Guzzino v. FeltermanGuzzino v. Felterman
Dеan Witter Reynolds, Inc. appeals the trial court’s remand order issued under the discretionary provision of
BACKGROUND
This case arose from the illegal conduct of a Dean Witter stockbroker, Jody M. Felterman. Felterman conducted a Pon-zi
Plaintiffs were grouрed according to the names of their attorneys: the Baldwin and Haspel plaintiffs; the Stansbury plaintiffs; the Wright plaintiffs; the Versaggi plaintiffs; and the Rice plaintiffs. Dean Witter successfully removed all cases to federal court on the basis of federal question jurisdiction. Plaintiffs’ complaints, other than those filed by the Stansbury plaintiffs, alleged RICO
ANALYSIS
At the threshold we pause to consider the challenge to our appellate jurisdiction. Our pause need only be brief. Plaintiffs suggest that the trial court should have remanded under the authority of
Alternatively, plaintiffs and third-party defendants submit that the remand order fell within the court’s discretionary powers.
(a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall havе supplemental jurisdiction over all other claims that are so related to the claims in the action within such original jurisdiction that they form part of the same case or controversy under Article Ill of the United States Constitution ....
(c)The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if—
(1) the claim raises a novel or complex issue of State law;
(2) the claim substantially predominates ovеr the claim or claims over which the district court has original jurisdiction;
(3) the district court has dismissed all claims over which it has original jurisdiction; or
(4) in exceptional circumstances there are оther compelling reasons for declining jurisdiction.7
The Supreme Court in United Mine Workers v. Gibbs
lies in considerations of judicial economy, convenience and fairness to litigants; if these are not present a federal court should hesitate to exercise jurisdiction over state claims, even though bound to apply state law to them. Needless dеcisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicаble law. Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well.9
The Gibbs test is a flexible one, under which courts should cоnduct a fact-specific
The trial court noted the general rule favoring dismissal of state claims when the federal сlaims to which they are pendent are dismissed.
Dean Witter vigorously argues that the trial court exceeded its discretionary authority in remanding the cases. It insists that the intensive, protracted pretrial preparation in federal court brings this case within the rubric of Newport Ltd. v. Sears, Roebuck and Co.,
In evaluating Dean Witter’s arguments — which are not wholly lacking in persuasive force — we are mindful of the wide discretion vested in the trial court to ordеr a remand of state claims on the heels of a dismissal of federal claims.
Deаn Witter suggests that those seeking a remand are engaged in forum manipulation. We are not persuaded. The trial court considered and rejected this contention, noting:
The plaintiffs get to рick their forum and pick the claims they want to make unless they are blatantly forum shopping. I don’t think that we are looking at that. I think they would have loved to have stayed here and fought their RICO and [fedеral] securities claims; but once they lost them, then they [sic] would like to go back.
Similarly, to the extent that the status of the state cases — which impeded settlement, according to the trial court — factored into the decision to remand, we are persuaded that Dean Witter suffered no prejudice. The trial court cited various reasons for the remand, and this “extra-record” observation was only one of many. We have no hesitation whatever in accepting the inference that the pendency of a large number of related cases would have a chilling effect on the consummation of a settlement which did not include those cases.
Finally, our review of the total record, in light of the briefs and oral arguments of counsel, convinces us that the trial сourt did not abuse its discretion in entering the remand order. The order, however, is too embracive. The remand order is based on the court’s belief that only state law claims remained in any of the remanded actions. That understanding is incorrect. The actions involving the Versaggi plaintiffs have outstanding federal claims against Dean Witter. We must therefore vacate and remand the order of the trial court as it relates to the actions by the Versaggi plaintiffs. On remand the district court will be free to consider anew a remand request should the federal claims issue be resolved so as to permit such. In all other respects the remand order appealed is affirmed.
AFFIRMED IN PART; VACATED AND REMANDED IN PART.
Notes
. The term was coined from the last name of the swindler in Cunningham v. Brown,
. The third-party defendants are: First National Bank in St. Mary Parish, merged into Whitney National Bank; Patterson State Bank; and President and Chief Executive Officer of Patterson State Bank, Peter J. Lipari.
. Racketeer Influenced and Corrupt Organizations Act,
. There exists some confusion as to whether the correct number is nine or seven. As the discrepancy does not impact our analysis of the issues, we will simply assume (as the parties do) that the correct number is nine.
. It appears that Felterman may now be im-pecunius.
. Burks v. Amerada Hess Corp.,
.
.
. Id. 'at 726,
. See Carnegie-Mellon Univ. v. Cohill,
. See Parker & Parsley Petroleum Co. v. Dresser Indus.,
.
. Robertson v. The Neuromedical Center,