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42. May the court grant the investor's motion to remand?
An investor from State A sued a State A company in State A court, asserting two claims: (i) a violation of federal securities laws, over which state and federal courts have concurrent subject-matter jurisdiction; and (ii) fraud under State A law. The company filed a notice of removal in the local federal district court. Several months later, after seeking the advice of counsel, the investor decided to voluntarily dismiss his federal claim and moved to remand the case to state court.
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When the original claim is based on federal question jurisdiction, § 1367 allows the federal court to assert jurisdiction over similar and related state law claims. However, federal courts are not required to hear every claim falling under supplemental jurisdiction.
When a complaint is amended to delete the federal-law claims that enabled removal to federal court, leaving only state law claims behind, the federal court loses supplemental jurisdiction over the state law claims, and the case must be remanded to state court.
B is correct. The court initially exerted supplemental jurisdiction over the investor's state law claim because the court had federal question jurisdiction over the investor's federal securities law claim. Because the federal claim was dismissed, without an independent basis for jurisdiction, the federal court must remand the state law claim.
A is incorrect. This choice states the correct conclusion with the incorrect legal reasoning. Under these circumstances, the federal district court's decision to remand may not be based on its discretion. Since the federal claim was eliminated, there is no longer any basis for supplemental jurisdiction over the state law claims.
C is incorrect. This choice misstates the law. Without any federal claims remaining, the court also lost supplemental jurisdiction over the state law claims. Therefore, without an independent basis for jurisdiction, the federal court must remand the state law claim.
D is incorrect. This choice contains an incorrect application of the law. The investor's motion to remand was made promptly after the federal question claim was eliminated from the case. The motion was therefore not untimely, so it is not a basis to deny the remand.