CIGS as a basis for federal jurisdiction (also over state claims that “derive from a common nucleus of operative fact”) – a short discussion

CIGS as a basis for federal jurisdiction (also over state claims that “derive from a common nucleus of operative fact”) – a short discussion

On February 18, 2015, the Southern District Court of New York affirmed that the United Nations Convention on Contracts for the International Sale of Goods (“CISG”) provides a basis for federal court jurisdiction and supplemental jurisdiction over non-CISG state-law claims if the latter “derive from a common nucleus of operative fact”.

In this case, an Italian company (D&G Group, S.r.l.) brought a breach of contract action against an American importing company (H.A. Import USA).

Defendant had imported food product from the Italian company from November 2012 to April 2013. Defendant paid the products only in part and refused to return them. Plaintiff brought an action for breach of contract under article 74 of the CISG and a claim under and New York state law. Defendant moved to dismiss for lack of personal jurisdiction.

The court denied Defendant’s motion to dismiss because Plaintiff showed two grounds for federal court jurisdiction: (i) diversity jurisdiction, being Plaintiff and Defendant citizens of different countries; (ii) subject matter jurisdiction, having federal courts jurisdiction over all civil actions arising under the treaties of the United States. Also, the court had supplemental jurisdiction over the state law claim because the court found that latter shared a “common nucleus of operative fact” with the treaty-law claim.

As for this latter ground for jurisdiction, federal courts have “jurisdiction over treaty matters” (28 U.S.C. § 1331) as the CISG is. (Delchi Carrier SpA v. Rotorex Corp – see here). The CISG grants a private right of action to plaintiff (Hanwha Corporation v. Cedar Petrochemicals, Inc – see here). Also, 28 U.S.C. § 1367 grants supplemental jurisdiction over state claims forming “part of the same case or controversy”, which happens when the claims “derive from a common nucleus of operative fact”. (Shahriar v Smith Wollensky Restaurant – see here)

Full opinion in D&G Group, S.R.I. v. H.A. Import USA (S.D.N.Y. Feb. 18, 2015) is available here.

Thank to Sam Hines for bringing this case to our attention.

 

For more information contact Francesca Giannoni-Crystal.