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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION KALITTA AIR, LLC, Plaintiff, vs. GSBD & ASSOCIATES, LLC, et al., Defendants. ______________________________/ ORDER GRANTING THE MOTION OF DEFENDANTS GRAY AND GSBD & ASSOCIATES, LLC, TO DISMISS THE COMPLAINT This matter is presently before the Court on the motion of defendants William Gray and GSBD & Associates, LLC, to dismiss the complaint for lack of subject matter jurisdiction [docket entry 121]. Plaintiff has filed a response in opposition. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court shall decide this motion without oral argument. This case involves a dispute over a contract for the sale and purchase of jet fuel. The first amended complaint (FAC) asserts one federal claim against some of the defendants under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c) and (d), and various state-law claims against all of the defendants. The Courts subject matter jurisdiction rests solely on the RICO claim. See FAC 18. In a series of orders, the Court dismissed the RICO claim against all of the defendants (and cross-claim defendants) who sought dismissal of this claim. See docket entries 100, 102, 103, 104, 105, 117. In the instant motion defendants Gray and GSBD seek dismissal of the state-law claims for lack of subject matter jurisdiction, noting that the only federal claim in this matter has been dismissed and that diversity jurisdiction does not exist because plaintiff and several of the defendants are citizens of the State of Michigan. Plaintiff acknowledges that Civil Action No. 12-CV-13554 HON. BERNARD A. FRIEDMAN

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diversity jurisdiction does not exist, but it argues that the Court should nonetheless continue to exercise supplemental jurisdiction over the state-law claims because (1) a clerks default has been entered against one of the defendants (Stephen Westman) and the claims asserted against him include the RICO claim; and (2) dismissal of the state-law claims would lead to an inefficient use of judicial resources and cause plaintiff to start over in state court. The Courts exercise of supplemental jurisdiction is governed by 28 U.S.C. 1367, which states: (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. * * *

(c) 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. Under subsection (a), the Court clearly had authority initially to exercise supplemental jurisdiction over plaintiffs state-law claims due to the presence of the RICO claim. The issue raised by defendants motion is whether the Court should continue to exercise supplemental jurisdiction over 2

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the state-law claims now that the RICO claim has been dismissed. Plaintiff first argues that the Court may not decline to exercise supplemental jurisdiction because not all of the federal claims have been dismissed. Pl.s Resp. Br. at 8. Plaintiff points to the fact that the RICO claim has not been dismissed as to defendant Stephen Westman. Westman was served with process on November 5, 2012, while he was confined at a jail in Santa Ana, California. See docket entry 41; Pl.s Resp. Br. at 2. Westman, who is one of the eight defendants against whom the RICO claim is asserted, see FAC at 15, has never responded to the complaint or taken any action in this case. On May 17, 2013, at plaintiffs request, the clerk entered Westmans default. Plaintiff has not moved for a default judgment as to Westman. Technically, plaintiff is correct in observing that not all of the federal claims have been dismissed, as the RICO claim remains in place as to Westman. But this is due solely to the fortuity that Westman has not requested dismissal. Were he to do so, the Court would grant such a motion for the same reasons articulated in the above-referenced orders (docket entries 100, 102, 103, 104, 105, 117) which have dismissed the RICO claim as to all of the other defendants because the FAC fails to allege a pattern of racketeering activity. This ruling is the law of the case, and it applies with equal force as to Westman as to the defendants who filed motions to dismiss the RICO claim. See Arizona v. California, 460 U.S. 605, 618 (1983) (under the law of the case doctrine, when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case); Bench Billboard Co. v. City of Covington, 2013 WL 5942230, at *8 (6th Cir. Nov. 1, 2013). Plaintiff has argued extensively in opposition to the other RICO defendants motions to dismiss this claim. The Court is familiar with plaintiffs arguments and has rejected them for the reasons indicated previously. There is no reason to suspect that

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plaintiff would present any different arguments if Westman were to move for dismissal of this claim. Applying the law of the case doctrine, the Court shall sua sponte dismiss the RICO claim as to defendant Westman.1 All federal claims in this matter have now been dismissed. As the Supreme Court has recognized, [a] district courts decision whether to exercise [supplemental] jurisdiction after dismissing every claim over which it had original jurisdiction is purely discretionary. Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009). The factors a district court should consider in exercising this jurisdiction include the values of

Even if the Court elected not to dismiss the RICO claim as to Westman, the existence of that claim would not justify the exercise of supplemental jurisdiction over all of plaintiffs statelaw claims. As the Second Circuit aptly noted in Oneida Indian Nation v. Madison County, 665 F.3d 408, 439 (2nd Cir. 2011): Even if the existence of one narrow surviving federal claim means that not all claims over which [the district court] has original jurisdiction have been dismissed, . . . it has nonetheless become clear that the state-law claims now substantially predominate[ ] in this litigation, [] 1367(c)(2). Once it appears that a state claim constitutes the real body of a case, to which the federal claim is only an appendage, the state claim may fairly be dismissed. Gibbs, 383 U.S. at 727, 86 S.Ct. 1130; see also, e.g., Dargis v. Sheahan, 526 F.3d 981, 991 (7th Cir. 2008) (survival of one federal due-process claim does not require court to retain jurisdiction over seven state-law claims); Garro v. Connecticut, 23 F.3d 734, 737 (2d Cir. 1994) (survival of an insubstantial federal claim does not require that jurisdiction be retained over state-law claim). Thus, dismissal of the state-law claims in this matter is justified under 1367(c)(2) as well as 1367(c)(3). The state-law claims (Counts II-X) substantially predominate over the RICO claim. Dismissal of the state-law claims is also warranted under 1367(c)(4), as Westmans failure to file a motion to dismiss the RICO claim a motion the Court would certainly grant is an exceptional circumstance and a compelling reason justifying the Court in not exercising supplemental jurisdiction. It would be an odd circumstance indeed if the Court were to exercise such jurisdiction and decide the many state-law claims pled against 15 defendants merely because one defendant neglected to seek dismissal of an inadequately pled federal claim. 4

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judicial economy, convenience, fairness, and comity. City of Chicago v. Intl Coll. of Surgeons, 522 U.S. 156, 173 (1997), quoting CarnegieMellon Univ. v. Cohill, 484 U.S. 343, 350 (1988). When all federal claims are dismissed before trial, the balance of considerations usually will point to dismissing the state law claims, or remanding them to state court if the action was removed. Gamel v. City of Cincinnati, 625 F.3d 949, 952 (6th Cir. 2010), quoting Musson Theatrical, Inc. v. Fed. Exp. Corp., 89 F.3d 1244, 1254-55 (6th Cir. 1996). Accord, Packard v. Farmers Ins. Co. of Columbus Inc., 423 F. Appx 580, 584 (6th Cir. 2011) (this Court applies a strong presumption against the exercise of supplemental jurisdiction once federal claims have been dismissed); Brown v. Cassens Transp. Co., 546 F.3d 347, 363 (6th Cir. 2008) (a federal court should typically decline to exercise pendent jurisdiction over a plaintiffs state-law claims after dismissing the plaintiffs federal claims); Experimental Holdings, Inc. v. Farris, 503 F.3d 514, 521 (6th Cir. 2007) (Generally, once a federal court has dismissed a plaintiffs federal law claim, it should not reach state law claims); Moon v. Harrison Piping Supply, 465 F.3d 719, 728 (6th Cir. 2006) (a federal court that has dismissed a plaintiffs federal-law claims should not ordinarily reach the plaintiff's state-law claims. . . . Residual jurisdiction should be exercised only in cases where the interests of judicial economy and the avoidance of multiplicity of litigation outweigh our concern over needlessly deciding state law issues); Washington v. Starke, 855F.2d 346, 352 (6th Cir. 1988) (It is a clear rule of this circuit that if a plaintiff has not stated a federal claim, his pendent state law claims should be dismissed). See also 13D C. Wright & A. Miller, Federal Practice and Procedure 3567.3, pp. 428-29 (2008) (In Gibbs and Carnegie-Mellon, . . . the Court created a rule of thumb to which courts have consistently adhered in applying 1367(c)(3). As a general matter, a court will decline supplemental jurisdiction if the underlying claims are dismissed before trial).

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In the present case, the relevant factors weigh in favor of abiding by the general rule and dismissing the state-law claims. No judicial economy would be gained if this Court were to decide those claims. This Court or a state court would expend the same resources in resolving the case. This Court has a superficial familiarity with the issues in this case, having decided a number of motions to dismiss. However, the Court has focused primarily on the RICO claim, not the statelaw claims, and it has only assessed whether claims were stated, not whether they have evidentiary support. The Court has not issued a scheduling order or convened an initial pretrial conference, and the parties have conducted no discovery and filed no substantive motions other than the abovereferenced motions to dismiss. Therefore, no judicial economy will be lost if the state-law claims are litigated in state court. Fairness and convenience do not tip the balance either way. Comity, however, strongly favors dismissal of the state-law claims. As the Supreme Court commented in United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726-27 (1966), [n]eedless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law. Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well . . . and left for resolution to state tribunals. As a matter of comity and federalism, federal courts should not decide state-law claims in the absence of a solid jurisdictional basis. As a rule, state-law claims should be decided by state courts. Accordingly,

IT IS ORDERED that plaintiffs RICO claim as to defendant Stephen Westman is dismissed sua sponte.

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IT IS FURTHER ORDERED that defendants motion to dismiss is granted. Plaintiffs state-law claims are dismissed without prejudice pursuant to 28 U.S.C. 1367(c)(2), (c)(3) and (c)(4).

Dated: December 5, 2013 Detroit, Michigan

S/ Bernard A. Friedman_______ BERNARD A. FRIEDMAN SENIOR UNITED STATES DISTRICT JUDGE