By Sarah E. Harmon
This is Part 2 of an 8-part series which covers:
- Part 1 – Federal Question Jurisdiction;
- Part 2 – Supplemental Jurisdiction;
- Part 3 – Diversity Jurisdiction: Complete Diversity;
- Part 4 – Diversity Jurisdiction: Amount in Controversy;
- Part 5 – Diversity Jurisdiction: Resident Defendants;
- Part 6 – Timing of Removal;
- Part 7 – Checklist for Removal;
- Part 8 – Remand
Part 2 – Supplemental Jurisdiction
In Part 1 of this Removal series, we discussed removal based on federal question jurisdiction. Now we’ll explore removal when the Plaintiff’s complaint alleges both federal questions and state law claims.
General Rules
When a complaint has alleged both federal and state law claims that are so related that they form part of the same case and controversy, and a defendant removes the action to federal court, the federal court can exercise its supplemental jurisdiction to retain jurisdiction over both the federal claims and the state claims. 28 U.S.C. § 1367(a). However, if the federal claims are dismissed after supplemental jurisdiction has been exercised, the federal court has the discretion to either retain jurisdiction over the state law claims or it can remand the case back to state court for determination of the state claims. 28 U.S.C. § 1367(c). Similarly, if after removal based on federal question jurisdiction, the complaint is amended to include state law claims that are separate and independent from the federal claims, the federal court has the discretion to either retain jurisdiction over all of the claims or to remand the non-removable claims (not the entire action) back to state court. 28 U.S.C. § 1441(c).
Example 1
Here is an example: Mary Smith sues her employer XYZ, Inc. in state court for discriminatory discharge under Title VII of the Civil Rights Act and for breach of contract. Specifically, Mary claims that XYZ, Inc. breached the terms of the compensation clauses of her employment contract when it wrongfully discharged her. Based on the employment discrimination claim, XYZ, Inc. removes the case to federal court. The federal court would exercise supplemental jurisdiction over the breach of contract claim because both claims are related and arise out of the same transaction and occurrence. If, when discovery commences, Mary decides to drop the discriminatory discharge claim and to proceed only with the breach of contract claim, will the federal court continue to exercise its supplemental jurisdiction over the breach of contract claim?
As set forth above, the federal court has the discretion to either maintain its jurisdiction over the claim or to remand the action back to state court. In this example, with the case just entering the discovery phase, it is more likely than not that the federal court would remand the action to state court, as this would not lead to judicial inefficiencies or prejudice at such an early stage of the case. On the other hand, if Mary had decided to dismiss her discrimination claim when the action was only a few weeks away from trial, it is more likely than not that the federal court would choose to continue to exercise its supplemental jurisdiction and conduct the trial on the breach of contract claim.
Example 2
Now, let’s suppose that Mary files an action in state court against XYZ, Inc. alleging only the claim for discriminatory discharge under Title VII. Because this claim raises a federal question, XYZ, Inc. removes the case to federal court. After removal, Mary amends her complaint to include a claim against a co-worker under the Violence Against Women Act, which by statute, is not removable. Will the federal court exercise its supplemental jurisdiction to retain jurisdiction over the Violence Against Women Act claim?
The discriminatory discharge claim and the Violence Against Women Act claim are not based on the same transaction and occurrence; rather, they are separate and distinct claims. Therefore, the Violence Against Women Act claim does not qualify for the federal court’s supplemental jurisdiction, and it is very likely that the federal court would sever this claim and remand it back to state court while maintaining jurisdiction over the discriminatory discharge claim. However, if the court finds that it is more efficient to proceed with one lawsuit, rather than force the parties to litigate two separate matters, the federal court has the discretion to retain jurisdiction over both claims. Newton v. Coca-Cola Bottling Co. Consol., 958 F. Supp. 248, 251 (W.D. N.C. 1997).
Stay tuned for Part 3 in this series, posted here, in which I will discuss the complete diversity requirement for removal based on diversity jurisdiction.
Please email me if you would like a copy of this series.
About Sarah Harmon:
Sarah E. Harmon is a partner at Bailey Kennedy and has over 18 years of experience in the areas of appellate advocacy and civil/business litigation, including breach of contract, fraud, legal malpractice, products liability, complex civil litigation, and many other types of business disputes. Her experience with appellate advocacy includes appeals from adverse judgments and orders as well as petitions for extraordinary writ relief. Ms. Harmon can assist clients with obtaining settlements and judgments before going to trial, avoiding errors at trial, and properly preserving issues for an appeal.
If you have any questions about appeals or civil/business litigation, please call or email Sarah Harmon at 702-562-8820 or sharmon@baileykennedy.com. Additional resources can also be found at www.baileykennedy.com/category/articles/ or linkedin.com/in/sarahharmonbk/.
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