Ricci v. Salzman, No. 19-3035

• Decision Date: 01 October 2020
• Docket Number: No. 19-3035
• Citation: 976 F.3d 768
• Parties: Randal RICCI, Plaintiff-Appellant, v. Darrin SALZMAN, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

976 F.3d 768

Randal RICCI, Plaintiff-Appellant,

v.Darrin SALZMAN, et al., Defendants-Appellees.

No. 19-3035

United States Court of Appeals, Seventh Circuit.

Argued September 17, 2020

Decided October 1, 2020

Rehearing and Rehearing En Banc Denied November 30, 2020

Joel A. Flaxman, Attorney, Kenneth N. Flaxman, Attorney, Law Office of Kenneth N. Flaxman P.C., Chicago, IL, for Plaintiff-Appellant.

Scott D. Heffron, Attorney, Office of the United States Attorney, Chicago, IL, Defendants-Appellees.

Before Kanne and Hamilton, Circuit Judges.^*

Kanne, Circuit Judge.

This case calls for us to determine whether the district court properly dismissed the plaintiff's amended complaint without prejudice under the doctrine of derivative jurisdiction even though that complaint invoked federal jurisdiction. We affirm the district court because the derivative jurisdiction doctrine barred it from exercising jurisdiction over the case and dismissal without prejudice was the appropriate result.

I. BACKGROUND

Randal Ricci was awarded custody of his minor daughter in state-court divorce proceedings.¹ Ricci's daughter receives supplemental security income from the Social Security Administration ("SSA") and requires a "representative payee" to receive and manage her benefits. For nearly three years, Ricci served as representative payee. In August 2018, however, Defendants—SSA employees—removed Ricci as representative payee because they determined that he was not his daughter's legal guardian.

Ricci filed a pro se action in state court requesting that the court require Defendants to reinstate him as representative payee. Defendants, as federal employees, removed the case to federal court under the federal officer removal statute, 28 U.S.C. § 1442. Then, Defendants moved to dismiss the action under the doctrine of derivative jurisdiction. They argued that the state court had no jurisdiction over the case when it was originally filed, and therefore, the federal court could not hear the case after it was removed. Ricci, this time with counsel, amended his complaint to invoke federal jurisdiction under 28 U.S.C. § 1361, which vests federal courts with jurisdiction over mandamus actions against federal employees. Defendants again moved to dismiss under the derivative jurisdiction doctrine. Ricci responded that his amended complaint cured any procedural defect in removal caused by the doctrine.

The district court agreed with Defendants, granted their motion, and dismissed the amended complaint without prejudice under the derivative jurisdiction doctrine. The court also instructed Ricci to initiate a new federal action if he wished to pursue his claims. Ricci filed this appeal instead.

II. ANALYSIS

The district court's dismissal of Ricci's amended complaint under the derivative jurisdiction doctrine presents a question of law that we review de novo . See Slaney v. Int'l Amateur Athletic Fed'n , 244 F.3d 580, 588 (7th Cir. 2001) ; Lopez v. Sentrillon Corp. , 749 F.3d 347, 350 (5th Cir. 2014) (reviewing dismissal under the derivative jurisdiction doctrine de novo ).

Ricci makes two arguments on appeal. First, he argues that the state court did have jurisdiction over his initial action, so the derivative jurisdiction doctrine poses no bar to his case continuing in federal court. Second, Ricci argues that even if the state court did not have jurisdiction over his initial action, this court has twice signaled that a plaintiff may cure a defect in removal created by the derivative jurisdiction doctrine simply by filing an amended complaint that invokes federal jurisdiction. See Hammer v. U.S. Dep't of Health & Human Servs. , 905 F.3d 517, 535 (7th Cir. 2018) ; Rodas v. Seidlin , 656 F.3d 610, 629 (7th Cir. 2011). And because Ricci's amended complaint invoked federal mandamus jurisdiction, he argues that it should not have been dismissed.

Ricci's first argument can be dealt with fairly quickly because he never made it in the district court. In response to Defendants’ motion to dismiss, Ricci argued only that our Rodas and Hammer decisions allowed him to avoid the derivative jurisdiction bar because his amended complaint invoked federal mandamus jurisdiction. He did not argue that the state court had jurisdiction in the first place. In fact, Ricci explained to this court in his reply brief that he "did not argue about the state[ ] court's jurisdiction because it was not material to his theory of the case." That, he argues, was "neither accident nor neglect and is not a forfeiture." But it is waiver; Ricci made "a deliberate decision not to present a ground for relief that might be available in the law." United States v. Cook , 406 F.3d 485, 487 (7th Cir. 2005). Because Ricci did not make his state-court-jurisdiction argument in the district court "and instead raised it for the first time in [his] appellate brief, [he has] waived it for purposes of this appeal." Henry v. Hulett , 969 F.3d 769, 786 (7th Cir. 2020) (en banc).²

Ricci also contends that an appellant may raise on appeal any issue decided by the district court. But this argument similarly falls victim to Ricci's own briefing, which stresses that the district court entered dismissal "without discussing whether the state court had jurisdiction over any portion of the controversy" and "[w]ithout resolving this question." We decline to address an issue that Ricci concedes was not fully argued, discussed, or resolved in the district court. We therefore assume without deciding that the state court did not have subject-matter jurisdiction over Ricci's claims for injunctive relief against these federal officials. Cf. 42 U.S.C. § 405(g) (judicial review under the Social Security Act is available only in U.S. district courts).

Moving on to Ricci's second argument on appeal: that the district court should not have dismissed his amended complaint without prejudice under the derivative jurisdiction doctrine. Traditionally stated, this doctrine provides that "if the state court lacks jurisdiction over the subject matter or the parties, the federal court acquires none upon removal, even though the federal court would have had jurisdiction if the suit had originated there." Arizona v. Manypenny , 451 U.S. 232, 242 n.17, 101 S.Ct. 1657, 68 L.Ed.2d 58 (1981) (citing, among other cases, Minnesota v. United States , 305 U.S. 382, 389, 59 S.Ct. 292, 83 L.Ed. 235 (1939) ). We have since clarified that this doctrine "is best understood as a procedural bar to the exercise of federal judicial power. That is, the doctrine creates a procedural defect in removal, but is not an essential ingredient to federal subject matter jurisdiction." Rodas , 656 F.3d at 619. As such, it can be forfeited if not timely raised before the trial court. Id. at 623, 629. Moreover, "[t]he doctrine provides a background rule against which all of the removal statutes operate; it applies unless abrogated." Id. at 618.

Congress has abrogated the doctrine with respect to the general removal statute, 28 U.S.C. § 1441(f) ("The court to which a civil action is removed under this section is not precluded from hearing and determining any claim in such civil action because the State court from which such civil action is removed did not have jurisdiction over that claim." (emphasis added)). But it has not abrogated the doctrine with respect to the federal officer removal statute at issue here, 28 U.S.C. § 1442. Rodas , 656 F.3d at 616 ("[T]he doctrine of derivative jurisdiction has been abrogated in the general removal statute ... but not the federal officer removal statute."); see also Lopez , 749 F.3d at 350 ("[A]ny ambiguity about the endurance of the derivative action doctrine as applied to removals under § 1442 was eliminated when Congress amended § 1441 in 2002 to add the words ‘removed under this section.’ "). On that much, the parties seem to agree.

Ricci argues that we have nevertheless approved a procedure that permits a plaintiff to bypass the derivative jurisdiction bar by filing an amended complaint that properly invokes federal jurisdiction. He points to language from Rodas and Hammer . We think Ricci puts too much stock in these cases.

It's true that in Rodas we stated "that any defect in removal created by the doctrine of derivative jurisdiction would be cured if [the plaintiff] simply filed an amended complaint." 656 F.3d at 629. But as the district court recognized, Rodas only held that because the doctrine is not strictly jurisdictional, it can be waived or forfeited and must be asserted before a ruling on the merits. Id. at 623. The Rodas defendants did not raise their derivative jurisdiction argument until after judgment was entered, so it was forfeited and the court was not barred from exercising its jurisdiction. Id. at 614, 623–24. Accordingly, courts in this circuit have widely recognized that the " Rodas exception" applies "only in the context of a case where the dispute has proceeded to a disposition on the merits." Pelto v. Office of Reg'l Chief Counsel , No. 11-CV-815-WMC, 2013 WL 5295678, at *3 (W.D. Wis. Sept. 19, 2013) ; accord Brown v. Hosp. "A" , No. 2:17-CV-125, 2017 WL 5989717, at *2 (N.D. Ind. Dec. 4, 2017) ; Abu-Humos v. First Merit Bank , No. 15-CV-6961, 2015 WL 7710374, at *1 n.1 (N.D. Ill. Nov. 30, 2015). Here, Defendants asserted the doctrine in their very first responsive pleading in federal court, and no substantive issues have been decided. So Rodas is inapposite.

Ricci then points to similar language in Hammer . There, after the case was removed from state court, the Department of Health and Human Services ("HHS") timely moved for dismissal under the derivative jurisdiction doctrine, and the plaintiff moved to remand the case back to state court. Hammer , 905 F.3d at 524. The district court remanded the case for lack of removal jurisdiction under § 1442, but we concluded on appeal that the district court did have removal jurisdiction and "should not have remanded this case to state court." Id. at 535.

We then...