Opinion
IP 02-0538-C-B/S
January 28, 2003.
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR REMAND
This matter comes before the Court on Plaintiff's Motion for Remand. Plaintiff Boone County Utilities, LLC ("BCU") contends that Counts I and II of this action should be remanded to the Boone County Superior Court under 28 U.S.C. § 1441(c) and 1367(c) and that this Court should abstain from considering Count III of the Amended Complaint pending disposition of Counts I and II, the state law claims. BCU asserts that remand is appropriate because Count II contains a novel question of state law and the state law claims in Count I and II substantially predominate over the federal question in Count III. For the reasons stated below, BCU's Motion for Remand is GRANTED IN PART and DENIED IN PART.
Procedural Background
BCU commenced this action in the Boone County Superior Court, alleging in a two-count complaint that Defendants, the Board of Commissioners of Boone County, and Commissioners Georgia Baldauf, Wendy Brant, and Byron Loveless, in their official capacities (collectively "Commissioners"), violated Indiana's Open Door Law (Ind. Code § 5-14-1.5 et. seq.) and the statutory record-keeping requirements imposed on local governments by state law (Ind. Code § 36-2-2-11). Specifically, BCU alleged that in November 2001 the Commissioners voted to authorize the filing of a petition before the Indiana Utility Regulatory Commission ("IURC") seeking to revoke BCU's "Certificate of Territorial Authority" for its sewage disposal business. Count I of the Complaint alleged that the Board's decision to initiate the IURC proceeding was made in secret, in violation of the Indiana Open Door Law. Count II alleged that the Boone County Auditor's failure to keep minutes of certain Board meetings leading up to the filing of the revocation petition before the IURC violated the record-keeping requirements under Indiana Code § 36-2-2-11. Both Counts I and II related exclusively to state law. As for remedies, Count I sought injunctive relief, asking the Court to declare void the Defendants' action to commence the Petition, to require Defendants to withdraw the Petition, and to order Defendants to comply with the Open Door Law in the future. Count II requested an order prohibiting Defendants from failing to enlist the Auditor to keep minutes of their meetings rather than keeping their own minutes, and mandating that Defendants instruct the Boone County Auditor to record all such meetings.
In March 2002, BCU amended its Complaint to add Count III, a claim arising under 42 U.S.C. § 1983. Count III relied on the same factual allegations as Count I, but requested, in addition to the injunctive relief sought in Count I, compensatory damages based on the alleged deprivation of federally protected rights under the due process clause of the Fourteenth Amendment to the United States Constitution. (Pl.'s Br. in Supp. of Mot. to Remand at 6; Am. Compl. ¶ 34). BCU maintains that one of the bases for the § 1983 claim is the deprivation of a property right, which is determined by state law. (Pl.'s Br. in Supp. of Mot. to Remand at 6). In addition, BCU alleges that it "has been denied its right under the First Amendment to freely petition and be heard," as incorporated by the Fourteenth Amendment. (Id. at 6 n. 3, citing Medina v. City of East Chicago, Ind., 184 F. Supp.2d 805, 825 (N.D.Ind. 2001)).
Following BCU's filing of the Amended Complaint, Defendants filed a Notice of Removal to this Court, citing federal jurisdiction over Count III based on 28 U.S.C. § 1441. The entire case was subsequently removed to the Southern District of Indiana. BCU filed this Motion to Remand on May 24, 2002.
Legal Analysis
Pursuant to 28 U.S.C. § 1441(a), a case may only be removed from state to federal court if the case might have been brought originally in federal court. Section 1441(a) states that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States. . . ." Federal subject matter jurisdiction may be based on either diversity of citizenship or a federal question. Brewer v. State Farm Mut. Auto. Co., 101 F. Supp.2d 737, 739 (S.D.Ind. 2000). A defect in the removal procedure or a lack of subject matter jurisdiction requires remand of the action to state court. 28 U.S.C. § 1447(c). Furthermore, the removal statutes must be strictly construed, with all doubts resolved in favor of remand. Brewer, 101 F. Supp.2d at 739; see also Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993); People of State of Ill. v. Kerr-McGee Chem. Corp., 677 F.2d 571, 576 (7th Cir. 1982).
Because the parties to the present action are not of diverse citizenship, our jurisdiction over this action depends entirely on whether a federal question exists. Federal "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331; see also Speciale v. Seybold, 147 F.3d 612, 614 (7th Cir. 1998). The presence or absence of federal question jurisdiction is governed by the "well-pleaded complaint rule," which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). "This rule makes the plaintiff the master of the complaint, allowing the plaintiff to avoid federal jurisdiction by pleading only state law claims." Kittle v. Prudential Ins. Co. of America, 102 F. Supp.2d 1029, 1032 (S.D.Ind. 2000).
The parties do not dispute that Count III, stating a claim under § 1983, presents a federal question. However, BCU contends that Counts I and II of this action should be severed and remanded to the Boone County Superior Court under 28 U.S.C. § 1367(c) and 1441(c), and that the Court should abstain from further consideration of Count III until disposition of the state court claims.
1. Remand Under 28 U.S.C. § 1441(c)
The removal statute, 28 U.S.C. § 1441(c) provides, in relevant part:
Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion may remand all matters in which State law predominates.
Section 1441(c) gives this Court discretion to remand the state law claims found in Counts I and II to state court, if Count III, the federal claim, is "separate and independent" from Counts I and II.
However, if "there is a single wrong to the 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)." American Fire Cas. Co. v. Finn, 341 U.S. 6, 14 (1951) (superseded by statute on other grounds); see also Lewis v. Louisville Nashville R.R. Co., 758 F.2d 219, 221 (7th Cir. 1985). A cause of action is not comprised of facts, but "of the unlawful violation of a right which the facts show." Id., 341 U.S. at 13. "The use of different counts to plead different legal theories or multiple theories of recovery does not automatically make those counts separate and independent." Borough of West Mifflin v. Lancaster, 45 F.3d 780, 786 (3rd Cir. 1995).
To determine whether multiple counts actually relate to a single wrong, the court must look to the plaintiff's pleading, which controls. Finn, 341 U.S. at 14 (citing Pullman Co. v. Jenkins, 305 U.S. 534, 538 (1939). In Finn, the Court illustrated, in the context of a claim for copyright infringement, how multiple claims can arise from the violation of a single right:
The bill alleges the violation of a single right, namely, the right to protection of the copyrighted play. And it is this violation which constitutes the cause of action. Indeed, the claims of infringement and unfair competition so precisely rest upon identical facts as to be little more than the equivalent of different epithets to characterize the same group of circumstances. The primary relief sought is an injunction to put an end to an essentially single wrong, however differently characterized, not to enjoin distinct wrongs constituting the basis for independent causes of action.
Id. at 13 n. 11, (quoting Hurn v. Oursler, 289 U.S. 238, 246 (1933)).
Counts I and III of the Amended Complaint are based on the timing of and the circumstances surrounding the meeting at which the Commissioners authorized the filing of a petition before the IURC. Count III does not allege any additional fact not asserted in Count I. All three counts reference the violation of a single right, namely the right to due process under the Fourteenth Amendment. The alleged violation of this right underlies the entire cause of action. Indeed, the alleged violations of Indiana's Open Door Law and recording statute rest upon such similar facts to the federal claim as to be little more than the equivalent of "different epithets to characterize the same group of circumstances." Hurn, 289 U.S. at 246. The primary relief sought is designed "to put an end to an essentially single wrong, however differently characterized, not to remedy distinct wrongs constituting the basis for independent causes of action." Id.
Because Counts I and II are not separate and independent from Count III, the § 1983 claim over which this court has original jurisdiction, the state law claims in Counts I and II lie within the supplemental jurisdiction of this court and were appropriately removed under § 1441(a).
2. Remand Under 28 U.S.C. § 1367
Plaintiff argues that, even if this court may exercise supplemental jurisdiction over Counts I and II, remand is proper under 28 U.S.C. § 1367 because 1) Count II of the Amended Complaint alleges a novel issue of state law, and 2) the state law claims substantially predominate over the § 1983 claim.
The statute to which Plaintiff refers provides, in relevant part:
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 have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.
As stated earlier, we have original jurisdiction over the Section 1983 claim in Count III. The accompanying state law claims in Counts I and II fall within our supplemental jurisdiction if they are "so related to [the federal] claims . . . that they form part of the same case or controversy." 28 U.S.C. § 1367(a); Groce v. Eli Lilly Co., 193 F.3d 496, 500 (7th Cir. 1999). The supplemental jurisdictional statute codifies the principle that the federal courts' original jurisdiction over federal questions carries with it jurisdiction over state law claims that derive from a common nucleus of operative fact such that the relationship between [the federal] claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional case. Groce, 193 F.3d at 500 (internal quotations omitted).
In this case, the state law claims in Counts I and II of the Amended Complaint fall within our supplemental jurisdiction because they and the federal claim share a common nucleus of operative facts, namely, the allegedly improper circumstances of the meeting at which the Commissioners authorized the filing of a petition before the IURC. However, "the fact that § 1367(a) authorizes a district court to exercise jurisdiction over state claims `does not mean that the jurisdiction must be exercised in all cases.'" Groce, 193 F.3d at 500-01 (quoting City of Chicago v. Int'l College of Surgeons, 522 U.S. 156, 172 (1997)). The terms of § 1367 make clear that a district court may in its discretion accept or refuse jurisdiction over state law claims. The statute lists the circumstances in which a district court may decline to exercise its jurisdiction:
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 over 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 other compelling reasons for declining jurisdiction.
Plaintiff asserts that the factors expressed in § 1367(c)(1) and § 1367(c)(2) weigh in favor of remand.
a. Existence of Novel Issue of State Law
Section 1367(c)(1) permits the district court to decline supplemental jurisdiction and to remand a "claim [that] raises a novel or complex issue of State law." Novel issues of Indiana law are presumably best left to the state courts, particularly if a government agency is an actor. See Myers v. County of Lake, Ind., 30 F.3d 847, 849 (7th Cir. 1994) (nevertheless affirming Magistrate Judge's decision to exercise supplemental jurisdiction to decide whether Indiana would recognize intentional efforts to commit suicide as defenses to the tort of negligently failing to prevent suicide attempts when jurisdiction was uncontested by the parties). "Federal courts are not the appropriate forum for venturing beyond the frontiers marked out by state courts themselves." Roe v. City of Milwaukee, 26 F. Supp.2d 1119, 1123 (E.D.Wis. 1998) (citing Shields Enterprises, Inc. v. First Chicago Corp., 975 F.2d 1290, 1298 (7th Cir. 1992); Gust K. Newburg Const. Co. v. E.H. Crump Co., 818 F.2d 1363, 1368 (7th Cir. 1987)). A federal court's role "in exercising supplemental jurisdiction over state claims is to mirror or predict, on the basis of existing state precedent, if any, how a state court would rule on such claims." Id.
For example, in Hernandez v. Kiley, a court in the Northern District of Illinois found that Count II of the complaint, a pendent claim premised on the failure of defendants to comply with a specific statutory command of the state's mental health code, presented a novel issue of state law and, thus, that remand to state court was appropriate. The court noted an absence of state case law implying a private right of action for damages under the particular code provision cited by the plaintiff and concluded that "it is highly unlikely the particular provision identified by plaintiff could support one." 1987 WL 12194, at *2 (N.D.Ill. 1987). The court reasoned that remand was appropriate because "[this] is precisely the type of novel issue of state law that should first be resolved by a state court. This court should not be the first to imply causes of action in nonsubstantive provisions of a State's mental health code. Nor should this court be the first to say that the legislature did not intend such a remedy." Id. at *3.
Similarly, in Roe v. City of Milwaukee, 26 F. Supp.2d 1119, 1123 (E.D.Wis. 1998), the court determined that remand was appropriate because the complaint raised a novel issue of state law. At issue was whether the right to privacy afforded by a Wisconsin statute to the plaintiff, a pretrial detainee, was violated when a sign regarding the plaintiff's HIV status was posted temporarily on a prison cell door. Wisconsin courts had not addressed whether that state statute applied to that type of disclosure. The court remanded the state law claims pursuant to § 1367(c)(1) and retained jurisdiction over the § 1983 claim, concluding that any "inefficiency in the existence of parallel proceedings is . . . outweighed by the interest the Wisconsin courts should have to decide important state statutory and constitutional issues of first impression." Id. at 1124.
While these prior decisions by other district courts do not mandate a particular conclusion in this case, we find their reasoning instructive. Here, BCU contends that passing on Count II of the Amended Complaint would require this court to construe an Indiana state law as a matter of first impression. Count II alleges that the Commissioners violated Indiana Code § 36-2-2-11 by keeping minutes of their "work sessions" themselves, when the law requires that the Boone County Auditor, "record in writing" all meetings of the Commissioners. BCU asserts "that the statute prohibits the Boone Commissioners from doing indirectly that which is prohibited directly — holding meetings without the county auditor present as an independent record keeper as required by statute to `record in writing the official proceedings of the executive.'" (Pl.'s Br. in Supp. of Mot. to Remand at 3-4). Defendants characterize this issue as whether Defendants can be sued for the auditor's failure to perform. The plain language of Indiana Code § 36-2-2-11 does not appear to require any action by or impose any duty on the Commissioners. Defendants contend that the absence of case law addressing this question does not make it novel; the statute simply does not apply to this category of disputes.
Indiana Code § 36-2-2-11(a): "The county auditor shall attend all meetings of, and record in writing the official proceedings of, the executive."
As in the cases of Hernandez and City of Milwaukee, here neither the parties nor the Court has identified case law interpreting the reporting requirement of § 36-2-2-11. We are of the view that this federal court should not be the first court to recognize or refuse the suggested cause of action under this state code provision. It is better left to an Indiana court to determine whether such a cause of action arises here. Concerns of federalism and comity outweigh any potential inefficiency due to the possibility of parallel proceedings. City of Milwaukee, 27 F. Supp. at 1124. Therefore, we REMAND Count II of BCU's Amended Complaint to Boone County Superior Court.
b. Determination Whether State Law Predominates
BCU next argues that the state law claims in Counts I and II substantially predominate over the § 1983 claim in Count III. We note that 28 U.S.C. § 1367(c)(2) allows the district court to remand a state law claim that "substantially predominates over the claim or claims that the district court has original jurisdiction over." Stromberg Metal Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928, 932 (7th Cir. 1996). Because we have determined that Count II should be remanded under § 1367(c)(1), only Count I will be considered here.
In Harper Plastics, Inc. v. Amoco Chemicals Corp., 657 F.2d 939, 946 (7th Cir. 1981), the Seventh Circuit recognized the following factors in determining whether a state law claim substantially predominates over a federal cause of action: whether "the state issues predominate . . . in terms of proof, of the scope of the issues raised, or the comprehensiveness of the remedy sought." Id. at 946 (citing United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1966)).
The factors in this case do not weigh decisively in either direction. Here, Defendants assert that the state and federal claims are based on the same conduct (that which is alleged in Count I), involve the same evidentiary presentation at trial, and require a single measure of damages. (Defs.' Resp. to Pl.'s Mot. to Remand at 7). In this case, the scope of the relief is greater under the federal claim, as it is the only claim seeking compensatory damages. (Id. at 8). BCU responds that the state law claims and the § 1983 claim would require very different evidence, including evidence related to "the stigma, injury to business reputation, trade relations and goodwill of BCU's business operations resulting from the Commissioners' acts or omissions." Pl.'s Reply Br. in Supp. of Mot. to Remand at 5.
The Northern District of Illinois faced a similar issue under § 1367(c)(2) in Palivos v. City of Chicago, 901 F. Supp. 271 (N.D.Ill. 1995). There, a three-count complaint alleged that defendants "arbitrarily refused to issue plaintiff a building permit, although he has complied with all of the relevant requirements of the City of Chicago Building Code and received the approval of the City of Chicago Building Department." Id. at 272. Counts I and II were state law claims seeking a writ of mandamus to direct issuance of a building permit, and declaratory judgment that applicant was entitled to construct and renovate property in question. Id. Count III stated a claim under 42 U.S.C. § 1983 for deprivation of due process with regard to the permit issuance. Id. The court in Palivos pointed out that "[p]roperty interests . . . are not created by the Constitution. Rather they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law. . . ." Id. (quoting Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972)). The court found remand appropriate under § 1367(c)(2).
[T]he focus of plaintiff's complaint is the City's refusal to issue a building permit; Palivos maintains that once the various requirements have been satisfied, the City is without discretion to refuse to issue the requested permit. Whether this is so is purely a matter of state (or rather, local) law, and is therefore more properly entrusted to state courts . . . Furthermore, resolution of these primary issues will have a significant impact on Palivos' § 1983 claim. . . . [I]t appears that he is alleging that he is being deprived of his property interest in a permit to which he is entitled, contrary to law. However, whether Palivos actually has a property interest in the permit . . . for constitutional due process purposes is an issue of state law. . . . In other words, the viability of Palivos' § 1983 claim . . . is largely dependent upon the resolution of Counts I and II. In light of these facts it is clear that the supplemental claims (i.e., Counts I and II) "substantially predominate " over the federal claim. Accordingly, we decline to exercise supplemental jurisdiction over Counts I and II, and remand those counts to the Circuit Court of Cook County.
Palivos, 901 F. Supp. at 273 (internal citations omitted).
Similarly, in Harrison v. Board of Education, Maine Township High School District Number 207, 1996 WL 182559, at *1 (N.D.Ill. 1996), the plaintiff alleged that her dismissal after four consecutive school terms of employment violated the tenure provisions of the Illinois School Code. She later amended her one-count complaint to include an age discrimination claim under the Age Discrimination in Employment Act ("ADEA") and an Equal Protection claim under the Fourteenth Amendment and 42 U.S.C. § 1983. Id. The court found that the state law issues raised in Count I did not predominate over the federal claims raised in Counts II and III:
Regardless of whether Harrison's rights under the School Code were violated, if she was terminated because of her age then the ADEA and § 1983 were implicated. . . . . Harrison's equal protection and ADEA claims do not depend on a resolution of Count I, but can be decided without regard to the merits of her state law claim. Accordingly, we deny Harrison's motion to remand Count I to the Circuit Court of Cook County based on § 1367(c).
Id. at *2.
Again, we find instructive the principles applied by other district courts of this circuit. Here, although the Amended Complaint and BCU's brief are vague on this point, it appears that BCU's Fourteenth Amendment claim is premised on the deprivation of a property interest in its "Certificate of Territorial Authority" ("CTA") for its sewage disposal business. Unlike the court in Palivos, we do not face a claim challenging the ultimate grant or denial of the CTA under state law. Counts I and II, in contrast to Count III, do not require (or create) a property interest. The situation we face bears greater similarity to that in Harrison. The determination regarding the alleged violation of the Indiana's Open Door Law, although relevant, does not necessarily dispose of BCU's Fourteenth Amendment claim. The crux of BCU's claim is a violation of due process, and this federal claim predominates over the state law claims. Therefore, we DENY Plaintiff's Motion to Remand its Count I claim.
3. Abstention
BCU finally contends that this Court should abstain from considering the matters over which it has retained jurisdiction until the state court has decided the remanded issues, pursuant to the Pullman abstention doctrine. Railroad Commission of Tex. v. Pullman Co., 312 U.S. 496 (1941). The doctrine of abstention is "an extraordinary and narrow exception of a District Court to adjudicate a controversy properly before it" and may be invoked only in those "exceptional circumstances" in which surrendering jurisdiction "would clearly serve an important countervailing interest." Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996); Int'l College of Surgeons v. City of Chicago, 153 F.3d 356, 360 (7th Cir. 1998) (citing Allegheny County v. Frank Mashuda Co., 360 U.S. 185, 188-89 (1959)). When a court abstains under the Pullman doctrine, it seeks to avoid collision between the federal courts and state legislatures by refraining from unnecessary constitutional adjudication. Roe v. City of Milwaukee, 26 F. Supp.2d 1119, 1124 (E.D.Wis. 1998) (citing Int'l College of Surgeons, 153 F.3d at 360). The Seventh Circuit has laid out two requirements for abstention under Pullman: (1) some risk that the statute will be found unconstitutional or other wise unlawful unless narrowed by the state court; and (2) some reasonable chance that it can be narrowed through interpretation. Mazanec v. North Judson-San Pierre School Corp., 763 F.2d 845, 847 (7th Cir. 1985).
Based on these guiding principles, we find abstention unnecessary in this case. BCU is not challenging the constitutionality or validity of a state statute. Instead, BCU is arguing that the state statute provides another avenue for liability on the part of the defendants. City of Milwaukee, 26 F. Supp. at 1125. Thus the Seventh Circuit's first requirement for abstaining under Pullman is not satisfied in this case. Moreover, the state court's determination of the defendant's liability, if any, under Indiana Code § 36-2-2-11 is not central to the resolution of the federal claim before this court, nor can it be said, with any degree of certainty, that resolution of the state law statutory claim would obviate the need for this Court to address the federal constitutional claims. For these reasons, we find that abstention pursuant to the Pullman doctrine is not appropriate in this case.
Conclusion
Plaintiff moved for remand on Counts I and II of the Amended Complaint and requested that this Court abstain from further consideration of Count III pending disposition of the state law claims. BCU's Amended Complaint includes a claim under 42 U.S.C. § 1983, over which the federal court has jurisdiction under 28 U.S.C. § 1331, plus two state law claims arising out of the same events and circumstances, over which the federal court has supplemental jurisdiction under 28 U.S.C. § 1367. For the reasons explained in detail above, we find that 1) this action was properly removed from state court under 28 U.S.C. § 1441(a); 2) Count II is properly remanded to Boone County Court because it raises a novel issue of state law; 3) this Court retains jurisdiction over Count I based on supplemental jurisdiction arising out of its original jurisdiction over Count III; and 4) we need not abstain from deciding Counts I and III pending the state court disposition of Count II. Accordingly, BCU's Motion for Remand is GRANTED IN PART and DENIED IN PART.
It is so ORDERED this day of January, 2003.