The Myth of Supplemental Jurisdiction over Permissive Counterclaims

Douglas D. McFarland, Hamline University School of Law

Abstract

ABSTRACT

Prior to 1990, all courts agreed that compulsory counterclaims qualified for ancillary jurisdiction and permissive counterclaims did not because both joinder and jurisdiction relied on the same transaction or occurrence test. Congress entered this consistent and clear area of the law in 1990 when it codified pendent and ancillary jurisdiction into supplemental jurisdiction, based on the “same case or controversy under Article III.” In recent years, a growing number of federal courts have decided that case or controversy is broader than transaction or occurrence. They have decided that some permissive counterclaims qualify for supplemental jurisdiction.

All of these recent decisions are rooted in a grudging attitude toward the broad scope of a transaction or occurrence. Mining “case or controversy” of § 1367(a) and “transaction or occurrence” of the counterclaim rule to find nuances of differences is pointless. No principled reason supports interpreting them differently. Nothing is gained by interpreting them differently. Even though several cases announce they are asserting supplemental jurisdiction over a “permissive counterclaim,” analysis demonstrates that every one of those cases actually involves a compulsory counterclaim. Supplemental jurisdiction over a permissive counterclaim is a myth.