DEERING et al v. GRAHAM et al

Filing 72

OPINION FILED. Signed by Judge Noel L. Hillman on 4/28/16. (js)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
_________________________________
MARY DEERING,
Plaintiff,

Civil No. 14-3435 (NLH/JS)

v.
OPINION
DONALD ELLWOOD GRAHAM, et al.,
Defendants.
__________________________________

Appearances:
Robert R. Fuggi
Fuggi Law Firm
47 Main Street
P.O. Box 1808
Toms River, NJ 08754
Attorney for Plaintiff
Eric David Wong
Louis Smith
Greenberg Traurig
500 Campus Drive
Suite 400
P.O. Box 677
Florham Park, NJ 07932
Attorneys for Defendants Donald Elwood Graham and Graham
Financial Services LLC
Jed L. Marcus
Emily Jane Bordens
Bressler, Amery & Ross, PC
325 Columbia Turnpike
Florham Park, NJ 07932
Attorneys for Defendants Executive Wealth Advisors LLC and
JP Turner & Co. LLC

1

HILLMAN, District Judge
As the Court set forth in its April 12, 2016 Order to Show
Cause, Plaintiff’s complaint was originally filed in this Court
on May 30, 2014 and contained both federal securities claims as
well as state law claims.

On January 30, 2015, Magistrate Judge

Joel Schneider severed Plaintiff’s securities claims and found
they were subject to arbitration.
Order [Doc. Nos. 15, 16].)

(See Jan. 30, 2105 Op. and

Plaintiff thereafter voluntarily

dismissed with prejudice Counts 2-11 of her complaint, leaving
only Counts 1 (NJLAD) and 12 (assault and sexual battery) of her
original complaint to be litigated.

(See Aug. 12, 2015

Stipulation [Doc. No. 29].)
On September 25, 2015, Plaintiff amended her complaint.
[Doc. No. 44].

In her amended complaint, Plaintiff alleges that

the Court has original jurisdiction under the Securities and
Exchange Act, 15 U.S.C. § 78a et seq., and supplemental
jurisdiction pursuant to 28 U.S.C. § 13671 over her state law
claims.

(Am. Compl. ¶ 11.)

Plaintiff’s amended complaint

contains three counts: NJLAD (Count I), assault and sexual
battery (Count II) and “vicarious liability and respondeat

1

Pursuant to 28 U.S.C. § 1367, “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.”
2

superior” (Count III).

Plaintiff’s amended complaint does not

state any claims under the Securities and Exchange Act or any
other federal law.2

The parties concede they are not diverse.

Federal courts have an independent obligation to address
issues of subject matter jurisdiction sua sponte and may do so
at any stage of the litigation.

Zambelli Fireworks Mfg. Co.,

Inc. v. Wood, 592 F.3d 412, 418 (3d Cir. 2010) ("Federal courts
are courts of limited jurisdiction, and when there is a question
as to our authority to hear a dispute, ‘it is incumbent upon the
courts to resolve such doubts, one way or the other, before
proceeding to a disposition on the merits.’”) (citing Carlsberg
Res. Corp. v. Cambria Sav. & Loan Ass’n, 554 F.2d 1254, 1256 (3d
Cir. 1977)).

“The presence or absence of federal-question

jurisdiction is governed by the ‘well-pleaded complaint rule,’
which provides that federal question jurisdiction exists only
when a federal question is presented on the face of the
plaintiff's properly pleaded complaint.”
Williams, 482 U.S. 386, 392 (1987).

Caterpillar Inc. v.

“The rule makes the

plaintiff the master of the claim; he or she may avoid federal

2

It is well established that “when a plaintiff files a complaint
in federal court and then voluntarily amends the complaint,
courts look to the amended complaint to determine jurisdiction.”
Rockwell Int'l Corp. v. United States, 549 U.S. 457, 473-74, 127
S. Ct. 1397, 1409, 167 L. Ed. 2d 190 (2007). Additionally,
Plaintiff does not incorporate her original complaint in her
amended complaint.
3

jurisdiction by exclusive reliance on state law.”

Id.

In order to exercise supplemental jurisdiction over
Plaintiff’s state claims, the Court must have jurisdiction over
one or more related federal claims in the complaint.

Lyon v.

Whisman, 45 F.3d 758, 760 (3d Cir. 1995) (citing United Mine
Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218
(1966)).

Stated a different way, Section 1367(a) does not

provide an independent basis for federal subject matter
jurisdiction.

Kohn v. AT & T Corp., 58 F. Supp. 2d 393, 421

(D.N.J. 1999) (“Supplemental jurisdiction depends upon the
existence of subject matter jurisdiction over other claims in
the action.”).

Here, Plaintiff filed her complaint in federal

court on the basis of federal question jurisdiction and then
voluntarily amended her complaint to exclude any federal claims.
Thus, there is no remaining federal claim to which supplemental
jurisdiction may be based upon.
While the Third Circuit has not ruled squarely on the same
procedural posture presented in this case, when a plaintiff
files his or her complaint in federal court, then voluntarily
amends that complaint to drop all federal claims, other federal
courts are in agreement that the district court must dismiss the
complaint.3

See, e.g., Boelens v. Redman Homes, Inc., 759 F.2d

3

This makes sense because it prevents plaintiffs from forum
shopping. Otherwise, any plaintiff who wished to litigate in
4

504, 507-08 (5th Cir. 1985) (“In that case [of original federal
question jurisdiction in which the plaintiff, rather than the
defendant, is invoking the jurisdiction of the federal court]
because the burden is on the plaintiff to establish jurisdiction
in the first instance, we conclude that the plaintiff must be
held to the jurisdictional consequences of a voluntary
abandonment of claims that would otherwise provide federal
jurisdiction.”);

13D Fed. Prac. & Proc. Juris. § 3567 (3d ed.)

(“The situation in which the federal claim is dismissed should
be distinguished from the situation in which an amendment to the
complaint eliminates the original basis of federal jurisdiction.
In the latter scenario, the amended complaint supersedes the
original complaint, and the case should be treated as though the
plaintiff has pleaded no basis of federal jurisdiction.

In such

a case, retaining jurisdiction of the non-federal claims is
improper.”); see also Hemispherx Biopharma, Inc. v. Asensio, No.
98-5204, 2000 WL 807012, at *2-3 (E.D. Pa. June 7, 2000)
(dismissing complaint where plaintiff omitted federal claims in
the amended complaint) (citing Wellness Cmty.-Nat'l v. Wellness
House, 70 F.3d 46, 50 (7th Cir. 1995) (vacating judgment where
the amended complaint no longer contained federal claims and

federal court could tack on a federal claim, file the complaint,
then drop the claim which formed the basis for federal subject
matter jurisdiction and remain in federal court.
5

“there was no federal claim to which these state claims could be
‘supplemental’”)).
In their letter briefs, the parties skirt the procedural
posture of this case and ask the Court to exercise its
discretion to retain jurisdiction.

They cite only to cases

originally brought in state court or cases where the court
dismissed the federal claims.

See Def.’s Letter Br. (citing

Williams v. Newark Beth Israel Med. Ctr., 322 F. App'x 111, 11213 (3d Cir. 2009) (district court properly exercised it
discretion to remand case back to state court pursuant to under
28 U.S.C. § 1441(c) after plaintiff withdrew her state claims);
Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 276 (3d Cir.
2001) (district court properly exercised its discretion to
exercise supplemental jurisdiction and not remand after federal
claims were dismissed); New Rock Asset Partners, L.P. v.
Preferred Entity Advancements, Inc., 101 F.3d 1492, 1506 (3d
Cir. 1996) (district court had discretion to retain jurisdiction
over state law claims when the jurisdiction-conferring party was
granted summary judgment and dismissed from the case)); Pl.’s
Letter Br. (citing Annulli v. Panikkar, 200 F.3d 189, 202 (3d
Cir. 1999), overruled on other grounds by, Rotella v. Wood, 528
U.S. 549 (2000) (holding that the district court may decline to
exercise supplemental jurisdiction if it has dismissed all
federal claims); Pacheco v. Rosenberg, No. 12-4513, 2013 WL
6

588225, at *4 (D.N.J. Jan. 24, 2013), report and recommendation
adopted, 2013 WL 588246 (D.N.J. Feb. 13, 2013) (defendant’s
motion to remand third-party complaint denied after he withdrew
his federal claims because court had discretion to exercise
supplemental jurisdiction under removal statute)).
Here, the Court did not dismiss Plaintiff’s federal claims,
and this case was not originally filed in state court and
removed by Defendants.4

The jurisdictional problem that exists

here is that Plaintiff has a controlling complaint which alleges
only state tort causes of actions.

There are no federal claims

for these state claims to “supplement.”

Further, even if there

was a claim within Plaintiff’s amended complaint to which
supplemental jurisdiction could be based, the Court would
exercise its discretion pursuant to 28 U.S.C. § 1367 (c)(2)5 not
to hear the state tort claims because they substantially
predominate over the remaining case (indeed, they are the only
claims).

Borough of W. Mifflin v. Lancaster, 45 F.3d 780, 788

4

Where federal claims which formed the basis of removal are
dropped from a case, the district court is not automatically
deprived of jurisdiction. Felice v. Sever, 985 F.2d 1221, 1225
(3d Cir. 1993). This is not the case here because Plaintiff
chose to file in federal court and no longer asserts any federal
claims.
5

This section provides that a district court may decline to
exercise supplemental jurisdiction if the claim substantially
predominates over the claim or claims over which the district
court has original jurisdiction. 28 U.S.C. § 1367(c)(2).
7

(3d Cir. 1995) (citing Gibbs, 383 U.S. at 726–27, 86 S.Ct. at
1139) (“[I]f it appears that the state issues substantially
predominate, whether in terms of proof, of the scope of the
issues raised, or of the comprehensiveness of the remedy sought,
the state claims may be dismissed without prejudice and left for
resolution to state tribunals.”).

To hear these state tort

claims would be to permit “a federal tail to wag what is in
substance a state dog,” Borough of W. Mifflin v. Lancaster, 45
F.3d 780, 789 (3d Cir. 1995), and in this case, the dog has no
tail at all.6
Accordingly, the case will be dismissed and an appropriate
Order will be entered.

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
At Camden, New Jersey
Date: April 28, 2016

6

  In an Opinion and Order dated January 30, 2015, Judge Schneider

considered whether Plaintiff’s contract, financial, and
securities claims, as well as her state tort claims for sexual
assault and battery, were subject to mandatory arbitration.
Judge Schneider considered six separate brokerage agreements
Plaintiff signed, all of which contained similar arbitration
clauses. Judge Schneider found that all of Plaintiff’s
contract, financial, and securities claims fell squarely within
the “plain meaning” of the arbitration clauses. (Jan. 30, 2015
Op. at 20-21 [Doc. No. 15].) This finding supports the
conclusion that Plaintiff’s original claim of subject matter
jurisdiction in this case was thin at best. 
8