Georgine Asbestos Litigation Supplemental Brief on Amount in Controversy Jurisdiction
In *Zahn v. Int'l Paper Co.*, 414 U.S. 291 (1973), the Supreme Court held that, in a class action where jurisdiction is based on diversity of citizenship, each named plaintiff and each absent class member must independently meet the amount-in-controversy requirement of 28 U.S.C. Section 1332. For the first time in this two and a half year old litigation, the CCR defendants now argue that the district court had diversity jurisdiction over the claims of the absent class members under the supplemental jurisdiction statute, 28 U.S.C. Section 1367. Relying on *In re Abbott Laboratories*, 51 F.3d 524 (5th Cir. 1995), CCR maintains that, upon Section 1367's enactment in 1990, Congress overruled *Zahn*. For the reasons that follow, CCR's reliance on *Abbott Labs* and Section 1367 is unavailing.(See Footnote 1) *A. The Plain Language of Section 1367 Does Not Compel the Result Reached in *Abbott Labs*.* *Abbott Labs* held that the plain language of Section 1367 had overruled not only *Zahn*, but the century and a half of precedent upon which it was based, which forbade aggregation of claims to meet the diversity statute's amount-in-controversy requirement. *See* *Zahn*, 414 U.S. at 294-95 (relying non-aggregation rules "firmly rooted in prior cases dating from 1832"). We acknowledge at the outset that Section 1367 can be read reasonably, indeed, taken in isolation, perhaps most easily, to overrule *Zahn*. Subsection (a) grants district courts supplemental jurisdiction of claims that form part of a single Article III case or controversy.(See Footnote 2) Subsection (b) provides a list of types of supplemental claims (*e.g.*, claims under Rules 19 and 24) in diversity cases to which subsection (a) is inapplicable, but it does not list Rule 23, the class action rule. Thus, the argument goes, *Zahn*, which involved an attempt to join absent class members under Rule 23, does not survive the literal language of Section 1367. But as *Abbott Labs* noted, Section 1367 is not a model of clarity, 51 F.3d at 528 n.9, and there is another plausible interpretation of Section 1367 under which *Zahn* would survive. We note at the outset that, despite very extensive briefing on the amount-in-controversy issue below, and Judge Reed's lengthy ruling on the subject, *Georgine v. Amchem Prods., Inc.*, 157 F.R.D. 246, ___ (E.D. Pa. 1994), neither the settling parties nor the court so much as breathed a word about Section 1367's supposed abrogation of *Zahn*. This is so even though the issue had been bandied about in numerous opinions and law review articles, including this Court's decision in *Packard v. Provident Nat'l Bank*, 994 F.2d 1039 1045 n.9 (3d Cir), *cert. denied*, 114 S. Ct. 440 (1993), which has otherwise figured prominently in the parties' and district court's discussion of diversity jurisdiction. It is peculiar, to say the least, that the settling parties now embrace a statute's "plain language" when that language had not even been mentioned previously, let alone been deemed "plain." We now turn to our alternative reading of Section 1367 which comports with Congressional intent. As noted above, the first sentence of subsection (a) of Section 1367 states that the district courts shall have supplemental jurisdiction of claims that may form part of the same case or controversy. This sentence appears to cover both pendent *claims* and pendent *parties*. The very next sentence, however -- the second and last sentence of subsection (a) -- was, in our view, intended to describe the entire universe of permissible supplemental claims against or by pendent *parties*. Thus, it states that such supplemental jurisdiction "shall include claims that involve *joinder* or *intervention* of additional *parties*," but makes no mention of absent class members in class actions, thus leaving *Zahn* unaffected. While, at first blush, it may seem peculiar to ascribe to this sentence an intent to limit pendent-party jurisdiction to only certain types of claims, such a limitation is necessary to give that sentence meaning. Otherwise, the second sentence of Section 1367(a) would be surplusage, since the first sentence of subsection (a), standing alone, would otherwise apply to *all* pendent claims and *all* pendent parties within the reach of Article III. Put another way, the first sentence of subsection (a) speaks of supplemental jurisdiction in general, which clearly encompasses pendent *claims* of a party already properly in federal court. *See* *United Mine Workers v. Gibbs*, 383 U.S. 715 (1966). The next sentence clarifies that certain claims of pendent *parties* also qualify for treatment as supplemental claims. It is this sentence which carries out the principal purpose of the statute, which was "to restore traditional understandings of federal jurisdiction" of pendent-party jurisdiction, *Abbott Labs*, 51 F.3d at 528, that had been swept away in *Finley v. United States*, 490 U.S. 545 (1989), where the Court rejected the concept of pendent-party jurisdiction unless specifically provided for by statute. Enacted the very next year, Section 1367 was intended principally to overrule *Finley*, H.R. Rep. No. 734, 101st Cong., 2d Sess. __ (1990), *reprinted in* 1990 U.S.C.C.A.N. 6860, ___, and, secondarily to codify the standards for exercising other forms of supplemental jurisdiction recognized prior to *Finley*, such as the pendent-claim jurisdiction of *Gibbs*. *See* 28 U.S.C. Section 1367(c); *accord* Mengler, Burbank, and Rowe, "Congress accepts Supreme Court's invitation to codify supplemental jurisdiction," 74 *Judicature* 213, 214-15 (Dec.-Jan. 1991)(discussion of legislative history and purpose by statute's drafters). With this background in mind, the most persuasive reading of Section 1367(a) is that its second sentence describes the subset of Section 1367 claims for which pendent-*party* jurisdiction is available. As such, it is limited by its express terms to "claims that involve joinder or intervention." This is precisely the type of claim that was at issue in *Finley*, where original jurisdiction existed against the federal government under the Federal Tort Claims Act and the plaintiff sought joinder over a party over whom the court did not have original jurisdiction. *Finley*, of course, had nothing to do with claims by or against absent class members, and, not surprisingly, neither does the second sentence of Section 1367(a). Our understanding of subsection (a) is not only a permissible reading of the statute which is consistent with Congressional intent to overrule *Finley*, but it serves to make sense of subsection (b) of Section 1367. Because the second sentence of subsection (a) does not encompass absent class members within the types of claimants for whom pendent-party jurisdiction has been extended, subsection (b)'s list of exceptions in diversity cases is similarly limited to certain rules of civil procedure rules that involve joinder and intervention of *named* parties, and does not extend to unnamed parties in class actions. *See* 28 U.S.C. Section 28 U.S.C. Section 1367(b)(listing Rules 14, 19, 20, and 24). Our reading thus lends a logical symmetry to subsections (a) and (b) that the holding in *Abbott Labs* destroys.(see Footnote 3) Further, subsection (b) was meant to overrule *Finley* only in the context in which it arose --where the original jurisdiction was based on a federal question -- and, therefore, does not permit plaintiffs to bring in pendent * parties in diversity cases. It would have made little sense to forbid plaintiffs to exercise pendent-party jurisdiction in diversity cases in every case except for the most expansive (class actions), without a word to that effect anywhere in the legislative history, especially since doing so would have overruled a well-entrenched, if not well-liked, precedent --*Zahn*. As one court has aptly put it, "[t]he purpose of subsection (b) is to prevent plaintiffs from using the concept of supplemental jurisdiction to evade the complete diversity requirement and other limitations of diversity jurisdiction. ... This purpose is inconsistent with an implied repeal of *Zahn*." *Averdick v. Republic Financial Services, Inc.*, 803 F. Supp. 37, 45 (E.D. Ky. 1992).(See Footnote 4) * B. The Legislative Purpose and History of Section 1367 Demonstrate That *Zahn* Remains Good Law.* As we have shown, there are conflicting permissible interpretations of the literal language of Section 1367, and thus a further inquiry into Congressional intent is necessary. But even if this Court were to agree that the statutory language, considered in isolation, effects an abrogation of *Zahn*, there is no reason why this the Court, like many courts before it, *see*, *e.g.*, *Averdick*, 803 F. Supp. at 45; *Mayo v. Key Financial Services, Inc.*, 812 F. Supp. 277, 278 (D. Mass. 1993), *see* *Abbott Labs*, 51 F.3d at 528 n.8 (citing many cases), should ignore Section 1367's legislative history. The legislative history leaves no doubt that Congress had that intent. The House Judiciary Committee from which Section 1367 emerged stated that the statute was not intended to alter the pre-*Finley* jurisdictional requirements of Section 1332, and noted that "section  is not intended to affect the jurisdictional requirements of 28 U.S.C. Section 1332 in diversity-only class actions, as those requirements were interpreted prior to *Finley*." H.R. Rep. No. 734, *supra*, at 29, *reprinted in* 1990 U.S.C.C.A.N. 6875. The Report specifically cited *Zahn* as one of those pre-*Finley* "jurisdictional requirements" that was to remain unaffected. *Id.* 1990 U.S.C.C.A.N. 6875 n.17. In light of the House Report, the decision in *Abbott Labs* does violence to, rather than advances, Congressional intent. In assessing the import of this legislative history, *Abbott Labs* stated that clear statutory language can only be overcome if application of such language "does not demand an absurd result." *Abbott Labs*, 51 F.3d at 529. While the statute is susceptible to more than one reasonable interpretation and is not as crystal clear as the Fifth Circuit believed, *see* *supra* Part A, *Abbott Labs* nevertheless misinterpreted the relevant principle of statutory construction. A literal application of statutory language is improper if that application would lead to absurd results *or* would be clearly contrary to Congressional intent. As the Supreme Court has put it, plain language "must ordinarily be regarded as conclusive" unless there is a "clearly expressed legislative intention to the contrary ... ." *Consumer Product Safety Comm'n v. GTE Sylvania, Inc.*, 447 U.S. 102, 108 (1980); *see* *also, **e.g.*, *United States National Bank of Oregon v. Independent Ins. Agents of America, Inc.*, 113 S. Ct. 2173, 2186 n.11 (1993)(use of legislative history is appropriate, where "the law's plain meaning is 'demonstrably at odds with the intentions of the drafters'")(citations omitted). In light of the House Report, and the sequence of events following the Supreme Court's decision in *Finley*, to interpret Section 1367 as overruling *Zahn* would, indeed, be contrary to "clearly expressed legislative intention," as the vast majority of courts to have addressed the question have held. *See* *Abbott Labs*, 51 F.3d at 528 n.8 (listing cases). Thus, a finding of "absurd results" is not required for this Court uphold the rule in *Zahn*. Nevertheless, even if absurd results were required, the Fifth Circuit erred. In attempting to demonstrate that its decision would not lead to an absurd outcome, *Abbott Labs* correctly noted that the result in *Zahn* has been criticized by certain commentators and that Justice Brennan's *Zahn* dissent did not espouse an absurd position. *Abbott Labs*, 51 F.3d at 529. However, one could always posit a "non-absurd" result if the question were simply whether a particular result -- considered in a vacuum -- were a possible policy choice. But the appropriate question here is whether, in the context of Section 1367's legislative background, beginning with *Finley* and ending with the House Report, it is rational to believe that Congress wanted to overrule *Zahn* in the Judicial Improvements Act of 1990. As noted above, that is inconceivable, given Congress' limited purposes of overruling *Finley* and codifying pre-existing doctrines of pendent jurisdiction. If Congress had suddenly wanted to open the federal courts to all manner of small-claims class actions in which *only* state law was applicable, it would have surely been the subject of considerable debate, or at least *some* debate. Thus, when placed in the context in which it arose, it would be absurd to ascribe to the 101st Congress the intent to overrule *Zahn*, and this Court should reject *Abbott Labs*' contrary holding. *C. This Court Need Not Reach The Question Decided by *Abbott Labs* Because The Named Plaintiffs' Claims Did Not Meet the Amount-in-Controversy Requirement.* As noted in our Reply Brief (at 6 n.2), the issue presented in *Abbott Labs* can be avoided here, because 28 U.S.C. Section 1367(a) and *Snyder v. Harris*, 394 U.S. 332 (1969), nevertheless require that each representative plaintiff in a diversity class must individually meet Section 1332's amount-in-controversy requirement, a point which CCR concedes. CCR Surreply 22. *See* McLaughlin, "The Federal Supplemental Jurisdiction Statute--A Constitutional and Statutory Analysis," 24 Ariz. St. L.J. 849, 973 n.606 (1992)(arguing that Section 1367 should not be interpreted as overruling *Zahn*, but noting that, even if it does, *Snyder* remains unaffected). Thus, even assuming that *Zahn* is a dead-letter, because none of the named exposure-only plaintiffs' claims, their claims and the claims of the absent exposure-only class members they purport to represent must be dismissed. As we discussed in our prior briefs, each exposure-only named plaintiff specifically stated, under oath, that he was not seeking any damages at all at the time the complaint was filed. Rather than repeat what the plaintiffs said, we direct the Court to our briefs which recount their testimony in detail and the arguments that accompany that testimony.(See Footnote 5) We note as well that neither CCR's main brief or its Surreply has pointed to any record evidence rebutting the testimony upon which we rely or otherwise demonstrating that the exposure- only plaintiffs had made good-faith claims for the money damages alleged in the complaint. Thus, as it did in *Packard*, 994 F.2d at 1045 n.9, this Court properly may defer the question whether Section 1367 overrules *Zahn* by holding that the named plaintiffs' claims do not meet Section 1332's amount-in-controversy requirement. --------------------------------------- FOOTNOTES --------------------------------------- Footnote 1: 28 U.S.C. Section 1367 provides in pertinent part: (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. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties. (b) In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims made by plaintiffs against persons made parties under Rule 14, 19, 20 or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332. Footnote 2: We also maintain that the complaint does *not* allege an Article III case or controversy, but we need not repeat those arguments here. *See* White Lung Open. Br. __; White Lung Reply Br. 19-24. Footnote 3: Indeed, *Abbott Labs* acknowledges that its reading of the statute may reflect a "clerical error" that is at odds with Congress' actual intent. *Abbott Labs*, 51 F.3d at 528. If, as we have shown, there is a permissible construction which is consistent with Congressional intent and does not depend on a clerical error, such a construction is obviously preferable. *See* *United States National Bank of Oregon v. Independent Ins. Agents of America, Inc.*, 113 S. Ct. 2173, 2182-83 (1993)(rejecting literal application of certain punctuation marks because they "were misplaced," as evidence by other evidence of Congressional intent). Footnote 4: *See* *also* Mengler, *supra*, 74 *Judicature* at 215 ("Class actions under Federal Rule of Civil Procedure 23 are not included in the diversity cases to which the restrictions in subsection (b) apply, and the legislative history makes clear that section 1367 is not intended to affect their jurisdictional requirements as previously determined. Thus, the Supreme Court's holding that ... all class members must satisfy the amount in controversy requirement, remain[s] good decisional law [footnote citing *Zahn* omitted]." Footnote 5: White Lung Open. Br. ___; White Lung Reply Br. ___.