964 F.3d 369
5th Cir.2020Background
- SJ Associated Pathologists (SJAP), an in‑network pathology provider, contracted with Cigna under a 2002 In‑Network Agreement.
- In 2019 Cigna audited paid claims, flagged SJAP for alleged "pass‑through" billing, auto‑denied future claims, and demanded repayment of ~$4.63M; Cigna later terminated the In‑Network Agreement.
- SJAP sued Cigna in Texas state court on state statutory and common‑law claims; the state court granted a temporary injunction in SJAP’s favor.
- SJAP amended to add Insight Defendants and federal securities claims against them; the Insight Defendants removed to federal court based on those federal claims.
- SJAP later voluntarily dismissed the federal securities claims; the federal district court nonetheless addressed Cigna’s motion to compel arbitration, granted it, and dismissed the case.
- The Fifth Circuit vacated the district court’s arbitration judgment and instructed remand to state court because the district court lacked supplemental jurisdiction over SJAP’s state‑law claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Supplemental jurisdiction over SJAP’s state‑law claims after removal | SJAP: state claims unrelated to the federal securities claims; remand required once federal claims dismissed | Defendants: federal claim made the case removable; district court could exercise jurisdiction over related state claims | Held: No supplemental jurisdiction—state claims did not derive from a common nucleus of operative fact; district court was required to sever and remand under §1441(c)(2) |
| District court’s authority to revisit state court interlocutory orders pending appeal | SJAP: federal court should not reexamine state interlocutory rulings while appeals pending | Cigna: federal court could consider and potentially modify state orders after removal | Held: Court did not reach this question because lack of supplemental jurisdiction was dispositive |
| Motion to compel arbitration in federal court after removal | SJAP: arbitration motion should not be decided in federal court lacking jurisdiction; claims belong in state court | Cigna: arbitration clause mandatory; federal court may compel arbitration | Held: District court erred by ruling on arbitration; its arbitration judgment vacated and case remanded to state court |
Key Cases Cited
- United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966) (establishes "common nucleus of operative fact" test for supplemental jurisdiction)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) (removal doctrine and when federal question jurisdiction makes a case removable)
- Mendoza v. Murphy, 532 F.3d 342 (5th Cir. 2008) (applies Gibbs standard in Fifth Circuit supplemental jurisdiction analysis)
- Venable v. Louisiana Workers' Comp. Corp., 740 F.3d 937 (5th Cir. 2013) (discusses limits of federal jurisdiction to adjudicate related state claims)
- Prolite Bldg. Supply, LLC v. MW Manufacturers, Inc., 891 F.3d 256 (7th Cir. 2018) (§1441(c)(2) requires severance and remand of state claims not within supplemental jurisdiction)