Phillip Emrich and Eric Gillberg v. Touche Ross & Company et al.

Summary

The Ninth Circuit reviewed the dismissal of claims arising from the sale of securities in Sambo's Restaurant joint ventures. The court held that the RICO claim and related state-law claims were properly within federal jurisdiction after removal, but that the Securities Act of 1933 claims were not removable and the Securities Exchange Act of 1934 claims were subject to derivative-jurisdiction principles. The court affirmed dismissal of the 1934 Act claims, reversed dismissal of the remaining claims, ordered remand of the 1933 Act claims to state court, and remanded for consideration of equitable tolling.

Holdings

1. A civil RICO claim arises under federal law and is removable under 28 U.S.C. § 1441(a); the district court therefore had original jurisdiction over the RICO claim and pendent jurisdiction over sufficiently related California statutory and common-law claims.
2. The district court properly dismissed the Securities Exchange Act of 1934 claims because the state court lacked subject matter jurisdiction over claims subject to exclusive federal jurisdiction, and the federal court could derive no jurisdiction through removal.
3. The Securities Act of 1933 claims were not removable under § 1441(a), and the RICO claim was not a separate and independent claim supporting removal under § 1441(c); the district court therefore lacked jurisdiction over those claims and was required to remand them to state court.
4. The district court improperly dismissed the state-law and RICO claims as time-barred on the pleadings because the complaint alleged facts invoking state and federal equitable-tolling doctrines and the public record showed that earlier related actions might have remained pending.
5. The motion to dismiss was not automatically converted into a summary-judgment motion merely because defendants submitted a declaration requesting judicial notice of public records.

Questions Presented

1. Whether the district court acquired subject matter jurisdiction over the removed action and over the federal and state claims.
2. Whether the RICO claim was removable under 28 U.S.C. § 1441(a) and whether it supplied pendent jurisdiction over related state-law claims.
3. Whether the RICO claim was separate and independent from the nonremovable Securities Act of 1933 claim under 28 U.S.C. § 1441(c).
4. Whether the district court properly dismissed the Securities Exchange Act of 1934 claims under the derivative-jurisdiction doctrine.
5. Whether the Securities Act of 1933 claims had to be remanded because of the statutory prohibition on removal.
6. Whether the state-law and RICO claims could be dismissed as time-barred on the face of the complaint despite allegations invoking equitable tolling and the pendency of earlier actions.
7. Whether the Rule 12(b)(6) motion should have been treated as a motion for summary judgment because defendants submitted a declaration.

Disposition

reversed_and_remanded