Court Opinion

ID: 4098400
Source: CourtListenerOpinion
Date Created: 2016-11-15 18:00:41.564265+00
Date Added: 2024-06-11T14:45:26.418214
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                      No. 15-3859
                                     ____________

                          ROBERT B. PATEL, M.D.;
                  MID-ATLANTIC MEDICAL ASSOCIATES, LLC;
                                                 Appellants

                                            v.

              MERIDIAN HEALTH SYSTEM, INC.; SCOTT LARSEN;
            TIMOTHY HOGAN; ANTHONY CAVA; GEORGE YOUNAN
                             ____________

                    On Appeal from the United States District Court
                             for the District of New Jersey
                              (D. N.J. No. 3-12-cv-03102)
                     District Judge: Honorable Freda L. Wolfson
                                     ____________

                   Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                                 September 30, 2016

               Before: AMBRO, SMITH,1 and FISHER, Circuit Judges.

                               (Filed: November 15, 2016)
                                      ____________

                                       OPINION*
                                     ____________

      1
        Honorable D. Brooks Smith, United States Circuit Judge for the Third Circuit,
assumed Chief Judge status on October 1, 2016.
      *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
FISHER, Circuit Judge.

       Appellants Robert B. Patel, M.D. (“Patel”) and Mid-Atlantic Medical Associates,

LLC, appeal two orders: the first denying a motion for leave to amend the complaint, and

the second dismissing their state law claims under the supplemental jurisdiction statute,

28 U.S.C. § 1367(c). We will affirm both orders and the District Court’s final judgment.

                                              I.

       We write principally for the parties, who are familiar with the factual context and

legal history of this case. Therefore, we will set forth only those facts that are necessary

to our analysis.

       Appellants sued Appellees Meridian Health System, Inc. (“Meridian”), Scott

Larsen, Timothy Hogan, Anthony Cava, and George Younan, alleging that Patel was

terminated “in furtherance of Meridian’s goals to eliminate competition.”2 Appellants’

complaint alleged violations of the Sherman Act; the Racketeer Influenced and Corrupt

Organizations Act (“RICO”); the Americans with Disabilities Act (“ADA”); and various

state law causes of action.3 The District Court granted Appellees’ motion to dismiss

Appellants’ RICO and ADA claims for failure to state a claim.4 At that time, the District

Court cautioned Appellants that it would decline to exercise supplemental jurisdiction

       2
Ohio App. 41; Appellants Br. 7.
       3
Ohio App. 28. The state law claims include a violation of the New Jersey Law Against
Discrimination, breach of contract, tortious interference with a contract, and defamation.
See App. 53-60.
      4
Ohio App. 23.
                                              2
over the remaining state law claims if the federal claim did not survive.5 Subsequently,

the District Court granted Appellees’ motion to dismiss Appellants’ Sherman Act claim,

their final federal claim. In its order the District Court advised Appellants to file a motion

for leave to amend before the Magistrate Judge if they wished to proceed with their

federal claims.6

       Appellants moved before the Magistrate Judge for leave to amend and attached a

proposed amended complaint.7 Relevant to this appeal is Count I, alleging that Appellees

violated Section One of the Sherman Act8 by wrongfully “arranging a joint boycott of

Appellant Patel’s services in the relevant market” and imposing “an unreasonable

restraint on trade that has an anticompetitive effect on the relevant market.”9 Appellants

alleged concerted action to remedy their deficient Sherman Act claim.10

       The Magistrate Judge denied Appellants’ motion to amend the Sherman Act claim,

citing futility, but granted the motion with respect to the surviving state law claims.11 The

time to object to the Magistrate Judge’s order in the District Court expired without

objection from either party.12 Appellants filed an amended complaint without any federal

       5
Ohio App. 5.
       6
Ohio App. 4.
       7
Ohio App. 30.
       8
         15 U.S.C. § 1.
       9
Ohio App. 51.
       10
Ohio App. 10.
       11
Ohio App. 18.
       12
          See Fed. R. Civ. P. 72 (a plaintiff must appeal a magistrate judge’s order by
raising the objection in the district court within 14 days of the order).
                                               3
claims. Noting the lack of objections to the Magistrate Judge’s order, the District Court

thereafter declined to exercise supplemental jurisdiction over Appellants’ remaining state

law claims.13

                                            II.14

       We review the District Court’s denial of a motion for leave to amend and refusal

to exercise supplemental jurisdiction under 28 U.S.C. § 1367(c) for abuse of discretion.15

“To demonstrate an abuse of discretion, [Appellants] must show that the District Court’s

decision was arbitrary, fanciful or clearly unreasonable.”16

                                            III.

                                            A.

       Before reaching the merits of the Magistrate Judge’s denial of Appellants’ motion

for leave to amend their Sherman Act claim, we must determine whether the Appellants

waived their right to appeal that order.

       13
Ohio App. 5.
       14
           The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1367. We have
jurisdiction under 28 U.S.C. § 1291.
        15
           See Maher Terminals, LLC v. Port Auth. of N.Y. & N.J., 805 F.3d 98, 104 (3d
Cir. 2015) (reviewing a district court’s refusal to exercise supplemental jurisdiction over
state law claims for abuse of discretion); Renchenski v. Williams, 622 F.3d 315, 324-25
(3d Cir. 2010) (reviewing a district court’s denial of a motion for leave to amend for
abuse of discretion).
        16
           Hart v. Elec. Arts, Inc., 717 F.3d 141, 148 (3d Cir. 2013).
                                               4
       The Magistrate Judge denied Appellants’ motion for leave to amend their Sherman

Act claim on futility grounds but granted leave to amend in all other respects.17 The

threshold issue is whether the Magistrate Judge’s order is dispositive. Appellants argue

that the order is dispositive of the Sherman Act claim, and, therefore, under Federal Rule

of Civil Procedure 72(b), the Magistrate Judge exceeded her authority by issuing an order

rather than issuing a report and recommendation for the District Court to review. 18 We

disagree.

       The Federal Magistrates Act19 permits district court judges to assign specified

matters to magistrate judges. The Act does not allow magistrate judges to determine

pretrial matters that dispose of the litigation, specifically excluding eight motions from

the authority of a magistrate judge. 20 A motion for leave to amend is not among those

matters listed as dispositive. We have held that a motion for leave to amend is

nondispositive.21

       Because we find that the Magistrate Judge’s denial of Appellants’ motion for leave

to amend is nondispositive, Appellants were required to challenge that order within 14

       17
Ohio App. 8. Appellants’ motion was granted to remove the previously dismissed
RICO and ADA claims.
       18
          Fed. R. Civ. P. 72(b); see also Henderson v. Carlson, 812 F.2d 874, 877 (3d Cir.
1987) (failure to object to a magistrate judge’s report and recommendation for disposition
does not foreclose appellate review).
       19
          See 28 U.S.C. §§ 631-39.
       20
          See 28 U.S.C. § 636(b)(1)(A) (excluding motions to amend from the list of eight
dispositive motions outside the scope of a magistrate judge’s authority to issue an order).
       21
          See Cont’l Cas. Co. v. Dominick D’Andrea, Inc., 150 F.3d 245, 251 (3d Cir.
1998).
                                              5
days in the District Court to preserve the right to challenge it on appeal.22 The Magistrate

Judge’s order is dated September 28, 2015. Appellants argue that if this Court concludes

that the order is nondispositive, the issue was preserved for appeal by Appellees’ October

20, 2015, objection in the District Court.23 Under Rule 72(a), the time to challenge the

order in the District Court expired on October 12, 2015. Even if Appellants were able to

take advantage of Appellees’ objection, the objection was untimely.24

       Appellants’ failure to object to the Magistrate Judge’s nondispositive order within

14 days in the District Court bars this Court from reaching the merits of that decision.

                                              B.

       The District Court did not abuse its discretion in declining to exercise

supplemental jurisdiction over Appellants’ state law claims.25 A district court “may

decline to exercise supplemental jurisdiction” over state law claims if it “has dismissed

all claims over which it has original jurisdiction[,]”26 unless considerations of judicial

economy, convenience, or fairness to the parties provide an affirmative justification for

exercising supplemental jurisdiction.27

       22
          See Fed. R. Civ. P. 72(a); United States v. Polishan, 336 F.3d 234, 239-40 (3d
Cir. 2003).
       23
Ohio App. 27.
       24
Ohio App. 4.
       25
Ohio App. 5.
       26
          28 U.S.C. § 1367(c)(3).
       27
          Hedges v. Musco, 204 F.3d 109, 123 (3d Cir. 2000).
                                              6
       Appellants argue that the District Court’s sua sponte dismissal without any

“indication that the court below considered fully the factors for supplemental

jurisdiction”28 was a deprivation of due process. We reject this argument. The fact that

the District Court acted sua sponte is irrelevant to the validity of its order. The record

indicates that the District Court fully considered the applicability of supplemental

jurisdiction over the state law claims in this case.

       Over a year before dismissal, the District Court warned Appellants that it would

decline to exercise supplemental jurisdiction over the state law claims if the federal claim

did not survive.29 Even though Appellants were on notice that the filing of their amended

complaint without federal claims might result in dismissal under 28 U.S.C. § 1367(c),

they did not object to the Magistrate Judge’s order. After the District Court’s dismissal,

Appellants filed their remaining claims in state court. We do not find any factors here

warranting supplemental jurisdiction over Appellants’ state law claims.

       Given the absence of federal claims and of any extraordinary factors warranting

supplemental jurisdiction, the District Court did not abuse its discretion in declining to

exercise supplemental jurisdiction over Appellants’ remaining state law claims.

       28
            Reply Br. 14.
       29
Ohio App. 5.
                                               7
                                           IV.

       For the reasons set forth above, we will affirm the Magistrate Judge’s denial of

Appellants’ motion for leave to amend and the District Court’s dismissal of Appellants’

state law claims under the supplemental jurisdiction statute, 28 U.S.C. § 1367(c).

                                            8