Supplemental Jurisdiction

This post explores supplemental jurisdiction. At the most fundamental level, this doctrine is relatively straightforward. The concept of supplemental jurisdiction has its origins in the court-developed concepts of pendent and ancillary jurisdiction. The Constitution limits the jurisdiction of the federal courts to “Cases” and “Controversies” falling into the categories listed in Article III, the most common of which are cases arising under federal law and controversies between citizens of different states, as codified in 28 U.S.C.A. §§ 1331 and 1332. The courts have construed the terms “case” and “controversy” to broadly authorize the federal courts to hear the entire case or controversy falling into one of the approved categories.

Thus, if a complaint includes a claim arising under a federal statute, that claim would qualify for federal question jurisdiction under § 1331. If the complaint also included a claim arising under state law (and diversity jurisdiction was not available), the court could still hear the state law claim if it was so intertwined with the federal law claim that it formed part of the same “case or controversy.” In other words, by authorizing the federal courts to hear a “case” arising under federal laws, it authorized the federal courts to hear all of the claims or disputes that form part of that one case—even if some of the claims do not themselves arise under federal law. The concepts of pendent and ancillary jurisdiction are now encoded in 28 U.S.C.A. § 1367, which uses the term “supplemental jurisdiction” to refer to both common law doctrines.

Same Case or Controversy

To assess whether the claim potentially subject to supplemental jurisdiction forms part of the same case or controversy as a claim qualifying for original jurisdiction, courts consider whether the two claims arise from a “common nucleus of operative fact.” Thus, if the same witnesses and documentary evidence would be required to prove or defend both claims, the courts are likely to conclude that the two claims form part of the same case or controversy and should be tried together. See Cinar v. R&G Brenner Income Tax, LLC, 2024 WL 4224046 (E.D.N.Y. 2024).

Supplemental jurisdiction can be invoked by plaintiffs to bring in such closely related claims, but it is even more routinely invoked for compulsory counterclaims, crossclaims, and third-party claims, which—almost by definition—will meet the requirements for supplemental jurisdiction (assuming the complaint was properly filed in federal court in the first place). Many of the joinder rules require that the joined claim arise out of the same “transaction or occurrence” as the claim asserted against the claiming party. That phrase, or a slight variation of it, appears in Rule 13(a) governing compulsory counterclaims, Rule 13(g) governing crossclaims, Rule 14 governing third-party practice, Rule 15(c) governing relation back, and Rule 20 (governing joinder of multiple plaintiffs or defendants in a single pleading).

Many courts construe forming part of the same case or controversy as the functional equivalent of arising from the same transaction or occurrence. Some courts, however, have held that “same case or controversy” is a somewhat broader test than “same transaction or occurrence” such that two claims might form part of the same case or controversy even if they do not arise from the same transaction or occurrence. Id. Under this approach, while a compulsory counterclaim or a crossclaim will virtually always qualify for supplemental jurisdiction, the converse is not true—a permissive counterclaim, which does not arise out of the same transaction or occurrence as the claim asserted against the counterclaimant—might nonetheless qualify for supplemental jurisdiction.

B-Bar

There are two provisions in § 1367 that may limit a party’s ability to invoke supplemental jurisdiction. The first is subsection (b), sometimes referred to as the “B-Bar.” This limitation codifies the Supreme Court’s limit on ancillary jurisdiction (the common law predecessor to supplemental jurisdiction) announced in Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365 (1978). In that case, the plaintiff, whose husband was electrocuted in a construction accident, deliberately omitted Owen Equipment—the logical target defendant, but a citizen of the same state as the plaintiff—so that the plaintiff could file the complaint in federal court under the court’s diversity jurisdiction. After the defendant predictably impleaded Owen Equipment, the plaintiff amended her complaint to add a claim against Owen Equipment. The Court held that allowing such an exercise of ancillary jurisdiction would undermine the limitations of diversity jurisdiction.

Keeping the goal of preventing the circumvention of the limitations of diversity jurisdiction in mind helps to understand the components of § 1367(b). It essentially blocks the exercise of supplemental jurisdiction if all four of the following requirements are satisfied:

• The only basis for original jurisdiction is diversity jurisdiction [because the jurisdiction manipulation concerns are not implicated in the same way if there is federal question jurisdiction];
• The claim in question is brought by a plaintiff or someone seeking to intervene as a plaintiff [since the defendants did not pick the forum, the rule doesn’t need to protect against their manipulation];
• The claim is brought by a party joined as a plaintiff under Rule 19 or 24 or against a party joined as a defendant under Rule 14, 19, 20, or 24 [rules designed to capture when jurisdictional manipulation might occur]; and
• The exercise of supplemental jurisdiction would be “inconsistent with the requirements of Section 1332 [if the exercise is consistent with the requirements of diversity jurisdiction, then no manipulation would have been necessary].

The statute has been widely criticized as one of the most poorly drafted procedural statutes in effect. Two provisions have drawn particular criticism, the list of Rules in (3) above and the “inconsistent with the requirements of Section 1332” condition in (4). Starting with the list of Rules, it is unclear why the list of defendant rules includes Rule 20 while the list of plaintiff rules does not. The Supreme Court characterized this difference as “odd” and as potentially an “unintentional drafting gap,” a polite way of saying it was simply a mistake. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 565 (2005).

With respect to the exception’s requirement that the exercise of supplemental jurisdiction not be “inconsistent with the requirements” of diversity jurisdiction, the clause has been described as “curious.” See Supplemental Jurisdiction—Withdrawal of Supplemental Jurisdiction Under 28 U.S.C.A. § 1367(b), 13D Fed. Prac. & Proc. Juris. § 3567.2 (3d ed.). The courts are divided as to whether this clause is limited to claims that are inconsistent because they implicate the requirement for complete diversity or whether it also includes claims that are inconsistent only because they fall below the amount-in-controversy requirement. If this clause is construed to include any form of inconsistency with the requirements for diversity jurisdiction, it “seems meaningless.” Id. After all, if the claim was fully consistent with the requirements for diversity jurisdiction, the plaintiff would simply invoke diversity jurisdiction and there would be no need for supplemental jurisdiction. See Wright v. Nat’l Union Fire Ins. Co. of Pittsburgh PA, 2024 WL 1549760 (W.D. La. 2024), for more on this issue.

Discretion to Decline

The second limitation is in subsection (c), which gives the district court the discretion to decline to exercise supplemental jurisdiction in four enumerated circumstances—exceptions to the general rule that federal courts are obligated to exercise subject-matter jurisdiction when it exists. See Carnegie-Mellon University v. Cohill, 484 U.S. 343, 356 (1988). Section 1367(c) provides the district court with the authority to decline to exercise supplemental jurisdiction if:

(1) the claim raises a novel or complex issue of State law;

(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction;

(3) the district court has dismissed all claims over which it has original jurisdiction; or

(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.

See Frazier v. The Beauti Spot L.L.C.A, 2024 WL 1135664 (C.D. Cal. 2024).

The most common exercise of the courts’ discretion to decline supplemental jurisdiction is third—when the court has dismissed all claims over which the court has original jurisdiction. Supplemental jurisdiction, in essence, allows a claim that doesn’t qualify for original jurisdiction to “piggy back” on a closely related claim that does have original jurisdiction. If the claim with original jurisdiction is dismissed or otherwise goes away, the court is allowed, but not required, to continue to exercise supplemental jurisdiction. Whether the court chooses to do so typically depends on the stage of the proceedings. If the court dismisses the claim with original jurisdiction on a Rule 12(b)(6) motion at the beginning of the case, it will be likely to decline to retain another claim based on supplemental jurisdiction. Conversely, if, shortly before trial, the court enters summary judgment against the plaintiff on the claim with original jurisdiction, the court would be much more likely to retain the supplemental claim. Id.

Tolling of the Statute of Limitations

When the court declines to exercise its supplemental jurisdiction, it typically does so with the idea that the claim should be litigated in state court, not federal court. Accordingly, the court typically dismisses such claims without prejudice. Recognizing that the dismissed claim may have been pending in the federal court for some period of time prior to the court’s dismissal order, § 1367(d) provides the claiming party with a “get out of jail free” card for statute of limitations problems that arose while the claim was pending in federal court. It tolls the statute of limitations for the entire time the claim was pending in federal court, plus an additional 30 days.  Thus, if the claim was timely when filed and the claiming party asserts it within 30 days of the federal court dismissal, it will be timely.  See Moreno-Livini v. AFL-CIO Hous. Inv. Tr., 2024 WL 4144112 (D.D.C. 2024).

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Steve is one of the authors of The Federal Litigator, a monthly publication from Thomson Reuters that reports on cases of general interest to those who practice in the federal courts. Each fall, The Federal Litigator reports on amendments to the federal court rules. This article is an excerpt from the November 2024 edition of The Federal Litigator that is reprinted with the publisher’s permission (© 2024 Thomson Reuters). Further reproduction of any kind is strictly prohibited. For further information about this publication, please click here, or call 800.328.9352. Individual case summaries can be accessed through Westlaw. Steve is also one of the authors of the Federal Civil Rules Handbook, an annual publication from Thomson Reuters containing detailed, practical commentary providing a blueprint for the application of the Federal Rules of Civil Procedure and related jurisprudential concepts. To purchase the Handbook, please click here.