Allapattah and the Amount Rule

Allapattah and the Amount Rule

Section 1367(a) gives the district courts supplemental jurisdiction over any claim so related to a claim within their original jurisdiction that the two form one Article III case or controversy, and its last sentence reaches claims that join or intervene additional parties.¹ In an action founded solely on diversity, subsection (b) takes part of that grant back. It withholds supplemental jurisdiction over a plaintiff’s claims against persons joined under Rule 14, 19, 20, or 24, and over claims by persons joined as plaintiffs under Rule 19 or intervening as plaintiffs under Rule 24, whenever exercising it would be inconsistent with § 1332.² Neither subsection says what happens when one diversity plaintiff clears the amount in controversy and a related co-plaintiff does not. Exxon Mobil Corp. v. Allapattah Services, Inc. answered that question.

Before Congress enacted § 1367 in 1990, the answer was no. Each plaintiff in a diversity action had to meet the amount in controversy independently, and Zahn applied the rule to class actions: when the representative sought $200,000 but other members sought less than the jurisdictional amount, the court lacked jurisdiction over those members.³ The new statute seemed to unsettle that rule. The larger claim supplies original jurisdiction, the smaller claim arises from the same accident, and subsection (b) lists no exception for plaintiffs permissively joined under Rule 20 or for class members.⁴ The legislative history pointed the other way, because the House Report said that § 1367 was not intended to upset Zahn.⁵ The courts of appeals split over which signal controlled, and the Supreme Court itself divided four to four on the question before it agreed to decide it again.⁶

The Court took something from each side. On the amount in controversy, it followed the text: § 1367 overruled Clark and Zahn, so a class action may proceed with members whose claims fall below the threshold as long as one claim meets it.⁷ On citizenship, it kept the complete diversity rule of Strawbridge, so supplemental jurisdiction reaches a diversity case only when the parties already satisfy complete diversity as an original matter.⁸ The two requirements part ways because a citizenship overlap removes original jurisdiction over the entire action, while a shortfall in one claim’s amount leaves the other claims intact. The four subsections below cover the facts and holding, the reasoning about original jurisdiction, the limits that survive, and the dissent.

Facts and Holding of Allapattah

The Court consolidated two unrelated lawsuits that put one question: when one diversity plaintiff’s claim meets the amount in controversy and a related plaintiff’s claim does not, does § 1367(a) reach the smaller claim?⁹ It held that it does. When the other elements of jurisdiction are present and at least one named plaintiff satisfies the amount, § 1367 authorizes supplemental jurisdiction over the claims of the other plaintiffs in the same Article III case or controversy, even if those claims fall below the amount.¹⁰ Each suit paired plaintiffs who stood unequally on the amount, and the two suits show how the lower courts came to disagree.

The first suit began in 1991, when about 10,000 Exxon dealers sued Exxon as a class in a federal district court in Florida. A class action lets named representatives sue on behalf of a larger group whose other members do not appear in the caption.¹¹ The dealers alleged an intentional and systematic scheme to overcharge them for fuel and invoked diversity under § 1332(a).¹² The district court exercised original jurisdiction over the claims of the named plaintiffs who met the amount and supplemental jurisdiction over the claims of the unnamed members who did not, and it entered judgment for the class.¹³ The Eleventh Circuit upheld that exercise of jurisdiction. It held that § 1367 “clearly and unambiguously” lets a district court in a diversity class action hear the claims of class members below the amount, so long as the court has original jurisdiction over the claims of at least one class representative.¹⁴

The second suit was a personal-injury case. A nine-year-old girl sued Star-Kist in the federal district court in Puerto Rico, invoking diversity, for unusually severe injuries from slicing her finger on a tuna can, and members of her family joined to seek damages for emotional distress and certain medical expenses.¹⁵ The district court granted summary judgment to Star-Kist after finding that none of the plaintiffs met the minimum amount. The First Circuit decided that the girl had alleged the required amount and her family members had not. It then held that § 1367 authorizes supplemental jurisdiction only when the district court has original jurisdiction over the action, and that in a diversity case original jurisdiction is lacking if one plaintiff fails the amount requirement.¹⁶ On that view the girl’s qualifying claim could not carry her relatives’ claims, which grew out of her injury.

The courts of appeals had split along the same line. The Eleventh Circuit accepted supplemental jurisdiction over below-amount class members,¹⁷ while the First, Third, Eighth, and Tenth Circuits read § 1367 to withhold it, and the Eighth and Tenth Circuits applied that reading expressly to class actions.¹⁸ The Supreme Court had divided four to four in Free v. Abbott Labs., Inc., which left the circuits where they were.¹⁹ Every court was answering the same question: whether a diversity case in which some plaintiffs’ claims meet the amount and others’ do not is a “civil action of which the district courts have original jurisdiction.” A yes brings § 1367(a) into play and confers supplemental jurisdiction over all claims in the same Article III case or controversy, including those that fall below the amount. A no leaves § 1367(a) inapplicable, and under Clark and Zahn the court has no statutory basis for the extra claims.²⁰

In an opinion by Justice Kennedy, five Justices said yes. The Court affirmed the Eleventh Circuit in the dealers’ case and reversed the First Circuit in the tuna-can case, over four dissents.²¹ The holding has two conditions and one consequence. Complete diversity and the other elements of jurisdiction must be present, and at least one plaintiff’s own claim must satisfy the amount. When both conditions hold, § 1367 reaches the claims of other plaintiffs in the same constitutional case, whatever their size. Two limits travel with the rule: the added claims must share a common nucleus of operative fact with the anchor claim, and supplemental jurisdiction cannot be used to defeat complete diversity.²²

The rule follows from what the amount requirement tests. It screens each dispute for enough importance to warrant federal-court attention, and a claim that clears the screen gives the court original jurisdiction over a civil action even if other claims in the complaint would fail it.²³ Once a court has original jurisdiction over some claims in an action, it may hear additional claims that form part of the same case or controversy.²⁴ The First Circuit’s contrary reading let one plaintiff’s shortfall strip the court of original jurisdiction over the whole action, and the Court rejected that reading on the statutory text, as the next subsection shows.²⁵

A stem with several diversity plaintiffs should prompt one question first: does any single plaintiff’s claim clear $75,000 on its own? That answer decides whether the others have anything to attach to. The tuna-can plaintiffs answer yes, because on the First Circuit’s own finding the girl’s claim qualified, so her family’s smaller claims rode with it and the First Circuit’s judgment was reversed. The Texas drivers answer yes for the same reason: the driver seeking $125,000 anchors the action, and the other driver’s related claim comes in under § 1367(a), because the Court applied the same analysis to plaintiffs permissively joined under Rule 20.²⁶

That class might still reach federal court under the Class Action Fairness Act, which, subject to limitations, confers diversity jurisdiction over class actions in which the aggregate amount in controversy exceeds $5 million, but the Act is a separate statute with its own conditions.²⁷ Exam answers go wrong in both directions: they deny jurisdiction over a smaller claim because one plaintiff falls short, as the First Circuit did, or they assume supplemental jurisdiction can rescue an action in which no plaintiff clears the amount.

Original Jurisdiction Over the Action

The phrase “civil action of which the district courts have original jurisdiction” hides a choice, because “action” could mean the whole complaint or only the part of it the court could hear on its own. Allapattah put the question in those terms and held that a diversity case in which some plaintiffs’ claims meet the amount and others’ do not is such an action.²⁹ When the well-pleaded complaint contains at least one claim that satisfies the amount requirement and no other relevant jurisdictional defect exists, the court plainly has original jurisdiction over that claim. That suffices for original jurisdiction over a “civil action” under § 1367(a), even though the action comprises fewer claims than the complaint. Only then does the court ask whether a constitutional and statutory basis exists for the remaining claims.³⁰

Two arguments would have read “civil action” as the whole complaint, and the Court named them in order to reject them. The indivisibility theory holds that all the claims in a complaint stand or fall together as one civil action, so one claim outside original jurisdiction removes the entire action from it. The contamination theory holds that including a claim or party outside original jurisdiction spoils every other claim in the complaint.³¹ Under either theory, a defective claim would leave supplemental jurisdiction with nothing to attach to.

The Court rejected indivisibility for several reasons. The theory sits badly with supplemental jurisdiction itself, which presupposes that a court with original jurisdiction over some claims in an action may hear additional related claims; Gibbs is the leading modern case.³² It contradicts the Court’s practice of curing a jurisdictional defect by dismissing the offending parties instead of the whole action, as in Clark v. Paul Gray, Inc., where the Court dismissed the plaintiffs who missed the amount and kept the one who met it.³³ It would give the identical phrase “original jurisdiction of all civil actions” one meaning in § 1331 and another in § 1332, which the Court found implausible.³⁴ It cannot be squared with City of Chicago v. International College of Surgeons, where the federal claims made the cases civil actions within original jurisdiction and the related state-law claims did not alter that fact.³⁵ And it would make cases with additional parties unremovable, because the removal statute asks the same question.³⁶

The contamination theory deserves closer attention, because the Court accepted it for one requirement in § 1332 and rejected it for the other. Complete diversity shows the theory working. The Constitution does not require that rule, and § 1332(a) does not state it, but the Court has adhered to it for its purpose, which is to give important disputes a federal forum where state courts might favor, or be perceived as favoring, home-state litigants.³⁷ When citizens of one state stand on both sides of the case, that concern disappears for the action as a whole. A single plaintiff from the same state as a single defendant therefore deprives the court of original diversity jurisdiction over the entire action, and supplemental jurisdiction has nothing to attach to.³⁸

The amount requirement does a different job, and the theory fails there. It ensures that a dispute is important enough to warrant federal-court attention, and a claim is important or not on its own terms.³⁹ A claim that falls short does nothing to reduce the importance of a claim that clears the minimum, so the reason for hearing the larger claim stays intact. The federal-question and amount requirements can be analyzed claim by claim, and complete diversity cannot.⁴⁰ The Court added that federal-question jurisdiction once had an amount requirement of its own; had that requirement been revived, § 1367(a) would plainly permit supplemental jurisdiction where only some of the federal claims met it.⁴¹ Removal follows the same line. An action without complete diversity is not removable, because a failure of complete diversity contaminates every claim, but a failure of some claims to meet the amount does not.⁴²

An exam stem that adds a second plaintiff to a diversity suit is asking which requirement the newcomer fails, because the answer decides whether the court has anything left to hear.

The claim sizes run against the outcomes. Coleridge’s $25,000 claim comes in and Cowper’s $100,000 claim does not, because only Coleridge fails the requirement that is tested claim by claim. Coleridge’s shortfall leaves Browning’s claim as an untouched anchor, and the related claim attaches to it. Cowper’s shared citizenship is a defect of the whole action, so even Browning’s claim lacks original jurisdiction and supplemental jurisdiction has no anchor.⁴³ The usual exam error treats the two defects as one kind. It either rescues the nondiverse plaintiff because the claim is large and related, or dismisses the whole action because one plaintiff’s claim is small.

The structure of subsection (b) supports the result for a plaintiff like Coleridge. It bars supplemental jurisdiction over claims by plaintiffs joined under Rule 19 and by Rule 24 intervenors, but its text says nothing about plaintiffs permissively joined under Rule 20 or class members certified under Rule 23.⁴⁴ The Court called the resulting inference natural, indeed necessary: Congress listed the plaintiffs it meant to exclude, so those left off the list remain within § 1367(a). The inference is stronger for Rule 20 plaintiffs because subsection (b) does name Rule 20 when it excludes claims against defendants joined under that rule.⁴⁵ The Rule 19 clause supplies a second argument. If adding parties took an action outside original jurisdiction, the limit on Rule 19 plaintiffs would be superfluous, and § 1367 would leave the result in Finley undisturbed even though everyone concedes the statute meant to change it.⁴⁶

The Rule 20 inference cannot help Cowper, because it operates only inside an action that already satisfies complete diversity.⁴⁷ The dissent explains the same silence in subsection (b) differently, as a later subsection shows.⁴⁸

What Allapattah Leaves Intact

Allapattah loosened one requirement, the amount in controversy, and left the rest of § 1367 as Congress wrote it. Subsection (b) still bars supplemental jurisdiction in diversity-only actions over the claims it lists whenever exercising it would be inconsistent with § 1332.⁵⁰ The Court’s holding addresses only the amount: a plaintiff whose own claim falls short may ride with another plaintiff whose claim qualifies.⁵¹ Four limits therefore survive, and each rests on a different feature of the statute.

The first limit is complete diversity. The Court could rescue below-amount claims because a shortfall in the amount goes only to the importance of one claim, while a single nondiverse party contaminates every claim in the lawsuit.⁵² Supplemental jurisdiction therefore attaches in a diversity action only if the parties already satisfy complete diversity as an original matter, and § 1367 cannot add a nondiverse plaintiff, however large or closely related that plaintiff’s claim.⁵³ Cowper’s $100,000 claim in the preceding subsection failed for this reason.

The second limit comes from the text of subsection (b), which covers a plaintiff’s claims against defendants joined under Rule 20. Allapattah involved several plaintiffs suing a single defendant, a shape that subsection (b) does not reach.⁵⁴ A plaintiff’s claim against an added defendant is different. Subsection (b) withholds supplemental jurisdiction over it when exercising jurisdiction would be inconsistent with § 1332, and the amount in controversy is one of § 1332’s requirements.⁵⁵

Two points from that result carry over to new problems. The claim against Watson belongs to the same case or controversy as the claim against Holmes and fails anyway, because relatedness is only one screen. And a plaintiff cannot add claims against separate defendants together to reach $75,000; once a plaintiff meets the amount against one defendant, most courts will not let the plaintiff join a below-amount claim against another.⁵⁶

The treatment of Rule 20 looks lopsided, but it is the text of the statute and not a puzzle awaiting a clever reading. Subsection (b) names Rule 20 when it excludes claims against defendants and says nothing of Rule 20 plaintiffs, and the Court treated that contrast as strengthening its inference that Rule 20 plaintiffs fall within § 1367.⁵⁷ A diverse co-plaintiff with a small claim against the single defendant gets supplemental jurisdiction, while an added defendant facing a small claim does not.⁵⁸

The third limit concerns class actions, where the anchor requirement applies to the named representatives. In Allapattah itself, thousands of Exxon dealers sued as a class, and dealers with small claims stayed in the case because at least one named plaintiff met the amount.⁵⁹ The holding has a floor. The threshold of § 1367(a) is satisfied when some, but not all, of the plaintiffs allege a sufficient amount, so at least one named representative must independently satisfy it, and representatives who each fall short cannot pool their claims unless they share a single title or right.⁶⁰ A class whose lead representative claims $90,000 can carry thousands of members whose claims are worth a few hundred dollars. A class whose five named representatives each claim $20,000 carries none, because no single claimant holds the $100,000 total. With no qualifying named claim, nothing in the action is within the court’s original jurisdiction, and supplemental jurisdiction has nothing to attach to. Such a class may still reach federal court under the Class Action Fairness Act, which permits aggregation against a $5 million threshold and, in certain class actions, relaxes complete diversity to minimal diversity, but that route runs through a different statute with its own conditions.⁶¹

The fourth limit is a drafting oddity the Court declined to repair. Subsection (b) withholds supplemental jurisdiction over claims by persons joined as plaintiffs under Rule 19, who are needed for a just adjudication, and over claims by persons intervening as plaintiffs under Rule 24, yet it says nothing about plaintiffs who join voluntarily under Rule 20.⁶² Read literally, the statute restricts the plaintiff the case requires and frees the plaintiff who merely chooses to join. The Court conceded that the omission may seem odd, though not absurd, and suggested it may have been an unintentional drafting gap that Congress, not the courts, must fix.⁶³ It then offered two possible explanations without choosing between them. Congress may have feared evasion of the complete diversity rule, since a nondiverse plaintiff could be left out of the original action and joined later under Rule 19 as a necessary party; the contamination principle would defeat that ploy, but Congress may have wanted to make assurance double sure. Or Congress may have concluded that federal jurisdiction is appropriate only if the court has original jurisdiction over the claims of every plaintiff so essential that Rule 19 would require joinder.⁶⁴

Until Congress changes the text, a Rule 20 plaintiff who is diverse from the defendant can use supplemental jurisdiction despite a small claim, while a Rule 19 plaintiff or a Rule 24 intervenor cannot.⁶⁵

The order matters because the first two steps can end the problem before the identity of the claimant ever comes up.

The Dissent and Legislative History

Four Justices read the same words differently, and their reading shows how a close textual question can turn on interpretive method. Justice Ginsburg, writing for the four dissenters, argued that in a diversity case the phrase “civil action of which the district courts have original jurisdiction” takes in the rules attached to § 1332 when Congress enacted § 1367, including complete diversity and the rule against aggregating claims.⁶⁹ On that view a complaint must first pass the original-jurisdiction test; one that fails it authorizes no supplemental jurisdiction at all, and one that passes it opens the door to related claims.⁷⁰ The rule at stake came from two earlier decisions. Clark held that when federal jurisdiction rests on a specified amount, each joined plaintiff must independently meet it, and Zahn confirmed that in Rule 23(b)(3) class actions any member who falls short must be dismissed.⁷¹ The dissent lost by one vote, so the majority’s reading is the law, and an answer that says Clark and Zahn still bar an undersized plaintiff in a diversity action misstates the statute as the Court construes it.

The dissent started from the premise that Congress legislates against the law already in place. By 1990 the nonaggregation rule was the solidly established reading of § 1332’s amount requirement, and the dissent treated that rule as the background against which Congress wrote § 1367.⁷² It added the canon that close questions of statutory construction should be resolved in favor of continuity and against change.⁷³ On this account § 1367 codified the doctrines of pendent and ancillary jurisdiction under a single heading and kept their substance, with overriding Finley as the only basic change.⁷⁴

The dissent met the majority’s textual argument on its own ground. The majority had inferred from the silence of subsection (b) about Rule 20 plaintiffs and Rule 23 class members that Congress meant to admit them. The dissent replied that the silence has a simpler explanation: if an undersized plaintiff already fails the original-jurisdiction threshold, Congress had no reason to write an exception in subsection (b) to turn that plaintiff away.⁷⁵ Subsection (b) keeps its own work, which is to stop a plaintiff from using another party’s claim as a hook for a claim the plaintiff could not have brought alone, as in Kroger.⁷⁶ The dissent’s reading would also synchronize § 1367 with the removal statute, which likewise applies only to a civil action of which the district courts have original jurisdiction and which the Court has read to bar removal unless the entire action, as it stands at the time of removal, could have been filed in federal court in the first instance.⁷⁷

Both readings can be run on the same plaintiffs. In the tuna-can case the family members had joined the girl’s suit, and their own claims fell below the amount. Under the majority’s construction they stayed in the case, because the girl’s claim satisfied the amount and subsection (b) names no exception for plaintiffs permissively joined under Rule 20.⁷⁸ Under the dissent’s construction their claims failed the original-jurisdiction test under Clark and Zahn, so the dissent would have affirmed the First Circuit and reversed the Eleventh, which means dismissing both the family members and the dealers whose claims fell short.⁷⁹ The facts are identical under both constructions. The only variable is whether the phrase “original jurisdiction” absorbs the nonaggregation rule.

The dissent also drew on legislative history. Justice Stevens, joined by Justice Breyer, wrote separately to argue that the history confirms the Ginsburg reading.⁸⁰ The House Report specifically said that § 1367 was not intended to upset Zahn, and its entire explanation showed that Congress had in mind a specific and modest task, undoing Finley. According to the Report, the statute otherwise codifies and preserves the pre-Finley understandings of the authorization for and limits on other forms of supplemental jurisdiction, with one small change not relevant here.⁸¹ On that account, the majority’s reading asked § 1367 to do much more than the Report said it would. Stevens also objected to the majority’s method. Ambiguity is in the eye of the beholder, he said, so making a statute’s ambiguity the gateway to legislative history lets each judge’s own confidence decide which evidence counts, and he believed judges are more constrained when they answer to all reliable evidence of legislative intent.⁸²

The majority answered by reading the text first. The statute, it held, is not ambiguous, so the invitation to consult legislative history could be refused at the outset, and even if the dissent’s reading were textually plausible, the history would not change the Court’s view of the best interpretation.⁸³ The Court added that nothing in the history said directly and explicitly that Congress understood “civil action” to exclude cases in which only some diversity plaintiffs meet the amount.⁸⁴

The majority also pressed two criticisms of legislative history. The material is often murky and contradictory, and committee reports are not themselves subject to the requirements of Article I, which may give unrepresentative members, unelected staffers, and lobbyists both the power and the incentive to manipulate the record to win results they could not win in the text.⁸⁵ The Court left open whether those problems make legislative history unreliable in every case, but it found both criticisms right on the mark here. In its view this case showed the second criticism at work: those who helped draft the statute had written that its text overruled Zahn and that the disclaimer in the Report was an attempt to correct an oversight in the text.⁸⁶

The majority’s outcome has a seam that the dissent’s reading lacks. The majority applied the text literally to the amount requirement but required complete diversity as an original matter, which treats the two requirements of § 1332 differently even though the plain text of § 1332(a) does not state the complete diversity rule.⁸⁷ The dissent’s reading keeps both rules inside the original-jurisdiction threshold and does not sever them.⁸⁸ The seam does not change the law, since the majority explained the difference by the distinct purposes of the two requirements. It does show where an essay on Allapattah can credit the dissent’s argument without adopting its result.

The Class Action Fairness Act, enacted in 2005, receives a short treatment in the opinion. The Act confers federal diversity jurisdiction over class actions in which the aggregate amount in controversy exceeds $5 million, subject to limitations, and it abrogates the rule against aggregating claims that Zahn had reaffirmed.⁸⁹ The majority held that the Act has no bearing on how to read § 1367, because the Act is not retroactive and the views of the 2005 Congress are not relevant to a text the 1990 Congress enacted. It also held that the Act does not moot the decision, because many proposed exercises of supplemental jurisdiction, even in class actions, fall outside the Act’s reach.⁹⁰ Section 1367 therefore remains the working source of supplemental jurisdiction. It lets federal courts settle entire disputes, expressly reaches added parties, sets standards for discretionary dismissal, and extends the limitations period for dismissed supplemental claims.⁹¹