lewis, from Kentucky sues Caterpillar, which is a citizen of Delaware and Illinois.  So far, so good, assuming we’re over the amount-in-controversy requirement.


Lewis also sues Whayne supply in Kentucky, which is a non-diverse defendant.  This case is “anchored” in state court.


Liberty Mutual Insurance, from Massachusetts, sues both Caterpillar and Whayne.  They sue to subrogate the workers’ comp benefits.  Lewis says, “How do you get into my lawsuit?  This is my lawsuit!!!  I’m mad!”


The insurance company intervenes!  That’s Rule 24.  This is how outsiders butt into your lawsuit.  There are two types of interventions: permissive interventions, and interventions of right.


The insurance company had a stake in the dispute.  They had to pay workers’ comp, and they want to recoup that cost from the defendants in Lewis’s case.


This lawsuit was originally filed in state court in Kentucky.  Then what?  Lewis and Whayne settle.  Then Caterpillar moves to remove the case to federal court because presumably Whayne is out of the way.


The original lawsuit was anchored to state court in two ways: you both had non-diverse defendants, and a home-state defendant.


But again, Lewis settles with Whayne.  What does Caterpillar do?  They remove the case to federal court.


Is this removal proper?  No.  There is Kentucky on both sides of the controversy.  This is blatantly wrong!  This is a wrongful removal!  It’s wrong, right?  Right.  It’s wrong.  Even though Lewis has settled, Liberty Mutual still has a claim against Whayne, which means there is a violation of complete diversity.  That makes this case wrong for removal.


Let’s say you’re Lewis.  You’ve been wrongfully removed to federal court.  What do you do?  Lewis files a motion to remand.  The motion gets denied, and that’s wrong too!  It should have been granted.  That’s the second error in this case.


Ultimately, Whayne settles with Liberty Mutual as well.  It turns out that at the time of trial in federal court, the parties were appropriately diverse.  Caterpillar wins, and then we start the appeals process.


So, Lewis loses in federal court.  Lewis appeals to the 6th Circuit, which reverses, saying there was no jurisdiction.  The jurisdictional issues are considered at the time the lawsuit was filed, namely, when the lawsuit was removed to federal court.  Lewis and Whayne were both parts of the lawsuit at the time, which means that diversity jurisdiction was no good at the time.


What the Supreme Court says (wrongly, according to Fairman), is that once the case has been tried in district court, you can’t go back due to efficiency grounds.  Caterpillar should not have removed the case; the district court should not have accepted jurisdiction.  However, it is argued that time cures all ills because by the time of the trial the parties were diverse.


Lewis did everything right here.  Does he have any recourse?  He could have tried filing an interlocutory appeal under 28 U.S.C. § 1292.  The district court wouldn’t have flinched.


The rule is that you look at the time that the lawsuit is filed.


Where are we?  There is more to say about Caterpillar.  Next is Erie.  Eeewww.  We will get to Erie tomorrow.


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