TEXAS EMPLOYERS’ INSURANCE ASSOCIATION, Plaintiff-Appellee, v. Leroy JACKSON, Defendant-Appellant.
Nos. 85-2583, 85-2690.
United States Court of Appeals, Fifth Circuit.
July 15, 1987.
Rehearing En Banc Granted July 15, 1987.
820 F.2d 1406
Reagan Wm. Simpson, Houston, Tex., Arthur R. Miller, Cambridge, Mass., Steven Lynn Roberts, Stephen Pate, Fulbright & Jaworski, Houston, Tex., for plaintiff-appellee.
JOHN R. BROWN, Circuit Judge:
This case lies at the point where federalism and the Anti-Injunction Act intersect with preemption and the Declaratory Judgment Act. The question is whether the Longshore and Harbor Workers Compensation Act (LHWCA) preempts a state law cause of action for the bad faith withholding of compensation benefits. We affirm the District Court‘s declaratory judgment that the LHWCA is preemptive, but reverse the injunction staying the state court proceedings.
A Tale of Two Lawsuits
Appellant Leroy Jackson, an employee covered by the LHWCA,
At the time of Jackson‘s injury, Gulfport Shipbuilding was an employer subject to the LHWCA. As Gulfport‘s LHWCA carrier, Texas Employers’ Insurance Association (TEIA) paid fоr Jackson‘s medical treatment and paid him temporary total disability benefits during those periods when Jackson was unable to work.
On May 3, 1982, Jackson seriously reinjured his back while at work and has not returned to work since. On July 6, 1982, Jackson filed a formal claim for permanent disability benefits. See
On July 6, 1983, in an informal conference before the Deputy Commissioner, TEIA agreed to, and did, resume Jackson‘s payments. Jackson was re-examined by a physician in mid-August 1983, and on September 14, TEIA again filed a controversion and suspended Jackson‘s benefits, this time on the stated basis that Jackson‘s disability was due to a continuing arthritic condition and not the result of his 1978 back injury. On September 28, 1983, a second informal conference was held, this time before a Claims Examiner. The next day, September 29, TEIA filed a third controversion, here challenging the Claims Examiner‘s recommendation for payment of compensation. As provided under the Act,
Jackson Goes to the State Court
On June 5, 1984, while the decision of the ALJ was pending, Jackson filed a lawsuit against TEIA2 in Texas state court. Jackson‘s original petition contained seven causes of action generally alleging bad faith insurance practices on the part of TEIA, and it requested $1.5 million in actual damages and $15 million in punitive damages. TEIA answered the lawsuit, and extensive discovery ensued.
On September 14, 1984, the ALJ who heard Jackson‘s claim issued a final decision and order declaring Jackson to be totally and permanently disabled and ordered payment of compensation benefits, attorney‘s fees, and interest on all past unpaid amounts. Neither party appealed the ALJ‘s decision and the order became final. See
Even though the ALJ had decided his claim favorably, Jackson nevertheless pressed on with the state court case. In January 1985, the state trial court denied TEIA‘s plea in bar, which had asserted that Jackson‘s state claims were barred by the exclusivity provisions of the LHWCA.
TEIA Goes to the Federal Court
In June 1985, TEIA filed the instant suit in federal district court. TEIA sought two declaratory judgments: (i) the LHWCA preempted Jackson‘s state bad faith insurance practices action and (ii) the ALJ‘s decision was res judicata with respect to Jackson‘s challenge to the manner in which TEIA handled his LHWCA claim. TEIA also sought an injunction prohibiting Jackson from proceeding with his state action. In August 1985, the District Court enjoined Jackson from further proceeding in state court. In September 1985, the District Court entered a subsequent order, permanently enjoining Jackson from prosecuting his state court suit and declaring that the LHWCA preempts the state law causes of action arising from the handling of compensation payments under the Act. 618 F.Supp. 1316 (E.D.Tex.1985). The state trial remains stayed. Jackson appeals.
We first consider whether Jackson‘s state law claims are preempted by the LHWCA. Federal law will be found to preempt state law in three different instances. First, Congress may explicitly express its intent to preempt state law. Shaw v. Delta Air Lines, 463 U.S. 85, 95, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490, 500 (1983). Second, Congress’ intent to displace state law may be inferred, generally through the comprehensiveness or pervasiveness of the federal regulatory scheme. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447, 1459 (1947). Finally, even where Congress has not entirely displaced state law, federal law will nevertheless preempt state law when state law conflicts with federal law, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248, 257 (1963), or when state law interferes with the accomplishment and execution of the congressional purpose, Hines v. Davidowitz, 312 U.S. 52, 67-68, 61 S.Ct. 399, 404, 85 L.Ed. 581, 587 (1941). See Michigan Canners & Freezers Ass‘n v. Agricultural Marketing & Bargaining Bd., 467 U.S. 461, 469, 104 S.Ct. 2518, 2523, 81 L.Ed.2d 399, 406 (1984) (summarizing three types of preemption). Although any one of these three bases would be sufficient to establish preemption, we agree with the District Court that, on all of these bases, the LHWCA preempts the Texas state law invoked by Jackson.
(i) Congressional Intent to Preempt
With respect to explicit congressional intent to preempt state law, we look to § 5(a) of the Act,
(ii) Comprehensiveness of Federal Scheme
Federal law will also preempt state law if the sheer comprehensiveness of the federal regulatory scheme warrants the inference of congressional intent to preempt. The LHWCA,3 born of much judicial travail and contention among the states, Congress, and the Supreme Court,4 was established as a uniform national program of workers compensation benеfits for longshore and harbor workers which could not be constitutionally provided by the States. The program is administered by the Secretary of Labor through the Director of Office of Workers’ Compensation Programs.
Thus, of great significance for this case, the LHWCA provides for automatic payment of benefits, and further provides for express penalties for an employer‘s failure to pay benefits.
(iii) State Law Conflicts with Federal Law
The third instance in which federal law will be found to preempt state law occurs when state law either conflicts with federal law or interferes with the accomplishment or execution of the purpose behind federal law. In this case, we believe that the intrusion of a state tort claim would interfere with the regulatory program established by Congress.
Recognition of such state claims would inject numerous conflicting “bad faith” standards into an otherwise uniform national system. In addition, such claims would interfere with the penalty provisions that Congress included in the LHWCA. Section 14(a) of the Act,
[i]f any installment of compensation payable without an award is not paid within fourteen days after it becomes due, ... there shall be added to such unpaid installment an amount equal to 10 per centum thereof, which shall be paid at the same time as, but in addition to, such installment, unless notice is filed under subsection (d) of this section [the controversion section]....5
(Emphasis added). Thus, where thе employer controverts a claim, it is expressly relieved from paying either the disputed compensation or the 10% penalty for nonpayment.
Controversy over Controversion
Significantly, both before and after the enactment of the 1984 LHWCA amendments,6 Congress rejected serious proposals to impose expressly an obligation of good faith on the right to file a controversion and to create a specific cause of action for wrongful controversion. In response to repeated complaints by organized labor about arbitrary controversions, Congress (although rejecting these more extreme measures), in 1984 added a provision to the LHWCA creating criminal penalties for the fraudulent denial of benefits, see
Help from § 301 and Lueck
Our conclusion that Jackson‘s state tort claims are preempted by the LHWCA is supported by the recent Supreme Court decision in Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). In Lueck, an employee brought in state court a common law tort claim for bad faith failure to pay disability benefits against his employer and his employer‘s insurer. The employee complained that both defendants had intentionally and repeatedly failed to make disability payments to him under a disability plan negotiated as part of a collective bargaining agreement by the employer and the employee‘s union. The Wisconsin Supreme Court held that the employee‘s action could proceed in state court. The Supreme Court granted certiorari to determine whether § 301 of the Labor Management Relations Act (LMRA),
The Supreme Court held that the state claim was preempted. The Court emphasized the importance of national uniformity in giving meaning to the terms of collective bargaining agreements. “Unless federal law governs that claim, the meaning of the health and disability-benefit provisions of the labor agreement would be subject to varying interpretations, and the congressional goal of a unified federal body of labor-contract law would be subverted.” Lueck, 471 U.S. at 220, 105 S.Ct. at 1916, 85 L.Ed.2d at 221; see also Teamsters v. Lucas Flour Co., 369 U.S. 95, 82 S.Ct. 571, 7 L.Ed.2d 593 (1962). “[I]t is a question of federal contract interpretation whether there was an obligation under this contract to provide the payments in a timely manner, and, if so, whether [the employer‘s] conduct breached that implied contract provision.” Lueck, 471 U.S. at 215, 105 S.Ct. at 1913, 85 L.Ed.2d at 218. The Court also rejected the employee‘s claim that, characterizing his suit as one grounded in tort rather than in contract, was sufficient to remove it from the LMRA‘s preemptive reach.
[Q]uestions relating to what the parties to a labor agreement agree, and what legal consequences were intended to flow from breaches of that agreement, must be resolved by reference to uniform federal law, whether such questions arise in the context of a suit for breach оf contract or in a suit alleging liability in tort.
Id. at 211, 105 S.Ct. at 1911, 85 L.Ed.2d at 215. Finally, the Court asserted that its holding was necessary to preserve the role of arbitration in labor-management relations. Allowing employees to bypass the grievance procedure by going directly to state court would subvert the mediation process and “eviscerate a central tenet of federal labor-contract law.” Id. at 220, 105 S.Ct. at 1916, 85 L.Ed.2d at 221.
Although the Supreme Court purported not to decide whether a state bad faith failure to pay a tort claim would be preempted by “other federal laws governing employment or benefit plans,” the reasoning in Lueck is just as compelling, if not more so, when applied to the situation of
Further, the instant case provides a stronger argument for preemption than did Lueck. In Lueck, the state court tort action arose from an interpretation of a privately negotiated agreement, some of whose substantive provisions were not dictated by federal law. Here the collision between Congress and the state court arises not from a contract negotiated under the auspices of the Act but from the terms of the Act itself.
Fifth Differs with First
In support of his position that his state tort claim is not preempted, Jackson urges us to adopt the reasoning of Martin v. Travelers Insurance Co., 497 F.2d 329 (1st Cir.1974). In Martin, an LHWCA claimant brought a common law claim for infliction of emotional distress against the LHWCA carrier in federal court. The facts in Martin were particularly egregious. The claimant had received three LHWCA compensation checks, which he deposited and drew against. The insurer, evidently deciding to appeal, stopped payments on the checks. Claimant had no knowledge of the stop order. The result was financial hardship and emotional distress to the claimant.
The court held that the claimant‘s cause of action was not preempted. It read the exclusivity provision in § 5 of the Act,
As we stated above, we read the exclusivity language in § 5 broadly in order to effectuate the comprehensive statutory compensation scheme contained in the Act. See LeSassier v. Chevron USA, Inc., 776 F.2d 506 (5th Cir.1985) (simply because retaliatory discharge provision of LHWCA is not included in LHWCA‘s exclusivity provision does not mean that plaintiff was free to bring retaliatory discharge claim under state law). As we also stated above, we read the Act so that the rights and obligations of the employer‘s insurer are congruent with those of the employer. See
McCarran No Obstacle
Jackson also argues that the McCarran Act,
Insofar as the matters presented in the instant case are concerned, we hold that the LHWCA “specifically relates to the business of insurance” and thus falls outside the area left to the exclusive regulation of the states. Numerous provisions of the LHWCA relate specifically to insurance carriers, and through § 35 of the Act,
In light of each of the above considerations, we conclude that Jackson‘s Texas state law claims are precluded by the LHWCA. Jackson‘s exclusive remedy for failure to pay his claims arises under the LHWCA. We therefore affirm the District Court in holding Jackson‘s state law claims to be preempted.
Enjoined from Enjoining
The District Court concluded that Jackson‘s state law claims were preempted by the LHWCA, and permanently enjoined Jackson from proceeding with those claims in state court. In light of controlling Supreme Court precedent, however, we vacate the injunction, holding that it violates the Anti-Injunction Act,
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 [i] as expressly authorized by Act of Congress, or [ii] where necessary in aid of its jurisdiction, or [iii] to protect or effectuate its judgments.”7 The District Court held that the injunction issued in this case was authorized by the first and third of the stated exceptions. Jackson challenges the issuance of the injunction as contrary to established case law. We agree.
(i) Expressly Authorized by Congress
The standard for determining when an injunction of a state court proceeding is “[i] expressly authorized by Act of Congress” is laid out in Mitchum v. Foster, 407 U.S. 225, 92 S.Ct. 2151, 32 L.Ed.2d 705 (1971). The statutory authorization need not refer expressly to § 2283, Amalgamated Clothing Workers v. Richman Bros. Co., 348 U.S. 511, 516, 75 S.Ct. 452, 455, 99 L.Ed. 600, 608 (1955), nor need it expressly authorize an injunction of a state court proceeding, Mitchum, 407 U.S. at 237, 92 S.Ct. at 2159, 32 L.Ed.2d at 714. “[A]n Act of Congress must have created a specific and uniquely federal right or remedy, enforceable in a federal court of equity, that could be frustrated if the federal court were not empowered to enjoin a state court proceeding. ... The test is whether an Act of Congress, clearly creating a federal right or remedy enforceable in a federal court оf equity, could be given its intended scope only by the stay of a state court proceeding.” Id. at 237-38, 92 S.Ct. at 2159-60, 32 L.Ed.2d at 714-15 (footnote omitted).
Mitchum was a civil rights case brought under
A similar inquiry was made in Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 97 S.Ct. 2881, 53 L.Ed.2d 1009 (1977). Although Lektro-Vend in some ways muddled the “expressly authorized” doctrine, it did reemphasize the importance of legislative history in finding such an exception. In Lektro-Vend, the plurality opinion determined that the legislative history of the Clayton Act did not demonstrate that Congress intended for the injunctive relief provision of the Clayton Act to constitute an express exception to the Anti-Injunction Act.
The law is clear that a federal court cannot enjoin a state court proceeding “merely because those proceedings interfere with a protected federal right or invade an area preempted by federal law, even when the interference is unmistakably clear.” Atlantic Coast Line Railroad Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 294, 90 S.Ct. 1739, 1747, 26 L.Ed.2d 234, 245 (1970). “This rule applies regardless of whether the federal court itself has jurisdiction over the controversy
A distillation of these cases, thus, yields this rule: to justify finding that a statute contains an expressly authorized exception to the Anti-Injunction Act, a court must first find that Congress explicitly recognized that state courts would, or would be used by others to, invade areas protected by federal law and second, that the only way to give the federal law its full meaning and scope is to enjoin such state court proceedings.
The District Court made no findings on the first prong. It instead focused only on the primacy of a national, uniform scheme of LHWCA coverage, equating that concern with the “full scope” element. The proper inquiry would have been whether Congress recognized that the state courts would so frustrate or destroy the LHWCA‘s objective that the statute‘s full scope could be achieved only by enjoining state actions. That inquiry was not made. The District Court‘s emphasis on the national uniformity of the LHWCA is relevant to a determination of preemption, which we have affirmed. By its own force, however, that determination cannot then properly be extrapolated into an express authorization exception under the Anti-Injunction Act. Accordingly, the District Court erred in so holding.
(ii) To Protect or Effectuate Judgments8
The District Court also held that its injunction was authorized by § 2283 as one necessary “[iii] to protect or effectuate [the] judgments” of the federal courts.
According to the District Court, the federal courts’ judgment to be protected in this case was the final decision of the ALJ granting compensation, plus interest and attorney‘s fees, to Jackson. The District Court held the award of attorneys’ fees and interest to be a “penalty” against TEIA, and res judicata as to wrongful withholding claims. The court held that the fee award precluded all litigation of TEIA‘s liability for its questionable handling of the claim, including the pending state case. We disagree. The issues alleged in state court of bad faith, fraud, infliction of emotional distress, et al. were simply not before the ALJ. A finding of res judicata on these issues based on the ALJ‘s final order is unfounded.
The relitigation exception is construed narrowly.9 It authorizes injunctions on matters that have been finally decided by a federal court. Res judicata may also bar state litigation on a part of the claim that could have been, but was not, determined in the federal case.
The issues charged in the state court case, unrelated directly to Jackson‘s waterfront injury, were not before, and thus not decided by the ALJ. Res judicata is applicable in an administrative proceeding10 only when “an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an opportunity to litigate.” United States v. Utah Construction Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642, 661 (1966). See also, United Statеs v. RCA, 358 U.S. 334, 79 S.Ct. 457, 3 L.Ed.2d 354 (1959).
In this case, TEIA, bearing the burden of establishing exception (iii) of the Act, made
We recognize that a finding of preemption coupled with an inability to coercively enforce that finding is paradoxical, to say the least. Nevertheless, it is only emblematic of the prized value we have historically placed on the principles of federalism and comity.12
Federal Question Jurisdiction: Present and Accounted for
As we have discussed, none of the three exceptions to the Anti-Injunction Act are clearly available in this case. Accordingly, we defer to the time-honored rule that “[a]ny doubts as to the propriety of a federal injunction against state court proсeedings should be resolved in favor of permitting state courts to proceed in an orderly fashion to finally determine the controversy.” Atlantic Coast Line Railroad Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 297, 90 S.Ct. 1739, 1748, 26 L.Ed.2d 234, 246-47 (1970). As our foregoing discussion demonstrates, to determine whether a federal court injunction could be granted, it was necessary that we first determine the underlying question of preemption by the LHWCA. We therefore affirm the District Court‘s declaratory judgment13 that Congress has preempted
At this point, we wish to address certain issues that may be raised concerning our jurisdiction. We recognize that although this area of law may not be crystal-clear, the Supreme Court recognizes that there is room for disagreement. For example, one possible argument is that this case raises the evil spectre of the well-pleaded complaint rule. And indeed, there is language in some cases lending support for that contention. In Louisville & Nashville Railroad Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908), the Supreme Court held that a federal court cannot take jurisdiction of a case as one “arising under” federal law if the federal issue will be raised only as a defense to the opposing party‘s state law claim.
The well-pleaded complaint rule has been knitted into the Declaratory Judgment Act, although not without dropping a stitch or two. As one thoughtful commеntator explains, “the effect of the well-pleaded complaint rule in preemption cases is complicated. Mottley presented a situation in which the plaintiff sued under state contract law and the defendant relied on preemption as a defense. In this case, the Court understandably treated preemption as a defense to a state-law claim. The result is not quite so understandable in declaratory judgment actions, in which the Mottley rule has been applied to bar suits presenting preemption claims raised by plaintiffs.” Note, Federal Jurisdiction Over Preemption Claims: A Post-Franchise Tax Board Analysis, 62 Tex.L.Rev. 893, 898 n. 40 (1984).
In the past, Mottley and the well-pleaded complaint rule have often acted to defeat jurisdiction in declaratory judgment actions. See Merrell Dow Pharmaceuticals Inc. v. Thompson, — U.S. —, —, 106 S.Ct. 3229, 3235, 92 L.Ed.2d 650, 661 (1986) (“the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction“); Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 16, 103 S.Ct. 2841, 2850, 77 L.Ed.2d 420, 435 (1983) (“‘if, but for the availability of the declaratory judgment procedure, the federal claim would arise only as a defense to a state created action, jurisdiction is lacking.‘“), quoting 10A C. Wright, A. Miller, & M. Kane, Federal Practice & Procedure § 2767 at 744-45 (2d ed. 1983); Public Service Commission v. Wycoff Co., 344 U.S. 237, 248, 73 S.Ct. 236, 242-43, 97 L.Ed. 291, 298 (1952) (“it is doubtful if a federal court may entertain an action for declaratory judgment establishing a defense to [a pending or threatened state based] claim“); Powers v. South Central United Food & Commercial Workers Unions, 719 F.2d 760, 764 (5th Cir.1983) (“an asserted or anticipated defense predicated on federal preemption of state law is, in jurisdictional terms, a defense like any other and will not serve to invoke federal jurisdiction“).
We feel certain, however, that this negative characterization is dispelled by a proper review of the case law. To begin with, we point out another analogy to the Labor Management Relations Act. (See discussion of LMRA and Lueck case, supra.) In Avco Corp. v. Machinists, 376 F.2d 337 (6th Cir.1967), aff‘d, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968), the plaintiff employee filed suit in state court alleging that the defendant union had breached its “contract” by sanctioning work stoppages. The employee sought temporary and permanent injunctions. Clearly, the plaintiff had a federal cause of action under § 301 of the LMRA, if he desired it. The union then sought to remove the case to federal court, over the employee‘s objections.
The court of appeals held, and the Supreme Court affirmed, that the employee‘s action “arose under” § 301, and thus the union‘s motion to remove the case to federal court was proper. (The removal statute, like the declaratory judgment statute, is procedural and derivative only. An independant basis of jurisdiction must be established in either removal or declaratory judgment actions.) The necessary ground of decision in Avco was that “the preemptive force of § 301 is so powerful as to displace entirely any state cause of action for violations of contracts between an employer and a labor organization. ... Any such suit is purely a creature of federal
In addition, we have a bright new lodestar to guide our course. In a very recent decision, the Supreme Court has continued the trend begun nearly 20 years ago in Avco. In Metropolitan Life Ins. Co. v. Taylor, — U.S. —, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987), the Court affirmed the vitality of Avco and extended the Avco-LMRA exception to analogous ERISA cases. After setting out the general nature of the well-pleaded complaint rule, the Court states
One corollary of the well-pleaded complaint rule developed in the case law, however, is that Congress may so completely pre-exempt a particular area, that any civil complaint raising this select group of claims is necessarily federal in character. For 20 years [since Avco], this Court has singled out claims preempted by § 301 of the Labor Relations Management Act for such special treatment.
... extended to statutes other than the LMRA in order to recharacterize a state law complaint displaced by § 502(a)(1)(B) [the section conferring private causes of action under ERISA] as an action arising under federal law.
— U.S. at —, 107 S.Ct. at 1546-47, 95 L.Ed.2d at 63.
To answer that question, the Court resorted to a comparison of the legislative history of ERISA and the LMRA. Focusing on similar language in the statutes’ enforcement provisions, and emphasizing that both are broad labor law acts, the Court found with little difficulty, that Congress has conferred federal jurisdiction in cases with such overarching federal, legislatively declared, interests. Accordingly, the Court concluded that Taylor, although “port[ing] to raise only state law claims, is necessarily federal in character by virtue of the clearly manifested intent of Congress.” Id. at —, 107 S.Ct. at 1548, 95 L.Ed.2d at 65.14
Our question, then, is whether the LHWCA is powerful enough to satisfy the principle of Avco and Taylor: stated differently, is the Longshore Act entitled to the same federal protection as are the LMRA and ERISA. It is a question easily answered in the affirmative. The Court focuses on the “explicit direction” from Congress—both in statute and legislative history—that demоnstrates its intent utterly to “displace” state law in establishing federal question jurisdiction.15 As we have set out
Our determination that the LHWCA is so preemptive as to create federal question jurisdiction is no “expansion” of the Avco rule. The LHWCA, if anything, is broader, and more comprehensive than the LMRA. As we mentioned in our discussion of Lueck, § 301 of the LMRA merely places jurisdiction of labor disputes in the federal district courts. The LHWCA, on the other hand, contains not only the exclusive remedy section (§ 905(a)), but also sets out sections and chapters that comprehensively regulate employers and insurance carriers that provide LHWCA coverage, and utterly control the sum total of rights and obligations of insurers, employers and employees. We, by no means, then, are “diluting” the Avco rule; we are acknowledging an exception more powerful than the original. See аlso, Taylor, — U.S. at —, 107 S.Ct. at 1548, 95 L.Ed.2d at 65 (Brennan, J., concurring).
Accordingly, we hold that federal question jurisdiction is present here, and declaratory relief may properly be considered.
Declaratory Judgment—Not a Forbidden Injunction
We recognize that this declaration, to a certain extent, raises conceptually some questions regarding the Younger v. Harris line of cases.16 We decline, however, to circumscribe the perimeter of this purely civil matter precisely along the fence erected against federal intervention in state criminal cases. Rather, we take our cue from Justice Brennan‘s opinion for a unanimous Court in Steffel. Although his comments were directed to the distinction between injunctive and declaratory relief in criminal matters, we find much of his opinion instructive on the propriety of the gentler relief of declaratory judgment in civil preemption matters. “Congress plainly intended declaratory relief to act as an alternative to the strong medicine of the injunction.... [E]ven though a declaratory judgment has ‘the force and effect of a final judgment‘, it is a much milder form of relief than an injunction. Though it may be persuasive, it is not ultimately coercive; non-compliance with it may be inappropriate, but it is not contempt.” Steffel, 415 U.S. at 466, 471, 94 S.Ct. at 1219, 1221, 39 L.Ed.2d at 519, 521, citing Perez v. Ledesma, 401 U.S. at 124-26, 91 S.Ct. at 696-98, 27 L.Ed.2d at 728-29 (separate opinion of Brennan, J.). Steffel also makes clear that a showing of irreparable injury—a traditional prerequisite to injunctive relief, having no equivalent in the law of declaratory judgments,—is unnecessary in an action for declaratory judgment.17 Steffel, 415 U.S. at 471-72, 94 S.Ct. at 1222, 39 L.Ed.2d at 521-22.
Bearing in mind the instructive teaching of Steffel, we now approach the declaratory judgment. Clearly, there is an “actual controversy” between the parties: there is a pending trial. The parties have adverse legal interests and are positioned adversarily. We have already determined that an independent basis of jurisdiction, that is, federal question jurisdiction, exists. And finally, the issues in controversy between the parties remain very much alive.19
While it is true that the pendancy of a state court proceeding is a proper basis for a federal court to decline to issue a declaratory judgment, PPG Industries, Inc. v. Continental Oil Co., 478 F.2d 674, 677 (5th Cir.1973), neither statutory nor case law mandates such refusal. See Western Casualty & Surety Co. v. Teel, 391 F.2d 764, 766 (10th Cir.1968) (“Courts should not be deterred from giving full force and effect to the purpose of the Declaratory Judgment Act.“); Travelers Indemnity Co. v. Winmill, 294 F.Supp. 394, 397 (D.Minn.1968) (spirit of the Declaratory Judgment Act counsels a practical approach in exercising discretion: “Problems should be appraised in the light of common sense, having regard to federаl-state relations, comity between courts of concurrent jurisdiction, the potentials of the respective systems for expert and comprehensive solution, and factors such as cost and convenience to the public as well as to the parties.“); Wong v. Bacon, 445 F.Supp. 1177, 1186-87 (N.D.Cal.1977), cited in Franchise Tax Board, 463 U.S. at 22 n. 24, 103 S.Ct. at 2853 n. 24, 77 L.Ed.2d at 438 n. 24 (federal declaratory relief proper on a preemption claim, even though state court proceeding already pending).
In our earlier discussion under (iii) the relitigation exception to the Anti-Injunction Act, we held it unnecessary to reach the issue of the retroactive effect of Parsons Steel on the state court‘s rejection of TEIA‘s plea in bar.20
Here, however, we must address directly the implications of the Full Faith and Credit Act,
Parsons Steel speaks in terms of “issues” being finally decided. 474 U.S. at —, 106 S.Ct. at 771-73, 88 L.Ed.2d at 883-84. Although this implies that a state court need not have rendered a truly final judgment on the case as a whole in order for res judicata and full faith and credit to come into play, it certainly means that the judicial order—opinion or otherwise—at issue must be one which the state court regards as final and beyond recall by the court issuing it. See Restatement (Second) of Judgments § 13 comment g (1982).
Thus, if the state court‘s ruling was a “final” one, we ourselves are bound by that determination. Unlike our earlier discussion, in which we declined to find Parsons Steel sufficient to affirmatively support an injunction on issue relitigation, here it assumes negative significance. A federal declaratory judgment, issued subsequent to the state‘s ruling, would violate
We thus review Texas state law to determine first, how “final” its courts would consider the state judge‘s ruling, and second, to what preclusive effect it is entitled.
A recent Texas Supreme Court case ends our search. In Van Dyke v. Boswell, O‘Toole, Davis & Pickering, 697 S.W.2d 381 (Tex.1985), the supreme court adopted the Restatement (Second) of Judgments (1982) to determine issues like ours. The supreme court focused on “whether the conclusion in question was procedurally definite ... and was subject to appeal or was in fact appealed.” 697 S.W.2d at 385. Obviously, “subject to appeal” is in terms of whether the order under scrutiny was itself then and there—with no necessity for further trial or judgment on the merits—could be appealed. The state court‘s ruling in Jackson‘s case was an interlocutory order. “It is Texas law, long established, that only those interlocutory decrees that are specifically made so by statute are appealable.” General Box Co. v. Southwest Subsidiary Co., 598 S.W.2d 662, 663 (Tex.Civ.App.1980). See also Hunt Oil Co. v. Moore, 639 S.W.2d 459 (Tex.1982). Denial of a plea in bar is not an appealable interlocutory judgment under Texas law. Therefore, we hold that, since another Texas court would not consider this order “finally decided“, neither should we accord it preclusive effect under full faith and credit. Our inquiry under Parsons Steel is satisfied.
Tail End of the Tale
We do not direct state courts. We do not today presume to decide cases or issues for them. They are as competent as we. Our determination today is valid for res judicata purposes as between these parties and as stare decisis in the Federal Courts of the Fifth Circuit. Although our judgment (and that of the District Court) has no coercive effect, we have no doubt that the Texas courts will, as always, accord full weight to the determination of a federal court having jurisdiction over the parties, speaking in terms of the application of a federal statute.
AFFIRMED IN PART, VACATED IN PART.
EDITH H. JONES, Circuit Judge, dissenting:
In their zeal to hold that the Longshoremen and Harbor Workers Compensation Act (LHWCA) is the exclusive remedy for Jackson, the majority have seriously erred in several facets of their analysis. Most critically, they conclude that we have jurisdiction over this action despite the obvious applicability of the well-pleaded complaint rule. The only basis of our jurisdiction is TEIA‘s federal defense, alleging preemption оf state remedies by the LHWCA, to Jackson‘s claim for state law relief. A prior Fifth Circuit panel has disclaimed jurisdiction in a closely analogous case involving LHWCA, but the majority do not acknowledge its controlling effect.
The majority‘s rush to protect the supremacy of the federal compensation scheme has also led to an ungainly spectacle: a federal court‘s umpiring an ongoing lawsuit in state court. While the Supreme Court has not extended Younger abstention principles to all pending state court civil litigation, the majority have misread the analytical framework of the Court‘s most recent pronouncement on that issue.
I.
It is a rule almost too well settled to require citation that no federal jurisdiction exists in a declaratory judgment action if a federal question would arise only as a defense to a state cause of action. As stated by the Supreme Court in Public Service Commission of Utah v. Wycoff Co., 344 U.S. 237, 248, 73 S.Ct. 236, 242, 97 L.Ed. 291 (1952):
Where the complaint in an action for declaratory judgment seeks in essence to assert a defense to an impending or threatened state court action, it is the character of the threatened action, and not of the defense, which will determine
whether there is federal-question jurisdiction in the District Court.
“The best-settled application of the well-pleaded complaint rule to actions for a declaratory judgment is that federal question jurisdiction exists of a declaratory action if the plaintiff could have sued in federal court for coercive relief.” 13B C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 3566, at 99 (1984). This principle was recently reaffirmed in Franchise Tax Board of California v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). There, the Court held that federal jurisdiction may not be premised “on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff‘s complaint, and even if both parties admit that the defense is the only question truly at issue in the case.” 463 U.S. at 14, 103 S.Ct. at 2848. See also Caterpillar, Inc. v. Williams, — U.S. —, —, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987) (holding that it is “settled law” that a federal defense to a state law cause of action, including the defense of preemption, is insufficient to establish federal question jurisdiction under the well-pleaded complaint rule).
The majority acknowledge this rule, as well as its applicability here. Jackson‘s state law complaint contains no operative ingredient of federal law. The LHWCA becomes pertinent only as the basis for TEIA‘s preemption defense. The majority neglect, however, to address this court‘s controlling prior decision that the LHWCA does not overcome the well-pleaded complaint rule in a declaratory judgment context.
In Lowe v. Ingalls Shipbuilding, 723 F.2d 1173 (5th Cir.1984), a declaratory judgment action was instituted by several individuals against Litton, the parent of their shipbuilding employer Ingalls, and Owens-Corning Corporation. The complaint alleged that each of the plaintiffs had previously filed a suit against Owens-Corning for personal injury resulting from exposure to asbestos, which Owens-Corning agreed to settle conditioned on approval by Litton. Litton declined to give its approval and asserted, as plaintiffs’ employer, an independent right of indemnification against Owens-Corning in addition to its LHWCA subrogation rights. Thus, plaintiffs sought a declaration that Litton had no right of indemnification against Owens-Corning and that the right of subrogation under the LHWCA was Litton‘s exclusive remedy.
Applying the well-pleaded complaint rule, this court concluded that jurisdiction was lacking because “plaintiffs do not assert a cause of action or claim under the LHWCA against Litton, but rather seek declaratory judgment concerning the effect of the LHWCA on claims Litton might otherwise have against Owens-Corning.” 723 F.2d at 1179. The court reasoned that it was immaterial “that plaintiffs and Owens-Corning contend that the LHWCA .. bars such an action, as this is the sort of defensive issue which cannot form the basis of section 1331 jurisdiction.” Id. at 1183 (emphasis added). Lowe inescapably requires us to deny jurisdiction over TEIA‘s declaratory judgment request.
Not to be deterred, the majority attempt to fit TEIA‘s claim into the exception to the well-pleaded complaint rule recognized in Avco v. Aero Lodge No. 735, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968) which held that the breadth of section 301 of the LMRA displaced state causes of action relating to management/labor relations. Declaring the LHWCA as comprehensive in scope as the LMRA, the majority would effectively transform what would normally be state law claims into claims uniquely federal in character. This argument overlooks that Avco represents a virtually unique exception to the well-pleaded complaint rule. The Supreme Court recently reaffirmed that unless Congress unmistakably manifests an intent to make a cause of action removable to federal court, a defense of federal preemption is insufficient to create federal subject matter jurisdiction. Metropolitan Life Insurance Co. v. Taylor, — U.S. —, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).1
Avco itself is not an all-encompassing labor-law exception to the well-pleaded complaint rule. The Supreme Court, reiterating its Metropolitan Life pronouncement, stated that “the presence of a federal question, even a § 301 question, in a defensive argument does not overcome the paramount policies embodied in the well-pleaded complaint rule—that the plaintiff is master of the complaint, that a federal quеstion must appear on the face of the complaint [i.e. not as a defense], and that the plaintiff may ... choose to have the cause heard in state court.” Caterpillar, Inc. v. Williams, 107 S.Ct. at 2433. Thus, the Court concluded, a state court may interpret § 301 and a federal collective bargaining agreement whose terms are raised in defense to plaintiffs’ state law action for an alleged employment contract breach. Likewise, we are bound by the formidable and “settled” well-pleaded complaint doctrine to reject TEIA‘s search for shelter in a federal forum. TEIA may obtain resolution of its federal law issues in state court, with review by the Supreme Court if necessary.
II.
Having discussed the dispositive question, I must nevertheless take issue with two additional portions of the majority opinion. First, the discussion of abstention by the majority appears to be a “strawman” erected to defer attention from the more significant question whether granting declaratory relief would in this case violate, in letter or in spirit, the Anti-Injunction Act,
A.
Although the majority conclude that
Steffel, to borrow a phrase, is a whole different kettle of fish from this case. The Supreme Court‘s dicta there suggest that “different considerations” affect the decision whether to grant declaratory relief vis-a-vis injunctive relief in that a declaratory judgment is less intrusive to a state‘s interest in preserving the integrity of its judiciary. What the majority overlook, however, is the critical distinction in Steffel: principles of comity and federalism were not implicated in that case because there was no pending state proceeding.
The Supreme Court has, however, underscored the proposition that principles of comity and federalism apply with equal weight to federal declaratory judgment actions instituted during the pendency of state criminal proceedings. In Samuels v. Mackell, 401 U.S. 66, 72, 91 S.Ct. 764, 767, 27 L.Ed.2d 688 (1971), the Court reasoned that:
In cases where the criminal proceeding was begun prior to the federal civil suit, the propriety of declaratory and injunctive relief shоuld be judged by essentially the same standards. In both situations deeply rooted and long-settled principles of equity have narrowly restricted the scope for federal intervention, and ordinarily a declaratory judgment will result in precisely the same interference with and disruption of state proceedings that the long-standing policy limiting injunctions was designed to avoid.
The Court expressed two fundamental concerns over issuing declaratory relief during the pendency of state proceedings. First, the Court questioned whether granting declaratory relief would effectively bootstrap the proscriptions of the Anti-Injunction Act if it later served as the basis for an injunction against those proceedings to “protect or effectuate” the declaratory judgment.
Professor Wright agrees that generally, “if a declaratory judgment would have essentially the same effect as an injunction, it should be refused if the injunction would be barred by § 2283.” 17 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4222, at 316 (1978). See also Chandler v. O‘Bryan, 445 F.2d 1045, 1058 (10th Cir.1971); McLucas v. Palmer, 427 F.2d 239, 242 (2d Cir.1970); Glasgow, Inc. v. Noetzel, 556 F.Supp. 595, 598 (S.D.W.V.1983). Because we all agree that
B.
I also disagree with the majority‘s declining “to circumscribe the parameter of this purely civil matter precisely along the fence erected against federal intervention in state criminal cases.” Ante at 1420. In light of Pennzoil Co. v. Texaco Inc., — U.S. —, 107 S.Ct. 1519, 95 L.Ed.2d 1
The breadth of the Court‘s holding, however, must be gauged by two footnotes. In one, the majority observed that “[t]he various types of abstention are not rigid pigeonholes into which federal courts must try to fit cases. Rather, they reflect a complex of considerations designed to soften the tensions inherent in a system that contemplates parallel judicial processes.” — U.S. at —, n. 9, 107 S.Ct. at 1526 n. 9. Shortly thereafter, they caution that “[o]ur opinion does not hold that Younger abstention is always appropriate whenever a civil proceeding is pending in a state court. Rather, as in Juidice, we rely on the State‘s interest in protecting ‘the authority of the judicial system, so that its orders and judgments are not rendered nugatory.‘” — U.S. at — n. 12, 107 S.Ct. at 1527 n. 12 (quoting Juidice v. Vail, 430 U.S. 327, 336 n. 12, 97 S.Ct. 1211, 1217 n. 12, 51 L.Ed.2d 376). Two pertinent questions follow from the Court‘s comments: whether a declaratory judgment could ever lead to the interference sought to be avoided in Pennzoil; and whether this declaratory judgment action should be so proscribed. I would disagree with the majority and answer the first question affirmatively, based on Samuels and the above-cited portions of the Pennzoil opinion. Because the second issue is not briefed or argued, I would defer its resolution. The majority too hastily dismiss the rationale for abstention in the post-Pennzoil era.
For the foregoing reasons, I respectfully dissent.
Before CLARK, Chief Judge, GEE, RUBIN, REAVLEY, POLITZ, JOHNSON, WILLIAMS, GARWOOD, JOLLY, HIGGINBOTHAM, DAVIS, HILL, and JONES, Circuit Judges.*
BY THE COURT:
A member of the Court in active service having requested a poll on the suggestion for rehearing en banc and a majority of the judges in active service having voted in favor of granting a rehearing en banc,
IT IS ORDERED that this cause shall be reheard by the Court en banc with oral argument on a date hereafter to be fixed. The Clerk will specify a briefing schedule for the filing of supplemental briefs.
* Judge Randall is recused, and therefore did not participate in this decision.
Notes
107 S.Ct. at 1547.Even with a provision such as § 502(a)(1)(B) that lies at the heart of a statute with the unique pre-emptive force of ERISA ... we would be reluctant to find that extraordinary preemptive power, such as has been found with respect to § 301 of the LMRA, that converts an ordinary state common law complaint into one stating a federal claim for purposes of the well pleaded complaint rule.
The Court‘s decision was founded on the virtual identity between the jurisdictional schemes of ERISA,
The presumption that similar language in two labor statutes has a similar meaning is fully confirmed by the legislative history of ERISA‘s civil enforcement provisions. The Conference Report on ERISA describing the civil enforcement provisions of § 502(a) says:
H.R.Conf.Rep. No. 93-1280, p. 327 (1974) (emphasis added).“[W]ith respect to suits to enforce benefit rights under the plan or to recover benefits under the plan which do not involve application of the Title I provisions, they may be brought not only in U.S. district courts but also in State courts of competent jurisdiction. All such actions in Federal or State courts are to be regarded as arising under the laws of the United States in similar fashion to those brought under section 301 of the Labor-Management Relations Act of 1947.”
No more specific reference to the Avco rule can be expected. ...
Nevertheless, the Court cautioned, “even an ‘obvious’ preemption defense does not, in most cases, create removal jurisdiction. In this case, however, Congress has clearly manifested an intent to make causes of action within the scope of the civil enforcement provisions of § 502(a) removable to federal court.” Id. at 1548.
The LHWCA contains no civil enforcement provision like the Siamese twin provisions found decisive in Taylor between ERISA and § 301 of the LMRA. The decisive factor therefore is whether the LHWCA is “so powerful as to displace entirely any state cause of action. ...” Franchise Tax Board, 463 U.S. at 23, 103 S.Ct. at 2853. Congress has not indicated, as it did with ERISA, that the LHWCA reaches this far. Absent a direct expression of legislative intent to create federal jurisdiction for all causes of action related to LHWCA, the well-pleaded complaint rule may not be overcome.
If any compensation, payable under the terms of an award, is not paid within ten days after it becomes due, there shall be added to such unpaid compensation an amount equal to 20 per centum thereof, which shall be paid at the same time as, but in addition to, such compensation, unless review of the compensation order making such award is had as provided in section 921 of this title and an order staying payment has been issued by the Board or court.
In this case, TEIA filed a plea in bar in state court. The state court held a special hearing on TEIA‘s motion, and rejected it. The state case, however, was enjoined before going to trial and final judgment. Thus, the effect of Parsons Steel on the instant case is unclear. Parsons Steel is limited to issues in which “the state court has finally rejected a claim of res judicata,” 474 U.S. at —, 106 S.Ct. at 772, 88 L.Ed.2d at 884 (emphasis added). Whether the state court‘s rejection of TEIA‘s res judicata argument was “final” enough—even though the cаse had not gone to trial—to serve as an independent bar to the relitigation exception is a question of state law. See, e.g., Van Dyke v. Boswell, O‘Toole, Davis & Pickering, 697 S.W.2d 381, 385 (Tex.1985) (“test for finality is whether the conclusion in question is procedurally definite and subject to appeal.“); Green Oaks Apts., Ltd. v. Cannan, 696 S.W.2d 415, 418 (Tex.Ct.App.1984) (only final judgment can support plea of res judicata); Whitmire v. Kriegel, 678 S.W.2d 567, 569 (Tex.Ct.App.1984) (same).
The District Court ignored the state court‘s rejection of TEIA‘s res judicata claim. Nevertheless, since we have already found that the ALJ did not adjudicate the bad faith claims, we need not reach the issue of the retroactive effect of Parsons Steel on the District Court‘s action. The bearing of Parsons Steel on the propriety of granting declaratory relief is discussed infra.
The action of the Defendant presently pending in the State of Texas District Court of Jefferson County, which asserts various theories of recovery based upon the manner in which the Plaintiff handled Defendant‘s claim for compensation and other benefits under the Longshore and Harbor Workers’ Compensation Act (“the Longshore Act“)
Jackson also abrogates the congressionally established scheme of LHWCA economic rights and limitations in Paragraph XIV of his complaint. There, he invokes the Texas Deceptive Trade Practices Act seeking “as a matter of law [that] damages be trebled.”
Unlike the federal Food, Drug and Cosmetic Act at issue in Merrell Dow, the LHWCA provides an exclusive means by which to challenge, and recover for, wrongful controversion. See