Fulford v. Transport Services Co. , 412 F.3d 609 ( 2005 )

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED JUNE 28, 2005
June 14, 2005
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
No. 04-30963
SHIRLEY FULFORD; DONALD DEROGERS; IRMA O. THOMAS,
Plaintiffs-Appellees
versus
TRANSPORT SERVICES COMPANY; PROTECTIVE INSURANCE COMPANY,
Defendants-Appellants
YOLANDA M. ABRAM; JACQUELIN GORDON, wife of; BOBBY GORDON, and on
Behalf of Those Similarly Situated,
Plaintiffs-Appellees
versus
TRANSPORT SERVICES COMPANY,
Defendant-Appellant
Appeal from the United States District Court
for the Eastern District of Louisiana
Before WIENER, DeMOSS and PRADO, Circuit Judges.
PER CURIAM:
Appellant Transport Services Company (“Transport”) appeals the
district court’s order denying its motion to enjoin state court
proceedings. We affirm.
I. FACTS AND PROCEEDINGS
Appellees Shirley Fulford, Donald DeRogers, and Irma Thomas
(collectively the “Fulford plaintiffs”) filed a class action
petition in Louisiana state court against Transport claiming
damages from an alleged chemical spill that occurred on August 7,
2002 (the “Fulford suit”). A second class action suit (the “Abram
suit”) was filed the following day in Louisiana state court by
Appellees Yolanda Abram, Jacquelin Gordon and Bobby Gordon
(collectively the “Abram plaintiffs”) containing essentially
identical allegations as the Fulford suit. Transport removed the
Fulford suit to the Eastern District of Louisiana based on federal
diversity jurisdiction, then removed the Abram suit which
thereafter was consolidated with the Fulford suit. Both the
Fulford and Abram plaintiffs filed motions to amend their petitions
to add Dan Davis and Protective Insurance Company (“Protective”) as
defendants. Davis, a non-diverse party, was the driver of the
transport truck at the time of the alleged spill. The Fulford
plaintiffs also filed a motion to remand their case to state court,
but this motion was denied by the district court as premature. One
week later, the district court denied the motions to amend the
complaints in both suits to add Davis.1 The district court, in
denying the motion to amend the complaints to add Davis, adopted
the magistrate judge’s findings that (1) the purpose of the
1
The motion to add Protective went unopposed by Transport
and was granted by the district court.
2
amendment was to defeat diversity jurisdiction, (2) the plaintiffs
were dilatory in asking for the amendment, and (3) Transport and
Protective stipulated that they would be responsible for Davis’s
liability on the theory of respondeat superior, pretermitting any
possibility that the plaintiffs would suffer hardship if the
amendment was not allowed.
The Fulford plaintiffs, at the invitation of the district
court, filed a motion for class certification, but the Abram
plaintiffs never filed for class certification. The district court
denied the Fulford plaintiffs’ motion for class certification, and
after denying a motion for reconsideration, denied permission to
the Fulford plaintiffs to bring an interlocutory appeal on the
question of class certification.
Following the denial of class certification in the Fulford
suit, a new action, Smith v. Transport Services Co. (the “Smith
suit”), was filed in Louisiana state court. The plaintiffs in the
Smith suit (the “Smith plaintiffs”), like those in the Fulford and
Abram suits, claimed damages arising from the same alleged August
7, 2002 chemical spill and sought class certification as well. The
Smith plaintiffs are represented by the same attorneys who
represent the Fulford and Abram plaintiffs, and the Smith
plaintiffs seek the same relief for the same cause of action. A
review of the record shows that the state court complaints in the
Fulford and Abram suits are essentially identical to those in the
Smith suit complaint. There are two differences, however, between
3
the Fulford and Abram suits and the Smith suit: (1) Davis is named
as a defendant in the Smith suit, and (2) different individuals are
named as class representatives in the Smith suit.
Transport filed a motion in the Fulford and Abram actions to
enjoin the Smith suit, claiming that the purpose of the Smith suit
was to evade and subvert the purpose of the federal removal
statute. Relying on our decision in Frith v. Blazon-Flexible
Flyer, Inc.,2 the district court held that an injunction was not
proper because the Fulford and Abram plaintiffs failed to allege
fraudulent joinder of Davis in their motion to enjoin the state
court proceedings in the Smith suit. In a footnote at the end of
its order, the district court requested further clarification of
Frith, noting that it “plainly appear[s] that [the Smith]
plaintiffs’ motive in naming Davis was in fact to avoid removal.”
Transport appeals the district court’s order denying Transport’s
motion to enjoin the state court proceedings in the Smith suit.
II. ANALYSIS
Although Transport purports to raise two issues on appeal, it
is essentially one issue: whether the district court erred in
denying Transport’s motion to enjoin the Smith suit proceedings in
state court. Transport contends that there is a second issue, even
though it is really a subsidiary of the first issue: Can a
district court enjoin a state court proceeding under 28 U.S.C. §
2
512 F.2d 899 (5th Cir. 1975).
4
1446(d) —— an exception to the Anti-Injunction Act, 28 U.S.C. §
2283 —— in the absence of a holding by the district court that the
plaintiffs in the state court suit fraudulently joined a non-
diverse defendant? There is no need for us to address this
subsidiary question, however, as the first question can be answered
in the negative without reaching the subsidiary one. Once the
district court denied class certification, the Smith suit
plaintiffs were no longer implicated in the Fulford and Abram
proceedings, and were therefore free to bring their own suit in
state court.
The Anti-Injunction Act states that
[a] court of the United States may not grant an
injunction to stay proceedings in a State court except as
expressly authorized by Act of Congress, or where
necessary in aid of its jurisdiction, or to protect or
effectuate its judgments.3
The Act, on its face, “is an absolute prohibition aaginst [sic]
enjoining state court proceedings, unless the injunction falls
within one of three specifically defined exceptions.”4 “Any doubts
as to the propriety of a federal injunction against state court
proceedings should be resolved in favor of permitting the state
courts to proceed in an orderly fashion to finally determine the
controversy.”5 Transport limits its argument to the application of
3
28 U.S.C. § 2283.
4
Atl. Coast Line R.R. Co. v. Bhd. of Locomotive Eng’rs, 398
U.S. 281, 286 (1970).
5
Id. at 297.
5
the “expressly authorized” exception to § 2283; specifically, that
the district court was authorized to enjoin the Smith suit by the
language of the removal statute, 28 U.S.C. § 1446. Section 1446(d)
has long been recognized as one of the statutory exceptions to §
2283.6 It states that once removal has taken place, “the State
court shall proceed no further unless and until the case is
remanded.”7
In Frith, the plaintiff’s original case was removed from state
court to the district court on the basis of diversity jurisdiction.
Following removal, the plaintiff filed a second suit in state court
on the same claim, but joined a resident defendant. The defendants
removed the second case, relying on the doctrine of fraudulent
joinder.8 The plaintiff filed a motion to remand the removed
second case, and the district court granted the remand, explicitly
holding that the case did not fit within the doctrine of fraudulent
joinder. The Frith defendants responded by obtaining an injunction
in the first, properly removed case, prohibiting the plaintiff from
proceeding in the state action. We reversed that injunction,
holding that the district court’s determination that there was no
fraudulent joinder in the second one was an implicit holding that
6
Frith, 512 F.2d at 901 (citing Toucey v. New York Life
Ins. Co., 314 U.S. 118 (1941)). The Frith court was looking at §
1446(e), changed in the 1988 amendments to § 1446(d).
7
28 U.S.C. § 1446(d).
8
On removal, the second case was assigned to a different
district court judge.
6
“the second suit was not brought in an attempt to subvert the
purposes of the removal statute and was not aimed at defeating
federal jurisdiction.”9
In the instant case, the district court interpreted Frith as
requiring a finding of fraudulent joinder before it could conclude
that a second lawsuit filed in state court was meant to subvert the
purposes of the removal statute. Transport insists that this was
error, arguing that a finding of fraudulent joinder is not a
prerequisite to a showing that a second suit was meant to subvert
the purposes of the removal statute. Transport points to
statements by the district court that the Smith plaintiffs named
Davis to avoid federal jurisdiction. It is unnecessary, however,
for us to reach this question. Once the district court refused
class certification in the Fulford suit, the Smith plaintiffs were
no longer involved in the Fulford and Abram suits and were
therefore free either to (1) attempt to intervene or (2) bring
their own suit.10 This stands in clear contrast to Frith, in which
9
Frith, 512 F.2d at 901.
10
Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 354
(1983) (“Once the statute of limitations has been tolled, it
remains tolled for all members of the putative class until class
certification is denied. At that point, class members may choose
to file their own suits or to intervene as plaintiffs in the
pending action.”). The Smith plaintiffs were in fact required to
bring suit in order to protect their potential right to recover.
See Stone Container Corp. v. United States, 229 F.3d 1345, 1355
(Fed. Cir. 2000) (tolling of statute of limitations for putative
class members ends with denial of class action certification);
Armstrong v. Martin Marietta Corp., 138 F.3d 1374, 1391 (11th
Cir. 1998) (same).
7
the same plaintiff filed both the first and second lawsuits.
Section 1446(d) is not implicated here because, following the
district court’s refusal to certify a class in the Fulford suit,
there was no removal jurisdiction to protect vis-à-vis the Smith
plaintiffs —— they were no longer a part of the removed Fulford and
Abram suits.11
None of the other cases to which Transport cites supports its
position. The Eighth Circuit decision in Kansas Public Employees
Retirement System v. Reimer & Koger Associates, Inc.12 (“KPERS”) is
distinguishable because, like Frith, the same plaintiff in the
federal suit filed the second state court suit. The KPERS court
made this distinction explicit when it stated the principle from
Frith that it relied on: “[A]fter removal the plaintiff cannot file
essentially the same case in a second state action to subvert
federal jurisdiction.”13
Similarly, in Lou v. Belzberg,14 the plaintiff first combined
state and federal claims in a state court suit, alleging derivative
11
The Appellees argue that the denial of certification was
equivalent to a remand, and therefore satisfies the express
condition in § 1446(d) that the state court not proceed “unless
and until the case is remanded.” Appellees argument is incorrect
—— the denial of certification was not a remand, it was more akin
to the dismissal of the putative class plaintiff’s without
prejudice.
12
77 F.3d 1063 (8th Cir. 1996).
13
Id. at 1069 (emphasis added).
14
834 F.2d 730 (9th Cir. 1987).
8
claims on behalf of a corporation and claims on behalf of a class
comprising the corporation’s shareholders. After the defendants
removed the first case, a second plaintiff, who was represented by
the same attorneys and who was also a shareholder, filed a second
suit in state court in which she asserted additional state law
claims and omitted the federal claims. The federal district court
in the removed case enjoined the state court suit. The Ninth
Circuit recognized that a federal court must have the ability to
enjoin state proceedings that are filed to subvert the purposes of
the relevant federal removal statute.15 On the facts before it in
Belzberg, however, the Ninth Circuit reversed the injunction on the
ground that it was barred by the Anti-Injunction Act. The district
court had not ruled that the second suit was “fraudulent or an
attempt to subvert the purposes of the removal statute,”16 and the
second suit involved “different plaintiffs, additional counsel,
additional defendants, and only state claims.”17 There was
therefore no basis for concluding that the new suit was merely a
refiling of the old suit in an attempt to subvert the purposes of
the removal statute.
Belzberg, although arguably more apposite than Frith or KPERS,
is nevertheless distinguishable on the ground that the plaintiff/
15
Id. at 741.
16
Id.
17
Id.
9
shareholder filed the second suit while the shareholder class
action was still intact in the federal court; i.e., the second
plaintiff was still a member of the plaintiff class in the federal
suit. Here, the Smith plaintiffs ceased having any connection to
the Fulford and Abram suits when class certification was rejected
in the Fulford suit and abandoned in the Abram suit. This left the
Smith plaintiffs with no recourse but to file their own suit, and
they were free to do so.
Transport argues in its reply brief that the Smith plaintiffs
did not have to file suit in state court to protect their rights
because they could have attempted to intervene in the Fulford and
Abram actions. Although the Smith plaintiffs appear to have had
that option, they also had the option of filing their own suit.18
Nothing required them to exercise the intervention option; the
choice was theirs to make.
Transport might have prevailed had it removed the Smith suit
on a claim of fraudulent joinder of Davis, but for reasons not
apparent on appeal, Transport never pursued this alternative. The
district court’s order denying Transport’s motion for an injunction
of state court proceedings in the Smith case is
AFFIRMED.
18
Crown, Cork & Seal Co., 462 U.S. at 354 (after denial of
class certification, “class members may choose to file their own
suits or to intervene as plaintiffs in the pending action”).
10