Gaff v. Federal Deposit Insurance Corp‪.‬

Plaintiff Joel R. Gaff, a shareholder of a now insolvent banking institution, brought suit against the institution and two of its officers. In amended Count V of his complaint, Gaff sought to assert three sets of claims in his individual capacity as a shareholder; (1) federal claims arising under the federal banking laws; (2) federal claims arising under the federal securities laws; and (3) pendent state law claims. The district court dismissed amended Count V in its entirety and Gaff appealed to this court. In an opinion reported at 814 F.2d 311 (6th Cir. 1987), we affirmed in part and reversed in part the judgment of the district court. In Parts II and III of our opinion, we upheld the district courts dismissal of Gaffs federal claims on the ground that Gaff lacked standing to maintain direct causes of action under the federal banking and securities provisions. In Part IV, we reversed the dismissal of the state law claims on the ground that the court should not have exercised pendent jurisdiction over those claims. We premised this latter holding on the general principle set forth in United Mine Workers v. Gibbs, 383 U.S. 715, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966), that district courts should ordinarily refrain from exercising jurisdiction over pendent state law claims when the federal claims to which the state claims are pendent are dismissed before trial. Accordingly, we ordered that the state claims be remanded to the district court for the purpose of remanding them to the state court from which they had been removed. The defendants have petitioned for rehearing as to Part IV of our opinion. That petition is granted and, for the reasons which follow, we conclude that the district court properly retained jurisdiction over the state law claims but improperly dismissed them. We therefore find it necessary to remand those claims for further consideration on their merits.