Suppressed v. Suppressed

Filing 84

OPINION AND ORDER. Signed by the Honorable Sara L. Ellis on 4/9/2014:Mailed notice(rj, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES OF AMERICA and the
STATE OF ILLINOIS ex rel. LOKESH
CHANDRA,
Plaintiffs,
v.
SUSHIL A. SHETH, M.D.,
Defendant.

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No. 06 C 2191
Judge Sara L. Ellis

OPINION AND ORDER
After this False Claims Act (“FCA”) case was settled and the relator’s recovery was
distributed to relator’s counsel, Robin Potter & Associates, P.C. (the “Potter Firm”), a dispute
arose between relator Lokesh Chandra (“Chandra”), his brother Rakesh Chandra (“Rakesh”), and
the Potter Firm over the distribution of the recovery amount. The parties dispute the validity and
interpretation of their engagement agreement, which provides that the Potter Firm is entitled to
40% of any recovery and that the remainder is to be split equally between the brothers. The
dispute is inherently one of state contract law. The brothers chose different forums in which to
litigate the dispute, with Rakesh filing a lawsuit in state court and Lokesh filing a motion [48] in
this case asking the Court to disburse the relator recovery and adjudicate attorneys’ fees. Lokesh
then removed Rakesh’s state court suit to federal court. Finding it lacked subject matter
jurisdiction, however, the Court remanded that action to state court. Chandra v. Chandra, No.
13 C 8539, 2014 WL 624596 (N.D. Ill. Feb. 18, 2014).
Lokesh then filed a motion [68] to join Rakesh to this action pursuant to Federal Rule of
Civil Procedure 19(a). At the same time, the Potter Firm and Rakesh filed motions [70, 72] to

dismiss or stay proceedings on the motion to disburse in favor of Rakesh’s state law suit. The
Court need not address these motions, however. Although the Court has supplemental
jurisdiction over Lokesh’s motion to disburse the relator recovery, because the dispute involves
state law issues and no federal claims remain pending, the Court declines to exercise
supplemental jurisdiction over Lokesh’s motion to disburse. Thus, the motions to join and
dismiss are moot.
As the Court has previously stated, it has supplemental jurisdiction over the dispute
among the parties regarding disbursement of the relator’s recovery. See Goyal v. Gas Tech. Inst.,
718 F.3d 713, 717–18 (7th Cir. 2013) (“District courts may exercise supplemental jurisdiction
over disputes between attorneys and clients concerning costs and fees for representation in
matters pending before the district court.”); Baer v. First Options of Chicago, Inc., 72 F.3d 1294,
1299–1301 (7th Cir. 1995). 1 Because the FCA action was never dismissed and the Court retains
jurisdiction over it, the dispute over the relator’s recovery as raised in Lokesh’s motion is
properly before the Court. Cf. Goyal, 718 F.3d at 717 (“Supplemental jurisdiction does not
extend, however, to attorney fee disputes after the case has been dismissed and jurisdiction has
been relinquished.”).
But the fact that the Court has supplemental jurisdiction does not mean that the Court
must exercise that jurisdiction. The Court instead has discretion to relinquish jurisdiction over
state law claims. RWJ Mgmt. Co. v. BP Prods. N. Am., Inc., 672 F.3d 476, 479 (7th Cir. 2012).
It may decline to exercise supplemental jurisdiction 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
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The Seventh Circuit recently noted, however, that its rule that federal courts have supplemental
jurisdiction over attorneys’ fee disputes related to litigation within a federal court’s jurisdiction may
require reconsideration. Oparaeche v. Reddy, --- F. App’x ----, 2014 WL 274541, at *1 (7th Cir. 2014).

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which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling
reasons for declining jurisdiction.” 28 U.S.C. § 1367(c). When all federal claims in a suit are
dismissed, the presumption is that a federal court will relinquish federal jurisdiction over
supplemental state law claims. Al’s Serv. Ctr. v. BP Prods. N. Am., Inc., 599 F.3d 720, 727 (7th
Cir. 2010). The Court should not relinquish jurisdiction if “(1) the state law claims may not be
re-filed because a statute of limitations has expired, (2) substantial judicial resources have been
expended on the state claims, or (3) it is clearly apparent how the state claims are to be decided.”
Dargis v. Sheahan, 526 F.3d 981, 990 (7th Cir. 2008).
Here, the federal claims supporting this Court’s jurisdiction have been settled and a
consent judgment has been entered. No federal claims remain pending and thus § 1367(c)(3)
provides a basis for declining jurisdiction over the motion to disburse. See Mooney v. Nw. Ill.
Reg’l Commuter R.R. Corp., 128 F. Supp. 2d 1178, 1181 (N.D. Ill. 2001) (where federal claim
was settled, § 1367(c)(3) provided basis for declining jurisdiction over state law claim). The
Court need not entertain the parties’ contract dispute simply because the Court has retained
jurisdiction to enforce the settlement agreement, particularly where this dispute does not require
interpretation of the settlement agreement but rather of a separate contract. See Dargis, 526 F.3d
at 991 (finding “no reason” for a district court to entertain state law claims simply because
judgment was entered in the plaintiff’s favor on a federal claim).
Moreover, none of the exceptions apply. This Court has not substantively addressed the
issues raised by Lokesh’s request for disbursal. Nor is this Court familiar with the facts of the
FCA claim, as the case was transferred to it after the consent judgment was entered. See
Mooney, 128 F. Supp. 2d at 1181 (noting that judicial economy would not be served by retaining
jurisdiction over state law claims where a different judge had presided over the case “virtually

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from its inception”). And despite Lokesh’s continued efforts to invoke federal law, the Court is
not persuaded that issues surrounding the proper distribution of the relator recovery will require
an interpretation of federal law. Although the facts of the underlying litigation may have some
bearing on the resolution of the dispute, the ultimate question will be one of state law contract
interpretation, not of the FCA. See S.G. by & through Garcia v. Calica, No. 13 C 5405, 2013
WL 5818457, at *3 (N.D. Ill. Oct. 29, 2013) (reference to federal statutes as part of contractual
dispute did not mean that dispute belonged in federal court); Sentry Ins. A Mut. Co. v. Regal
Ware, Inc., No. 10-CV-168-WMC, 2012 WL 1088585, at *4 (W.D. Wis. Mar. 30, 2012)
(declining to exercise supplemental jurisdiction over unjust enrichment claim where disputed
legal question was distinct from facts of underlying litigation). Further, there is no time bar to
asserting the parties’ claims in state court, as evidenced by the pendency of Rakesh’s declaratory
judgment action in state court. Lokesh can assert any issues not already raised as counterclaims
to Rakesh’s complaint. Finally, it is not clearly apparent how the motion to disburse should be
decided, with further factual development and argument required from all parties.
Thus, the Court declines to exercise supplemental jurisdiction over the dispute regarding
the disbursal of the relator recovery. The pending motions to disburse relator recovery and for
adjudication of attorney’s fees [48], to join [68], and to dismiss or stay [70, 72] are terminated.

Dated: April 9, 2014
SARA L. ELLIS
United States District Judge

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