Norfolk Southern v. Guthrie, James ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-1763
Norfolk Southern Railway Company,
Plaintiff-Appellant,
v.
James E. Guthrie, Buddy W. Snyder,
and Lakin Law Firm,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Illinois, East St.
Louis Division.
No. 99 C 639--William L. Beatty, Judge.
Argued October 24, 2000--Decided November 15,
2000
Before Flaum, Chief Judge, and Manion and
Evans, Circuit Judges.
Flaum, Chief Judge. Norfolk Southern
Railway Company ("NS") appeals the
dismissal of its declaratory judgment
action against Buddy W. Snyder and Lakin
Law Firm ("Lakin")./1 The district
court dismissed NS’s claims for lack of
subject-matter jurisdiction under Article
III. We affirm the lower court’s
decision, but on different grounds.
I. Background
Part of NS’s extensive railroad
operations are located in Illinois. NS’s
relations with its employees in this area
are governed by a collective bargaining
agreement ("CBA") and the Railway Labor
Act ("RLA"), 45 U.S.C. sec. 151 et seq.
Under the CBA, NS must hold a fair and
impartial investigation to discipline
workers who have been employed for sixty
or more days. Such a worker is entitled
to be represented by an officer of the
union during these hearings. NS requires
any employee who is injured while on duty
or on company property to report to his
or her supervisor before the end of that
day. Any employee who obtains medical
attention for such injuries must also
notify his or her supervisor.
Current defendant Snyder and former
defendant Guthrie are employees of NS who
suffered apparently work-related injuries
and received medical treatment for these
during June, 1999 without informing their
supervisors. When NS’s management learned
of their failure to follow the company’s
rules, it notified both Snyder and
Guthrie that they were to attend
disciplinary investigations that were
originally scheduled in July but were
postponed until September. After
receiving these notifications, both
Guthrie and Snyder hired Lakin.
On August 27, NS received two letters
from Lakin regarding Guthrie and Snyder.
Lakin informed NS that it represented
both employees. Both letters state that
any disciplinary investigation by NS
would interfere with Lakin’s attorney-
client relationships with Guthrie and
Snyder. Lakin requested that NS cancel
the investigation until after Lakin had
filed and litigated Guthrie and Snyder’s
claims under the Federal Employer’s
Liability Act ("FELA"), 45 U.S.C. sec. 51
et seq., and asked to be notified of NS’s
decision by August 31.
In response to these letters, NS filed
a complaint for declaratory and
injunctive relief on August 31, 1999. The
complaint asked the district court to
find that the disciplinary investigations
were permitted by the RLA and CBA and
that any attempt by Lakin to prevent such
investigations through state law means
would be preempted by federal law. NS was
aware that Illinois recognized a tort for
interference with an attorney-client
relationship and that law firms could sue
in their own names to recover under this
cause of action. NS also knew that on
eight different occasions within the
preceding year-and-a-half Lakin had filed
suits in state court employing this claim
to prevent Union Pacific, another
railroad operating in southern Illinois,
from conducting disciplinary
investigations of its employees.
Lakin moved to dismiss NS’s action on a
variety of theories. The district court
chose one not argued by the parties: lack
of a case or controversy under Article
III. The court stated that it did not
have subject-matter jurisdiction over the
case because Lakin had not taken any
actions against NS and NS was not in
immediate danger of sustaining direct
injury caused by Lakin. NS filed a
Fed.R.Civ.P. 59(e) motion asking for an
opportunity to brief the case or
controversy issue and for the court to
reconsider its decision, but this was
denied.
NS appealed to this court. During the
appellate briefing schedule, Northeast
Ill. Reg’l Commuter R.R. Corp. v. Hoey
Farina & Downes, 212 F.3d 1010 (7th Cir.
2000) ("Metra"), whose legally relevant
facts are identical with the instant
case, was decided. Metra holds that,
because of the well-pleaded complaint
rule, the federal courts lack statutory
subject-matter jurisdiction over
declaratory actions that seek to
challenge threatened state law actions by
non-governmental declaratory defendants.
Id. at 1014-16.
II. Discussion
The parties present two arguments: one
concerning constitutional subject-matter
jurisdiction and the other regarding
statutory subject-matter jurisdiction. We
may exercise our discretion in choosing
which of these threshold issues to
address initially. See Steel Co. v.
Citizens for a Better Environment, 523
U.S. 83, 97 n.2 (1998) (stating that "a
statutory standing question can be given
priority over an Article III question,"
(emphasis added) suggesting that a court
has the discretion to consider either a
constitutional or statutory subject-
matter jurisdiction question first). Even
though Article III jurisdiction need not
always be examined before any other
issue, it is an antecedent question of
every case. Id. at 101. Thus, we choose
to analyze the case or controversy issue
before the well-pleaded complaint
question.
A. Case or Controversy
The district court’s legal determination
that it lacked Article III jurisdiction
is reviewed de novo. See Love Church v.
City of Evanston, 896 F.2d 1082, 1085
(7th Cir. 1990). NS argues that its
complaint against Lakin and Snyder
presents a case or controversy and thus
should not have been dismissed for lack
of constitutional subject-matter
jurisdiction. NS is correct.
Where a declaratory plaintiff files a
complaint in anticipation of litigation
by the declaratory defendant, a case or
controversy exists if the threat of such
litigation is real and immediate. See GNB
Battery Technologies, Inc. v. Gould,
Inc., 65 F.3d 615, 620 (7th Cir. 1995).
Only the actions of the declaratory
defendant known to the declaratory
plaintiff at the time the action is
commenced can be considered in
determining whether such a threat exists.
See Trippe Mfg. Co. v. American Power
Conversion Corp., 46 F.3d 624, 627 (7th
Cir. 1995). NS knew that Lakin had filed
tortious interference claims against
Union Pacific on eight occasions when
that railroad had tried to conduct
disciplinary investigations against
Lakin’s clients. These incidents show
that Lakin is likely to litigate whenever
it believes a railroad is interfering
with its attorney-client relationships.
NS received two letters from Lakin
stating that NS’s proposed investigations
against Snyder and Guthrie would
sointerfere. Lakin’s propensity to sue
whenever it believes that a railroad is
interfering with its attorney-client
relationships combined with its letters
to NS stating that Lakin believed that
NS’s proposed disciplinary investigations
would constitute such interference is
sufficient to demonstrate a real and
immediate threat of litigation. Thus, the
district court had the constitutional
subject-matter jurisdiction necessary to
proceed with NS’s declaratory action.
International Harvester Co. v. Deere &
Co., 623 F.2d 1207 (7th Cir. 1980),
relied upon by Lakin, is not to the
contrary. In that case, Deere would
frequently use litigation against parties
that it believed infringed on its
patents, much the same way Lakin sues
railroads that it believes are about to
interfere with its attorney-client
relationships. However, declaratory
plaintiff International Harvester failed
to show that Deere believed that
International Harvester’s product design
infringed on Deere’s patent, which is the
fact that would trigger a suit by Deere.
Id. at 1212. In contrast to International
Harvester, the letters from Lakin to NS
show that Lakin believed the disciplinary
investigations would interfere with its
attorney-client relationships, which is
the fact that would trigger litigation by
Lakin, and thus a real and immediate
threat of suit existed.
B. Metra Decision
Unfortunately for NS, it faces another
barrier in its attempt to bring Lakin and
Snyder into federal court. This circuit’s
decision in Metra holds that in a
declaratory judgment action anticipating
litigation by a non-governmental
declaratory defendant, statutory subject-
matter jurisdiction exists only where
federal jurisdiction would be present in
a suit filed by the private declaratory
defendant against the declaratory
plaintiff. 212 F.3d at 1014-16. In this
case, the declaratory defendant is Lakin,
which is not a government entity, and its
only claim in a putative suit filed
against NS would be a state law tortious
interference action. Under Metra, the
well-pleaded complaint rule of Louisville
& Nashville Co. v. Mottley, 211 U.S. 149(1908) applies because Lakin’s complaint
would not allege a federal cause of
action and thus federal question
jurisdiction under 28 U.S.C. sec. 1331
(the only type of statutory jurisdiction
NS alleges) does not exist.
NS correctly admits that the facts of
the instant case are identical to those
of Metra for all legally relevant
purposes and concedes that Metra bars its
suit if that decision stands. Thus, NS
argues that Metra and the Seventh Circuit
cases on which it relies are incorrect
and should be overruled. NS claims that
Metra lacks support in Supreme Court
holdings and is in tension with a prior
Seventh Circuit decision. NS’s
contentions, or variations on these, were
considered in and rejected by the Metra
opinion. Petitions for rehearing by the
panel and rehearing en banc were filed in
Metra, but were denied. NS does not claim
that the Metra holding conflicts with a
Supreme Court decision. NS has not
demonstrated that Metra goes against the
bulk of Seventh Circuit law, nor does NS
cite opinions from other circuits showing
that Metra deviates from the decisions of
other courts that have considered the
issue. In these circumstances, we decline
to overrule Metra and instead reaffirm
it. See In re Bentz Metal Prods. Co., ___
F.3d ___, 2000 WL 1661833, *3 (7th Cir.
2000). Applying Metra to NS’s complaint,
we hold that the lower court lacks
statutory subject-matter jurisdiction
over this case.
III. Conclusion
NS’s declaratory complaint presents a
justiciable case or controversy under
Article III. However, Lakin’s claims
against NS would be based only on state
law, and thus no federal jurisdiction
exists under sec. 1331. Because of this
lack of federal question jurisdiction,
the judgment of the district court is
Affirmed.
/1 James E. Guthrie was also a defendant in the
original complaint, but NS named only Snyder and
Lakin in its amended complaint which is the
subject of this appeal.