Allapattah Services, Inc. v. Exxon Corp.

Citation362 F.3d 739
Decision Date15 March 2004
Docket NumberNo. 01-16244.,No. 01-15575.,01-15575.,01-16244.
PartiesALLAPATTAH SERVICES, INCORPORATED, a Florida corporation, Robert Lewis, Inc., a Florida corporation, d.b.a. Trial Exxon, G.G.S.K.1, Inc., a Florida corporation, d.b.a. North Stuart Exxon, G.G.S.K., Inc., et al., Plaintiffs-Appellees, Cross-Appellants, Roy Page, Glebe Road Exxon, Incorporated, Plaintiffs, v. EXXON CORPORATION, a New Jersey corporation, Defendant-Appellant, Cross-Appellee. Allapattah Services, Incorporated, a Florida corporation, Robert Lewis, Inc., a Florida corporation, d.b.a. Northlake Exxon, d.b.a. Trial Exxon, G.G.S.K.1, Inc., a Florida corporation, d.b.a. North Stuart Exxon, G.G.S.K., Inc., et al., Plaintiffs-Appellees, Roy Page, et al., Plaintiffs, v. Exxon Corporation, a New Jersey corporation, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

John F. Stanton, Robert G. Abrams, Robert J. Brookshiser, Jr., Jerrold J. Ganzfried, Howrey, Simon, Arnold & White, LLP, Washington, DC, Larry S. Stewart, Stewart, Tilghman, Fox & Bianchi, P.A., Miami, FL, for Exxon Corp.

Eugene E. Stearns, Mark P. Dikeman, Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A., Jay Solowsky, Pertnoy, Solowsky & Allen, P.A., Miami, FL, for Allapattah Services, Inc. and Robert Lewis, Inc.

James E. Cecchi, Carella, Byrne, Bain, Gilfillan, Cecchi & Stewart, Roseland, NJ, Amicus Curiae for New Jersey, Maryland and Virginia.

Appeals from the United States District Court for the Southern District of Florida (No. 91-00986-CV-ASG), Alan S. Gold, Judge.

ON PETITION FOR REHEARING EN BANC

(Opinion June 11, 2003, 11th Cir., 333 F.3d 1248)

Before EDMONDSON, Chief Judge, and TJOFLAT, BIRCH, BLACK, CARNES, BARKETT and WILSON, Circuit Judges*.

ORDER:

The Court having been polled at the request of one of the members of the Court and a majority of the Circuit Judges who are in regular active service not having voted in favor of it (Rule 35, Federal Rules of Appellate Procedure; Eleventh Circuit Rule 35-5), the Petition for Rehearing En Banc is DENIED.

TJOFLAT, Circuit Judge, dissenting from the Denial of Rehearing En Banc, in which BIRCH, Circuit Judge, joins:

I dissent from this court's decision to let the panel's ruling stand because I disagree with the panel's interpretation of the federal supplemental jurisdiction statute, 28 U.S.C. § 1367.1 This law does not empower federal courts to exercise supplemental jurisdiction over the claims of unnamed class members in diversity-based class actions who fail to satisfy the amount-in-controversy requirement of the federal diversity statute, 28 U.S.C. § 1332.2 The Supreme Court's holding in Zahn v. International Paper Co., 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973), requiring each unnamed class member in a diversity-based class action to meet § 1332's amount-in-controversy requirement in order to invoke a federal court's jurisdiction, remains good law.3 The panel's opinion in this case will have wide-ranging ramifications on a variety of other areas of the law and lead to massive practical problems. See infra Subsections II.C.3, II.C.8.

Regardless of the underlying merits of this dispute, however, this issue is one where careful judicial consideration should not end with a three-judge panel, or even an en banc sitting of a circuit court of appeals, but with the Supreme Court of the United States. In light of its own criteria for granting certiorari, the Court should issue an authoritative determination as to the proper interpretation of § 1367.

I will readily admit that, upon initially considering this subject, one's eyes might glaze over with bored indifference, because it might seem like nothing more than an esoteric point of civil procedure of little interest or practical import to the majority of the nation. Indeed, most Americans have probably never heard of supplemental jurisdiction, and many students have probably graduated law school without having pondered the implications of § 1367's enigmatic language. Upon further reflection, however, it becomes readily apparent that this seemingly obtuse issue raises fundamental questions concerning constitutional law, statutory interpretation, and the integrity of the judicial system that merit the attention and admittedly limited resources of the Supreme Court. See generally Thomas E. Baker, Why We Call the Supreme Court "Supreme": A Case Study on the Importance of Settling the National Law, 4 Green Bag 2d 129 (2001) (arguing that the Supreme Court has a responsibility to resolve the supplemental jurisdiction question).

I. A Brief Introduction to the Supplemental Jurisdiction Controversy

In general, district courts may not entertain a particular type of claim unless Congress has expressly granted them jurisdiction to hear it. Keene Corp. v. United States, 508 U.S. 200, 207, 113 S.Ct. 2035, 2040, 124 L.Ed.2d 118 ("Congress has the constitutional authority to define the jurisdiction of the lower federal courts."). Over the years, however, the Supreme Court has created certain exceptions to this general rule. For example, 28 U.S.C. § 1331 permits district courts to hear cases brought under federal statutes ("federal question" cases). In 1966, the Court held that a district court hearing a federal question case may exercise "pendent jurisdiction" over state-law claims brought by the same plaintiff against the same defendant as long as they arise from the same "common nucleus of operative facts." United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966) (establishing the modern test for pendent jurisdiction); see also Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978) (holding that where a plaintiff brings federal-law claims against a defendant, the plaintiff may not pursue state-law claims against a third-party defendant interpled by the original defendant, even if such claims arise from the same transaction or event that gave rise to the underlying federal claims against the original defendant).

Similarly, the Supreme Court has held that a district court may exercise "ancillary jurisdiction" over "claims by a defending party haled into court against his will [against the plaintiff or third parties], or by another person whose rights might be irretrievably lost unless he could assert them in an ongoing action in a federal court." Id. at 376, 98 S.Ct. at 2404.

The Supreme Court has never expressly tied either of these doctrines — "pendent jurisdiction" and "ancillary jurisdiction" — to a particular statute; rather, these doctrines evolved solely as a matter of common law within the judiciary. When Congress enacted the Judicial Improvements Act of 1990, however, it attempted to combine and codify these doctrines under the rubric of "supplemental jurisdiction." See Judicial Improvements Act of 1990, § 310(a), Pub.L. 101-650, Dec. 1, 1990, 104 Stat. 5089, codified at 28 U.S.C. § 1367. One important question that has arisen is how this statute applies in diversity-based class action suits, and the degree to which it overrules certain Supreme Court precedents.

Before the enactment of § 1367, the Supreme Court had held that all plaintiffs in diversity-based class actions, including unnamed class members, had to meet the amount-in-controversy requirement set forth in the federal diversity statute, 28 U.S.C. § 1332, for diversity-based suits.4 Zahn v. Int'l Paper Co., 414 U.S. 291, 301, 94 S.Ct. 505, 512, 38 L.Ed.2d 511 (1973) ("Each plaintiff in a Rule 23(b)(3) class action must satisfy the jurisdictional amount, and any plaintiff who does not must be dismissed from the case...."). While the Zahn Court never expressly mentioned supplemental jurisdiction (or its antecedents, pendent and ancillary jurisdiction), the ruling's language was broad enough to preclude district courts from exercising any sort of jurisdiction over such plaintiffs. See id. at 301, 94 S.Ct. at 511 ("[A]ny plaintiff without the jurisdictional amount must be dismissed from the case, even though others allege jurisdictionally sufficient claims."). Put simply, a district court could not entertain claims by class members who did not allege at least the jurisdictional amount in damages (now $75,000), even if the named plaintiffs overcame this hurdle.

The Court based this conclusion on two considerations. First, it believed that the opposite holding would wreak havoc on the judiciary's workload. See, e.g., Snyder v. Harris, 394 U.S. 332, 340, 89 S.Ct. 1053, 1059, 22 L.Ed.2d 319 (1969) ("The expansion of the federal caseload could be most noticeable in class actions brought on the basis of diversity of citizenship.... To allow aggregation of claims where only one member of the entire class is of diverse citizenship could transfer into the federal courts numerous local controversies involving exclusively questions of state law."). Second, the Court recognized that Congress had relied upon this interpretation in continuously re-enacting § 1332's amount-in-controversy language. Zahn, 414 U.S. at 301, 94 S.Ct. at 512 ("[W]e have no good reason to disagree with ... the historic construction of the jurisdictional statutes, left undisturbed by Congress over these many years."); Snyder, 394 U.S. at 339, 89 S.Ct. at 1058 (refusing to depart from "a judicial interpretation of congressional language that has stood for more than a century and a half," particularly where "Congress has consistently re-enacted its prior statutory language ... in the face of a settled interpretation of that language").

The main issue in the case at hand, Allapattah Serv. v. Exxon Corp., 333 F.3d 1248, 1255 (11th Cir.2003), is whether 28 U.S.C. § 1367 codifies or overrules Zahn's approach to class actions. Put another way, does § 1367 allow district courts to exercise supplemental jurisdiction over unnamed plaintiffs in diversity-based class actions who fail to satisfy § 1332's amount-in-controversy requirement?5

The panel answered...

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