23 June 2005

Courting Confusion

No decision in Grokster today—but there was a decision in the diversity jurisdiction cases that just might shed some light upon it. Although that sounds like civil-procedure-nerd territory—and I suppose it is—it has some interesting and wider implications for the entire "federalism" argument.

The Constitution limits the jurisdiction of federal courts to (primarily) matters raising questions of federal law and matters between citizens of different states. Congress has specified what constitutes the latter in 28 U.S.C. § 1332, which provides that:

(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between—

(1) citizens of different States;

(2) citizens of a State and citizens or subjects of a foreign state;

(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and

(4) a foreign state, defined in section 1603 (a) of this title, as plaintiff and citizens of a State or of different States.

Federal courts can also hear, under their power of supplemental jurisdiction under § 1367, state-law matters that are related to other matters over which they clearly do have jurisdiction.

The kicker comes with class actions. The cases decided today try to fill a gap left between § 1332 and § 1367: What if the class representative's state-law claim does fulfill § 1332's requirements (usually related to the amount in controversy), but there is no clear demonstration that the absent class members' claims would?1 A straightforward reading of the statute leads us… nowhere. It's an unconsidered case, because the assumptions in both sections are of a one-to-one action. Logically, this should be easy: If supplemental claims can get into federal court under § 1367, so should supplemental plaintiffs whose claims are operatively identical and linked to a named plaintiff. This is not just a question of judicial economy (although that certainly doesn't hurt the argument): It is a question of fundamental fairness to all parties involved. Defendants can be spared multiple battles in competing jurisdictions, while plaintiffs who otherwise can't (or don't know to) seek compensation have a shot at it, at least by proxy. Unfortunately, logic isn't good enough: The Court has split 4–4 on this issue previously.

Justice Kennedy wrote the majority opinion. He puts the critical inquiry this way:

All parties to this litigation and all courts to consider the question agree that § 1367 overturned the result in Finley. There is no warrant, however, for assuming that § 1367 did no more than to overrule Finley and otherwise to codify the existing state of the law of supplemental jurisdiction. We must not give jurisdictional statutes a more expansive interpretation than their text warrants; but it is just as important not to adopt an artificial construction that is narrower than what the text provides. No sound canon of interpretation requires Congress to speak with extraordinary clarity in order to modify the rules of federal jurisdiction within appropriate constitutional bounds. Ordinary principles of statutory construction apply. In order to determine the scope of supplemental jurisdiction authorized by § 1367, then, we must examine the statute's text in light of context, structure, and related statutory provisions.

Slip op. at 14 (citations omitted, hyperlink added). This passage is self-evident in a lot of ways; it seems intended to distinguish federalism concerns from the law of jurisdiction. Admittedly, that's a rather hyperformalist approach; but then, the law of jurisdiction is itself hyperformalist, so perhaps that's merely internally consistent.

When the well-pleaded complaint contains at least one claim that satisfies the amount-in-controversy requirement, and there are no other relevant jurisdictional defects, the district court, beyond all question, has original jurisdiction over that claim. The presence of other claims in the complaint, over which the district court may lack original jurisdiction, is of no moment. If the court has original jurisdiction over a single claim in the complaint, it has original jurisdiction over a "civil action" within the meaning of § 1367(a), even if the civil action over which it has jurisdiction comprises fewer claims than were included in the complaint. Once the court determines it has original jurisdiction over the civil action, it can turn to the question whether it has a constitutional and statutory basis for exercising supplemental jurisdiction over the other claims in the action.

Id. at 15.

The opt-out ability under § 1367(d)—which allows the federal court to decline, on a case by case basis, matters that will overwhelmingly involve state law that do not have independent bases for federal jurisdiction, even if they are otherwise part of the constitutional case—is an important safety valve here, even if Justice Kennedy's opinion never cites it.2 What is more interesting, in the end, is Justice Kennedy's method of trashing certain "legislative history" that might conceivably require a different result.

[T]he worst fears of critics who argue legislative history will be used to circumvent the Article I process were realized in this case. The telltale evidence is the statement, by three law professors who participated in drafting § 1367, that § 1367 "on its face" permits "supplemental jurisdiction over claims of class members that do not satisfy section 1332's jurisdictional amount requirement, which would overrule [Zahn]. [There is] a disclaimer of intent to accomplish this result in the legislative history…. It would have been better had the statute dealt explicitly with this problem, and the legislative history was an attempt to correct the oversight." The professors were frank to concede that if one refuses to consider the legislative history, one has no choice but to "conclude that section 1367 has wiped Zahn off the books." So there exists an acknowledgment, by parties who have detailed, specific knowledge of the statute and the drafting process, both that the plain text of § 1367 overruled Zahn and that language to the contrary in the House Report was a post hoc attempt to alter that result. One need not subscribe to the wholesale condemnation of legislative history to refuse to give any effect to such a deliberate effort to amend a statute through a committee report.

Id., slip op. at 27.3 That's pretty unambiguous itself… but it also has some interesting implications for "strict scrutiny" analysis, for interpretation of the DMCA (whose legislative history is, if anything, far worse in terms of attempts to "rewrite the statute" than that of § 1367… which implies to me that Justice Kennedy voted to at least partially overturn Grokster), and for a variety of other difficult questions of statutory interpretation. Justice Kennedy is careful to avoid saying that legislative history never provides anything of value; instead, his focus is on the unambiguous nature of both the statute and the legislative history, not on the interpretive process itself.

  1. I suppose I should disclose my own bias here. I used to do extensive class litigation, usually in federal court; the contrast with state-court practice only reinforced my preexisting expansive preference for federal jurisdiction. Of course, my current practice leans even farther toward federal jurisdiction, since copyright is exclusively under federal jurisdiction (and the vast majority of my clients are not residents of New York, meaning that at least that part of the diversity requirements is pretty much a given). Contrary to the "received wisdom," it has been my experience that federal court is faster, more consistent, cheaper, and even-handed in dealing with class actions, and that it is too easy to overturn or delay the effect of state-court decisions through an extended appeal process. In short, I'd rather be in federal court anyway.
  2. I have personal experience with this particular situation. One of my first appellate matters was also the first decision to interpret § 1367(c) and (d) together. We successfully convinced the Seventh Circuit that the propriety of hearing debt-based counterclaims by the defendant as a class matter—effectively creating a defendant class of the original plaintiffs—was properly a matter for judicial discretion. On remand, Judge Castillo did the wise thing and washed his hands of the counterclaims, exercising his discretion to evade them.
  3. Dean Mengler—who was one of the three professors cited by Justice Kennedy—dropped in to my 1L civ pro class to discuss this very issue.