LIGIA PACHECO DE PEREZ, individually, et al., Plaintiffs-Appellants, versus AT&T COMPANY, et al., Defendants-Appellees. CRUZ SIGALA, and NORMA SOFIA DE SIGALA, individually and on behalf of the Estate of CRUZ FERNANDO SIGALA and MONICA HUORNUG, as Succession Representative of CRUZ FERNANDO SIGALA, Plaintiffs-Appellants, versus AT&T COMPANY, et al., Defendants-Appellees.
No. 96-8792
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
April 29, 1998
D. C. Docket No. 1:95-CV-2749-FMH. Appeal from the United States District Court for the Northern District of Georgia. Before BLACK and BARKETT, Circuit Judges, and PROPST*, Senior District Judge. *Honorable Robert B. Propst, Senior U.S. District Judge for the Northern District of Alabama, sitting by designation.
In these two consolidated cases, plaintiffs-appellants, individuals injured in a 1993 gas pipeline explosion in Venezuela, appeal from the district court‘s order denying their motion to remand the case to the Georgia state courts and dismissing the action under the doctrine of forum non conveniens.
The explosion, which killed fifty people and injured many others, occurred during the laying of fiber-optic cable in the town of Tejerias, Venezuela, when a machine used to dig a trench for the cable struck a gas pipeline. Plaintiffs allege that defendants-appellees AT&T Company (“AT&T“),1 a New York corporation, and several citizens of Georgia who worked for AT&T, participated in the acts or omissions that caused the explosion.2
Before filing the present actions, many of the plaintiffs in this case filed and dismissed actions based on the same claims against the same or similar defendants in other federal district courts. Specifically, most of the plaintiffs brought two diversity tort actions in the United States District Court for the Eastern District of California, which they voluntarily dismissed, and later filed two similar suits in the United States District Court for the District of New Jersey, which
Thereafter, plaintiffs filed two separate actions in Georgia state court, asserting various state law claims against AT&T and the individual employees of AT&T. Defendants removed the cases to the United States District Court for the Northern District of Georgia. The district court consolidated the two actions, denied the plaintiffs’ motion to remand, and dismissed the consolidated actions under the doctrine of forum non conveniens.
The threshold question on appeal is whether, as the plaintiffs argue, the district court should have remanded the case back to the Georgia state court for lack of federal jurisdiction. Although there is complete diversity among the parties, removal of a case on diversity grounds is not permitted if one or more of the defendants is a citizen of the state in which the suit was originally filed.
The defendants further assert that federal question jurisdiction exists in this case under four alternative theories. First, the defendants maintain that the plaintiffs’ attempt to “artfully plead” their state-law complaint so as to avoid the preclusive effect of the voluntary dismissals of their prior federal lawsuits presents a substantial federal question sufficient to support federal jurisdiction. Second, they argue that the plaintiffs’ complaint presents a substantial federal question because the plaintiffs must rely on a federal treaty to prove that they have standing to proceed in the Georgia state courts. Third, the defendants argue that the lawsuit involves the federal common law of foreign relations because the litigation implicates the national interests of Venezuela. Fourth, the defendants assert that the district court had the authority to exercise supplemental jurisdiction over this case under the All Writs Act,
We conclude that federal question jurisdiction does not exist under any of the defendants’ theories. We further conclude that the record does not support the defendants’ assertion of fraudulent joinder of the Georgia resident defendants. Because federal jurisdiction is lacking in this case, the district court should have granted the plaintiffs’ motion to remand.5
I. Background Principles
An action filed in state court may be removed to federal court based upon diversity or federal question jurisdiction.
A. Res Judicata
The defendants first argue that the plaintiffs’ attempt to avoid the preclusive effect of their prior federal lawsuits by “artfully pleading” their complaint to contain only state law claims creates a federal issue sufficient to support federal jurisdiction in this case. The district court accepted this argument, holding that the doctrine of res judicata provides one alternative ground for federal subject matter jurisdiction over the plaintiffs’ suit. Specifically, the district court found that those plaintiffs who had twice filed and twice dismissed the prior actions in other federal courts could not avoid the preclusive effect of the “two dismissal” rule of
While noting that the prior suits were brought against AT&T International and its Venezuelan subsidiary--and not AT&T Corp.--the district court concluded that AT&T Corp. and AT&T International were in “privity” with one another so as to permit AT&T Corp. to assert the preclusive effect of
We need not address the privity question, as the recent Supreme Court decision in Rivet v. Regions Bank of Louisiana, No. 96-1971, (U.S. February 24, 1998), explicitly holds that “claim preclusion by reason of a prior federal judgment is a defensive plea that provides no basis for removal under
B. Do Plaintiffs’ Claims “Arise Under” a Federal Treaty?
Defendants next argue, as their second basis for removal jurisdiction, that an essential part of the plaintiffs’ causes of action requires interpretation of a federal treaty. Specifically,
The citizens of other states of the United States or of foreign states at peace with this state shall, by comity, be allowed the privilege of suing in the courts of this state and of giving evidence therein, as long as the same comity is extended in the courts of the other states to the citizens of this state.
In reaching its conclusion, the district court relied upon Kern v. Jeppesen Sanderson, Inc., 867 F. Supp. 525 (S.D. Tex. 1994), which held that a similar provision of Texas law required an interpretation of an international treaty on the issue of standing and, therefore, a substantial federal issue was presented by the plaintiffs’ state law complaint. The holding in Kern, however, has been rejected by the Fifth Circuit. See Torres v. Southern Peru Copper Corp., 113 F.3d 540,
At the outset we reject [the defendant‘s] contention that
Tex. Civ. Prac. & Rem. Code § 71.031 confers federal question jurisdiction.... The mere fact thatsection 71.031 requires a Texas state court to examine treaties to determine whether a plaintiff has standing is insufficient by itself to create federal jurisdiction.
In this case, we agree with the Fifth Circuit. We conclude that the need to look to the treaty to satisfy the Georgia code provision does not present a federal question substantial enough to place the plaintiffs’ state law tort actions within the jurisdiction of the federal courts. As the Supreme Court has emphasized, “the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction.” Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 813 (1986). Defendants argue that because resolution of the treaty issue may determine whether the plaintiffs could proceed at all on their causes of action, the federal issue is essential to plaintiffs’ state law actions. While this argument has superficial appeal, it does not withstand the careful scrutiny required of courts conducting an inquiry into federal jurisdiction.8
Federal jurisdiction may be invoked to vindicate a right or privilege claimed under a federal statute. It may not be invoked where the right asserted is nonfederal, merely because the plaintiff‘s right to sue is derived from federal law, or because the property involved was obtained under federal statute. The federal nature of the right to be established is decisive--not the source of the authority to establish it.
Id. at 483 (citations omitted). Although factually distinct, Russell is analytically analogous. As in Russell, the plaintiffs here have a substantive cause of action based in state law, but their right to proceed in a particular court system finds its source in federal law. In both cases, the federal law at issue creates a procedural right of access to the courts that is antecedent to, and separate from, the plaintiffs’ state-based substantive cause of action. See Gully v. First Nat‘l Bank in Meridian, 299 U.S. 109, 116 (1936) (“Here the right to be established is one created by the state. If that is so, it is unimportant that federal consent is the source of state authority.“); cf. Buechold v. Ortiz, 401 F.2d 371, 372 (9th Cir. 1968) (holding that a similar treaty granting access to United States courts but not establishing substantive rights does not create a right “arising under” the
If we follow the ascent far enough, countless claims of right can be discovered to have their source or their operative limits in the provisions of a federal statute or in the Constitution itself with its circumambient restrictions upon legislative power. To set bounds to the pursuit, the courts have formulated the distinction between controversies that are basic and those that are collateral, between disputes that are necessary and those that are merely possible.
299 U.S. at 118. Therefore, although determination of whether the treaty supplies the necessary comity required by the Georgia statute may be in some sense outcome-determinative in plaintiffs’ case, we conclude that this is one of those instances where the federal issue is collateral to the essence of plaintiffs’ state-law claims.
As with other courts that have found collateral issues of federal law to be insufficient to confer federal jurisdiction over a suit otherwise exclusively based in state law, our holding reflects the concern that whole classes of state law actions should not be “federalized” by the mere presence of a federal issue. This concern has been most clearly expressed in cases involving actions to establish title to land in which the plaintiff must trace the source of the title
As their third alternative theory of federal jurisdiction, defendants assert that the plaintiffs’ claims implicate the federal common law of foreign relations. The Supreme Court has held that the area of international relations is governed exclusively by federal law. See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 423-24 (1964) (holding that application of “act of state doctrine,” which precludes courts of this country from questioning the validity of acts of a foreign government committed within its own territory, is governed by federal law); see also Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 641 (1981) (noting that the narrow realm of federal common law includes “international disputes implicating ... our relations with foreign nations“). Where a state law action has as a substantial element an issue involving foreign relations or foreign policy matters, federal jurisdiction is present. Republic of Philippines v. Marcos, 806 F.2d 344, 353 (2d Cir. 1986) (holding that “there is federal question jurisdiction over actions having important foreign policy implications“). The cases addressing this area of federal common law generally involve disputes in which a foreign government, or its instrumentality, is a named party to the lawsuit, or where the actions of a foreign government are a direct focus of the litigation. See Sabbatino, 376 U.S. at 404-406 (involving a contract dispute between the defendants and the Cuban National Bank regarding Cuba‘s expropriation of sugar owned by the defendants); Republic of Philippines, 806 F.2d at 353 (allegations in the complaint “concern efforts by a foreign government to reach or obtain property located” in the United States); Republic of Iraq v. First Nat‘l City Bank, 353 F.2d 47 (2d Cir. 1965) (holding that attempt by Republic of Iraq to recover assets held in the United States was governed by federal law).
Citing Torres, defendants argue that the plaintiffs’ action implicates the economic and sovereign interests of Venezuela to such a significant extent that federal jurisdiction based upon the federal common law of foreign relations exists in this case. Defendants note that the factors considered by the Fifth Circuit in this jurisdictional inquiry include whether the injuries occurred
We conclude that the federal common law of foreign relations will not support federal jurisdiction in this case. First, although the court in Torres stated “[t]hat Peru has injected itself into this lawsuit does not, standing alone, create a question of federal law,” 113 F.3d at 542-43, we think it significant, for purposes of this case, that the Venezuelan government has taken no position on whether this lawsuit proceeds in the United States or in Venezuela. Without such an indication from the sovereign nation, we are reluctant to find that the plaintiffs’ private cause of action sounding in Georgia tort law implicates important foreign policy on the face of the plaintiffs’ pleadings. It seems more likely to us that any issues involving the participation of the
Second, we find that the evidence regarding Venezuela‘s interests in the plaintiffs’ action is too speculative and tenuous to confer federal jurisdiction over this case. In emphasizing that the plaintiffs’ action implicated the vital economic and political interests of Peru, the court in Torres found that:
[t]he mining industry in Peru, of which SPCC is the largest company, is critical to that country‘s economy, contributing up to 50% of its export income and 11% of its gross domestic product. Furthermore, the Peruvian government has participated substantially in the activities for which SPCC is being sued. By way of example, the government: (1) owns the land on which SPCC operates; (2) owns the minerals which SPCC extracts; (3) owned the Ilo refinery from 1975 until 1994, during which time pollution from the refinery may have contributed to the injuries complained of by plaintiffs; and (4) grants concessions that allow SPCC to operate in return for an annual fee. Moreover, the government extensively regulates the mining industry.
113 F.3d at 543. In this case, by contrast, while the record shows that Venezuelan governmental entities or corporations partially owned by the government participated in activities that may have had an effect on the events giving rise to the explosion, the evidence of Venezuela‘s direct participation in any tortious actions is weaker than the evidence of the Peruvian government‘s involvement in Torres, and there is no evidence regarding the relative importance of the fiber-optic cable project, or the telecommunications industry in general, to the Venezuelan national economy. Although this litigation might significantly affect AT&T‘s business operations in Venezuela, it is not clear that the lawsuit threatens the economic vitality of Venezuela itself.
D. All Writs Act
Defendants argue that the All Writs Act,
Some courts of appeals have held, in the context of complex class actions in which a final settlement agreement has been reached, and a subsequent or concurrent state court action threatens the viability of this final agreement, that a district court may exercise its authority under the All Writs Act to remove an otherwise unremovable case from state court and to enjoin further proceedings in that case in order to prevent frustration of the settlement agreement. See In re VMS Securities Litigation, 103 F.3d 1317, 1323-24 (7th Cir. 1996) (upholding the district court‘s assumption of jurisdiction over a state action under the All Writs Act in order to protect the court‘s ongoing orders and prior rulings in complex class action litigation over which the court “expressly retained jurisdiction“); In re Agent Orange Product Liability Litigation, 996 F.2d 1425, 1431 (2d Cir. 1993) (same). But see Hillman v. Webley, 115 F.3d 1461, 1469 (10th Cir.
We need not decide today whether the approach of the Second and Seventh Circuits in Agent Orange and VMS Securities or that of the Tenth Circuit in Hillman is the correct one, because we conclude that even under the Second and Seventh Circuits’ approach, the defendants have not shown the existence of the sort of “exceptional circumstances” that might justify removal of the plaintiffs’ lawsuits to federal court where federal jurisdiction is otherwise wholly lacking. See VMS Securities, 103 F.3d at 1324; In re Agent Orange, 996 F.2d at 1431. As the Second Circuit emphasized in Agent Orange, the exercise of authority under the All Writs Act is not appropriate where a district court is “determining simply the preclusive effect of a prior final judgment on claims or issues expected to be raised in subsequent collateral proceedings.” Id. Rather, a district court‘s assumption of removal jurisdiction under the Act is proper, if at all, only “to enforce [the court‘s] ongoing orders against relitigation and to guard the integrity of its prior rulings over which it has expressly retained jurisdiction.” VMS Securities, 103 F.3d at 1324. We do not see how, at the time of removal, the plaintiffs’ prosecution of their action in state court would have interfered with the discovery orders made in the Armas action, nor do we see how allowing the plaintiffs to go forward now would thwart the judgment of dismissal for forum non conveniens in Armas. Any questions about the preclusive effect of judgments made in Armas or in other actions on the claims of certain plaintiffs in this case can be resolved by the state court. The fact that a few of the fifty-six plaintiffs in this action may be barred from relitigating their claims, however, does not justify the exercise of supplemental jurisdiction over the entire case under the All Writs Act. We hold that the district court did not have authority under these circumstances to assume jurisdiction under the Act.
Defendants also argue that the plaintiffs fraudulently joined the Georgia defendants to defeat the original diversity jurisdiction that otherwise exists in this case. “In a removal case alleging fraudulent joinder, the removing party has the burden of proving that either: (1) there is no possibility the plaintiff can establish a cause of action against the resident defendant; or (2) the plaintiff has fraudulently pled jurisdictional facts to bring the resident defendant into state court.” Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997) (citing Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1561 (11th Cir. 1989)). The burden of establishing fraudulent joinder is a heavy one. Where a plaintiff states even a colorable claim against the resident defendant, joinder is proper and the case should be remanded to state court. See id.; Cabalceta, 883 F.2d at 1562. The determination of whether a resident defendant has been fraudulently joined must be based upon the plaintiff‘s pleadings at the time of removal, supplemented by any affidavits and deposition transcripts submitted by the parties. Id. In making its determination, the district court must evaluate factual allegations in the light most favorable to the plaintiff and resolve any uncertainties about the applicable law in the plaintiff‘s favor. Id.
Although the district court did not address the issue of fraudulent joinder in its order, the parties were afforded the opportunity to present arguments and supporting documents regarding the fraudulent joinder issue. Defendants argued that under Venezuelan law--which they contend governs the plaintiffs’ suit--plaintiffs could not possibly establish a cause of action against any of the resident defendants. In support of this argument, defendants submitted to the district court the affidavit of an attorney who practices in Venezuela, who opined that under the so-called Venezuelan doctrine of “adequate cause,” the individual AT&T employees could not be held liable for the explosion. Affidavit of Daniel Diquez, R. 3-30, Ex. C. In his affidavit, attorney Diquez stated that under Venezuelan law a plaintiff must establish a causal link between the defendant‘s acts and omissions and the plaintiffs’ damages. Diquez predicted that the Venezuelan courts will not find the individual defendants liable because the explosion could not have been the foreseeable result of the individual defendants’ acts and because there were too many intervening acts taken by others to establish the necessary causal link between the acts of the individual defendants and the plaintiffs’ damages. Plaintiffs responded that they have adequately alleged claims against the Georgia resident defendants under the law of either Georgia or Venezuela. Specifically, plaintiffs alleged that they joined the resident defendants because those defendants were the AT&T employees directly responsible for planning and surveying the proposed site for laying the fiber-optic cable, and because they performed their duties negligently.
The fact that the plaintiffs may not ultimately prevail against the individual defendants because of an insufficient causal link between the defendants’ actions and the plaintiffs’ injuries does not mean that the plaintiffs have not stated a cause of action for purposes of the fraudulent joinder analysis. In a fraudulent joinder inquiry, “federal courts are not to weigh the merits of a plaintiff‘s claim beyond determining whether it is an arguable one under state law.” Crowe, 113 F.3d at 1538. Nothing in the Diquez affidavit, or in the record, suggests that Venezuelan law does not provide a cause of action for the sort of negligence claims asserted against the individual defendants. Cf. id. at 1539 (holding remand appropriate where it is “arguable” as to whether Georgia law creates a cause of action against landowner for failure to abate a continuing nuisance created by his property). We conclude that the defendants failed to show that the plaintiffs cannot state an arguable cause of action against the resident defendants. Thus, we cannot say that the Georgia defendants were fraudulently joined.15
For the foregoing reasons, we conclude that the district court lacked federal question jurisdiction and that the plaintiffs’ actions were improperly removed to federal court. Therefore, we REVERSE and REMAND this case with directions that the district court remand this action to the State Court of Fulton County, Georgia.
I fully agree with the majority that federal question jurisdiction cannot be predicated on either theory addressed by the district court -- res judicata or the federal treaty with Venezuela. Although the majority opinion is thorough and well reasoned, I would remand the case for the district court to determine whether federal question jurisdiction exists based on either the All Writs Act or the federal common law of international relations and whether removal is proper because of fraudulent joinder. See Citro Florida, Inc. v. Citrovale, S.A., 760 F.2d 1231, 1232 (11th Cir. 1985). These three theories require an examination of the factual record, a function uniquely within the province of the district court. Lee v. Celotex Corp., 764 F.2d 1489, 1492-93 (11th Cir. 1985).