Order Form (01/2005)

United States District Court, Northern District of Illinois

Name of Assigned Judge

or Magistrate Judge

Elaine E. Bucklo Sitting Judge if Other

than Assigned Judge

CASE NUMBER 04 C 397 DATE 1/21/2011

CASE

TITLE

Last Atlantis, et al. vs. AGS Specialist Partners, et al.

DOCKET ENTRY TEXT

Plaintiffs’ motion to clarify [840] is granted. Defendants SIG, AGS, Bear and TDO’s motion for final judgment

pursuant to Rule 54(b) [849] is denied without prejudice. Pursuant to the final paragraph below, defendants, if

they so choose, may file motions for summary judgment by February 11, 2011. Responses are due March 4, 2011

and replies are due March 18, 2011. Target date for ruling by mail set for 4/25/11.

O[ For further details see text below.] Docketing to mail notices.

STATEMENT

On December 16, 2010, plaintiffs moved to clarify my March 26, 2010 and November 4, 2010 summary

judgment orders in which I relinquished supplemental jurisdiction over certain state law claims [840]. In those

orders, I relinquished supplemental jurisdiction over certain state law claims pursuant to 28 U.S.C. § 1367(c)(3),

which specifies that a federal court may decline to exercise supplemental jurisdiction when it “has dismissed all

claims over which it has original jurisdiction.” 28 U.S.C. § 1367(c)(3). In their motion, plaintiffs argue that I

did not have authority to relinquish supplemental jurisdiction over these state law claims because all federal

claims against all defendants were not dismissed. All the defendants, except Knight, argue that I should elect

to retain jurisdiction over the state law claims and maintain that I should summarily dismiss those state claims

based on my earlier rulings. Knight’s primary argument is that I no longer have supplemental jurisdiction over

the state law claims against Knight because those claims are not part of the same “case or controversy” as the

remaining federal claims against the other defendants. As explained below, plaintiffs’ motion is granted to the

extent it requests that I reinstate all state law claims that I dismissed in my previous summary judgment orders. 

The other relief plaintiffs request is denied as moot. 

 

 I first address Knight’s contention that I no longer have supplemental jurisdiction over the state law

claims against it. Section 1367 provides that when a district court has original jurisdiction over an action, the

court has 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.” 28 U.S.C. § 1367(a). “Two claims are part of the same case or controversy if they ‘derive from

a nucleus of operative facts. A loose factual connection is generally sufficient.’” Sanchez & Daniels v. Koresko,

503 F.3d 610, 614 (7th Cir. 2007) (quoting Baer v. First Options of Chicago, Inc., 72 F.3d 1294, 1299 (7th Cir.

1995)). A common nucleus of operative fact will generally exist if “considered without regard to their federal

or state character, a plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial

proceeding[.]” United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966). 

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STATEMENT

The issue, therefore, is whether the state claims against Knight derive from the same nucleus of operative

facts as plaintiffs’ federal claims. Neither side has disputed that the state law claims against Knight (breach of

contract, common law fraud, breach of fiduciary duty, Illinois Consumer Fraud and Deceptive Business Practices

Act, tortious interference with business relationships and contracts) share the same nucleus of operative facts as

the federal claim (Rule 10b-5 claim) against Knight. Therefore, I certainly had supplemental jurisdiction over

Knight’s state law claims prior to my summary judgment ruling. Importantly, the Seventh Circuit has stated that

a district court does not automatically lose supplemental jurisdiction over state claims once summary judgment

is granted on any federal claims. See Groce v. Eli Lilly & Co., 193 F.3d 496, 500 (7th Cir. 1999) (“[O]ur case

law makes clear that the district court did not automatically lose [supplemental] jurisdiction once it granted

summary judgment on [plaintiff’s federal claim].”); United States v. Zima, 766 F.2d 1153, 1158 (7th Cir. 1985)

(“Once power [to adjudicate supplemental claims] is rightfully conferred, the district court retains the power to

consider the ancillary claims.”). While Knight wants me to frame the question as whether or not the state law

claims against it stem from the same nucleus of operative facts as the remaining federal claims against the other

defendants, Knight has simply failed to provide any persuasive, on-point authority for its argument. The only

case Knight cites, Adkins v. Illinois Central Railroad Co., 326 F.3d 828 (7th Cir. 2003), does not support its

novel argument, but rather supports the general notion that a court has supplemental jurisdiction over state law

claims which are part of the same case or controversy as the federal claim(s). In the end, Knight has not

developed this argument in any meaningful way and has failed to support it properly. 

 Based on the above, I conclude that I had supplemental jurisdiction over the state law claims. The next

question is whether or not I had the authority to decline to exercise that jurisdiction. Plaintiffs assert that I did

not have such authority because I did not dismiss all federal claims against all defendants. See Hansen v. Board

of Trustees of Hamilton Southeastern Sch. Corp., 551 F.3d 599, 608 (7th Cir. 2008) (“[T]he district court’s

discretion to relinquish jurisdiction under § 1367(c)(3) was never triggered, because the court did not dismiss

all claims over which it had original jurisdiction). In the end, I need not decide whether I had the authority to

decline to exercise supplemental jurisdiction because I conclude that I will amend my earlier summary judgment

rulings and retain jurisdiction over the state law claims. This case is entering its seventh year. The court and the

parties have expended tremendous time and resources in litigating this matter. Given this, forcing the parties to

start from scratch in state court, which would necessarily entail duplicating efforts already made in this court,

would be quite onerous to both sides. In addition, plaintiffs and all defendants except Knight agree that I should

retain jurisdiction over the state law claims I dismissed in my summary judgment rulings. In light of all these

factors, I have reconsidered my earlier rulings and now conclude that I will continue to exercise supplemental

jurisdiction over the state law claims I dismissed in my March 26, 2010 and November 4, 2010 summary

judgment rulings. While I recognize that plaintiffs did not promptly raise this issue, I decline to find waiver here,

given that I have concluded that my earlier rulings were in error with respect to the exercise of supplemental

jurisdiction. 

Finally, in their response to plaintiffs’ motion, defendants attempted to argue that I should summarily

dismiss certain state law claims based on my earlier summary judgment rulings. I agree with plaintiffs that this

would be improper. However, it does seem likely that my summary judgment rulings on the federal claims will

be dispositive of most, if not all, of the state law claims I previously dismissed. In light of this, I will allow

defendants an opportunity to file summary judgment motions directed at the state law claims I have now

reinstated in the case. If they so choose, defendants may file motions for summary judgment (and supporting

memoranda and materials) on or before February 11, 2011. Responses are due March 4, 2011 and replies are

due March 18, 2011.

 In a separate motion, defendants SIG, AGS, Bear and TDO have moved for final judgment pursuant

to Rule 54(b) [849]. Rule 54(b) provides “a practical means of permitting an appeal to be taken from one or more

04C397 Last Atlantis, et al. vs. AGS Specialist Partners, et al. Page 2 of 3
STATEMENT

final decisions on individual claims, in multiple claims actions, without waiting for final decisions to be rendered

on all the claims in the case.” Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 435 (1956). However, defendants

have not provided me with any legal argument as to why their motion should be granted. This motion is denied

without prejudice. If defendants choose to refile this motion, they must include legal argument in support, and

also address whether or not such a motion is timely.

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