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The American Law Institute (ALI) has spent decades working on the thorny subject of federal jurisdiction, which bedevils many a judge and lawyer. Its newly published Federal Judicial Code Revision Project addresses many of the most intractable areas and may finally result in some helpful amendments to the removal and venue statutes, and cure some of the problems engendered by the supplemental jurisdiction. In my last column, I discussed the ALI’s venue recommendations. In this column and the next, I will examine the ALI’s supplemental jurisdiction proposals and related removal recommendations. Trying to rectify a fundamental incoherence Some aspects of the supplemental jurisdiction statute enacted in 1990 are fairly easy to apply, despite the change in terminology from the replaced judicially crafted pendent jurisdiction and ancillary jurisdiction doctrines. But � 1367(b), particularly, created problems. Section 1367(b) generally was designed to codify the Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365 (1978). In Owen, the Supreme Court held that a plaintiff in a diversity-based case could not amend her complaint to allege claims against a non-diverse party joined by the defendant as a third-party defendant. Such a move would allow a plaintiff to do an end run around the venerable complete diversity doctrine, pursuant to which all plaintiffs must be of diverse state citizenship from all defendants. According to the court, just as the complete diversity rule represented Congress’ will in terms of cases Congress wants in federal courts under the diversity jurisdiction, the court could not extend ancillary or pendent party jurisdiction to the plaintiff’s claim against the nondiverse third-party defendant because that too would defeat the will of Congress. The problem with � 1367(b) is that the attempt to codify the result in Owen, of course, was not perfect. Section 1367(b) states that in diversity-based cases, “the district courts shall not have supplemental jurisdiction . . . over claims by plaintiffs against persons made parties under Rule 14, 19, 29, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 . . . or seeking to intervene as plaintiffs under Rule 24 . . . when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of [the diversity statute].” The problem with this language was that it was overbroad in some respects, underinclusive in others, and just plain ambiguous in some situations. The ALI proposes to fix the problem with � 1367(b), as well as the removal statute, � 1441(a) and (c), by confronting and rectifying “a fundamental incoherence in the statutory scope of the original jurisdiction of the federal district courts.” Professor John B. Oakley of the University of California, Davis School of Law, in his Reporter’s Summary of the proposals, explains the simple but critical problem at hand: The federal jurisdictional statutes confer jurisdiction over “civil actions.” But civil actions, whether filed in state or federal court, typically consist of “a cluster of claims, often involving different sets of claiming and defending parties.” Many of the problems lawyers and courts encounter when determining whether federal jurisdiction exists result from the fact that the jurisdictional statutes need to operate in a “claim-specific” way, rather than an “action-specific” way. Take two examples: First, apart from the difficult question of whether a particular claim is a federal question, it is relatively easy to determine whether there is federal question jurisdiction under � 1331. We look to see whether any of the “claims” asserted on the face of a well-pleaded complaint is a federal question. Such a claim provides the basis for federal jurisdiction when the case is filed originally in federal court and when a defendant seeks to remove it to federal court. The state law claims that formed part of a common nucleus of fact with the federal question claim could be heard by the federal court under pendent, now supplemental, jurisdiction. This is an example of “claim-specific” analysis. We find the claim that provides the basis for getting into the federal courthouse, and then allow certain other nonfederal question claims to come in as well. Now take a diversity case. The rule that needs to be satisfied in such a case is the complete diversity rule. That rule is “action-specific” and that creates the problems with meshing diversity jurisdiction with supplemental jurisdiction, including its restrictions on the use of supplemental jurisdiction in diversity cases. The ALI’s proposals for rewriting �� 1367 and 1441 use the distinction between claim-specific and action-specific to provide the basis for a more coherent analysis of when federal jurisdiction exists, and which supplemental claims are within the court’s jurisdiction. The first, and most radical from a terminology point of view, 1367(a) defines a “freestanding” claim as one that is within the original jurisdiction of the federal courts; second, it defines a “supplemental” claim as one that is not freestanding but related to any freestanding claim asserted in the action; and third, it creates a new analytical term-claims “asserted in the same pleading.” The use of these three concepts allows for a more coherent approach to determining when nonfederal claims can be supported by � 1367, and, therefore, whether the case is within federal jurisdiction for original or removal purposes. For example, the proposed revision to � 1367(a) provides a way of protecting, but not burdensomely so, the complete diversity requirement. Here’s how: Most of the end runs around the complete diversity rule that the Supreme Court has opined that Congress does not want, and that were embodied in the current Sec. 1367(b), would not be permitted because of the new “asserted in the same pleading” language of the proposal. Having set forth its new definitions in subsection (a), proposed � 1367(b) sets out a broad grant of supplemental jurisdiction. Section 1367(b) essentially captures the scope of supplemental jurisdiction in the current � 1367(a), but it does so by simply using its new definition. Having set out what a supplemental claim is in (a), it then says in (b) that “a district court shall have original jurisdiction of all supplemental claims, including claims that involve the joinder or intervention of additional claiming or defending parties.” Now, looking at � 1367(a) and (b), it would appear that a plaintiff could join a claim against a nondiverse defendant. A claim against a diverse defendant would be a freestanding claim, and the claim against the nondiverse defendant, assuming it is related, would be a supplemental claim. Under subsection (b), the court would have supplemental jurisdiction over the claim against the nondiverse defendant. However, we must then look at proposed � 1367(c), which replaces the current � 1367(b) quoted above. It provides: “When the jurisdiction of a district court over a supplemental claim depends upon a freestanding claim that is asserted in the same pleading and that qualifies as a freestanding claim solely on the basis of [diversity jurisdiction], the court shall have jurisdiction of the supplemental claim only if it-(1) is asserted representatively by or against a class of additional unnamed parties; or (2) would be a freestanding claim on the basis of section 1332 of this title but for the value of the claims; or (3) has been joined to the action by the intervention of a party whose joinder is not indispensable to the litigation of the action.” (Emphasis added.) Claim against a nondiverse defendant not supported Note what is accomplished here: First, the claim described above, by a plaintiff against a nondiverse defendant, would not be supported by supplemental jurisdiction. Because the hypothesized case is based solely on diversity grounds, supplemental jurisdiction exists only in the three enumerated situations set forth in � 1367(c). None of them encompass the claim of a plaintiff against a nondiverse defendant. It is a supplemental claim to a freestanding claim, but, because it was “asserted in the same pleading” as the freestanding claim that was used to provide diversity jurisdiction, it is proscribed. Additionally note that the ALI’s proposal does not limit the use of supplemental jurisdiction by nonplaintiffs. For example, look at a defendant’s third-party claim against a nondiverse third-party defendant. Under the definitions in � 1367(a), that claim would be supplemental to the plaintiff’s freestanding claim that provided the basis for diversity jurisdiction. The claim was not asserted in the pleading that provided for diversity jurisdiction, so it is not proscribed by � 1367(c). Also, notice that the proposal broadens supplemental jurisdiction in some respects. First, the proposal would resolve the problem that the current version of � 1367 has produced: whether supplemental jurisdiction supports class claims where not all the class members’ claims meet the jurisdictional amount of � 1332. It follows the majority approach that supplemental jurisdiction supports such claims. Similarly, the proposal would allow the exercise of supplemental jurisdiction to cure amount-in-controversy problems in all other contexts. Finally, it allows for intervention by any party, be they plaintiff or defendant, so long as that party is not an indispensable party. This provision would restore the state of the law before the overbroad � 1367(b), which by its language, prevented nondiverse plaintiff intervenors from joining whether they were indispensable or not. I am sure that your head is hurting at this point. Supplemental jurisdiction is hard enough, and now the ALI proposes a new way of looking at it, thinking about it and talking about it. I recommend that you take a look at the ALI’s report on it because even if it never becomes law, you will finally understand it. Georgene M. Vairo is a professor of law and William M. Rains Fellow at Loyola Law School, Los Angeles. She can be reached by e-mail at [email protected]. She is on the board of editors of Moore’s Federal Practice, and writes the Moore’s chapters on removal and venue problems.

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