Interesting Tactic, Chapter Two
by Michael Fox
Just yesterday, I discussed an unusual tactic where rather than filing a motion to compel arbitration in response to a state court law suit, the defendant successfully filed a federal court action to compel the arbitration. See Duplicating Effort? State Court Action - Federal Court Lawsuit to Compel Arbitration . The 6th Circuit was faced with a similar unusual technique. It started with a federal lawsuit by Palkow against CSX Transportation for gender discrimination. The jury found in favor of CSXT and the judge entered judgment accordingly. Rather than challenge the verdict in federal court, Palkow filed a second suit in state court, alleging that a witness in the first trial had committed perjury under the direction of a CSTX supervisor.
Unhappy, CSTX removed the case to the federal court that had entered the original judgment. Since there was no diversity nor federal question on the face of the state court petition, CSTX argued that the case was in reality an improper attack on the validity of the federal court judgment, thus conferring federal court jurisdiction. Palkow filed a motion to remand, which was rejected by the district court, which apparently not happy by the attack either, dismissed Palkow's claim.
On appeal to the 6th Circuit, the case turned on that principle drilled into me by Professor Bernie Ward -- federal courts are courts of limited jurisdiction. That was the argument advanced by Palkow and ultimately accepted by the 6th Circuit. Palkow v. CSX Transportation (6th Cir. 11/18/05) [pdf]. For students of federal courts, it's an interesting read.
My guess is that the arguments advanced by CSTX will ultimately prevail, but not in its chosen forum.