Rodriguez v. Shell Oil Company ( 2000 )

REVISED, October 23, 2000
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 95-21074
FRANKLIN RODRIGUEZ DELGADO, ET AL. (Individually
and on behalf of all others similarly situated),
Plaintiffs-Appellants-Cross-Appellees,
VERSUS
SHELL OIL COMPANY; DOW CHEMICAL COMPANY; OCCIDENTAL CHEMICAL
CORPORATION (Individually and as successor to Occidental
Chemical Company and Occidental Chemical and Agricultural
Products, Inc.); STANDARD FRUIT CO.; STANDARD FRUIT AND
STEAMSHIP COMPANY; DOLE FOOD COMPANY, INC.; DOLE FRESH FRUIT
CO.; CHIQUITA BRANDS, INC.; CHIQUITA BRANDS INTERNATIONAL, INC.;
DEL MONTE TROPICAL FRUIT COMPANY,
Defendants-Appellees-Cross-Appellants,
DEL MONTE FRESH PRODUCE, N.A.,
Defendant-Third Party Plaintiff-Appellee-Cross-Appellant,
VERSUS
DEAD SEA BROMINE COMPANY, LTD.; AMERIBROM, INC.,
Third Party Defendants-Appellees-Cross-Appellants.
* * * * * * * * * * * * * * * * * * * * * * * * * *
JORGE COLINDRES CARCAMO, ET AL. (Individually, and on
behalf of all others similarly situated),
Plaintiffs-Appellants-Cross-Appellees,
VERSUS
SHELL OIL COMPANY; OCCIDENTAL CHEMICAL CORPORATION
(Individually and as successor to Occidental Chemical
and Occidental Chemical and Agricultural Products, Inc.);
STANDARD FRUIT COMPANY; STANDARD FRUIT AND STEAMSHIP
COMPANY; DOLE FOOD COMPANY, INC.; DOLE FRESH FRUIT
COMPANY; CHIQUITA BRANDS, INC.; CHIQUITA BRANDS
INTERNATIONAL, INC.,
Defendants-Appellees-Cross-Appellants,
DOW CHEMICAL COMPANY,
Defendant-Third Party Plaintiff-Appellee-Cross-Appellant,
VERSUS
DEL MONTE FRESH PRODUCE COMPANY (sued as Del Monte
Tropical Fruit Company); DEAD SEA BROMINE COMPANY,
LTD.; AND AMERIBROM, INC.,
Third Party Defendants-Appellees-Cross-Appellants,
DEL MONTE FRESH PRODUCE, N.A., INC.,
Third Party Defendant-Fourth Party
Plaintiff-Appellee-Cross-Appellant,
VERSUS
BROMINE COMPOUNDS, LTD.,
Fourth Party Defendant-Appellee-Cross-Appellant.
* * * * * * * * * * * * * * * * * * * * * * * *
JUAN RAMON VALDEZ, ET AL.,
Plaintiffs-Appellants-Cross-Appellees,
VERSUS
SHELL OIL COMPANY; OCCIDENTAL CHEMICAL CORPORATION
(Individually and as successor to Occidental Chemical
Company and Occidental Chemical and Agricultural
Products, Inc.); STANDARD FRUIT COMPANY; STANDARD
FRUIT AND STEAMSHIP COMPANY; DOLE FOOD COMPANY, INC.;
DOLE FRESH FRUIT COMPANY; CHIQUITA BRANDS, INC.;
CHIQUITA BRANDS INTERNATIONAL, INC.,
Defendants-Appellees-Cross-Appellants,
DOW CHEMICAL COMPANY,
Defendant-Third Party Plaintiff-Appellee-Cross-Appellant,
VERSUS
DEL MONTE FRESH PRODUCE, N.A.; DEL MONTE TROPICAL FRUIT
COMPANY; DEAD SEA BROMINE COMPANY, LTD.; AMERIBROM, INC.,
Third Party Defendants-Appellees-Cross-Appellants.
* * * * * * * * * * * * * * * * * * * * * * * * *
ISAE CARCAMO,
Plaintiff-Appellant-Cross-Appellee,
VERSUS
DOW CHEMICAL COMPANY; OCCIDENTAL CHEMICAL CORPORATION
(Individually and as successor to Occidental Chemical
Company and Occidental Chemical and Agricultural
Products, Inc.); STANDARD FRUIT COMPANY; STANDARD
FRUIT AND STEAMSHIP COMPANY; DOLE FOOD COMPANY, INC.;
DOLE FRESH FRUIT COMPANY,
Defendants-Appellees-Cross-Appellants,
SHELL OIL COMPANY
Defendant-Third Party Plaintiff-Appellee-Cross-Appellant,
VERSUS
DEAD SEA BROMINE COMPANY, LTD.; AMERIBROM, INC.,
Third Party Defendants-Appellees-Cross-Appellants.
No. 97-20060
RAMON RODRIGUEZ RODRIGUEZ,
Plaintiff-Appellant,
VERSUS
SHELL OIL COMPANY; STANDARD FRUIT & STEAMSHIP COMPANY;
CHIQUITA BRANDS; CHIQUITA BRANDS INTERNATIONAL, INC.;
STANDARD FRUIT COMPANY,
Defendants-Third Party Plaintiffs-Appellees,
and
DOLE FOOD COMPANY, INC.; DOLE FRESH FRUIT CO.;
DOW CHEMICAL COMPANY; OCCIDENTAL CHEMICAL,
Defendants-Appellees,
VERSUS
BROMINE COMPOUNDS, LTD.; AMVAC CHEMICAL COMPANY;
DEAD SEA BROMINE COMPANY, LTD.,
Third Party Defendants-Appellees.
Appeals from the United States District Court
For the Southern District of Texas
October 19, 2000
Before GARWOOD, WIENER, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
In these consolidated appeals,1 Plaintiffs-Appellants
(“Plaintiffs”), who are several thousand foreign agricultural
workers, challenge the district court’s orders dismissing on forum
non conveniens, five of six cases removed from Texas state court.
Plaintiffs assert that the removals were improper and that the
district court lacked subject matter jurisdiction. Concluding that
removal and jurisdiction were proper in all of the five dismissed
cases, we affirm.
I. BACKGROUND
A. Overview
Plaintiffs originally filed all six cases in various Texas
state courts, seeking damages for injuries allegedly caused by
their apparently incremental exposure over a considerable period to
a nematocide, dibromochloropropane (“DBCP”), while working on
banana farms in several foreign countries. Plaintiffs justify
their presence in the state courts of Texas on provisions of a
Texas statute that furnishes a Texas forum to a plaintiff who has
1
By a concurrent order, appeal No. 97-20060 is consolidated
with appeal No. 95-21074.
been injured in a foreign country if that plaintiff is a citizen of
a foreign country that has equal treaty rights with the United
States. See Tex. Civ. Prac. & Rem. Code § 71.031. Defendants-
Appellees (collectively “Defendants”) are Shell Oil Company
(“Shell”), Dow Chemical Company (“Dow”), Occidental Chemical
Corporation (“Occidental”), Standard Fruit Company and Standard
Fruit & Steamship Company (collectively “the Standard Fruit
entities”), Dole Fresh Fruit Company and Dole Food Company, Inc.
(collectively “the Dole entities”), Chiquita Brands, Inc., and
Chiquita Brands International, Inc. (collectively “the Chiquita
entities”), and Del Monte Tropical Fruit Company and Del Monte
Fresh Produce, N.A. (collectively “the Del Monte entities”).
Defendants are alleged to have designed, manufactured, sold, or
used DBCP.
The filing of these cases in the state courts of Texas was by
no means happenstance. In a classic exercise of forum shopping,
Plaintiffs selected Texas because, among other plaintiff-friendly
features, its law at the time of filing provided no applicable
doctrine of forum non conveniens pursuant to which their actions
could be dismissed. See Dow Chemical Co. v. Castro Alfaro, 786
S.W.2d 674, 679 (Tex. 1990).2
2
The Texas legislature subsequently enacted a statute making
the doctrine of forum non conveniens applicable to personal injury
actions filed on or after September 1, 1993. See Tex. Civ. Prac.
& Rem. Code § 71.051. Plaintiffs filed the instant actions before
that date.
6
In response, Defendants determined that removal of these cases
to federal court, where forum non conveniens was available, would
be an effective way to send these suits back to their countries of
origin. In pursuit of their objective, a different pre-designated
defendant in each of the six cases first filed a third-party
petition impleading Dead Sea Bromine Company, Limited (“Dead Sea”).
Next, Dead Sea removed each action to federal court by virtue of
its alleged status as a "foreign state" under the Foreign Sovereign
Immunity Act (“FSIA”), 28 U.S.C. §§ 1602-1611.3 As the third step,
Dead Sea waived its sovereign immunity in each of the federal
cases.
But, among other things, Plaintiffs contend that Texas Rule of
Civil Procedure 38(a) requires a third-party plaintiff to obtain
leave of court to serve a third-party petition when it is filed
more than thirty days after service of the defendant’s original
state court answer.4 In four of the six cases, the third-party
petitions were filed more than thirty days after the answers. In
the remaining two cases, the third-party petitions were filed
3
Under 28 U.S.C. § 1441(d), a foreign state is entitled to
remove to federal court any civil action brought against it in a
state court.
4
Tex. R. Civ. P. 38(a) provides, "The third-party plaintiff
need not obtain leave to make the service [on the third-party
defendant] if he files the third-party petition not later than
thirty (30) days after he serves his original answer. Otherwise,
he must obtain leave on motion upon notice to all parties to the
action."
7
within less than thirty days following the answers, so leave of
court was not required.
B. Prior Proceedings
Against this backdrop, we pause to recount in turn the
individual procedural history of each case, for cognizance of the
prior proceedings in each is essential to our determination of (1)
the efficacy of Defendants’ joinder of Dead Sea, (2) the validity
of Dead Sea’s removals, and (3) the existence of federal subject
matter jurisdiction.
1. Delgado v. Shell Oil Co. (“Delgado”)
The Delgado plaintiffs are more than 2,000 residents of three
foreign countries who filed suit originally in Galveston County,
Texas.5 The defendants in Delgado previously attempted to remove
to federal court, asserting that the Federal Insecticide,
Fungicide, and Rodenticide Act (“FIFRA”), 7 U.S.C. §§ 136-136y,
preempted the plaintiffs’ claims and provided federal question
jurisdiction. The district court remanded, noting that even if the
FIFRA preempted the Delgado plaintiffs’ claims, there was no
federal question jurisdiction. See Rodriguez v. Shell Oil Co., 818
5
The Delgado plaintiffs are residents of Costa Rica, Nicaragua,
or Panama. The Delgado defendants are Shell, Dow, Occidental, the
Standard Fruit entities, the Dole entities, the Chiquita entities,
and the Del Monte entities.
8
F. Supp. 1013, 1018 (S.D. Tex. 1993).6 Subsequently, Defendant Del
Monte Fresh Produce, N.A., filed an original answer in state court
and, within thirty days, served a third-party petition impleading
Dead Sea and its American affiliate, Ameribrom, Inc., (“Ameribrom”)
as third-party defendants. State court leave to serve the third-
party petition was not required. Later the same day that the
third-party petition was filed against it, Dead Sea removed the
case to the Southern District of Texas, Galveston Division.7
The other defendants joined in the removal and filed cross-
claims against Dead Sea and, in some cases, against one another.8
Shell filed supplemental notices of removal. The Delgado
plaintiffs filed a motion to remand, asserting lack of subject
matter jurisdiction. The district court denied the motion,
concluding that Dead Sea was a foreign state entitled to remove,
6
Following remand, the state court consolidated Delgado with
Aguilar v. Shell Oil Co., an action brought in that court by an
uncertified class of all persons (and their spouses) in Costa Rica
who had been adversely exposed to DBCP that was allegedly designed,
manufactured, marketed, distributed, or sold by one or more of the
defendants and who had not already commenced an individual civil
action. The defendants in Aguilar are Shell, Dow, Occidental, and
the Standard Fruit entities.
7
The district judge to whom the case was originally assigned
recused himself. The case was transferred to the Houston Division
and assigned to the district judge whose decisions form the basis
of these appeals.
8
Del Monte Fresh Produce, N.A., did not file a cross-claim
against Dead Sea.
9
pursuant to 28 U.S.C. § 1441(d),9 and consolidated Delgado with
Jorge, which we consider next.
2. Jorge Carcamo v. Shell Oil Co. (“Jorge”)
The Jorge plaintiffs are nine representatives who filed suit
originally in Brazoria County, Texas, on behalf of themselves and
an uncertified class of more than 16,000 citizens and residents of
twelve foreign countries.10 Defendant Dow filed a third-party
petition against Dead Sea, Ameribrom, and the Del Monte entities
and delivered a courtesy copy of that petition to Dead Sea. More
than thirty days had elapsed since Dow had served its original
answer in state court, and Dow did not obtain state court leave
prior to filing the third-party petition. Regardless, on the same
day that Dow filed its third-party petition, Dead Sea removed the
case to the Southern District of Texas, Galveston Division.11
Predictably, the other defendants joined in the removal, asserting
9
The district court refrained from deciding at that time
whether Dead Sea’s presence conferred federal subject matter
jurisdiction.
10
The Jorge plaintiffs are residents of Burkina Faso, Costa
Rica, Dominica, Ecuador, Guatemala, Honduras, Ivory Coast,
Nicaragua, Panama, the Philippines, Saint Lucia, or Saint Vincent.
One of the Honduran plaintiffs is allegedly a resident of
California. The Jorge defendants are the same as those in Delgado
with the exception of the Del Monte entities, which are not
defendants in Jorge.
11
The district judge to whom the case was originally assigned
(and to whom Delgado had also been originally assigned) recused
himself. The case was transferred to the Houston Division and
ultimately assigned to the district judge whose decisions form the
basis of these appeals.
10
additional bases of subject matter jurisdiction, and filed cross-
claims. Shell filed supplemental notices of removal. The Jorge
plaintiffs filed motions to remand, arguing that (1) Dead Sea’s
removal was procedurally defective for want of state court leave to
serve Dead Sea, and that (2) the district court lacked subject
matter jurisdiction as the Jorge plaintiffs’ Seventh Amended
Petition expressly renounced any intention of pursuing claims
against Dead Sea or its affiliated entities, thus rendering Dead
Sea’s joinder "fraudulent." Subsequent to removal, however, Dow
moved for leave to serve an amended third-party complaint
impleading, inter alia, Dead Sea.12 The motion was referred to a
magistrate judge, who granted the motion.
12
The other third-party defendants served were Ameribrom, the
Del Monte entities, AMVAC Chemical Corp. (“AMVAC”), Saint Lucia
Banana Growers Association, Saint Vincent Banana Growers
Association, Dominica Banana Growers Association, and Programa
Nacional de Banano. Del Monte Fresh Produce, N.A., then filed a
fourth-party complaint impleading Bromine Compounds, Ltd.,
(“Bromine”) a wholly owned subsidiary of Dead Sea. The district
court later dismissed Dominica Banana Growers Association, Saint
Lucia Banana Growers Association, Saint Vincent Banana Growers
Association, and Programa Nacional de Banano.
11
3. Rodriguez v. Shell Oil Co. (“Rodriguez”)
The Rodriguez plaintiffs are Honduran citizens and residents
who filed suit originally in Jim Hogg County, Texas.13 Defendants
Shell and the Chiquita entities filed third-party petitions against
Dead Sea and Ameribrom more than thirty days after filing their
original answers in state court, without any prior approval by the
state court. After these petitions were filed, Dead Sea removed
the case to the Southern District of Texas, Laredo Division. The
other defendants joined in the removal, asserting additional bases
of federal subject matter jurisdiction, and filed cross-claims
against Dead Sea. Shell filed supplemental notices of removal.
The Rodriguez plaintiffs moved to remand, asserting lack of subject
matter jurisdiction. The district court in Laredo transferred
Rodriguez to the Houston Division where it was consolidated with
Delgado, Jorge, and the following case.
4. Erazo v. Shell Oil Co. (“Erazo”)
In Erazo, a lone Honduran citizen filed suit originally in
Hidalgo County, Texas.14 Defendant Shell filed a third-party
petition against Dow, Occidental, Dead Sea, Ameribrom, and AMVAC
13
One Rodriguez plaintiff is alleged to be a resident of Texas
and another a resident of Michigan. The Rodriguez defendants are
the same as those in Jorge.
14
Shell attempted to remove, asserting federal question
jurisdiction based on FIFRA preemption, but the district court
remanded for lack of subject matter jurisdiction, as it did in
Delgado and Rodriguez.
12
more than thirty days after answering and without leave to serve
the petition. Dead Sea immediately removed the case to the
Southern District of Texas, McAllen Division. The remaining
defendants joined in the removal, asserting additional bases of
federal subject matter jurisdiction, and filed cross-claims against
Dead Sea. Shell filed supplemental notices of removal. The Erazo
plaintiff moved to remand, asserting lack of subject matter
jurisdiction. The district court transferred the case to the
Houston Division where it was consolidated with the others.
5. Isae Carcamo v. Shell Oil Co. (“Isae”)
Isae was originally brought in Morris County, Texas, by
another lone Honduran citizen and resident.15 Defendant Dow filed
a single pleading containing both an answer and a third-party
petition against Dead Sea, Ameribrom, and the Del Monte entities.
As a result, state court leave to serve that petition was not
required. Dead Sea removed the case to the Eastern District of
Texas, and the other defendants joined in the removal, asserting
additional bases of federal subject matter jurisdiction, and filed
cross-claims against Dead Sea. Shell filed supplemental notices of
removal. The Isae plaintiff moved to remand, asserting lack of
15
Originally, Shell was the only Isae defendant. Shell filed a
notice of removal, asserting federal question jurisdiction based on
FIFRA preemption, but the district court remanded the case for the
reasons articulated in Delgado, Rodriguez, and Erazo. The
plaintiff then amended his petition to add, as defendants, Dow,
Occidental, the Dole entities, and the Standard Fruit entities.
13
subject matter jurisdiction. The case, however, was consolidated
with Valdez, which we consider last.
6. Valdez v. Shell Oil Co. (“Valdez”)
The plaintiffs in Valdez are more than 6,000 citizens of eight
foreign countries who filed suit originally in Morris County,
Texas.16 More than thirty days after answering, Defendant Dow filed
a third-party petition against the Del Monte entities, Dead Sea,
and Ameribrom and delivered a courtesy copy of that petition to
Dead Sea. Dead Sea removed the case to the Eastern District of
Texas. The other defendants joined in the removal, asserting
additional bases of federal subject matter jurisdiction, and filed
cross-claims against Dead Sea. Shell filed supplemental notices of
removal. The district court consolidated Valdez with Isae.
Subsequent to removal, Dow moved for leave to serve an amended
third-party complaint to implead, inter alia, Dead Sea.17 The
magistrate judge assigned to the Valdez case granted the motion and
also denied remand in both Valdez and Isae, concluding that federal
subject matter jurisdiction existed in the two cases. Thereafter,
16
The Valdez plaintiffs are citizens of Burkina Faso, Dominica,
Ecuador, Honduras, Ivory Coast, the Philippines, Saint Lucia, or
Saint Vincent. At least two of them allegedly reside in Texas.
The Valdez defendants are the same as those in Jorge.
17
The other third-party defendants served were Ameribrom, the
Del Monte entities, AMVAC, Saint Lucia Banana Growers Association,
St. Vincent Banana Growers Association, and Programa Nacional de
Banano.
14
Valdez and Isae were transferred to the Southern District of Texas,
Houston Division, where they were consolidated with the other four
cases.
C. The Houston District Court’s Proceedings
Once the six cases were consolidated in the Houston Division
of the Southern District, Plaintiffs filed (1) motions to remand,
asserting lack of subject matter jurisdiction and procedurally
defective removal, and (2) motions to strike the third-party claims
or, in the alternative, to dismiss Dead Sea and its affiliated
entities for fraudulent joinder, and to remand the underlying
claims. Defendants contested the fraudulent joinder allegation,
asserting the validity of their third-party claims against Dead Sea
based on the laws of the home countries of several of the
plaintiffs. As a final step, Defendants filed motions to dismiss
all of the removed cases for forum non conveniens.
The district court addressed first whether Dead Sea’s removals
were proper in Jorge, Valdez, Rodriguez, and Erazo, the cases in
which Texas law required leave of state court to serve the third-
party petitions. The court concluded that all removals were
premature and, thus, defective for want of leave. Deferring to the
authority of the state court to determine in the first instance
whether third-party joinder was appropriate, the district court
remanded Rodriguez and Erazo. On appeal, neither party challenges
this decision to remand.
15
In Jorge and Valdez, however, the district court noted that
magistrate judges had issued post-removal orders granting leave to
implead Dead Sea into federal court pursuant to Federal Rule of
Civil Procedure 14. The district court assumed that Dead Sea had,
thus, validly been made a party in federal court and would remain
a party on remand to state court. Speculating that Dead Sea would
"immediately exercise its presently mature right to again remove
the actions to federal court," the district court concluded that
remand would be futile and denied remand.
The district court also denied remand in the final two cases,
Delgado and Isae (the "under thirty days" cases), in neither of
which had leave to make service on Dead Sea been required under
Texas law.18 Invoking the doctrine of forum non conveniens, the
district court then dismissed all four cases that remained
unremanded -- the two "over thirty days" cases and the two "under
thirty days" cases.
As conditions precedent to dismissal, the district court
required Defendants (including third- and fourth-party defendants)
to (1) waive all jurisdictional and certain limitation-based
defenses, (2) permit the dismissed plaintiffs a reasonable period
within which to conduct discovery before trial in their home
18
In Delgado, Del Monte Fresh Produce, N.A., filed a third-party
petition against Dead Sea within thirty days of the service of its
(Del Monte’s) answer in state court. In Isae, Dow filed a single
pleading containing an answer and a third-party petition against
Dead Sea.
16
countries, and (3) agree to satisfy those plaintiffs’ concerns with
respect to the enforceability of foreign judgments that might be
rendered against Defendants. In addition, the district court
permanently enjoined the dismissed plaintiffs from commencing or
causing to be commenced in the United States any DBCP action and
from intervening in Rodriguez and Erazo, the two remanded cases.
Finally, the district court agreed that it would re-assume
jurisdiction, on proper motion, if the highest court in any foreign
country should affirm a dismissal for lack of jurisdiction over any
action commenced by a dismissed plaintiff in his home country or
his country of injury.
D. The Agreements Between Defendants And Dead Sea
On the day that Dead Sea was required to stipulate to foreign
judgment, Defendants and Dead Sea entered into a pair of agreements
which together allocated their joint liability in the event of an
adverse judgment.19 Those agreements stipulated Dead Sea’s maximum
percentage market share liability in each foreign country. In no
country was that share greater than 2.5%.
As soon as Plaintiffs got word of the existence of the
19
The first agreement was executed by the "Manufacturer
Defendants," defined as Dow, Shell, and Occidental, and "Dead Sea,"
defined as Dead Sea and Bromine. The second agreement was executed
by the "Non-Manufacturer Defendants," defined as the Standard Fruit
entities, the Dole entities, the Del Monte entities, and the
Chiquita entities, and "Dead Sea," again defined as Dead Sea and
Bromine.
17
agreements, they filed a motion for relief from final judgment,
pursuant to Federal Rule of Civil Procedure 60(b)(2), arguing that
Defendants (1) never intended to prosecute their claims against
Dead Sea and (2) joined Dead Sea only to gain entry into federal
court. Plaintiffs asked the district court to remand the entire
matter to state court or, in the alternative, to sever the third-
party claims and remand the underlying ones. The district court
denied Plaintiffs’ motion.
E. The Re-Removal Of Rodriguez
When the district court remanded Rodriguez to Texas state
court on July 11, 1995, the Standard Fruit entities had on file a
“Special Appearance Objecting to Jurisdiction, First Amended Motion
to Transfer Venue, or in the Alternative Motion to Dismiss, and
First Amended Original Answer.” In essence, the Standard Fruit
entities had filed their answers subject to and without waiving
their special appearances. Upon remand, the state court addressed
and denied the Standard Fruit entities’ special appearances on
February 2, 1996, with the order filed on February 5, 1996. On
March 4, 1996, without obtaining leave from the state court, the
Standard Fruit entities filed third-party petitions naming Dead
Sea, Bromine, and AMVAC as third-party defendants and delivered
courtesy copies to Dead Sea and to Bromine. Thereafter, Dead Sea
and Bromine removed the case to the Laredo Division of the Southern
18
District of Texas, asserting federal question jurisdiction as a
foreign state under the FSIA. The case was then transferred to the
federal district court at Houston, whose decisions form the basis
of these appeals.
In the district court, the Rodriguez plaintiffs moved for
remand, arguing that the Standard Fruit entities should have asked
for leave from the state court before filing their third-party
petitions pursuant to Rule 38(a) because the Standard entities had
filed their original answers in August of 1993 and their amended
original answers on September 17, 1993, over two years from the
time that the Standard Fruit entities had filed their third-party
petitions. The district court denied the motion, finding that the
Standard Fruit entities’ answers were conditional and did not
become effective for purposes of Rule 38(a) until the state court
overruled the Standard Fruit entities’ special appearances. As in
Delgado, the Rodriguez plaintiffs sought to strike the third-party
claims on grounds of fraudulent joinder or, in the alternative, to
sever the third-party claims while the Defendants moved for
dismissal on forum non conveniens. The district court denied the
Rodriguez plaintiffs’ motions, but granted dismissal subject to the
same conditions as in Delgado.
F. The Appeals20
20
Erazo is not on appeal.
19
In appeal No. 95-21074, Plaintiffs timely seek review of the
district court’s dismissal of the "over thirty days" cases (Jorge
and Valdez) and the "under thirty days" cases (Delgado and Isae),
asserting that the district court erred in denying remand and in
dismissing these cases for forum non conveniens. Specifically,
Plaintiffs maintain that: (1) Dead Sea is not a "foreign state"
under the FSIA; (2) the magistrate judges’ orders in the "over
thirty days" cases were nullities which could neither cure
Defendants’ defective joinder of Dead Sea and Dead Sea’s premature
removal nor confer on the district court its otherwise lacking
subject matter jurisdiction; (3) Dead Sea was fraudulently joined;
and (4) the district court abused its discretion in denying
Plaintiffs’ Rule 60(b)(2) motion. In appeal No. 97-20060, besides
charging that Dead Sea is not a “foreign state” under the FSIA and
that it was fraudulently joined, Plaintiffs contend that the
district court erred when it ruled that the Standard Fruit
entities’ answers did not become effective for purposes of Rule
38(a) until the state court overruled their special appearances.
In neither of the appeals, however, do Plaintiffs explicitly take
umbrage with the substance of the district court’s forum non
conveniens analysis, or its use by the court were we to conclude
that it had subject matter jurisdiction.21
21
Defendants and third-party defendants also cross-appealed,
seeking modification of the district court judgment to incorporate
the protections of the Uniform Foreign Money-Judgments Recognition
20
II. DISCUSSION
A. Subject Matter Jurisdiction And The Foreign Sovereign Immunity
Act
Before proceeding to the other issues raised in these appeals,
we must first address whether the district court would have subject
matter jurisdiction over any case that Dead Sea properly removed,
for original jurisdiction is absolutely essential to the
maintenance of an action in federal court. See Avitts v. Amoco
Prod. Co., 53 F.3d 690, 693 (5th Cir. 1995). If we conclude that
the district court lacked subject matter jurisdiction, we have no
choice but to remand the cases to state court. See 28 U.S.C.
§ 1447(c) ("If at any time before final judgment it appears that
the district court lacks subject matter jurisdiction, the case
shall be remanded."). We review questions of federal subject
matter jurisdiction de novo. See United States v. Teran, 98 F.3d
831, 833-34 (5th Cir. 1996).
The district court based its jurisdiction solely on Dead Sea’s
presence in the cases, concluding that Dead Sea was a "foreign
state" entitled to remove to federal court and that its waiver of
sovereign immunity conferred jurisdiction. Under the express
provisions of 28 U.S.C. § 1330, the district courts are vested with
Act and equivalent common law rules. Defendants later withdrew
their request to modify the district court judgment after
Plaintiffs conceded that nothing in the district court’s orders or
the agreements submitted by Defendants, as required by those
orders, deprives Defendants of the protections of those laws.
21
original jurisdiction of civil actions against a foreign state as
defined by § 1603(a), as to which the foreign state is not entitled
to immunity under §§ 1605-1607. Furthermore, according to the
federal removal statutes, a foreign state, as defined in 28 U.S.C.
§ 1603(a), may remove any civil action brought against it in a
state court. See 28 U.S.C. § 1441(d). Section 1603 provides in
pertinent part:
(a) A "foreign state", . . . includes a
political subdivision of a foreign state or an
agency or instrumentality of a foreign state as
defined in subsection (b).
(b) An "agency or instrumentality of a
foreign state" means any entity --
(1) which is a separate legal person,
corporate or otherwise, and
(2) which is an organ of a foreign state
or political subdivision thereof, or a
majority of whose shares or other ownership
interest is owned by a foreign state or
political subdivision thereof, and
(3) which is neither a citizen of a State
of the United States . . ., nor created under
the laws of any third country.
28 U.S.C. § 1603. Dead Sea is not "a political subdivision of a
foreign state;” therefore, to pass muster as a foreign state, it
must be an "agency or instrumentality of a foreign state as defined
in subsection (b)." Id. None of the parties question that Dead
Sea meets the first and third requirements of that subsection; the
only issue is whether a majority of Dead Sea’s shares are owned by
a foreign state, as required by (b)(2).
22
Indisputably a foreign state, the State of Israel owns 75.3%
of Israel Chemicals Limited, an entity which owns 88.2% of Dead Sea
Works Limited, which in turn owns 100% of Dead Sea. Through this
tiered structure, there is no question that Israel indirectly owns
a majority interest in Dead Sea. Plaintiffs insist, however, that
indirect ownership is insufficient to qualify an entity for foreign
state status. We disagree. Based on our reading of the statute,
we discern nothing to support the proposition that indirect
ownership of the requisite percentage precludes an entity from
qualifying as a foreign state.
The plain language of the statute simply requires "ownership"
by a foreign state. It draws no distinction between direct and
indirect ownership; neither does it expressly impose a requirement
of direct ownership. Indeed, we have previously indicated that
indirect ownership is sufficient to confer foreign state status.
In Linton v. Airbus Industrie, we stated:
[T]he resolution of the Airbus Defendants’ claim of
immunity turns on whether through "tiering" a
foreign state’s ownership interest can be
attributed when that foreign state did not own a
majority interest in the company that held the
ownership interest in Airbus . . . .[Section 1603],
however, erects no explicit bar to the methods by
which a foreign state may own an instrumentality,
merely requiring that the entity claiming immunity
-- not its parent -- have a "majority of [its]
shares or other ownership interest . . . owned by a
foreign state or a political subdivision thereof.”
There is no mention of "voting" or "control"
majority, thus equitable or beneficial majority
ownership is not expressly prohibited from serving.
23
30 F.3d 592, 598 n.29 (5th Cir. 1994) (citations omitted). Should
any doubt remain concerning this Circuit’s position on tiering or
indirect ownership, we squarely hold today that indirect or tiered
majority ownership is sufficient to qualify an entity as a foreign
state, assuming that all other requirements are met. In so doing,
we join at least two other Circuits that have considered the issue
and reached the same conclusion. See In re Aircrash Disaster Near
Roselawn, Ind. on Oct. 31, 1994, 96 F.3d 932, 941 (7th Cir. 1996);
Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 426-
27 (7th Cir. 1993); and Gould, Inc. v. Pechiney Ugine Kuhlmann, 853
F.2d 445, 449-50 (6th Cir. 1988). But see Gates v. Victor Fine
Foods, 54 F.3d 1457, 1462 (9th Cir. 1995). We hold, therefore,
that Dead Sea is a foreign state for purposes of the FSIA and can
create federal subject matter jurisdiction in actions that it
properly removes to federal court. We turn next to consider the
validity of Dead Sea’s removals.
B. Removal
1. Standard of Review
In dismissing the cases for forum non conveniens, the district
court implicitly denied plaintiffs’ motions to remand. We review
the district court’s refusal to remand de novo. See Herron v.
Continental Airlines, Inc., 73 F.3d 57, 58 (5th Cir. 1996).
2. Removal and Texas Rule of Civil Procedure 38(a)
24
In the "over thirty days" cases, Texas Rule of Civil Procedure
38(a) required state court leave to serve third-party petitions on
Dead Sea. Even though the required leave was not obtained before
removal, the district court upheld the validity of Dead Sea’s
removals by relying on the post-removal orders of two federal
magistrate judges who granted leave to implead Dead Sea pursuant to
Federal Rule of Civil Procedure 14.
Plaintiffs contend that the district court erred in relying on
those orders.22 Plaintiffs’ logic proceeds as follows: (1) at the
time of removal, the state court had not granted leave to serve
Dead Sea, so Dead Sea was not a party in state court; (2) as a non-
party, Dead Sea could not remove to federal court; (3) without Dead
Sea’s presence in federal court, there was no federal subject
matter jurisdiction; and (4) in the absence of subject matter
jurisdiction, (a) the magistrate judges had no authority to issue
post-removal orders, and (b) the district court had no choice but
to remand.
In the face of the district court’s ruling that there had to
have been state court leave to serve the third-party petitions on
Dead Sea and that the removals were, therefore, premature, we
recognize the logical force of Plaintiffs’ argument. Nevertheless,
we reject Plaintiffs’ desired result because, contrary to the
22
Because state court leave to serve the third-party petitions
was not required in the “under thirty days” cases, Plaintiffs do
not challenge their removal on the basis of a failure to comply
with Rule 38(a).
25
district court and Plaintiffs’ view, the removals were not
premature. Generally, service of process is not an absolute
prerequisite to removal. Section 1446(b) expressly provides for
removal of a civil action or proceeding within thirty days after
the receipt by the defendant, “through service or otherwise, of a
copy of an amended pleading, motion, or order or other paper from
which it may first be ascertained that the case is one which is or
has become removable.” We read § 1446(b) and its “through service
or otherwise” language as consciously reflecting a desire on the
part of Congress to require that an action be commenced against a
defendant before removal, but not that the defendant have been
served.23 Indeed, 28 U.S.C. § 1448, which provides that service may
be completed in district court for any removed case from state
court in which any one or more of the defendants was not served
with process or in which the service was not perfected prior to
removal, reinforces a less demanding view of the service
“requirement” prior to removal. And under Texas law, an action has
commenced when a petition is filed. See Tex. R. Civ. P. 22.
Moreover, the removal statute pertaining to a FSIA entity,
does not refer to a served party, or even the term “party,” and it
does not differentiate between parties who have been served and
23
In Murphy Bros. v. Michetti Pipe Stringing, 119 S. Ct. 1322(1999), the Supreme Court found that mere receipt of a complaint
unattended by any formal service did not trigger a defendant’s time
to remove a case from state court. But the decision did not
address whether service was a prerequisite for a defendant to be
able to remove a case.
26
those who have not. See 28 U.S.C. § 1441(d). Instead, that
removal statute merely states that “[a]ny civil action brought in
a State court against a foreign state . . . may be removed by the
foreign state to the district court . . . .” In light of the fact
that Texas views an action as having commenced when a petition is
filed, Defendants’ filing of their third-party claims initiated
civil actions against Dead Sea, which allowed for the instant cases
to be removed under § 1441(d).24
Accordingly, Defendants’ failure to seek leave under Rule
38(a) to serve the third-party petitions on Dead Sea did not
materially affect Dead Sea’s right to remove the instant cases from
state court, and the removals were not improper. Because service
was not a prerequisite to the removal of the “over thirty days”
cases, we need not address in Rodriguez whether the Standard Fruit
entities’ answers became effective for purposes of Rule 38(a) only
after the state court overruled their special appearances.
24
In the case of a third-party petition, one might argue that
under Texas law such a complaint should be viewed differently than
an initial petition with respect to when an action has commenced.
That is, a third-party action should not be viewed as having
commenced until the third-party petition has been filed and served.
Rule 22, however, makes no distinction between an initial petition
and a third-party petition. The filing of both kinds of petitions
commences an action. Additionally, the history of Rule 38(a) and
third-party petitions indicates that any distinction between the
two kinds of petitions, which may have existed in the past,
regarding the commencement of an action was likely eviscerated by
amendments enacted in 1984. Before that year, a party had to seek
leave of court to file and to serve a third-party petition. See
Tex. R. Civ. P. 38(a) (Vernon 1979, amended 1984). After the
amendments, only leave to serve is required. See Tex. R. Civ. P.
38(a).
27
3. Fraudulent or Collusive Joinder
As another basis for remand, Plaintiffs insist that defendants
"fraudulently" joined Dead Sea for no purpose but to have it invoke
FSIA jurisdiction as Defendants’ ticket for admission into federal
court. For support, they refer to: 1) the speed with which the
removals occurred; 2) the post-removal agreements between
Defendants and Dead Sea; and 3) two of their amended petitions,
which expressly state that they are not asserting any claims
arising out of products attributable to Dead Sea.
We have normally confronted the fraudulent joinder doctrine
when a defendant removes a case based on diversity jurisdiction and
charges that the plaintiff fraudulently joined a non-diverse
defendant to try to prevent removal. That doctrine has not been
applied where, as here, a third-party, foreign sovereign is alleged
to have been joined willingly and cooperatively to create
jurisdiction as a basis for removal. Recognizing this, the
district court pressed a different inquiry of the facts surrounding
Dead Sea’s joinder, pursuant to 28 U.S.C. § 1359, which prohibits
federal jurisdiction "in a civil action in which any party, by
assignment or otherwise, has been improperly or collusively made or
joined to invoke the jurisdiction of such court." “Section 1359 is
designed to prevent the litigation of claims in federal court by
suitors who by sham, pretense, or other fiction acquire a spurious
status that would allow them to invoke the limited jurisdiction of
the federal courts.” Nolan v. Boeing Co., 919 F.2d 1058, 1067 (5th
28
Cir. 1990). Its purpose is “to prevent the manipulation of
jurisdictional facts where none existed before.” Id. And it has
generally been restricted to circumstances involving assignment of
interests from non-diverse to diverse parties to collusively create
diversity jurisdiction. See, e.g., Kramer v. Caribbean Mills,
Inc., 89 S. Ct. 1487 (1969). Because Plaintiffs did not aver that
Defendants had manufactured Dead Sea’s status as a foreign
sovereign or their claims for contribution or indemnity against
Dead Sea, the district court was not persuaded that any
jurisdictional facts had been collusively manipulated in
contravention of § 1359. We believe that the district court was
correct in holding that § 1359 was not applicable.
On appeal, Plaintiffs do not appear to challenge the district
court’s § 1359 analysis. Rather, they question the district
court’s reliance on that statute as opposed to an analysis
predicated on the fraudulent joinder doctrine. As we previously
noted, the district court declined to apply that doctrine because
it perceptively realized that fraudulent joinder is normally
reserved for cases where a third party is alleged to have been
joined to defeat diversity jurisdiction as a basis for removal.
Accordingly, we are wary of recognizing the applicability of that
judicially constructed doctrine in a new context. Moreover,
whether we ought to apply the fraudulent joinder doctrine to
situations where a third-party, foreign sovereign is alleged to
29
have been joined willingly and cooperatively to create jurisdiction
as a basis for removal is complicated by the doctrine’s
intersection with Congress’s paramount desire that a foreign
sovereign have access to a federal forum to ensure uniformity in
procedure and substance. See, e.g., Nolan, 919 F.2d at 1065. That
is, to craft a fraudulent joinder rule to an FSIA entity’s right to
remove an action from state court would conflict with Congress’s
intent. We need not, and do not, resolve these issues today, for
it is apparent that even if the fraudulent joinder doctrine were to
apply to the instant case, Plaintiffs have failed to establish that
Dead Sea was fraudulently joined.
In those more typical fraudulent joinder cases where a party
has been joined to defeat removal, the burden of persuasion is on
the one who cries fraudulent joinder.25 See B., Inc. v. Miller
Brewing Co., 663 F.2d 545, 549 (5th Cir. Unit A Dec. 1981). To
establish fraudulent joinder, the party crying foul must show that
25
In the more typical fraudulent joinder case, the party crying
fraudulent joinder is also the party removing the case. Because
the party invoking removal jurisdiction has the burden of
establishing federal court jurisdiction, see Frank v. Bear Stearns
& Co., 128 F.3d 919, 921-22 (5th Cir. 1997), one might argue that
the burden of persuasion should still be with the party who removed
the case rather than with the party seeking remand but charging
fraudulent joinder. Such an argument, however, presumes that the
removing party has not already satisfied its burden to establish
federal court jurisdiction. After the removing party has satisfied
its burden to establish federal court jurisdiction, the burden of
persuasion with respect to the issue of fraudulent joinder to
create federal court jurisdiction shifts to the party charging
fraudulent joinder.
30
there is no reasonable probability of recovery against the joined
party or that there has been outright fraud in the pleadings of
jurisdictional facts. See id. If there is no arguably reasonable
basis for believing that liability may be established against the
joined party, then remand is appropriate. See id. at 550.
Normally, a court reviewing allegations of fraudulent joinder
should refrain from conducting an evidentiary hearing but may
utilize a summary judgment-like procedure. See Burchette v.
Cargill, 48 F.3d 173, 176 (5th Cir. 1995).
To support their fraudulent joinder allegations, Plaintiffs’
rely upon three main points: 1) the speed with which the removals
occurred; 2) the post-removal agreements between Defendants and
Dead Sea; and 3) two of Plaintiffs’ amended state court petitions,
which expressly state that they are not asserting any claims
arising out of products attributable to Dead Sea. With respect to
the first point, the intervals between the filing of the third-
party petitions by Defendants and the filing of the notices of
removal by Dead Sea were short, but in our view that time interval
in and of itself is not enough to establish fraudulent joinder.
Indeed, opposing parties often notify each other about pending
petitions and arrange for their convenient delivery. See, e.g., 28
U.S.C. § 1608(b)(1) (contemplating special arrangements for service
by parties suing agencies or instrumentalities of foreign states).
As for Plaintiffs’ second point, the post-removal agreements
31
between Defendants and Dead Sea were dated nearly sixteen months
after the filing of the third-party petitions against Dead Sea in
state court and the removal of those cases. There is nothing in
the record reflecting any negotiation and agreement between
Defendants and Dead sea prior to the filing of the third-party
petitions and the notices of removal. Absent such proof,
Plaintiffs have not established that no cause of action could
possibly have been asserted against Dead Sea by Defendants at the
time of removal.
Plaintiffs’ third basis for fraudulent joinder, however,
merits further discussion. At the time of removal, in two of the
dismissed cases, Jorge and Rodriguez, the latest state court
amended petitions expressly stated that Plaintiffs were not
asserting any “claims because of exposure to DBCP or DBCP-
containing products designed, manufactured, marketed distributed,
or used by Dead Sea Bromine Co., Ltd., Ameribrom, Inc., Israel
Chemical Co., Ltd., Dead Sea Works, Ltd., and the State of Israel.”
The critical issue becomes what law determines the effect of those
disclaimers. Without explanation, Plaintiffs seem to think that
Texas law applies to this determination and dictates the outcome of
any fraudulent joinder analysis.26 Indeed, the only affidavit that
26
The only legal authority that Plaintiffs refer to is an order
in an unrelated DBCP case by a Texas state court judge denying
certain defendants motion to apply Costa Rican law. That order,
though, does not state that Texas law, or any other law, is the
governing law.
32
either Plaintiffs or Defendants refer to in their briefs with
respect to the choice of law issue does not support Plaintiffs’
position but actually suggests the opposite. Defendants, on the
other hand, make a blanket assertion that the relevant choice of
law for determining whether a party was fraudulently joined in a
DBCP-related case is the law of the country where the plaintiff was
exposed to DBCP, i.e., Honduras in the case of Rodriguez and
various foreign countries in the case of Jorge. For support, they
cite to a decision out of the Eleventh Circuit. See Cabalceta v.
Standard Fruit Co., 883 F.2d 1553, 1562 (11th Cir. 1989). In
Cabalceta, several Costa Rican plaintiffs brought suit in Florida
state court against several defendants, including many in the
present appeals, for injuries from exposure to DBCP. The
defendants removed the case to federal district court where it was
ultimately dismissed on forum non conveniens. Among the issues on
appeal was whether the plaintiffs had fraudulently joined one of
the defendants, Dole Fresh Fruit Co. (“Dole”), to defeat removal.
To determine whether the plaintiffs had a colorable cause of
action, the district court applied Florida law. The plaintiffs
charged that this was error because when the district court
dismissed the case on forum non conveniens, it ruled that Costa
Rican law would apply. Noting that the plaintiffs’ pleadings at
the time of removal did not definitely assert that they were
proceeding against Dole under Florida law, the Eleventh Circuit
33
agreed with the plaintiffs and reversed, remanding the fraudulent
joinder issue so that the plaintiffs’ cause of action against Dole
could be evaluated under Costa Rican law.
We find Cabalceta instructive but not dispositive of the
instant cases. We note first that Plaintiffs have not alleged in
either Jorge or Rodriguez that their claims are made under the laws
of any particular state or nation. Next, we turn to the Texas law
of conflicts for guidance as Texas is the state in which the forum
district court sits. See W.R. Grace & Co. v. Continental Cas. Co.,
896 F.2d 865, 873 (5th Cir. 1990). In Gutierrez v. Collins, 583
S.W.2d 312, 318 (Tex. 1979) (Johnson, J.), the Texas Supreme Court
adopted the most significant relationship test as enunciated in
sections 6 and 145 of the Restatement (Second) of Conflicts as
governing all conflicts cases sounding in tort. Those sections
provide:
§ 6. Choice of Law Principles
(1) A court, subject to constitutional
restrictions, will follow a statutory
directive of its own state on choice of law.
(2) When there is no such directive, the
factors relevant to the choice of the
applicable rule of law include
(a) the needs of the interstate and
international systems,
(b) the relevant policies of the
forum,
(c) the relevant policies of other
interested states and the relative
34
interests of those states in the
determination of the particular
issue,
(d) the protection of justified
expectations,
(e) the basic policies underlying
the particular field of law,
(f) certainty, predictability and
uniformity of result, and
(g) ease in the determination and
application of the law to be
applied.
§ 145. The General Principle
(1) The rights and liabilities of the parties
with respect to an issue in tort are
determined by the local law of the state
which, with respect to that issue, has the
most significant relationship to the
occurrence and the parties under the
principles stated in § 6.
(2) Contacts to be taken into account in
applying the principles of § 6 to determine
the law applicable to an issue include:
(a) the place where the injury
occurred,
(b) the place where the conduct
causing the injury occurred,
(c) the domicile, residence,
nationality, place of incorporation
and place of business of the
parties, and
(d) the place where the
relationship, if any, between the
parties is centered.
These contacts are to be evaluated according
to their relative importance with respect to
the particular issue.
35
In addition, § 173 of the Restatement (Second) of Conflicts states
that “[t]he law selected by application of the rule of § 145
determines whether one tortfeasor has a right to contribution or
indemnity against another tortfeasor.” At least one court has
interpreted that section to mean that the source of law governing
the primary liability claim is also the source of law governing the
contribution claim. See 50-Off Stores, Inc. v. Banque Paribas
(Suisse) S.A., No. SA-95-CA-159, 1997 WL 790739, at *12 (W.D. Tex.
May 20, 1997); cf. Marathon Pipe Line Co. v. Drilling Rig
Rowan/Odessa, 761 F.2d 229, 235 (5th Cir. 1985) (“This court has
held that the body of law establishing the indemnitee’s primary
liability governs his claim for indemnity or contribution against
a third party.”).
Our evaluation of the choice of law issue under these
prescribed rules leads us to conclude that Texas law would not
qualify as the appropriate source of law. Among other things, more
than 99 percent of the Jorge and Rodriguez plaintiffs are citizens
of another country and not of the United States. All of the
plaintiffs’ injuries occurred in various foreign countries,
principally Honduras, and those foreign countries obviously have an
interest in protecting the rights and welfare of their citizens.
And even if the source of law governing Defendants’ contribution
claims were different than that for governing the primary liability
issue, our review suggests no reason why Texas law would
36
necessarily be the preferred choice. As the party crying foul,
Plaintiffs have the burden of proof and persuasion to show that
there is no arguably reasonable basis for believing that liability
may be established against Dead Sea. Plaintiffs have not cited us
to any case law or statutory provision of any jurisdiction, other
than Texas, likely to be chosen as the source of law for
determination of (i) the Plaintiffs’ liability claim against the
various Defendants, (ii) the claims for indemnity or contribution
among the various Defendants, or (iii) the effects of Plaintiffs’
disclaimer respecting Dead Sea on any of the foregoing.
Given the multiplicity of differing provisions that the
various systems of jurisprudence in the countries involved in this
litigation have on the subjects of primary tort liability,
apportionment of liability among joint tortfeasors, indemnity and
contribution, and the disclaimer in this case, and given the
incremental nature of the claimed exposure, the numerous sources of
DBCP’s going into the particular products produced by the
manufacturing Defendants, the apparently very small and
undifferentiated percentage attributable to Dead Sea, and the
various quantities of product that each grower Defendant could have
purchased from any particular manufacturer, we conclude that
Plaintiffs have failed to sustain their burden. Therefore, we are
unable to conclude that Defendants fraudulently or collusively
joined Dead Sea to create federal court jurisdiction and to remove
37
their cases.27
C. Rule 60(b)(2) And The Motion To Sever
Plaintiffs’ final attempt for relief pertains to the district
court’s denial of their Motion for Relief from Final Judgment
pursuant to Federal Rule of Civil Procedure 60(b)(2). That motion
was filed subsequent to Plaintiffs’ discovery of the post-removal
agreements between Defendants and Dead Sea. According to
Plaintiffs, those agreements illustrate 1) that there was
fraudulent or collusive joinder, and 2) that Defendants no longer
have any valid claims against Dead Sea and, hence, no basis for
federal court jurisdiction. Apparently, intertwined with the
denial of the Rule 60(b)(2) motion was another ruling denying
Plaintiffs’ request, in the alternative, to sever the third-party
claims from the primary claims and to remand those primary claims
back to state court. We review both of the district court’s
denials for abuse of discretion. See Fed. R. Civ. P. 14 advisory
committee’s note (stating that a district court has discretion with
respect to severance of a third-party claim); Barrs v. Sullivan,
906 F.2d 120, 121 (5th Cir. 1990) (“The standard of review is
whether the district court plainly abused its discretion in denying
the rule 60(b) motion.”).
27
Because Dead Sea is an agency or instrumentality of a foreign
state and because Defendants did not prematurely remove their cases
or fraudulently implead Dead Sea, we need not address Defendants’
other arguments for removal and subject matter jurisdiction.
38
Under Rule 60(b)(2), “on motion and upon such terms as are
just, the court may relieve a party or a party’s legal
representative from a final judgment, order, or proceeding for
. . . newly discovered evidence which by due diligence could not
have been discovered in time to move for a new trial under Rule
59(b).” Due to our conclusions with regard to the fraudulent
joinder allegations, we find no abuse of discretion based on
Plaintiffs’ first contention that the post-removal agreements
illustrate fraudulent or collusive joinder. As for Plaintiffs’
second contention that the agreements demonstrate that Defendants
have no valid claims against Dead Sea and, thus, no basis for
federal court jurisdiction, we agree with the district court that
there is still a case or controversy between Defendants and Dead
Sea. Although the agreements cap the maximum liability that Dead
Sea may owe to Defendants for their third-party claims, the
agreements do not definitely outline what the actual liability is
and Dead Sea is not barred from still contesting its liability.
Accordingly, we conclude that the district court did not abuse its
discretion when, confronted with the agreements between Defendants
and Dead Sea, it denied Plaintiffs’ Rule 60(b)(2) motion.
Lastly, the district court did not abuse its discretion when
it denied Plaintiffs’ request to sever Defendants’ third-party
claims from the primary claims and to remand those primary claims
to state court. Indeed, at least one other circuit has held that
a district court has no discretion to remand a plaintiff’s claims
39
when a FSIA third-party defendant has removed the third-party and
primary claims to federal court. See In re Surinam Airways Holding
Co., 974 F.2d 1255, 1260 (11th Cir. 1992). Although we decline to
address the specifics of that holding at this time, the Eleventh
Circuit’s decision suggests that the district court’s decision was
not an abuse of discretion. Furthermore, we note that there was no
indication that the third-party claims unduly complicated or
overburdened the primary claims. On the contrary, policy interests
such as efficiency warranted the disposition of all those claims
together. Thus, we find no abuse of discretion in the district
court’s refusal to sever the third-party claims from the primary
claims and to remand those primary claims to state court.
III. CONCLUSION
Initially, we hold that the majority ownership requirement for
an entity to qualify as a "foreign state" under the FSIA is
satisfied by tiered or indirect majority ownership to the same
extent that it is satisfied by direct ownership. Therefore, we
determine that Dead Sea is a "foreign state."
Next, we conclude that Dead Sea did not prematurely remove the
instant cases, notwithstanding Defendants’ failure to seek leave in
state court to serve Dead Sea. Service was unnecessary to trigger
Dead Sea’s right, as a FSIA entity, to remove under the removal
statute.
40
As for Plaintiffs’ fraudulent joinder argument, we do not
believe that the speed with which the removals occurred or the
post-removal agreements between Defendants and Dead Sea are
indicative of that reprobated tactic. With respect to the Jorge
and Rodriguez cases, the mere inclusion of disclaimers was
insufficient to satisfy Plaintiffs’ burden as to fraudulent
joinder. Plaintiffs failed to establish that Texas law or the law
of any other jurisdiction precluded Defendants from asserting a
cause of action against Dead Sea.
Finally, the district court did not abuse its discretion when
it denied Plaintiffs’ Rule 60(b)(2) motion and their request to
sever the third-party claims from the primary claims and to remand
those primary claims to state court.
AFFIRMED.28
28
During the pendency of this appeal, the parties have filed
numerous motions that have been held in abeyance. Many of those
motions pertain to various settlement agreements that have been
entered into by some, but not all, of the plaintiffs with some, but
not all, of the defendants in each of the cases involved in this
appeal. Among those motions pertaining to the various settlement
agreements, several seek to dismiss this appeal due to those
settlements. Other parties to this appeal have filed objections to
those motions for dismissal. None of the consummated settlements
required our approval as a condition of settlement, and none of the
settlements required dismissal of this appeal as a condition of
settlement. Under those circumstances, we conclude that the most
appropriate course of action is to deny all motions for dismissal
of this appeal based on settlement; however, denial of those
motions for dismissal should not be deemed or construed by any
party as indicating our position, either pro or con, as to the
validity or binding effect of those settlements. Finally, all
other pending motions are dismissed as moot.
g:\opin\95-21074.op3 41