February 20, 2012
Last week, the Seventh Circuit issued a decision in
RWJ Mgmt. Co., Inc. v. BP Products N. Amer., Inc., ___ F.3d ___ (7th Cir. 2012), Cause No. 11-1268, that surprised me. At issue was the level of discretion that district courts have when deciding to exercise supplemental jurisdiction. It turns out that they have a lot.
less..
In July 2009, two owner-operators of BP-franchise gasoline stations sued BP in Illinois state court, asserting both state and federal claims. The plaintiffs' state law claims were under both Indiana and Illinois law. The case was removed to federal court based on the court's federal question jurisdiction.
Over the next 15 months, the district court held 35 hearings, issued 45 orders, and considered 70 motions. The parties compiled 21 volumes of discovery material. Along the way the judge held that one of the plaintiffs had violated discovery rules and several court orders, but withheld judgment on the specific sanction. A two-week trial was scheduled to begin on January 18, 2011.
At a pretrial hearing on January 7, 2011, the plaintiffs informed the court that they would not be pursuing their federal claim after all. The district court dismissed that claim. On January 12, the district court issued a short, tentative order regarding the parties' summary judgment motions, reserving a final ruling until trial. That same day, the Court noted that all federal claims had been dismissed and asked the parties if there was a reason to keep the case in federal court. BP argued that there were, but the next day (two business days before trial) the district court relinquished jurisdiction and remanded the case to state court. BP appealed.
On appeal, the Court emphasized that the district court has broad discretion over whether it should exercise supplemental jurisdiction and that there is a presumption in favor of remand. Despite the facts described above, the Court affirmed the district court's decision.
This case focuses entirely on considerations of judicial economy and potential duplication of judicial effort. BP contends that the district court invested so much time superintending this litigation that the presumption in favor of relinquishment has been overcome. The district court is the best judge of that; our review examines only whether the court made "a considered determination of whether it should hear the claims."
Miller v. Herman, 600 F.3d 726, 738 (7th Cir. 2010). Here, the judge considered the relevant factors and determined that her work on the case was not so enmeshed in substantive issues of state law that the presumption in favor of remand should be set aside. That decision makes sense—-especially where, as here, the claims remaining in the case include complex common-law business torts and claims for violation of state statutory franchise law.
BP attempted at argue that the district court had been enmeshed in the merits of the case, but the Court disagreed, noting that most of the court's activity had been related to discovery and that the only substantive decision was a tentative ruling on the motions for summary judgment. this pretrial activity (including the pending motion for sanctions) did not overcome the presumption of remanding the case to state court.
The Court's description of the facts indicates that it may believe that the plaintiffs' actions in this case smack of gamesmanship. Therefore, this case shows both the amount of discretion that the Court gives to district courts on this issue and the strength of the presumption in favor of remand.
Lessons:
- There is a presumption against exercising supplemental jurisdiction if federal claims are dismissed.
- A district court's decision to remand a case if the federal claims are resolved will be affirmed if the district court makes a considered determination of whether it should hear the claims.
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