Harvey Spclt Supply v. Anson Flowline Equip ( 2006 )

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED JANUARY 10, 2006
December 20, 2005
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
No. 05-30187
HARVEY SPECIALTY & SUPPLY, INC
Plaintiff - Appellant
versus
ANSON FLOWLINE EQUIPMENT INC; ANSON LTD
Defendants - Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
Before REAVLEY, DAVIS, and WIENER, Circuit Judges.
WIENER, Circuit Judge:
Defendant-Appellees Anson, Ltd. and Anson Flowline Equipment
International sought an injunction from the district court to
prevent Plaintiff-Appellant Harvey Specialty & Supply (“HSS”) from
re-litigating, in currently pending state court litigation, the
validity of the forum selection clause in their contract. The
district court granted the injunction; HSS appeals; we vacate that
injunction.
I. FACTS AND PROCEEDINGS
HSS distributes oilfield equipment. Since 1991, HSS has
purchased and distributed Anson’s Scottish-made products.
Initially, HSS was Anson’s sole distributor in this country, but in
1998 Anson created its own United States subsidiary corporation,
Anson Flowline Equipment (“AFE”), to distribute its products in
Texas. In January 2000, HSS and AFE entered into a “Sales Agent
Agreement” (the “Agreement”) establishing HSS as Anson’s exclusive
distributor in Louisiana. The Agreement expired at the end of 2001,
and the parties neither renewed it nor entered into another written
contract.
In late 2003, HSS discovered that AFE was distributing Anson
products directly to Louisiana customers. The following April, HSS
sued Anson and AFE (collectively, “Anson”) in state court,
petitioning for, inter alia, a preliminary and permanent injunction.
Anson removed the action to the Eastern District of Louisiana, and
sought dismissal on two grounds: (1) Venue, pursuant to the forum
selection clause in the Agreement, which designated Houston, Texas
as the proper forum; and (2) lack of personal jurisdiction.
The district court upheld the forum selection clause and held
that venue in the Eastern District of Louisiana was improper. The
district court denied Anson’s motion to dismiss, however, and
instead exercised its discretion to transfer the action to the
Southern District of Texas. After the transfer, HSS filed a motion
to dismiss the suit voluntarily under Federal Rule of Civil
Procedure 41(a)(1) (“Rule 41(a)(1)”).
After voluntarily dismissing the initial suit against Anson,
HSS sued Anson again, but in a different Louisiana state court. HSS
2
advanced substantially the same claims as it had in the first
lawsuit. This time, however, HSS added a nondiverse Anson employee
as a defendant to prevent removal. As a result, Anson asked the
district court for the Eastern District of Louisiana to reopen the
original case and enjoin HSS from relitigating the validity of the
forum selection clause in the new state court proceedings.
The district court granted the injunction, which prohibited HSS
from prosecuting the suit in state court. HSS timely filed its
notice of appeal. We have appellate jurisdiction under 28 U.S.C.
§ 1292(a)(1), which permits interlocutory appeal of, inter alia, a
district court order granting an injunction.
II. ANALYSIS
A. Standard of Review
We review de novo the application of the relitigation exception
to the Anti-Injunction Act.1 We review the district court’s
ultimate decision whether to issue an injunction for abuse of
discretion.2
B. Applicable Law
With certain exceptions, the Anti-Injunction Act prohibits
federal courts from enjoining proceedings in state courts.3 At
1
28 U.S.C. § 2283; see Newby v. Enron Corp., 302 F.3d 295,
301 (5th Cir. 2002); Regions Bank v. Rivet, 224 F.3d 483, 488
(5th Cir. 2000).
2
Newby, 302 F.3d at 301; Rivet, 224 F.3d at 488.
3
28 U.S.C. § 2283.
3
issue here is the relitigation exception, which permits a federal
court to enjoin state court proceedings “where necessary... to
protect or effectuate its judgments.”4 The relitigation exception
“prevent[s] state litigation of an issue that was previously
presented to and decided by the federal court. It is founded in the
well-recognized concepts of res judicata and collateral estoppel.”5
As HSS dismissed the initial action as a matter of right without
prejudice, principles of collateral estoppel, and not res judicata,
are relevant.
Collateral estoppel applies when, in the initial litigation,
(1) the issue at stake in the pending litigation is the same, (2)
the issue was actually litigated, and (3) the determination of the
issue in the initial litigation was a necessary part of the
judgment.6 As the third element of collateral estoppel indicates,
“[f]inality is an essential component of the concept[] of...
collateral estoppel.”7 Therefore, “[b]ecause finality is central to
the concept[] of... collateral estoppel, which animate[s] the Anti-
Injunction Act,... a lack of finality is also fatal to a request for
4
Id.
5
Chick Cam Choo v. Exxon Corp., 486 U.S. 140, 147 (1988).
6
Next Level Commc’ns LP v. DSC Commc’ns Corp., 179 F.3d 244,
250 (5th Cir. 1999).
7
J.R. Clearwater, Inc. v. Ashland Chem. Co., 93 F.3d 176,
179 (5th Cir. 1996).
4
an injunction under the Act.”8 In other words, an order that “is
not a final judgment, and therefore is not appealable as a matter
of right... lacks sufficient finality to be entitled to preclusive
effect” under the relitigation exception.9 If there is any question
as to the propriety of an injunction, we must resolve it in favor
of permitting the state court action to proceed.10
C. Merits
Neither party disputes that the issues in the pending state
court case and the issues in the initial litigation are the same;
neither do they dispute that the validity of the forum selection
clause was “actually litigated.” The determinative issue is thus
whether the district court’s order transferring the case to the
Southern District of Texas is a final judgment for purposes of the
relitigation exception, thereby giving that judgment’s forum
selection clause determination preclusive effect under the
relitigation exception. We conclude that the transfer order was not
a final judgment and thus not preclusive.
Under Rule 41(a)(1), the plaintiff has the right to file a
notice of dismissal at any time before the defendant has filed
8
Id.
9
Id. The court explained that, in this circuit, the
availability of appellate review is “a significant factor in
determining whether an otherwise nonfinal order should be given
preclusive effect.” Id. at 179 n.2.
10
Id.; see also Royal Ins. Co. of Am. v. Quinn-L Capital
Corp., 960 F.2d 1286, 1294 (5th Cir. 1992).
5
either an answer or a motion for for summary judgment; and “[u]nless
otherwise stated in the notice of dismissal... the dismissal is
without prejudice.” The plaintiff has an “absolute right” to a Rule
41(a)(1) dismissal,11 and “[t]he effect of [a Rule 41(a)(1)]
dismissal is to put the plaintiff in a legal position as if he had
never brought the first suit.”12 The plaintiff “suffers no
impairment beyond his fee for filing.”13 Stated differently, the
plaintiff is free to return to the dismissing court or other courts
at a later date with the same claim.14 Ultimately, a Rule 41(a)(1)
dismissal is not a “final judgment.”15
11
Carter v. U.S., 547 F.2d 258, 258-59 (5th Cir. 1977).
12
LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 603 (5th Cir.
1976. See also Ford v. Sharp, 758 F.2d 1018, 1023-24 (5th Cir.
1985) (explaining that “[i]f a plaintiff voluntarily dismisses an
action without prejudice, it is considered that the suit had
never been filed”).
13
Am. Cyanamid Co. v. McGhee, 317 F.2d 295, 297 (5th Cir.
1963).
14
Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497,
505-06 (2001) (explaining the meaning of “dismissal without
prejudice” under Rule 41(a)).
15
We note that plaintiffs in removed cases frequently use
the rule to re-file an action in state court to secure their
preferred forum by, inter alia, adding non-diverse parties. 9
Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure, § 2623. See also Wilson v. City of San Jose, 111 F.3d
688, 694 (9th Cir. 1997) (noting that Rule 41(a)(1) essentially
permits forum shopping); Int’l Commc’ns, Inc. v. Rates Tech,
Inc., No. CV 88-0377, 1988 WL 49214 (E.D.N.Y. May 10. 1988)
(rejecting the defendants’ argument that the interests of justice
prevented voluntary dismissal under Rule 41(a)(1) when the
parties had litigated venue for one and a half years and the case
was ultimately transferred). While this may seem distasteful to
opposing parties, we have “consistently held that Rule 41(a)(1)
6
As noted, a final judgment is an absolute prerequisite to the
securing of an injunction under the relitigation exception to the
Anti-Injunction Act. Accordingly, the district court erred in
granting the injunction. This is because “[t]he element of
finality, essential to application of collateral estoppel, is
plainly lacking in a judgment upon a Rule 41(a)(1) dismissal.”16
To support the district court’s injunction, Anson attempts to
characterize the transfer order in the initial action as a final
judgment. First, Anson argues that the district court’s transfer
order was, in effect, a dismissal for improper venue. The district
court likewise characterized its transfer order as a dismissal for
improper venue when, long after its transfer, it granted the
injunction. But labeling an order a final judgment, particularly
post hoc, does not necessarily make it one. In determining whether
the district court issued a final judgment for the purposes of the
relitigation exception we must look to what actually happened in the
initial proceedings, and not to the retrospective characterization
of what happened.17 Although the court could have dismissed the
means what it says... [and] [d]efendants who desire to prevent
plaintiffs from invoking their unfettered right to dismiss
actions under Rule 41(a)(1) may do so by taking the simple step
of filing an answer.” Carter, 547 F.2d at 258-59.
16
In re Piper Aircraft Sys. Antitrust Lit, 551 F.2d 213, 220
(8th Cir. 1977).
17
Royal Ins., 960 F.2d at 1294 (“In determining which issues
have been “actually decided,” the emphasis is on the record and
7
action for improper venue, the court explicitly denied the motion
to dismiss and just as explicitly transferred the action to the
Southern District of Texas in an admirable effort to save HSS the
cost of having to re-file the action there. Yet, the court’s
decision to transfer, however well-intentioned, is not the legal
equivalent of a final judgment, because it was not appealable.18
And, again, an order that is not a final judgment, and is thus not
appealable as of right, lacks the finality necessary to endow it
with preclusive effect under the relitigation exception.
Anson and the district court also characterized the transfer
order as an effective denial of HSS’s motion for a preliminary
injunction. Thus, reasoned the district court, the transfer order
was sufficiently final for the purposes of the relitigation
exception because it was immediately appealable under § 1291. As
noted, however, interlocutory appeals of transfer orders are
generally not immediately appealable.
The sole exception to this general rule is a narrow one,
applicable only in cases in which a motion for injunctive relief is
pending. In such an instance, a party may appeal a transfer order
despite the district court’s failure to consider directly the merits
on what the earlier federal court actually said, not on the
court’s post hoc judgment as to what the previous judgment was
intended to say.”) (emphasis in original).
18
In re Lieb, 915 F.2d 180, 184 (5th Cir. 1990) (noting that
a transfer order is not a final judgment and is not immediately
appealable).
8
of a pending motion for injunctive relief only when the merits of
the venue determination are inseparable from the merits of the
motion for injunctive relief.19 For example, if the requested
injunction is to prevent the opposing party from litigating in a
particular forum, an order transferring the action to that forum is
immediately appealable because it has the effect of denying the
injunction.20 In contrast, if the motion for injunctive relief
addresses anti-competitive practices, a district court’s order
transferring the action is not immediately appealable because the
transfer order does not affect the substantive relief sought in the
injunction.21 Thus, “the motion for injunction and the order to
transfer [must be] inextricably bound up with each other” to permit
interlocutory appeal.22
19
Midwest Motor Express, Inc. v. Cent. States Southeast, 70
F.3d 1014, 1016(8th Cir. 1995). Cf. Jones v. Diamond, 519 F.2d
1090, 1095 (5th Cir. 1975) (explaining that interlocutory appeal
of a denial of class certification is permissible only when it
effectively denies the injunction).
20
Midwest Motor Express, 70 F.3d at 1016 (asserting
jurisdiction over an appeal of an order transferring an action in
a case with a pending motion for a preliminary injunction because
“the injunction would have prevented [the defendant] from
proceeding in the Northern District of Illinois, and the
[transfer] order in fact sent the case to that district”).
21
Ukiah Adventist Hosp. v. F.T.C., 981 F.2d 543, 548 (D.C.
Cir. 1992) (no appellate review of transfer order when motion for
injunctive relief was under section 6 of the Clayton Act).
22
Id. Cf. Jones v. InfoCure Corp., 310 F.3d 529, 537 (7th
Cir. 2002) (declining to assert pendent appellate jurisdiction to
review a transfer order because “the preliminary injunction is
not sufficiently closely related to the transfer order to warrant
the exercise of pendent appellate jurisdiction... The two issues
9
In its claim for injunctive relief in the initial litigation,
HSS requested that the district court enjoin Anson from terminating
distributorship of Anson products or refusing to renew it (acts that
would substantially change the competitive circumstances material
to HSS’s distributorship) or from taking any action to destroy or
diminish the value of HSS’s distributorship. The district court’s
order transferring the action to the Southern District of Texas only
identified the proper forum; it did not have the effect of denying
HSS’s motion for injunctive relief, much less expressly do so.
Thus, HSS’s motion for preliminary injunctive relief was completely
separate from the transfer order.23 Consequently, the transfer
order was not appealable under § 1291, and the relitigation
exception does not apply on this ground.
Anson also insists that the injunction was proper because this
circuit has affirmed injunctions under the relitigation exception
in other cases in which the dismissal was “without prejudice.” This
argument misses the mark for two reasons.
First and foremost, in none of the cases on which Anson relies
were the dismissals voluntary dismissals under Rule 41(a)(1). As
we have explained, to apply preclusive effect to anything that
can be resolved without reference to each other.”
23
Ukiah, 981 F.2d at 548 (“[T]he transfer order reflects
nothing more than an identification of the proper court... to
hear the claim for injunctive relief. The claim for injunctive
relief, however, implicates the scope of section 7 of the Clayton
Act. These two questions are wholly unrelated... [and] no appeal
lies from the District Court’s order transferring this case.”).
10
precedes a Rule 41(a)(1) dismissal would deny the plaintiff’s
absolute right under the rule to a dismissal that puts him in the
same legal position he would have been in had he never filed the
suit.
Second, the cases are critically distinguishable. At least,
in this circuit, the availability of appellate review is “a
significant factor in determining whether an otherwise nonfinal
order should be given preclusive effect.”24 Significantly, the
cases relied on by Anson include court-ordered dismissals for lack
of personal jurisdiction, improper venue, or forum non conveniens.25
Although these dismissals were without prejudice, they were subject
to appellate review. Thus, Anson’s reliance on them is misplaced.
III. CONCLUSION
As the relitigation exception to the Anti-Injunction Act does
not apply, the district court erred in granting Anson’s motion for
an injunction. Accordingly, the injunction is
VACATED.
24
J.R. Clearwater, 93 F.3d at 179 n.2.
25
See, e.g. Vasquez v. Bridgestone/Firestone, Inc., 325 F.3d
665 (5th Cir. 2003) (dismissal on grounds of forum non
conveniens); Great Earth Cos., Inc. v. Simons, 288 F.3d 878 (6th
Cir. 2002) (dismissal to enforce arbitration clause); Offshore
Sportswear, Inc. v. Vuarnet Int’l, B.V., 114 F.3d 848 (9th Cir.
1997) (dismissal to enforce forum selection clause); Quintero v.
Klaveness Ship Lines, 914 F.2d 717 (5th Cir. 1990) (dismissal on
grounds of forum non conveniens); Carey v. Sub Sea Int’l, Inc.,
121 F. Supp. 2d 1071 (E.D. Tex. 2000) (dismissal for lack of
personal jurisdiction and on grounds of forum non conveniens).
11