                                                                                                                           Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-24-2006

Pgh Comm Human v. Key Bank Natl Assn
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-1602




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                                          NOT PRECEDENTIAL


            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT

                        ____________________

                             NO. 05-1602
                        ____________________

 CITY OF PITTSBURGH COMMISSION ON HUMAN RELATIONS, on behalf of
                  DAVID and VALARIE POLLARD

                                     v.

KEY BANK USA, NATIONAL ASSOCIATION; P&C REPLACEMENT WINDOWS

             KEY BANK USA, NATIONAL ASSOCIATION,
                           Appellant

                          _________________

             On Appeal from the United States District Court
                for the Western District of Pennsylvania
                         (D.C. No. 04-cv-01034)
                   District Judge: David S. Cercone

                       ______________________

                        Argued October 20, 2005


         Before: SMITH, BECKER and NYGAARD, Circuit Judges

                        (Filed: January 24, 2006)

                      ________________________

                              OPINION
                      ________________________
JEFFREY J. RUDER (Argued)
1717 Murray Avenue, Suite 101
Pittsburgh, PA 15217

       Attorney for Appellee

JAMES W. BENTZ (Argued)
680 Washington Road, Suite 200
Pittsburgh, PA 15228

       Attorney for Appellant


BECKER, Circuit Judge.


       The City of Pittsburgh Commission on Human Relations (“the Commission”) filed

this action against Key Bank USA, National Association (“Key Bank”) and P&C

Replacement Windows in the Court of Common Pleas of Allegheny County. Alleging

violations of both the federal Fair Housing Act, 42 U.S.C. § 3601 et. seq., and §

659.03(a)-(e) of the Pittsburgh City Code, the Commission claimed, on behalf of David

and Valerie Pollard, that the Pollards were discriminated against on the basis of race

during their application for a home improvement loan. After the case was removed by

Key Bank to the District Court for the Western District of Pennsylvania, the Court

dismissed all federal claims for lack of standing and remanded the remaining claims to

the Court of Common Pleas of Allegheny County. The question presented here is

whether the claims under the Pittsburgh City Code were properly remanded, or whether,

as Key Bank argues, they should have been decided and dismissed by the District Court.

       Although this case potentially raises a number of difficult legal questions, we find

                                             2
that it can be disposed of on the more elemental ground that federal district courts should

refrain from exercising supplemental jurisdiction once all federal claims have been

dismissed. This principle has been long-recognized by this Court, and we do not find an

exception to the rule here. For that reason, we find that the District Court’s remand was

not an abuse of discretion. Therefore, we will affirm the Order of the District Court.



                             I. Facts and Procedural History

       The Commission’s suit was a fair lending action, claiming that Key Bank and

P&C Replacement Windows discriminated against the Pollards by denying their

application for a home improvement loan on the basis of race. Notably, the Commission

claimed that the Pollards were improperly asked their race in applying for a home

improvement loan, and that Key Bank’s request for such information indicated racial

preferences. (Id. at 20-21.) The Commission alleged violations of the Fair Housing Act

and the Pittsburgh City Code. (Id.)

       After Key Bank removed the case to federal court, it moved to dismiss, alleging

that the Commission lacked standing, that jurisdiction lay only with the Office of the

Comptroller of the Currency, and that there was no valid claim for relief because of the

way the application had been handled. Adopting the recommendation of Magistrate

Judge Caiazza, the District Court dismissed the Fair Housing Act claims for lack of

standing, and remanded the City Code claims to the Court of Common Pleas of

Allegheny County for further proceedings.

                                             3
       Magistrate Judge Caiazza’s recommendation that the federal Fair Housing Act

claims be dismissed due to lack of standing was grounded on the view that the Act does

not confer authority on local agencies to file suit. Rather, 42 U.S.C. § 3612(o)(1)

provides that the Attorney General may commence a civil action. He also reasoned that a

remand of the City Code claims was proper under 28 U.S.C. § 1367(c), which gives a

district court the ability to decline to exercise supplemental jurisdiction once the claims

over which it had original jurisdiction have been dismissed. The Magistrate Judge

emphasized that in the absence of “compelling circumstances,” district courts should

decline jurisdiction in circumstances such as these.

       This appeal followed, in which Key Bank challenges the portion of the District

Court’s order that remanded the remaining claims to the Court of Common Pleas of

Allegheny County. There is no dispute at this juncture about the inability of the

Commission to bring the federal claims in federal court. Accordingly, the dispute before

us turns on whether the District Court should have retained jurisdiction and adjudicated

the remaining claims, including the federal implied preemption defense, or whether it

properly remanded the claims to state court.1



                                       II. Discussion



1
 Originally, the Commission appealed the portion of the District Court’s order dismissing
the Fair Housing Act claim. However, the Commission later withdrew its appeal. We
have appellate jurisdiction to review this case pursuant to 28 U.S.C. § 1291.

                                              4
       A.      The Relevant Statutes

       Two statutes are relevant to this case in its present posture. First, and most

important, 28 U.S.C. § 1367(c) gives a district court discretion to decline supplemental

jurisdiction once it has dismissed all federal claims before it. That statute states: “The

district courts may decline to exercise supplemental jurisdiction over a [state law claim] if

. . . the district court has dismissed all claims over which it has original jurisdiction . . . .”

Second, 28 U.S.C. § 1447(c) mandates that when a district court lacks subject matter

jurisdiction altogether, the case must be remanded. That statute provides: “If at any time

before final judgment it appears that the district court lacks subject matter jurisdiction, the

case shall be remanded.”

       B.      The Exercise of Pendent Jurisdiction in the Absence of Federal Claims

       Decisions to remand under 28 U.S.C. § 1367(c) are reviewed for abuse of

discretion. See, e.g., De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 311 (3d Cir. 2003);

Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 276 (3d Cir. 2001). Key Bank asserts

that the District Court abused its discretion in remanding the Pittsburgh City Code claims

instead of dismissing them outright. It contends that the Commission lacked standing to

bring this action altogether and that the claims under the Pittsburgh City Code are

preempted by federal law. For example, Key Bank submits that the Office of the

Comptroller of the Currency has essentially exclusive power to ensure that national banks

comply with applicable state and federal laws. Key Bank also argues that it was required

to collect the race-related data at issue under 12 C.F.R. § 203.4. Therefore, it concludes, a

                                                5
remand is futile.

       Pendent jurisdiction is a doctrine of discretion. See, e.g., De Asencio, 342 F.3d at

308. In United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966), the Supreme Court

noted that the discretionary exercise of pendent jurisdiction must depend on questions of

judicial economy, convenience, and fairness to litigants. However, it stated that when

federal claims are dismissed at an early stage, the exercise of pendent jurisdiction should

be declined:

       Needless 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.

Id. (footnote omitted).

       This Court has confirmed that “[t]he power of the court to exercise pendent

jurisdiction, though largely unrestricted, requires, at a minimum, a federal claim of

sufficient substance to confer subject matter jurisdiction on the court.” Tully v. Mott

Supermarkets, Inc., 540 F.2d 187, 195 (3d Cir. 1976). In Tully, we stated that if it appears

that all federal claims are subject to dismissal, the court should not exercise jurisdiction

over remaining claims unless “extraordinary circumstances” exist. Id. We determined that

“substantial time devoted to the case” and “expense incurred by the parties” did not

constitute extraordinary circumstances. Id. at 196. We have reiterated this principle on

several occasions. See, e.g., Hedges v. Musco, 204 F.3d 109, 123 (3d Cir. 2000)

(“‘[W]here the claim over which the district court has original jurisdiction is dismissed

                                              6
before trial, the district court must decline to decide the pendent state claims unless

considerations of judicial economy, convenience, and fairness to the parties provide an

affirmative justification for doing so.’”) (citation omitted); Shaffer v. Board of Sch.

Directors of Albert Gallatin Area Sch. Dist., 730 F.2d 910, 912 (3d Cir. 1984) (“We have

held that pendent jurisdiction should be declined where the federal claims are no longer

viable, absent ‘extraordinary circumstances.’”) (citation omitted).

       Key Bank has argued that the Commission’s remaining claims under the

Pittsburgh City Code are preempted by federal law. However, even that proposition

cannot constitute “extraordinary circumstances” in light of Tully, especially at this

relatively early stage in the litigation. Key Bank has not shown that the circumstances

here warrant finding an exception to our general rule, given that there is no plausible

reason why the Court of Common Pleas of Allegheny County cannot fairly and

competently decide this issue. The caselaw is clear that when a district court has

dismissed the claim or claims that gave it original jurisdiction, it should decline to hear

pendent state claims, absent extraordinary circumstances. None have been sufficiently

alleged.

       Here, the Commission maintains that its remaining claims are viable. It argues that

Key Bank’s federal preemption arguments are “meritless.” In support, it states that

discrimination actions are not “visitorial acts” and can therefore be brought by a party

other than the Office of the Comptroller of the Currency. This claim, regardless of its

merit or lack thereof, can and should be resolved by the state court. Given that a remand

                                              7
is preferable unless “extraordinary circumstances” are presented, we find no abuse of

discretion here.2

       In sum, we are satisfied that the District Court acted within its sound discretion in

remanding this case to the Court of Common Pleas of Allegheny County. The Order of

the District Court will therefore be affirmed.




2
 The Commission claims that the District Court was required to remand the case under 28
U.S.C. § 1447. See Int’l Primate Prot. League v. Adm’rs of Tulane Educ. Fund, 500 U.S.
72 (1991). It argues that the District Court did not have subject matter jurisdiction to hear
the remaining Pittsburgh City Code claims because federal standing was lacking, and that
§ 1447 mandates that a federal court must remand state claims in such a situation.
Because we believe that § 1367 authorizes the outcome we reach here, and that the
District Court did not abuse its discretion in declining to exercise jurisdiction, we need
not examine the Commission’s more complex claim under § 1447(c) that the District
Court was required to remand the case.

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