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                      REVISED JANUARY 20, 2014

         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT
                                                              United States Court of Appeals
                                                                       Fifth Circuit

                                                                    FILED
                                  No. 12-31184                     January 9, 2014

                                                                   Lyle W. Cayce
                                                                        Clerk
ENERGY MANAGEMENT SERVICES, LLC,

                                             Plaintiff-Appellant
v.

CITY OF ALEXANDRIA,

                                             Defendant-Appellee



                   Appeal from the United States District Court
                      for the Western District of Louisiana


Before WIENER, DENNIS, and OWEN, Circuit Judges.
DENNIS, Circuit Judge:
       Plaintiff-Appellant Energy Management Services, L.L.C. (“EMS”) appeals
the district court’s order denying EMS’s motion to remand its suit against the
City of Alexandria, Louisiana (“the City”) to the state court from which it was
removed. Because the district court does not have jurisdiction over EMS’s suit,
we REVERSE the district court’s order and REMAND this case to the district
court with instructions to remand it to the Louisiana state court in which it was
initially filed.
                                        I.
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                                  No. 12-31184

      In a previous case, the City filed suit against its electricity provider,
CLECO Corporation and its subsidiaries (collectively “CLECO”), in Louisiana
state court on June 22, 2005, alleging that CLECO had overcharged the City for
electricity. CLECO removed the case (hereinafter “City v. CLECO”) to the U.S.
District Court for the Western District of Louisiana. The City and CLECO
reached a settlement agreement that involved several long-term contractual
relationships between the City and CLECO and two cash payments from
CLECO to the City. On February 24, 2010, in light of the settlement, the district
court entered a Judgment of Dismissal that dismissed the case with prejudice.
However, the district court retained jurisdiction over the City v. CLECO
settlement for the purpose of resolving disputes over attorneys’ fees expended
during the litigation of the otherwise-dismissed case and to enforce its protective
orders governing the confidentiality of the settlement proceedings and
documents, as needed. The evidence and settlement documents are under seal
in the district court.
      In 2004, in anticipation of its suit against CLECO, the City hired EMS, a
Louisiana-based energy and utility auditing and consulting firm, to conduct an
audit of the City’s electricity expenses and specifically its overpayments to
CLECO. EMS and the City signed an agreement that provided, inter alia, that
EMS’s fee was twenty percent of any recovery, damages, or other credits the City
received as a result of the City v. CLECO litigation. The agreement also
provided that the City would allow EMS to review all settlement documents in
order to assess its fee.
      Subsequently, in August 2010, EMS filed a separate suit against the City
in Louisiana state court. EMS asserted a breach of contract claim alleging that
the City failed to provide compensation and documentation, seeking damages as
well as a request for accounting and a writ of sequestration. The City removed
the case to the U.S. District Court for the Western District of Louisiana on

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August 26, 2010, asserting supplemental jurisdiction under 28 U.S.C. §§ 1367
and 1441. On September 16, 2010, EMS filed a motion to remand the case to
state court. The district court denied EMS’s motion to remand on the basis that
it possessed supplemental jurisdiction over EMS’s claims against the City. The
district court then granted EMS’s motion to certify the order for immediate
interlocutory appeal, authorizing this court’s review of the decision under 28
U.S.C. § 1292(b). We granted EMS’s Motion for Leave To Appeal from an
Interlocutory Order and now consider EMS’s appeal.
                                              II.
                                              A.
       “Federal courts are courts of limited jurisdiction. They possess only that
power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins.
Co. of Am., 511 U.S. 375, 377 (1994). “It is to be presumed that a cause lies
outside this limited jurisdiction, and the burden of establishing the contrary
rests upon the party asserting jurisdiction.” Id. Furthermore, “[t]he right of
removal is entirely a creature of statute and ‘a suit commenced in a state court
must remain there until cause is shown for its transfer under some act of
Congress.’ These statutory procedures for removal are to be strictly construed.”
Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32 (2002) (quoting Great N. Ry.
Co. v. Alexander, 246 U.S. 276, 280 (1918)). “If at any time before final judgment
it appears that the district court lacks subject matter jurisdiction [over a
removed case], the case shall be remanded.” 28 U.S.C. § 1447(c). We review the
denial of a motion to remand to state court de novo. Roland v. Green, 675 F.3d
503, 511 (5th Cir. 2012).
       The district court denied EMS’s motion to remand on the ground that it
possessed supplemental1 jurisdiction over EMS’s claims against the City because

       1
        A district court’s authority to exercise supplemental jurisdiction over state law claims
was codified in 1990 under 28 U.S.C. § 1367, which states in relevant part:

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EMS’s subsequent lawsuit was “factually interdependent” with the City v.
CLECO case and, therefore, should be maintained in the court with jurisdiction
over that litigation and settlement. We reverse, concluding that (1) the district
court does not have original jurisdiction over EMS’s state-court civil action
required to permit its removal to federal court, and (2) although the district


        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.
28 U.S.C. § 1367(a). Congress drafted § 1367 with the intent to codify, in part, the common-
law doctrines of “pendent” and “ancillary” jurisdiction. See 28 U.S.C. § 1367, David Siegel,
Practice Commentary, “The 1990 Adoption of §1367, Codifying ‘Supplemental’ Jurisdiction.”
Historically, the doctrine of pendent jurisdiction referred to a district court’s authority to
exercise jurisdiction over claims raised by a plaintiff in a single civil action regarding the same
event, series of events, or course of conduct, so long as one of such claims satisfied the court’s
original jurisdiction requirement, thereby acting as a “jurisdictional crutch” over the related
claims that independently would not invoke the court’s jurisdiction. Id. Comparatively,
ancillary jurisdiction referred to the court’s adjudicatory power over a defendant’s factually
related cross-claims or counterclaims against the plaintiff, as well as “impleader” claims made
by a third party. Id. The Supreme Court has explained that “ancillary” jurisdiction referred
to the district court’s jurisdiction exercised both “(1) to permit disposition by a single court of
claims that are, in varying respects and degrees, factually interdependent; and (2) to enable
a court to function successfully, that is, to manage its proceedings, vindicate its authority, and
effectuate its decrees.” Kokkonen, 511 U.S. 375, 379-80 (1994) (citations omitted).
        This first type of ancillary jurisdiction has largely been codified as part of supplemental
jurisdiction in § 1367. See Peacock v. Thomas, 516 U.S. 349, 354 n.5 (1996). Because of the
historical development of the doctrine, courts sometimes refer interchangeably to this type of
jurisdiction as either “supplemental” or ancillary jurisdiction. The second type of ancillary
jurisdiction, though not codified, remains a viable doctrine of ancillary jurisdiction and is often
referred to as “ancillary enforcement jurisdiction.” See Peacock, 516 U.S. at 356; Myers v.
Richland Cnty., 429 F.3d 740, 746-47 (8th Cir. 2005). The district court here used the term
“ancillary jurisdiction” in exercising jurisdiction over EMS’s civil suit without explicitly stating
whether it was invoking supplemental jurisdiction under § 1367 or ancillary enforcement
jurisdiction. We assume for purposes of this opinion that the court was relying upon
supplemental jurisdiction under § 1367(a), given its assertion that removal was proper because
of the “factual[] interdependen[ce]” and “interrelated[ness]” of the claims. However, we note
that neither supplemental jurisdiction under § 1367 nor ancillary enforcement jurisdiction
vests the district court with jurisdiction here because neither can “provide the original
jurisdiction needed for removal to federal court under 28 U.S.C. § 1441.” Myers, 429 F.3d at
748.

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court retains jurisdiction over the City v. CLECO post-settlement matters,
neither the dismissed claims nor the court’s retained jurisdiction over the
separate, post-settlement matters may serve as the basis for the district court’s
jurisdiction over EMS’s state-law claims, which are asserted in a separate and
new proceeding.
                                         1.
      Before a state-court civil action may be removed to federal district court,
the action must satisfy § 1441. In relevant part, § 1441 provides that
      [e]xcept as otherwise expressly provided by Act of Congress, any
      civil action brought in a State court of which the district courts of the
      United States have original jurisdiction, may be removed by the
      defendant or the defendants, to the district court of the United
      States for the district and division embracing the place where such
      action is pending.
28 U.S.C. § 1441(a) (emphasis added). This provision is to be strictly construed.
See Syngenta Crop Prot., 537 U.S. at 32. “Under the plain terms of § 1441(a), in
order to properly remove [an] action pursuant to that provision, petitioners must
demonstrate that original subject-matter jurisdiction lies in the federal courts.”
Id. A federal district court may exercise original jurisdiction over any civil
action that either satisfies diversity requirements or that arises under the
federal constitution, statutes, or treaties—commonly referred to as “federal
question” jurisdiction. 28 U.S.C. §§ 1331, 1332, 1369.        Thus, under § 1441,
removal is proper only when the court has original jurisdiction over at least one
asserted claim under either federal question or diversity jurisdiction. See City
of Chicago v. Int’l Coll. of Surgeons, 522 U.S. 156, 165 (1997). Once § 1441 is
satisfied, pursuant to § 1367, the court may then assert supplemental
jurisdiction over any remaining state-law claims that do not independently
satisfy original jurisdiction, if the state-law claims are part of the same case or




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controversy as the “anchor claim.”2 28 U.S.C. § 1367; see also Daimler Chrysler
Corp. v. Cuno, 547 U.S. 332, 351 (2006) (“[F]ederal question jurisdiction over a
claim may authorize a federal court to exercise jurisdiction over state-law claims
that may be viewed as part of the same case because they ‘derive from a common
nucleus of operative fact’ as the federal claim.” (quoting Mine Workers v. Gibbs,
383 U.S. 715, 725 (1966))).
       EMS’s suit against the City raises no claims over which a federal district
court could exercise original jurisdiction and therefore it does not satisfy § 1441.
EMS’s suit concerns a contract dispute that presents only state-law questions
and the parties do not dispute that there is lack of diversity between them. We
have unequivocally held that
       [w]here . . . the plaintiff files an action in state court with no federal
       question or complete diversity, the original jurisdiction necessary for
       removal under § 1441 does not exist. Congress specified that federal
       courts have removal jurisdiction under § 1441 only if the district
       court otherwise has original jurisdiction over the civil action. No
       federal court had original jurisdiction over the [present action], and
       § 1367, by its own terms cannot fill the void. Section 1367 grants
       supplemental jurisdiction over state claims, not original jurisdiction.
       Without original jurisdiction, [there is] no jurisdictional hook for
       removal.
Halmekangas v. State Farm Fire & Cas. Co., 603 F.3d 290, 294 (5th Cir. 2010)
(footnotes omitted) (internal quotation marks omitted). Thus, removal of EMS’s
entirely state-law-based, non-diverse action was improper under § 1441.
                                              2.
       The district court’s jurisdiction over the City v. CLECO litigation and
settlement does not satisfy the statutory requirements for removal of EMS’s



       2
         We use the term “anchor claim” throughout the opinion for ease of reference to a
claim over which the federal court has original jurisdiction pursuant to §§ 1331, 1332, or 1369
and which thus under § 1367 may serve as a basis for the federal court to exercise jurisdiction
over additional claims regarding the same case or controversy as the anchor claim.

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separate civil action under § 1441 and thus does not vest the district court with
jurisdiction over EMS’s claims. First, the district court’s original jurisdiction
over the claims asserted in City v. CLECO—which the parties settled and the
court dismissed on the merits with prejudice—may not serve as an anchor claim
for exercising jurisdiction over EMS’s state-law contract claims. Additionally,
standing alone, the attorneys’ fees and sealed document matters over which the
district court retained limited jurisdiction after the City v. CLECO settlement-
dismissal does not constitute an anchor claim that would support supplemental
jurisdiction over EMS’s separate civil action, given that EMS’s state-law claims
were not asserted in the same proceeding as the claims in City v. CLECO.
      Once the City v. CLECO claims were extinguished, their ability to serve
as anchor claims for purposes of supplemental jurisdiction ceased. As the
Supreme Court has explained, dismissal of a suit with original jurisdiction halts
the ability of the court to assert jurisdiction over related claims:
      In a subsequent lawsuit involving claims with no independent basis
      for jurisdiction, a federal court lacks the threshold jurisdictional
      power that exists when ancillary claims are asserted in the same
      proceeding as the claims conferring federal jurisdiction.
      Consequently, claims alleged to be factually interdependent with
      and, hence, ancillary to claims brought in an earlier federal lawsuit
      will not support federal jurisdiction over a subsequent
      lawsuit. . . . [O]nce judgment [i]s entered in the original [] suit, the
      ability to resolve simultaneously factually intertwined issues
      vanishe[s].
Peacock v. Thomas, 516 U.S. 349, 354 (1996) (emphasis added) (citations
omitted). Thus, the now-dismissed claims in the City v. CLECO litigation,
regardless of how factually “intertwined” with EMS’s suit, may not serve as an
anchor claim to establish jurisdiction over EMS’s “entirely new and original
suit.” Id. at 354.
      Likewise, the district court’s limited, continued jurisdiction of the City v.
CLECO settlement to resolve potential future disputes regarding attorneys’ fees

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and protective orders, does not provide a basis of original jurisdiction to support
removal of EMS’s action against the City under § 1441. “That a related case was
pending in federal court [i]s not in itself sufficient grounds for removal under 28
U.S.C. § 1441.” Fabricius v. Freeman, 466 F.2d 689, 693 (7th Cir. 1972); see also
Syngenta, 537 U.S. at 34; Motion Control Corp. v. SICK, Inc., 354 F.3d 702, 706
(8th Cir. 2003) (“[A] removal petition . . . may not base subject-matter
jurisdiction on the supplemental-jurisdiction statute, even if the action which a
defendant seeks to remove is related to another action over which the federal
district court already has subject mater jurisdiction.” (quoting Shearn v. Charter
Twp. of Bloomfield, 100 F.3d 451, 456 (6th Cir. 1996))).
       Defendants sometimes will assert that a pending federal action that
       shares a common nucleus of operative fact with the state lawsuit
       that defendants seek to remove can furnish an anchor claim under
       Section 1367(a), and thus enable removal of a separate suit under
       Sections 1441(a) and (b). This is a misreading of Section 1367,
       which authorizes supplemental jurisdiction over claims that are
       within the same civil action as a federal question claim . . . and those
       claims alone.
Halmekangas, 603 F.3d at 294 n. 15 (emphasis added) (quoting 14B Charles A.
Wright, Arthur R. Miller, Edward H. Cooper & Joan E. Steinman, Federal
Practice and Procedure § 3722 (4th ed. 2009)). “[E]ven if we assume that the
district court would have had supplemental jurisdiction over [EMS’s claims] had
[they been] filed [together with the City v. CLECO claims] in a single lawsuit in
federal court[,] . . . . [b]ecause [EMS’s] state-filed suit could not meet the
demands of original jurisdiction, § 1441 did not allow for removal.” Id. at 294.
Therefore, although the district court retains jurisdiction over post-settlement
disputes between the City and CLECO, that pending federal litigation may not
serve as a basis for removal of EMS’s separately filed civil action.3


       3
        With consent of the parties, a district court may expressly retain jurisdiction over a
settlement agreement in order to enforce the parties’ compliance with that agreement and

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       The district court erred in denying EMS’s motion to remand because: (1)
the district court does not have original jurisdiction over any of EMS’s claims;
(2) the settled and dismissed City v. CLECO claims may not serve as an anchor
claim to support supplemental jurisdiction over EMS’s suit; and (3) the court’s
retention of jurisdiction over the post-settlement matters likewise do not support
supplemental jurisdiction over EMS’s state-law breach-of-contract claims, given
that EMS’s claims were not asserted in the same proceedings as the City v.
CLECO litigation. Thus, the district court does not have jurisdiction over EMS’s
action and must remand the case to the state court for further proceedings.
                                               B.
       The City alternatively argues that Baccus v. Parrish, 45 F.3d 958 (5th Cir.
1995), serves as an exception to the original-jurisdiction requirement of § 1441.
In Baccus, we affirmed the removal of a state-law, non-diverse case because
“[f]ederal jurisdiction is proper where a claim brought in state court seeks to
attack or undermine an order of a federal district court.” Id. at 960. We further
held that “federal jurisdiction . . . may also be found where a claim seeks to set
aside a provision of a settlement agreement in a federal case.” Id. However, we
have since held that the Supreme Court’s ruling in Rivet v. Regions Bank of
Louisiana, 522 U.S. 470 (1998), “calls into doubt the holding of Baccus.” Texas
v. Real Parties in Interest, 259 F.3d 387, 394 n.10 (5th Cir. 2001). We need not
consider the extent to which Baccus is still good law in light of Rivet and
Syngenta Crop Protection, however, because EMS’s suit does not satisfy the



thereafter may assert jurisdiction over breach of settlement claims. Kokkenon, 511 U.S. at
380-81. However, that is not the situation here. EMS was never a party to the City v. CLECO
litigation, never consented to the retention of jurisdiction, and EMS’s breach-of-contract claims
are not an effort to enforce compliance with the City v. CLECO settlement agreement. Rather,
EMS filed a separate action alleging that the City breached contractual duties it owed EMS.
Although EMS’s claims are related to the City v. CLECO litigation, as explained, EMS’s claims
are part of a separate proceeding, and thus the court’s retention of jurisdiction may not serve
as a basis for removal under § 1441. The language in Kokkenon is not to the contrary.

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                                  No. 12-31184

requirements of Baccus. EMS does not seek to attack, unravel, or set aside any
provision of the City v. CLECO settlement. Rather, EMS’s suit concerns an
independent contract dispute between the City and EMS. Accordingly, even
assuming arguendo that Baccus retains its precedential value, the City has not
met its burden of demonstrating that the facts here are sufficiently analogous
to Baccus, and therefore Baccus cannot serve as a basis for removal or for
denying EMS’s motion to remand.
                                 CONCLUSION
      Removal was improper because none of the claims in EMS’s state court
civil action satisfies either the federal question or diversity requirements of
original jurisdiction. The district court’s prior jurisdiction over the claims
asserted in City v. CLECO, which are now dismissed, do not vest the district
court with jurisdiction over EMS’s claims. Moreover, regardless of how factually
intertwined with EMS’s suit, the district court’s retention of jurisdiction over the
post-settlement matters may not substitute for original jurisdiction for the
purpose of supplemental jurisdiction under § 1367 or removal under § 1441,
given that EMS’s claims were not asserted in the same proceeding as the claims
in City v. CLECO. Further, if Baccus retains any precedential value, it is
distinguishable and inapposite here. Thus, the federal district court lacked
jurisdiction over EMS’s suit and erred in denying EMS’s motion to remand. We
therefore REVERSE the district court’s denial of EMS’s motion to remand and
REMAND to the district court with instructions to remand the case to the
Louisiana state court in which it was initially filed.




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