Federal Courts can only hear cases based on federal law or when the parties are from different states. But when a federal-law claim is based on the same facts as a state-law claim a District Court has supplemental jurisdiction to hear the state-law claim. The Second Circuit recently considered a noteworthy case where the District Court refused to exercise this supplemental jurisdiction over state-law claims after dismissing federal-law claims—without hearing from the parties.

A group of laundromat workers sued their employers for allegedly breaking the federal Fair Labor Standards Act and New York state labor law. After two years of discovery and summary judgment proceedings the case was set to go to a three-day trial. But shortly before the final pretrial conference the workers filed a letter noting that they would only pursue their state law claims.

The district court, without briefing, announced it would not exercise supplemental jurisdiction over the state-law claims, cancelled the trial, and dismissed the workers’ claims. The workers appealed, and the Second Circuit reversed.

The Second Circuit began with the fact that the District Court had dismissed the case without giving either party the opportunity to be heard. “An opportunity to be heard prior to dismissing a case is not a mere formality . . . ‘No principle is more fundamental to our system of judicial administration than that a person is entitled to notice before adverse judicial action is taken against him.’” “Sua sponte dismissals without notice and an opportunity to be heard ‘deviate from the traditions of the adversarial system’. . . .”

If the District Court had ordered briefing, it might have learned why the workers had decided to focus on their state-law claims: While the case was going through discovery and briefing the Second Circuit held that a plaintiff can’t recover liquidated damages under both the Fair Labor Standards Act and New York state labor law. Without briefing, “[t]he plaintiffs could have explained whether they were trying to streamline the issues for the jury” by focusing on the state law claims. Since the District Court heard no briefing from the parties, the District Court’s grounds for dismissing the claims was “inherently speculative.” That was an abuse of discretion.

The Second Circuit finished its opinion by writing: “Litigants come to court to have their problems solved. . . . After all, as the very first Rule of Civil Procedure provides, procedure in the district courts is meant ‘to secure the just, speedy, and inexpensive determination of every action and proceeding.’”

Read the Second Circuit’s opinion here.