Federal Court Has Discretion to Exercise Supplemental Jurisdiction
You may remember Paul Ratchford, the former president of The Greenbrier, who was terminated in 2007 after less than one year on the job. He filed suit against CSX Corporation, the resort’s then-owner and some individual officers, and alleged several causes of action, including a violation of the West Virginia Wage Payment and Collection Act because CSX allegedly failed to pay him his severance of $700,000 and the value of 1,200 shares of CSX stock within 72 hours of his termination, as the statute requires. I wrote about Ratchford's termination and lawsuit in this post.
Last year, the Circuit Court of Greenbrier County granted CSX’s motion to dismiss and denied Ratchford’s motion for partial summary judgment on the grounds that under the Wage Payment and Collection Act, Ratchford’s severance and stock were not “wages” or “fringe benefits” that would entitle Ratchford to treble damages.
Ratchford appealed the dismissal to the Supreme Court of Appeals of West Virginia. Here are his petition for appeal and CSX’s response in opposition. On October 30, 2008, the Supreme Court refused his petition for appeal 4-0 with Justice Brent Benjamin disqualified.
That left Ratchford’s claims for breach of contract, wrongful discharge, tortious interference with a contractual relationship, intentional infliction of emotional distress, California labor statute violations, and fraud.
Ratchford sued at least two West Virginia residents, which destroyed diversity, but CSX Hotels, Inc.’ s bankruptcy in March created federal jurisdiction under 28 U.S.C. § 1334. In April, CSX filed this notice of removal.
Due to CSX Hotels’ sale of The Greenbrier to Jim Justice, the bankruptcy court dismissed CSX’s bankruptcy petition as moot. Ratchford claimed that without the bankruptcy proceeding, the federal court was deprived of jurisdiction to adjudicate his claims.
Although United States District Court Judge Thomas E. Johnston remanded Ratchford’s civil action, his order points out that a remand in these circumstances is not automatic:
Plaintiff [Ratchford] contends that in the absence of a bankruptcy debtor as a party to the action, the Court is “divest[ed]” of jurisdiction to adjudicate the state law claims… This assertion is not necessarily accurate. It is well-established that once a court obtains jurisdiction over a matter, jurisdiction “remains … even if subsequent events eliminate the original basis for federal jurisdiction.” Chapman v. Currie Motors, 65 F.3d 78, 81 (7th Cir. 1995). The Court can continue to exercise jurisdiction over this case, but it does not necessarily follow that it should.
(Emphasis added.)
The Court explained that it had discretion to continue to exercise supplemental jurisdiction over Ratchford’s remaining claims under 28 U.S.C. § 1367(a), abstain from exercising its supplemental jurisdiction under 28 U.S.C. § 1367(c)(3), or remand the action under 28 U.S.C. § 1452(b).
The Court determined that remand under § 1452(b) was appropriate because “the equities weight heavily in favor of remand[.]” Among the factors the Court looked at were the relative lengths of time the case had been in state court versus federal court, the fact that all of Ratchford’s claims are grounded in state law, and the fact that the defendants did not oppose the remand.
So remember that just because the original basis for federal jurisdiction disappears, that does not necessarily mean that the court loses jurisdiction. And for a case where the court elected to exercise its supplemental jurisdiction, take a look at former Chief Judge Charles H. Haden, II's opinion in Greiner v. Columbia Transmission Corp., 41 F.Supp.2d 625 (S.D.W.Va. 1999), which Judge Johnston cited in his order.
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To the right is a picture of the north entrance of 