660 F.

2d 845

Mildred A. McLEARN, Plaintiff-Appellant,

v.
COWEN & CO. and Merrill Lynch Pierce Fenner & Smith,
Incorporated, Defendants-Appellees.
No. 1465, Docket 81-7146.

United States Court of Appeals,

Second Circuit.
Argued June 1, 1981.
Decided Sept. 28, 1981.

Roy M. Cohn, New York City (John A. Kiser, Saxe, Bacon & Bolan,
P.C., New York City, of counsel), for plaintiff-appellant.
Roger J. Hawke, New York City (Brown, Wood, Ivey, Mitchell & Petty,
Willkie, Farr & Gallagher, New York City, of counsel), for defendantsappellees.
Before LUMBARD and MESKILL, Circuit Judges, and LASKER,*
District Judge.
LUMBARD, Circuit Judge:

The plaintiff, Mildred A. McLearn, appeals from a 1980 order of the Southern
District of New York that denied her motion under Fed.R.Civ.P. 60(a) to clarify
a 1976 judgment dismissing her complaint. Plaintiff sought clarification that the
dismissal of her cause of action under state law was not on the merits so that
she would be free to pursue that claim under state law in the New York state
courts. The district court denied plaintiff's motion, finding no omission subject
to relief under Rule 60(a) and, alternatively, that the plaintiff's state law claim
had been properly dismissed on the merits.

I believe that nothing done in the district court by the parties or the court
justified the district court in exercising jurisdiction over the state law claim with
respect to taking any action on the merits of the state law claim. Although the
record is ambiguous as to what the 1976 district court order meant to do

regarding the merits of the state claim, I am convinced that the district court
had no power to make any order about the merits of the state claim.
Consequently, I would reverse and remand with directions to amend the order
of dismissal to provide that it is without prejudice to the merits of any claim
under state law. As Judge Lasker concurs in this result, we so order.
I.
3

The complaint filed in the Southern District in 1975 followed the pattern of the
many complaints filed in that district in recent years against brokers and
investment bankers. It sought damages from the plaintiff's investment adviser
and broker, Merrill Lynch Pierce Fenner & Smith, Inc., under the Investment
Advisers Act of 1940 and the Securities Exchange Act of 1934. The allegations
of the third cause of action set forth a customer-broker relationship, reliance by
the plaintiff on the judgment and integrity of Merrill Lynch's officials in
handling her account, and that those officials acted in an unprofessional,
negligent and illegal manner and in "breach of the common law standards of
fiduciary responsibility." Thus, to the claims under federal law was added a
common law claim the merits of which is governed by the law of New York.
This cause of action was pendent to the federal claims. Although all three
causes of action were alleged to arise from the same operative facts namely, the
handling of plaintiff's account by Merrill Lynch it is well settled that the state
law claim could be heard in the federal courts only if some cause of action in
the complaint showed a basis for federal jurisdiction.

In 1975, the defendants moved to dismiss the complaint for failure to plead
fraud with particularity as required by Fed.R.Civ.P. 9(b). The court granted the
motion with leave to amend. After plaintiff amended her complaint, defendants
again moved to dismiss. In an order dated January 12, 1976, the court
dismissed McLearn's complaint with prejudice. No testimony was taken; no
trial was held. The order read, in pertinent part:

5 complaint still fails to set forth the facts and circumstances of the alleged fraud
The
and must be dismissed.
6

This court affirmed that order without opinion on May 27, 1976.

Neither Judge Metzner's memorandum opinion, or the order of dismissal,

referred specifically to the state cause of action.1 Undoubtedly, at this point, or
even after we had affirmed the dismissal, counsel should have applied to the
district court to amend its order to deal specifically with the survival of the state
cause of action.

Thereafter, Mildred McLearn filed suit in the Westchester County Supreme

Court against Merrill Lynch alleging the common law cause of action of breach
of fiduciary duty. The Supreme Court denied a motion to dismiss on the ground
of res judicata. The Appellate Division reversed, holding that the complaint
should have been dismissed on res judicata grounds. 64 A.D.2d 606, 406
N.Y.S.2d 538 (1978). The Court of Appeals affirmed the dismissal, with three
judges dissenting, 48 N.Y.2d 696, 422 N.Y.S.2d 60, 397 N.E.2d 750 (1979).
The majority's per curiam opinion held that the district court's dismissal was on
the merits for failure to state a cause of action, relying on Rule 41(b)
Fed.R.Civ.P., which provides that a dismissal is on the merits unless the
contrary expressly appears. 48 N.Y.2d at 699, 422 N.Y.S.2d 60, 397 N.E.2d
750. In dissent, Chief Judge Cooke argued that the federal court would not
exercise jurisdiction where the federal claims are dismissed prior to trial, citing
Second Circuit decisions. See, e. g., CES Publishing Corp. v. St. Regis
Publications, Inc., 531 F.2d 11 (2d Cir. 1975); Nolan v. Meyer, 520 F.2d 1276
(2d Cir.), cert. denied, 423 U.S. 1034, 96 S.Ct. 567, 46 L.Ed.2d 408 (1975);
Kavit v. A. L. Stamm & Co., 491 F.2d 1176 (2d Cir. 1974); Iroquois Industries
v. Syracuse China Corp., 417 F.2d 963 (2d Cir. 1969), cert. denied, 399 U.S.
909, 90 S.Ct. 2199, 26 L.Ed.2d 561 (1970). Judge Meyer in his dissent went
further and wrote that "as a matter of Federal law the State claims could not
have been dismissed on the merits by the Federal court" where the dismissal of
the federal claims was in advance of trial because the federal court was left
without subject matter jurisdiction of the State claim. Consequently, the federal
dismissal was not res judicata.

The plaintiff then moved the Court of Appeals for reargument, which the court
denied on January 20, 1981, in the following brief order:Motion for waiver of
thirty day time limit and for reargument denied, without prejudice to renewal in
the event the Federal District Court amends its order to show it declined to
exercise pendent jurisdiction over the state court action, with $20 costs and
necessary reproduction disbursements to respondent.

10

52 N.Y.2d 896, 437 N.Y.S.2d 306, 418 N.E.2d 1325.

11

After the Court of Appeals order, the plaintiff moved in the federal district
court for relief under Fed.R.Civ.P. 60(a).

II.
12

First, I note that we are not precluded by the principle of collateral estoppel
from deciding whether the district court had pendent jurisdiction over plaintiff's
state law claim. The general rule is that federal courts must give decisions of a

state court the same preclusive effect that the highest court of the state would.
Wright v. Georgia R.R. & Banking Co., 216 U.S. 420, 429, 30 S.Ct. 242, 245,
54 L.Ed. 544 (1910). If the New York Court of Appeals had decided that the
federal district court had pendent jurisdiction to dismiss McLearn's state law
claim on the merits, then in this case the parties would be bound by that
decision. See Angel v. Bullington, 330 U.S. 183, 187-88, 67 S.Ct. 657, 659660, 91 L.Ed. 832 (1947). Arguably, the Court of Appeals decided that issue in
holding that it must give res judicata effect to the district court order. However,
the Court of Appeals' order of January 20, 1981, expressly invited the federal
court "to show it declined to exercise jurisdiction over the state court action...."
This invitation to the federal court to decide an issue previously litigated in the
New York courts indicates that the Court of Appeals itself does not give
preclusive effect to its 1979 opinion. Accordingly, we are free to address the
issue of the district court's pendent jurisdiction over the plaintiff's state claim.
13

Second, I think it clear that the district court lacked jurisdiction to dispose of
the pendent state claim on the merits once it dismissed the federal claims prior
to trial. The recognition of pendent jurisdiction depends entirely on the
practical consideration of avoiding a retrial of factual issues that are necessarily
involved in a trial of the same operative facts. See United Mine Workers v.
Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966). Where
there has been a trial of the operative facts underlying both federal and state
claims, a decent regard for economical and sensible use of the state and federal
judicial machinery and considerations of expense to the litigants require that
judgment after trial of state causes of action in a federal court be accorded res
judicata effect in the state courts. Consequently, unless a trial of the operative
facts is necessary to resolve claims that the federal court must hear, the federal
court has no jurisdiction to take any action with respect to a pendent state law
claim. 2 See Nolan v. Meyer, supra, 520 F.2d at 1280. Because no such trial was
held here, the state claims were not pendent, not subject to federal jurisdiction,
and any order dismissing them on the merits was void for lack of jurisdiction.

14

The proper route by which plaintiff should have sought relief from the 1976
dismissal would have been a motion under Fed.R.Civ.P. 60(b)(4) to vacate the
judgment for lack of jurisdiction.3 Such a motion may be brought at any time
after final judgment. See Crosby v. Bradstreet Co., 312 F.2d 483 (2d Cir. 1963),
cert. denied, 373 U.S. 911, 83 S.Ct. 1300, 10 L.Ed.2d 412. However, plaintiff's
failure to bring her motion under Rule 60(b)(4) is not fatal. It is well settled that
a court may raise the issue of subject matter jurisdiction at any time, sua sponte.
E. g., Clerk v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83 L.Ed. 1001
(1939); see United States v. Burmah Oil Co. Ltd., 558 F.2d 43, 46 (2d Cir.),
cert. denied, 434 U.S. 967, 98 S.Ct. 511, 54 L.Ed.2d 454 (1977). Moreover, "

(a)lthough the rule requires a motion for relief from the judgment, it has been
held that the court on its own motion may set aside a void judgment provided
notice has been given of its contemplated action and the party adversely
affected has been given an opportunity to be heard." 11 C. Wright & A. Miller,
Federal Practice and Procedure: Civil 2862, at 198 (1973) (citing United
States v. Milana, 148 F.Supp. 152 (D.Mich.1957)). Here, defendants well
understood that the thrust of plaintiff's motion was to vacate the 1976 order,
even though plaintiff's counsel had labelled the motion one to correct a clerical
error under Rule 60(a).4 The failure of plaintiff's counsel to refer to the proper
rule number does not prevent us from granting the relief that plaintiff in
substance asked for, especially where defendants had notice of and argued
against that relief. Hence, we may grant such relief on our own motion.
However, because of the ambiguity in the district court's order, we reverse and
remand with directions to amend the order of dismissal to provide that the state
law claim is dismissed for lack of jurisdiction.
15

Reversed.
LASKER, District Judge, concurring:

16

I agree with the conclusion that we reverse and remand with directions that the
district court amend the 1976 order of dismissal to provide that it is without
prejudice to the merits of any claim under state law. I disagree, however, with
the reasoning that "the district court had no power to make any order about the
merits of the state claim" once it had dismissed the federal claims at the pretrial
stage. As a result, I do not believe that a motion under Fed.R.Civ.Pr. 60(b)(4) to
vacate the judgment for lack of jurisdiction would have been appropriate in
these circumstances. I would hold that when a complaint containing both
federal and state claims is dismissed on the pleadings it must be presumed that
the district court declined to exercise its discretionary jurisdiction over pendent
state law claims, absent clear indications to the contrary. Since there is no clear
basis for concluding that the district court intended to dismiss the state law
claims on the merits here, McLearn is entitled to relief from the operation of
the order under Fed.R.Civ.Pr. 60(b)(6) insofar as the order as it now stands
operates unjustly to preclude her from asserting those claims.

17

Under United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130,
16 L.Ed.2d 218 (1966), a federal court's jurisdictional authority over pendent
state law claims does not depend on whether a trial of the operative facts is
necessary to resolve the federal claim. To the contrary, the Supreme Court in
Gibbs emphasized that, so long as the federal claim has "substance sufficient to
confer subject matter jurisdiction on the court," and the state and federal claims

"derive from a common nucleus of operative fact," "there is power in federal

courts to hear the whole." 383 U.S. at 725, 86 S.Ct. at 1138 (emphasis in
original). Since there is no doubt that a federal remedy exists for violations of
section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), Rule
10b-5, 17 C.F.R. 6240.10b-5, and sections 205 and 206 of the Investment
Advisers Act of 1940, 15 U.S.C. 80b-5 and 80b-6, it is clear that, under
Gibbs, McLearn's federal claims were of sufficient substance to confer subject
matter jurisdiction on the trial court and therefore to empower it to determine
the pendent state claims. Cf. Nolan v. Meyer, 520 F.2d 1276 (2d Cir. 1975);
Hagans v. Lavine, 415 U.S. 528, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974); Bell v.
Hood, 327 U.S. 687, 66 S.Ct. 773, 90 L.Ed. 939 (1946). Moreover, the district
court did not dismiss the complaint for lack of subject matter jurisdiction under
Fed.R.Civ.Pr. 12(b)(1), but rather for failure to plead fraud with particularity
under Fed.R.Civ.Pr. 9(b).
18

While Gibbs clearly recognizes the jurisdictional power of the federal courts to
entertain pendent state claims in these circumstances, it also cautions that this
"power need not be exercised in every case in which it is found to exist." 383
U.S. at 726, 86 S.Ct. at 1139. In the context of its discussion of the
discretionary exercise of jurisdiction over pendent claims, the Court stated that
"if the federal claims are dismissed before trial, even though not insubstantial in
a jurisdictional sense, the state claims should be dismissed as well." 383 U.S. at
726, 86 S.Ct. at 1139 (emphasis added). The point is that jurisdiction exists
over the state claims, but should not ordinarily be exercised where the federal
claims are dismissed, as here, early in the game. It is the ordinary practice of
the district courts to adhere to Gibbs' counsel in this regard; that is, to decline to
exercise further jurisdiction over pendent state claims if the federal claims upon
which federal jurisdiction is based are dismissed before trial. It appears that the
practice has been uniformly approved. See, e. g., CES Publishing Corp. v. St.
Regis Publications, Inc., 531 F.2d 11, 14 (2d Cir. 1975); Nolan v. Meyer, 520
F.2d 1276, 1280 (2d Cir. 1975); Kavit v. A. L. Stamm & Co., 491 F.2d 1176,
1179-80 (2d Cir. 1974); Iroquois Industries v. Syracuse China Corp., 417 F.2d
963 (2d Cir. 1969), cert. denied, 399 U.S. 909, 90 S.Ct. 2199, 26 L.Ed.2d 561
(1970). None of these cases, however, questions the jurisdictional power of the
federal courts to consider pendent state claims despite pretrial dismissal of the
federal claims contained in the complaint.1

19

Since the district court had the power to dismiss both the federal and the state
claims on their merits, I disagree with the proposition that the order dismissing
the state claims was void because the district court lacked jurisdiction over
them once it dismissed the federal claims. The problem in this case arises not
from a lack of power in the district court to consider the pendent state claims on

their merits, but because the district court failed to indicate in its order
dismissing the complaint whether the pendent state claims were dismissed on
their merits or whether the court was declining to exercise its pendent
jurisdiction over them. In denying McLearn's motion to amend the order under
Fed.R.Civ.Pr. 60(a), the district court indicated that it was no longer able to
recall whether the state claims were considered on their merits or not.
20

It is certainly the preferred practice in cases involving pendent state law claims
for the district court to state explicitly whether a dismissal of state law claims is
on the merits or whether it is declining to exercise its pendent jurisdiction.
Where the district court, on the pleadings, dismisses a complaint containing
both state and federal claims and fails to indicate whether the state claims are
being dismissed on the merits, however, the most useful operative rule is to
presume that the court declined to exercise its discretionary pendent jurisdiction
over the state law claims. Such a presumption accords both with the direction of
Gibbs and the established practice of our courts, described above. This is true
despite the district court's inability to recollect the basis of the dismissal in the
present case.

21

Because of the ambiguity of the order dismissing the complaint in the present
case, it has been construed to bar relief in the New York courts under the
doctrine of res judicata. McLearn is thus denied an opportunity to have any
court consider her state law claims on the merits. Justice is not served by such a
result. The law favors, as a matter of high priority, that disputes be resolved on
their merits. See Conley v. Gibson, 355 U.S. 41, 48, 78 S.Ct. 99, 103, 2 L.Ed.2d
80 (1957); Medunic v. Lederer, 533 F.2d 891 (3d Cir. 1976); Pulliam v.
Pulliam, 478 F.2d 935 (D.C.Cir.1973). Since it is to be presumed that the
district court did not consider her state law claims on the merits, it is
appropriate that its order dismissing the complaint indicate that disposition.

22

To be sure, it would have been preferable for McLearn to have sought relief
under Fed.R.Civ.Pr. 59(e) immediately after dismissal, as the dissent contends.
It is also true, however, that in light of the practice of our courts to decline
pendent jurisdiction in these circumstances, she had no reason to believe that
the order was intended to, or would be construed to, dismiss her state claims on
the merits. Moreover, the burden of clarity in judgment should be on the court,
not the litigants. It would therefore be unfair to hold McLearn to the strict time
limits of Fed.R.Civ.Pr. 59(e).

23

We also agree, for the reasons stated in the dissent, that the district court was
correct that its failure to indicate the basis for its dismissal does not constitute a
"clerical mistake" under Fed.R.Civ.Pr. 60(a). McLearn is nevertheless entitled

to relief under Fed.R.Civ.Pr. 60(b)(6).2 Rule 60(b) (6) "vests power in courts
adequate to enable them to vacate judgments whenever such action is
appropriate to accomplish justice." Klapprott v. United States, 335 U.S. 601,
615, 69 S.Ct. 384, 390, 93 L.Ed. 266 (1949). With full view towards the
weighty interests served by insuring the finality of judgments of our courts, the
present case is an exceptional one in which justice can only be served by
affording relief from that portion of the judgment which may be construed to
dismiss McLearn's state law claims on their merits. McLearn should not be
forced to bear the brunt of the district court's lack of clarity in its order of
dismissal. Moreover, while over five years have passed since the order was
entered, the question whether the state claims were dismissed on the merits has
been continuously litigated over the course of that period, rendering
considerations of finality less weighty. And while McLearn presented her
motion for relief from judgment under the rubric of Rule 60(a), the
nomenclature is not dispositive for relief under Rule 60(b)(6). See Moore's
Federal Practice P 60.27(1), p. 350. Defendants understood that McLearn's
motion was directed at obtaining relief from the 1976 order, and the issues
relevant to a Rule 60(b)(6) determination have all been canvassed in the parties'
papers. Nothing except delay would be gained by requiring further litigation of
the issue. Finally, I believe in the unique circumstances of this case that the
institution of the motion for relief within a month of the New York Court of
Appeals order denying reargument without prejudice if the federal court
amends its order was "within a reasonable time" as Rule 60(b) requires.
24

In sum, McLearn is entitled to relief from that part of the 1976 order which
may be construed to dismiss her state law claims on the merits. This relief can
best be granted by a remand to the district court with directions to amend its
order of dismissal to provide that the state claims are dismissed without
prejudice.

25

I concur that the judgment of the district court should be reversed.

MESKILL, Circuit Judge (dissenting):

26

I.

The only issue properly before this Court is whether Judge Metzner erred in
denying relief to appellant under Rule 60(a) of the Federal Rules of Civil
Procedure, which provides for the correction of clerical errors or errors arising
from oversight or omission. Since I agree with Judge Metzner that such relief is
not available in this case, I respectfully dissent.

27

The propriety of relief in this case under Rule 60(a) was the sole issue raised by
McLearn before the district court and addressed by the parties on appeal.
Nevertheless, Judge Lumbard and Judge Lasker have reversed the judgment of
the district court, each resting upon a different reason, neither of which was
raised by any party to this action at any level of the proceedings. I believe that
my brothers have far exceeded the scope of our appellate review. While it is
well settled that a Court of Appeals may affirm a judgment on grounds not
urged in the lower court, see Helvering v. Gowran, 302 U.S. 238, 245-46, 58
S.Ct. 154, 157-158, 82 L.Ed. 224 (1937), it is equally clear that reversal of a
lower court decision on grounds which were never raised during the course of
trial should be reserved for rare instances of public interest or gross injustice,
see Singleton v. Wulff, 428 U.S. 106, 120-21, 96 S.Ct. 2868, 2877-2878, 49
L.Ed.2d 826 (1975). As this Court noted in Green v. Brown, 398 F.2d 1006,
1009 (2d Cir. 1968), "we (are) not ordinarily ... receptive to attempts to litigate
issues not raised in the trial court ...."

28

I recognize that "the rule that an order will not be reversed upon a point first
raised upon appeal is not absolute ...." New York, New Haven & Hartford R.R.
Co. v. Reconstruction Fin. Corp., 180 F.2d 241, 244 (2d Cir. 1950). However, I
do not believe that the present case involves the high level of injustice or public
necessity requisite to invoke the rule's exception, especially where the points on
which my brothers individually rely were not even raised on appeal. In Green v.
Brown, supra, this Court chose to entertain several issues raised for the first
time on appeal since they were "of great significance in construing an act
designed to protect thousands of investors." 398 F.2d at 1009. McLearn is only
a single investor, albeit an allegedly injured one. In Olegario v. United States,
629 F.2d 204, 216 n.8 (2d Cir. 1980), cert. denied, 450 U.S. 980, 101 S.Ct.
1513, 67 L.Ed.2d 814 (1981), this Court again invoked the exception where an
"important federal issue" was at stake and the government was not represented
by its own counsel before the district court. McLearn, however, raises no
allegations of injury to the public, only to herself, and she has had more than
ample access to counsel throughout the full range of this case.

29

If McLearn's counsel failed to move under Federal Rule of Civil Procedure

59(e) to have the district court's original judgment altered or amended within
ten days of judgment, the appropriate remedy under the facts of this case,
perhaps her appropriate recourse is in an action for malpractice; the remedy,
however, should not be for this Court to set the clocks back five years, which is
in effect what it has done. The effect of such a reversal as this Court orders
today, although well intended, will be to impair the finality of judgments and to
shift the judicial role, traditionally one of impartial arbiter, to one of advocate. I
would reserve such drastic intrusion into the domain of counsel for those

instances where "injustice might otherwise result," Hormel v. Helvering, 312

U.S. 552, 557, 61 S.Ct. 719, 721, 85 L.Ed. 1037 (1941).
II.
30

Beyond my opinion that this Court should have limited its review to the single
issue raised before the district court and on appeal, I cannot agree with Judge
Lumbard's reasoning that "the district court had no power to make any order
about the merits of the state claim." 660 F.2d at 846. To this limited extent, I
concur with Judge Lasker. That a federal court may exercise jurisdiction over
pendent state law claims where it has jurisdiction over the related federal claims
was made clear in United Mine Workers of America v. Gibbs, 383 U.S. 715,
725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). While McLearn's complaint
was twice dismissed for failure to plead fraud with particularity, I agree with
Judge Lasker that her "federal claims were of sufficient substance to confer
subject matter jurisdiction on the trial court and therefore to empower it to
determine the pendent state claims." Id. at 849-50. Consequently, there is no
legal basis for Judge Lumbard's conclusion that the district court's decision, if it
did dismiss the state law claims on the merits, must have been void and thus
subject to attack under Rule 60(b)(4).

III.
31

While I agree with Judge Lasker's rejection of Rule 60(b)(4) as a source of

relief to McLearn, I cannot accept his proposal for relief under Rule 60(b)(6)
for the reasons stated in the first part of my dissent. Whether dismissal of a
complaint containing both federal and state claims should, as Judge Lasker
argues, be presumed to address only the federal claims on the merits, "absent
clear indications to the contrary," must remain an open question until a litigant
properly raises it in an appropriate proceeding. Since this issue was never raised
before the district court or on appeal, I express no opinion on its merits.

IV.
32

While Judge Lumbard and Judge Lasker have expressed what each believes to
be the proper source of relief in this case, neither has addressed at any length
the one issue properly before us the propriety of relief under Rule 60(a). While
their failure to address this issue may be due to the obvious inapplicability of
Rule 60(a) to this case, I think that the issue deserves greater discussion since it
was the basis for the decision of the court below.

33

I agree with Judge Metzner that Rule 60(a) relief is not appropriate in this case

and would therefore affirm his decision. While relief from alleged judicial
errors may be available under Rule 59(e) or Rule 60(b)(1), see 7 Moore's
Federal Practice P 60.22(3) (2d ed. 1979); 11 Wright & Miller, Federal Practice
and Procedure, 2854, at 149 (1973), I agree with Professor Moore that "(i)n
exercising the power to correct clerical mistakes (under Rule 60(a)), courts
should ... confine the power to correction of mistakes that may legitimately be
said to be clerical, and exercise it only on a clear showing of mistake." 6A
Moore's Federal Practice, supra, P 60.06(3), at 4063 (footnote omitted). The
overriding policy of ensuring finality in judgments militates against interpreting
Rule 60(a), which permits a motion to be made thereunder at any time, to
embrace applications for the substantial relief sought here. McLearn would
have the district court declare over half a decade after the entry of judgment
whether the dismissal of her common-law claims was jurisdictional or on the
merits. The relief McLearn seeks was available within ten days from the entry
of judgment under Rule 59(e), or possibly, at the very latest, within one year
under Rule 60(b)(1).
34

Much of the litigation in this action obviously could have been avoided had the
district court made clear at the outset whether it exercised pendent jurisdiction
in dismissing the common-law claims. In cases involving pendent claims,
district courts should, as a matter of course, expressly state whether a dismissal
of a state cause of action is on the merits or for lack of subject matter
jurisdiction. Failing that, a plaintiff should seek relief under Rule 59(e) within
the prescribed time to alter or amend the judgment so that it reflects the
intended disposition of the state claims.

Honorable Morris E. Lasker, United States District Judge for the Southern
District of New York, sitting by designation

Although Judge Metzner's order dismissing the amended complaint did not
refer to the state cause of action, the order dismissing the original complaint
referred specifically to the allegations of "fraud based on breach of fiduciary
duty."

A federal court may exercise pendent jurisdiction in disposing of a state claim

prior to trial where it has invested "substantial time and energy" on the state law
issues prior to dismissal, Gray v. American International Association of Heat &
Frost Insulators, 447 F.2d 1118, 1120 (6th Cir. 1971), or where "the state claim
is so closely tied to questions of federal policy that the argument for exercise of
pendent jurisdiction is particularly strong," Gibbs, supra, 383 U.S. at 727, 86
S.Ct. at 1139. Neither exception applies here

I agree with Judge Meskill that Fed.R.Civ.P. 60(a) does not entitle plaintiff to
the relief that she seeks

As defendants said in their brief, "what plaintiff was really attempting to do on

her most recent application in the District Court was not to obtain 'clarification'
of that Court's intent, but to reargue the 1976 dismissal of her amended
complaint in an effort to avoid the effect of the dismissal of her common law
claims on the merits." Such avoidance is precisely the relief to which we
believe plaintiff is entitled. Defendants' argument against this relief
demonstrates that they had notice that the issue whether to vacate the 1976
order with respect to the state law claim was before this court

I do not conclude, as my Brother Lumbard does, that Nolan v. Meyer, supra,

supports the proposition that "unless a trial of the operative facts is necessary to
resolve claims that the federal court must hear, the federal court has no
jurisdiction to take any action with respect to a pendent state law claim." In
Nolan the predicate to pendent jurisdiction under Gibbs of a federal claim with
"substance sufficient to confer subject matter jurisdiction on the court" did not
exist. As the court stated, "the federal cause of action upon which Nolan relies
for 1331 jurisdiction is so insubstantial that the complaint was properly
dismissed." 520 F.2d at 1280. The court thus upheld a dismissal for total lack
of jurisdiction. Emphasizing the discretionary nature of the exercise of pendent
jurisdiction, the court then stated that "we would be inclined to hold that the
retention for trial of a pendent state law claim on the basis of a federal question
claim already disposed of by a Rule 12(b)(6) motion would be an abuse of
discretion absent unusual circumstances ..." 520 F.2d at 1280 (emphasis
added). However, even if this statement were relevant to the question of the
district court's power, it is inapplicable here because there is no contention that
the district court held the pendent state law claims "for trial"; the discretionary
exercise of pendent jurisdiction to dismiss state claims along with federal
claims involves a far different calculus of the efficient utilization of judicial
resources than the retention of state law claims for trial. See Kavit v. Stamm,
supra, at 1180, n.4 (efficient utilization of judicial resources a relevant
consideration to the determination whether to exercise pendent jurisdiction)

Fed.R.Civ.Pr. 60(b) provides:

"(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence;
Fraud, etc. On motion and upon such terms as are just, the court may relieve a
party or his legal representative from a final judgment, order, or proceeding for
the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence which by due diligence could not have been
discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether

heretofore denominated intrinsic or extrinsic), misrepresentation, or other

misconduct of an adverse party; (4) the judgment is void; (5) the judgment has
been satisfied, released, or discharged, or a prior judgment upon which it is
based has been reversed or otherwise vacated, or it is no longer equitable that
the judgment should have prospective application; or (6) any other reason
justifying relief from the operation of the judgment. The motion shall be made
within a reasonable time, and for reasons (1), (2), and (3) not more than one
year after the judgment, order, or proceeding was entered or taken. A motion
under this subdivision (b) does not affect the finality of a judgment or suspend
its operation. This rule does not limit the power of a court to entertain an
independent action to relieve a party from a judgment, order, or proceeding, or
to grant relief to a defendant not actually personally notified as provided in
Title 28, U.S.C. 1655, or to set aside a judgment for fraud upon the court.
Writs of coram nobis, coram vobis, audita querela, and bills of review and bills
in the nature of a bill of review, are abolished, and the procedure for obtaining
any relief from a judgment shall be by motion as prescribed in these rules or by
an independent action."