Clarke et al v. Tannin, Inc. et al

Filing 153

ORDER dismissing case without prejudice to plaintiff's ability to re-file their claims for fraud and breach of fiduciary duty in the appropriate state court. Signed by District Judge William H. Steele on 4/2/2018. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
KENDALL CLARKE, et al.,
Plaintiffs,
v.
TANNIN, INC., et al.,
Defendants.

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) CIVIL ACTION 16-0572-WS-M
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ORDER

The complaint asserts both state and federal causes of action. Because the parties
were not completely diverse when suit was filed, the Court does not possess diversity
jurisdiction. (Doc. 1 at 1-4). The complaint asserts subject matter jurisdiction based
solely on the basis of federal question jurisdiction pursuant to 28 U.S.C. § 1331, with the
state claims falling within the Court’s supplemental jurisdiction. (Id. at 4). The Court
has by separate order resolved the defendants’ motions for summary judgment. The
Court granted the motions as to the only federal claim but denied the motions in part as to
the state claims. (Doc. 145 at 35).
In general, “[i]n 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.”
28 U.S.C. § 1367(a). “The district courts may decline to exercise supplemental
jurisdiction over a claim under subsection (a) if … the district court has dismissed all
claims over which it has original jurisdiction.” 28 U.S.C. § 1367(c). Because the Court
has dismissed all claims over which it has original jurisdiction, the Court has discretion to
dismiss the remaining state claims under Section 1367(c). The Court afforded the parties
an opportunity to file briefs addressing how the Court should exercise its discretion,

(Doc. 146), and they have done so. (Docs. 151, 152). The plaintiffs favor dismissal with
leave to re-file in state court, (Doc. 152), while the defendants favor the Court’s retention
of supplemental jurisdiction. (Doc. 151).
In exercising its discretion under Section 1367(c), “the court should take into
account concerns of comity, judicial economy, convenience, fairness, and the like.”
Cook ex rel. Estate of Tessier v. Sheriff of Monroe County, 402 F.3d 1092, 1123 (11th Cir.
2005) (internal quotes omitted); accord Estate of Amergi ex rel. Amergi v. Palestinian
Authority, 611 F.3d 1350, 1366 (11th Cir. 2010). However, “[w]e have encouraged
district courts to dismiss any remaining state claims when, as here, the federal claims
have been dismissed prior to trial.” Raney v. Allstate Insurance Co., 370 F.3d 1086, 1089
(11th Cir. 2004). This preference exists because, “in the usual case in which all federallaw claims are eliminated before trial, the balance of factors to be considered under the
pendent jurisdiction doctrine — judicial economy, convenience, fairness, and comity —
will point toward declining to exercise jurisdiction over the remaining state-law claims.”
Carnegie-Mellon University v. Cohill, 484 U.S. 343, 350 n.7 (1988).
The preference for declining supplemental jurisdiction is particularly strong when
the federal claims “have dropped out of the lawsuit in its early stages.” Cohill, 484 U.S.
at 350. The preference, however, also applies when, as here, the federal claims are
removed on motion for summary judgment. See, e.g., Michael Linet, Inc. v. Village of
Wellington, 408 F.3d 757, 763 (11th Cir. 2005); Murphy v. Florida Keys Electric
Cooperative Association, 329 F.3d 1311, 1320 (11th Cir. 2003); Graham v. State Farm
Mutual Insurance Co., 193 F.3d 1274, 1282 (11th Cir. 1999) (“If no federal claim
survives summary judgment, the court sees no reason why the other claims should not be
dismissed or remanded pursuant to 28 U.S.C. § 1367(c)(3).”).1 In such a situation,

1

Other Eleventh Circuit cases affirming a trial court’s decision to decline supplemental
jurisdiction after dismissing all federal claims on motion for summary judgment include, without
limitation, Betts v. Hall, 679 Fed. Appx. 810, 814 (11th Cir. 2017); Okonkwo v. Callins Law
Firm, LLC, 668 Fed. Appx. 875, 876 (11th Cir. 2016); Trigo v. City of Doral, 663 Fed. Appx.
871, 875 (11th Cir. 2016); Estate of Owens v. GEO Group, Inc., 660 Fed. Appx. 763, 775-77
(11th Cir. 2016); Amerijet International, Inc. v. Miami-Dade County, 627 Fed. Appx. 744, 754
2

considerations of comity and fairness among the parties continue to favor dismissal. See
United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966) (“Needless decisions of state
law should be avoided as a matter of comity and to promote justice between the parties,
by procuring for them a surer-footed reading of applicable law. Certainly, if the federal
claims are dismissed before trial, ... the state claims should be dismissed as well.”). Thus,
retention of jurisdiction will be indicated only if considerations of judicial economy and
convenience favor such retention and do so with sufficient force to outweigh the
continuing pull of comity and fairness towards dismissal.2
Impacts on judicial economy are measured in order to “support the conservation of
judicial energy and avoid multiplicity in litigation” or “substantial duplication of effort.”
Parker v. Scrap Metal Processors, Inc., 468 F.3d 733, 746 (11th Cir. 2006) (internal
quotes omitted). The Court discerns no appreciable negative impact on judicial economy
by dismissing the remaining state law claims for re-filing in state court. The defendants
suggest it would be grossly inefficient for the litigation as to those claims to recommence in state court, (Doc. 151 at 2-3), but the Court cannot agree. The defendants
appear to assume that a new lawsuit would engender new discovery and motion practice,
but they offer no reason to believe they could not persuade a state judge that the plaintiffs
should not get two bites at that apple. They suggest the two remaining claims involve no
novel or difficult state law questions, but the Court’s order on motion for summary
judgment makes clear that the defendants press a welter of legal defenses to the fraud
n.7 (11th Cir. 2015); Maughon v. City of Covington, 505 Fed. Appx. 818, 823 (11th Cir. 2013);
Finn v. Haddock, 459 Fed. Appx. 833, 838 (11th Cir. 2012); Handi-Van Inc. v. Broward County,
445 Fed. Appx. 165, 170 (11th Cir. 2011); Dockens v. DeKalb County School System, 441 Fed.
Appx. 704, 709 (11th Cir. 2011); Linares v. Armour Correctional Health Services, Inc., 385 Fed.
Appx. 926, 929 (11th Cir. 2010); Dukes v. Georgia, 212 Fed. Appx. 916, 917 (11th Cir. 2006);
Arnold v. Tuskegee University, 212 Fed. Appx. 803, 811 (11th Cir. 2006); Lingo v. City of
Albany, 195 Fed. Appx. 891, 894 (11th Cir. 2006); Austin v. City of Montgomery, 196 Fed. Appx.
747, 755 (11th Cir. 2006); and Ingram v. School Board, 167 Fed. Appx. 107, 108-09 (11th Cir.
2006).
2

The defendants rely on a case from the Second Circuit that they believe offers an easier
path forward, (Doc. 151 at 2), but the Court is bound by the rulings of the Supreme Court and
Eleventh Circuit.
3

claim that admit of no easy solution and are thus apt for resolution by a state judge
schooled in such matters.
As for convenience, the defendants are a resident of Baldwin County and a
domestic corporation with its principal place of business in Baldwin County. (Doc. 1 at
3; Doc. 31 at 2; Doc. 34 at 1). Both are represented by counsel in Mobile. It is difficult
to imagine how state litigation in Baldwin County could be meaningfully inconvenient to
the defendants; certainly they identify no source of inconvenience.
The Court has repeatedly engaged in a similar analysis after all federal claims
were dismissed on motion for summary judgment and decided not to exercise
supplemental jurisdiction over remaining state claims in the absence of diversity
jurisdiction.3 This case offers no more compelling an argument for exercising
supplemental jurisdiction than did those.
In summary, after weighing the relevant factors as identified and expounded upon
by controlling authority, the Court concludes that it should exercise its discretion not to
retain supplemental jurisdiction. In such a case, the proper course is to “dismis[s] [the
state claims] without prejudice so that the claims may be refiled in the appropriate state
court.” Crosby v. Paulk, 187 F.3d 1339, 1352 (11th Cir. 1999).
For the reasons set forth above, the Court exercises its discretion in favor of not
retaining supplemental jurisdiction over the plaintiffs’ remaining state law claims. This
action is dismissed without prejudice to the plaintiffs’ ability to re-file their claims for
fraud and breach of fiduciary duty in the appropriate state court.4
DONE and ORDERED this 2nd day of April, 2018.
s/ WILLIAM H. STEELE
UNITED STATES DISTRICT JUDGE
3

E.g., Dunavant v. Sirote and Permutt, P.C., 2014 WL 2885483 (S.D. Ala. 2014); Dyas
v. City of Fairhope, 2011 WL 941496 (S.D. Ala. 2011); Amazing Grace Bed & Breakfast v.
Blackmun, 2011 WL 777892 (S.D. Ala. 2011); Young v. City of Gulf Shores, 2009 WL 920302
(S.D. Ala. 2009).
4

Because the Court granted the defendants summary judgment as to plaintiff Johnson’s
fraud claim, (Doc. 145 at 35), he of course may not re-file that claim in state court.
4