A plaintiff from State A sues a defendant from State B in federal court in State B for text 80,000 for a breach of contract. The defendant files a counterclaim against the plaintiff for text 15,000 arising from the same transaction. The plaintiff then realizes that the contract claim is weak and voluntarily dismisses the original complaint. The defendant wants to proceed with the counterclaim. Does the federal court have jurisdiction over the counterclaim?

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The Title 28 of the United States Code QUESTION #3704

Question 1

A plaintiff from State A sues a defendant from State B in federal court in State B for $\text{\$80,000}$ for a breach of contract. The defendant files a counterclaim against the plaintiff for $\text{\$15,000}$ arising from the same transaction. The plaintiff then realizes that the contract claim is weak and voluntarily dismisses the original complaint. The defendant wants to proceed with the counterclaim. Does the federal court have jurisdiction over the counterclaim?

No, because the original complaint was dismissed, and the counterclaim is only $\text{\$15,000}$.
No, because there is no longer a 'case or controversy' under Article III.
Yes, because the court had original jurisdiction over the complaint and the counterclaim arises from the same transaction (Rule 13(a)).✔️
Yes, but only if the plaintiff re-files the original claim.

Correct Answer Explanation

Under 28 U.S.C. $\S 1367$, a federal court has supplemental jurisdiction over compulsory counterclaims that arise from the same nucleus of operative fact. Once jurisdiction is established at the time of filing, the dismissal of the main claim does not necessarily divest the court of jurisdiction over the remaining supplemental claims.

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