Solow v. Jenkins, Not Reported in F.Supp.

2d (2000)

The genesis of this action was an altercation between Stefan

Solow, an employee of Solow, and Joseph M. Jenkins
2000 WL 489667
(“Jenkins”), an employee of J.P. Morgan. Stefan Solow sued
Only the Westlaw citation is currently available.
Jenkins and J.P. Morgan. Subject matter jurisdiction for that
United States District Court, S.D. New York.
action was based on diversity of the parties. Morgan filed an
amended answer in response to Stefan Solow's complaint, in
Stefan S. SOLOW and
which it asserted a counterclaim for indemnification for the
Stacey Solow, Plaintiffs, tort under Morgan's lease at 9 West 57th Street, a building
v. owned by Solow in which the altercation between Stefan
Solow and Jenkins took place. The Court has supplemental
Joseph M. JENKINS and J.P.
jurisdiction for Morgan's indemnification counterclaim under
Morgan & Co. Inc., Defendants.
28 U.S.C. § 1367(a).1 Solow then filed a counterclaim against
MORGAN GUARANTY TRUST COMPANY Morgan, incorporating claims arising out of Morgan's lease
OF NEW YORK s/h/a J.P. Morgan at 9 West 57th Street that were pending in state court.
By stipulation of the parties, the complaint and Morgan's
& Co., Inc., Third Party Plaintiff,
indemnification counterclaim were dismissed with prejudice
v. and are no longer before the Court.
Sheldon H. SOLOW, d/b/a Solow Building
Company, Third Party Defendant. Discussion
Whether the Court has subject matter over Solow's
No. 98 Civ. 8726 RPP.
counterclaim involves the interplay between Rule 13 of
|
the Federal Rules of Civil Procedure, which addresses
April 25, 2000.
compulsory and permissive counterclaims, and 28 U.S.C. §
Attorneys and Law Firms 1367(a), the supplemental jurisdiction statute. Under Rule
13(a), a counterclaim is compulsory “if it arises out of
Attn: Richard C. Seltzer, Kaye, Scholer, Fierman, Hays the transaction or occurrence that is the subject matter of
& Handler, LLP, New York, New York, for Third–Party the opposing party's claim and does not require for its
Plaintiff. adjudication the presence of third parties of whom the
court cannot acquire jurisdiction.” Such a counterclaim is
Attn: Robert B. Silver, Boies, Schiller & Flexner, LLP, compulsory unless “at the time the action was commenced
Armonk, New York, for Third–Party Defendant. the claim was the subject of another pending action ...”
Fed.R.Civ.P. 13(a). Under Rule 13(b), which concerns
permissive counterclaims, “[a] pleading may state as a
OPINION AND ORDER counterclaim any claim against an opposing party not arising
out of the transaction or occurrence that is the subject matter
PATTERSON, J.
of the opposing party's claim.”
*1 Third–Party Defendant/Counterclaimant Sheldon H.
Solow, d/b/a Solow Building Company (“Solow”) moved Section 1367(a) states:
on April 7, 2000 to dismiss this action for lack of subject
Except as provided in subsections (b) and (c) or as
matter jurisdiction. Trial commenced on April 13, 2000. At
expressly provided otherwise by Federal statute, in any
the Court's request, Third–Party Plaintiff Morgan Guaranty
civil action of which the district courts have original
Trust Company of New York (“Morgan”), s/h/a J.P. Morgan
jurisdiction, the district courts shall have supplemental
& Co., Inc. (“J.P.Morgan”) responded to Solow's motion to
jurisdiction over all other claims that are so related to
dismiss on April 17, 2000. For the reasons that follow, Solow's
claims in the action within such original jurisdiction
motion to dismiss was granted on April 17, 2000.
that they form part of the same case or controversy
under Article III of the United States Constitution. Such
Background supplemental jurisdiction shall include claims that involve
the joinder or intervention of additional parties.

© 2021 Thomson Reuters. No claim to original U.S. Government Works. 1

Solow v. Jenkins, Not Reported in F.Supp.2d (2000)
*2 28 U.S.C. § 1367(a).
Solow maintains that its counterclaim was filed as a
compulsory counterclaim. However, it is a permissive
counterclaim. When Morgan filed its indemnification
counterclaim, Solow's counterclaim was “the subject of
another pending action” in state court. Fed.R.Civ.P. 13(a).
Before the enactment of § 1367, the rule was clear that
permissive counterclaims required their own bases for
jurisdiction. See, e.g., Federman v. Empire Fire & Marine
Insurance Co., 597 F.2d 798, 812 (2d Cir.1979). Now,
however, there is some authority to suggest that whether a
counterclaim is compulsory or permissive is irrelevant for
determining whether the court has supplemental jurisdiction
and that the court should determine, based on the particular
circumstances of the case, whether it has authority to
exercise supplemental jurisdiction under § 1367(a). Channell
v. Citicorp National Services, Inc., 89 F.3d 379, 384–86 (7th
Cir.1996).
Morgan cites several decisions, all from the Seventh
Circuit, in support of its argument that, if the counterclaim
relates to the claims in this action, the Court can exercise
supplemental jurisdiction over it. In all of these Seventh
Circuit cases, the counterclaims are related to the original
action, not to counterclaims such as Morgan's indemnification
counterclaim.
In Channell v. Citicorp National Services, Inc., a class of
plaintiffs, all of whom had automobile leases which had
been assigned to Citicorp National Services and all of whose
leases terminated before expiration and who had paid or been
charged termination fees for the early termination of their
leases, brought a claim against Citicorp National Services
under the Consumer Leasing Act. 89 F.3d 379 (7th Cir.1996).
Citicorp filed a counterclaim seeking a judgment for the
termination payments owed to Citicorp by certain of the
plaintiffs for early termination of their leases. The district
court judge dismissed Citicorp's claim, asserting that it did
not have subject matter jurisdiction because Citicorp's claim
was a state-law claim for which the requirements of diversity
jurisdiction were not met.
In reviewing the district court's dismissal of the claim, the
Seventh Circuit noted that, “[u]ntil recently, it was clear that
a permissive counterclaim based on state law requires an
independent basis of jurisdiction.” 89 F.3d at 384. The court
went on to hold that the language of § 1367(a), providing for
supplemental jurisdiction “over all other claims that are so
© 2021 Thomson Reuters. No claim to original U.S. Government Works.
related to claims in the action within [the] original jurisdiction
that they form part of the same case or controversy under
Article III of the United States Constitution,” superseded
the rule on subject matter jurisdiction over permissive
counterclaims. The court analyzed the issue of jurisdiction
according to the language of § 1367(a), irrespective of
whether Citicorp's claim was a compulsory or a permissive
counterclaim. The court based its holding that there was
supplemental jurisdiction over Citicorp's counterclaim on
the close relation between Citicorp's counterclaim and the
original claims by the plaintiff class:
*3 Each class member's claim against Citicorp depends
on the lease, and indeed on the same clause of the lease
that creates Citicorp's claim for a termination charge. The
acts creating the claims differ—the claims against Citicorp
stem from the signing of the lease, while the claims against
the class stem from the early termination of the lease. But
the parties, the lease, the clause, and even the terminations
are constants....
89 F.3d 379, 385–86. The Seventh Circuit held that the district
court may exercise jurisdiction over Citicorp's counterclaim
under § 1367(a), but remanded to district court to determine
if that discretion should be exercised in light of § 1367(c).2
89 F.3d at 387.
Channell relied on several earlier Seventh Circuit decisions,
including Baer v. First Options of Chicago, Inc., Ammerman
v. Sween, and Brazinski v. Amoco Petroleum Additives Co.
Baer concerned a dispute between two attorneys, both of
whom claimed ownership of more than $42,000 in attorney's
fees for representing plaintiff in her Title VIII claim. 72 F.3d
1294 (7th Cir.1995). The court observed “that supplemental
jurisdiction generally has been asserted over attorney's fees
disputes when the disagreement arises between the client and
the lawyer,” noting that, “in this case, the original parties to
the underlying litigation are no longer involved.” 72 F.3d at
1299–1300. The court held that the district court did have
supplemental jurisdiction over the dispute under § 1367(a),
because “[u]nder these circumstances, ... this dispute was part
of the same ‘case or controversy’ as the underlying litigation.”
72 F.3d at 1301 (quoting 28 U.S.C. § 1367(a)). The legal fees
in Baer arose out of the original action, as in Cluett, Peabody
& Co. v. CPC Acquisition Co. in the Second Circuit. 863 F.2d
251 (2d Cir.1988).
In Ammerman v. Sween, the Seventh Circuit reviewed whether
the district court had subject matter jurisdiction over plaintiff's
state law claims for negligent infliction of emotional distress
2
Solow v. Jenkins, Not Reported in F.Supp.2d (2000)

and assault and battery that she raised in her Title VII action
for sexual harassment. 54 F.3d 423 (7th Cir.1995). Both
her Title VII claim and her state law claims arose out of
a sexual assault by defendant Sween. The Title VII claim
and the intentional infliction of emotional distress claim were
eventually dismissed, but plaintiff's assault and battery claim
against Sween was tried and the jury entered a verdict in favor
of the plaintiff in the amount of $60,000. On appeal, Sween
argued “that subject matter over the state claim was never
conferred upon the district court.” 54 F.3d at 424.
In finding that the district court did have supplemental
jurisdiction over the assault and battery claim under §
1367(a), the Seventh Circuit explained:
[Section 1367] confers supplemental jurisdiction to the
limits Article III of the Constitution permits, authorizing
federal courts to hear all claims that “are so related to
the claims in the action within such original jurisdiction
that they form part of the same case or controversy.”
Accordingly, judicial power to hear both state and federal
claims exists where the federal claim has sufficient
substance to confer subject matter jurisdiction on the court,
and the state and federal claims derive from a common
nucleus of operative facts. A loose factual connection
between the claims is generally sufficient.
*4 54 F.3d at 424 (internal citations omitted).
Cir.1993). It was later learned that one of the plaintiffs was not
an employee of Amoco. Therefore, her right of privacy claim
arose under state law, as opposed to the federal Taft–Hartley
Act. The Seventh Circuit held that “there is no doubt that [§
1367] covers [the non-employee's] suit in light of the close
relation between it and the employees' suit.” 6 F.3d at 1181.
A close reading of these cases and the language of § 1367(a)
dictates that Solow's counterclaim must form part of the same
case or controversy as the “original action” for the Court
to have authority to exercise supplemental jurisdiction over
the counterclaim. In this case, the “original action” arose
out of an altercation between two individuals, one of whom
was employed by Solow and one of whom was employed
by J.P. Morgan. The connection between this altercation
and Solow's counterclaim against Morgan for violations of
Morgan's obligations under its lease for the building space
in which the altercation took place is too far attenuated
to confer subject matter jurisdiction over the counterclaim.
Unlike the cases from the Seventh Circuit cited by Morgan,
Solow's counterclaim is based on different facts than the
original action and the counterclaim is between different
parties. Therefore, because supplemental jurisdiction over
Solow's counterclaim is not appropriate and because there is
no independent basis for jurisdiction, this action is dismissed
under 28 U.S.C. § 1367(a) for lack of subject matter
jurisdiction.

Finally, in Brazinski v. Amoco Petroleum Additives Co., eight IT IS SO ORDERED.

female workers sued their employer under section 301 of the
Taft–Hartley Act, codified at 29 U.S.C. § 185, complaining
All Citations
“that they had been subjected to video surveillance in
violation of their tort right of privacy.” 6 F.3d 1176, 1178 (7th Not Reported in F.Supp.2d, 2000 WL 489667

Footnotes
1 Solow argues that Morgan's indemnification counterclaim required its own jurisdictional basis because “the third party's
liability here is neither dependent upon the outcome of the main claim nor is the third party potentially secondarily liable
as a contributor to the defendant.” Kenneth Leventhal & Co. v. Joyner Wholesale Co., 736 F.2d 29, 31 (2d Cir.1984).
However, in this case, the indemnification counterclaim was sufficiently related to the original action that Morgan's
impleader of Solow was proper in this case.
2 Section 1367(c) provides:
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, or
(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.
28 U.S.C. § 1367(c).

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Solow v. Jenkins, Not Reported in F.Supp.2d (2000)

End of Document © 2021 Thomson Reuters. No claim to original U.S.

Government Works.

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