This article originally appeared in the Daily Journal on March 13, 2017.
“Dance with the One That Brought You,” Shania Twain once musically counseled. The 9th U.S. Circuit Court of Appeals has just chimed in with another chorus, extending this sage advice to the arcane world of subject matter jurisdiction.
Herklotz v. Parkinson, 2017 DJDAR 1353 (9th Cir. Feb. 14, 2017), like many a country song, tells a melancholy story, one the court characterized as a “procedurally tortured, sixteen-year saga.” In 2000, a Pennsylvania company sued Herklotz, Parkinson, and others, all California residents, in a diversity action in Pennsylvania federal court. Herklotz filed a state law cross-claim against his California co-defendants. When the Pennsylvania court granted summary judgment on the original claim in favor of plaintiff in early 2007, Herklotz got a hankering to head west. The court granted his motion to sever the cross-claim and transfer it to the Central District of California. He didn’t know it at the time, but this procedural divorce would eventually be his undoing.
The California federal trial court dismissed Herklotz’s action for failure to state a claim in late 2007, and he appealed to the 9th Circuit. Two months later, in December 2007, Herklotz filed a parallel action in California state court against the same defendants. This, too, met with an unhappy result, when the state court dismissed it with prejudice because of the res judicata effect of the federal judgment. The state appellate court affirmed.
That left the whole shooting match in the 9th Circuit. The story did not turn out well. The 9th Circuit held that the case should have been booted out of court long ago, as soon as it was severed from the diversity action in Pennsylvania.
Federal courts, as the 9th Circuit was quick to point out, are courts of limited jurisdiction. They don’t cotton to interlopers and are usually quick to put them in their place, which is not in federal court. Here the problem seems to have gone unnoticed in the two district courts that had handled the action, and it took the 9th Circuit, as the new sheriff in town, to set things right. As we all know, subject matter jurisdiction is never waived and can be raised at any time, even sua sponte by the court.
The problem was that Herklotz’s claim, once severed from the original plaintiff’s diversity action, was a non-diverse state law claim being pursued in a federal court. Things were all right when the cross-claim was joined to the diversity action, because then the federal court had supplemental jurisdiction over the whole shebang. 28 U.S.C. Section 1367(a) gives a federal court jurisdiction over all claims that form part of the same case or controversy as a claim over which it has jurisdiction.
But although the federal courts are hospitable to strangers who come to the dance in the company of a jurisdictionally sound cause of action, they are not about to welcome just anyone who decides to go solo. As the 9th Circuit put it: “Where, as here, the claims were stripped of their jurisdictional predicate through severance, they lose their federal hook and must stand on their own.” Once the cross-claim left the embrace of the original diversity action and headed for greener pastures, it no longer had a home in the federal court system.
On the surface, the decision seems to elevate form over substance. As the 9th Circuit’s opinion recognized, even when the underlying claim over which a federal court has jurisdiction has been dismissed, 28 U.S.C. Section 1367(c)(3) gives the court discretion to keep or dismiss the remaining supplemental claim. So there are circumstances in which federal courts are able to entertain supplemental claims left standing alone.
But, where you wind up is sometimes not as important as how you got there. 28 U.S.C. Section 1367(a) gives a federal court jurisdiction over claims “related to claims in the action.” Citing several authorities from other circuits, the 9th Circuit pointed out that severance creates two independent actions. Therefore, a severed action “can no longer rely on the supplemental jurisdiction afforded by 28 U.S.C. Section 1367(a), for there is nothing left to supplement.” In other words, if you’re a state law claim and your jurisdictionally sound partner leaves you, you still have at least a memory to cling to and, if the judge is willing, you can hang around. If you’re a state law claim and you sever your ties with that partner, you’re on your own and it’s time to hit the road.
One party to this appeal tried a bootstrap argument to rustle up enough federal jurisdiction to keep the action alive. He contended that, regardless of whether the district courts had had jurisdiction following severance, the 9th Circuit did indeed have jurisdiction at this late date, because there was now a federal question before it — i.e., the res judicata effect of the state court judgment. The court again found itself in harmony with Shania, who once sang, “That Don’t Impress Me Much.” Specifically, the court reminded everyone that jurisdiction “cannot be waived by agreement or delayed like a bouncing ball.”
The result of all this was that the 9th Circuit vacated the district court judgment and remanded with instructions to dismiss for lack of jurisdiction. Country songs often end on a note of regret for an unhappy fate. In this mold, the Herklotz opinion sums up as follows: “It is unfortunate this lengthy odyssey must conclude in this way, but jurisdiction is one rule this Court cannot bend.”
Postscript: The 9th Circuit’s decision took 10 years from filing to decision, which must be some kind of record. But, as Taylor Swift once sang, “We Are Never, Ever, Ever Getting Back Together.”
Charles Kagay is of counsel with of the California Appellate Law Group LLP*, an appellate boutique based in San Francisco. He has decades of experience handling appeals that involve complex or novel legal questions and is certified by the State Bar as a California appellate specialist. Find out more about Charles and the California Appellate Law Group LLP at www.calapplaw.com. Appellate Zealots is a bi-monthly column on recent appellate decisions written by the attorneys of the California Appellate Law Group LLP.
*In July 2022, the California Appellate Law Group was renamed the Complex Appellate Litigation Group.
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