Tuesday, March 27, 2007

Declining the Exercise of Supplemental Jurisdiction

The Seventh Circuit, via Posner, issued a short but interesting supplemental jurisdiction opinion earlier this month, Williams Elec. Games, Inc. v. Garrity.  The case went to trial on both federal and state-law claims, but by the time the case went to the jury, the district court had dismissed all federal claims.  In an earlier opinion, the Seventh Circuit granted the plaintiff a new trial because of errors in the state law fraud instructions to the jury.  On remand, rather than conducting the new trial, the district court relinquished jurisdiction over the lone remaining state-law claim and dismissed the case under 1367(c). 

The Seventh Circuit affirmed the dismissal, but said that it was "troubled" by the district judge's invocation of a "presumption" in favor of dismissal. Section 1367(c)(3) allows a district court to decline to exercise supplemental jurisdiction when all claims over which it has original jurisdiction have been dismissed.  The court noted that district courts are to presume that, "if the federal claims drop out before trial, the district court should relinquish jurisdiction over the state-law claims," but the court said that the presumption was inapplicable here:

For while some of the federal claims (the Sherman Act claim and some of the RICO claims) did fall out of the case before trial, other RICO claims were tried, along with some of the state-law claims, though they were dismissed mid-way in the trial on the defendants' motion for directed verdict.

Of course, what the court says here is true about the first trial, but only a state-law claim remained for the second trial.  I suppose the lesson we take from Garrity is that, where there is more than one trial, courts should only presume dismissal when it dismisses all federal claims before the first trial.

The Seventh Circuit affirmed the district courts dismissal, however, because the district court would have reached the same result "on proper grounds"--namely, section 1367(c)(1) ("the claim raises a novel or compex issue of State law").  If the state-law claim raised novel or complex issues of state law requiring dismissal after remand, didn't it raise those same novel and complex state-law issues before the first trial and appeal?  If so, should the district court have declined the exercise of supplemental jurisdiction before the first trial?



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