Energy Management Services, LLC v. City of Alexandria, 2014 U.S. App. LEXIS 469

EMS contract with the City provided EMS would receive 20% of any recovery in the City v. CLECO litigation.
City sued CLECO in Louisiana state court for overcharging; settlement and confidential district court proceedings followed; district court retained jurisdiction over post-settlement matters for fees and protective orders.
In 2010 EMS filed a separate state-court breach-of-contract action against the City regarding EMS’s compensation and documentation; City removed to federal court asserting supplemental jurisdiction.
The district court denied remand, invoking supplemental/ancillary jurisdiction over the related City v. CLECO matters.
EMS appealed; this court held that removal was improper because the federal court lacked original jurisdiction over EMS’s state-law claim, and the post-settlement matters could not supply jurisdiction; the case was remanded to state court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether EMS’s state-law contract claim could be removed under § 1441.	EMS argues removal was improper because no original jurisdiction exists for its contract claims.	City contends related federal proceedings provide supplemental/anchor basis for removal.	Removal improper; no original jurisdiction and § 1367 cannot supply it.
Whether City v. CLECO anchors could support § 1367 supplemental jurisdiction over EMS.	EMS claims the City v. CLECO proceedings—settlement and post-settlement matters—anchor EMS’s action.	City asserts ongoing interest in related matters suffices for supplemental jurisdiction.	No; anchor claims from dismissed/settled City v. CLECO do not sustain jurisdiction over EMS.
Whether the district court’s retention of post-settlement matters could support removal under § 1441/§ 1367.	EMS argues continued jurisdiction over fee disputes could anchor EMS’s action.	City relies on the district court’s post-settlement jurisdiction to preserve related claims.	No; post-settlement matters cannot supply original jurisdiction for EMS’s separate state-law action.
Whether Baccus v. Parrish provides an exception to the original-jurisdiction requirement here.	EMS contends Baccus allows removal when seeking to attack a federal settlement provision.	City argues Baccus is inapplicable given EMS’s independent contract dispute.	Inapplicable; EMS’s claims are not attacking a settlement provision and remain non-removable.

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (S. Ct. 1994) (jurisdiction and removal strictly construed; lack of jurisdiction mandates remand)
Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28 (S. Ct. 2002) (removal requires original jurisdiction; § 1367 cannot create original jurisdiction)
Peacock v. Thomas, 516 U.S. 349 (S. Ct. 1996) (discusses supplemental/ancillary jurisdiction and anchor claims)
Halmekangas v. State Farm Fire & Cas. Co., 603 F.3d 290 (5th Cir. 2010) (limits of supplemental/ancillary jurisdiction for removal when no original jurisdiction exists)
Rivet v. Regions Bank of Louisiana, 522 U.S. 470 (S. Ct. 1998) (limits of Baccus-type exceptions post-Rivet)
Baccus v. Parrish, 45 F.3d 958 (5th Cir. 1995) (initially allowed some removal where federal settlement could be attacked; later tempered by Rivet)
Fabricius v. Freeman, 466 F.2d 689 (7th Cir. 1972) (related case law: pending federal action alone does not justify removal)
Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28 (S. Ct. 2002) (see above)
Motion Control Corp. v. SICK, Inc., 354 F.3d 702 (8th Cir. 2003) (removal may not be based on related federal actions for supplemental jurisdiction)
Shearn v. Charter Twp. of Bloomfield, 100 F.3d 451 (6th Cir. 1996) (recognizes limits of supplemental jurisdiction when no original jurisdiction exists)
Mine Workers v. Gibbs, 383 U.S. 715 (S. Ct. 1966) (nucleus of operative fact doctrine for relationship between federal and state claims)