## F I L E D United States Court of Appeals Tenth Circuit 

### NOV 13 1998 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

LARRY LEONHARDT, DAN LAURSEN, and RICK RODRIQUEZ, RODRIQUEZ FARMS, INC.,

Plaintiffs - Appellants,

v. No. 97-8078 WESTERN SUGAR COMPANY, a corporation, Defendant - Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF WYOMING (D.C. NO. 97-CV-46-D)

Michael J. Heaphy (John M. Cogswell on the briefs), John M. Cogswell Law Office, Buena Vista, Colorado, for Appellants. Marc D. Flink, Baker & Hostetler, Denver, Colorado (Todd L. Lundy and L. Andrew Cooper, Baker & Hostetler, Denver, Colorado; W. Perry Dray and Gregory C. Dyekman, Cheyenne, Wyoming, with him on the briefs), for Appellees.

Before PORFILIO , McWILLIAMS , and ANDERSON , Circuit Judges.

ANDERSON , Circuit Judge.-2-

Plaintiffs, Wyoming sugar beet farmers, appeal the dismissal of their class action against defendant, Western Sugar Company. P laintiffs’ federal cause of action, alleging a violation of the Agricultural Fa ir Practices Act (“AFPA”), was dismissed for failure to state a claim. Because no t all members of the class satisfied the $75,000 jurisdictional amount require d under 28 U.S.C. § 1332 for a diversity action, the court declined to exercise supplemental jurisdiction over plaintiffs’ state law claims and dismissed them wit hout prejudice. This appeal followed. We affirm, holding as follows on the cen tral issues presented: 1) the district court correctly held that plaintiffs’ comp laint failed to state a claim under AFPA; and 2) because only one plaintiff’s claim sat isfied the $75,000 jurisdictional amount, and because 28 U.S.C. § 1367 has not overturned the historical rule under 28 U.S.C. § 1332 that plainti ffs in a diversity class action must each satisfy that jurisdictional amount, the d istrict court correctly dismissed plaintiffs’ state law claims without prejudice.

BACKGROUND The plaintiffs are Wyoming farmers who grow sugar b eets under contract for Western Sugar Company, a Colorado corporation. Each farmer had four separate contracts with Western Sugar covering crop years 1985-87, 1988-90, 1991-92, and 1993-95. In accordance with those contracts, the Wyoming farmers-3-

delivered beets to Western Sugar’s Lovell facility, where they were put in a pile and weighed. Because sugar beets can lose their su gar over time, a phenomenon referred to as “pile loss,” Western Sugar took samp les from and measured the sugar content of each grower’s beets both at the ti me they were delivered and at the time they were processed. The latter samples, taken from sliced sugar beets at the beginning of the manufacturing process, are ref erred to as “factory cossette samples.” The difference in sugar content between the samples taken at the time of delivery and the factory cossette samples is ref erred to as the “polarity difference,” or “PD.” The PD was used to calculate payments under the contracts, which were based on the market price of sugar, the weight of beets delivered, and the sugar content of each grower’s beets. Plaintiffs contend that the manufacturing process used at the Lovell facility permitted too many adulterants, such as water and soil, to adhere to the sliced beets that were used for the factory cossett e samples. The presence of these adulterants lowered the sugar content measure ment, thereby increasing the PD. This, in turn, lowered the payments the grower s received under their

contracts. Based on this contention, the plaintiffs brought su it on behalf of themselves and all persons who grew sugar beets under contractfor Western Sugar between 1985 and 1995. The complaint asserted federal clai ms under the Sherman Act and1 The plaintiffs agreed to the dismissal of their She rman Act claim. -4- AFPA, as well as five state law claims, alleging br each of contract, breach of an implied duty of good faith and fair dealing, breach of fiduciary duty, promissory estoppel, and a violation of the Wyoming Weights an d Measurers Act, Wyo. Stat. Ann. §§ 40-10-117 to -136 and its predecessor, Wyo. Stat. Ann. §§ 40-10-101 to -116 (repealed 1993). At the time of the district court ruling at issue on appeal, the only claims remaining in the suit were a single federal claim under AFPA and the state law claims. 1 The plaintiffs made no allegations that their free dom to join or not join any association or cooperative was in a ny way hindered by Western Sugar. The district court dismissed the AFPA claim for fai lure to state a claim. The court determined that no plaintiff’s remaining state claims met the $75,000 amount in controversy necessary for the exercise of diversity jurisdiction under 28 U.S.C. § 1332. Before the court, however, was a pe nding motion to amend the complaint to add a prayer for punitive damages to o ne of the state claims. If granted, this amendment would increase the potentia l recoverable damages of plaintiff Rodriquez Farms, Inc. to $75,000 or more. The court denied the motion to amend as futile, reasoning that, even if Rodriqu ez Farms could meet the jurisdictional limit, the court could not exercise supplemental jurisdiction over the-5-

claims of the remaining plaintiffs. Therefore, the court dismissed plaintiffs’ state law claims without prejudice, and this appeal follo wed.

DISCUSSION 1. Appellate Jurisdiction Over Rodriquez Farms As an initial matter, we must consider whether we h ave jurisdiction over the claims of Rodriquez Farms, Inc. Federal Rule o f Appellate Procedure 3(c) provides that “[a] notice of appeal must specify th e party or parties taking the appeal by naming each appellant in either the capti on or the body of the notice of appeal.” The caption of the notice of appeal here contains the names of only the three individual named plaintiffs, and not the name of Rodriquez Farms, another named plaintiff below. Both the docketing statemen t and the caption of appellants’ opening brief also omit Rodriquez Farms as a named appellant. The body of the notice of appeal, however, states that “[n]otice is hereby given that all of the plaintiffs in the above named case hereby ap peal,” and the notice of appeal is signed by John M. Cogswell, Esq., who represente d all four plaintiffs in the district court. Plaintiffs contend that Rodriquez Farms is properlyan appellant under Rule 3(c), and they move to amend the caption to reflectthe inclusion of Rodriquez Farms. Rule 3(c) provides that “[a]n attorney repr esenting more than one party-6-

may fulfill th[e] requirement [to specify the parti es taking the appeal] by describing those parties with such terms as ‘all pl aintiffs.’” Such a description will be sufficient if “it is objectively clear thata party intended to appeal.” Fed. R. App. P. 3(c) advisory committee’s note (1993). We agree with plaintiffs that it is objectively clear that Rodriquez Farms intended to appeal the district court’s order, especially in light of the fact that it is t he only plaintiff capable of meeting the $75,000 amount in controversy necessary for div ersity jurisdiction. We turn, then, to the merits of plaintiffs’ appeal.

2. AFPA Claim In 1968, Congress enacted AFPA, 7 U.S.C. §§ 2301-23 06, to “protect[] the right of farmers and other producers of agricultura l commodities to join cooperative associations through which to market their products.” Michigan Canners & Freezers Ass’n v. Agricultural Mktg. & Bargaining Bd. , 467 U.S. 461, 464 (1984) (footnote omitted). Although the Act’s principal purpose is to protect individual producers from interference by processors when deci ding whether to belong to a producers’ association, the Act also pr otects the producer from coercion by associations of producers. The AF PA thus provides that it is unlawful for either a processor or a pro ducers’ association to engage in practices that interfere with a produc er’s freedom to choose whether to bring his products to market hims elf or to sell them through a producers’ cooperative association. Id.-7-

Among the Act’s prohibitions is the following: “Itshall be unlawful for any handler knowingly to [make] or permit any emplo yee or agent . . . [t]o make false reports about the finances, management, or ac tivities of associations of producers or handlers.” 7 U.S.C. § 2303(e). The c omplaint here alleged that Western Sugar violated the prohibition contained in § 2303(e) by “conduct[ing] cossette tests on the 1985-1995 crops contrary to the standards established by the U.S.D.A. and report[ing] to the growers false resul ts and PD determinations.” Appellant’s App. at 48 (Complaint, ¶ 73(a)). The district court ruled that plaintiffs’ allegatio ns failed to state a claim under AFPA on three grounds. First, the court stat ed that a false cossette sample report did not fall within the scope of reports abo ut the “finances, management, or activities of associations of producers or handlers ” under § 2303(e). Second, the court said that, “[a]bsent the conclusory statementunder Paragraph 73(a),” the complaint did not contend that the cossette sample test results were false. Appellant’s App. at 153 (Telephonic Oral Ruling Transcript). Rather, the court noted, the complaint alleged that adulterants in th e cossette samples resulted in higher PDs. Finally, the court concluded that, eve n if Western Sugar issued false reports about its finances, management or activitie s, it did not do so “in an attempt to coerce or influence a producer to join o r not to join an association.” Id.-8-

“We review de novo the district court’s dismissal f or failure to state a claim upon which relief may be granted.” Dill v. City of Edmond , 155 F.3d 1193, 1201 (10th Cir. 1998). Such dismissal “is inappropriate unless [p]laintiff can prove no set of facts in support of his claims that would entitle him to relief.” Id. Furthermore, we must “accept all factual allegations in the complaint as true.” Id. Plaintiffs and defendants present dueling canons of statutory construction to support their respective interpretations of AFPA . Because some of the arguments relate to § 2303(e) in context, we set ou t the entire section:

It shall be unlawful for any handler knowingly to e ngage or permit any employee or agent to engage in the follo wing practices: (a) To coerce any producer in the exercise of his r ight to join and belong to or to refrain from joining or belongi ng to an association of producers, or to refuse to deal withany producer because of the exercise of his right to join and be long to such an association; or (b) To discriminate against any producer with respe ct to price, quantity, quality, or other terms of purchase, acqu isition, or other handling of agricultural products because of his me mbership in or contract with an association of producers; or (c) To coerce or intimidate any producer to enter i nto, maintain, breach, cancel, or terminate a membership agreement or marketing contract with an association of producers or a contract with a handler; or (d) To pay or loan money, give any thing of value, or offer any other inducement or reward to a producer for refusi ng to or ceasing to belong to an association of producers; or2 “Handler” also includes within its definition “asso ciations of producers.”

7 U.S.C. § 2302(a); Michigan Canners , 467 U.S. at 465 n.3. -9- (e) To make false reports about the finances, manag ement, or activities of associations of producers or handlers ; or (f) To conspire, combine, agree, or arrange with any other person to do, or aid or abet the doing of, any act made unlawful by this chapter. 7 U.S.C. § 2303. Under the definitions of AFPA, pl aintiffs are producers and Western Sugar is a handler. 2 “‘In interpreting statutes, we begin with the relevant language.’” Southern Ute Indian Tribe v. Amoco Prod. Co. , 151 F.3d 1251, 1257 (10th Cir. 1998) (en banc) (quoting Aulston v. United States , 915 F.2d 584, 589 (10th Cir. 1990)). If congressional will “‘has been expressed in reasonab ly plain terms, “that language must ordinarily be regarded as conclusive.”’” Id. (quoting Griffin v. Oceanic Contractors, Inc. , 458 U.S. 564, 570 (1982) (quoting Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc. , 447 U.S. 102, 108 (1980))). We do not, however, read specific statutory language in isolation: we “‘must look to the particular statutory language at issue, as well as the languag e and design of the statute as a whole.’” Id. (quoting K Mart Corp. v. Cartier, Inc. , 486 U.S. 281, 291 (1988)).-10- A. False reports We must first determine whether plaintiffs have suf ficiently alleged that Western Sugar made “false reports about the finance s, management, or activities of associations of producers or handlers” under § 2 303(e), when they alleged that Western Sugar “conducted cossette tests on the 1985 -1995 crops contrary to the standards established by the U.S.D.A. and reported to the growers false results and PD determinations.” Appellant’s App. at 48 (Co mplaint ¶ 73(a)). The complaint asserted that Western Sugar “massaged cos sette records and tampered with scales,” Appellant’s App. at 10 (Complaint ¶ 1 6(c)), and that the cossette samples it used were adulterated with water and oth er debris. Plaintiffs then asserted that those adulterated cossette samples we re used to calculate inaccurate (i.e. falsely high) PD measurements, which Western Sugar, a “handler,” reported to plaintiffs. Initially, we note that we could read § 2303(e) to prohibit only false reports about third parties, not false reports by a handler about its own activities. However, it is not clear that such an interpretatio n is the only permissible one, so we assume the statute reaches a handler’s false rep orts about itself. We must then consider whether Western Sugar’s provision of inacc urate PD measurements to plaintiffs constituted the making of “false reports ” under § 2303(e). To the extent the PD measurements provided by Western Sugar were based upon faulty or-11-

incorrect underlying data or materials (the adulter ated cossette samples), we agree that, for purposes of dismissal under Rule 12(b)(6) , plaintiffs have sufficiently alleged a “false report” under § 2303(e).

B. Intent to influence association membership More problematic is the issue of whether plaintiffs must allege that the false reports were intended to influence, or were o therwise made in connection with, the joining or refusal to join an association of producers. As both sides point out, the other subsections of § 2303 explicit ly reference the “right to join” or “membership in” or “contract with” an associatio n, and make it clear that the particular prohibited conduct must involve an attempt to influence or coerce such membership. Thus, § 2303(d) makes it unlawful for a handler “[t]o pay or loan money, give any thing of value, or offer any other inducement or reward to a producer for refusing to or ceasing to belong to an association of producers .” 7 U.S.C. § 2303(d) (emphasis added). Plaintiffs and defendants draw precisely the opposi te conclusion from that fact. Plaintiffs argue that Congress evidently purposely left out any requirement that the false report be made in connection with me mbership in an association, while Western Sugar argues that subsection (e) mustbe read in the context of the entire Act which, read as a whole, clearly indicate s that Congress intended to-12-

prohibit only false reports which are designed to h ave an effect on association membership. We agree with Western Sugar that the better view is to read AFPA as a whole. The declaration of policy for AFPA contains the following: Because agricultural products are produced by numer ous individual farmers, the marketing and bargaining position of i ndividual farmers will be adversely affected unless they are free to join together voluntarily in cooperative organizations as authorized by law. Interference with this right is contrary to the public interest and adversely affects the free and orderly flow of good s in interstate and foreign commerce. 7 U.S.C. § 2301 (emphasis added). As the Supreme C ourt has also acknowledged, AFPA’s “principal purpose is to protect individual producers from interference by processors when deciding whether to belong to a pro ducers’ association.” Michigan Canners , 467 U.S. at 464. Turning to the specific language of § 2303(e), we c onsider whether its meaning is clear, bearing in mind that we read it i n its statutory context. Under § 2303(e), handlers like Western Sugar are prohibit ed from making false reports about the “finances, management, or activities” of either “ associations of producers ” or “ handlers .” (Emphasis added.) Although the statute does no t explicitly reference influencing decisions regardin g membership in such associations, it is self-evident that creating fals e reports about “associations of producers” would influence decisions by producers w hether to join such-13-

associations. Thus, the language prohibiting false reports about associations of producers, in our view, unambiguously assumes such influence, and Congress evidently omitted as unnecessary any explicit refer ence to such influence. We deal here, however, with alleged false reports b y a handler about its

own activities—that is, activities of “handlers” under§ 2303(e). While the statute, on its face, appears to prohibit any such reports (it prohibits false reports by a handler about “handlers”), regardless of inten t or effect on association membership, the question is whether we must infer i n that language what is clearly inferred in the language addressing false r eports about the activities of “associations of producers,” and what is explicit i n the remainder of § 2303—namely, that the false reports must be inten ded to, or have the effect of, influencing whether to join an association. We hol d that we must. To hold otherwise would be to create a liability under AFPAfor false reports about handlers which is far beyond the liabilities created by the rest of § 2303, and far beyond the scope of AFPA. Further, the necessity to infer such intent creates an ambiguity, which permits us to examine the legislative history of AF PA. That legislative history supports our interpretation. Section 2303 is descri bed as containing a “[p]rohibition of coercion, discrimination, intimidation, bribery, falsehood , and conspiracy designed to influence a producer’s election as to joining a cooperative-14-

or otherwise marketing his produce .” S. Rep. No. 90-474, at 1 (1967), reprinted in 1968 U.S.C.C.A.N. 1867, 1868 (emphasis added). Th e Senate Report further stated that the Committee on Agriculture and Forest ry “sought language that would make it completely clear that the prohibited action is prohibited only where its motivation is interference with the producer’s free choice .” Id. at 5, reprinted in 1968 U.S.C.C.A.N. at 1872 (emphasis added). In sum, while read in isolation, § 2303(e) arguablyprohibits a handler from making any false reports about its own activities, without re striction, the section must be read in context. What is clear from AFPA a nd § 2303 as a whole, and its legislative history, is that the evil Congress was attacking was influencing or pressuring, in a variety of ways, a producer’s free choice whether to join an association of producers. The prohibition on the m aking of “false reports” must therefore apply only to false reports about associations of producers or handlers which are intended to influence or that have the ef fect of influencing a producer’s decision to join an association. Since plaintiffs’ complaint made no allegation conc erning membership in such an association, we affirm the district court’s dismissal of plaintiffs’ AFPA claim for failure to state a claim. We turn now to whether the court properly dismissed without prejudice plaintiffs’ state law c laims.3 While Zahnrequires each individual plaintiff to satisfy the jurisdictional

amount, the Supreme Court has historically interpre ted § 1332 to require only the named class representatives in a class action to be diverse from the defendants. See Supreme Tribe of Ben Hur v. Cauble , 255 U.S. 356, 365-67 (1921). Thus, individual class members need not be diverse, altho ugh they each must meet the jurisdictional amount in controversy. -15- 3. Supplemental Jurisdiction Over State Law Claims Plaintiffs contend that, even if they have failed t o state a federal claim under AFPA, the district court has diversity jurisd iction over their state law claims. Pursuant to 28 U.S.C. § 1332(a)(1), “[t]he district courts shall have original jurisdiction of all civil actions where th e matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States.” The Supreme Court h as historically interpreted § 1332's “matter in controversy” language to requir e plaintiffs who have separate and distinct claims, but unite together in a single suit, to each meet the jurisdictional amount in controversy. 3 See Zahn v. International Paper Co. , 414 U.S. 291, 300-01 (1973); Snyder v. Harris , 394 U.S. 332, 335-38 (1969). Aggregation has been permitted only (1) in cases inwhich a single plaintiff seeks to aggregate two or more of his ownclaims against a single defendant and (2) in cases in which two or m ore plaintiffs unite to enforce a single title or right in which t hey have a common and undivided interest. Snyder , 394 U.S. at 335. In Snyder , the Court refused to reconsider its longstanding construction of a “matter in controver sy,” noting that “Congress has-16-

. . . consistently amended the amount-in-controvers y section and re-enacted the ‘matter-in-controversy’ language without change of its jurisdictional effect against a background of judicial interpretation that has consistently interpreted that congressionally enacted phrase as not encompas sing the aggregation of separate and distinct claims.” Id. at 339. Therefore, under the historical interpretation of § 1332, any plaintiff in a diversity class action—whether class representative or putative class member—who does not meet the jurisdictional amount in controversy must be dismissed from the action, and if no plaintiff can meet the amount in controversy, the entire class action must be dismissed. See Zahn , 414 U.S. at 300. At issue here is whether the enactment of 28 U.S.C. § 1367, concerning supplemental jurisdiction, altered the historical aggregation ru les under § 1332 for class actions. The record reflects that each of the named plaintif fs and putative class members has one or more separate and distinct claim s against Western Sugar. The named plaintiffs conceded in the district courtthat an “aggregation theory based upon the ‘common undivided interest and singl e title’ analysis is unlikely to apply.” Appellant’s App. at 81. They argue, howev er, that so long as one class representative meets the jurisdictional amount in c ontroversy, the plain language-17-

of 28 U.S.C. § 1367(a) permits the district court t o exercise supplemental jurisdiction over all the other plaintiffs’ claims. Section 1367, which was enacted as part of the Judi cial Improvements Act of 1990, provides in pertinent part as follows:

(a) Except as provided in subsections (b) and (c) o r as expressly provided otherwise by Federal statute, inany civil action of which the district courts have original jurisdictio n, the district courts shall have supplemental jurisdiction over all otherclaims that are so related to claims in the action within such origina l jurisdiction that they form part of the same case or controversy unde r Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or interven tion of additional parties. (b) In any civil action of which the district court s have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction und er subsection (a) over claims by plaintiffs against persons made part ies under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedu re, or over claims by persons proposed to be joined as plaintiffs unde r Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction ov er such claims would be inconsistent with the jurisdictional requi rements of section 1332. Plaintiffs argue that the enactment of § 1367 had t he effect of overruling Zahn ’s requirement that each member of a plaintiff clas s meet the jurisdictional amount in controversy. Therefore, they argue, if R odriquez Farms can meet the $75,000 jurisdictional amount in controversy, the c ourt can exercise supplemental jurisdiction over the claims of the other class rep resentatives and putative class-18-

members, even though none of them can meet the juri sdictional amount in controversy. Whether § 1367 permits such an exercise of suppleme ntal jurisdiction in a class action is a question of first impression for this court. We first examine the statutory language and decide whether Congress has spoken “‘in reasonably plain terms.’” Southern Ute , 151 F.3d at 1257 (quoting Griffin , 458 U.S. at 570). If the statutory language is clear and unambiguous, we normally find that language conclusive. Id. If the language is ambiguous, however, we may “re sort to legislative history as an aid to interpretation.” United States v. Simmonds , 111 F.3d 737, 742 (10th Cir. 1997). While we have note d that “there is ‘no errorless test’ for recognizing ambiguity,” Biodiversity Legal Found. v. Babbitt , 146 F.3d 1249, 1254 (10th Cir. 1998) (quoting United States v. Turkette , 452 U.S. 576, 580 (1981)), we have observed that a “split in the circ uits is, in itself, evidence of the ambiguity” of a statutory phrase. State Ins. Fund v. Southern Star Foods, Inc. (In re Southern Star Foods, Inc. ), 144 F.3d 712, 715 (10th Cir. 1998), petition for cert. filed , 67 U.S.L.W. 3156 (Aug. 19, 1998) (No. 98-310). The Fifth Circuit was the first circuit court to di rectly address the issue before us. That court held that § 1367 is neither unclear nor ambiguous: “The statute’s first section vests federal courts with the power to hear supplemental claims generally, subject to limited exceptions setforth in the statute’s second4 Stromberg was not a class action; it involved two plaintiffs , only one of

whom met the jurisdictional amount in controversy. The Seventh Circuit later followed Stromberg and Abbottto hold, in a class action, that “[a]t least one named plaintiff must satisfy the jurisdictional min imum. If he does, the other named plaintiffs and the unnamed class members can, by virtue of the supplemental jurisdiction conferred on the federal district courts by 28 U.S.C. § 1367, piggyback on that plaintiff’s claim.” In r e Brand Name Prescription Drugs Antitrust Litig. , 123 F.3d 599, 607 (7th Cir. 1997), cert. denied , 118 S. Ct. 1178, andcert. denied , 118 S. Ct. 1336, andcert. denied , 118 S. Ct. 1337 (1998).

5 See , e.g. Russ v. State Farm Mut. Auto. Co. Ins. , 961 F. Supp. 808 (E.D. (continued...) -19- section. Class actions are not among the enumerated exceptions.” Free v. Abbott Lab. (In Re Abbott Lab. ), 51 F.3d 524, 528 (5th Cir. 1995). While acknowledging that the omission of class actions fr om § 1367(b)’s exceptions “may have been a clerical error,” the court nonethe less held that “the statute is the sole repository of congressional intent where the s tatute is clear and does not demand an absurd result.” Id. at 528-29. After concluding that overruling Zahn “is not an absurd result,” the court held that § 13 67 permitted the district court to exercise supplemental jurisdiction over class membe rs who did not meet the amount in controversy requirement. Id. at 529. The Seventh Circuit subsequently followed Abbott , finding that its rationale had “strong support fr om the statutory text.” Stromberg Metal Works, Inc. v. Press Mechanical, Inc. , 77 F.3d 928, 930 (7th Cir. 1996). 4 Thus, two circuits have held that § 1367 overruled Zahn

. Against that, the majority of district courts addre ssing the issue have ruled that § 1367 did not overrule Zahn

. 5 Commentators and treatises are divided. 65 (...continued)

Pa. 1997); Ren-Dan Farms, Inc. v. Monsanto Co. , 952 F. Supp. 370, 376 (W.D. La. 1997); McGowan v. Cadbury Schweppes, PLC , 941 F. Supp. 344, 347-48 (S.D.N.Y. 1996); DeCastro v. AWACS, Inc. , 935 F. Supp. 541, 547 (D.N.J. 1996), appeal dismissed , 940 F. Supp. 692 (D.N.J. 1996); Blair v. Source O ne Mortgage Servs. Corp. , 925 F. Supp. 617, 622-24 (D. Minn. 1996); Snider v. Stimson Lumber Co. , 914 F. Supp. 388, 389-92 (E.D. Cal. 1996). Inclu ded among the district courts finding Zahnnot overruled are several from this circuit. See Henkel v. ITT Bowest Corp. , 872 F. Supp. 872, 875-79 (D. Kan. 1994); Leroy Cattle Co. v. Fina Oil & Chem. Co. , No. 93-1286-MLB,1994 WL 151105 (D. Kan. 1994); cf. Amundson & Assocs. Art Studio, Ltd. v. National Co uncil on Compensation Ins. Inc. , 977 F. Supp. 1116, 1122-23 (D. Kan. 1997) (refusi ng to exercise supplemental jurisdiction over claims of c lass representatives and other putative class members where none of class representatives met jurisdictional amount although many unnamed putative class members did).

6 Compare 5 James Wm. Moore et. al., Moore’s Federal Practic e ¶ 23.07[3][c] at 23-47 (3d ed. 1998) (“The conclusi on that Zahnremains good law is ultimately unconvincing . . . .”); and 2 Herbert B. Newberg, Newberg on Class Actions § 6.11 (“The Act’s probable overruling of Zahnis fully consistent with the reasoning of the Federal Courts Study Committee on whose recommendation the Act was adopted.”); with13 Charles Alan Wright et. al., Federal Practice & Procedure § 3523.1, at 112 (1998 Supp.) (“Perhaps the most c ompelling evidence from the legislative history that Section 1367 was not intended to overrule Zahn is not so much what is said in the history itself , bu t rather what is omitted.”). See also Packard v. Provident Nat’l Bank , 994 F.2d 1039, 1045 n.9 (3d Cir. 1993) (collecting commentaries). See generallyJames E. Pfander, Supplemental Jurisdiction and Section 1367: The Case for Sympathetic Textualism (1998) (unpublished manuscript, on file with the University of Illinois Law School). -20- In determining that nothing in the language of § 13 67 limited the broad grant of authority conferred by § 1367(a) so as to preserve the historical aggregation rules for class actions under § 1332, the Fifth and Seventh Circuits focused only on the absence of Rule 23 from the exc eptions enumerated in § 1367(b). Abbott , 51 F.3d at 527-29. Those exceptions, however, c oncern only7 The legislative history explains the reason for the exceptions contained in

§ 1367(b) as follows: In diversity-only actions the district courts may n ot hear plaintiffs’ supplemental claims when exercising supplemental ju risdiction would encourage plaintiffs to evade the jurisdictio nal requirement of 28 U.S.C. § 1332 by the simple expedient of naming initially only those defendants whose joinder satisfies section 13 32's requirements and later adding claims not within original federal jurisdiction against other defendants who have intervened or bee n joined on a supplemental basis. In accord with case law, the s ubsection also prohibits the joinder or intervention of persons a[ s] plaintiffs if adding them is inconsistent with section 1332's req uirements. H.R. Rep. No. 101-734, at 29 (1990), reprinted in1990 U.S.C.C.A.N. 6860, 6875. -21- the exercise of supplemental jurisdiction over clai ms against defendants who are made parties to a diversity action under certain ru les and claims by plaintiffs who seek to be added to an on-going diversity action. 7We are concerned, however, with whether Congress intended to change the rules about when a plaintiff can bring an initial diversity-based class action under Rule 23, where the court’s original jurisdiction is based upon § 1332. The om ission of Rule 23 from § 1367(b) has no bearing on that question. In our view, a literal and textually faithful readi ng of § 1367(a) leads to the opposite conclusion from that of the Fifth and Seve nth Circuits. Section 1367(a) specifically addresses “any civil action of which the district courts have original jurisdiction .” (Emphasis added.) It then provides for supplemental jurisdiction over transactionally related claims. Section 1332 is what confers original-22-

jurisdiction over diversity cases and it expressly requires that the “matter in controversy exceed[] the sum or value of $75,000.” While § 1332 does not expressly refer to class actions, the Supreme Courthas noted that periodic congressional amendment of the diversity statute to alter only the amount in controversy evidences congressional agreement with the Court’s holding that “matter in controversy” does “not encompass[] the a ggregation of separate and distinct claims.” Snyder , 394 U.S. at 339. Thus, Congress in § 1367(a) exp ressly excepted claims brought under § 1332 and its well-u nderstood definition of “matter in controversy.” See Pfander, supra , at 20 (“Section 1367(a) appears to assume that the existing rules of original jurisdic tion will continue to apply and that the grant of supplemental jurisdiction will co me into play only after the plaintiff has submitted claims in a well-pleaded co mplaint that properly invoke such original jurisdiction.”). Furthermore, § 1367(b) itself supports this interpr etation of § 1367(a). Section 1367(b) sets forth various situations in wh ich a court, sitting in diversity, cannot exercise supplemental jurisdiction where the exercise of such jurisdiction “would be inconsistent with the jurisdictional requ irements of § 1332.” 28 U.S.C. § 1367(b). That very language evidences a concern for preserving the historical and well-established rules of diversity. The fact that § 1367(b) prohibits the addition of claims and parties which would destroy diversity supports our8 Even the Fifth and Seventh Circuits acknowledge that the legislative

history suggests Congress did not intend the resultthose courts reached. They simply refused to look at clearly contrary legislat ive history in the face of what they viewed as clear statutory language. -23- interpretation of § 1367(a) as also fully respectin g the rules of diversity in cases invoking the original jurisdiction of the federal c ourts. Thus, in our view § 1367(a) and (b) can be read lit erally, and unambiguously, to require each plaintiff in a class action diversity case to satisfy the Zahn definition of “matter in controversy” and to indi vidually meet the $75,000 requirement. However, we recognize that itis difficult to argue persuasively that the statute is truly unambiguous when two circuit courts of appeal have reached the opposite conclusion from us , when a majority of district courts are in agreement with us (although not all f or the same reasons) and when commentators are divided. We therefore assume thatambiguity in the statute permits us to examine legislative history. See United States v. Simmonds , 111 F.3d 737, 742 (10th Cir. 1997). The legislative history of § 1367 supports our interpretation of the statute. 8 The House Report that accompanied the Judicial Impr ovements Act, the analysis of which was adopted by the Senate Judiciary Committee, see 136 Cong. Rec. S17580-81 (daily ed. Oct. 27, 1990), expressly stat es that § 1367 “is not intended to affect the jurisdictional requirements of 28 U.S .C. § 1332 in diversity-only9 There are particularly persuasive reasons to rely upon the committee report

involving § 1367. “Committee reports are the most frequently cited and reliedupon sources of legislative history, and in the Cou rt’s traditional view the most authoritative source.” William N. Eskridge, Jr., T he New Textualism , 37 U.C.L.A. L. Rev. 621, 637 (1990) (footnote omitted) . Additionally, both the Senate and the House agreed on the pertinent langua ge, and the report was explicit in its intent that § 1367 not overrule Zah n . Moreover, this is an unusual situation, in that the legislative history so clearly refutes the textualist analysis of the Fift h and Seventh Circuits. As one district court has aptly put it:

To retain this case in this court [finding Zahn overruled] is to say to Congress: “We know what you meant to say, b ut you didn’t quite say it. So the message from us in the judici al branch to you in the legislative branch is ‘Gotcha! And better luck next time.’” Such a (continued...) -24- class actions, as those requirements were interpreted prior to [ Finley v. United
States , 490 U.S. 545 (1989)].” H.R. Rep. No. 101-734, at 29 (1990), reprinted in 1990 U.S.C.C.A.N. 6860, 6875. The House Report then cites Zahn as an example of the pre- Finley interpretation of the jurisdictional requirements of § 1332 that is not to be disturbed. Id. & n.17. The House Report also states that the statute provides that “[i]n diversity cases, the district c ourts may exercise supplemental jurisdiction, except when doing so would be inconsi stent with the jurisdictional requirements of the diversity statute.” Id. at 28, reprinted in 1990 U.S.C.C.A.N. at 6874. Thus, the legislative history indicates t hat Congress did not intend to overrule the historical rules prohibiting aggregation of claims, including Zahn ’s prohibition of such aggregation in diversity class actions. 99 (...continued)

message is not required by the separation of powers . Nor is it in harmony with the fact that Congress and the courts, however different their respective roles, are parts of a si ngle government.
Russ v. State Farm Mut. Auto. Ins. Co. , 961 F. Supp. 808, 820 (E.D. Pa. 1997). Finally, we simply note that there are a variety of pending bills before Congress, each of which explicitly states that aggr egation shall be permitted in class actions to determine whether the jurisdiction al amount is met. We wonder why Congress would see the need to be so explicit, if it had already accomplished that result in § 1367. See , e.g. , S. 2083, 105th Cong. § 3; H.R. 3789, 105th Cong. § 1. -25- We therefore conclude, from both an analysis of the language of § 1367 itself and from its legislative history, that the e nactment of § 1367 did not overrule Zahn ’s holding that each plaintiff in a diversity-based class action must meet the jurisdictional amount in controversy under§ 1332. Accordingly, the district court correctly held that it could not exe rcise supplemental jurisdiction over the claims of those plaintiffs whose claims did not meet the $ 75,000 jurisdictional amount in controversy. Plaintiffs conceded in the district court that, eve n if the court allowed them to amend the complaint, only the claims of Rodrique z Farms would meet the jurisdictional amount in controversy. Reasoning th at plaintiffs desired to proceed together in a single class action, rather than have Rodriquez Farms litigate its claims by itself in federal court, the district cou rt denied the motion to amend the complaint as futile. On appeal, plaintiffs challen ge the denial of the motion to-26-

amend only to the extent that it was based upon the district court’s conclusion that it could not exercise supplemental jurisdiction und er § 1367 in derogation of § 1332's historical aggregation rules. Because we have determined that the district court’s underlying conclusion about supple mental jurisdiction was correct, we affirm the otherwise unchallenged denial of the motion to amend. The judgment of the district court is AFFIRMED. Pl aintiffs’ motion to amend the caption to include Rodriquez Farms, Inc. as an appellant is
GRANTED.