federal courts

Artis v. District of Columbia might not have gotten a second look if it didn’t involve a city—but even if it had been brought against a non-government entity it would still affect any entity that gets sued regularly—including states and local governments.

In this case a year after the fact, Stephanie Artis sued the District of Columbia in federal court bringing a number of federal and state law claims related to her termination as a code inspector. It took the federal district court over two and a half years to rule on her claims. It dismissed her sole federal claim as “facially deficient” and no longer had jurisdiction to decide the state law claims.

28 U.S.C 1367(d) states that statutes of limitations for state law claims pending in federal court shall be “tolled” for a period of 30 days after they are dismissed (unless state law provides a longer tolling period).

Merrill Lynch v. Manning is a victory for state courts. It’s just complicated to explain how.

Per a general federal court jurisdiction statute, Section 1331, federal courts have jurisdiction over all civil lawsuits “arising under” federal law. Section 27 of the Securities Exchange Act provides federal court jurisdiction for all suits “brought to enforce” the Exchange Act.  

In Merrill Lynch v. Manning the Supreme Court held that “arising under” and “brought to enforce” mean the same thing. If a lawsuit, involving violating securities law, such as the one in this case, only includes state law claims that don’t necessarily raise federal issues that lawsuit doesn’t “arise under” federal law. Per the Court’s opinion it also therefore isn’t “brought to enforce” the Exchange Act and must be heard in state court.