A New Litigation Strategy For State And Local Governments: Removal to Federal Courts

State and local governments increasingly are removing to federal court actions filed against them in state court that contain both state law and federal claims. This trend has increased federal court litigation of what used to be considered "state court" claims.

By Anne Berleman Kearney

A number of state and local governments are turning to a new and surprising strategy when actions that contain both state law claims and federal claims are filed against them in state court: They are removing these cases to federal court. Although private parties have long removed such cases to federal court, it is surprising that state and local governments, which traditionally have looked to state courts to protect their interests, are now looking to federal courts to provide that protection. It is not entirely clear what is behind this trend - one could posit a more conservative federal judiciary or, with the decentralization of political power, state courts that are more likely to be sympathetic to plaintiffs' interests than to the government's, or, simply, the efficiency of federal courts. But the trend can be seen clearly in two recent U.S. Supreme Court cases overturning decisions of the Seventh Circuit.

This government removal strategy thus far has proved successful despite several apparent obstacles that would not arise in private litigation. The best example of this is the recent U.S. Supreme Court decision in City of Chicago v. International College of Surgeons,¹ which held that Chicago could remove to federal court a developer's challenge to the City Landmark Commission's denial of demolition permits. Even though this case was by all appearances a garden-variety appeal from a municipal administrative decision, the Supreme Court concluded that it was sufficient for purposes of federal court jurisdiction that the developer had included in its suit a federal constitutional challenge to the Commission's administrative ruling.

Wisconsin also has adopted this removal strategy, and recently saw the strategy succeed in the U.S. Supreme Court. In Schacht v. Wisconsin Dep't of Corrections,² handed down on June 22, 1998, the Supreme Court unanimously held that Wisconsin could remove to federal court the suit of a correctional officer against a state agency (specifically, the Department of Corrections) and certain state officials in their individual and official capacities.³ The Court determined that the action was properly removed because the correctional officer's suit included claims alleging violations of his federal constitutional rights, and even though some of his other claims - those against the state agency and state officials in their official capacity - could not be litigated in federal court since they were barred by the doctrine of sovereign immunity.⁴

Because Wisconsin's successful position in Schacht raises some of the same analytical issues as those considered by the Supreme Court in International College of Surgeons, it is helpful first to explore the basis for this earlier decision. In International College of Surgeons, the Court held that certain actions challenging decisions of state and local governments may be removed to federal court, even where these challenges predominantly include state law claims that are brought by in-state citizens and that therefore do not fall within the original jurisdiction of federal courts.⁵

In determining whether the local government had properly removed the case to federal court, the Court in International College of Surgeons first looked to whether there were any claims "arising under" federal law. Because such claims were present, the Court directed its attention to the supplemental jurisdiction statute, 28 U.S.C. §1367.⁶ That statute, enacted in 1990 and not previously relied upon by the Court, provides that "in any civil action of which the district courts have original jurisdiction [e.g., through the diversity or federal-question statutes], 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."⁷ The supplemental jurisdiction statute combines the doctrines of pendent and ancillary jurisdiction, enabling all claims that arise from "a common nucleus of operative fact" to be brought in federal court.⁸

The majority in International College of Surgeons found that this recent jurisdictional statute applied and that its terms were met because the complaints filed by the developer against the local government contained well-pleaded issues "arising under" federal law, namely, claims of federal constitutional due process and equal protection violations.⁹ Moreover, the developer's state law claims, which asked for judicial review of the Landmark Commission's determinations based upon a deferential on-the-record standard, were sufficiently related to the federal constitutional claims.¹⁰ Thus, the Court determined that the entire case fell within the federal court's jurisdiction - the federal claims within the federal court's original jurisdiction and the state law claims within the federal court's jurisdiction by virtue of the supplemental jurisdiction statute.¹¹

In rendering its decision in International College of Surgeons, the Supreme Court reversed the Seventh Circuit, which had ruled that the action against Chicago could not be removed because the action - even though it contained some federal court claims - also contained state law claims that fell outside the federal court's original jurisdiction.¹² Specifically, the majority rejected the view embraced by the Seventh Circuit that the nature of the state law claims should be determinative of federal court jurisdiction.¹³ Instead, the Court shifted the focus away from the state law claims to the federal claims because "[t]he district court's original jurisdiction [and thus the basis for federal court jurisdiction] derives from [the developer's] federal claims, not its state law claims."¹⁴ Moreover, the majority stated, "[n]othing in the jurisdictional statutes suggests that the presence of related state law claims somehow alters the fact that [the] complaints, by virtue of their federal claims, were 'civil actions' within the federal court's 'original jurisdiction.'"¹⁵ Indeed, Justice O'Connor, writing for the Court, concluded that the Seventh Circuit's interpretation "would effectively read the supplemental jurisdiction statute out of the books" since the law's very purpose was "to allow [federal] courts to exercise pendent jurisdiction over claims as to which original jurisdiction is lacking."¹⁶

In dissent, Justice Ginsburg (joined by Justice Stevens) was taken aback by the apparent scope of the Court's ruling. Indeed, she termed the majority's ruling in International College of Surgeons a "watershed decision" and a "landmark result" because, in her view, it allows a state's system for handling appeals from administrative agencies to the courts to be "displaced or dislodged" by any defendant that wants to remove a case to federal court whenever state law claims are joined with some federal claims or whenever there is diversity of citizenship.¹⁷

The dissent thought that this was not only unwise as a policy matter, but contrary to two earlier Supreme Court decisions, Chicago, R.I. & P.R. Co. v. Stude¹⁸ and Horton v. Liberty Mutual Insurance Co.¹⁹ These cases suggest that federal district courts do not have original jurisdiction to sit as appellate courts where a state administrative ruling is being challenged on the basis of the administrative record.²⁰ The dissent unsuccessfully proposed that, based on these precedents, the nature of the state law claims should be, at least in some part, determinative of the federal court's jurisdiction over an action.²¹

Given this International College of Surgeons backdrop, the Court's decision in Schacht has a familiar look about it. In Schacht the Court again focused on the federal claims that were present in the suit.²² In doing so, the Court rejected the Seventh Circuit's reasoning that since some of the correctional officer's claims did not fall within the federal court's original jurisdiction because of the sovereign immunity bar, the action could not be removed to federal court at all.²³

Instead, relying upon International College of Surgeons, the Court emphasized in Schacht that "the presence of even one claim 'arising under' federal law is sufficient to satisfy the requirement that the case be within the original jurisdiction of the district court for removal."²⁴ The Court reasoned that "[the] federal claims suffice to make the actions 'civil actions' within the 'original jurisdiction' of the district courts for purposes of removal."²⁵ And, as was the case in International College of Surgeons, the Court in Schacht concluded that the presence of related claims over which the district court may not have original jurisdiction (here, the claims implicating Wisconsin's sovereign immunity) does not destroy removal jurisdiction.²⁶

With its decisions this past year inInternational College of Surgeons and Schacht, the Supreme Court has taken a further step to expand federal court jurisdiction. These decisions thus require a change in thought regarding the relationship between federal and state law claims in an action brought against a state or local government.

In particular, because of the success of state and local governments in these cases, both plaintiffs and state and local governments alike effectively have been granted greater access to federal courts. Plaintiffs now can initially file in federal court when their lawsuits raise federal claims and their state law claims - almost whatever their nature and even if they are as mundane as the land-use challenge in International College of Surgeons - arise from the same set of facts. That is because in International College of Surgeons the premise of the decision that Chicago could remove was that the College could have brought its land-use challenge in federal court in the first place (so long as it was joined with the federal claims). Likewise, the premise in Schacht was that the federal court would have had original jurisdiction over the suit if it originally had been filed there. As for state and local governments named as defendants, these decisions establish that they may remove such actions to federal court if plaintiffs have opted for state court instead. Simply put, the Seventh Circuit's more restrictive view of federal jurisdiction no longer holds.

Moreover, because parties no longer are so boxed into either federal or state court where a state or local government is involved, they must adapt their litigation strategies. Now when such cases are filed, plaintiffs must carefully determine which claims they want to plead. For example, if violations of federal law are pleaded along with violations of state law against a governmental entity, the plaintiff must decide whether it wants to file in federal court or state court. And if the plaintiff wishes to file in state court, it may want to forgo pleading federal claims to preserve its state court forum. The same is true for litigants seeking to bring suit against state officers in their individual and official capacities. If such a plaintiff wants to retain a state court forum, it must think twice about including a federal claim in its suit.

Correlatively, state governments must pay particular attention to their removal strategy and the effect of that strategy on any affirmative defenses they may want to raise. As Justice Kennedy's concurrence inSchacht stresses, the Court has not yet determined whether a state's request for removal is a waiver of its Eleventh Amendment sovereign immunity defense. ²⁷

These initial strategy decisions will influence the parties' later decisions in litigating the suit. The parties' decisions on discovery, motions, and even settlement will be affected because they, too, will vary according to the forum where the case is being heard.

The Supreme Court's decisions also carry broader implications for all litigants in federal court. InInternational College of Surgeons, for example, the Court made clear that the supplemental jurisdiction statute is to be given effect - strong effect - as set forth in the plain terms of the statute. InSchacht as well, the Court adopted a more expansive view of federal court jurisdiction based upon the applicable jurisdictional statute.

These decisions reflect a general trend in the Court's jurisprudence towards interpreting jurisdictional statutes as written without inference of exceptions.²⁸ The message to be gleaned from this trend is that, if federal court jurisdiction is to be restricted, the restrictions must come from Congress and not from the courts. For litigants, that trend - with the addition of the decisions in International College of Surgeons and Schacht - translates into the immediate result of increased federal court litigation of what used to be considered "state court" claims.

Endnotes

¹ City of Chicago v. International College of Surgeons, 118 S. Ct. 523 (1997).

² Schacht v. Wisconsin Dep't of Corrections, No. 97-461, 1998 U.S. LEXIS 4177 (U.S. June 22, 1998).

³ See id. at *5-*6.

⁴ See id. at *5-*6, *16.

⁵ International College of Surgeons, 118 S. Ct. at 530.

⁶ See id.

⁷28 U.S.C. § 1367(a).

⁸ United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966).

⁹ International College of Surgeons, 118 S. Ct. at 527, 529-30.

¹⁰See id. at 529-30.

¹¹See id. at 530, 534.

¹²See id. at 528, 530-31.

¹³See id. at 530-31.

¹⁴Id. at 530.

¹⁵Id.

¹⁶Id. at 531.

¹⁷Id. at 534, 537, 539-40 (Ginsburg, J., dissenting).

¹⁸Chicago, R.I. & P.R. Co. v. Stude, 346 U.S. 574 (1954).

¹⁹Horton v. Liberty Mut. Ins. Co., 367 U.S. 348 (1961).

²⁰International College of Surgeons, 118 S. Ct. at 537-38 (Ginsburg, J., dissenting).

²¹See id. at 538 (Ginsburg, J., dissenting).

²²See Schacht, 1998 U.S. LEXIS 4177, at *6, *9-*11, *16.

²³See id. at *18-*19.

²⁴Id. at *10-*11.

²⁵Id. at *11 (quoting Int'l College of Surgeons, 118 S. Ct. at 530).

²⁶See id. at *9.

²⁷See id. at *22 (Kennedy, J., concurring).

²⁸See, e.g., Quackenbush v. Allstate Ins. Co., 116 S. Ct. 1712 (1996); New Orleans Pub. Serv. Inc. v. Council of City of New Orleans, 491 U.S. 350 (1989).

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