Opinion ID: 798166
Heading Depth: 4
Heading Rank: 2

Heading: Jurisdiction Existed at the Time of Judgment

Text: 28 Although Gentek waived its argument that removal was improper, this Court still must verify that jurisdiction existed at the time of judgment. As the case proceeded to summary judgment, Sherwin-Williams stated, contrary to its notice of removal, that the coating was not a consumer product under the Magnuson-Moss Act. Sherwin-Williams contends, however, that assessing jurisdiction is a simple inquiry—a quick look at the amended complaint shows that Gentek stated, explicitly, a Magnuson-Moss claim. Thus, Sherwin-Williams says, jurisdiction exists based on the allegations alone (regardless of their truth). Gentek, on the other hand, contends that, because the allegations regarding the consumer product were ultimately not true, there never was jurisdiction. 29 Sherwin-Williams's view that courts assess federal jurisdiction based solely on allegations in the complaint is not without exception. In Sherwin-Williams's world, a defendant could lie about a fact that creates a federal claim, a plaintiff could file a complaint based on that fact, and, ipso facto, federal jurisdiction would exist. Under this reasoning, a plaintiff could come up with its own lie to create federal jurisdiction and then file complaints in federal court, facing no jurisdictional problems. 30 Though the parties do not explicitly say so, what really is at issue here is a jurisdictional challenge to the allegations in the complaint. Rule 12(b)(1) motions to dismiss for lack of subject-matter jurisdiction generally come in two varieties: a facial attack or a factual attack. Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir.1990). A facial attack on the subject-matter jurisdiction alleged in the complaint questions merely the sufficiency of the pleading. Id. When reviewing a facial attack, a district court takes the allegations in the complaint as true, which is a similar safeguard employed under 12(b)(6) motions to dismiss. Id. If those allegations establish federal claims, jurisdiction exists. 31 Where, on the other hand, there is a factual attack on the subject-matter jurisdiction alleged in the complaint, no presumptive truthfulness applies to the allegations. Id. When a factual attack, also known as a speaking motion, raises a factual controversy, the district court must weigh the conflicting evidence to arrive at the factual predicate that subject-matter does or does not exist. Id. In its review, the district court has wide discretion to allow affidavits, documents, and even a limited evidentiary hearing to resolve jurisdictional facts. Id. (citing Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.1981) and Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977)). 32 Questions of removal similarly may involve facial and factual inquiries. When ruling on a motion to remand, a court generally looks to the plaintiff's complaint, as it is stated at the time of removal, and the defendant's notice of removal. See, e.g., Miller v. Grgurich, 763 F.2d 372 (9th Cir.1985). But federal courts may look beyond the pleadings to assess challenged facts; this may occur, for example, when the defendant alleges that the plaintiff fraudulently joined non-diverse defendants to destroy diversity jurisdiction. 16 Moore's Federal Practice § 107.41[1][e][ii]. In that context, the court may employ a summary-judgment-like procedure to examine affidavits and deposition testimony for evidence of fraud. Id. (citing Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 311-312 (5th Cir.2002)). 33 But a district court engages in a factual inquiry regarding the complaint's allegations only when the facts necessary to sustain jurisdiction do not implicate the merits of the plaintiff's claim. Garcia v. Copenhaver, Bell & Assocs., 104 F.3d 1256, 1261 (11th Cir.1997). If, on the other hand, an attack on subject-matter jurisdiction also implicates an element of the cause of action, then the district court should  find that jurisdiction exists and deal with the objection as a direct attack on the merits of the plaintiff's claim. Id. (quoting Williamson, 645 F.2d at 415-16) (emphasis added)). This provides a greater level of protection to the plaintiff who in truth is facing a challenge to the validity of his claim: the defendant is forced to proceed under Rule 12(b)(6) ... or Rule 56 ... both of which place greater restrictions on the district court's discretion .... Id. (quoting Williamson, 645 F.2d at 415-16). As a general rule a claim cannot be dismissed for lack of subject-matter jurisdiction because of the absence of a federal cause of action. Id. (quoting Williamson, 645 F.2d at 415-16). The exceptions to this rule are narrowly drawn, and are intended to allow jurisdictional dismissals only in those cases where the federal claim is clearly immaterial or insubstantial. Id. (quoting Williamson, 645 F.2d at 415-16). We follow these principles. See Moore v. LaFayette Life Ins. Co., 458 F.3d 416, 444 (6th Cir.2006) (quoting Williamson and explaining that when the basis of federal jurisdiction is intertwined with the plaintiff's cause of action, the court should assume jurisdiction over the case and decide the case on the merits); but cf. id. at 452 (Cook, J., dissenting) (noting that if the disputed question determines whether the plaintiff is a proper party, such as whether the plaintiff is a participant under ERISA, the district court should address first that jurisdictional question). 34 As mentioned, Sherwin-Williams contends that we should look to nothing more than the allegations in the amended complaint, assume their truth, and conclude jurisdiction exits. But this is the process for a facial attack; the question here is factual. Nobody disputes that the allegations in Gentek's amended complaint, referring to the coating as a consumer product under the Magnuson-Moss Act, raise a federal claim on their face. The question is whether the coating really is, factually, a consumer product. 35 Although this case presents the unusual situation of the plaintiff, Gentek, essentially raising a factual attack on its own complaint, this posture does not alter that any factual attack here—however, and by whomever, raised—is intertwined with the merits of Gentek's claim. Accordingly, the district court had jurisdiction. To establish Magnuson-Moss claim, a plaintiff must show that the item at issue was a consumer product. This disputed fact therefore goes to the merits. See Miller v. Willow Creek Homes, Inc., 249 F.3d 629, 632 (7th Cir.2001) (affirming district court's grant of summary judgment, which was based on conclusion that allegedly defective mobile home was not a consumer product under Magnuson-Moss Act); cf. Moore, 458 F.3d at 445 (noting that factual question regarding whether plaintiff was an employee was intertwined with the merits of his ERISA claim, so federal courts had jurisdiction); German Free Bavaria v. Toyobo Co. No. 1:06-CV-407, 2007 WL 851872, at , 2007 U.S. Dist. LEXIS 19828, at  & n. 3 (D.Mich. Mar. 20, 2007) (noting that defendant's argument that federal court lacked jurisdiction over plaintiffs' amended complaint, which added a Magnuson-Moss claim, is best examined in the context of a motion to dismiss for failure to state a claim because defendant argued that the claim was without merit). 36 The hypothetical situation Gentek raises in its reply brief illustrates how this principle operates. In Gentek's example, a plaintiff sues a federal employee in state court for negligence. The Attorney General then certifies that the federal employee was acting within the scope of his or her employment, removing the case to federal court and substituting the United States as a defendant under the Federal Tort Claims Act. To parallel Sherwin-Williams's tactics in this matter, Gentek explains, the Attorney General would then later move for summary judgment on the basis that the employee was never a federal employee. Having already conceded that the employee was a federal employee in order to get into federal court, the Attorney General's move, Gentek says, would be absurd and sanctionable. Gentek may be right, but the relevant question is whether the federal court has jurisdiction in that situation. 37 It likely would. If the employee were not a federal employee, the claim would fail on the merits. Because this factual issue regarding subject-matter jurisdiction is intertwined with the merits, the factual attack to jurisdiction would instead be treated as an attack on the merits, with the district court having jurisdiction. See Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir.1990) (vacating district court's dismissal for lack of jurisdiction where plaintiff brought FTCA claim and there was a factual question regarding whether the defendant was acting within the scope of his employment—a question that will resolve both the question of subject matter jurisdiction and a necessary element of the tort claim); Simpson v. Holder, 184 Fed. Appx. 904 (11th Cir.2006) (noting that whether defendants were government employees . . . affects both subject matter jurisdiction under the FTCA and the merits of the FTCA claim, so district court had to comply with Rule 56 when ruling on defendant's motion to dismiss for lack of subject-matter jurisdiction). Similarly, the district court had jurisdiction over Gentek's Magnuson-Moss claim, despite the debate over the status of the coating as a consumer product, because that question goes to the merits. 38 This is not to say a district court can never dismiss a federal claim for lack of subject-matter jurisdiction whenever a decision on subject-matter jurisdiction also implicates the substantive merits of the claim. Lawrence, 919 F.2d at 1530 n. 7. Where the plaintiff's claims are clearly immaterial, made solely for the purpose of obtaining jurisdiction or are wholly unsubstantiated and frivolous . . ., the court should dismiss the claim. Id. (internal citation and quotation marks omitted; also citing Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946)). And although it is less clear what a district court should do if, as here, the defendant allegedly makes a wholly unsubstantiated claim on which the plaintiff bases federal jurisdiction, Gentek makes no argument—other than Sherwin-Williams's later statement to the contrary—that Sherwin-Williams's original statement was without any basis in fact. In other words, Gentek does not argue why the coating really is not a consumer product—let alone whether a contrary argument would be wholly unsubstantiated. Moreover, as discussed above, if Gentek had any qualms about accepting Sherwin-Williams's statement that the coating was a consumer product and that Magnuson-Moss would therefore govern, Gentek could have simply moved to remand the case to state court. 39 This is also not to say that a party can make contradictory statements without consequence. Costs and attorney's fees are available if a party attempts removal absent an objectively reasonable basis. Martin v. Franklin Capital Corp., 546 U.S. 132, 136, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005) (holding that, under 28 U.S.C. § 1447(c), absent unusual circumstances, attorney's fees should not be awarded when the removing party has an objectively reasonable basis for removal). Removal absent an objectively reasonable basis may also subject an attorney to the imposition of sanctions, and a good-faith belief in the truth of the jurisdictional facts alleged to support removal is insufficient without reasonable inquiry to support the objective reasonableness of that belief. See Rockwell Int'l Credit Corp. v. U.S. Aircraft Ins. Group., 823 F.2d 302, 304-05 (9th Cir.1987) (failure to determine accurately citizenship of removing party as grounds for sanctions), overruled on other grounds by Partington v. Gedan, 923 F.2d 686, 688 (9th Cir.1991). Additionally, Rule 11 authorizes a court to impose sanctions if papers are filed containing statements that are not well-grounded in fact and warranted by law. 16 Moore's Federal Practice § 107.30[2][a][ii][A] (citing 28 U.S.C. § 1446, Commentary on 1988 Revision of Section 1446). But Gentek did not move for sanctions in the district court and does not explain why Sherman-Williams's first statement (admittedly contradicted later) lacked an objectively unreasonable basis. Gentek is therefore not entitled to sanctions.