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The Supreme Court on June 23, in a 5-4 decision, heatedly resolved a long-standing class action controversy, ruling that federal courts may exercise supplemental jurisdiction in diversity class actions for individual claims that do not satisfy the $75,000 amount-in-controversy requirement. Exxon Mobil Corp. v. Allapattah Services, slip op., 125 S. Ct. 2611 (2005). The 5-4 split was not surprising in light of the previous 4-4 split involving the same issues, with Justice Sandra Day O’Connor now voting with the dissenters. See Free v. Abbot Labs., 529 U.S. 333 (2000). In a decision by Justice Anthony M. Kennedy, and supported by the court’s conservative wing (Chief Justice William H. Rehnquist and justices Antonin Scalia, David H. Souter and Clarence Thomas), the majority affirmed that the 1990 supplemental jurisdiction statute, 28 U.S.C. 1367, overruled the Supreme Court’s decisions in Clark v. Paul Gray Inc., 306 U.S. 583 (1939), and Zahn v. Int’l Paper Co., 414 U.S. 291 (1973). In so doing, the court aligned itself with the 4th, 5th, 6th, 7th, 9th and 11th circuits, holding that the statute permits federal jurisdiction over class claims that do not individually satisfy the amount-in-controversy requirement. The majority rejected the contrary views of the 3d, 8th and 10th circuits that � 1367 did not overrule Zahn. In two dissenting opinions, justices Ruth Bader Ginsburg, John Paul Stevens, O’Connor and Stephen G. Breyer contended that the statute is ambiguous, and that legislative history clearly indicates a congressional intent not to overrule Zahn. See Allapattah, slip op. (Ginsburg dissenting at 16). The majority’s decision embodies an expansive reading of federal court jurisdiction, a somewhat surprising position for the court’s conservative wing. However, the Allapattah ruling is consistent with the recently enacted Class Action Fairness Act (CAFA), Pub. L. 109-2, 119 Stat. 4, which permits federal jurisdiction over class actions that in the aggregate exceed $5 million, a provision that effectively overrules the Zahn nonaggregation rule. Allapattah, slip op. at 24. The net effect of Allapattah and CAFA combined will be to sweep large-scale, small-claim diversity class actions into federal court. This would explain the conservative majority’s support for this result, and the liberal wing’s dissent. Doctrinal culmination of intersecting principles The Allapattah decision represents the doctrinal culmination of intersecting principles of federal diversity jurisdiction, the 1990 supplemental jurisdiction statute, legislative history, and a body of conflicting case law. Stevens, dissenting, characterized the court’s opinion: “After nearly 20 pages of complicated analysis, which explores subtle doctrinal nuances and coins various neologisms, the Court announces that � 1367 could not be reasonably read any other way . . . .This conclusion is difficult to accept.” Allapattah, slip opinion (Stevens dissenting at 6). The so-called Zahn problem derived from cases involving party joinder in diversity actions. In Clark, the Supreme Court held that each plaintiff joined in a diversity litigation must individually meet the amount-in-controversy requirement. In Zahn, the court held that in a diversity class action, the separate and distinct claims of multiple parties could not be aggregated for the purpose of satisfying the jurisdictional amount, relying on Snyder v. Harris, 394 U.S. 332 (1969). Conversely, each and every class member individually had to satisfy the amount-in-controversy. These Zahn principles were reigning class action jurisprudence from 1973 through 1989. In 1989, the Supreme Court reaffirmed these propositions in Finley v. United States, 490 U.S. 545 (1989), but the court rejected the concept of pendent party jurisdiction. The next year, in reaction to the court’s rejection of pendent party jurisdiction, Congress enacted the supplemental jurisdiction statute to codify common law principles relating to pendent party and claim jurisdiction. Judicial Improvements Act of 1990; see 28 U.S.C. 1367. In Allapattah, the only point on which all nine justices agree is that the purpose behind Congress’ enactment of the supplemental jurisdiction statute was to overrule the court’s Finley decision. Allapattah, slip op. at 10. The majority and dissenters, however, vehemently disagree whether Congress intended also to overrule Zahn. The majority contends that the unambiguous language of � 1367(a) resolves the supplemental jurisdiction question for diversity class actions, Allapattah, slip op. at 11-18, and that there is no need to examine legislative history. Id., slip op. at 18-25. The dissenters disagree, contending that the statutory provisions are ambiguous, and that the legislative history (“a virtual billboard of congressional intent”) indicates that Congress did not intend to overrule Zahn. Allapattah, slip op. (Stevens dissenting at 4). The Zahn problem arose from the interplay between the two core statutory provisions providing for federal court supplemental jurisdiction, intertwined with the legislative history explaining those provisions. The first subsection, 28 U.S.C. 1367(a), states that federal “district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” This language was intended to codify the principle of pendent claim jurisdiction in United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966); see Allapattah, slip op. at 9. Subsection (a) also states that supplemental jurisdiction shall include “the joinder or intervention of additional parties”; language intended to confer supplemental pendent party jurisdiction and to overrule the court’s Finley holdings to the contrary. Allapattah, slip op. at 10. The majority’s decision centers on its statutory construction of � 1367(a). The majority concludes that the section is a broad grant of supplemental jurisdiction over claims within the same case or controversy, as long as the action is one in which the district court would have original jurisdiction. Allapattah, slip op. at 10. Thus, the only question in which the claims of some plaintiffs satisfy the amount-in-controversy requirement but others do not, is whether the litigation presents a “civil action of which the district courts have original jurisdiction.” If yes, then the federal court has jurisdiction over all the claims, including those that do not independently satisfy the amount-in-controversy requirement. Allapattah, slip op. at 10-11. The supplemental jurisdiction conferred by � 1367(a) is limited by exclusions listed in subsection (b): “the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiff against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure . . . when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332.” Subsection (b) was intended to codify the rule in Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365 (1978). However, the drafters neglected to include Fed. R. Civ. P. 23 and Fed. R. Civ. P. 20. The lower federal courts have long disagreed over the relationship of subsections (a) and (b). In Abbott Labs., the 5th Circuit declared: “Section 1367(a) grants district courts supplemental jurisdiction over related claims generally, and � 1367(b) carves exceptions. Significantly, class actions are not among the exceptions.” In re Abbott Labs., 51 F.3d 524, 527 (5th Cir. 1995). Thus, because Rule 23 was not included in subsection (b), Congress had granted supplemental jurisdiction over class claims that did not independently satisfy the statutory amount-in-controversy requirement. The 4th, 6th, 7th, 9th and 11th circuits followed the 5th Circuit’s overruling of Zahn. See Olden v. LaFarge Corp., 383 F.3d 495 (6th Cir. 2004); Rosmer v. Pfizer Inc., 263 F.3d 110, 114 (4th Cir. 2001); Gibson v. Chrysler Corp., 261 F.3d 927 (9th Cir. 2001); Stromberg Metal Works Inc. v. Press Mech. Inc., 77 F.3d 928 (7th Cir. 1996). Other federal courts disagreed, arguing that the statute’s legislative history provided a substantial basis for concluding that omission of Rule 23 from � 1367(b) was an oversight. These courts, and Stevens dissenting in Allapattah, cited the House Judiciary Committee’s legislative history: “[t]his section is not intended to affect the jurisdictional requirements of 28 U.S.C. 1332 in diversity-only class actions, as those requirements were interpreted prior to Finley.” H. Rep. 101-734 (1990), reprinted in 1990 U.S.C.C.A.N. 6860, 6875. A footnote cites Zahn as a pre- Finley case unaffected by the supplemental jurisdiction statute. Id. at n.17. See Allapattah, slip op. (Stevens dissenting at 3). The debate, then, has hinged on whether courts found � 1367(b) ambiguous. Courts that have found the statute ambiguous have looked to the legislative history and concluded that Congress did not intend to overrule Zahn. See Trimble v. Asarco Inc., 232 F.3d 946, 962 (8th Cir. 2000); Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 22 (3d Cir. 1999); Leonhardt v. Western Sugar Co., 160 F.3d 631, 641 (10th Cir. 1998). Majority resolves dispute over interpreting statute The court’s majority resolved this dispute, ruling that “While � 1367(b) qualifies the broad rule of � 1367(a), it does not withdraw supplemental jurisdiction over the claims of the additional parties at issue here.” Allapattah, slip op. at 12. The majority further held that nothing in the text of � 1367(b) withheld jurisdiction over plaintiffs joined under Fed. R. Civ. P. 20 or class members certified under Fed. R. Civ. P. 23. Id., slip op. at 12-13. “The natural, indeed the necessary, inference is that � 1367 confers supplemental jurisdiction over claims by Rule 20 and Rule 23 plaintiffs.” Id. at 13. Finally, the majority definitively refused to consult legislative history as an aid to statutory construction: “We can reject this argument at the very outset simply because � 1367 is not ambiguous.” Allapattah, slip op. at 20. Linda S. Mullenix holds the Morris and Rita Atlas Chair in Advocacy at the University of Texas School of Law. She can be reached at [email protected].

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