Opinion ID: 405150
Heading Depth: 2
Heading Rank: 3

Heading: Unsettled Issues of Local Law

Text: 27 In addition, in exercising its discretion to retain pendent jurisdiction the District Court did not take into account the novel and unsettled nature of District of Columbia law regarding the fiduciary duties of an attorney to a client. Yet the importance of this factor was articulated in Gibbs, which emphasized that state courts would provide a surer-footed reading of applicable law, 383 U.S. at 726, 86 S.Ct. at 1139, and in the authorities cited by the Gibbs opinion. 12 More recently, in two cases applying the Gibbs principles in somewhat different contexts, the Supreme Court has reaffirmed the importance of this factor in deciding whether to exercise pendent jurisdiction. In Moor v. County of Alameda, 411 U.S. 693, 715-716, 93 S.Ct. 1785, 1798-1799, 36 L.Ed.2d 596 (1973), the Court upheld the District Court's dismissal of a state claim against a pendent party on the ground that dismissal was a proper exercise of discretion. The District Court had explained that it would be called upon to resolve difficult questions of California law upon which state court decisions are not legion. Id. at 715-716, 93 S.Ct. at 1799, quoting Rundle v. Madigan, 331 F.Supp. 492, 495 n.5 (N.D.Cal.1971). The Court wrote, As is evident from this Court's decision in Gibbs,    the unsettled nature of state law    (was an) entirely appropriate factor( ) for the District Court to consider. 411 U.S. at 716, 93 S.Ct. at 1799. Subsequently, in Hagans v. Lavine, 415 U.S. 528, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974), a case involving a pendent federal claim, the Court explained: 28 (T)he rationale of Gibbs centers upon considerations of comity and the desirability of having a reliable and final determination of the state claim by state courts having more familiarity with the controlling principles and the authority to render a final judgment.    29 Id. at 548, 94 S.Ct. at 1385 (distinguishing pendent federal and state claims). 30 Although the degree of uncertainty in state law is one of several factors that should guide the District Court's discretion, it should be given considerable weight. As Professor Wechsler has noted, (F)ederal courts are not the authorized expositors of state law; there is no mechanism by which their errors in such matters can be corrected on appeal by state courts. Wechsler, Federal Jurisdiction and the Revision of the Judicial Code, 13 Law & Contemp. Prob. 216, 232 (1948) (cited in Gibbs, 383 U.S. at 726 n.15, 86 S.Ct. at 1139 n.15). 13 In addition, as another commentary has noted, A federal court's holding on a novel issue of state law may unduly limit later state consideration of the problem; a state court will be hesitant to create a conflict with the federal determination because of possible reliance upon that earlier exposition. Note, UMW v. Gibbs and Pendent Jurisdiction, 81 Harv.L.Rev. 657, 666 (1968). Therefore, when it exercises its discretion, a federal court should be reluctant to retain pendent jurisdiction over a question for which state jurisprudence gives inadequate guidance. 31 The desirability of obtaining a surer-footed reading of applicable law in state courts weighs especially strongly when the federal claims have been dismissed before trial. In those circumstances, judicial economy factors are diminished and it is more likely that a determination of state law will be unnecessary. It is well within the sound discretion of the District Court to decline to retain pendent jurisdiction over novel issues of state law after pretrial dismissal of federal claims. See, e.g., Cenco Inc. v. Seidman & Seidman, --- F.2d ---, --- (7th Cir. No. 81-2126, decided March 26, 1982) (slip op. at 15-16) (on remand of pendent state claims, after Court of Appeals affirms dismissal of federal claims, District Court has discretion after balancing relevant factors to dismiss pendent claim involving novel and difficult issues of state law); Jones v. Fitch, 665 F.2d 586, 593 (5th Cir. 1982) (state claims involved substantial novel questions of state law, a factor supporting the District Court's decision to dismiss the state claim without prejudice); Gregory v. Mitchell, 634 F.2d 199, 202 (5th Cir. 1981) (at least one of the state claims involved a novel issue under the Alabama banking laws best left to the state courts; District Court's refusal to exercise pendent jurisdiction affirmed); Houlihan v. Anderson-Stokes, Inc., 434 F.Supp. 1324, 1329-1330 (D.D.C.1977) (one factor influencing the District Court's decision to decline pendent jurisdiction was that local law issues were novel and difficult and would best be decided by the courts which have most familiarity with the applicable law). 32 When a District Court reaches out to decide unsettled issues of state law despite the pretrial dismissal of all federal claims, its action may be an abuse of discretion. In REA Express, Inc. v. Travelers Ins. Co., 554 F.2d 1200, 1201 (D.C.Cir.), cert. denied, 434 U.S. 858, 98 S.Ct. 182, 54 L.Ed.2d 131 (1977), the District Court had granted summary judgment for the defendant on the federal antitrust claims. It had also dismissed the plaintiff's pendent state claims with prejudice on the ground that Delaware precedents conformed to federal doctrine. This court affirmed the dismissal of the federal claims on the merits, but disapproved the District Court's exercise of pendent jurisdiction over the state claims. Noting that the issues involved in this case are novel and the trial court found them 'troubling,'  this court quoted the Gibbs dictum and required the dismissal of the state claims to be without prejudice. In REA Express, as in this case, the District Court decided the state and federal claims after a lengthy period of litigation, but judicial economy concerns did not outweigh the desirability of authoritative state court determination of unsettled issues of state law. 14 33 The First Circuit took a similar approach in Rice v. President & Fellows of Harvard College, 663 F.2d 336 (1st Cir. 1981), cert. denied, --- U.S. ----, 102 S.Ct. 1976, 72 L.Ed.2d 444 (1982). A female Harvard Law School student filed suit alleging gender discrimination in the award of grades in violation of several federal statutes. She also brought a pendent state claim that Harvard had breached its fiduciary duty to her as a beneficiary of a charitable trust by discriminating on the basis of sex and failing to maintain the school's facilities up to proper educational standards. Before trial the District Court dismissed the federal claims on the merits, and also held, on the basis of a Massachusetts statute and a state supreme court case, that the plaintiff lacked standing to maintain the state claim. The Court of Appeals affirmed the disposition of the federal claims, but disapproved the District Court's exercise of pendent jurisdiction over the state claims. Noting that dicta in two Massachusetts cases might be interpreted as support for plaintiff's claim of standing, it remanded for dismissal of the pendent state claims without reaching the question of standing. The First Circuit's disposition suggests that uncertain questions of state law, even if they can be decided by a federal court without additional judicial proceedings, should be left to state courts once the federal claims have been dismissed. 34 In this case Financial General Bankshares' fiduciary duty claim raises issues of District of Columbia law that have never been addressed by the District of Columbia courts. Historically the courts of the states have had the power to regulate admission to the bar and to discipline lawyers. 15 Since reorganization of the courts of the District of Columbia in 1970, the local court system has had the same authority as state courts to establish and enforce standards of professional conduct for attorneys. 16 To determine whether plaintiff FG is entitled to relief in this case, a court must decide what standards define a breach of an attorney's fiduciary duty in a situation giving rise to alleged conflicts of interest and alleged disclosure of client confidences. It must also decide whether Metzger's conduct violated these standards and whether disgorgement of fees is an appropriate remedy. Although the District Court devoted considerable time, effort, and care to these questions, in a completely unsettled area of local law a federal District Court opinion is no substitute for an authoritative decision by the courts of the District of Columbia. 35 We conclude that the District Court abused its discretion by failing to take into account the uncertainty of state law and by proceeding to trial on the local claims after the dismissal of the federal claims.