### REVI SED JANUARY 20, 2014

I N THE UNI TED STATES COURT OF APPEALS

FOR THE FI F TH CI RCUI T

No. 12-31184

ENERGY MANAGEMENT SERVICES, LLC, Plaintiff-Appellant
v. CITY OF ALEXANDRIA, Defendant-Appellee

A ppeal from the United States District Court for the Western District of Louisiana

Before WIENER, DENNIS, and OWEN, Circuit Judges. DENNIS, Circuit Judge: P l a i n t i f f

- Ap p e l l a n t E n e r g y Management Services, L.L.C. (“EMS”) a p p e a l s t he d i s trict court’s order denying EMS’s motion to remand its suit against t he City of Alexandria, Louisiana (“the City”) to th e s t a te court f rom w hich it was removed. Because the district court d oes not have jurisdiction over EMS’s suit,

we R EVERSE the district court’s ord e r a n d REMAND this case to the district court with instructions to r emand it to the Louisiana state court in which it was initially filed. I. U n i t e d S ta t e s C o u rt o f A p p e a l s F ift h C i r c u i t 

### F I L E D January9, 2014 Ly le W . Cay ce Clerk Case: 12-31184 Document: 00512505470 Page: 1 Date Filed: 01/20/2014No. 12-31184

In a previou s c a s e, the City f iled suit against its electricity provider, CLECO Corporation a n d i t s subsidiaries (collectively “CLECO”), in L ouisiana state court on June 2 2, 2005, alleging that CLECO had overcharged the City for electricity. CLECO removed the case (hereinafter “City v. CLECO”) to the U.S. District Court f

or t he Western District of Louisiana. T h e City a nd CLECO

r eached a settlement agreement that involved several long-term contractua l relation s h i p s between the City and CLECO and two c ash payments from CLECO to the City. O n February 24, 2010, in l ight of the settlement, the district court entered a Judgment of Dismissal that dismissed the case with prejudice. However, the district court retained jurisd i ction over the City v
. CLECO settlement for the purpose o f resolving disputes over attorneys ’ f e e s e xpended during the litigation of the otherwise-dismissed case and to enforce its p r otective orders g o v e r n i ng t he confidentiality of the s e ttlement p r oceedings and documents, as needed. The evidence and settlement documents are under seal in the district court. In 2004, i n anticipation of i ts s u it against CLECO, the C ity 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 overpaymen t s to CLECO. EMS a nd the City signed an agreement that provided, inter a lia , that EMS’s f ee w as t wenty percent of any recovery, d amages, or o ther credits the City received as a r e s u l t o f the City v. CLECO litigation. The agreement also provided that the City would allow E MS t o review a ll 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 C ity f

ailed to provide compensation a nd documentation, s eeking d amages as well as a request for accounting and a writ o f sequestration. The City removed the case to the U .S. District Court for the Western District of Louisiana on

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August 26, 2010, asserting supplemental jurisdiction under 28 U.S.C. §§ 1367 and 1441. On September 16, 2010, EMS f i l e d a m o t i o n to remand the case to state court. T he district court denied E MS’s motion t o remand on the basis that it p ossessed supplemental jurisdiction over EMS’s claims a gainst the C ity. The district court then g ranted EMS’s motion to certify the order for immediate in t erlocutory appeal, authorizing this court’s review o f t he decision u n der 28 U.S.C. § 1292(b). We granted E MS’s M o tion f or Leave To Appeal from an Interlocutory Order and now consider EMS’s appeal. II. A. “Federal courts a re courts of limited jurisdiction. They possess only that
power authorized by C onstitution and statute.” Kokkonen v. Guardian Life Ins. Co. of A m. , 511 U.S. 375, 377 ( 1 9 9 4 )

. “ I t i s t o be p resumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdic t i o n
. ” 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 f or i t s t r a nsfer under some act of Congress.’ These statutory procedures for removal are t o be strictly construed.” Syngenta Crop Prot., Inc. v. Henson , 537 U

. S. 28, 3 2 (2002) (quoting Great N. R y. Co. v
. Alexander , 246 U.S. 2 76, 280 (1918)). “ If at any time before final judgment it appears that the district court l a cks s ubject matter jurisdiction [over a removed case], the case shall be remanded.” 28 U.S.C. § 1447(c). We review the denial o f a motion to remand to state court de novo. Roland v. G reen , 675 F.3d 503, 511 (5th Cir. 2012). The district court denied EMS ’ s motion to remand on t he ground that it possessed s u p p l e m e n t a l 1 j u r i s d i c t i o n o ver EMS’s claims against the C ity because

1 A d is trict court’s authority to exercis e s up p lem ental juris d iction over s tate law claim s w as cod if

ied in 1990 und er 28 U

. S. C. § 1367, w hich states in relevant p art: 3 Case: 12-31184 Document: 00512505470 Page: 3 Date Filed: 01/20/2014No. 12-31184

EMS’s s ubsequent lawsuit w as “ f a c tually interdependent” with the City v
. CLECO c ase and, t herefore, should be maintained in the court w ith j urisdiction

over that litigation and settlement. We reverse, concluding that (1) the district court does not have original jurisdiction over EMS’s state

- c o u r t civil action required to permit its removal to f ederal court, and (2) although the district

Excep t as p rovid ed in s ubs ections (b) and ( c) or as exp res s ly p rovid ed otherw is e by Fed eral s tatute, in any civil action of which the d is trict courts have original juris diction, the d i s t r i ct courts s hall have s up plem ental juris d iction over all other claim s that are s o related to claim s in the ac t i o n w ithin s uch original juris diction that they f orm p art of the s am e c a s e or controvers y und er Article III of the U nited States Cons titution. Such s up plem ental juris d iction s hall includ e claim s that involve the joind er or intervention of ad d itional p arties

. 28 U

. S. C. § 1367( a)

. Congres s d raf ted § 1367 w ith the intent to cod if y, in p art, the com monlaw d octrines of “p end ent” and “ancillar y” juris diction. See 28 U

. S. C

. § 1367, D avid Siegel, Practice Com m entary, “The 1990 Ad op tion of §1367, Cod if ying ‘Sup p lem ental’ Juris d iction. ” H is torically, the doctrine of p end ent j u r i s d i c tion ref erred to a d is trict court’s authority to exercis e juris d iction over claim s rais ed by a p laintif f in a s ingle civil action regard ing the s am e event, s eries of events , or cours e of cond uct, s o long as one of s uch claim s s atis f ied the court’s original juris d iction requirem ent, thereby acting as a “juris dictional crutch” over the related claim s t h a t i nd ep end ently w ould not invok e the court’s juris diction. Id. Com p aratively, ancillary juris d iction ref erre d t o t he court’s ad jud icatory p ow er over a d ef end ant’s f

actually related cros s- claim s or counterclaim s agains t the p laintif f, as well as “im plead er” claim s m ad e by a third p arty. Id. The Sup rem e Court has exp lained that “ancillary” juris d iction ref erred to the dis trict court’s juris d iction exercis ed both “( 1) to perm it d is p os ition by a single court of claim s that are, in varying res p ects and d egrees , f actually interd ep end ent; and ( 2) to enable
a court to function s ucces s f ully, that is , to m anage its p roceed ings , vind icate its authority, and ef f ectuate its d ecrees .” Kokkonen , 511 U

. S. 375, 379- 80 ( 1994) ( citations om itted ). This f irs t typ e of ancillary juris d iction has largely been cod if ied as part of s up p lem ental juris d iction in § 1367. See Pea cock v
. Thom a s , 516 U

. S. 349, 354 n. 5 ( 1996)

. Becaus e of the his torical d evelop ment of the d octrine, courts s om etim es ref er interchangeably to this typ e of juris d iction as either “s up p lem ental” or ancillary juris d iction. The se c ond typ e of ancillary juris d iction, though not cod if ied , rem ains a viable d octrine of ancillary juris d iction and is of ten ref erred to as “ancillary enf orcem ent juris diction. ” See Pea cock , 516 U

. S

. a t 3 56; M yers v
. Ri chl a nd Cnty. , 429 F. 3d 740, 746- 47 ( 8th C ir. 2005)

. The d is trict court here us ed the term “ancillary juris d iction” i n e x e r c i si n g j u r i s d iction over EM S’s civil s uit w ithout exp licitly s tating
w hether i t w as invok ing s up p lem ental juris d iction und er § 1367 or ancillary enf orcem ent j u ris d iction. We as s um e f or p urp os es of this op inion that the court w as relying u p o n s up p lem ental juris d iction und er § 1367( a) , gi v e n i t s a sse r t i o n that rem oval w as p rop er becaus e of the “f actual[ ] interd ep end en[ ce] ” and “interrelated [ nes s ] ” of the claim s
. H ow ever, w e note that neither s up p lem ental juris diction und er § 1367 nor ancillary enf o rcem ent j uris d iction
ves ts the d is trict court w ith juris d iction here becaus e neither can “p ro v i d e t h e original juris d iction need ed f

or rem oval to f

ed eral court und er 28 U

. S. C. § 1441. ” M yers, 429 F. 3d at 748.
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court retains jurisdiction o ver the City v. CLECO post-settlement ma t ters, neither the dismiss e d claims nor the court’s retained jurisdiction over the separate, post-settlement matters may serve as t he b asis for the district court’s jurisdiction over EMS’s state-law claims, which a re asserted in a separate and new proceeding. 1
. Before a state-court civil action m ay be r emoved to federal district court, the action must satisfy § 1441. In relevant part, § 1441 provides that [e]xcept as otherwise expressly p rovid e d b y Act of Congress, any civil action brought in a State court of which the district courts of the United States h ave original juri s d i c t ion , may b e removed b y t h e defendant or the defendants, to t he distric t c o u r t of the U nited States for t he district and division e mbracing the place where such action is pending. 28 U.S.C. § 1441(a) (emphasis added). This provision is to be strictly c o nstrued. See Syngenta Crop Prot. , 537 U.S. at 3 2. “Under the plain terms o f § 1441(a), in order to properly remove [an] action p ursuant to that p r ovision, petitioners must demonstrate t hat original subject-matter jurisdiction lies i n the federal courts.” Id. A federal district court may exercise original jurisdiction ov e r a n y c i vil action that either satisfies diversity requirements or that arises under the federal consti t u t ion, statutes, or treaties—commonly referred to as “federal question” jurisdiction. 28 U.S.C. §§ 1331, 1332, 1 369. Thus, und e r § 1441, removal is proper only when the court has original jurisdiction over at least one asserted claim under either federal question o r diversity j urisdiction. See City of Chicago v. Int’l Coll. of Surgeons , 522 U.S. 156, 165 (1997). Once § 1441 is satisfied, pursuant t o § 1367, the court may then asser t supplemental jurisdiction over any r emaining state-law c laims th a t d o not independently satisfy original jurisdiction, i f the state-law c l aims are part of the same case or

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controversy as the “anchor claim.” 2 28 U.S.C. § 1367; see also Daimler Chrysler Corp. v. Cuno , 5 47 U.S. 332, 351 (2006) (“[F]ederal question jurisdiction over a claim m ay authorize a federal court t o exercise jurisdiction over state-law claims that may be viewed a s p art of the same case b ecause t hey ‘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 c laims over w hich a federal district court could exercise original jurisdiction and therefore i t does not satisfy § 1441. EMS’s suit c oncerns a contract dispute that presents only state-law questions and the parties do not dispute that t here is lack of diversity between them. We have unequivocally held that [w]here

. . . the plaintiff files an action in state c o urt with no federal q u e s t i o n o r c o m p l e t e diversity, the original jurisdict i o n n e c e s s a r y f o r removal under § 1 441 does n ot exist. Congress specified that federal courts have removal jurisdiction under § 1441 only if t h e d i strict court otherwise has original jurisdiction over the civil ac t ion. No federal c ourt h ad original jurisdiction over the [present action], and § 1367, b y its own terms cannot fill the voi d

. Section 1367 grants s u p p l e m e n t a l j u r i s d iction o ver state claims, no t o r i g i n a l j u r i s d i c t i o n
. Without original jurisdiction, [ there is] no j urisdictional hook for removal. Halmekangas v. State Farm Fire & Cas. Co. , 603 F.3d 290, 294 (5th Cir. 2010) (footnotes o mitted) (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 t he City v
. C L E C O litigation and settlem e n t d oes n ot satisfy the statutory r equirements f or r emoval of EMS’s

2 We us e the term “anchor claim ” throughout the op inion f o r e a s e o f r ef

erence to a claim over w hich the f ed eral court has original juris diction purs uant to §§ 1331, 1332, or 1369 and w hich thus und er § 1367 m ay s erve as a bas is f or the f ed eral court to exercis e j uris d iction
over ad d itional claim s regard ing the s am e cas e or controvers y as the anchor claim

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separate civil a ction under § 1441 and thus does not vest the district court with jurisdiction over EMS’s claims. First, t he d i s t r i ct c ourt’s original j urisdiction

over the claims asserted in City v. C LECO—which the parties set t led and the court dismissed on the m e r its with prejudice—may not serve as a n anchor claim for exercising juris d i c t ion over EMS’s state-law contract c laims. Additionally, standing alone, the a ttorneys’ fees and sealed document matters o ver which the district court retained limited jurisdiction a fter the City v. C LECO s e ttlementdismissal does not constitute an anchor claim t hat would support supplemental jurisdiction over EMS’s separate civil action, given t h at 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 juri s d i ction 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 w ith no independent basis for jurisdiction, a federal court l acks the t hreshold jurisdictional power that e xists w hen ancillary claims are asser t ed i n t he same proceeding a s t he claims conferring federal juri s d i ction. Consequently, claims alleged to b e factually i nterd e p e ndent with and, hence, a ncillary to claims brought in an earlier federal l a wsuit will not support federal jurisdiction over a subse q u ent lawsuit.

. . . [O]nce judgment [i]s entered in the original [] s uit, t h e ability to resolve simultaneously factually intertwined issues vanishe[s]. Peacock v. T

homas, 516 U.S. 349, 354 (1996) (emphasis added) (c itations omitted). Thus, the now-dismissed c l a i ms in the City v
. CLECO litigation, regardless of h ow f

actually “intertwined” with EMS’s suit, may not serve as an anchor claim to establish jurisdiction over E M S ’ 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 f uture disputes regarding attorneys’ fees

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and protective orders, does not provide a b asis o f original j urisdiction to support removal of EMS’s action a gainst the City under § 1 441. “That a related case was pending in federal court [i]s not in itself sufficient grounds for removal under 28 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 ( 8 th Cir. 2003) (“[A] removal petition

. . . may not base subjec t

- m a t t e r jurisdiction on the supplemental-jurisdiction s tatute, even if the action which a defendant seeks to remove is related to another a ction over w hich t h e f e deral 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 p e nding federal a ction that shares a common nucleus of o perative fact w ith t h e s t ate l a wsuit that defendants seek to remove can furnish a n anchor claim under Section 1367(a), and thus enable removal of a separate s uit under Sections 1441(a) and (b). This is a misreading o f S ection 1 367, which authorizes supplemental jurisdiction over claims t hat a re within the s ame civil action as a federal question claim

. . . and those claims alone. Halmekangas , 603 F .3d a t 2 94 n. 15 (emphasis added) (quoting 14B Charles A. Wright, Art h u r R

. Miller, Edward H. C ooper & Joan E. Steinman, Federal Practice and Procedure § 3 722 (4th e d. 2009)). “ [E]ven i f w e a s s u m e that the district c ourt 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]eca u s e [ E M S ’ s] state-filed suit could not meet the demands of original jurisdiction, § 1441 did not allow for removal.” Id

. at 294. Therefore, although the d istrict c ourt 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 cons ent of the p arties , a d is trict court m ay exp res sly retain juris diction over a s ettlem ent agr e e m ent in ord er to enf orce the p arties ’ com p liance w ith that agreem ent and 8 Case: 12-31184 Document: 00512505470 Page: 8 Date Filed: 01/20/2014No. 12-31184

The district court erred in denying EMS’s m otion t o remand because: (1) t h e d i s t r ict court d oes n ot 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 m a t t e r s l i k e w i s e do not support supplemental jurisdiction over EMS’s state-law breach-of-contract claims, given that E MS’s claims were not asserted in the sa m e p r o c e edings as the City v
. CLECO litigation. Thus, the district court d oes n ot have jurisdiction over EMS’s action and must remand the case to the state court for further proceedings. B. The City a lternatively argues that Baccus v
. Parrish , 45 F.3d 958 (5th Cir. 1995), s erves a s an exception to the original-jurisdiction requirement of § 1441. In Baccus , we a ffirmed the r emoval of a state-law, non-diverse c ase because “[f]ederal jurisdiction is proper w here a claim b rou g h t i n state court seeks to attack or undermine an order of a federal district c ourt.” Id. at 960. We further held t hat “ federal j urisdiction

. . . m ay also be found w here a claim seeks to set aside a provision of a s ettlement agreement in a federal case.” I d. However, we have since held that the Supreme Court’s ruling i n R i v e t v. Regions Bank of Louisiana , 522 U.S. 470 (1998), “calls into doubt the holding of Baccus. ” Texas

v. Real Parties i n Interest , 259 F.3d 387, 394 n.10 (5th Cir. 2001). We need not consider the e x t ent t o which Bac c u s i s still good law in light o f R ivet and S y ng e nta Crop Protection , however, b ecause EMS’s suit does not satisfy t he

thereaf ter m ay as s ert juris d iction over breach of s ettlem ent claim s. Kokkenon, 511 U

. S. at 380- 81

. H ow ever, that is not the s ituation here. EM S w as never a p arty to the City v. CLECO litigation, never cons ented to the retention o f j u r i s d i c t i o n , a n d E MS ’ s breach- of-contract claim s are not an ef

f ort to enf

orce com pliance with the C ity v. CLECO s ettlem ent agreem ent. Rather, EM S f iled a s ep arate action alleging that the City breached contractual d uties it ow ed EM S. Although EM S’s claim s are related to the City v. CLECO litigation, as exp lained , EM S’s claim s are p art of a s ep arate p roceed ing, and thus the court’s retention of juris d iction m ay not s erve as a bas is f

or rem oval und er § 1441. The language in Kokkenon is not to the contrary. 9 Case: 12-31184 Document: 00512505470 Page: 9 Date Filed: 01/20/2014No. 12-31184

requirements of Baccus. EMS does not seek to attack, u nravel, or set aside any provision of the City v. CLECO settlement

. Rather, EMS’s suit concerns an independent contract dispute betwee n t h e C i t y and E MS. Accordingly, even assuming arguendo that Baccus retains its p r ecedential value, the City has not met its burden of demonstrating that the f acts here are sufficiently analogous to Baccus , and therefore Baccus cannot serve a s a basis for removal or for denying EMS’s motion to remand. CONCLUSION Removal was improper b e c a u s e none of the claims in E MS’s state court civil action satisfies either the federal question or diversity requirements of original jurisdiction. Th e d i s trict court’s prior jurisdiction over the claims asserted in City v
. C LECO, which a re n o w dismissed, do not vest the district court with jurisdiction over E MS’s claims. Moreover, regardless of how factually intertwined with EMS’s suit, t he d istrict court’s retention of jurisdiction over the post-settle m ent matters may not substitute for original j urisdiction for the
purpose of supp l e m e n t a l jurisdiction u nder § 1367 or removal under § 1441, given that EMS’s claims were not asserted i n the same proceeding as the claims in C ity v. CLECO. Further, if Baccus retains a n y precedential value, it is distinguishable and i napposite here. Thu s , t h e federal district court lacked jurisdiction over EMS’s suit and e rred in denying EMS’s motion t o remand. We therefore REVERSE the district court’s d enial 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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