United States v. Schurkman , 728 F.3d 129 ( 2013 )

12-3079-cv
United States v. Manne
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
_____________________
August Term, 2012
(Argued: May 31, 2013 Decided: August 27, 2013)
Docket No. 12-3079-cv
_____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
-v.-
STEVEN A. SCHURKMAN, IN HIS CAPACITY AS TRUSTEE OF THE JACOB MANNE
IRREVOCABLE TRUST, JOHN DOE, IN HIS CAPACITY AS THE REPRESENTATIVE OF THE
ESTATE OF JACOB MANNE, GUARDIAN JOSEPH S. MANNE,
Defendants,
JOSEPH S. MANNE,
Defendant-Appellant.*
_______________________
Before:
HALL and LYNCH, Circuit Judges, and ENGELMAYER, District Judge.†
_______________________
Defendant-appellant Joseph S. Manne appeals from an order of the District Court
for the Southern District of New York (Karas, J.) enjoining him and other defendants,
*
The Clerk of Court is respectfully directed to amend the caption to conform to the above.
†
The Honorable Paul A. Engelmayer of the United States District Court for the Southern District of New York,
sitting by designation.
1
pursuant to the Anti-Injunction Act, 28 U.S.C. § 2283, from litigating in any court other
than the Southern District of New York issues related to a consent decree that resolved an
environmental enforcement action brought against him by the government under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and
the Fair Debt Collection Practices Act of 1990. We hold that under the circumstances the
statutory exception to the Anti-Injunction Act which permits a federal court to enjoin
state proceedings “where necessary in aid of its jurisdiction” does not apply. We
therefore conclude that the Anti-Injunction Act’s general prohibition against a federal
injunction of state proceedings precludes the district court from enjoining appellant’s
state suit.
VACATED.
_______________________
LAWRENCE H. FOGELMAN (Sarah S. Normand, on the brief),
Assistant United States Attorneys, Of Counsel, for Preet
Bharara, United States Attorney for the Southern District of
New York, New York, NY, for Plaintiff-Appellee.
AMBROSE RICHARDSON, A.M. Richardson, P.C., New York,
NY, for Defendant-Appellant.
_______________________
HALL, Circuit Judge:
This appeal presents the issue of whether a district court, under the All Writs Act,
28 U.S.C. § 1651(a), and the Anti-Injunction Act, 22 U.S.C. § 2283, has the authority to
enjoin a party from litigating in state court issues arising out of a consent decree which
settled a civil action brought against the party in federal court by the United States.
2
Appellant Joseph S. Manne settled an environmental enforcement action brought against
him by the United States through a consent decree providing, inter alia, that Manne
would pay the government an amount equal to the fair market value of a parcel of real
property owned by Manne. Under the decree, an independent appraiser was engaged to
determine the property’s fair market value. After the appraiser issued a report, Manne
unsuccessfully challenged the appraised value in federal court. Manne then filed an
action in New York Supreme Court, asserting claims against the appraiser for, among
others, fraud and negligent misrepresentation. On application by the government, the
district court enjoined the state court proceedings. We hold that the Anti-Injunction Act,
which permits a federal court to enjoin a state proceeding in certain limited
circumstances, including where an injunction is “necessary in aid of [the federal court’s]
jurisdiction,” does not permit the district court in this case to enjoin Manne’s state court
suit. Accordingly, we vacate the injunction of the district court.
BACKGROUND
In October 2000, after receiving reports of contaminated wells in East Fishkill,
Dutchess County, New York, the Environmental Protection Agency (“EPA”) and the
New York State Department of Environmental Conservation identified as the primary
source of the contamination a septic tank at a site in East Fishkill owned by Jacob Manne,
appellant Joseph S. Manne’s father.1 EPA later discovered a buried acid waste pit on the
site that contained lead, perchloroethene, and other hazardous substances.
1
For ease of reference, “Manne” as used in this opinion will refer to appellant Joseph S. Manne.
3
In February 2001, after incurring significant costs in cleaning up and removing
contaminated soil from the site, EPA forwarded a Notice of Potential Liability and
Request for Information informing Jacob Manne that EPA considered him a potentially
liable party for the response costs incurred in the cleanup. Following Jacob Manne’s
death, the United States brought an action against appellant Joseph S. Manne, in his
capacity as trustee of the Jacob Manne Irrevocable Trust (the “Trust”), a trust created and
funded by Jacob Manne, and against Steven A. Schurkman, in his capacity as
representative for the Estate of Jacob Manne. The United States alleged that shortly after
receiving the notice, Jacob Manne had created the Trust, appointed Schurkman as
Trustee, and fraudulently transferred cash and real property into the Trust. These assets
were subsequently transferred to Joseph S. Manne, the Trust’s principal beneficiary.
The United States sought reimbursement of approximately $1.5 million in
response costs incurred under sections 104 and 107 of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9604 and 9607, for
cleanup activities undertaken at the site. According to the Amended Complaint, the site
was used during the 1960s and 1970s by J. Manne, Inc., a company owned by Jacob
Manne that was engaged in the cleaning and repairing of computer chip racks. J. Manne,
Inc.’s work generated toxic waste materials, including tetrachloroethene, trichloroethene,
lead, nitric acid, and sulfuric acid, all of which were stored at the site. The United States
also sought to void as fraudulent conveyances the transfers of cash and real property from
Jacob Manne to the Trust and to compel the return of those assets to Jacob Manne’s
Estate to satisfy the Estate’s liabilities to the United States.
4
In 2010, the parties reached a settlement, embodied in a Consent Decree which the
district court approved in July 2010. Under the terms of the Consent Decree, Manne2
agreed to pay the United States an amount equal to the appraised value of certain
property which had been transferred by Jacob Manne into the Trust (the “Property”).3
The appraised value of the Property was to be determined by an appraiser selected by the
parties. Pursuant to the Consent Decree, the United States would provide a list of at least
three appraisers, from which defendants would choose one. The United States would
then retain the appraiser to prepare an appraisal report of the Property within six months
of the date the appraiser was selected. The parties agreed that “[t]he Appraised Value of
the Property as determined by the Selected Appraiser shall be unreviewable by any Party
to this Consent Decree or by the Court.” Consent Decree ¶ 8.
In exchange for payment of the Property’s appraised value, the United States
provided defendants with a covenant not to sue or to take administrative action against
Manne and ND-4 pursuant to 42 U.S.C. § 9607(a), regarding the contaminated site.
Defendants also received protection from contribution actions arising out of the
contamination. See 42 U.S.C. § 9613(f)(2). Schurkman, Manne, and ND-4, in turn,
covenanted not to sue “the United States, or its contractors or employees, with respect to
the [contaminated site] or this Consent Decree.” Consent Decree ¶ 28.
2
Although Manne was named in the action only in his capacity as the representative of the Estate of Jacob Manne,
he executed the Consent Decree both in that capacity and in his personal capacity. See Consent Decree at 4, ¶ 3(p);
20-21.
3
Pursuant to the Consent Decree, Schurkman transferred title to the Property from the Trust to ND-4 LLC, an entity
owned by Manne that was the owner and manager of Trust assets, and Schurkman was subsequently dismissed from
the action with prejudice.
5
The parties expressly contemplated the approval and enforcement of the Consent
Decree by the district court:
The United States and Settling Defendants agree, and this
Court by entering this Consent Decree finds, that this Consent
Decree has been negotiated by the Parties in good faith, that
settlement of this matter will avoid prolonged and
complicated litigation between the Parties, and that this
Consent Decree is fair, reasonable, and in the public interest.
Id. ¶ I(C). The Consent Decree provided that “[t]his Court shall retain jurisdiction over
this matter for the purpose of interpreting and enforcing the terms of this Consent
Decree,” id. ¶ 39, and that Manne and ND-4 “shall not challenge the terms of this
Consent Decree or this Court’s jurisdiction to enter and enforce this Consent Decree,” id.
¶ 1. Following a period of public notice and comment on the Consent Decree, during
which no public comments were received, the district court approved and entered the
Consent Decree.
In August 2010, the United States provided the names of three appraisers to
defendants, who selected DeWan & Schott Appraisal Associates, LLC (“DeWan &
Schott”). Following a visit to the Property, during which representatives from DeWan &
Schott were accompanied by attorneys for Manne and the United States, the appraiser
submitted an Appraisal Report. The Report noted that the appraiser took various steps in
developing a valuation opinion of the Property, including researching the regional market
for industrial real estate, specifically market information relating to recent sales and
listings of industrial properties with similar characteristics located around the I-84 and I-
87 corridors; interviewing real estate brokers with experience in the regional market;
6
studying information relating to nearby groundwater contamination to understand its
potential impact on the Property’s fair market value; and employing various methods of
property valuation. The appraisers concluded that the appraised value of the Property as
a whole as of October 5, 2010, the date of the inspection, was $1,290,000.
The appraisers certified that the statements of fact in the Report were true and
correct, that the appraisers were unbiased with respect to the Property and the parties
involved, and that compensation for preparation of the Report was not contingent upon
reaching a predetermined result. The appraisers represented that the Report was prepared
in accordance with the Uniform Standards of Professional Appraisal Practice (“USPAP”),
the Code of Professional Ethics, and the Standards of Professional Appraisal Practice of
the Appraisal Institute. On January 13, 2011, in accordance with the terms of the
Consent Decree, the district court entered judgment against Joseph S. Manne, in his
capacity as the representative of the Estate of Jacob Manne, and ND-4, in the amount of
$1,290,000 plus interest.
In July 2011, despite the Consent Decree’s provision that the Property’s appraised
value shall be unreviewable, Manne filed a motion seeking to modify or vacate the
judgment pursuant to Federal Rule of Civil Procedure 60(b), based on objections to the
Appraisal Report. Manne sought a new appraisal, arguing that the DeWan & Schott
appraisal was deficient in that the appraiser failed to state and justify certain
“extraordinary assumptions” made in the Report, including its use of sales of comparable
parcels in Orange County as a proxy for sales in Dutchess County, where the Property is
located, and the Report’s determination that development of the Property would not be
7
subject to substantial permitting requirements. Manne also argued that the appraiser
failed to factor certain “unique” features into the appraised value, including anticipated
opposition to development by citizen environmental groups; construction obstacles posed
by a water course running through the property; and regulatory complications caused by
the Property’s proximity to the Taconic Parkway, the Appalachian Trail, and the presence
of rare plant and animal species. In support of his request for relief, Manne submitted
two expert reports—one, by a law firm, opined that any attempt to develop the Property
would be hindered by substantial regulatory hurdles and the other, by an appraiser,
concluded that the Appraisal Report completed by DeWan & Schott failed to conform to
USPAP standards.
The district court denied the motion on the basis that the Consent Decree explicitly
provided that the appraised value shall be “unreviewable.” The court noted that the
Consent Decree had been negotiated at arms’ length and that there was no allegation that
the appraisal was procured by fraud. Rather, Manne’s objections to the Appraisal Report
were, at bottom, criticisms of the appraisal methods employed by DeWan & Schott. This
court affirmed the denial of Manne’s motion. See United States v. Manne, 510 Fed.
App’x 83 (2d Cir. 2013).
After Manne appealed the district court’s denial of his Rule 60(b) motion but
before this court affirmed that order, Manne and ND-4 brought an action in New York
Supreme Court against DeWan & Schott and two members of that firm asserting claims
for negligent misrepresentation, gross negligence, and fraud arising out of the preparation
of the Appraisal Report. The complaint’s allegations of deficiencies in the Report were
8
similar to, and indeed, nearly identical to those made in support of Manne’s Rule 60(b)
motion in federal district court. Manne and ND-4 sought damages of at least $650,000—
the difference between the appraised amount as determined by DeWan & Schott and the
amount proffered by Manne as a reasonable appraisal value. The complaint made no
mention of the district court’s denial of Manne’s Rule 60(b) motion or of the appeal then
pending before this court.
By letter dated May 23, 2012, the United States notified the district court of the
filing of the state court action. The United States requested that the district court exercise
its jurisdiction over the enforcement of the Consent Decree and enjoin the state court
proceeding pursuant to its authority under the All Writs Act, 28 U.S.C. § 1651(a). The
United States argued that such an injunction was not precluded by the Anti-Injunction
Act, 28 U.S.C. § 2283, which provides that a federal court may not enjoin proceedings in
a state court except “[1] as expressly authorized by Act of Congress, or [2] where
necessary in aid of its jurisdiction, or [3] to protect or effectuate its judgments.” The
United States argued that a district court injunction of the state court proceeding was not
barred for two reasons. Pursuant to the Consent Decree’s provision that the district court
retained “jurisdiction over th[e] matter for the purpose of interpreting and enforcing the
terms of this Consent Decree,” the district court could enjoin Manne and ND-4’s state
court action from proceeding on the grounds that doing so is (1) “necessary in aid of [the
district court’s] jurisdiction” and (2) “to protect or effectuate [the district court’s]
judgment[].”
9
The district court rejected the government’s argument that the issuance of an
injunction was permitted under the so-called “relitigation” exception to the Anti-
Injunction Act, which permits a federal court to enjoin state proceedings where necessary
“to protect or effectuate its judgments.” 28 U.S.C. § 2283. Citing Smith v. Bayer Corp.,
131 S. Ct. 2368 (2011), the district court held that the relitigation exception did not apply
because the specific allegations made by Manne in the state court complaint—that the
appraisers negligently or fraudulently prepared the appraisal—had not been raised in the
Rule 60(b) proceedings in federal court. The government has expressly declined to
challenge this aspect of the district court’s ruling on appeal. See Appellee Br. 27 n.8.
However, finding that the “State Court action in my view clearly interferes with
this Court’s exclusive jurisdiction over the Consent Decree,” the district court held that
an injunction was permitted under the “in aid of jurisdiction” exception. The court noted
that the Consent Decree granted to the district court jurisdiction over the interpretation
and enforcement of the Consent Decree. The court opined that Manne, “after striking out
in this court,” brought the state court suit asserting claims of fraud and negligent
misrepresentation against the appraiser, thus seeking review of the adequacy of the
appraiser’s methods. Such a review, the court noted, is clearly disallowed by the Consent
Decree’s provision that the appraisal shall be “unreviewable.” The court continued:
And whether one dresses it up as mistake or as negligence or
as gross negligence or even fraud, it’s the same, which is, it’s
asking a State Court to do what this Court should be doing,
which is interpreting and applying and enforcing the Consent
Decree, which includes issues having to do with the appraisal,
and, of course, the Court will apply the Consent Decree that
10
the parties negotiated with counsel and the Court so ordered
back nearly two years ago.
Special App’x 32. In the district court’s view, any judgment issued in the state court suit
that awarded money to Manne “would in effect challenge or redo the appraisal” and
“would frustrate the Consent Decree and would be inconsistent with [the] Court’s
exclusive jurisdiction over the enforcement of the Consent Decree.” Id. at 34. The
district court thus granted the government’s request for an injunction and issued an order
“enjoin[ing] Defendants from litigating issues related to the Consent Decree in any court
other than the Southern District of New York.” Special App’x 2. This appeal followed.
DISCUSSION
The sole issue on appeal is whether the district court’s injunction against the state
court action was proper under the All Writs Act, 28 U.S.C. § 1651, and the Anti-
Injunction Act, 28 U.S.C. § 2283. The All Writs Act grants federal courts authority to
“issue all writs necessary or appropriate in aid of their respective jurisdictions and
agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a). This statute must be
read in tandem with the Anti-Injunction Act, which tempers the potency of the All Writs
Act by limiting the circumstances under which a federal court may enjoin state court
proceedings. The Anti-Injunction Act, enacted in its original form as part of the Judiciary
Act of 1793, provides, as noted above, that a federal court “may not grant an injunction to
stay proceedings in a State court except [1] as expressly authorized by Act of Congress,
or [2] where necessary in aid of its jurisdiction, or [3] to protect or effectuate its
judgments.” 28 U.S.C. § 2283 (emphasis added). We review the district court’s issuance
11
of an injunction under the All Writs Act for abuse of discretion. United States v. Int’l
Bhd. of Teamsters, 266 F.3d 45, 49 (2d Cir. 2001). We review de novo the court’s
interpretation of consent decrees, and of the All Writs Act and the Anti-Injunction Act.
Id.Given “the explicit wording” of the Anti-Injunction Act and “the fundamental
principle of a dual system of courts,” “[a]ny 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.” Atl.
Coast Line R.R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281, 297 (1970). Since the
Anti-Injunction Act’s prohibitory provision “rests on the fundamental constitutional
independence of the States and their courts, the exceptions should not be enlarged by
loose statutory construction.” Id. at 287. “Proceedings in state courts[, thus,] should
normally be allowed to continue unimpaired by intervention of the lower federal courts,
with relief from error, if any, through the state appellate courts and ultimately [the
Supreme] Court.” Id.In this case, the district court having held that an injunction was permitted under
the “in aid of jurisdiction” exception to the Anti-Injunction Act, and the United States
having expressly declined to challenge the court’s ruling with respect to the relitigation
exception, our review is limited solely to the applicability of the “in aid of jurisdiction”
exception.
Historically, the “in aid of jurisdiction” exception was seen as expressing the “well
settled rule that if an action is in rem the court first obtaining jurisdiction over the res
12
could enjoin suits in other courts involving the same res.” Wright & Miller, Federal
Practice & Procedure § 4225 (3d ed.) (italics added); see also Toucey v. New York Life
Ins. Co., 314 U.S. 118, 134-35 (1941). In Toucey, the Supreme Court considered a prior
version of the statute, which contained a general prohibition against federal injunctions of
state proceedings tempered only by a limited exception permitting a federal court to
enjoin state proceedings that interfere with its administration of a bankruptcy proceeding.
Justice Frankfurter, writing for the Court, rejected the idea that there existed a number of
nonstatutory exceptions to the statute’s prohibitory provision. The sole nonstatutory
exception to the statute’s general prohibition, the Court noted, was to permit a federal
court to protect its in rem jurisdiction by enjoining a parallel in rem state proceeding. Id.
at 139. That rule, the Court recognized, was by then “well settled.” Id. at 135.
Congress amended the statute in 1948 to its present form by expressly
incorporating three exceptions to the statute’s prohibition against federal injunctions of
state proceedings: where such an injunction is (1) expressly authorized by Act of
Congress, (2) necessary in aid of the federal court’s jurisdiction, or (3) to protect or
effectuate the federal court’s judgments. 28 U.S.C. § 2283. The Supreme Court
explained the historical limitations of the exception in Vendo Co. v. Lektro-Vend Corp.,
433 U.S. 623 (1977). In that case, Vendo Co. sued a former employee in state court for
violation of a noncompetition clause in his employment contract. The employee then
sued Vendo Co. in federal court asserting that the noncompetition clause violated federal
antitrust laws. Following the institution of the federal antitrust suit, Vendo Co. won a $7
million judgment in state court. The federal court, invoking the “in aid of jurisdiction”
13
exception (and other grounds), issued an order prohibiting Vendo Co. from collecting on
the judgment.
The Supreme Court reversed, finding that the “in aid of jurisdiction” exception did
not apply because the federal and state actions were each in personam. Id. at 641. The
Court noted:
The traditional notion is that in personam actions in federal
and state court may proceed concurrently, without
interference from either court, and there is no evidence that
the exception to § 2283 was intended to alter this balance.
We have never viewed parallel in personam actions as
interfering with the jurisdiction of either court; as we stated in
Kline v. Burke Construction Co., 260 U.S. 226, 230 (1922):
“[A]n action brought to enforce [a personal liability] does
not tend to impair or defeat the jurisdiction of the court in
which a prior action for the same cause is pending. Each
court is free to proceed in its own way and in its own time,
without reference to the proceedings in the other court.
Whenever a judgment is rendered in one of the courts and
pleaded in the other, the effect of that judgment is to be
determined by the application of the principles of res
adjudicata . . . .”
Vendo Co., 433 U.S. at 641 (alterations in original). The Court observed that the “in aid
of jurisdiction” exception thus “may be fairly read as incorporating th[e] historical in rem
exception.” Id. (citing Wright, Law of Federal Courts, 204 (3d ed. 1976)).
We recently reaffirmed the principle that the “in aid of jurisdiction” exception
generally applies only where necessary to protect a federal court’s jurisdiction over a res.
See Wyly v. Weiss, 697 F.3d 131, 137-38 (2d Cir. 2012). In Wyly, we held that a district
court could not invoke the “in aid of jurisdiction” exception to enjoin state proceedings,
notwithstanding that a settlement agreement resolving the federal action provided that the
14
federal district court would retain exclusive jurisdiction over enforcement of the
settlement. Id. at 139. Wyly involved a class action, certified by the district court, in
which the class asserted violations of securities laws against a defendant corporation.
Following appointment of class counsel, the parties reached a settlement agreement,
pursuant to which class counsel would receive as attorneys’ fees shares of common stock
in the defendant corporation valued at $30 million to $40 million. Id. at 134-35. After
holding a fairness hearing, at which no class member objected to the proposed settlement,
this court approved the settlement and issued a judgment providing that both the
settlement amount and the class counsel fee provision were fair and reasonable. The
judgment also provided that the district court would retain exclusive jurisdiction “over
the parties and the Settlement Class Members for all matters relating to th[ese] Actions.”
Id. at 135 (alteration in original).
Months after the settlement was approved, after revelation that certain material
had been improperly withheld by the defendant corporation during discovery, class
members requested that class counsel move to vacate the judgment that approved the
settlement pursuant to Federal Rule of Civil Procedure 60(b), but class counsel declined
to do so. The class members, acting on their own, then filed a Rule 60(b) motion, which
was denied by the district court. Undeterred, the class members filed a complaint in New
York Supreme Court against class counsel, asserting claims for, among others, legal
malpractice, breach of fiduciary duty, and fraud. The federal district court, relying in part
on the “in aid of jurisdiction” exception, enjoined the class members from prosecuting the
state court action. Id. at 137.
15
On appeal, this court held that the “in aid of jurisdiction” exception did not
authorize the federal court to enjoin the state malpractice suit. We reiterated that the
exception “is generally reserved for state court actions in rem, because the state court’s
exercise of jurisdiction ‘necessarily impairs, and may, defeat,’ the federal court’s
jurisdiction over the res.” Id. at 137-38 (quoting Kline v. Burke Constr. Co., 260 U.S.
226, 229 (1922)). Because “an in personam action involves a controversy over liability
rather than over possession of a thing[,] . . . an in personam action generally does not
tend to impair or defeat the jurisdiction of the court in which a prior action for the same
cause is pending.” Id. at 138 (internal quotation marks omitted).
We have recognized a limited exception to the general rule that the “in aid of
jurisdiction” exception does not permit a federal court to enjoin a parallel in personam
action. See In re Baldwin-United Corp., 770 F.2d 328, 337 (2d Cir. 1985). In Baldwin-
United, we held that injunction of an in personam action was justified where “the district
court had before it a class action proceeding so far advanced that it was the virtual
equivalent of a res over which the district judge required full control.” Id. at 337. In
crafting that exception, however, we relied on the exceptional circumstances of that
case—the case’s extraordinary complexity and multidistrict nature, the fact that 18 of the
26 defendants had already settled, and the fact that there was a “substantially significant
prospect that [the remaining] 8 defendants [would] settle in the reasonably near future.”
Id. at 338. We noted that other courts, employing similar reasoning, have invoked the “in
aid of jurisdiction” exception to enjoin state proceedings which threatened to interfere
with ongoing federal school desegregation litigation. Id.; see also Swann v. Charlotte-
16
Mecklenburg Bd. of Educ., 501 F.2d 383, 384 (4th Cir. 1974). Noting that “the
jurisdiction of a multidistrict court is analogous to that of a court in an in rem action or in
a school desegregation case, where it is intolerable to have conflicting orders from
different courts,” we departed from the general rule that the “in aid of jurisdiction”
exception may be invoked only to protect a federal court’s jurisdiction over a res.
Baldwin-United, 770 F.2d at 337 (internal quotation marks omitted).
The circumstances in Baldwin-United—litigation consisting of consolidated
multidistrict class actions which, following two years of settlement negotiations brokered
by the district court, was in the final stages of settlement at the time the state court suit is
filed—are absent from this case, see Wyly, 697 F.3d at 138; Baldwin-United, 770 F.2d at
338, and this single-district, non-class action is easily distinguished from that one.
Moreover, we recognized in Baldwin-United that, were the circumstances such that the
remaining eight defendants were no longer likely to settle, “the situation would fall
within the Burke v. Kline Construction Co. rule that in personam proceedings in state
court cannot be enjoined merely because they are duplicative of actions being heard in
federal court.” Id. Because circumstances similar to those in Baldwin-United are absent
here, we are bound to apply the general rule that an in personam state court action may
not be enjoined merely because it is duplicative of, or conflicts with, a prior federal
judgment. In accord with the principle that exceptions to the Anti-Injunction Act “should
not be enlarged by loose statutory construction,” Atl. Coast Line R.R. Co., 398 U.S. at
17
287, we decline to extend the holding of Baldwin-United beyond the exceptional
circumstances of that case.4
The United States maintains that this case falls within the limited exception
described in Baldwin-United because, were Manne to prevail on his fraud and negligence
claims and obtain a judgment against the appraisers in state court, that judgment would
impermissibly conflict with the district court’s denial of Manne’s Rule 60(b) motion.
The district court agreed, holding that any judgment that awarded money damages to
Manne in the state court suit “would in effect challenge or redo the appraisal” and “would
frustrate the Consent Decree and . . . be inconsistent with [the] Court’s exclusive
jurisdiction over the enforcement of the Consent Decree.” Special App’x 34. The
possibility that a potential judgment in a subsequent state court suit might conflict with a
prior federal judgment, however, is not a basis to enjoin the state court suit. As this Court
has recently recognized, “a court does not usually get to dictate to other courts the
preclusion consequences of its own judgment.” Wyly, 697 F.3d at 140 (quoting Smith v.
Bayer Corp., 131 S. Ct. 2368, 2375 (2011)). “Deciding whether and how prior litigation
has preclusive effect is usually the bailiwick of the second court”—here, the New York
state court. Id.We have no reason to believe that any judgment Manne obtains in state court
would not peaceably coexist with the district court’s judgment approving the Consent
4
Notably, the injunction in Baldwin-United was to expire upon entry of final judgment in all of the multidistrict
proceedings in federal court, thus posing less of a risk to “fundamental constitutional independence of the States and
their courts.” Atl. Coast Line R.R. Co., 398 U.S. at 207; see also Baldwin-United, 770 F.2d at 334. By contrast, the
injunction in this case, if permitted to stand, would be permanent in nature, and would seriously undercut principles
of comity.
18
Decree. The Consent Decree and the judgment approving it are, together, an explication
of the rights and obligations of Manne and ND-4 vis-à-vis the United States; the appraiser
is not a party to the Consent Decree.5 Any money judgment that Manne might win in
state court against the appraiser, therefore, can have no effect on the appraisal value
already determined according to the terms of the Consent Decree. Manne’s obligation to
remit to the United States the full amount of that appraisal value as dictated by the
Consent Decree and confirmed by this court persists unaffected.
CONCLUSION
The district court erred by relying on the “in aid of jurisdiction” exception to the
Anti-Injunction Act in enjoining Manne’s state court suit. The injunction is VACATED.
5
We express no opinion as to any rights the appraiser may have under the Consent Decree vis-à-vis Manne, nor do
we express any opinion as to the merits of Manne’s state court proceedings generally.
19