2.6 Supplemental Jurisdiction

Updated 2013 by Jeffrey S. Gutman

In 1990, Congress enacted the supplemental jurisdiction statute, 28 U.S.C. § 1367, which largely codified, with certain critical distinctions, the former common law doctrines of pendent, ancillary, and pendent-party jurisdiction.  When applicable, these doctrines permitted the federal court to take jurisdiction over state law claims over which there was no independent basis of jurisdiction so long as they were anchored to a claim in the action over which federal jurisdiction was appropriate.  

2.6.A. Historical Basis of Pendent and Ancillary Jurisdiction

In order to understand the supplemental jurisdiction statute, the legal aid lawyer should first be familiar with the basic pre-codification principles of pendent and ancillary jurisdiction established by the Supreme Court.

2.6.A.1. Pendent Jurisdiction

The doctrine of pendent jurisdiction governed the exercise by federal courts of subject matter jurisdiction over claims that lack an independent basis of jurisdiction. When a plaintiff files a federal claim against a defendant, under what circumstances may it add a state law claim over which there is no independent basis of federal jurisdiction to the complaint? The Supreme Court’s decision in United Mine Workers v. Gibbs created the modern test for determining when federal courts may exercise pendent jurisdiction over state law claims.1 By “establishing a new yardstick for deciding whether a federal court has jurisdiction over a state-law claim brought in a case that also involves a federal question,” the Gibbs Court intended “not only to clarify, but also to broaden, the scope of federal pendent jurisdiction.”2

The Court in Gibbs drew a distinction between power and discretion. Under the two-prong test adopted in Gibbs, federal courts must first determine whether they have the constitutional power to exercise pendent jurisdiction. This power exists when there is a substantial federal claim over which federal courts have subject matter jurisdiction,3 and when both the “state and federal claims derive from a common nucleus of operative facts” so that a plaintiff would “ordinarily be expected to try them all in one judicial proceeding.4 When the entire action before the federal court comprises a single constitutional “case,” the court may, under Article III, exercise jurisdiction over the action, including the state-law claims.5

If the federal court has the power to exercise jurisdiction over the pendent claim, the federal court may nevertheless refuse to exercise pendent jurisdiction based on “considerations of judicial economy, convenience and fairness to litigants.”6 Questions of economy arise when the federal claim is dismissed or resolved before the pendent state claim. The Gibbs Court observed that “if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well.”7 The Court subsequently qualified this statement to permit trial courts to entertain pendent claims after the jurisdiction-conferring claims are dismissed as moot.8 Ultimately the issue turns on whether sending the pendent claim to state court would result in the wasteful and duplicative expenditure of resources. The Gibbs Court was also mindful of principles of comity, and cautioned against making “[n]eedless decisions of state law.”9 Indeed, “if it appears that the state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may by dismissed without prejudice and left for resolution to state tribunals.”10

2.6.A.2. Pendent Party Jurisdiction

Some federal courts subsequently used the Gibbs approach to support the exercise of jurisdiction over new parties over whom there was no independent basis of federal jurisdiction. When a plaintiff files a federal claim against a defendant, under what circumstances may the court entertain jurisdiction over a state claim against a second defendant when there is no independent basis for federal jurisdiction?  Such state law claims might, for example, fall short of the amount in controversy requirement or be filed against a non-diverse second defendant. The Supreme Court first considered the question of pendent party jurisdiction in Aldinger v. Howard.11   The plaintiff there sued county officials under Section 1983, and asserted a pendent state law claim against the county. Because the state law claim against the county arose from the same nucleus of facts as the Section 1983 claim against its officials, the Gibbs test appeared to support the assertion of jurisdiction.

Nevertheless, the Court rejected the attempted use of pendent party jurisdiction and held the asserted expansion of subject matter jurisdiction to be inconsistent with congressional limitations on the exercise of jurisdiction. The Court observed that adding a transactionally related state law claim against a defendant subject to a properly filed federal claim was quite different from adding a pendent claim to a new defendant. The Court further held that Congress impliedly negated the exercise of pendent party jurisdiction over counties pursuant to 28 U.S.C. § 1343 because counties were not “persons” subject to Section 1983. The specific basis for this latter conclusion was later overruled in Monell v. New York City Department of Social Services.12  Still, Aldinger continued to stand for the proposition that, before exercising pendent party jurisdiction, the court must determine whether Congress had impliedly negated the authority for doing so.

In Owen Equipment and Erection Company v. Kroger, the Court extended the reasoning of Aldinger to a case involving Rule 14(a) of the Federal Rules of Civil Procedure.13 There, the plaintiff in a tort case over which the court had diversity jurisdiction amended her complaint to add claims arising from the same accident against a non-diverse third-party defendant. Reasoning that the exercise of jurisdiction would be inconsistent with the statutory requirement of complete diversity, the Court rejected jurisdiction over the claims.

Finley v. United States marked the death knell of pendent party jurisdiction.14   In Finley, the Supreme Court held that a plaintiff suing the United States under the Federal Tort Claims Act was not allowed to assert a pendent party claim against jointly liable, non-diverse defendants, even though the claim against the United States was within the exclusive jurisdiction of the federal courts. The plaintiff was therefore consigned to suing the United States in federal court and the private defendants in state court.  Modifying the test established in Aldinger, the Court held that federal courts had no authority to assert subject matter jurisdiction over pendent parties absent an affirmative grant of jurisdiction by Congress. In the absence of a legislative basis for the assertion of pendent party jurisdiction, the plaintiff had to establish an independent basis of subject matter jurisdiction for each defendant sued. Since most jurisdictional statutes say nothing about pendent jurisdiction, the Finley Court called into question the statutory bases of both ancillary and pendent jurisdiction.15   

2.6.A.3. Ancillary Jurisdiction

The related doctrine of ancillary jurisdiction developed to empower a federal court to hear some counterclaims and third-party claims over which it lacked an independent jurisdictional base.16   In a case in which a plaintiff filed a federal claim against a defendant, under what circumstances may the defendant bring claims against the plaintiff or others over which there is no independent basis of subject matter jurisdiction?  Such claims are brought by defending parties which have not chosen the federal forum. Generally, when a claim bore a logical relationship to the main claim or arose out of the same transaction or occurrence, courts permitted ancillary jurisdiction. Ancillary jurisdiction consequently extended to compulsory counterclaims, cross-claims, and additional parties to such claims.17    It did not generally extend to permissive counterclaims, which, by definition, lacked the required factual nexus with the main claim.18   

However, the Court in Owen cautioned that satisfying the Gibbs constitutional test is necessary, but not sufficient, to confer ancillary jurisdiction. Jurisdiction may also be limited by statute. Thus, since the diversity statute has been interpreted to require complete diversity, the Owen Court held, a plaintiff may not advance even transactionally related state claims against a non-diverse third-party defendant. As noted above, the Finley Court’s insistence on an express legislative grant of ancillary jurisdiction effectively precluded most exercises of it.

2.6.B. Statutory Codification of Supplemental Jurisdiction

Congress responded to Finley in 1990 by enacting 28 U.S.C. § 1367. The supplemental jurisdiction statute retains the basic division described by the Supreme Court in Gibbs between the power of a court to entertain a pendent claim and the discretionary authority of a court to decline to exercise that power. However, in codifying supplemental jurisdiction, Congress also chose to incorporate several of the discretionary factors that warranted declining jurisdiction.19   

The statute first delineates the power of the federal court to hear supplemental claims and claims against supplemental parties. Section 1367(a), which provides that “the 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,” confers power to entertain supplemental jurisdiction in mandatory terms.20    Rather than using Gibbs' “common nucleus of operative fact” standard, Section 1367(a) explicitly makes direct reference to the constitutional “case or controversy” requirement, signaling Congress’ intent to vest the federal courts with the full measure of supplemental jurisdiction permitted by the Constitution. Some post-enactment cases have indicated that the "common nucleus" and "case or controversy" tests are the same, but the trend is otherwise with three courts of appeals holding that Section 1367(a) extends supplemental jurisdiction to at least some permissive counterclaims.21 The statute also expressly retains the doctrine of pendent party jurisdiction by mandating the inclusion of claims involving “the joinder or intervention of additional parties.”22

Section 1367(b) imposes some limitations of supplemental jurisdiction in cases in which original federal jurisdiction rests on diversity. In such cases, the statute codified the result in Kroger and does not permit supplemental jurisdiction over claims by plaintiffs against persons made parties under Rules 14, 19, 20 and 24 when doing so would destroy complete diversity. Yet, the Supreme Court recently interpreted Section 1367(a) and (b) broadly when the jurisdictional issue involved the amount in controversy requirement. In Exxon Mobil  Corporation v. Allapattah Services,23 a class action, the Court decided that federal courts may exercise supplemental jurisdiction over class member claims which fail to satisfy the amount in controversy requirement if their claims are part of the same case or controversy presented by at least one plaintiff who alleges a sufficient amount in controversy. So long as the federal court has original jurisdiction over a claim made by at least one plaintiff, there is a “civil action of which the district courts have original jurisdiction,”24 to which supplemental claims may adhere.25   The decision in Exxon Mobil is important to legal services attorneys because it holds that Section 1367(a) overrules Zahn v. International Paper Company,26   which held that each class member in a class action seeking to invoke diversity jurisdiction must meet the amount in controversy requirement.27  In Exxon Mobil's companion case, Ortega v. Star-Kist Foods Inc., the Court reached the same conclusion in a non-class action case in which the plaintiffs were joined under Rule 20.  The Court found nothing in § 1367(b) that withdrew supplemental jurisdiction in either Exxon Mobil or Ortega,where plaintiffs were joined by Rule 23 and Rule 20, respectively.28

Section 1367(c) sets forth the occasions in which a federal court may exercise its discretion not to hear a supplemental claim or add a supplemental party, despite the power of the court to do so. A federal court may decline to assert supplemental jurisdiction over a pendent claim if any of the following four circumstances specifically enumerated in Section 1367(c)(1)-(4) apply: “the claim raises a novel or complex issue of State law,” “the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,” “the district court has dismissed all claims over which it has original jurisdiction,” or “in exceptional circumstances, there are other compelling reasons for declining jurisdiction.” The first three factors in Section 1367(c)(1)–(3) “are rephrased Gibbs factors.”29 The statute offers no guidance on the fourth ground for declining supplemental jurisdiction. The courts have accordingly used a range of factors to define this exception to supplemental jurisdiction,30 some resting principally on Gibbs' language of fairness, economy, comity, or convenience,31   even though these terms are not found in the statute.32 Section 1367(c) applies equally to claims removed from state court.33  

The statute, then, has a framework that alternately uses mandatory commands and discretionary criteria for the exercise of supplemental jurisdiction. Section 1367(a) uses the term “shall,” indicating that once a supplemental claim is determined to be related to the federal claim within the court’s original jurisdiction such that they form the same case or controversy, the court must assert supplemental jurisdiction over the related claim. In contrast, the use of “may” in Section 1367(c) appears to confer on federal courts at least some discretion to decline to hear claims over which supplemental jurisdiction is potentially available. The circuits are split over the question of whether the word “may” in Section 1367(c) broadly incorporates the discretionary Gibbs factors or whether Section 1367(c) more narrowly sets forth the only bases for declining supplemental jurisdiction.

The Seventh Circuit has taken the former approach,34 followed by the First, Third, and D.C. Circuits.35   In Executive Software North America Inc. v. U.S. District Court, in contrast, the Ninth Circuit held that the statutory structure adopted by Congress demonstrated its intent for Section 1367(c) “to provide the exclusive means by which supplemental jurisdiction can be declined by a court...."  "Accordingly, the court stated, "unless a court properly invokes a [S]ection 1367(c) category in exercising its discretion to decline to entertain pendent claims, supplemental jurisdiction must be asserted."36   The Ninth Circuit reasoned that, although subsections (c)(1)–(3) “appear to codify concrete applications of the underlying Gibbs values,” the statute “channels” their application and alters “the nature of the Gibbs discretionary inquiry."37   Once a court identifies one of the “factual predicates” corresponding to one of the Section 1367(c) categories, the exercise of discretion “is informed by whether remanding the pendent state claims comports with the underlying objective of most sensibly accommodat[ing] the values of ‘economy, convenience, fairness, and comity.’"38  

In addition, the Executive Software court found that the “other compelling reasons” referred to in the Section 1367(c)(4) “catchall” subsection referred back to the circumstances identified in subsections (c)(1)–(3), thus requiring the court to balance the Gibbs discretionary values of economy, convenience, fairness, and comity. Nonetheless, the Ninth Circuit also found that the “exceptional circumstances” referred to in subsection (c)(4) meant that the court’s discretion should be employed only when the circumstances were “quite unusual.” This would require a district court to “articulate why the circumstances of the case are exceptional in addition to inquiring whether the balance of the Gibbs values provide compelling reasons for declining jurisdiction in such circumstances."39   The Ninth Circuit’s approach has been either expressly adopted or effectively utilized by the Second, Eighth, and Eleventh Circuits.40 The Fifth Circuit appears to have adopted yet a different approach: balancing the Section 1367(c) statutory conditions against each other and then weighing the Gibbs common law factors.41  

The Supreme Court has not directly acknowledged this controversy.42 The Court in City of Chicago v. International College of Surgeons observed that federal courts “can decline to exercise jurisdiction over pendent claims for a number of valid reasons.”43 “Accordingly,” the Court added, “we have indicated that ‘district courts [should] deal with cases involving pendent claims in the manner that best serves the principles of economy, convenience, fairness, and comity which underlie the pendent jurisdiction doctrine.’”44 The Court flatly stated that “[t]he supplemental jurisdiction statute codifies these principles.”45

The Court has also addressed the applicability, in light of the Eleventh Amendment, of Sections 1367(a) and (d) in the context of claims against non-consenting states. In Raygor v. Regents of the University of Minnesota, the Court noted that Pennhurst had barred the adjudication of pendent state-law claims against non-consenting state defendants in federal court before the enactment of Section 1367.46   The Court held that Section 1367(a) did not alter this principle, “even though nothing in the statute expressly excludes such claims.”47 The Raygor48 Court further held that Section 1367(d), which tolls the period of limitations for supplemental claims while they are pending in federal court and for thirty days after they are dismissed, does not apply to toll the period of limitations for state law claims asserted against non-consenting state defendants and dismissed on Eleventh Amendment grounds.

2.6.C. Tactical ConsiderationsWhether or Not to Raise Supplemental Claims

A threshold question for advocates is whether to join federal and transactionally related state law claims in federal or state court. A recent Kansas Supreme Court Case, Rhoten v. Dickson, suggests caution before reflexively filing in federal court.49 In Rhoten, the plaintiff joined federal and related state law claims in federal court. The trial court granted the defendant's motion for summary judgment on the federal claim and the court dismissed the remaining state law claims pursuant to Section 1367(c). When the plaintiff refiled the state law claims in state court, the defendant moved to dismiss them on grounds of claim preclusion. The Kansas Supreme Court agreed, even though the plaintiff did not split its claims, the dismissal of the state claims was not a determination on the merits and the result left Section 1367(d) a dead letter. Were Rhoten reflective of the prevailing view of state courts,50 it is possible that federal courts would retain jurisdiction over state law claims to avoid the unfair application of claim preclusion, but there is no guarantee of this and advocates should consider state preclusion law when deciding the forum for anticipated litigation involving related federal and state law claims.

One response to this problem would be to file the federal claims in federal court and later file the transactionally related state law claims in state court. Advocates should ordinarily not do so; a judgment entered in one forum will usually preclude the undecided claims.51 One can assert that the state law claims were not joined because the federal court would have exercised its discretion to decline jurisdiction over them. However, most state courts confronted with state law claims that were not joined (or attempted to be joined) in earlier federal court litigation have been unwilling to assume that federal courts would have refused to exercise pendent jurisdiction and have applied claim preclusion to bar litigation of the state law claims in state courts.52 Rather, some state courts have refused to preclude litigation of state claims only when federal courts clearly would have declined to hear them as pendent claims for jurisdictional53 or discretionary reasons.54 When these courts cannot conclude that the federal court would clearly have declined jurisdiction over the state claims, they apply claim preclusion.55

Updated 2013 by Jeffrey S. Gutman