In the
United States Court of Appeals
For the Seventh Circuit
No. 09-3302
JEFF W HITELY, et al.,
Plaintiffs-Appellants,
v.
A NTHONY M ORAVEC , et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:07-cv-788-DFH-TAB—David F. Hamilton, Judge.
A RGUED S EPTEMBER 20, 2010—D ECIDED F EBRUARY 16, 2011
Before E ASTERBROOK, Chief Judge, and P OSNER and
R OVNER, Circuit Judges.
E ASTERBROOK, Chief Judge. Plaintiffs worked for
Waste Reduction, Inc., at its facilities in Indiana, until
they were laid off in 2006. The next year Waste Reduc-
tion entered bankruptcy in Michigan. Plaintiffs filed
claims for overdue wages and fringe benefits. Their
wage claims were allowed and paid, but they remained
dissatisfied. Indiana imposes penalties on employers
2 No. 09-3302
that tarry in remitting wages, see Ind. Code §§ 22-2-5-2, 22-
2-9-4(b), and Waste Reduction did not have enough
assets to satisfy the penalty claims in the bankruptcy. So
the ex-employees filed suit in a state court of Indiana,
demanding penalties—not from Waste Reduction (any
claims against it belonged in the bankruptcy court) but
against the ten shareholders who had the largest equity
stakes in the firm.
Indiana does not require corporate investors to
make good the firm’s debts unless the conditions for
piercing the corporate veil have been satisfied. Ind. Code
§23-1-26-3. Plaintiffs do not contend there is any basis
for investors’ liability under Indiana law. But Waste
Reduction was incorporated in New York, and the inter-
nal affairs doctrine designates a firm’s state of incorpora-
tion as the source of rules about whether investors are
liable for its debts. See Restatement (Second) of Conflict of
Laws §307; Ind. Code §23-1-49-5. New York requires some
investors in privately held firms to guarantee employees’
wages and benefits.
The ten largest shareholders, as determined by the
fair value of their beneficial interest as of the
beginning of the period during which the
unpaid services referred to in this section are
performed, of every corporation . . ., no shares
of which are listed on a national securities ex-
change or regularly quoted in an over-the-counter
market . . ., shall jointly and severally be per-
sonally liable for all debts, wages or salaries due
and owing to any of its laborers, servants or em-
No. 09-3302 3
ployees other than contractors, for services per-
formed by them for such corporation. . . . An action
to enforce such liability shall be commenced
within ninety days after the return of an execution
unsatisfied against the corporation upon a judg-
ment recovered against it for such services.
N.Y. Bus. Corp. L. §630(a). Language that we have
omitted requires notice, which plaintiffs gave. The share-
holders concede that the bankruptcy court’s decision is
equivalent to “return of an execution unsatisfied”. But
they deny that liability for the penalty specified by
Indiana law is covered by §630(a).
Because the former employees complained about
unpaid fringe benefits as well as unpaid wages, part of
their suit necessarily arose under ERISA (the Em-
ployee Retirement Income Security Act), which com-
pletely preempts state law on the subject of pension and
welfare plans. See Franchise Tax Board v. Construction
Laborers Vacation Trust, 463 U.S. 1 (1983). The share-
holders removed the proceeding to a federal district
court, which concluded that none of plaintiffs’ principal
claims is sound. 2008 U.S. Dist. L EXIS 15841 (S.D. Ind.
Feb. 29, 2008). The court kept the case open on
its docket until the bankruptcy court resolved all em-
ployees’ claims for unpaid wages. Once that had been
done, and plaintiffs no longer sought to collect wages
(as opposed to penalties) under §630(a)—defendants
settled with Randall McKee, the only ex-employee
whose wage claims were not fully satisfied in the bank-
ruptcy—the court entered final judgment for defen-
4 No. 09-3302
dants. Shortly before doing so, the court denied a
motion to remand. The motion was filed more than
18 months after the opinion on the merits, and the
court deemed it far too late.
The former employees repeat on appeal the argument
that a district court is obliged to remand once it resolves
the federal claim that supported removal. That is not,
however, what 28 U.S.C. §1367(c)(3), which governs
the exercise of supplemental jurisdiction, provides. The
statute says that a district judge has discretion to re-
linquish supplemental jurisdiction and remand once
the federal claim has dropped out. Discretion to
remand implies a power to retain jurisdiction for good
reasons. See also Miller v. Herman, 600 F.3d 726, 738
(7th Cir. 2010); Hansen v. Hamilton Southeastern School
Corp., 551 F.3d 599, 607 (7th Cir. 2008). It is impossible
to see how the judge could have abused his discretion
by resolving the state-law theory more than a year
before anyone asked him to relinquish supplemental
jurisdiction. Once a court has invested the time and
energy needed to resolve a legal claim, it would be
foolish to set the decision aside and remand so that a
different court could cover the same ground. Once
is enough. Someone who wants a district judge to send
state-law issues back to state court should ask far
enough in advance that the judge and litigants can save
the time needed to gather evidence, file briefs, and
write opinions. Remands after decision would produce
nothing but wasteful duplication. The district judge
did not abuse his discretion in denying this belated motion.
No. 09-3302 5
Plaintiffs want to combine the Indiana statute, which
makes employers liable for penalties when they do not
pay wages on time, with the New York statute, which
makes some equity investors directly liable to workers
for wages and benefits. Yet neither state passed such
a hybrid law, which the district judge likened to a griffin
or jackalope. (A griffin is a mythical creature, but a
jackalope is the main character in the short film
Boundin’ and therefore must exist. Surely Pixar would
not mislead millions of children.) All laws are compro-
mises. A court can’t combine the pro-worker features
of disparate laws, while disregarding the statutes’ pro-
employer features. In Indiana the employer is liable for
penalties, but investors do not stand behind corporate
debts; in New York some investors can be liable, but
only for wages and benefits.
True enough, the New York statute says that the ten
largest shareholders “shall jointly and severally be per-
sonally liable for all debts, wages or salaries due and
owing to any of its laborers”. Plaintiffs observe that a
corporation’s liability for penalties is a “debt” to workers.
But there is more to the New York law. What follows
the phrase we have just quoted is: “for services per-
formed by them for such corporation.” Thus the
investors stand behind “all debts . . . for services per-
formed”. A penalty under Indiana law is not a debt “for”
services performed. It may grow out of, and be related to,
those services (coupled with the absence of timely pay-
ment), but it is not a debt “for” services. The New York
legislature used the comprehensive word “debt” so that
it would not need to list commissions, fees, and all
6 No. 09-3302
other words that designate compensation. As far as we
can see, New York has resisted efforts to use §630(a) to
make investors liable for anything except compensation.
See Sasso v. Vachris, 66 N.Y.2d 28, 33–34, 484 N.E.2d 1359,
1362 (1985); Lindsey v. Winkler, 277 N.Y.S.2d 768, 770
(Nassau County D. Ct. 1967). Plaintiffs have not pointed
us to any New York decision that supports their posi-
tion—and, as §630(a) is unique among the states, deci-
sions from other jurisdictions are unavailable. The
district judge therefore correctly concluded that §630(a)
does not make defendants liable for a penalty under
Indiana law.
A FFIRMED
2-16-11