Amanda DeMatteis: Hi, Josh.
Josh Goodbaum: Hi, Amanda. What are we talking about today?
DeMatteis: I thought we would talk to our fellow employment lawyers, both in Connecticut and across the country, about a cautionary tale that we’ve just gotten out of the 10th Circuit. What can you tell us?
Goodbaum: Amanda, the case is Markley v. US Bank, and this is a trap that really any plaintiff’s lawyer could fall into, and thanks to our colleagues’ misfortune, we can now avoid.
The case involves a claim for age discrimination. The plaintiff sued in federal court, invoking the court’s federal question jurisdiction, and also pleaded related state law claims under the court’s supplemental jurisdiction. There was no reference in the federal court complaint to diversity jurisdiction, even though there was diversity of citizenship between the plaintiff and the defendant.
The defendant moves to dismiss. The court grants dismissal as to the federal law claim, but it dismisses the state law claims without prejudice because there’s no federal question anymore, so the federal court does not have jurisdiction to proceed.
The plaintiff then refiles the state law claims in state court, but there’s diversity, so the defendant removes the case back to federal court. The defendant then moves to dismiss the state law claims based on claim preclusion because the state law claims had been pursued in the previous action and, more importantly, could have been litigated in the first action under the court’s diversity jurisdiction.
The district court agrees and grants the motion to dismiss. The appellate court affirms, writing: “If a party could have litigated a claim in a prior lawsuit by asserting diversity jurisdiction but fails to do so, that claim is precluded if the prior lawsuit arose from the same operative facts and reached a final judgment on the merits.”
So, let this be a lesson to all of us plaintiff’s employment lawyers and other plaintiffs’ lawyers: If you’re in federal court on a federal claim and there’s diversity between the plaintiff and the defendant, and you want to pursue state law claims, you need to explicitly invoke the district court’s diversity jurisdiction.
DeMatteis: That is what employment law nightmares are made of. Thank you so much. Let’s hope that because of your good work in telling us about this case, it doesn’t happen to any more of our colleagues.
Thank you so much, and thank you for watching. Take care.