IRAOLA & CIA, S.A., Plaintiff-Counter-Defendant-Appellant-Cross-Appellee, v. KIMBERLY-CLARK CORPORATION, J.N. Anderson, Defendants-Counter-Claimants-Appellees-Cross-Appellants, George Semones, Defendant-Appellee-Cross-Appellant.
No. 99-8127
United States Court of Appeals, Eleventh Circuit
November 9, 2000. November 21, 2000
232 F.3d 854
ANDERSON, Chief Judge
Appeals from the United States District Court for the Northern District of Georgia.(No. 97-01347-CV-TWT-1), Thomas W. Thrash, Judge.
Before ANDERSON, Chief Judge, and BLACK and HALL*, Circuit Judges.
ANDERSON, Chief Judge:
Appellant Iraola & CIA, S.A. (“Iraola“) appeals the district court‘s determination that subject matter jurisdiction in this action existed under
I. FACTS
1 Iraola is an Argentine company and Kimberly-Clark is a citizen of Delaware and Texas; Appellees Anderson and Semones, employees of Kimberly-Clark, are citizens of Georgia. Iraola contracted with Kimberly-Clark to distribute its medical products in Argentina. After Kimberly-Clark terminated the contract, Iraola sued, alleging that Kimberly-Clark tortiously interfered with its employee and business relations by distributing products through former Iraola employee Robert Alpert. Iraola named Kimberly-Clark, Anderson, and Semones as defendants in this action. Kimberly-Clark counterclaimed for payment of unsold supplies Iraola retained at the time of the contract termination.
2 Iraola also named as a defendant Geo Med, the company through which Kimberly-Clark distributed its products in Argentina before its contract with Iraola was terminated. Geo Med invoices that Iraola obtained showed a Georgia address and telephone number that Iraola learned belonged to defendant Semones, a Kimberly-Clark employee. Thus Iraola thought that Semones owned and operated Geo Med and that it was based in Georgia. It was unable to serve Geo Med and learned in discovery that the company was in fact owned by Iraola‘s former employee, Alpert, a citizen of Argentina. The Appellees maintain that Geo Med is a fictitious company, and that Alpert just used the name as a straw company for Kimberly-Clark to send its products for shipment to Argentinа.
4 The district court ruled on the motions for dismissal, summary judgment, and default judgment at the same time. The court first granted a default judgment in favor of Kimberly-Clark on its counterclaim for payment for unsold supplies because Irаola had never responded to the counterclaim. Then the district court granted Iraola‘s motion for voluntary dismissal under
II. DISCUSSION
A. Section 1332(a)(2) Diversity Where the Parties on One Side are Citizens of Different States and the Party on the Other Side is the Citizen or Subject of a Foreign State.
5 As noted above, Iraola, a citizen of a foreign statе, sued Kimberly-Clark, a citizen of Delaware and Texas, and two Georgia citizens, Anderson and Semones. Iraola‘s primary argument on appeal is that there is no diversity jurisdiction here. Iraola argues that
(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between -
...
(2) citizens of a State and citizens or subjects of a foreign state;
10 (Emphasis added). Iraola argues that the plain meaning of the statute is that all non-foreign parties must be from a single state. Iraоla derives this argument from the statute‘s use of the article “a” in the phrase “citizens of a State.”
11 This Court recently stated “[i]n construing a statute we must begin, and often should end as well, with the language of the statute itself.” United States v. Steele, 147 F.3d 1316, 1318 (11th Cir.1998)(en banc)(internal quotation and citation omitted). However, we have held that where the language is ambiguous, resort to legislative history is appropriate. See Lyes v. City of Riviera Beach, Fla., 166 F.3d 1332, 1337 (11th Cir.1999)(en banc); United States v. DBB, Inc., 180 F.3d 1277, 1281 (11th Cir.1999)(“We will only look beyond the plain language of the statute at extrinsic materials to determine the congressional intent if: (1) the statute‘s language is ambiguous; (2) applying it according to its plain meaning would lead to an absurd result; or (3) there is clear evidence of contrary legislative intent.“); Bryant v. Avado Brands, Inc., 187 F.3d 1271 (11th Cir.1999)(“When interpreting a statute, we look to its plain language, resorting to the legislative history in an attempt to discern congressional intent only when the language of the statute is unclear.“).
12 Thus, we first examine the language of the statute for ambiguity. Certainly the meaning that Iraola has proffered is one possible reading of the statute. However, the same language is capable of another plausible interpretation: each non-foreign party must be the citizen of “a” State and cannot be a citizen of a foreign state or a stateless expatriate. See, e.g., Sadat v. Mertes, 615 F.2d 1176 (7th Cir.1980)(holding that jurisdiction under
13 Congress first adopted the language at issue in 1875. See Act of March 3, 1875, ch. 137, 18 Stat. 470 (1875). At that time, the statute was not limited to diversity jurisdiction and instead defined the original jurisdiction of the federal circuit courts. The statute only permitted diversity jurisdiction between “citizens of different States” and between “citizens of a State and foreign states, citizens, or subjects.” Id. It was not until 1948 that Congress created 1332, a separate statute covering only diversity jurisdiction.2
14 Focusing on the statute as it existed in 1948, it is clear that its structure indicates that Congress intended to provide a federal forum where the parties were diverse. For example,
15 Additionally, the legislative history bolsters this interpretation that Congress intended to provide a federal forum for diverse parties. In 1948, when Congress reorganized and modified the existing statute on original jurisdiction, it clarified and broadened diversity jurisdiction. Previously, the statute had clearly covered actions between aliens and citizens as well as actions between citizens of different states. See
16 When Congress amended 1332 in 1976, it added an additional paragraph, i.e. subparagraph (4), which provided for suits between “a foreign state ... as plaintiff and citizens of a State or of different States.” At the same time, the amendment removed the term “foreign states” from subparagraph (2). Subparagraph (4) provides jurisdiction for foreign states as plaintiffs;
17 To support its interpretation of
18 Since the time of the adoption of the language at issue, no court has interpreted it in the manner in which Iraola suggests. In fact, the courts that have specifically addressed this interpretation have rejected it. See De Korwin v. First National Bank of Chicago, 156 F.2d 858 (7th Cir.1946); Jaffe v. Boyles, 616 F.Supp. 1371, 1374-75 (W.D.N.Y.1985); Niccum v. Northern Assurance Co., 17 F.2d 160 (D.Ind.1927). Furthermore, there are many cases that have permitted citizens of different states to sue or be sued by a foreign citizen but have not specifically addressed the interpretation offered by Irаola. See, e.g., Mutuelles Unies v. Kroll & Linstrom, 957 F.2d 707 (9th Cir.1992); Dullard v. Berkeley Assoc. Co., 606 F.2d 890, 893 (2d Cir.1979); Jackson v. Heiser, 111 F.2d 310, 312 (9th Cir.1940); China Nuclear Energy Industry Corp. v. Arthur Andersen, LLP, 11 F.Supp.2d 1256, 1258 (D.Colo.1998); Galaxy Investment Fund v. Fenchurch Capital Management, Ltd., No. 96 C 8098 (N.D.Ill. Aug.29, 1997); Diatronics, Inc. v. Elbit Computers, Ltd., 649 F.Supp. 122, 125 (S.D.N.Y.1986); Lavan Petroleum Co. v. Underwriters at Lloyds, 334 F.Supp. 1069, 1071 (S.D.N.Y.1971). These cases finding jurisdiction have both preceded and followed the 1976 amendment upon which Iraola relies.
19 We concluded above that the identical-words-in-the-same-act canon does not support Iraola‘s interpretation. Moreover, a different canon of statutory interpretation supports the interpretation that
20 While one possible interpretation of the language in
B. Diversity Jurisdiction where Subjects or Citizens оf Foreign States are on Opposite Sides of the Lawsuit.
22 Next we turn to Iraola‘s argument that the inclusion of defendant Geo Med also divests the court of subject matter jurisdiction. Iraola named Geo Med as a defendant, believing that it was a Georgia corporation, based on invoices that listed a Georgia address. However, after several failed attempts to serve Geo Med at that address, Iraola learned аt a deposition that Geo Med was instead a creation of Argentine citizen Robert Alpert. Iraola thus argues that Geo Med is a citizen of Argentina and that the existence of foreign entities on both sides of the lawsuit defeats jurisdiction. The Appellees respond by stating that Geo Med is a fictitious entity and thus cannot be a party to the suit.
23 It is a standard rule that federal courts do not have diversity jurisdiction over cases where there are foreign entities on both sides of the action, without the presence of citizens of a state on both sides. See Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1558 (11th Cir.1989). And because unincorporated entities are attributed the citizenship of their owners, see Bass v. International Brotherhood of Boilermakers, 630 F.2d 1058, 1067 n. 17 (5th Cir.1980),4 that rule would mean that Geo Med is an Argentinian entity because its owner, Alpert, is Argentinian. Diversity of the parties is determined at the time that the complaint is filed, see Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428, 111 S.Ct. 858, 860, 112 L.Ed.2d 951 (1991), and two circuits have determined that an unserved party‘s citizenship is considered in the calculus for assessing diversity, see Howell v. Tribune Entertainment, 106 F.3d 215, 217-18 (7th Cir.1997); Oppenheim v. Sterling, 368 F.2d 516, 518 (10th Cir.1966). We assume arguendo, without deciding, that the diversity analysis would include an unserved defendant whose foreign citizenship was not known until after discovery had begun. Accordingly, if Geo Med, an Argentine entity, is considered in the diversity analysis, this court would not have jurisdiction.
24 However, this court can dismiss a dispensable party in order to retain jurisdiction. See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 833, 109 S.Ct. 2218, 2223, 104 L.Ed.2d 893 (1989); Ingram v. CSX Transportation, Inc., 146 F.3d 858, 863 (11th Cir.1998). Such power is to be used sparingly, and the сourt should carefully consider whether one of the parties will be prejudiced by the dismissal. See id. at 837-38, 109 S.Ct. at 2225.
25 Here, Iraola‘s only claim of prejudice is that it will suffer a tactical disadvantage if Geo Med is dismissed from the action. Specifically, Iraola asserts that prosecuting its claims against both Kimberly-Clark and Geo Med in the same court provides a tactical advantage. The problem with this argument is that Iraola sought, and obtained frоm the district court, permission to voluntarily dismiss this action so that it could sue all of the defendants in state court. The district court granted Iraola‘s request for voluntary dismissal without prejudice pursuant to
26 Iraola also argues that Geo Med is an indispensable party. Because Iraola‘s claims were not adjudicated below and only Kimberly-Clark‘s counterclaim against Iraola was adjudicated before the court ordered the dismissal, only that counterclaim figures into the analysis of whether Geo Med is an indisрensable party. Geo Med had no relation to that counterclaim and thus, under the factors enumerated in
C. Attorneys’ Fees Pursuant to the District Court‘s Grant of Iraola‘s Motion for Voluntary Dismissal under Fed.R.Civ.P. 41(a)(2).
28 When Iraola filed for voluntary dismissal, the Appеllees opposed the motion and asked the court to impose certain conditions if it granted the motion. Specifically, the Appellees sought an award of attorneys’ fees that would cover the expenses they incurred in pursuing matters that would be useless in subsequent litigation. The district court did not address the Appellees’ request and denied it by implication.
29 Rule 41(a)(2)6 allows a plaintiff to dismiss an action voluntarily once he receives approval of the district court. The rule also permits the court to attach certain conditions to its order, such as those requested by the Appellees.
30 In McCants v. Ford Motor Co., 781 F.2d 855 (11th Cir.1986), the plaintiff sought and received a Rule 41(a)(2) dismissal so that she could bring suit against the defendants in another court. Although the defendants sought attorneys’ fees for the work done in that case that would not be applicable in the new case, the court denied the request by implication. We held that we could not determine if the court abused its discretion because the court did not list any of the factors that it used in making the determination. See id. at 861. Thus we remanded the case, with instructions for the district court to state its findings and conclusions. See id. This is precisely what occurred in this case and thus we remand with instructions to the court to state its findings and conclusions.
III. CONCLUSION
31 We reject Iraola‘s two jurisdictional challenges for thе reasons above stated, and thus we affirm in part. However, the district court was required to state its findings and conclusions regarding its failure to award attorneys’ fees, and thus we vacate in part and remand.
32 AFFIRMED IN PART, VACATED IN PART and REMANDED.