Davis International, LLC v. New Start Group Corp. , 488 F.3d 597 ( 2007 )

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
5-23-2007
Davis Intl LLC v. New Start Grp Corp
Precedential or Non-Precedential: Precedential
Docket No. 06-2294
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2007
Recommended Citation
"Davis Intl LLC v. New Start Grp Corp" (2007). 2007 Decisions. Paper 1025.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/1025
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2007 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 06-2294 and 06-2408
_____________________________
DAVIS INTERNATIONAL, LLC;
HOLDEX, LLC;
FOSTON MANAGEMENT, LTD;
OMNI TRUSTHOUSE, LTD
v.
NEW START GROUP CORP.; VENITOM CORP.;
PAN-AMERICAN CORP.; MDM BANK;
URAL-GORNO METALLURGICAL COMPANY;
EVRAZ HOLDING; MIKHAIL CHERNOI;
OLEG DERIPASKA; ARNOLD KISLIN;
MIKHAIL NEKRICH; ISKANDER MAKMUDOV
Davis International, LLC, Holdex, LLC,
Foston Management, LTD, Omni Trusthouse, LTD,
Appellants in 06-2294
New Start Group Corp; Venitom Corp.;
MDM Bank; Ural-Gorno Metaluragical Company;
Evraz Holding; Mikhail Chernoi;
Oleg Deripaska; Arnold Kislin;
Mikhail Nekrich; Iskander Makmudov,
Appellants in 06-2408
Appeal from the United States District Court
for the District of Delaware
(D.C. Civil Action No. 04-cv-01482)
District Judge: Honorable Gregory M. Sleet
Submitted Under Third Circuit LAR 34.1(a)
January 30, 2007
Before BARRY AND ROTH, Circuit Judges,
and DEBEVOISE*, District Judge
(Opinion filed: May 23, 2007)
Bruce S. Marks, Esq.
Marks & Sokolov, LLC
1835Market Street, Suite 625
Philadelphia, PA 19103
Attorneys for Appellants/Cross-Appellees
Davis International LLC, Holdex LLC,
Foston Management, Ltd, Omni Trusthouse, Ltd
Karen V. Sullivan, Esq.
Charles M. Oberly III, Esq.
Oberly, Jennings, Rhodunda
1220 Market Street
Suite 710, P.O. Box 2054
Wilmington, DE 19899
Attorneys for Appellees/Cross-Appellants
Iskander Makmudov, Mikhail Nekrich,
Arnold Kislin, Mikhail Chernoi
Ural-Gorno Metaluragical Company,
Venitom Corp., New Start Group Corp.
William H. Devaney, Esq.
Venable LLP
405 Lexington Avenue
56th Floor
New York, NY 10174
Attorney for Appellees/Cross-Appellants
Ural-Gorno Metaluragical Company,
Iskander Makmudov
*
Honorable Dickinson R. Debevoise, Senior District Court
Judge for the District of New Jersey, sitting by designation.
2
Peter J. Venaglia, Esq.
Dornbush, Schaeffer, Strongin & Venaglia
747 Third Avenue
11th Floor
New York, NY 10017
Attorney for Appellees/Cross-Appellants
Venitom Corp., New Start Group Corp.
Lawrence S. Goldman, Esq.
Elizabeth M. Johnson, Esq.
Law Offices of Lawrence S. Goldman
500 Fifth Avenue
29th Floor
New York, NY 10110
Lisa C. Cohen, Esq.
Schindler Cohen & Hochman LLP
100 Wall Street, 15th Floor
New York, New York 10005
Attorneys for Appellee/Cross-Appellant
Arnold Kislin
Jay Moffitt, Esq.
William M. Lafferty, Esq.
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19899
David H. Herrington, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attorneys for Appellee/Cross-Appellant
Evraz Holding
Joel Kleinman, Esq.
David H. Greenberg, Esq.
Dickstein, Shapiro, Morin & Oshinsky
2101 L Street, N.W.
Washington, DC 20037
3
Andrew D. Cordo, Esq.
Richard I.G. Jones, Jr., Esq.
Ashby & Gaddes
222 Delaware Avenue
P.O. Box 1150, 17th Floor
Wilmington, DE 19899
Attorneys for Appellee/Cross-Appellant
MDM Bank
Brian E. Maas, Esq.
Frankfurt, Kurnit, Klein & Selz
488 Madison Avenue
New York, NY 10022
Attorney for Appellee/Cross-Appellant
Mikhail Chernoi
Kevin F. Brady, Esq.
Collins J. Seitz Jr., Esq.
Connolly, Bove, Lodge & Hutz
1007 North Orange Street
P.O. Box 2207
Wilmington, DE 19899
Attorneys for Appellee/Cross-Appellant
Oleg Deripaska
Edward M. Spiro, Esq.
Morvillo, Abramowitz, Grand, Iason & Silberberg
565 Fifth Avenue
New York, NY 10017
Attorney for Appellee/Cross-Appellant
Mikhail Nekrich
OPINION
Debevoise, Senior District Judge
The Appellants and Cross-Appellees on this appeal are
4
Davis International, LLC (“Davis”), Holdex, LLC, (“Holdex”),
Foston Management, Ltd. (“Foston”) and Omni Trusthouse, Ltd.
(“Omni”) (collectively referred to as “Appellants”). The
Appellees and Cross-Appellants are New Start Group Corp.
(“New Start”), Venitom Corp. (“Venitom”), Pan-American
Corp. (“Pan-American”), MDM Bank (“MDM”), Ural-Gorno
Metallurgical Company (“Ural-Gorno”), Evraz Holding
(“Evraz”), Mikhail Chernoi (“Chernoi”), Oleg Deripaska
(“Deripaska”), Arnold Kislin (“Kislin”), Mikhail Nekrich
(“Nekrich”), and Iskander Makmudov (“Makmudov”)
(collectively referred to as “Appellees”).
In November 2004, Appellants filed a complaint in the
Delaware Court of Chancery (the “Chancery Court”), alleging
federal RICO and common-law conversion claims. Appellees
removed the action to the District Court, after which Appellants
filed an amended complaint that deleted their state law claims.
Simultaneously Appellants re-filed their conversion claims in the
Chancery Court, adding two new state law claims.
Appellees moved to dismiss the amended complaint on
multiple grounds.1 The District Court heard first Appellees’
motion based on direct estoppel, in which they contended that a
2000 forum non conveniens decision in the Southern District of
New York mandated dismissal. Base Metal Trading SA v.
Russian Aluminum, 253 F. Supp. 2d 681 (S.D.N.Y. 2003), aff’d
sub nom., Base Metal Trading Ltd. v. Russian Aluminum, 98
Fed. Appx. 47 (2d Cir. 2004) (“Base Metal”). Appellees also
moved for an order enjoining Appellants from refiling the same
claims in another United States court.
The District Court granted Appellees’ motion to dismiss,
holding that the forum non conveniens issue had already been
1
After removal Appellees filed motions to dismiss based
on: i) lack of subject matter jurisdiction, ii) failure to state a claim,
iii) direct estoppel, iv) forum non conveniens, and v) international
comity. The parties and the Court agreed that initially the Court
would address only the direct estoppel ground, which the parties
then briefed and argued.
5
litigated in Base Metal and that the doctrine of direct estoppel
barred Appellants from relitigating the decision against them.
Noting Appellees’ challenge to its subject matter jurisdiction, the
District Court held that it was without authority to issue an
injunction and denied Appellees’ motion for injunctive relief.
We will affirm the District Court’s dismissal of the complaint on
direct estoppel grounds and reverse the District Court’s order
denying Appellees’ motion for an anti-suit injunction, remanding
the case to the District Court to determine whether injunctive
relief is appropriate.
I. Background
A. First Amended Complaint: The First Amended
Complaint (the “Complaint”) alleges that a conspiracy, that
extended from the 1990s to the present, was perpetrated by
members of an international organized group of Russian and
American racketeers and was carried out in the United States and
Russia. The conspirators were Chernoi, Deripaska, Makmudov,
Nekrich and Kislin (the “Conspirators”). By means of check-
kiting, threats, physical seizure of property, bribery, a sham
bankruptcy, and corrupt judicial proceedings, the Conspirators, it
is alleged, acquired control of Kachkanarsky GOK (“GOK”), of
which Appellants were the majority shareholders. GOK is a
Russian company that maintains Russia’s largest vanadium ore
plant in the Town of Kachkanar in the Sverdlovsk Oblast in the
Ural Mountains.
The Complaint alleges in detail the multitude of actions
the Conspirators, and persons and entities associated with them,
took to further their scheme to seize GOK and to prevent
Appellants from obtaining redress in the Russian courts. For the
purposes of this opinion it is necessary to describe only the
general nature of these actions.
The Conspirators were a part of the Izmailovo Mafia, one
of the most powerful Russian-American organized crime groups.
6
(¶¶ 38-44).2 As such they engaged in the check-kiting fraud on
the Russian central bank that procured the funds in the United
States that became the seed money for their criminal ventures,
including the seizure of GOK. (¶¶ 45-48). In 1999 the
Conspirators and members of the Russian mafia threatened
GOK’s general director, Jalol Khaidarov, with death unless he
sought to persuade GOK’s shareholders to turn over first 20%
and later 51% of their shares to the Conspirators. (¶¶ 49-53).
Khaidarov transmitted the demands to the GOK
shareholders, but the shareholders did not comply. Next,
Makmudov asked Khaidarov to meet with him in Moscow. The
two were joined by Malevsky, a leader in the Russian Mafia;
Conspirators Deripaska, Kislin, and Nekrich; and five armed
thugs. Makmudov demanded that Khaidarov arrange for the
GOK controlling shareholders to transfer 51% of GOK’s shares
to Chernoi without payment. Khaidarov said he thought
Makmudov was crazy, but that he would transmit the message.
He was told, “This is the last time you will leave here alive.” (¶¶
54-57).
In 1999, Eduard Roussel (“Roussel”) was the Governor of
Sverdlovsk Oblast, where GOK was located. The Conspirators
bribed him for his support of their efforts to do business in
Sverdlovsk Oblast. (¶¶ 58-62).
In January 2000, the Conspirators sent armed persons to
take physical control of the GOK plant. By threats of physical
harm the Conspirators caused four of the seven members of
GOK’s board of directors to remove Khaidarov as general
director and to replace him with Andrey Kozitsin (“Kozitsin”),
an agent of the Conspirators. In response to a legal challenge to
the takeover, a member of Russia’s Supreme Court issued a
directive that invalidated the ruling of a lower court approving
the action of the rump board of directors and remanded the case
to the lower court for reconsideration. The lower court has taken
2
The “¶” numbers refer to the paragraphs of the Complaint,
which is set forth in the Joint Appendix at pp. 275-302.
7
no action. (¶¶ 63-65).
Three of the remaining board members filed criminal
complaints challenging the illegal takeover. Malevsky’s people
threatened these directors and their families with death if they
continued to resist the takeover, and the cooperation of two other
directors was secured with bribes. (¶¶ 65-68).
The Complaint sets forth in considerable detail the steps
the Conspirators took to place GOK out of the reach of its
shareholders should the shareholders prevail in their legal
proceedings. The Conspirators arranged for the new general
director, Kozitsin, to enter a number of sham transactions, as a
result of which a shell company, Lebaut, accumulated a total of
53 GOK promissory notes with a face value of approximately
$39 million. The Conspirators, through collusive means, then
arranged for GOK to be placed into bankruptcy. The Sverdlovsk
Arbitrazh Court appointed Oleg Kozyrev (“Kozyrev”), an agent
of the Conspirators, as provisional manager of GOK. (¶¶ 75 -
83).
At an August 2000 first meeting of creditors, Lebaut’s
fraudulent claim amounted to 94% of creditor votes, giving it the
power to elect Kozyrev external manager of GOK, a position
that gave him management authority over the company.
Thereupon the Conspirators arranged for Appellants to be
removed from the registry of GOK shareholders and for their
shares to be transferred secretly to Delaware shell companies
New Start, Venitom and other companies controlled by the
Conspirators. (¶¶ 84-88). The Complaint sets forth in detail the
multiple transactions that the Conspirators were alleged to have
orchestrated in order to transfer the Davis, Omni, Foston and
Holdex shares to Venitom and other companies that the
Conspirators controlled. (¶¶ 89-114).
Having achieved their objective of transferring all the
GOK shares, the Conspirators no longer needed the bankruptcy
proceedings. Accordingly, in March 2001 Kozyrev held a
second meeting of creditors at which, based on Lebaut’s huge
claim, the creditors approved a sham settlement agreement
which had the effect of making the claims of legitimate creditors
8
worthless and transferring control of GOK to its new
shareholders. Under Russian bankruptcy law, shareholders had
no standing to challenge this agreement. (¶¶ 115-117).
In retaliation for their opposition, the Conspirators
arranged for false criminal charges to be brought against
Khaidarov and Joseph Traum, a managing director of Appellant
Davis. These charges and threats of violence forced Khaidarov
and Traum to flee to Israel. (¶¶ 118-126).
This summarizes the allegations that form the factual
basis of the Complaint.
B. The Base Metal Action: On December 19, 2000, Base
Metal Trading, SA and two other corporations filed a complaint
in the United States District Court for the Southern District of
New York, charging that the named defendants, using tactics
similar to those alleged in the Complaint in the instant case,
sought to take control of NKAZ, an aluminum corporation, as
part of their effort to monopolize the Russian aluminum
industry.
Of particular significance in the instant case is the
amended complaint that the plaintiffs filed on August 3, 2001.
The amended complaint advanced claims based on the alleged
illegal takeover of GOK through physical force, bribery and
extortion. The plaintiffs in Base Metal included the four
Appellants in the instant case. The defendants in Base Metal
included seven of the eleven Appellees in the instant case. The
allegations concerning the seizure of GOK, as they appeared in
Base Metal, parallel the allegations of the Complaint in this case,
including initial threats of violence, bribing the local Governor
of the Sverdlovsk Oblast, physical seizure of GOK, removal of
Khaidarov and his replacement by Kozitsin, the creation of
massive false debts and the institution of a fraudulent Russian
bankruptcy proceeding, the fraudulent transfer of the plaintiffs’
shares in GOK to shell companies owned and controlled by the
Conspirators, and the sham settlement of the Russian bankruptcy
proceeding.
The Base Metal defendants moved to dismiss the
9
amended complaint on forum non conveniens grounds. The
Court granted the motion, finding that as to the private interest
factors: i) little deference should be given to the plaintiffs’
choice of forum, as the only plaintiffs who were United States
citizens were shell holding corporations and as substantially all
of the critical alleged actions took place in Russia; ii) Russia was
both an available alternative forum and provided plaintiffs with
adequate judicial remedies; and iii) the public and private
interest factors all weighed in favor of granting the motion,
namely, the relative ease of access to sources of proof, the
convenience of willing witnesses, the availability of compulsory
process for attaining the attendance of unwilling witnesses, and
the other practical problems that make trial easy, expeditious and
inexpensive.
The Court also found that all the public interest factors
weighed in favor of dismissal: i) court congestion; ii) avoiding
difficult problems in conflict of laws and application of foreign
law; iii) the unfairness of imposing jury duty on a community
with no relation to the case; and iv) the interest of communities
in having local disputes decided at home.
The District Court in the instant case held that by virtue
of the doctrine of estoppel, the decision in Base Metal precluded
Appellants from relitigating the forum non conveniens issue.
II. Discussion
The District Court had subject matter jurisdiction under
28 U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291.
The principal ground of Appellants’ appeal is that the
District Court erred in dismissing the case by reason of the
estoppel effect of another court’s forum non conveniens
decision, without first deciding Appellants’ subject matter and
personal jurisdiction motions. Before addressing that issue we
will consider Appellants’ argument that the District Court erred
by failing to consider Appellants’ contention that because
Appellees chose the forum by removing this action from the
Chancery Court, they were barred by the doctrines of unclean
hands and estoppel from moving to dismiss on forum non
10
conveniens grounds.
The District Court did not consider Appellants’ unclean
hands and estoppel arguments, because those contentions related
to a forum non conveniens motion, consideration of which had
been deferred. The parties and the Court had agreed that only
the motion raising the estoppel effect of Base Metal would be
argued, and Appellants’ unclean hands and estoppel arguments
were not applicable to that issue. Nevertheless, because Base
Metal ruled on the forum non conveniens issue, and forum non
conveniens was the subject of the estoppel ruling, we will
address Appellants’ unclean hands and estoppel arguments.
The nub of Appellants’ argument is that Appellees did not
invoke the jurisdiction of the federal court for the legitimate
purpose of adjudicating federal issues; rather their purpose was
to deprive Appellants of the ability to have any American court,
federal or state, examine the RICO claims. Appellants cite a law
review article in support of their position: “[A] federal court that
grants forum non conveniens dismissals in removed cases where
the state court would have retained jurisdiction creates an
incentive for defendants to use the removal jurisdiction not for
its apparent purpose of providing a federal forum for certain
claims, but for the purpose of depriving plaintiffs of any
American forum for the claims . . . . In sum, forum non
conveniens should never be made available in removed cases.”
Peter G. McAllen, Deference to the Plaintiff in Forum Non
Conveniens, 13 S. Ill. U.L.J. 191, 270-271 (1989).
Appellants have cited no cases that support their
contention that either the doctrine of unclean hands or the
doctrine of estoppel precludes defendants in a removed case
from moving for dismissal on forum non conveniens grounds. In
fact, the law is to the contrary, e.g., P.T. United Can Co. Ltd. v.
Crown Cork & Seal Co., Inc., 138 F.3d 65, 73 (2d Cir. 1998)
(affirming forum non conveniens dismissal after removal); Prack
v. Weissinger, 276 F.2d 446, 450 (4th Cir. 1960) (“[I]n view of
the [Supreme Court’s] Gulf Oil Corp. v. Gilbert [, 330 U.S. 501(1947)] decision, we are of the opinion that a removed action to
which a Federal District Court applies the doctrine of forum non
conveniens need not be remanded, but may be dismissed.”).
11
Thus even if the District Court had addressed Appellants’
motion to dismiss on forum non conveniens grounds, the
doctrines of unclean hands and estoppel would not have
prevented it from proceeding.
We turn to Appellants’ principal ground, that the District
Court erred by applying direct estoppel without first determining
that it had jurisdiction. Appellants relied on Malaysia Int’l
Shipping Corp. v. Sinochem Int’l Co., Ltd., 436 F.3d 349 (3d
Cir. 2006), which held that a district court must establish its own
jurisdiction before dismissing a suit on the ground of forum non
conveniens. In the present case the District Court distinguished
Malaysia Int’l Shipping and held that it need not establish its
jurisdiction before dismissing the action on estoppel grounds.
The Supreme Court’s recent reversal of that case,
Sinochem, Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 127 S.
Ct. 1184 (2007), resolves the issue:
We hold that a district court has discretion to
respond at once to a defendant’s forum non
conveniens plea, and need not take up first any
other threshold objection. In particular, a court
need not resolve whether it has authority to
adjudicate the cause (subject-matter jurisdiction)
or personal jurisdiction over the defendant if it
determines that, in any event, a foreign tribunal is
plainly the more suitable arbiter of the merits of
the case.
Id. at 1188.
In light of this opinion, the District Court’s decision to
proceed with the estoppel motion was unquestionably correct.
We apply de novo review to a district court’s dismissal of claims
on estoppel grounds and to a district court’s determination of
jurisdiction to issue an injunction.
In the District Court, Appellees, citing Pastewka v.
Texaco, Inc., 565 F.2d 851 (3d Cir. 1977), argued that because
the Appellants’ claims had already been dismissed on forum non
12
conveniens grounds in Base Metal, and because there were no
material differences between the Complaint in the present case
and the amended complaint in Base Metal, Appellants were
estopped from relitigating their claims. Appellants, on the other
hand, urged that the District Court should conduct its own forum
non conveniens analysis because the present case was vastly
different from Base Metal, and because they proffered different
objective criteria and material facts than were proffered in Base
Metal.
In accordance with Pastewka, the District Court looked to
the facts alleged in the Appellants’ Complaint and compared
them with the Base Metal amended complaint to determine
whether they were “identical in all material respects.” The Court
stated:
. . . the court has undertaken its own side-by-side
examination of both amended complaints, with the
following results: (1) a total 96 paragraphs in the
Base Metal amended complaint are devoted to
“The Takeover of GOK”; and (2) 57 of the 86
paragraphs that comprise the substantive factual
allegations of the amended complaint in this case,
i.e. paragraphs 49-134, as well as the headings, are
either identical or significantly similar to the
allegations set forth in Base Metal. Based on its
examination, the court concludes that the
plaintiffs’ characterization of their claims as a
“small part of the Base Metal complaint” is
disingenuous at best.
(A013) (footnotes omitted).
We have also compared the facts alleged in the Complaint
with the facts alleged in the Base Metal amended complaint and
agree with the District Court that the two complaints, insofar as
the GOK claims are concerned, are identical in all material
respects.
On this appeal the Appellants do not challenge the
Pastewka analysis and argue simply that the District Court erred
13
in deciding the estoppel issue before it determined its
jurisdiction. Because this argument has been disposed of in the
Supreme Court’s decision reversing Malaysia Int’l Shipping,
nothing remains of Appellants’ challenge to the District Court’s
dismissal of the Complaint on estoppel grounds. The judgment
of dismissal of the Complaint will be affirmed.
There remains Appellants’ cross-appeal of the District
Court’s denial of their motion for an order enjoining Appellees
from bringing future actions in the United States based on the
underlying facts asserted in the present case.
On April 13, 2005, the District Court decided to proceed
with the motions to dismiss based on direct estoppel and to
enjoin Appellants. On April 26, 2005, Appellants filed their
amended complaint in which they eliminated all non-federal law
claims. At the same time they filed another lawsuit against
Appellees in the Chancery Court based on non-federal claims.
The Chancery Court stayed that action, observing that “the
plaintiffs are engaging in piecemeal litigation and are trying to
subvert the removal statute by improperly splitting their claims.”
Davis Int’l, LLC v. New Start Group, Corp., No. Civ. A. 1297-
N, 2005 WL 2899683, at *3 (Del. Ch. Oct. 27, 2005).
Addressing the injunction motion, the District Court held
that “the ‘application of the Anti-Injunction and All-Writs Acts
should . . . be[] preceded by the satisfaction of jurisdictional
prerequisites[,]’ including subject matter jurisdiction. Carlough
v. Amchem Prods., Inc., 10 F. 3d 189, 198 (3d Cir. 1993)
(emphasis in original).” (A029). Because the Appellees
challenged the Court’s subject matter jurisdiction, the District
Court stated that it was “without authority to issue the requested
injunction.” (Id.).
It is evident that the District Court had both subject matter
jurisdiction and in personam jurisdiction over at least some of
the Appellees and all of the Appellants, the entities which were
to be subject to the proposed injunction. Appellants asserted
their claims under RICO, a federal statute. The Appellees, who
might ultimately contest in personam jurisdiction, sought relief
from the Court when pursuing their motion to dismiss on
14
estoppel grounds. This was sufficient to give the District Court
jurisdiction to decide whether, in the circumstances of the case,
the All Writs Act, 28 U.S.C. § 1651, authorized or required it to
issue the requested injunction and whether the Anti-Injunction
Act, 28 U.S.C. § 2283, precluded such an injunction.
The District Court, like the Chancery Court, was
“convinced . . . that the plaintiffs are attempting to subvert the
removal statute by splitting their claims.” Courts considering the
question have unanimously held that a plaintiff’s fraudulent
attempt to subvert the removal statute implicates the “expressly
authorized” exception to the Anti-Injunction Act and may
warrant the granting of an anti-suit injunction. See Quackenbush
v. Allstate Ins. Co., 121 F.3d 1372, 1378 (9th Cir. 1997)
(recognizing a district court’s authority to enjoin a state suit
fraudulently filed in an attempt to subvert the removal statute);
Kan. Pub. Employees Ret. Sys. v. Reimer & Koger Assocs., Inc.,
77 F.3d 1063, 1070-71 (8th Cir. 1996) (affirming district court’s
injunction of parallel state court action filed for the purpose of
subverting a removal statute); Frith v. Blazon-Flexible Flyer,
Inc., 512 F.2d 899, 901 (5th Cir. 1975). (“[W]here a district
court finds that a second suit filed in state court is an attempt to
subvert the purposes of the removal statute, it is justified and
authorized by § 1446(e) in enjoining the proceedings in the state
court.”); cf. 1975 Salaried Retirement Plan for Eligible
Employees of Crucible, Inc. v. Nobers, 968 F.2d 401, 407 & n.5
(3d Cir. 1992) (opining that a federal injunction of ongoing state
proceedings in a removed case satisfies the “necessary in aid of
its jurisdiction” exception under the Anti-Injunction Act, and
“may also fall under the ‘expressly authorized’ exception,
because 28 U.S.C. § 1446(e) (1988) provides that upon removal
the ‘State court shall proceed no further unless and until the case
is remanded’”).
Carlough v. Amchem Prods., Inc., 10 F.3d 189 (3d Cir.
1993), does not require a contrary conclusion. In Carlough a
federal district court, in which an asbestos class action had been
filed but not yet certified, enjoined the prosecution of a class
action filed in a West Virginia state court consisting of plaintiffs
whose exposure occurred in West Virginia and the defendants
named in the federal action. Subsequently the federal district
15
court approved notice to the class and set a deadline to opt out of
the class. The Court of Appeals questioned the jurisdiction of
the district court to enjoin the West Virginia plaintiffs prior to
the issuance of the opt out notice but held that “once the district
court approved the dissemination of notice and commenced the
opt out period . . . the jurisdictional problem was resolved.” Id.
at 201. In the present case there never was a time when the
District Court did not have jurisdiction over Appellants, the
parties to be enjoined, and the Court was in the same posture as
the post-opt out Carlough court.
The parties’ briefs devoted considerable space to the
merits of the injunction questions, but they are questions that
should be resolved by the District Court in the first instance.
…
For the reasons set forth above, we affirm the order of the
District Court dismissing Appellants’ Complaint pursuant to the
doctrine of direct estoppel and reverse the order of the District
Court denying Appellees’ motion to enjoin Appellants from
refiling this action, remanding the action to the District Court for
consideration of Appellees’ motion to enjoin refiling of this
action on the merits.
16