shall include claims that involve the joinder or intervention of additional parties.
Because that provision embraces pendent-party as well as pendent-claim jurisdiction, it is not necessarily fatal to plaintiffs' state law claims that some of the defendants may no longer be subject to any federal claim.
Even the expansive new statute, however, is still subject to Article III's constitutional limits. It applies only to supplemental claims that form part of the "same case or controversy." That determination is still informed by United Mine Workers v. Gibbs, 383 U.S. 715, 725, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966), which states that claims are part of the same case or controversy if they "derive from a common nucleus of operative fact" and "are such that [the plaintiff] would ordinarily be expected to try them all in one judicial proceeding. . . ."
It is not wholly clear whether that standard is satisfied under the federal claims that remain at this time. Those claims involve only two relatively narrow issues: misstatements in the Compass registration statement and any fraud that Dickinson may have committed. And as this opinion reflects, the dust has not yet settled on the identification of all of plaintiffs' federal claims. Accordingly, rather than determining at this time whether or not the state law claims and the parties that they implicate are sufficiently related to the federal claims to establish supplemental jurisdiction, this Court will defer ruling on defendants' motions to dismiss those claims until the scope of the remaining federal case is more clearly established.
Plaintiffs' CEA claims are dismissed against all defendants except for Dickinson, which is potentially liable only under CEA § 4o. Ruling is deferred on plaintiffs' 1934 Act § 10(b) claim pending further discovery. Plaintiffs' 1933 Act § 12(2) claims are dismissed against all defendants, though in part without prejudice. Their 1933 Act § 11 claims are dismissed in part against all defendants and in their entirety against Ciaglia and Zarcone, but again such dismissals are without prejudice. Both RICO counts are dismissed. Finally, ruling on the supplemental state law claims is deferred pending further definition of the federal claims.
Milton I. Shadur
United States District Judge
Date: March 9, 1992
One of the surprises of exercising the judicial function is the frequency with which the phenomenon of serendipity exhibits itself. It is truly extraordinary just how often, for example, this Court's weekly reading of authorities deriving from a host of sources--our Court of Appeals' slip opinions, or United States Law Week, or the opinions from other District Courts in the Seventh Circuit as reported in the F.Supp. and F.R.D. advance sheets, or West's Federal Case News or the Illinois Decisions advance sheets--turns up a case that is directly relevant to an issue posed in a pending motion in a case on this Court's calendar that is either fully briefed or in the briefing process.
Serendipity has struck again, this time in the simultaneous involvement of this Court's two first-rate law clerks in the preparation of bulky draft opinions each of which is outside the range of most of this Court's opinions in scope and complexity. In this case, for example, any law clerk who is exposed to the arcane mysteries of RICO and its "pattern" requirement (necessarily for the first time) must perforce engage in massive efforts to acquire the degree of understanding that is needed to resolve the application of that requirement to the situation here--something that by definition poses fewer problems for someone such as this Court who has had to live through the formative years of civil RICO (a subject also dealt with in this opinion).
Moreover, this case (like the one that has absorbed this Court's other law clerk during the same time frame) involves not only a whole panoply of issues posing extraordinary difficulty but also the presence of several sets of defense counsel, each of whom has naturally (and properly) focused on the issues relating to his, her or its respective clients. And as this Court has just within the past few days said in a similar appendix added to its opinion in that other case, that additional factor creates for the law clerk the extra level of complexity of having to organize the total treatment of the already complex legal issues into a coherent whole.
All this is a prelude to acknowledging the splendid work of this Court's law clerk, Ms. Karen Wiviott, in generating the draft opinion that has ultimately led to the issuance of the opinion to which this appendix is annexed. Having said that, this Court must add the point that it always makes when it has this kind of occasion to pay tribute to the outstanding work of one of its uniformly outstanding law clerks: Every draft opinion submitted by a law clerk is reviewed and reworked sentence by sentence (indeed, word by word) by this Court, and as part of that process this Court also reads every one of the authorities that is cited in each of its opinions. If then there is anything to find fault with in this or any other completed opinion, that fault is ascribable to this Court and not to the fine work of its clerks.