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

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

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