Opinion ID: 783671
Heading Depth: 2
Heading Rank: 1

Heading: jurisdiction

Text: 9 Eva Air properly removed the case from state to federal court, because [a]ny civil action of which the district courts have original jurisdiction founded on a claim or right arising under ... treaties or laws of the United States shall be removable.... 2 No party filed a motion to remand upon removal. The complaint was drawn claiming a right to recover under a treaty and federal statute, 3 the federal aspect was central to the claim and was not insubstantial or frivolous-for all Albingia knew, the chips were stolen while aboard Eva Air. Therefore, jurisdiction at the time of removal existed regardless of whether the Warsaw Convention ultimately turned out to supply a basis for recovery. 4 10 There is also no serious question that in its summary judgment order, the district court first determined that the Warsaw Convention did not apply and then determined the state law limitations issue in favor of Schenker. We held in Read-Rite Corporation v. Burlington Air Express, Ltd. 5 that where the loss to the goods occurs outside the airport, the Warsaw Convention does not apply. 6 The Convention applies to transportation by air but not everything leading up to transportation by air. 11 Thus by the time the district court entered judgment in the case at bar, the federal question that justified removal had disappeared. The claim under the Warsaw Convention disappeared once the district court presumed and the parties stipulated that the bricks had been substituted for the chips in Schenker's South San Francisco warehouse. 7 12 Albingia argues that once the district court correctly so decided, that should have been the end of the case in federal court. But instead of dismissing the state law claims or remanding them to state court, the district court exercised supplemental jurisdiction over them. Albingia contends that there was no supplemental jurisdiction over the remaining state law claims. As stated, supra, Albingia did not raise this issue until after the district court had ruled against it on its state law claims. 13 The supplemental jurisdiction statute provides that 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. 8 In this case, the district court had a basis of original jurisdiction because of the federal question raised by Albingia's Warsaw Convention claim. Further, the state law claims plainly form part of the same case or controversy as the federal claim. Just like the Warsaw Convention claim, the state claims are four different theories for getting reimbursed for the $235,000 that Albingia paid Siemens for the stolen chips. The removal was without question proper at the time it was accomplished, because of the Warsaw Convention claim, so the district court plainly had supplemental jurisdiction at that time over the state law claims. 9 14 The district court, in a single ruling on cross motions for summary judgment, held that because the chips were stolen in Schenker's off-airport warehouse, the Warsaw Convention did not apply, and the contractual limitation to $20 per kilogram was valid under federal common law. Albingia argues that upon deciding that the Warsaw Convention did not apply, the district court lost jurisdiction to decide that the contractual limitation applied. That contention is incorrect. Where removal was proper, but the federal question claim is defeated on the merits, the district court nevertheless may in its discretion retain supplemental jurisdiction over the state law claims. 10 The Supreme Court held in Bell v. Hood that when a well-pleaded complaint states a federal claim, [j]urisdiction, therefore, is not defeated... by the possibility that the averments might fail to state a cause of action on which the petitioners could actually recover, and [i]f the court does later exercise its jurisdiction to determine that the allegations in the complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want of jurisdiction. 11 In the case at bar, the federal claim was dismissed on the merits rather than for lack of jurisdiction, because it turned out that the chips were stolen at Schenker's off-airport warehouse. Jurisdiction existed because the pleading asserted, without frivolousness, that the Warsaw Convention gave Albingia a claim. 15 It is arguably an obstacle to this interpretation that the statute governing procedure after removal has subsequently been amended. In pertinent part, the removal statute, section 1447(c), provides that motions to remand for procedural defects must be made within 30 days of removal, but [i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. 12 Wright & Miller says that [a]n interpretive debate has arisen whether the language `lacks subject matter jurisdiction' in the current text of Section 1447(c) refers only to defects existing at the time of removal or takes into account subsequent events. 13 The words any time and lacks, in the present tense, suggest mandatory remand, but the word case suggests that jurisdiction must be lacking over the entire case, not merely a claim within the case. 16 It was well-settled under the previous version of the removal statute 14 that a federal district court retains the power to hear claims that would not [have been] independently removable even after the basis for removal jurisdiction is dropped from the proceedings. 15 Our sister circuits that have ruled on the question interpret the statute as amended not to deprive the district court of jurisdiction to decide the related state claims even though the federal claim upon which removal was based is dismissed on the merits. 16 Thus, in our post-amendment en banc decision in Acri v. Varian Associates, 17 we held that even if all federal claims are dismissed before trial, this has never meant that they [state law claims] must be dismissed. 18 This interpretation preserves coherence with the new supplemental jurisdiction statute, which provides that where the district court has original jurisdiction over a federal claim, it shall have supplemental jurisdiction over related state law claims. 19 17 The supplemental jurisdiction statute, section 1367, says that district courts shall have jurisdiction over the non-federal claims forming part of the same case or controversy, which they may decline to exercise under denoted circumstances, 20 while the procedure after removal statute, section 1447, says that [i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. 21 Here is how we reconcile the may decline to exercise language of the supplemental jurisdiction statute with the shall be remanded language of the procedure after removal statute: if state law claims are asserted as part of the same case or controversy with a federal claim, the district court has discretion to exercise supplemental jurisdiction over the remaining state law claims and the mandatory remand provision of the procedure after removal statute does not apply. Under the plain language of the statutes, logically it cannot appear[] that the district court lacks jurisdiction under 1447(c) if it shall have jurisdiction under 1367. 18 The Second Circuit held in Parker PPA v. Della Rocco, Jr., 22 that § 1447(c) merely addresses the consequences of a jurisdictional flaw, i.e. it mandates a remand rather than a dismissal. 23 Parker relies on language in a Supreme Court decision, International Primate Protection League v. Administrators of Tulane Educational Fund, 24 that, in somewhat different circumstances, reads the new language in section 1447(c) to mean that a finding that removal was improper deprives that court of subject matter jurisdiction and obliges a remand. 25 That is to say, section 1447(c) does not mean that if the federal claim drops out, the district court must remand; it means that if there is no jurisdiction — federal question, supplemental, diversity, or otherwise — the district court must remand the removed case rather than dismissing it. Our cases already bear this out; now we hold explicitly what, in Acri and other cases, 26 we have held implicitly: section 1447(c) means that if it is discovered at any time in the litigation that there is no federal jurisdiction, a removed case must be remanded to the state court rather than dismissed. Section 1447(c) does not mean that if a facially valid claim giving rise to federal jurisdiction is dismissed, then supplemental jurisdiction is vitiated and the case must be remanded. Once supplemental jurisdiction exists, it remains, subject to the discretionary provision for remand in section 1441. 19 In the case at bar, because Albingia's state law complaint was properly removed to the district court due to the federal question asserted by Albingia's Warsaw Convention claim, the district court had supplemental jurisdiction over the state law claims. The district court's supplemental jurisdiction over the state law claims was not destroyed by dismissal of the Warsaw Convention claim. This is consistent with the long established approach to diversity cases, where even if the damages proved turn out to be less than the jurisdictional amount, the district court nevertheless retains jurisdiction to render a final judgment on the merits. 27 Supplemental jurisdiction is not destroyed by elimination of the basis for original jurisdiction. 20 The only remaining issue relating to jurisdiction is whether, after the federal claim was dismissed, the district court abused its discretion by retaining the case rather than remanding it. 28 Our en banc decision in Acri holds that although the district court may, under section 1367(c), decline to exercise its supplemental jurisdiction in these circumstances, and ordinarily should dismiss the state law claims under United Mine Workers v. Gibbs, that has never meant that they must be dismissed. 29 Here, considering the Acri factors, 30 there was plainly no abuse of discretion, because Albingia waited until the dealer turned up his hole card, in the court's summary judgment decision, before claiming that the adverse decision should be vacated because federal question jurisdiction had disappeared. We decline to let Albingia take its chips off the table because it didn't like the dealer's hand.