Henson v. Ciba-Geigy Corporation , 261 F.3d 1065 ( 2001 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
AUGUST 14, 2001
No. 99-6021 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 98-01150-CV-CB
HURLEY HENSON,
Plaintiff-Appellant,
versus
CIBA-GEIGY CORPORATION, ROBERT RAAB, et al.,
Defendants-Appellees.
________________________
No. 99-6130
________________________
D. C. Docket No. 94-00647-CV-CB-S
RUSSELL PRICE, et al., on behalf of themselves and
others similarly,
Plaintiffs-Appellants,
HURLEY HENSON,
Movant-Appellant,
versus
CIBA-GEIGY CORPORATION, a corporation,
Defendant-Appellee.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_________________________
(August 14, 2001)
Before EDMONDSON, CARNES and COX, Circuit Judges.
PER CURIAM:
These consolidated appeals arise from two actions, both of which originally
asserted various tort claims arising from Ciba-Geigy Corporation’s manufacture and
sale of a chlorodimeform-based insecticide, Galecron. The principal issue presented
is whether the district court had removal jurisdiction under 28 U.S.C. § 1441 and the
All Writs Act, 28 U.S.C. § 1651, over a later action solely because prosecuting that
action violated a settlement stipulation in an earlier action already before the court.
We hold that it did not.
2
Background
The first of the two actions, Price v. Ciba-Geigy Corp., was originally filed in
the circuit court of Mobile County, Alabama. The defendants later removed it to the
Southern District of Alabama, which certified a nationwide class and approved a
complicated, structured settlement. The second, Henson v. Ciba-Geigy Corp.,
originated in state district court in Iberville Parish, Louisiana. The Louisiana court
stayed Henson after its named plaintiff and others successfully intervened in Price
(where they were called the Henson interveners) and participated in the Price
settlement. The settlement stipulation in the Price action had a clause requiring
Henson’s dismissal:
CLASS COUNSEL hereby stipulates that the RELATED CASE,
including any and all claims (including, without limitation any CLAIMS
defined herein) against CIBA GEIGY CORPORATION and individual
defendants . . . shall be dismissed, with prejudice, as of the APPROVAL
DATE.
(R.7-84-Ex. A at 18.) “Related case” means, according to the stipulation, “Hurley
Henson, et al v. Ciba-Geigy Corporation, et al / Docket No. 43,620, 18th Judicial
District Court, Parish of Iberville, State of Louisiana.” (Id. at 15.)
Following the approval of the Price settlement, “class counsel” (lawyers for the
original Price plaintiffs) complied with the stipulation and prompted the Louisiana
state district court to enter an order to show cause why the action should not be
3
dismissed because of the stipulation. A hearing before the Louisiana district court
ensued. Hany Zohdy, a Louisiana lawyer who represented the Henson interveners in
the Price proceedings, told the Louisiana court that the Price settlement required
dismissal only of claims concerning chlorodimeform and not claims about other
chemicals handled by Ciba-Geigy. That was incorrect, of course, because the
settlement stipulation plainly named the entire Henson action by docket number and
said nothing about dismissing only certain claims.1 Zohdy’s representation
nonetheless successfully misled the Louisiana court into inviting the Henson plaintiffs
to amend their petition to assert tort claims arising from exposure to Atrazine, another
toxic Ciba-Geigy product.
This amendment prompted Ciba-Geigy (and three individual defendants, all
diversity-defeating Louisiana residents, who were also named in Henson) to remove
the action to the Middle District of Louisiana under 28 U.S.C. § 1441(a), asserting
federal jurisdiction based on the All Writs Act, 28 U.S.C. § 1651.2 The defendants
immediately requested a transfer to the Southern District of Alabama under 28 U.S.C.
1
In an earlier motion filed before the same Louisiana court, Zohdy had explained
that “the definition of ‘Related Case’ found in the Stipulation of Settlement is without doubt an
unambiguous reference to the instant case.” (Mem. Supp. Mot. Lift Stay at 2.)
2
In addition to the lack of complete diversity, Ciba-Geigy could not have removed
by asserting jurisdiction under 28 U.S.C. § 1332 because the notice of removal was filed more
than one year after the action’s commencement. See 28 U.S.C. § 1446(b).
4
§ 1404(a), which was granted. Following the transfer, the Southern District dismissed
Henson as barred by the Price settlement. Exercising jurisdiction in the Price action
itself, moreover, the Southern District ordered Zohdy to pay about $27,000 to Ciba-
Geigy for the legal fees it incurred in enforcing the Price settlement despite Zohdy’s
efforts to thwart it. These are the rulings that the Henson plaintiffs and Zohdy appeal.
Whether the district court had removal jurisdiction is a question we review de
novo. Singleton v. Apfel, 231 F.3d 853, 856 (11th Cir. 2000). “We review the district
court’s construction of the [settlement stipulation] de novo.” Waters v. Int’l Precious
Metals Corp., 237 F.3d 1273, 1277 (11th Cir. 2001). Whether the district court
properly imposed sanctions for violation of a court-adopted stipulation of settlement
we review for abuse of discretion only. See Abbott Labs. v. Unlimited Beverages,
Inc., 218 F.3d 1238, 1240 (11th Cir. 2000).
Discussion
Sanctions on Zohdy
Zohdy challenges the sanctions order on three meritless grounds. First, he says,
the district court lacked jurisdiction to sanction him. Not so, because he was counsel
of record in Price, the action in which he signed the settlement stipulation and in
which he was sanctioned for violating the settlement. See Levine v. Comcoa Ltd., 70
F.3d 1191, 1192 (11th Cir. 1995). Second, Zohdy argues, the settlement stipulation
5
did not require dismissal of claims relating to Atrazine, and he therefore did not act
contrary to the settlement. This contention is meritless; the stipulation language
quoted above explicitly requires dismissal of all claims in the Henson action, which
the stipulation identifies by docket number. Finally, Zohdy asserts that he had no
obligation to dismiss the Henson action because the settlement stipulation puts that
onus on “class counsel,” who do not include him. Perhaps that is so, but the district
court sanctioned Zohdy, a signatory of the stipulation of settlement, for his efforts to
undermine the settlement by preventing class counsel from discharging their duties
to secure Henson’s dismissal. Whether or not Zohdy was specifically responsible for
getting Henson dismissed, it was within the court’s power to effectuate its orders to
punish Zohdy for interfering with the settlement’s implementation. See Chambers v.
Nasco, Inc., 501 U.S. 32, 45, 111 S. Ct. 2123, 2133 (1991) (court has inherent power
to assess attorney fees on counsel for willful contravention of court order).
Removal Jurisdiction Over Henson
Zohdy’s challenge to the district court’s subject-matter jurisdiction over Henson
has more merit. The asserted jurisdictional basis is the All Writs Act, whose pertinent
part provides district courts the power to protect their jurisdiction: “The Supreme
Court and all courts established by Act of Congress may issue all writs necessary or
appropriate in aid of their respective jurisdictions and agreeable to the usages and
6
principles of law.” 28 U.S.C. § 1651(a). Thus, for example, a district court has the
authority under the Act to enjoin a party to litigation before it from prosecuting an
action in contravention of a settlement agreement over which the district court has
retained jurisdiction. See In re VMS Secs. Litig., 103 F.3d 1317, 1324 (7th Cir. 1996);
White v. Nat’l Football League, 41 F.3d 402, 409 (9th Cir. 1994); Wesch v. Folsom,
6 F.3d 1465, 1470 (11th Cir. 1993); Kelly v. Merrill Lynch, Pierce, Fenner & Smith,
985 F.2d 1067, 1069 (11th Cir. 1993). Whether a district court also has jurisdiction
under the All Writs Act over an action removed under § 1441 is a question that is
currently unanswered in this circuit.3
The circuits have split in addressing similar questions of federal courts’ power
under the All Writs Act to protect judgments and control diehard litigants. On one
3
We have come close. Pacheco de Perez v. AT & T Co., 139 F.3d 1368, 1379
(11th Cir. 1998), concluded that even if All Writs Act removal jurisdiction existed in
“exceptional circumstances,” the circumstances in that case were not exceptional enough—only
the preclusive effect of a federal judgment was at issue. Id. And in one of the 2000 presidential
election actions, this court found a federal question, but did not “rule out other bases that federal
jurisdiction might exist” over a removed action and cited other circuits’ cases about the All Writs
Act. Harris v. Fla. Elections Comm’n, 235 F.3d 578, 580 n.3 (11th Cir. 2000).
The issue is, by contrast, unavoidably presented here. First, there is no other possible
ground of federal subject-matter jurisdiction. Ciba-Geigy’s removal notice also alleged
supplemental jurisdiction, by virtue of Price, under 28 U.S.C. § 1367. But § 1367 cannot
provide the “original jurisdiction” that § 1441 demands for an action to be removable. Ahearn v.
Charter Township, 100 F.3d 451, 456 (6th Cir. 1996). Ciba-Geigy did not, furthermore, assert
ancillary jurisdiction, if such jurisdiction exists independent of § 1367 (see Peacock v. Thomas,
516 U.S. 349, 116 S. Ct. 862 (1996)), and we therefore do not address it as a potential basis.
Second, the circumstances here fit the definition of “exceptional” that other circuits’ cases imply,
since a signatory to a federal settlement stipulation sought to sabotage it. Cf. In re Agent Orange
Prod. Liab. Litig., 996 F.2d 1425, 1430-31 (2d Cir. 1993) (absent class members sought to
relitigate the settled action, in violation of a release in the settlement).
7
hand, most have read the All Writs Act generously. Presented with statutory removal
questions nearly identical to the one posed here, the Sixth and Eighth Circuits have
held that state-court actions that could produce judgments undermining federal
consent orders—and in one case a state-court action that was merely barred by the
preclusive effect of a federal consent decree—are removable under § 1441, with
original subject-matter jurisdiction supplied by the All Writs Act. See Xiong v. State
of Minn., 195 F.3d 424, 426 (8th Cir. 1999); Bylinski v. City of Allen Park, 169 F.3d
1001, 1003 (6th Cir. 1999); N.A.A.C.P., Minneapolis Branch v. Metro. Council, 125
F.3d 1171, 1174 (8th Cir. 1997) (removal simply to determine preclusive effect of the
federal consent decree), cert. granted; summarily vacated and remanded for
reconsideration in light of Rivet v. Regions Bank, 522 U.S. 470, 118 S. Ct. 921(1998), 522 U.S. 1145, 118 S. Ct. 1162 (1998), reinstated, 144 F.3d 1168, 1169
(1998); Sable v. Gen. Motors Corp., 90 F.3d 171, 175 (6th Cir. 1996). The Second
Circuit has not yet gone that far, but it has repeatedly held that a district court may,
on motion of parties to an action over which it has jurisdiction, order a common-law
removal (distinct from that authorized by 28 U.S.C. § 1441(a) or other removal
statutes) to federal court of a state-court action, even if there is no other basis of
federal subject-matter jurisdiction, when the prosecution of the state-court action
threatens the integrity of a consent decree or judgment entered in the federal action.
8
See In re Agent Orange Prod. Liab. Litig., 996 F.2d 1425, 1431 (2d Cir. 1993); United
States v. City of N.Y., 972 F.2d 464, 469 (2d Cir. 1992); Yonkers Racing Corp. v. City
of Yonkers, 858 F.2d 853, 855 (2d Cir. 1988); see also United States v. Am. Soc’y of
Composers, Authors, & Publishers, 32 F.3d 727, 731 (2d Cir. 1994) (All Writs Act
provides independent ground of federal subject-matter jurisdiction of motion to vacate
an arbitral award, when the parties arbitrated according to the terms of a preexisting
federal consent decree). The Seventh Circuit has agreed with the Second Circuit,
possibly in dicta (while the procedural history is not completely clear from the
opinion, it appears that the district court enjoined the state-court actions rather than
deeming them “removed”). In re VMS Secs. Litig., 103 F.3d at 1324. The Third
Circuit has also embraced the Second Circuit rule, although it declined to find
appellate jurisdiction under the All Writs Act to review the district court’s refusal to
exercise removal jurisdiction under the Act. Davis v. Glanton, 107 F.3d 1044, 1047
n.4 (3d Cir. 1997).
On the other hand are the minority of courts that have taken a less expansive
view. The Tenth Circuit has held that the All Writs Act does not furnish removal
jurisdiction at all because it confers no independent jurisdiction. See Hillman v.
Webley, 115 F.3d 1461, 1469 (10th Cir. 1997). A Ninth Circuit opinion could be read
to reach a similar conclusion. See Westinghouse Elec. Corp. v. Newman & Holtzinger,
9
P.C., 992 F.2d 932, 937 (9th Cir. 1993) (state-court action alleging breach of the
agreement that led to a federal court’s consent protective order was not removable,
both because it did not concern the interpretation of the protective order itself and
because the All Writs Act “may be invoked by a district court only in aid of
jurisdiction which it already has”). Some academic opinion tends to reject an
expansive view of the All Writs Act preferred by the Second, Sixth, and Eighth
Circuits. See Joan Steinman, The Newest Frontier of Judicial Activism: Removal
Under the All Writs Act, 80 B.U.L. Rev. 773 (2000); Lonny Sheinkopf Hoffman,
Removal Jurisdiction and the All Writs Act, 148 U. Pa. L. Rev. 401 (1999).
We tend toward the Tenth Circuit camp and conclude that the district court
lacked removal jurisdiction over the Henson case. Two settled principles, one about
the prerequisites of § 1441 removal, and another about the All Writs Act, lead us to
this conclusion. First, § 1441(a) authorizes removal only of actions “of which the
district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a).
That phrase means that actions are not removable unless they “originally could have
been filed in federal court.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.
Ct. 2425, 2429 (1987). The implication of that rule here is that removal is proper only
if the All Writs Act could have furnished subject-matter jurisdiction over the Henson
action if it had first been filed in federal court. And, second, the Act does not provide
10
such jurisdiction. The All Writs Act authorizes writs “in aid of [the courts’] respective
jurisdictions,” and thus does not provide an independent basis of federal subject-
matter jurisdiction; a plaintiff cannot sue invoking only the court’s All Writs power.
Clinton v. Goldsmith, 119 S. Ct. 1538, 1542 (1999); see Pa. Bureau of Corr. v. United
States Marshals Serv., 474 U.S. 34, 40, 106 S. Ct. 355, 360 (1985) (Act authorizes
orders protecting the jurisdiction that a federal court has “otherwise acquired”);
McIntire v. Wood, 11 U.S. (7 Cranch) 503, 504 (1813) (no jurisdiction under
contemporary All Writs Act over action seeking writ of mandamus against Ohio
official based on federal law); see generally Hoffman, supra, at 433-39 (history of All
Writs Act strongly implies that it is not an independent source of subject-matter
jurisdiction). Section 1441 and the All Writs Act do not, therefore, together provide
a right to remove actions such as Henson.
The most troubling counterargument, and the one that the Second, Sixth, and
Eighth Circuits ultimately rely on, is that the All Writs Act is jurisdictional caulk —
it plugs the cracks in federal jurisdiction through which crafty litigants can escape the
effect of a federal order. See United States v. N.Y. Tel. Co., 434 U.S. 159, 172-73, 98
S. Ct. 364, 372 (1977) (articulating this broad view of the All Writs Act’s purpose).
Therefore, the argument goes, the Act authorizes any exercise of authority that is
convenient for effectuating a federal judgment, including the exercise of removal
11
jurisdiction over a different action whose prosecution is inconsistent with a federal
judgment. See, e.g., In re Agent Orange Prod. Liab. Litig., 996 F.2d at 1431. This
reasoning is tempting in a case like ours, but it goes too far. Too elastic an
interpretation of the All Writs Act perverts it from a tool for effectuating Congress’s
intent in conferring jurisdiction on the lower federal courts into a device for judicially
re-equilibrating a state-federal balance that is Congress’s to strike. By requiring
complete diversity in § 1332, and by limiting the time for removal of diversity cases
to one year after their commencement, Congress has decided that Henson does not
belong in federal court. The All Writs Act, even as jurisdictional caulk, should not
allow us to override Congress’s decision unless no other reasonable way appears to
ensure that the federal court’s orders are heeded. See Clinton, 119 S. Ct. at 1543. The
district court did not need to exercise jurisdiction over Henson when it had the ready
remedy of an injunction against prosecution of the action, properly issued under the
All Writs Act.
All things considered, we conclude that the district court lacked subject-matter
jurisdiction over the Henson action.
12
Conclusion
We accordingly vacate the district court’s order dismissing Henson and remand
with instructions for the court to remand Henson to Louisiana state court. We do not,
however, imply that the district court may not by injunction force Henson’s dismissal.
We affirm the district court’s award of sanctions against Zohdy.
NO. 99-6021 (APPEAL IN HENSON V. CIBA-GEIGY): VACATED AND REMANDED
WITH INSTRUCTIONS; NO. 99-6130 (APPEAL IN PRICE V. CIBA-GEIGY): AFFIRMED.
13