First Circuit Finds Supplemental Jurisdiction over Compulsory & Permissive Counterclaims

In an issue of first impression for the First Circuit, the Court held that 28 U.S.C. § 1367, enacted in 1990, gives federal courts supplemental jurisdiction over both compulsory and at least some permissive counterclaims.

The case is Global NAPs, Inc. v. Verizon and Global NAPs, Inc. appealed from entry against it of a judgment for $57,716,714 for access charges that GNAPs owed but failed to pay Verizon for services Verizon provided between 2003 and 2006. Concerned that GNAPs could not pay a judgment, Verizon also successfully brought counterclaims alleging alter ego liability and disregard of the corporate form against GNAPs; its owner, Frank Gangi; and several GNAPs affiliates. These defendants appeal from the district court’s assertion of federal jurisdiction and grant of default judgment, which holds Gangi and the affiliates jointly liable for the sum GNAPs owes.

This ruling alters the First Circuit’s former rule, adopted before the enactment of § 1367, that required permissive counterclaims to have an independent basis for jurisdiction.

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One response to “First Circuit Finds Supplemental Jurisdiction over Compulsory & Permissive Counterclaims

  1. Michael Yelnosky

    Matt:

    Bless you for covering recent developments in the law of supplemental jurisdiction in the First Circuit. As a teacher of Civil Procedure, it gives me great joy.

    Michael

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