Opinion ID: 778967
Heading Depth: 2
Heading Rank: 2

Heading: supplemental party jurisdiction

Text: 31 The employees sued Selective Employment solely under state law, precluding federal question jurisdiction, and all parties are Washington citizens, precluding diversity jurisdiction. See 28 U.S.C. §§ 1331 & 1332. In such a situation, absent an independent basis for federal subject matter jurisdiction, Congress has authorized the district court to exercise supplemental jurisdiction: 32 [T]he 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. 28 U.S.C. § 1337(a). 5 33 Prior to the passage of § 1337, supplemental jurisdiction was more circumscribed and the addition of a party was one factor that barred jurisdiction over additional claims brought by plaintiffs. See generally Denis F. McLaughlin, The Federal Supplemental Jurisdictional Statute — A Constitutional and Statutory Analysis, 24 Ariz. St. L.J. 849, 859-89 (1992). In 1973, the Supreme Court expressed some skepticism about pendent party jurisdiction — jurisdiction over plaintiffs' claims requiring the addition of parties not involved in the main lawsuit. The Court characterized this issue as a subtle and complex question with far-reaching implications. Moor v. County of Alameda, 411 U.S. 693, 715, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973). Continuing this thread, in Aldinger v. Howard, 427 U.S. 1, 96 S.Ct. 2413, 49 L.Ed.2d 276 (1976), the Court held that pendent party jurisdiction was impermissible as a matter of statutory construction under the particular circumstances of the case. Finally, in Finley v. United States, 490 U.S. 545, 549, 109 S.Ct. 2003, 104 L.Ed.2d 593 (1989), the Court assume[d], without deciding, that pendent party jurisdiction was constitutional, but cautioned that it requires an express statutory jurisdictional grant. In 1990, Congress enacted § 1367 to provide such an express grant. Pub.L. No. 101-650 § 310. 34 The statutory grant of jurisdiction is, of course, limited by constitutional boundaries. Upon careful review, however, we are convinced that the controlling constitutional standard remains that articulated in United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966): The claims must form but one constitutional `case' and derive from a common nucleus of operative fact. We therefore decline Selective Employment's invitation to impose a per se constitutional bar on supplemental jurisdiction over claims against additional parties.
35 Selective Employment relies on Ayala v. United States, 550 F.2d 1196, 1199-1200 (9th Cir.1977), where we held that federal courts were without power to exercise pendent party jurisdiction under the Federal Tort Claims Act. At that time, neither of the key Supreme Court cases, Moor and Aldinger, had resolved the question, nor did we have the benefit of the explicit language of Finley, which came ten years later. Selective Employment, however, points to language that implied that, in addition to not being authorized under any statute, pendent party jurisdiction posed constitutional difficulties. Id. at 1199, 1200 n. 8. These statements, however, are best read as flagging the necessity for caution due to potential constitutional problems that might arise with an unduly broad exercise of pendent jurisdiction. 36 Significantly, Ayala also came before intervening decisions that clarified that Ayala 's restrictive interpretation does not survive the 1990 passage of § 1367. We explained in Galt G/S v. Hapag-Lloyd AG, 60 F.3d 1370, 1374 (9th Cir.1995), that Finley imposed two requirements for supplemental jurisdiction: (1) the claims must be part of the same constitutional `case'; and (2) the jurisdiction must be expressly authorized by statute. We further observed that 28 U.S.C. § 1367 supercedes this second Finley requirement.... Id. at 1374 n. 3; see also Yanez v. United States, 989 F.2d 323, 327 n. 3 (9th Cir.1993) (holding that court lacked jurisdiction in pre-1990 suit, but noting that Congress has now explicitly authorized pendent party jurisdiction (citing 28 U.S.C. § 1367)). 37
38 Any lingering doubt that Ayala establishes a binding constitutional rule is put to rest by the Supreme Court's recent decision in Raygor v. Regents of the University of Minnesota, 534 U.S. 533, 122 S.Ct. 999, 1004, 152 L.Ed.2d 27 (2002). Holding that a tolling provision was curtailed by the Eleventh Amendment, the Court discussed the history of supplemental jurisdiction: 39 In Mine Workers v. Gibbs, this Court held that federal courts deciding claims within their federal-question subject matter jurisdiction, 28 U.S.C. § 1331, may decide state law claims not within their subject matter jurisdiction if the federal and state law claims derive from a common nucleus of operative fact and comprise but one constitutional `case.' ... This Court later made clear that absent authorization from Congress, a district court could not exercise pendent jurisdiction over claims involving parties who were not already parties to a claim independently within the court's subject matter jurisdiction. See Finley v. United States, 490 U.S. 545, 109 S.Ct. 2003, 104 L.Ed.2d 593 (1989). 40 122 S.Ct. at 1004 (emphasis added; some citations omitted). The Court elaborated that § 1367 provided just such authorization, functioning as a general grant of jurisdiction. Id. at 1005. As the Supreme Court explained in Raygor, Article III permits supplemental jurisdiction if the federal and state law claims `derive from a common nucleus of operative fact' and comprise `but one constitutional case.' Id. at 1004(quoting Gibbs, 383 U.S. at 725) (some internal quotation marks omitted). Thus, any suggestion in Ayala that the Constitution imposes a bar on supplemental jurisdiction over additional parties independent of statutory authorization has been undermined by intervening Supreme Court authority. See United States v. Gay, 967 F.2d 322, 327 (9th Cir.1992) (holding that a prior panel decision is not binding in such a situation). 41 Selective Employment provides no compelling rationale to restrict supplemental jurisdiction beyond the limitation imposed in Gibbs. Indeed, the district court suggested that it would hold otherwise but for the belief that its hands were tied by Ayala. The district court's instincts were vindicated by the Supreme Court's later ruling in Raygor. We acknowledge, of course, that federal courts are courts of limited jurisdiction. U.S. Const. Art. III, sec. 2; Finley, 490 U.S. at 550(quoting Aldinger, 427 U.S. at 15). The Gibbs standard defines the minimum constitutional constraints, offering both Congress and the district courts flexibility to shape each case in a way that is efficient for the courts, fair to the parties, and respectful of state sovereignty. 42 Finally, we note that none of our sister circuits has imposed a per se constitutional restriction on supplemental jurisdiction over additional parties. See Hinson v. Norwest Financial S.C., Inc., 239 F.3d 611, 615 (4th Cir.2001) (holding that district court did not abuse its discretion in joining plaintiffs who asserted only state law claims); HB Gen'l Corp. v. Manchester Partners, L.P., 95 F.3d 1185, 1197-98 (3d Cir.1996) (holding that nondiverse party could be joined for counterclaims); Ammerman v. Sween, 54 F.3d 423, 424 (7th Cir.1995) (noting that only Gibbs now limits pendent party jurisdiction); Palmer v. Hosp. Auth., 22 F.3d 1559, 1566-67 (11th Cir.1994) (holding that district court had pendent party jurisdiction because claims involved the same facts, occurrences, witnesses, and evidence). 43 Thus, to avoid dismissal for lack of federal subject matter jurisdiction, the employees must show that the state conspiracy claims against Selective Employment constitute part of the same constitutional case as the federal RICO claims against the growers. Assuming that the claims meet the Gibbs standard, the district court has the power to exercise supplemental jurisdiction. The decision to exercise that jurisdiction remains discretionary with the district court. City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 172-73, 118 S.Ct. 523, 139 L.Ed.2d 525 (1997) (holding that district courts may decline to exercise jurisdiction over supplemental state law claims in the interest of judicial economy, convenience, fairness, and comity). We therefore remand for the district court to determine, in the first instance, whether the application of the Gibbs standard permits the exercise of supplemental jurisdiction, and to exercise discretion over whether such jurisdiction would be appropriate in the context of this litigation. 44 REVERSED and REMANDED.