Contemporary Services v. Universal City Studios

• Decision Date: 02 March 1987
• Docket Number: No. CV 86-7120 WJR.,CV 86-7120 WJR.
• Citation: 655 F. Supp. 885
• Court: U.S. District Court — Central District of California
• Parties: CONTEMPORARY SERVICES CORPORATION, Damon Zumwalt, and Peter Kranske, Plaintiffs, v. UNIVERSAL CITY STUDIOS, INC., Ned West, Inc., Event Management Services, Robert Geddes, Eugene Felling, Steven Redfearn, Cory Meredith, William Parsons, and Does I through 70, Defendants.

655 F. Supp. 885

CONTEMPORARY SERVICES CORPORATION, Damon Zumwalt, and Peter Kranske, Plaintiffs, v. UNIVERSAL CITY STUDIOS, INC., Ned West, Inc., Event Management Services, Robert Geddes, Eugene Felling, Steven Redfearn, Cory Meredith, William Parsons, and Does I through 70, Defendants.

No. CV 86-7120 WJR.

United States District Court, C.D. California.

March 2, 1987.

J. Michael Hennigan, Jeanne E. Irving, Hennigan & Mercer, Los Angeles, Cal., for defendant Robert E. Geddes.

Maren Christensen, Maggie Heim, Rosenfeld, Meyer & Susman, Beverly Hills, Cal., for defendants Universal City Studios, Inc., dba Universal Amphitheatre, and Eugene Felling.

David J. Gudino, Iverson, Yoakum, Papiano & Hatch, Los Angeles, Cal., for defendants and cross-defendants Steven Redfearn and Ned-West, Inc., dba Pacific Amphitheatre.

James M. Gansinger, Gansinger & Hinshaw, Los Angeles, Cal., for defendants Event Management Services, Cory Meredith and William Parsons.

Gordon E. Bosserman, Malissa Hathaway McKeith, Kenneth L. Wilton, MacDonald, Halsted & Laybourne, Los Angeles, Cal., for plaintiffs.

MEMORANDUM DECISION AND ORDER OF PARTIAL REMAND

REA, District Judge.

The issue presented in this case is whether to remand some or all of plaintiffs' eleven claims to the state court from which defendants removed them. The plaintiff brought ten of these claims under state law and one under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961, 1964. The Court finds that it must retain jurisdiction over the RICO claim, it must remand some of the state law claims because they are asserted against "pendent parties," and it may in its discretion remand the remaining pendent state claims. In the interests of justice and to promote judicial economy, the Court exercises this discretion to remand these claims.

I. SUBSTANTIVE BACKGROUND

The plaintiffs Contemporary Services Corporation, Damon Zumwalt and Peter Kranske provide security services at major Southern California sports and concert arenas. Plaintiffs provided service for defendants Universal Studios, Inc., d/b/a Universal Amphitheatre ("Universal Amphitheatre") and Ned West, Inc., d/b/a Pacific Amphitheatre ("Pacific Amphitheatre") until these defendants allegedly breached their contracts in 1984. Plaintiffs allege that defendant Event Management Services (EMS) induced Universal and Pacific Amphitheatres to breach their contracts with plaintiffs and hire EMS to provide security instead. Plaintiffs are suing the managers of Pacific and Universal Amphitheatres, Steven Redfearn and Eugene Felling for allegedly convincing their respective corporations to replace plaintiffs with EMS. Plaintiffs claim that EMS and its owners, defendants William Parsons and Cory Meredith, offered bribes and kickbacks to Universal and Pacific Amphitheatres and their managers and threatened to prevent certain musical acts from performing at the Amphitheatres if EMS was not hired. EMS and its owners allegedly used their contacts with defendant Robert Geddes, the owner of Avalon Attractions (a large concert promotion firm), to make credible their threats to conduce musical acts to boycott the Amphitheatres.

Plaintiffs further allege that the various defendants have used EMS to implement a lucrative ticket scalping operation that requires the participation of the security service ordinarily responsible for policing against such illegal activities. Plaintiffs contend that they were displaced at Pacific and Universal Amphitheatres and at other sports and concert arenas by EMS because they would not participate in the unlawful scalping scheme.

II. PROCEDURAL HISTORY

Plaintiffs filed this action in California Superior Court for Los Angeles County in January, 1984. On October 14, 1986, the state court allowed the plaintiffs to amend their complaint to add additional parties and causes of action, including a federal RICO claim. In the First Amended Complaint, plaintiffs have the following claims: breach of contract against Universal and Pacific Amphitheatres; inducing breach of contract, interference with prospective economic advantage, and violations of California Business and Professions Code sections 17200-17208 (unfair competition) and sections 16700-16761 (unlawful restraint of trade and unlawful attempt to monopolize) against Robert Geddes, Eugene Felling, Steve Redfearn, Cory Meredith, William Parsons, and Event Management Services (EMS); libel and trade libel against Mr. Felling and Mr. Redfearn; and RICO claims against defendants Geddes, Felling, Redfearn, Parsons, and Meredith. Thus, plaintiffs plead a federal RICO claim against five defendants but have no federal claim against the remaining three defendants.

On October 30, 1986, defendant Geddes removed the entire action to this Court, claiming federal jurisdiction due to plaintiffs' RICO claim. On December 8, 1986, the plaintiffs moved to remand the entire action. The Court heard argument on the remand motion on January 5, 1987. At this hearing, the Court requested further briefs on whether partial remand would be appropriate and took the matter under submission. The Court has now received and reviewed these supplemental briefs.

III. THE STATUTORY BASIS FOR REMOVAL

Initially, determining whether to remand some or all of plaintiffs' claims requires analysis of whether they were properly removed under 28 U.S.C. sections 1441(a), (b) or (c). Section 1441(a) provides that any civil action may be removed to federal district court if a district court would have had original jurisdiction over the action.¹ Section 1441(b) modifies 1441(a) by limiting when diversity of citizenship cases are removable.² Section 1441(c) authorizes removal of an entire case when "a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of action."³

Section 1441(c) was enacted as part of the 1948 revision of the Judicial Code. Professors C. Wright, A. Miller and E. Cooper note that, "The stated purpose of the change in language effected by the 1948 revision was the simplification of removal and the advancement of the administration of justice. Unfortunately, it is difficult to conclude that these purposes have been achieved." 14A Federal Practice and Procedure § 3724, at 359-60 (1985). Indeed, in the case now before the Court, section 1441(c) creates ambiguity about whether removal of an action with federal and factually related state claims is proper. On the one hand, sections 1441(a) and (b) imply that a case containing federal and factually related state claims may be removed in its entirety because a district court could have heard the entire action had it been originally filed in the district court. (The factually related state claims would be within the district court's pendent jurisdiction, a point discussed in more detail below). On the other hand, section 1441(c) can be interpreted as allowing removal of an action with mixed federal and state claims only when the federal claim is "separate and independent" from the state claims. In other words, section 1441(c) arguably precludes removal of actions with federal and factually related state claims.

A. Interpretations of Section 1441(c) Blocking Removal of Pendent State Claims

Two recent district court decisions within the Ninth Circuit have held that section 1441(c) blocks removal of otherwise removable claims when they are not "separate and independent" from nonremovable claims in the complaint. Kinsey v. Nestor Exploration Ltd.—1981A, 604 F.Supp. 1365 (E.D.Wash.1985); Skaw v. Lady Pacific, Inc., 577 F.Supp. 2 (D.Alaska 1983).

In Kinsey, plaintiffs filed RICO and state law tort claims in state court, and the defendants removed to federal court. The district court held that removal was improper because the state court lacked jurisdiction to hear a federal RICO claim and an action may not be removed from a court lacking jurisdiction. In the alternative, the court held that section 1441(c) barred removal of any part of the case because the RICO claim was not "separate and independent" from the state claims as defined by American Fire & Casualty Co. v. Finn, 341 U.S. 6, 14, 71 S.Ct. 534, 540, 95 L.Ed. 702 (1951). Kinsey, 604 F.Supp. at 1370-71. In Finn, the Supreme Court defined a section 1441(c) "separate and independent claim" as one arising from different facts than the remaining claims in an action:

Where there is a single wrong to plaintiff, for which relief is sought, arising from an interlocked series of transactions, there is no separate and independent claim or cause of action under § 1441(c).

341 U.S. 6, 14, 71 S.Ct. 534, 540.

The Kinsey approach of interpreting Finn to allow removal only when federal and state claims do not arise from an interlocked series of transactions precludes removal of an action containing pendent state claims. This is apparent by comparing Finn's definition of a "separate and independent claim" with the Supreme Court's definition of a pendent state claim in United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). In Gibbs, the Supreme Court defined pendent claims as those that "arise out of a common nucleus of operative facts" with related federal claims. Id. Thus, the Supreme Court has placed section 1441(c) separate and independent claims and pendent state claims into mutually exclusive categories.

In Skaw, the second case alluded to earlier that relies on section 1441(c) to deny removal, the district court was faced with two federal claims, the first under the Jones Act, 46 U.S.C. § 688, and the second for maintenance and cure for injuries received during employment as a seaman.⁴ The plaintiff's Jones Act claim could not be removed because of the "savings to suitors" clause of 28 U.S.C. section 1333(1). The district court held that section 1441(c) blocked the defendant from removing either...