IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-31184

ENERGY MANAGEMENT SERVICES, LLC, 

Plaintiff-Appellant

v.

CITY OF ALEXANDRIA,

Defendant-Appellee

Appeal from the United States District Court

 for the Western District of Louisiana

Before WIENER, DENNIS, and OWEN, Circuit Judges.

DENNIS, Circuit Judge:

Plaintiff-Appellant Energy Management Services,L.L.C.(“EMS”) appeals

the district court’s order denying EMS’s motion to remand its suit against the

City of Alexandria, Louisiana (“the City”) to the state court from which it was

removed. Because the district court does not have jurisdiction over EMS’s suit,

we REVERSE the district court’s order and REMAND this case to the district

court with instructions to remand it to the Louisiana state court in which is was

initially filed.

I.

In a previous case, the City filed suit against its electricity provider, 

CLECO Corporation and its subsidiaries (collectively “CLECO”), in Louisiana

United States Court of Appeals

Fifth Circuit

F I L E D

January 9, 2014

Lyle W. Cayce

Clerk

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No. 12-31184

state court on June 22, 2005, alleging that CLECO had overcharged the City for

electricity. CLECO removed the case (hereinafter “City v. CLECO”) to the U.S.

District Court for the Western District of Louisiana. The City and CLECO

reached a settlement agreement that involved several long-term contractual

relationships between the City and CLECO and two cash payments from

CLECO to the City. On February 24, 2010, in light of the settlement, the district

court entered a Judgment of Dismissal that dismissed the case with prejudice.

However, the district court retained jurisdiction over the City v. CLECO

settlement for the purpose of resolving disputes over attorneys’ fees expended

during the litigation of the otherwise-dismissed case and to enforce its protective

orders governing the confidentiality of the settlement proceedings and

documents, as needed. The evidence and settlement documents are under seal

in the district court.

In 2004, in anticipation of its suit against CLECO, the City hired EMS, a

Louisiana-based energy and utility auditing and consulting firm, to conduct an

audit of the City’s electricity expenses and specifically its overpayments to

CLECO. EMS and the City signed an agreement that provided, inter alia, that

EMS’s fee was twenty percent of any recovery, damages, or other credits the City

received as a result of the City v. CLECO litigation. The agreement also

provided that the City would allow EMS to review all settlement documents in

order to assess its fee. 

Subsequently, in August 2010, EMS filed a separate suit against the City

in Louisiana state court. EMS asserted a breach of contract claim alleging that

the City failed to provide compensation and documentation, seeking damages as

well as a request for accounting and a writ of sequestration. The City removed

the case to the U.S. District Court for the Western District of Louisiana on

August 26, 2010, asserting supplemental jurisdiction under 28 U.S.C. §§ 1367

and 1441. On September 16, 2010, EMS filed a motion to remand the case to

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state court. The district court denied EMS’s motion to remand on the basis that

it possessed supplemental jurisdiction over EMS’s claims against the City. The

district court then granted EMS’s motion to certify the order for immediate

interlocutory appeal, authorizing this court’s review of the decision under 28

U.S.C. § 1292(b). We granted EMS’s Motion for Leave To Appeal from an

Interlocutory Order and now consider EMS’s appeal.

II.

A.

“Federal courts are courts of limited jurisdiction. They possess only that

power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins.

Co. of Am., 511 U.S. 375, 377 (1994). “It is to be presumed that a cause lies

outside this limited jurisdiction, and the burden of establishing the contrary

rests upon the party asserting jurisdiction.” Id. Furthermore, “[t]he right of

removal is entirely a creature of statute and ‘a suit commenced in a state court

must remain there until cause is shown for its transfer under some act of

Congress.’ These statutory procedures for removal are to be strictly construed.” 

Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32 (2002) (quoting Great N. Ry.

Co. v. Alexander, 246 U.S. 276, 280 (1918)). “If at any time before final judgment

it appears that the district court lacks subject matter jurisdiction [over a

removed case], the case shall be remanded.” 28 U.S.C. § 1447(c). We review the

denial of a motion to remand to state court de novo. Roland v. Green, 675 F.3d

503, 511 (5th Cir. 2012). 

The district court denied EMS’s motion to remand on the ground that it

possessed supplemental

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jurisdiction over EMS’s claims against the City because

1 A district court’s authority to exercise supplemental jurisdiction over state law claims

was codified in 1990 under 28 U.S.C. § 1367, which states in relevant part:

Except as provided in subsections (b) and (c) or as expressly provided otherwise

by Federal statute, in any civil action of which the district courts have original

jurisdiction, the district courts shall have supplemental jurisdiction over all

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EMS’s subsequent lawsuit was “factually interdependent” with the City v.

CLECO case and, therefore, should be maintained in the court with jurisdiction

over that litigation and settlement. We reverse, concluding that (1) the district

court does not have original jurisdiction over EMS’s state-court civil action

required to permit its removal to federal court, and (2) although the district

court retains jurisdiction over the City v. CLECO post-settlement matters,

neither the dismissed claims nor the court’s retained jurisdiction over the

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. Such supplemental jurisdiction shall

include claims that involve the joinder or intervention of additional parties.

28 U.S.C. § 1367(a). Congress drafted § 1367 with the intent to codify, in part, the commonlaw doctrines of “pendent” and “ancillary” jurisdiction. See 28 U.S.C. § 1367, David Siegel,

Practice Commentary, “The 1990 Adoption of §1367, Codifying ‘Supplemental’ Jurisdiction.”

Historically, the doctrine of pendent jurisdiction referred to a district court’s authority to

exercise jurisdiction over claims raised by a plaintiff in a single civil action regarding the same

event, series of events, or course of conduct, so long as one of such claims satisfied the court’s

original jurisdiction requirement, thereby acting as a “jurisdictional crutch” over the related

claims that independently would not invoke the court’s jurisdiction. Id. Comparatively,

ancillary jurisdiction referred to the court’s adjudicatory power over a defendant’s factually

related cross-claims or counterclaims against the plaintiff, as well as “impleader” claims made

by a third party. Id. The Supreme Court has explained that “ancillary” jurisdiction referred

to the district court’s jurisdiction exercised both “(1) to permit disposition by a single court of

claims that are, in varying respects and degrees, factually interdependent; and (2) to enable

a court to function successfully,that is,to manage its proceedings, vindicate its authority, and

effectuate its decrees.” Kokkonen, 511 U.S. 375, 379-80 (1994) (citations omitted).

This first type of ancillary jurisdiction has largely been codified as part of supplemental

jurisdiction in § 1367. See Peacock v. Thomas, 516 U.S. 349, 354 n.5 (1996). Because of the

historical development of the doctrine, courts sometimes refer interchangeably to this type of

jurisdiction as either “supplemental” or ancillary jurisdiction. The second type of ancillary

jurisdiction, though not codified, remains a viable doctrine of ancillary jurisdiction and is often

referred to as “ancillary enforcement jurisdiction.” See Peacock, 516 U.S. at 356; Myers v.

Richland Cnty., 429 F.3d 740, 746-47 (8th Cir. 2005). The district court here used the term

“ancillary jurisdiction” in exercising jurisdiction over EMS’s civil suit without explicitly stating

whether it was invoking supplemental jurisdiction under § 1367 or ancillary enforcement

jurisdiction. We assume for purposes of this opinion that the court was relying upon

supplemental jurisdiction under § 1367(a), given its assertionthat removal was proper because

of the “factual[] interdependen[ce]” and “interrelated[ness]” of the claims. However, we note

that neither supplemental jurisdiction under § 1367 nor ancillary enforcement jurisdiction

vests the district court with jurisdiction here because neither can “provide the original

jurisdiction needed for removal to federal court under 28 U.S.C. § 1441.” Myers, 429 F.3d at

748.

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separate, post-settlement matters may serve as the basis for the district court’s

jurisdiction over EMS’s state-law claims, which are asserted in a separate and

new proceeding.

1.

Before a state-court civil action may be removed to federal district court,

the action must satisfy § 1441. In relevant part, § 1441 provides that 

[e]xcept as otherwise expressly provided by Act of Congress, any

civil action brought in a State court of which the district courts of the

United States have original jurisdiction, may be removed by the

defendant or the defendants, to the district court of the United

States for the district and division embracing the place where such

action is pending.

28 U.S.C. § 1441(a) (emphasis added). This provision is to be strictly construed.

See Syngenta Crop Prot., 537 U.S. at 32. “Under the plain terms of § 1441(a), in

order to properly remove [an] action pursuant to that provision, petitioners must

demonstrate that original subject-matter jurisdiction lies in the federal courts.”

Id. A federal district court may exercise original jurisdiction over any civil

action that either satisfies diversity requirements or that arises under the

federal constitution, statutes, or treaties—commonly referred to as “federal

question” jurisdiction. 28 U.S.C. §§ 1331, 1332, 1369. Thus, under § 1441,

removal is proper only when the court has original jurisdiction over at least one

asserted claim under either federal question or diversity jurisdiction. See City

of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 165 (1997). Once § 1441 is

satisfied, pursuant to § 1367, the court may then assert supplemental

jurisdiction over any remaining state-law claims that do not independently

satisfy original jurisdiction, if the state-law claims are part of the same case or

controversy as the “anchor claim.”228 U.S.C. § 1367; see also Daimler Chrysler

2 We use the term “anchor claim” throughout the opinion for ease of reference to a

claim over which the federal court has original jurisdiction pursuant to §§ 1331, 1332, or 1369

and which thus under § 1367 may serve as a basis for the federal court to exercise jurisdiction

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Corp. v. Cuno, 547 U.S. 332, 351 (2006) (“[F]ederal question jurisdiction over a

claim may authorize a federal court to exercise jurisdiction over state-law claims

that may be viewed as part of the same case because they ‘derive from a common

nucleus of operative fact’ as the federal claim.” (quoting Mine Workers v. Gibbs,

383 U.S. 715, 725 (1966))).

EMS’s suit against the City raises no claims over which a federal district

court could exercise original jurisdiction and therefore it does not satisfy § 1441. 

EMS’s suit concerns a contract dispute that presents only state-law questions

and the parties do not dispute that there is lack of diversity between them. We

have unequivocally held that 

[w]here . . . the plaintiff files an action in state court with no federal

question or complete diversity,the original jurisdiction necessary for

removal under § 1441 does not exist. Congress specified that federal

courts have removal jurisdiction under § 1441 only if the district

court otherwise has original jurisdiction over the civil action. No

federal court had original jurisdiction over the [present action], and

§ 1367, by its own terms cannot fill the void. Section 1367 grants

supplementaljurisdiction over state claims, not original jurisdiction. 

Without original jurisdiction, [there is] no jurisdictional hook for

removal.

Halmekangas v. State Farm Fire & Cas. Co., 603 F.3d 290, 294 (5th Cir. 2010)

(footnotes omitted) (internal quotation marks omitted). Thus, removal of EMS’s

entirely state-law-based, non-diverse action was improper under § 1441.

2.

The district court’s jurisdiction over the City v. CLECO litigation and

settlement does not satisfy the statutory requirements for removal of EMS’s

separate civil action under § 1441 and thus does not vest the district court with

jurisdiction over EMS’s claims. First, the district court’s original jurisdiction

over the claims asserted in City v. CLECO—which the parties settled and the

over additional claims regarding the same case or controversy as the anchor claim.

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court dismissed on the merits with prejudice—may not serve as an anchor claim

for exercising jurisdiction over EMS’s state-law contract claims. Additionally,

standing alone, the attorneys’ fees and sealed document matters over which the

district court retained limited jurisdiction after the City v. CLECO settlementdismissal does not constitute an anchor claim that would support supplemental

jurisdiction over EMS’s separate civil action, given that EMS’s state-law claims

were not asserted in the same proceeding as the claims in City v. CLECO. 

Once the City v. CLECO claims were extinguished, their ability to serve

as anchor claims for purposes of supplemental jurisdiction ceased. As the

Supreme Court has explained, dismissal of a suit with original jurisdiction halts

the ability of the court to assert jurisdiction over related claims:

In a subsequent lawsuit involving claims with no independent basis

for jurisdiction, a federal court lacks the threshold jurisdictional

power that exists when ancillary claims are asserted in the same

proceeding as the claims conferring federal jurisdiction. 

Consequently, claims alleged to be factually interdependent with

and, hence, ancillary to claims brought in an earlier federal lawsuit

will not support federal jurisdiction over a subsequent

lawsuit. . . . [O]nce judgment [i]s entered in the original [] suit, the

ability to resolve simultaneously factually intertwined issues

vanishe[s].

Peacock v. Thomas, 516 U.S. 349, 354 (1996) (emphasis added) (citations

omitted). Thus, the now-dismissed claims in the City v. CLECO litigation,

regardless of how factually “intertwined” with EMS’s suit, may not serve as an

anchor claim to establish jurisdiction over EMS’s “entirely new and original

suit.” Id. at 354.

Likewise, the district court’s limited, continued jurisdiction of the City v.

CLECO settlement to resolve potential future disputes regarding attorneys’ fees

and protective orders, does not provide a basis of original jurisdiction to support

removal of EMS’s action against the City under § 1441. “That a related case was

pending in federal court [i]s not in itself sufficient grounds for removal under 28

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U.S.C. § 1441.” Fabricius v. Freeman, 466 F.2d 689, 693 (7th Cir. 1972); see also

Syngenta, 537 U.S. at 34; Motion Control Corp. v. SICK, Inc., 354 F.3d 702, 706

(8th Cir. 2003) (“[A] removal petition . . . may not base subject-matter

jurisdiction on the supplemental-jurisdiction statute, even if the action which a

defendant seeks to remove is related to another action over which the federal

district court already has subject mater jurisdiction.” (quoting Shearn v. Charter

Twp. of Bloomfield, 100 F.3d 451, 456 (6th Cir. 1996))). 

Defendants sometimes will assert that a pending federal action that

shares a common nucleus of operative fact with the state lawsuit

that defendants seek to remove can furnish an anchor claim under

Section 1367(a), and thus enable removal of a separate suit under

Sections 1441(a) and (b). This is a misreading of Section 1367,

which authorizes supplemental jurisdiction over claims that are

within the same civil action as a federal question claim . . . and those

claims alone.

Halmekangas, 603 F.3d at 294 n. 15 (emphasis added) (quoting 14B Charles A.

Wright, Arthur R. Miller, Edward H. Cooper & Joan E. Steinman, Federal

Practice and Procedure § 3722 (4th ed. 2009)). “[E]ven if we assume that the

district court would have had supplemental jurisdiction over [EMS’s claims] had

[they been] filed [together with the City v. CLECO claims] in a single lawsuit in

federal court[,] . . . . [b]ecause [EMS’s] state-filed suit could not meet the

demands of original jurisdiction, § 1441 did not allow for removal.” Id. at 294. 

Therefore, although the district court retains jurisdiction over post-settlement

disputes between the City and CLECO, that pending federal litigation may not

serve as a basis for removal of EMS’s separately filed civil action.3

3 With consent of the parties, a district court may expressly retain jurisdiction over a

settlement agreement in order to enforce the parties’ compliance with that agreement and

thereafter may assert jurisdiction over breach of settlement claims. Kokkenon, 511 U.S. at

380-81. However, that is not the situation here. EMS was never a party to the City v. CLECO

litigation, never consented to the retention of jurisdiction, and EMS’s breach-of-contract claims

are not an effort to enforce compliance with the City v. CLECO settlement agreement. Rather,

EMS filed a separate action alleging that the City breached contractual duties it owed EMS.

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The district court erred in denying EMS’s motion to remand because: (1)

the district court does not have original jurisdiction over any of EMS’s claims;

(2) the settled and dismissed City v. CLECO claims may not serve as an anchor

claim to support supplemental jurisdiction over EMS’s suit; and (3) the court’s

retention of jurisdiction over the post-settlement matters likewise do not support

supplemental jurisdiction over EMS’s state-law breach-of-contract claims, given

that EMS’s claims were not asserted in the same proceedings as the City v.

CLECO litigation. Thus, the district court does not have jurisdiction over EMS’s

action and must remand the case to the state court for further proceedings. 

B.

The City alternatively argues that Baccus v. Parrish, 45 F.3d 958 (5th Cir.

1995), serves as an exception to the original-jurisdiction requirement of § 1441. 

In Baccus, we affirmed the removal of a state-law, non-diverse case because

“[f]ederal jurisdiction is proper where a claim brought in state court seeks to

attack or undermine an order of a federal district court.” Id. at 960. We further

held that “federal jurisdiction . . . may also be found where a claim seeks to set

aside a provision of a settlement agreement in a federal case.” Id. However, we

have since held that the Supreme Court’s ruling in Rivet v. Regions Bank of

Louisiana, 522 U.S. 470 (1998), “calls into doubt the holding of Baccus.” Texas

v. Real Parties in Interest, 259 F.3d 387, 394 n.10 (5th Cir. 2001). We need not

consider the extent to which Baccus is still good law in light of Rivet and

Syngenta Crop Protection, however, because EMS’s suit does not satisfy the

requirements of Baccus. EMS does not seek to attack, unravel, or set aside any

provision of the City v. CLECO settlement. Rather, EMS’s suit concerns an

independent contract dispute between the City and EMS. Accordingly, even

Although EMS’s claims are related to the City v. CLECO litigation, as explained, EMS’s claims

are part of a separate proceeding, and thus the court’s retention of jurisdiction may not serve

as a basis for removal under § 1441. The language in Kokkenon is not to the contrary.

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assuming arguendo that Baccus retains its precedential value, the City has not

met its burden of demonstrating that the facts here are sufficiently analogous

to Baccus, and therefore Baccus cannot serve as a basis for removal or for

denying EMS’s motion to remand.

CONCLUSION

Removal was improper because none of the claims in EMS’s state court

civil action satisfies either the federal question or diversity requirements of

original jurisdiction. The district court’s prior jurisdiction over the claims

asserted in City v. CLECO, which are now dismissed, do not vest the district

court with jurisdiction over EMS’s claims. Moreover, regardless of how factually

intertwined with EMS’s suit, the district court’s retention of jurisdiction over the

post-settlement matters may not substitute for original jurisdiction for the

purpose of supplemental jurisdiction under § 1367 or removal under § 1441,

given that EMS’s claims were not asserted in the same proceeding as the claims

in City v. CLECO. Further, if Baccus retains any precedential value, it is

distinguishable and inapposite here. Thus, the federal district court lacked

jurisdiction over EMS’s suit and erred in denying EMS’s motion to remand. We

therefore REVERSE the district court’s denial of EMS’s motion to remand and

REMAND to the district court with instructions to remand the case to the

Louisiana state court in which it was initially filed. 

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