City of Chicago v. International College of Surgeons: the Interplay Between Supplemental Jurisdiction and Cross-system Appeals, and the Impact on Federalism - Jacob Edward Daly

• Publication year: 1999

City of Chicago v. International College of Surgeons: The Interplay Between Supplemental Jurisdiction and Cross-System Appeals, and the Impact on Federalism

In City of Chicago v. International College of Surgeons,¹ the United States Supreme Court reversed a well-established rule in holding that federal district courts may exercise supplemental jurisdiction over state law claims for deferential review of local administrative agency decisions.²

I. Factual and Procedural Background

North Lake Shore Drive in Chicago was once home to the wealthiest and most prominent Chicagoans. Today, however, only seven of the elegant homes that once lined Lake Shore Drive between North Avenue and Oak Street remain. The International College of Surgeons ("ICS") owns two of these mansions—the Edward T. Blair House, which contains ICS's administrative offices, and the Eleanor Robinson Countiss House, which contains the International Museum of Surgical Science.³

In July 1988 the Commission on Chicago Historical and Architectural Landmarks ("Commission") preliminarily determined that the seven homes on Lake Shore Drive, including the Blair House and the Countiss House, qualified as a landmark district pursuant to the city's landmarks ordinance. Seven months later, ICS contracted for the sale and redevelopment of the Blair House and the Countiss House. Under the contract, the developer was to demolish all but the facades of the two buildings and construct a high-rise condominium tower in their place. In June 1989, however, the city council enacted an ordinance ("designation ordinance") officially designating these seven buildings as a landmark district. The landmarks ordinance required developers to obtain a permit from the Commission before demolishing a designated landmark. Accordingly, ICS applied for the necessary permits in October 1990.⁴

The Commission denied ICS's permit applications, finding that demolition of the Blair House and the Countiss House would have a deleterious effect on the landmark district. Pursuant to the Illinois Administrative Review Act ("LARA"), which provides for judicial review of decisions of municipal landmarks commissions in the state's circuit courts, ICS filed a lawsuit in the Circuit Court of Cook County seeking review of the Commission's denial of its permit applications. The complaint alleged that the landmarks and designation ordinances violated, both facially and as applied, several federal constitutional provisions, including the Due Process and Equal Protection Clauses of the Fourteenth Amendment and the Takings Clause of the Fifth Amendment. The complaint also alleged similar violations of the Illinois Constitution and sought deferential, or on-the-record, administrative review of the Commission's decision.⁵

Relying on federal question jurisdiction, the city removed the lawsuit to the United States District Court for the Northern District of Illinois.⁶ ICS moved to remand the case to the Circuit Court of Cook County, but the district court denied the motion.⁷ Without elaborating, the district court ruled that removal was proper because it had original jurisdiction over ICS's federal constitutional claims pursuant to 28 U.S.C. Sec. 1331.⁸ The district court also exercised supplemental jurisdiction over the state constitutional claims and the request for administrative review.⁹

In the meantime, ICS reapplied for the permits pursuant to a provision of the landmarks ordinance that allowed exceptions if the applicant demonstrated that denial of the permits would result in economic hardship. The Commission again denied the applications, finding that ICS would not suffer economic hardship as defined by the landmarks ordinance. Consequently, ICS filed another lawsuit in the Circuit Court of Cook County alleging substantially the same federal and state constitutional violations and seeking deferential administrative review of the Commission's denial of its permit applications based on economic hardship.¹⁰

Again relying on federal question jurisdiction, the city removed the second lawsuit to the United States District Court for the Northern District of Illinois, and the district court consolidated the cases.¹¹ The city then moved to dismiss the complaints for failure to state a claim upon which relief could be granted. As to the federal constitutional claims, the district court granted the city's motion to dismiss in part¹² but reserved ruling on the state law claims until it resolved the remaining federal constitutional claims.¹³

The district court did not formally address its jurisdiction over ICS's state law claims until January 1995, at which time it granted summary judgment sua sponte for the city.¹⁴ Despite granting summary judgment for the city on all remaining federal constitutional claims and acknowledging its discretion under 28 U.S.C. Sec. 1367(c) to decline jurisdiction over the state law claims, the district court nevertheless continued to exercise supplemental jurisdiction over the state law claims in the interests of "economy, convenience, fairness and comity.''¹⁵ In addition to expressing concern about increasing the burdens of the Illinois court system, the district court considered itself to be "in the best position to resolve the remaining [state law] issues expeditiously."¹⁶ After analyzing the state law claims, the district court granted summary judgment for the city on all state constitutional claims and affirmed the Commission's decisions denying ICS the permits.¹⁷

ICS appealed, and the United States Court of Appeals for the Seventh Circuit unanimously reversed and remanded to the district court with instructions to remand to the Circuit Court of Cook County.¹⁸ The circuit court held that the district court lacked subject matter jurisdiction because complaints for deferential review of state administrative agency decisions¹⁹ are not "'civil action[s] ... of which the district courts . . . have original jurisdiction' within the meaning of 28 U.S.C. Sec. 1441(a).''²⁰ The circuit court reasoned that because the IARA required deferential review of administrative agency decisions, judicial review of the Commission's decisions denying ICS the demolition permits was actually an appellate proceeding "that [was] inconsistent with the character of a court of original jurisdiction" and the meaning of 28 U.S.C. Sec. 1441(a).²¹

The United States Supreme Court granted certiorari²² to decide whether federal district courts may exercise jurisdiction over cases that include both federal law claims and state law claims that require deferential review of local administrative agency decisions.²³ The Court reversed the circuit court's decision and held that state law claims requiring deferential review of local administrative agency decisions are within the purview of supplemental jurisdiction.²⁴ Because the circuit court failed to address section 1367(c) or abstention, the Court also remanded to allow the circuit court to consider those issues in the first instance.²⁵

II. Legal Background

A case may be removed from a state court to a federal district court only if it could have been brought in that federal district court originally.²⁶ Thus, to remove a case the district court must have either independent jurisdiction for each claim, founded on a federal question²⁷ or diversity,²⁸ or supplemental jurisdiction.²⁹ Complications arise in cases in which nondiverse parties raise both federal law claims and state law claims over which the federal district court has no independent jurisdiction, but which may fall within the district court's supplemental jurisdiction. The scope of supplemental jurisdiction, which has proven to be difficult to ascertain despite numerous cases interpreting it,³⁰ lies at the heart of the Court's opinion in International College of Surgeons. Accordingly, Part A summarizes the law regarding supplemental jurisdiction. Part B then discusses two decisions relied on by ICS and the Seventh Circuit which reflect the Supreme Court's disinclination, before International College of Surgeons, to allow federal jurisdiction over state law claims seeking deferential review of state or local administrative agency decisions.

A. Supplemental Jurisdiction

Historically, there was no express constitutional or statutory authority for a federal court to exercise jurisdiction over a case involving both federal law claims and state law claims over which it had no independent basis for jurisdiction.³¹ Chief Justice John Marshall, however, endorsed such jurisdiction when he declared:

We think, then, that when a question to which the judicial power of the Union is extended by the constitution, forms an ingredient of the original cause, it is in the power of congress to give the circuit courts

jurisdiction of that cause, although other questions of fact or law may be involved in it.³²

From this proclamation was born the doctrine of pendent jurisdiction.³³ Although hailed as beneficial to the judicial process, the Supreme Court's early jurisprudence failed to articulate a coherent constitutional standard for applying pendent jurisdiction.³⁴

In United Mine Workers of America v. Gibbs,³⁵ however, the Court attempted to end the "considerable confusion" that resulted from previous formulations of the constitutional standard for exercising pendent jurisdiction.³⁶ The Court held that pendent jurisdiction was appropriate whenever a case involved at least one substantial claim that arose under federal law and a state law claim so related to that federal law claim that they constituted a single case in that they "derive[d] from a common nucleus of operative fact."³⁷ However, the Court cautioned against ^discriminate application of pendent jurisdiction by observing that the "power need not be exercised in every case in which it is found to exist. It has consistently been recognized that pendent jurisdiction is a doctrine of discretion, not of plaintiff's right."³⁸ The Court noted that federal...