The Korner Klub v. Gallatin County et al

Filing 53

ORDER denying 9 Motion to Stay. ORDERED: 1. Pla Counts 1, 2 and 3 and Dfts Counterclaims 1, 2, 3 and 4 are SEVERED from this action. 2. Pla Counts 1, 2 and 3 and Dfts Counterclaims Counts 1, 2, 3 and 4 are REMANDED to the Montana 18th Judicial District Court, Gallatin County. Pla Motion to Stay is DENIED as moot, without prejudice. 4. Pla Count 4 remains within the original jurisdiction of this Court. Signed by Judge Sam E Haddon on 12/28/2017. (ELL)

FILED
DEC 2 8 2017
Clerk, U.S. Distrid Court
District Of Montana

Helena

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BUTTE DIVISION
THE KORNER KLUB, INC., a
Montana corporation,
No. CV-17-36-BU-SEH
Plaintiff,
vs.

ORDER

GALLATIN CITY-COUNTY
BOARD OF HEAL TH and MATT
KELLEY, as Health Officer for the
Gallatin City-County Health
Department
Defendants.

On June 21, 2017, Defendants filed a Notice of Removal in this Court. 1 An
Amended Notice of Removal was filed on September 20, 2017. 2

1

Doc. I.

2

Doc. 24.

On November 1, 2017, Plaintiff filed an Amended Complaint, 3 asserting the
following claims: 1) Count I, Appeal of the Gallatin City-County Health Officer's
Refusal to Validate the Korner Klub's 2017 Retail Food Permit; 4 2) Count II,
Appeal of Gallatin City-County Board of Health's Decision to Not Overturn
Health Officer's Refusal to Validate Retail Food Permit; 5 3) Count III, Defendants
Refusal to Validate the Retail Food Permit should be Stayed Pending a Final
Decision by this Court; 6 and 4) Count IV, The Refusal by Defendant Kelley to
Validate Plaintiffs Retail Food License is a Deprivation of Constitutional Rights. 7
On November 11, 2017, Defendant Gallatin City-County Board of Health
filed an Answer to Second Amended Complaint & Counterclaim, 8 asserting the
following counterclaims: 1) Count I, Claim for Declaratory Relief; 9 2) Count II,
Claim for Permanent Injunctive Relief; 10 3) Count III, Claim for Civil Penalty; 11

3

Doc. 38

4

Doc. 38 at 14.

'Doc. 38at17.
6

Doc. 38 at 17.

7

Doc. 38 at 18.

8

Doc. 41.

9

Doc. 41 at 20-22.

10

Doc. 41 at 22-23.

11

Doc. 41at23.

and 4) Count IV, Claim for Costs & Expenses. 12
On December 20, Plaintiff filed a Notice of Non Objection to Decline
Supplemental Jurisdiction. 13 Defendants filed a Jurisdictional Brief, 14 opposing
decline of supplemental jurisdiction.
Discussion
I.

The Court has original jurisdiction over Plaintiff's Count IV.
28 U.S.C.A. § 1331 provides:
The district courts shall have original jurisdiction of all
civil actions arising under the Constitution, laws, or
treaties of the United States. 15
Here, Count IV "incorporates the foregoing allegations as if set forth in full"

and makes the claim that "[b ]y refusing to validate its 2017 Retail Food Permit,
Defendant Kelley has deprived Plaintiff of its constitutional property and due
process rights, under the Fifth and Fourteenth Amendments of the United States
Constitution ... under color of state law, in violation of Title 42, United States
Code, Section 1983, et seq." 16 The Court has original jurisdiction over Count IV.

12

Doc. 41 at 24.

13

Doc. 50.

14

Doc. 51.

"28 U.S.C. § 1331.
16

Doc. 38 at 18.

II.

The Court declines to exercise supplemental jurisdiction over Plaintiffs'
Counts I, II, and III and Defendants' Counts I, II, III, and IV.

28 U.S.C. § 1367 provides:
(a) 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 ...
(c) 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,
(4) in exceptional circumstances, there are other
compelling reasons for declining jurisdiction. 17

In City of Chicago v. International College ofSurgeons, the United States
Supreme Court determined that a federal district court may exercise supplemental
jurisdiction over state claims, even where "a case contain[ s] claims that local
administrative action violates federal law, but also contain[ s] state law claims for
on-the-record review of the administrative findings," 18 Here, Plaintiffs' Counts I,
17

28 U.S.C. § 1367.

18

City of Chicago v. Int'/ Coll. a/Surgeons, 522 U.S. 156, 163 (l 997)(emphasis in

original)

II, and III, are so related to Count IV that they form part of the same case or
controversy, within the meaning of28 U.S.C. § 1367(a). Likewise, Defendants'
Counterclaims, Counts I, II, III, and IV, form part of the same case or controversy
as Plaintiffs Count IV.
However, in City of Chicago, the United States Supreme Court also stated
that the applicability of supplemental jurisdiction to such claims "does not mean
that the jurisdiction must be exercised in all cases," pointing to the principle that
supplemental jurisdiction is "a doctrine of discretion, not of plaintiffs right," and
the Court stated that declining supplemental jurisdiction under one of the factors
in 28 U.S.C. § 1367(c) may be appropriate in such cases. 19
In Executive Software N Am., Inc. v. United States Dist. Court, the Ninth
Circuit Court of Appeals established that, in order to properly decline
supplemental jurisdiction over a claim, a district court must determine that one of
the statutory justifications from 28 U.S.C. § 1367(c) applies.' 0
A.

Plaintiffs' Counts I, II, and III and Defendants' Counts I, II, III,
and IV, substantially predominate over Plaintiff's Count IV in
terms of the scope of the issues raised.

Under 28 U.S.C. § 1367(c)(2), discretion to exercise supplemental
jurisdiction over a claim is proper where "the claim substantially predominates
19

United Mine Workers ofAmerica v. Gibbs, 522 U.S. at 172-74.

20

24 F.3d 1545, 1556-57, 1560 (9th Cir. 1994).

over the claim or claims over which the district court has original jurisdiction."21 A
district court may decline supplemental jurisdiction over a state claim if state
issues substantially predominate in terms of proof, scope of issues raised, or the
comprehensiveness of the remedy sought. 22 The district court may decline
jurisdiction where "a state claim constitutes the real body of the case, to which the
federal claim is only an appendage. " 23 A higher quantity of state law issues, by
itself, does not justify declining supplemental jurisdiction. 24 Rather, "an analysis
more sensitive to the relevant interests is required." 25 Here, Plaintiffs' Counts I, II,
and III, along with Defendants' Counts I, II, III, and IV, substantially predominate
over Plaintiff's Count IV.
Counts I, II, and III are authorized by the Montana Administrative
Procedure Act ("MAPA"), which provides for judicial review of agency decisions,
confined to the agency record, and provides for discretionary stays of agency
decisions pending judicial review. 26 The MAP A also provides that petitions be

21

28 U.S.C. § 1367(c)(2).

22

383 U.S. 715, 726-27 (1966).

23

Gibbs, 383 U.S. at 727.

24

Wang v. Chinese Daily News, 623 F.3d 743, 762 (9th Cir. 2010); Borough a/West
Mifflin v. Lancaster, 45 F.3d 780, 789 (3d Cir. 1995).
25

Borough of Wes! Mifflin, 45 F.3d at 789.

26

Mont. Code Ann. § 2-4-702 and 704.

filed "in the district court for the county where the petitioner resides or has the
petitioner's principal place of business or where the agency maintains its principal
office." 27 MAPA defines "agency" as" any board, bureau, commission,
department, authority, or officer of the state or local government." 28 The MAPA is
solely concerned with the conduct of state and local agencies and requires that
review occur in a district court in the county bearing the closest geographical
relationship to the case. MAPA therefore implicates state and local interests.
Counts I, II, and III likewise require interpretation and application of
statutes and regulations covering numerous state and local issues. For example,
under Count I, Plaintiff claims that Korner Klub has an affirmative right to its
2017 Retail Food License based on interpretation of MCA§ 50-50-204. 29
Plaintiff also claims its wastewater system is valid under various state
regulations and local health codes, 30 that these same statutes do not require
connection to the local sewer district, 31 and that Defendant Matt Kelley failed to
inspect Komer Klub, or provide findings or reasons, to the extent required by

27

Mont. Code Ann. § 2-4-702(2)(a).

28

Mont. Code Ann.§ 2-4-102(2)(a); Mont. Code Ann.§ 2-3-102(1).

29

Doc. 38 at 14.

30

Doc. 38 at 15.

31

Doc. 38 at 15.

licensing statutes and regulations. 32 Counts II and III require the interpretation and
application of many of the same statutes and regulations, all of which are designed
to protect state and local interests.
Likewise, Defendants' Counterclaims, Counts I, II, III, and IV, require
application and interpretation of statutes and regulations covering a variety of
local and state issues that impact state and local interests. Counts I, II, and III and
Defendants' Counts I, II, III, and IV form the "real body" of this lawsuit.
Count IV, in contrast, is a mere "appendage" to the MAP A claims. In that
Count, Plaintiff concludes that a violation of the Fifth and Fourteenth
Amendments occurred but makes no factual allegations specific to the claim,
relying upon an incorporation of prior allegations as support. 33 The task is left to
the Court to derive a constitutional violation from conclusions reached in
interpreting and applying statutes and regulations referred to in prior allegations.
Unlike Borough of West Miffin, in which a 42 U.S.C. § 1983 claim relied primarily
upon interpretation federal civil rights law rather than state law, resolution here
depends substantially upon interpretation of state and local licensing laws and
health codes. 34 Counts I, II, and III, and the state and local interests which they

32

Doc. 38 at 15-16.

33

Doc. 38 at 18.

34

Borough of West Mifflin, 45 F.3d at 789-90.

implicate, constitute the "real body of the case." Count IV is a mere
"appendage."35 The scope of the issues raised by the MAPA claims substantially
predominate over the scope of the issues raised in the federal constitutional claim.

B.

Declining Supplemental Jurisdiction is guided by objectives of
economy, convenience, fairness, and comity.

In Executive Software N Am., Inc., the Ninth Circuit stated that a district
court's discretionary decline of supplemental jurisdiction should be guided by
objectives of"economy, convenience, fairness, and comity." 36 The Court's
decision is guided by those objectives in this case. The case is still at an early
stage of proceedings. It is still economical, convenient, and fair to the litigants and
the courts to remand those claims to state court. No preliminary pretrial conference
has been set. No scheduling order has been issued. No formal period for discovery
has begun, and no substantive motions are before the Court.
Comity also guides the Court's decision to avoid disruption of state
administrative process. 37 The merits of all Plaintiffs' Counts depend on the
interpretation and application of state and local statutes and regulations.
Moreover, MAPA directs petitioners to seek judicial review of administrative

35

Gibbs, 383 U.S. at 727.

36

24 F.3d at 1556-57, 1560.

37

See Allegheny County v. Frank Mashuda Co., 360 U.S. 185, 189 (1959) (citing Burford
v. Sun Oil Co., 319 U.S. 315 (1943).

process in the county where the case arose, indicating a legislative preference for
localized review of such inherently state and local issues. 38

III.

The proper procedure is for this Court to sever and remand Plaintiffs'
Counts I, II, and Ill, along with Defendants' Counts I, II, III, and IV,
and to retain jurisdiction over Plaintifrs Count IV.
28 U.S.C. § 144l(c) provides:
(c) Joinder of Federal law claims and State law
claims.--( I) If a civil action includes-(A) a claim arising under the Constitution, laws, or
treaties of the United States (within the meaning of
section 1331 of this title), and
(B) a claim not within the original or supplemental
jurisdiction of the district court or a claim that has
been made nonremovable by statute,
the entire action may be removed ifthe action would be
removable without the inclusion of the claim described
in subparagraph (B).
(2) Upon removal of an action described in paragraph
(1), the district court shall sever from the action all
claims described in paragraph (l)(B) and shall remand
the severed claims to the State court from which the
action was removed. 39

If a district court declines to exercise supplemental jurisdiction over state law
claims, the removal statute "does not support remand of federal claims, requiring
instead severance and remand of claims that are not within the original or

38

Mont. Code Ann. § 2-4-702(2)(a).

39

28 U.S.C. § 1441(c) (emphasis added).

supplemental jurisdiction of the district court." 40
ORDERED:
I.

Plaintiffs' Counts I, II, and III, 41 and Defendants' Counterclaims,

Counts I, II, III, and IV, 42 are SEVERED from this action.
2.

Plaintiffs' Counts I, II, and III, 43 and Defendants' Counterclaims,

Counts I, II, III, and IV, 44 are REMANDED to the Montana Eighteenth Judicial
District Court, Gallatin County.
3.

Plaintiff's Motion to Stay45 is DENIED as moot, without prejudice.

4.

Plaintiffs' Count IV remains within the original jurisdiction of this

4fJ_

Court.

DATED thisJ1 day of December, 2017.

~(#~!/~
~E.HADDDON
United States District Judge
40

JAMES WM. MOORE ET AL., 16 MOORE'S FEDERAL PRACTICE§ 106.63, at 106-82 (3d
ed. 2017); See Executive Software N Am., Inc, 24 F.3d at 1551-53; See also Retail Prop. Trust v.
United Bhd of Carpenters, 768 F.3d 938, 962 (9th Cir. 2014.).
41

Doc. 38 at 14-18.

42

Doc. 41 at 20-24.

43

Doc. 38 at 14-18.

44

Doc. 41 at 20-24.

45

Doc. 9.