Thursday, February 2, 2012

What does Groundhog Day teach us about federal courts?

In the movie Groundhog Day, Bill Murray repeats February 2—over, and over, and over again—until he gets it right. In Sollitt v. Keycorp (6th Cir. 2/1/12) [pdf], Kevin Sollitt and his former employer are doomed to repeat his wrong discharge lawsuit, because the bank took an aggressive position in removing his case to federal court.

(For the uninitiated who want to read all about the removal of lawsuits from state court to federal court, click here, read, and then come back.)

In sum, the appellate court concluded that the Edge Act—which permits claims involving international or foreign banking to be filed in federal court—did not provide a basis for removal of Sollitt’s state law wrongful discharge claim. The Court was reluctant to subscribe “an inherently limitless view” to the Edge Act’s grant of federal jurisdiction:

Suppose, for example, that Sollitt had tripped and fallen over a stack of carelessly placed printouts of foreign-currency transactions. This meager association—ridiculous as it is—between the potential negligence claim and the foreign banking transaction that generated the printouts, would appear to suffice for Edge Act jurisdiction under so limitless a view. That cannot be correct….

Sollitt accused a co-worker of misconduct, KeyCorp fired Sollitt, and Sollitt sued in federal court for wrongful termination. KeyCorp’s firing of Sollitt was not an aspect of “banking” and, therefore, Sollitt’s claim of wrongful termination did not “arise out of” a banking transaction, even though the entire episode arguably can be traced back to the PHC foreign currency transaction.

As a result, the case will be remanded back to state court, where it was originally filed. In the interim, the parties litigated the case, and the employer won summary judgment. Now, the parties are going back to state court, (maybe) to do it all over again. The plaintiff will certainly want the chance to re-present the factual issues raised in opposition to the summary judgment motion, or present new issues he may have discovered.

The lesson? Be very careful when you remove cases. A federal court’s subject matter jurisdiction is always in play, at each stage of litigation. An appellate court can bounce a case back to state court even if the district court never even entertained the jurisdictional issue. When that happens, you will have a Bill Murray moment.

Happy Groundhog Day.

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