Opinion ID: 759209
Heading Depth: 2
Heading Rank: 2

Heading: Intent to influence association membership

Text: 28 More problematic is the issue of whether plaintiffs must allege that the false reports were intended to influence, or were otherwise made in connection with, the joining or refusal to join an association of producers. As both sides point out, the other subsections of § 2303 explicitly reference the right to join or membership in or contract with an association, 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). 29 Plaintiffs and defendants draw precisely the opposite conclusion from that fact. Plaintiffs argue that Congress evidently purposely left out any requirement that the false report be made in connection with membership in an association, while Western Sugar argues that subsection (e) must be read in the context of the entire Act which, read as a whole, clearly indicates that Congress intended to prohibit only false reports which are designed to have an effect on association membership. 30 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: 31 Because agricultural products are produced by numerous individual farmers, the marketing and bargaining position of individual 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 goods in interstate and foreign commerce. 32 7 U.S.C. § 2301 (emphasis added). As the Supreme Court has also acknowledged, AFPA's principal purpose is to protect individual producers from interference by processors when deciding whether to belong to a producers' association. Michigan Canners, 467 U.S. at 464, 104 S.Ct. 2518. 33 Turning to the specific language of § 2303(e), we consider whether its meaning is clear, bearing in mind that we read it in its statutory context. Under § 2303(e), handlers like Western Sugar are prohibited from making false reports about the finances, management, or activities of either associations of producers  or handlers. (Emphasis added.) Although the statute does not explicitly reference influencing decisions regarding membership in such associations, it is self-evident that creating false reports about associations of producers would influence decisions by producers whether to join such 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 reference to such influence. 34 We deal here, however, with alleged false reports by 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 intent or effect on association membership, the question is whether we must infer in that language what is clearly inferred in the language addressing false reports about the activities of associations of producers, and what is explicit in the remainder of § 2303--namely, that the false reports must be intended to, or have the effect of, influencing whether to join an association. We hold that we must. To hold otherwise would be to create a liability under AFPA for false reports about handlers which is far beyond the liabilities created by the rest of § 2303, and far beyond the scope of AFPA. 35 Further, the necessity to infer such intent creates an ambiguity, which permits us to examine the legislative history of AFPA. That legislative history supports our interpretation. Section 2303 is described 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 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). The Senate Report further stated that the Committee on Agriculture and Forestry 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). 36 In sum, while read in isolation, § 2303(e) arguably prohibits a handler from making any false reports about its own activities, without restriction, the section must be read in context. What is clear from AFPA and § 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 making 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 effect of influencing a producer's decision to join an association. 37 Since plaintiffs' complaint made no allegation concerning 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 claims. 38 3. Supplemental Jurisdiction Over State Law Claims 39 Plaintiffs contend that, even if they have failed to state a federal claim under AFPA, the district court has diversity jurisdiction 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 the 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 has historically interpreted § 1332's matter in controversy language to require 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, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973); Snyder v. Harris, 394 U.S. 332, 335-38, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969). 40 Aggregation has been permitted only (1) in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant and (2) in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest. 41 Snyder, 394 U.S. at 335, 89 S.Ct. 1053. In Snyder, the Court refused to reconsider its longstanding construction of a matter in controversy, noting that Congress has ... consistently amended the amount-in-controversy 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 encompassing the aggregation of separate and distinct claims. Id. at 339, 89 S.Ct. 1053. 42 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, 94 S.Ct. 505. At issue here is whether the enactment of 28 U.S.C. § 1367, concerning supplemental jurisdiction, altered the historical aggregation rules under § 1332 for class actions. 43 The record reflects that each of the named plaintiffs and putative class members has one or more separate and distinct claims against Western Sugar. The named plaintiffs conceded in the district court that an aggregation theory based upon the 'common undivided interest and single title' analysis is unlikely to apply. Appellant's App. at 81. They argue, however, that so long as one class representative meets the jurisdictional amount in controversy, the plain language of 28 U.S.C. § 1367(a) permits the district court to exercise supplemental jurisdiction over all the other plaintiffs' claims. 44 Section 1367, which was enacted as part of the Judicial Improvements Act of 1990, provides in pertinent part as follows: 45 (a) 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 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. 46 (b) In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332. 47 Plaintiffs argue that the enactment of § 1367 had the effect of overruling Zahn 's requirement that each member of a plaintiff class meet the jurisdictional amount in controversy. Therefore, they argue, if Rodriquez Farms can meet the $75,000 jurisdictional amount in controversy, the court can exercise supplemental jurisdiction over the claims of the other class representatives and putative class members, even though none of them can meet the jurisdictional amount in controversy. 48 Whether § 1367 permits such an exercise of supplemental 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, 102 S.Ct. 3245). If the statutory language is clear and unambiguous, we normally find that language conclusive. Id. If the language is ambiguous, however, we may resort to legislative history as an aid to interpretation. United States v. Simmonds, 111 F.3d 737, 742 (10th Cir.1997). While we have noted 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, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981)), we have observed that a split in the circuits 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), cert. denied, --- U.S. ----, 119 S.Ct. 438, --- L.Ed.2d ---- (1998). 49 The Fifth Circuit was the first circuit court to directly 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 set forth in the statute's second section. Class actions are not among the enumerated exceptions. Free v. Abbott Laboratories (In re Abbott Laboratories), 51 F.3d 524, 528 (5th Cir.1995). While acknowledging that the omission of class actions from § 1367(b)'s exceptions may have been a clerical error, the court nonetheless held that the statute is the sole repository of congressional intent where the statute 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 § 1367 permitted the district court to exercise supplemental jurisdiction over class members 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 from 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 addressing the issue have ruled that § 1367 did not overrule Zahn. 5 Commentators and treatises are divided. 6 50 In determining that nothing in the language of § 1367 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 exceptions enumerated in § 1367(b). Abbott, 51 F.3d at 527-29. Those exceptions, however, concern only the exercise of supplemental jurisdiction over claims against defendants who are made parties to a diversity action under certain rules and claims by plaintiffs who seek to be added to an on-going diversity action. 7 We 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 omission of Rule 23 from § 1367(b) has no bearing on that question. 51 In our view, a literal and textually faithful reading of § 1367(a) leads to the opposite conclusion from that of the Fifth and Seventh 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 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 Court has 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 aggregation of separate and distinct claims. Snyder, 394 U.S. at 339, 89 S.Ct. 1053. Thus, Congress in § 1367(a) expressly excepted claims brought under § 1332 and its well-understood definition of matter in controversy. See Pfander, supra, at 20 (Section 1367(a) appears to assume that the existing rules of original jurisdiction will continue to apply and that the grant of supplemental jurisdiction will come into play only after the plaintiff has submitted claims in a well-pleaded complaint that properly invoke such original jurisdiction.). 52 Furthermore, § 1367(b) itself supports this interpretation of § 1367(a). Section 1367(b) sets forth various situations in which a court, sitting in diversity, cannot exercise supplemental jurisdiction where the exercise of such jurisdiction would be inconsistent with the jurisdictional requirements 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 our interpretation of § 1367(a) as also fully respecting the rules of diversity in cases invoking the original jurisdiction of the federal courts. 53 Thus, in our view § 1367(a) and (b) can be read literally, and unambiguously, to require each plaintiff in a class action diversity case to satisfy the Zahn definition of matter in controversy and to individually meet the $75,000 requirement. However, we recognize that it is 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 for the same reasons) and when commentators are divided. We therefore assume that ambiguity in the statute permits us to examine legislative history. See United States v. Simmonds, 111 F.3d 737, 742 (10th Cir.1997). 54 The legislative history of § 1367 supports our interpretation of the statute. 8 The House Report that accompanied the Judicial Improvements Act, the analysis of which was adopted by the Senate Judiciary Committee, see 136 Cong. Rec. S17580-81 (daily ed. Oct. 27, 1990), expressly states that § 1367 is not intended to affect the jurisdictional requirements of 28 U.S.C. § 1332 in diversity-only class actions, as those requirements were interpreted prior to [Finley v. United States, 490 U.S. 545, 109 S.Ct. 2003, 104 L.Ed.2d 593 (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 courts may exercise supplemental jurisdiction, except when doing so would be inconsistent 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 that Congress did not intend to overrule the historical rules prohibiting aggregation of claims, including Zahn 's prohibition of such aggregation in diversity class actions. 9 55 We therefore conclude, from both an analysis of the language of § 1367 itself and from its legislative history, that the enactment 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 exercise supplemental jurisdiction over the claims of those plaintiffs whose claims did not meet the $ 75,000 jurisdictional amount in controversy. 56 Plaintiffs conceded in the district court that, even if the court allowed them to amend the complaint, only the claims of Rodriquez Farms would meet the jurisdictional amount in controversy. Reasoning that 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 court denied the motion to amend the complaint as futile. On appeal, plaintiffs challenge the denial of the motion to amend only to the extent that it was based upon the district court's conclusion that it could not exercise supplemental jurisdiction under § 1367 in derogation of § 1332's historical aggregation rules. Because we have determined that the district court's underlying conclusion about supplemental jurisdiction was correct, we affirm the otherwise unchallenged denial of the motion to amend. 57 The judgment of the district court is AFFIRMED. Plaintiffs' motion to amend the caption to include Rodriquez Farms, Inc. as an appellant is GRANTED.