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Today’s Opinion in Exxon Mobil Corp. v. Allapattah Services, Inc. and Ortega v. Star-Kist Foods, Inc.

These consolidated cases presented the question whether 28 U.S.C. 1367, the supplemental jurisdiction statute, overruled Zahn v. International Paper, which held that in order for a federal court to exercise diversity jurisdiction, all plaintiffs in the case had to satisfy 28 U.S.C. 1332’s amount-in-controversy requirement. The courts of appeal had sharply divided on the question and the Court had previously failed to resolve the issue, dividing 4-4 in the 2000 case Free v. Abbott Laboratories. More detailed background information on the case is available in this SCOTUSBlog post from the day of the argument.

Summary

In a 5-4 decision written by Justice Kennedy, the Court today held that Section 1367 does overrule Zahn and that so long as one of the plaintiffs in a suit satisfies the amount-in-controversy requirement, federal district courts may exercise supplemental jurisdiction to hear the claims of other plaintiffs that do not independently satisfy the requirement. The decision applies both to class action suits like Exxon and additional plaintiffs joined via Rule 20, as in Ortega.

Justice Ginsburg’s dissenting opinion, joined by Justices Stevens, O’Connor, and Breyer, acknowledged that the ambiguous language of Section 1367 was amendable to the majority’s interpretation. However, she argued that the language was also susceptible to a more narrow construction that is more consistent with the legislative history and “less disruptive of our jurisprudence regarding supplemental jurisdiction.” Slip Op. at 3.

Justice Stevens’s shorter dissenting opinion, joined by Justice Breyer, argued that this case demonstrates the need to consult legislative history whether or not the text of the statute is deemed “ambiguous.” As he explained, “[b]ecause ambiguity is apparently in the eye of the beholder, I remain convinced that it is unwise to treat the ambiguity vel non of a statute as determinative of whether legislative history is consulted.” Slip Op. at 1.

The outcome and voting line-up in this case are especially interesting for two reasons. First, in 2000 the court divided 4-4 on the same question with Justice O’Connor not participating. However, today Justice O’Connor dissented, which suggests that one of the five justices from the majority must have voted the other way in 2000.

Second, the more “conservative” justices voted to expand access to the federal courts. By contrast, in Zahn (decided in 1973), Justices Burger, Stewart, White, Powell, Blackmun and Rehnquist voted to require that each plaintiff independently satisfy the amount-in-controvery requirement, while Justices Brennan, Douglas and Marshall would have adopted the more permissive rule applied by the Court today. The explanation for the switch could simply be that in the interim Congress changed the law by passing 1367. However, it is also notable that since 1973 the practical consequences of the rule have changed. The parties likely to avail themselves of supplemental jurisdiction are class action defendants seeking removal to federal court from more plaintiff-friendly state fora. Like the 2004 amendments to 28 U.S.C. 1332, which granted federal courts jurisdiction over class action suits where the aggregate amount in controversy exceeds $5 million even if no single plaintiff meets $75,000 amount-in-controversy requirement, the net effect of this case will likely be to move more class action suits from state courts to federal courts.


Majority Opinion

After tracing the development of the doctrine of supplemental jurisdiction, Justice Kennedy turned to the text of Section 1367. He emphasized that nothing about the statute required the Court to employ special interpretive methods: “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.” Slip Op. at 10.

By its terms, Section 1367 grants federal courts the power to exercise supplemental jurisdiction over claims that are part of the same Article III “case or controversy” as a “civil action of which the district courts have original jurisdiction.” Therefore, Justice Kennedy framed the “single question before us” as “whether a diversity case in which the claims of some plaintiffs satisfy the amount-in-controversy requirement, but the claims of others plaintiffs do not, presents a “’civil action of which the district courts have original jurisdiction.’”” Slip Op. at 11. The question turns on the proper unit of analysis for “civil action.” If each plaintiff is evaluated separately, then the claims of the plaintiff who satisfies the amount in controversy requirement are the “civil action of which the district courts have original jurisdiction” and the other plaintiffs’ claims can be heard via supplemental jurisdiction. On the other hand, if the unit of analysis is the entire case, then there is no “civil action” over which the courts have original jurisdiction because of the inclusion of jurisdictionally-deficient claims by plaintiffs not satisfying the amount-in-controversy requirement.

In applying Section 1367 to federal question cases, the unit of analysis is an individual claim — so long as there is one claim raising a federal question, there is a “civil action of which the courts have original jurisdiction” and other state-law claims may be heard via supplemental jurisdiction. By contrast, for the purposes of the diversity of citizenship requirement the unit of analysis is the entire case. If a plaintiff is diverse from all defendants in the case (and therefore would satisfy Section 1332’s requirements if she were suing alone), the presence of a second plaintiff who is not diverse from one of the defendants nonetheless destroys jurisdiction over the entire case and the non-diverse plaintiff cannot add her claims via supplemental jurisdiction.

Justice Kennedy found that the appropriate unit of analysis for the amount in controversy requirement is an individual party, and not the entire case. He explained that the contrary view–which he called the “indivisibility theory”–was inconsistent with the “whole notion of supplemental jurisdiction.” Slip Op. at 13. The purpose of supplemental jurisdiction is to allow a court to hear claims over which it would otherwise lack jurisdiction, so it would be paradoxical to require that a court have jurisdiction over every claim in a case as a prerequisite.

Justice Kennedy explained that the limited use of the indivisibility theory in evaluating the diversity of citizenship requirement was based on the rationale behind diversity of citizenship: the fear of bias against out-of-state parties was not an issue if at least one of the parties on each side of the case are from the same state.

Justice Kennedy found additional support for this reading in the exceptions to supplemental jurisdiction in Section 1367(b), which would not be necessary if the original grant of jurisdiciton in 1367(a) did not include the joinder of additional parties not satisfying the amount in controversy requirement: “The natural, indeed the necessary, inference is that Section 1367 confers supplemental jurisdiction over claims by Rule 20 and Rule 23 plaintiffs. This inference, at least with respect to Rule 20 plaintiffs, is strengthened by the fact that Section 1367(b) explicitly excludes supplemental jurisdiction over claims against defendants joined under Rule 20.” Slip Op. at 13. Similarly, “[i]f the district court lacks original jurisdiction over a civil diversity action where any plaintiffÂ’’s claims fail to comply with all the requirements of Section 1332, there is no need for a special Section 1367(b) exception for Rule 19 plaintiffs who do not meet these requirements.” Slip Op. at 19.

Finally, although Justice Kennedy emphasized that there was no need to consult the legislative history because the statute’s terms are unambiguous, he also argued that the history in this case does not contradict his reading of the statute. In particular, he noted that the dissent relies on statements from a House Report that amounted to a deliberate, post-hoc attempt by drafters to alter the plain meaning Section 1367 after its passage.

Dissenting Opinions

Justice Ginsburg began by arguing that Section 1367 must be interpreted against the “background of law already in place and the historical development of that law,” including the well-established rule that separate plaintiffs could not aggregate their claims to satisfy the amount-in-controvery requirement. Slip Op. at 11. Her conclusion that Section 1367 was not meant to disrupt this well-settled rule is supported by legislative history suggesting that Congres viewed the statute’s impact as “modest.”

Justice Ginsburg also argued that her narrower reading of Section 1367 yields a more logical treatment of diversity and federal question jurisdiction. On her interpretation, when a court’s jurisdiction is based on 1332, the unit of analysis for 1367’s “civil action” is the entire case–what Kennedy called the “indivisibility theory”–for both the amount-in-controversy and the diversity of citizenship requirement. By contrast, the majority’s approach “draws
a sharp line between the diversity and amount-incontroversy components of Section 1332.”

Justice Stevens wrote a separate dissent arguing that the majority’s claim that the statute is unambiguous is implausible and providing additional support for the dissenters’ interpetation from the legislative history.