7th Circuit Review Blog

RWJ Management Co., Inc. v. BP Products North America (11-1268) is an appeal from a ruling by Judge Rebecca Pallmeyer.

Plaintiffs are franchise owners who sued BP Products alleging violations of Illinois and Indiana state franchise law. The cases began in the Cook County Circuit Court and were consolidated but were removed to Federal Court by BP Products when the franchise owner plaintiffs added a claim under the federal Petroleum Marketing Practices Act. The franchise owners subsequently added a claim based on the Robinson-Patman Act. Less than two weeks before trial, the franchise owners dropped all of their federal claims leaving only state franchise and tort law claims. Judge Pallmeyer then remanded the case to state court since no federal claims remained.

The Court, in its opinion written by Judge Sykes, pointed out that the plain language of the supplemental-jurisdiction statute, 28 U.S.C. §1367(c)(3) allows the District Court to decline to exercise supplemental jurisdiction over state law claims if the court has dismissed all claims over which it has original jurisdiction. Since the statute allows the District Court to use its own judgment, the Seventh Circuit will only intervene if there was an abuse of discretion.

The main argument proffered by BP Products for keeping the case in federal court was a consideration of judicial economy as the District Court presided over the case for 15 months and considered 70 motions. The Seventh Circuit noted that Judge Palllmeyer considered the relevant factors and that given the unsettled nature of Illinois' state franchise law claims, the presumption in favor of relinquishment is "particularly strong." While the amount of attention Judge Pallmeyer gave to case seems large in terms of numbers (35 hearings, 70 motions and 45 orders entered), only one ruling was substantive with the vast majority of the judicial time and orders being used to settle discovery disputes. Since all that remained in the case were claims based on Illinois franchise and tort law, the Seventh Circuit opined that such issues are "ideally" decided by an Illinos judge applying Illinois law.

It is hard to argue with Judge Sykes' conclusion. Professors in my first year of law school ingrained in my fellow classmates' minds that unless a federal court has original jurisdiction, the case can (and in most instances should) be remanded to state court. It is unfortunate that the matter was remanded on the proverbial eve of trial but the supplemental jurisdiction statute is black and white and gives a District Court judge the discretion to remand anytime. From a practical standpoint, discovery was complete in the case so the matter could have easily been set for trial once it was remanded to state court thus alleviating BP Product's concerns regarding judical economy.