Penske Media Corporation v. Shutterstock, Inc.
- Vyskocil
- 1:20-cv-04583
- U.S. District Court · Southern District of New York
- 3
In Penske Media v. Shutterstock, Judge Vyskocil dismissed the case after all federal claims were voluntarily dismissed and declined jurisdiction over the remaining state claims.
Penske Media Corporation and Shutterstock, Inc.; the case was dismissed after the federal claims and counterclaims were voluntarily dismissed, and either party may use the case’s discovery in a later action involving the surviving state-law claims.
What happened
Penske Media Corporation v. Shutterstock, Inc. involved state-law claims remaining after the parties voluntarily dismissed all federal claims and counterclaims that had supported federal jurisdiction. The defendant agreed the case should be dismissed, while Penske Media asked the court to obtain assurances about using completed discovery if the state claims were brought in state court.
The court said federal courts generally cannot decide matters outside their jurisdiction. Because no claims remained within the court’s original jurisdiction, it weighed whether to continue hearing the state claims. It concluded that judicial economy, fairness, and respect for state courts favored declining jurisdiction, particularly because the case was not close to trial.
Judge Mary Kay Vyskocil ordered that the case be dismissed and directed the clerk to close it. She also amended the protective order to allow either party to use discovery from this case in a later action involving the surviving state-law claims. The opinion does not specify whether the dismissal was with or without prejudice.
The detailed version
- Penske Media Corporation v. Shutterstock, Inc. · No. 1:20-cv-04583
- Vyskocil
- Mar. 27, 2024
Background
The parties had voluntarily dismissed all federal claims and counterclaims on which federal subject-matter jurisdiction was based. Only state-law claims remained, including purely contract-related claims. The court issued an order directing the parties to explain why the case should not be dismissed for lack of federal subject-matter jurisdiction.
Shutterstock responded that the case should be dismissed. Penske Media recognized that the court could decline to exercise supplemental jurisdiction over the remaining state-law claims, but asked the court, before dismissing, to obtain assurances that the parties would not duplicate or rehash discovery already completed in federal court if the claims were later pursued in state court.
Court’s reasoning
Federal courts have limited subject-matter jurisdiction. The court explained that 28 U.S.C. § 1367(c)(3) allows a district court to decline supplemental jurisdiction—authority to hear related state-law claims—when it has dismissed all claims over which it had original jurisdiction.
The court balanced judicial economy, convenience, fairness, and respect for state courts. Judicial economy favored dismissal because the case was far from ready for trial. Respect for state courts also favored dismissal because unnecessary decisions about state law should be avoided. The court found that any fairness concerns were reduced by amending the protective order as described below.
Disposition
The court declined to exercise supplemental jurisdiction over the purely contract-related state claims. Judge Mary Kay Vyskocil ordered that the case be dismissed and directed the clerk to close it. The court also amended the stipulated protective order to permit either party to use discovery from this case in any later action in which the surviving state-law claims are litigated. The opinion does not state whether the dismissal was with or without prejudice.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.