Elna Sefcovic v. TEP Rocky Mountain

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS March 18, 2020
Christopher M. Wolpert
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
ELNA SEFCOVIC, LLC; WHITE RIVER
ROYALTIES, LLC; JUHAN, LP; ROY
ROYALTY, INC., individually and on
behalf of all others similarly situated,
Plaintiffs - Appellees,
v.
No. 19-1121
TEP ROCKY MOUNTAIN, LLC,
Defendant - Appellee.
------------------------------
CHARLES DEAN GONZALES;
SUSANNAH GONZALES; TED L.
VAUGHAN; HILDA VAUGHAN,
Objectors,
IVO LINDAUER; SIDNEY LINDAUER;
RUTH LINDAUER; DIAMOND
MINERALS,
Intervenors - Appellants,
and
THE LAW OFFICES OF GEORGE A.
BARTON, PC,
Movant - Appellee.
_________________________________
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:17-CV-01990-MEH)
_________________________________
David G. Seely, Fleeson, Gooing, Coulson & Kitch, L.L.C., Wichita, Kansas (Thomas D.
Kitch, Gregory J. Stucky, Ryan K. Meyer, Fleeson, Gooing, Coulson & Kitch, L.L.C.,
Wichita, Kansas; George Robert Miller, G. R. Miller, P.C., Durango, Colorado; and
Nathan A. Keever, Dufford, Waldeck, Milburn & Krohn, LLP, Grand Junction,
Colorado, with him on the briefs) for Intervenors−Appellants.
Christopher A. Chrisman, Holland & Hart LLP, Denver, Colorado (John F. Shepherd,
P.C., Holland & Hart LLP, Denver, Colorado; George A. Barton and Stacy A. Burrows,
Law Offices of George A. Barton, P.C., Overland Park, Kansas, with him on the brief),
for Appellees.
_________________________________
Before PHILLIPS, McHUGH, and MORITZ, Circuit Judges.
_________________________________
McHUGH, Circuit Judge.
_________________________________
This appeal arises out of a class action contract dispute. Appellants intervened in
the district court, seeking to dismiss the action for lack of federal subject matter
jurisdiction. Through two separate motions to dismiss, the briefing from both parties
confused the bounds of federal subject matter jurisdiction and conflated that concept with
the doctrines of abstention and comity, and with matters of venue and forum. Despite this
misdirection, the district court properly exercised jurisdiction and rebuffed appellants’
attempts to unwind nearly eighteen months of class action litigation. We affirm.
I. BACKGROUND
Appellee-defendant TEP Rocky Mountain, LLC (“TEP”) operates wells that
produce natural gas in Colorado. These wells are subject to various leases or royalty
2
agreements under which the owners of such instruments receive a share of profits
from the sale of natural gas.
Appellant-intervenors Ivo Lindauer, Sidney Lindauer, Ruther Lindauer, and
Diamond Minerals LLC (the “Lindauers” or the “Intervenors”), are the
representatives for a class of royalty owners who filed suit in 2006 in Colorado state
court (the “Lindauer class” or “Lindauer litigation”), alleging that TEP had
underpaid royalties on various leases and royalty agreements. In 2008, TEP and the
Lindauer class entered into a settlement agreement (the “Lindauer SA”) purporting to
“resolve all class claims relating to past calculation of royalt[ies]” and to “establish
certain rules to govern future royalty” payments. App. at 411.
The Lindauer SA declared that the state court would retain “continuing
jurisdiction” to enforce provisions of the settlement related to “the description of past
and future royalty methodologies.” App. at 427–28. The state court also issued a
judgment (the “stipulated judgment” or “consent decree”) certifying the class and
approving the Lindauer SA. This stipulated judgment concluded that the Lindauer
SA was “fair, adequate and reasonable” and stated that the parties “shall take any and
all steps necessary to implement the [Lindauer SA] according to its terms and the
terms of [the stipulated judgment].” App. at 447, 448. Finally, the stipulated
judgment included the following provision:
Without affecting the finality of this Final Judgment in any way, this
Court shall retain continuing jurisdiction of this action to address any issues
concerning implementation of the Settlement Agreement and enforcing this
Final Judgment.
3
Ohio App. at 449.
Approximately eight years passed, seemingly free of incident. But on July 18,
2017, a subset of the Lindauer class (the “Sefcovic class”)1 initiated this action
against TEP in Colorado state court, alleging that TEP had calculated and paid
royalties in a manner inconsistent with the Lindauer SA and contrary to the
underlying royalty agreements. TEP removed the case to federal court on August 17,
2017. The parties engaged in discovery and ultimately reached a proposed class
settlement. One year later, on August 16, 2018, the district court2 issued an order
preliminarily approving the settlement and permitting the notice to be mailed to the
Sefcovic class members.
Less than a month later, on September 14, 2018, the Lindauers filed a “Motion
to Enforce Court Order and Settlement Agreement” in Garfield County District
Court—the Colorado state court that had entered the stipulated judgment in the
Lindauer litigation. That motion made no mention of the federal action alleging
breaches of the Lindauer SA—initiated fourteen months prior and having reached
preliminary approval of a class settlement agreement. The state court initially ordered
TEP to show cause why it should not be held in contempt for breaching the terms of
1
The Sefcovic class is composed of parties to the Lindauer SA with leases and
royalty agreements falling into four of thirteen categories created in the Lindauer
litigation.
2
The Sefcovic class and TEP consented to the Magistrate Judge presiding over
this matter. We therefore refer to the Magistrate Judge’s orders as those of the district
court.
4
the Lindauer SA but subsequently stayed the proceedings to “await [the federal
district court’s] ruling on pending motions.” App. at 1039–40.
On September 28, 2018, the Lindauers filed a motion to intervene in the
federal district court proceeding. Before the district court ruled on the motion to
intervene, the Lindauers filed a motion to dismiss, arguing the court lacked subject
matter jurisdiction based on the stipulated judgment’s clause retaining “continuing
jurisdiction” in the state court. The district court then “dismissed [the action] without
prejudice based on [its] independent assessment of subject matter jurisdiction” and
largely because of the state court’s retention of jurisdiction over the Lindauer SA.
App. at 1052. It therefore dismissed the Lindauers’ motion to intervene as moot and
vacated the fairness hearing on the proposed Sefcovic SA. App. at 1052–53.
TEP filed a motion to reconsider, arguing the district court’s jurisdiction was
proper despite the state court’s retention of jurisdiction. The Lindauers filed a
renewed motion to intervene, which the district court granted, and a renewed motion
to dismiss, arguing again that the district court lacked subject matter jurisdiction
and/or should have abstained from presiding over the case under Younger or
Colorado River abstention.
The district court granted TEP’s motion to reconsider and reinstated the case
on January 23, 2019. In doing so, the district court clarified that in its original order
it believed “dismissal would be appropriate here under principles of comity and wise
judicial administration . . . akin to the doctrine set forth in Colorado River.” App. at
1084. The court explained that
5
(1) courts are authorized to retain jurisdiction over settlement agreements,
and (2) when a court has done so, and that jurisdiction is explicitly (or
implicitly under the totality of circumstances) exclusive, then (3) the
doctrine of comity permits a court, even in the presence of subject matter
jurisdiction, to defer to the settlement court in cases requiring the
interpretation and enforcement of the settlement agreement.
App. at 1086 (footnote omitted). But because this doctrine is non-jurisdictional and
thus “not an absolute obligation,” the district court determined that dismissal was
inappropriate for a variety of reasons, including that Intervenors were aware of this
litigation but opted to intervene only after preliminary approval of the settlement
agreement. App. at 1086.
The district court subsequently approved the Sefcovic SA,3 and Intervenors
timely appealed the district court’s determination that it possessed subject matter
jurisdiction.
II. DISCUSSION
In seeking dismissal of this action below, Intervenors relied primarily on two
similar provisions appearing in the Lindauer SA and the stipulated judgment adopted
by the state court. Those provisions declare that the state court retains “continuing
jurisdiction” to enforce the Lindauer SA and the stipulated judgment. Intervenors
argued below, and they maintain on appeal, that those provisions vest “exclusive
jurisdiction over the parties and subject matter” in the state court. Aplt. Br. at 17.
3
The district court approved the Sefcovic SA over the objections of several
class members. Those objections form the basis of a separate appeal (Case No.
19-1120) heard by the same panel and resolved by a separate Order and Judgment
issued concurrently with this Opinion.
6
Because many of their arguments rest in whole or in part on Intervenors’ erroneous
assertion that the district court was without subject matter jurisdiction, we begin with
a discussion of subject matter jurisdiction. We then proceed to distinguish that
concept from doctrines of abstention and matters of venue and forum, and conclude
by applying these concepts to this appeal.
A. Subject Matter Jurisdiction
“Subject matter jurisdiction defines the court’s authority to hear a given type
of case.” Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009) (quoting
United States v. Morton, 467 U.S. 822, 828 (1984)). “Only Congress may determine a
lower federal court’s subject-matter jurisdiction.” Kontrick v. Ryan, 540 U.S. 443,
452 (2004) (emphasis added) (citing U.S. Const. Art. III, § 1). Thus, the scope of a
federal court’s subject matter jurisdiction is governed exclusively by acts of
Congress.4 And when Congress grants subject matter jurisdiction, no other entity—
not the litigants and not the states—can divest a federal court of the same.5 See
4
Congress, in turn, is constrained in the types of matters it can authorize the
federal courts to adjudicate by Section 2 of Article III of the Constitution.
5
Nor can a state court achieve the same result by enjoining federal
proceedings. See Donovan v. City of Dallas, 377 U.S. 408, 412–13 (1964) (“While
Congress has seen fit to authorize courts of the United States to restrain state-court
proceedings in some special circumstances, it has in no way relaxed the old and well-
established judicially declared rule that state courts are completely without power to
restrain federal-court proceedings in in personam actions . . . .” (footnotes omitted)).
One practical exception exists when parallel state and federal “suits are in rem, or
quasi in rem, so that the court, or its officer, has possession or must have control of
the property which is the subject of the litigation.” Princess Lida v. Thompson, 305
U.S. 456, 466 (1939). Because only one tribunal can exercise control over the subject
property, the rule, “applicable to both federal and state courts,” is that “the court first
7
Marshall v. Marshall, 547 U.S. 293, 313 (2006) (“Jurisdiction is determined ‘by the
law of the court’s creation and cannot be defeated by the extraterritorial operation of
a [state] statute . . . , even though it created the right of action.’” (alterations in
original) (quoting Tenn. Coal, Iron, & R.R. Co. v. George, 233 U.S. 354, 360
(1914))); Ry. Co. v. Whitton’s Adm’r, 80 U.S. (13 Wall.) 270, 286 (1871)
(“Whenever a general rule as to property or personal rights . . . is established by State
legislation . . . the jurisdiction of the [federal] court in such a case is not subject to
State limitation.”); Odom v. Penske Truck Leasing Co., L.P., 893 F.3d 739, 742 (10th
Cir. 2018) (“Congress alone defines the lower federal courts’ subject-matter
jurisdiction.”).6
assuming jurisdiction over property may maintain and exercise that jurisdiction to the
exclusion of the other.” Id. Both this action and the Lindauer action were brought in
personam.
6
See also VanDesande v. United States, 673 F.3d 1342, 1350 (Fed. Cir. 2012)
(citing “the well-established rule that neither a court nor the parties has the power to
alter a federal court’s statutory grant of subject matter jurisdiction”); Begay v. Kerr-
McGee Corp., 682 F.2d 1311, 1315 (9th Cir. 1982) (“[S]tate law may not control or
limit the diversity jurisdiction of the federal courts. The district court’s diversity
jurisdiction is a creature of federal law under Article III and 28 U.S.C. § 1332(a).
Pursuant to the supremacy clause, [§] 1332(a) preempts any contrary state law.”);
Markham v. City of Newport News, 292 F.2d 711, 716 (4th Cir. 1961) (“[A] court, in
determining its own jurisdiction, must look to the constitution and laws of the
sovereignty which created it. The laws of a state cannot enlarge or restrict the
jurisdiction of the federal courts or those of any other state.”); McGarry v. Lentz, 13
F.2d 51, 52 (6th Cir. 1926) (“Obviously, no state Legislative can regulate, limit, or
control the jurisdiction of the federal courts, nor can the laws of any state preclude
resort to the federal courts, nor confer exclusive jurisdiction upon a designated state
court, in a class of cases of which the federal courts of equity have theretofore been
accustomed to assume jurisdiction.”).
8
That many of Congress’s statutory grants of subject matter jurisdiction operate
to create concurrent jurisdiction between state and federal courts is of no
significance, at least so far as subject matter jurisdiction is concerned. Indeed, the
Supreme Court “has repeatedly held that ‘the pendency of an action in the state court
is no bar to proceedings concerning the same matter in the Federal court having
jurisdiction.’” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 292
(2005) (quoting McClellan v. Carland, 217 U.S. 268, 282 (1910)); see also Donovan
v. City of Dallas, 377 U.S. 408, 412 (1964) (“[W]here the judgment sought is strictly
in personam, both the state court and the federal court, having concurrent
jurisdiction, may proceed with the litigation at least until judgment is obtained in one
of them which may be set up as res judicata in the other.” (quoting Princess Lida v.
Thompson, 305 U.S. 456, 466 (1939))).
B. Abstention
Nevertheless, the Supreme Court has counseled that a district court may, and
sometimes must, abstain from hearing a matter that otherwise finds a statutory basis
for subject matter jurisdiction. See Exxon Mobil, 544 U.S. at 292 (“Comity or
abstention doctrines may, in various circumstances, permit or require the federal
court to stay or dismiss the federal action in favor of the state-court litigation.”). But
when cases present circumstances implicating these doctrines, no question is raised
as to the court’s subject matter jurisdiction.7 Rather, when a federal court may or
7
In its first order dismissing the case for lack of subject matter jurisdiction,
the district court indicated its belief that the Supreme Court and this court “routinely”
9
must abstain from exercising its unquestioned subject matter jurisdiction over a
dispute, it does so pursuant to a power derived from the “historic discretion exercised
by federal courts ‘sitting in equity.’” Quackenbush v. Allstate Ins. Co., 517 U.S. 706,
718 (1996).8 But because of the “virtually unflagging obligation of the federal courts
to exercise the jurisdiction given them,” the Supreme Court has repeatedly cautioned
that “[a]bstention from the exercise of federal jurisdiction is the exception, not the
find that a district court “lacks” subject matter jurisdiction when Younger abstention
applies. App. at 1044. Although the mandatory nature of Younger abstention is
concededly confusing in this respect, we have taken care to clarify—in a case cited
by the district court—that “Younger is a doctrine of abstention [that] . . . differs from
a case in which the district court is barred at the outset from exercising its
jurisdiction.” D.A. Osguthorpe Family P’ship v. ASC Utah, Inc., 705 F.3d 1223, 1230
n.8 (10th Cir. 2013).
For the proposition that the Supreme Court uses jurisdiction interchangeably
with abstention, the district court also cited to Exxon Mobil Corp. v. Saudi Basic
Indus. Corp., 544 U.S. 280 (2005). But Exxon Mobil was not decided on abstention.
Rather, Exxon Mobil involved the Rooker-Feldman doctrine, a principle that gives
effect to the fact that Congress has authorized only the Supreme Court to exercise
appellate review of state court judgments. See Exxon Mobil, 544 U.S. at 291
(“Rooker and Feldman exhibit the limited circumstances in which this Court’s
appellate jurisdiction over state-court judgments, 28 U.S.C. § 1257, precludes a
United States district court from exercising subject-matter jurisdiction in an action it
would otherwise be empowered to adjudicate under a congressional grant of authority
. . . .”). By enacting 28 U.S.C. § 1257, Congress placed a limitation on the subject
matter jurisdiction of the lower federal courts to review state court judgments. Thus,
when a federal action presents Rooker-Feldman circumstances, a district court is in
fact without subject matter jurisdiction to adjudicate it.
8
Due to this equitable origin, a federal court has “the power to dismiss or
remand cases based on abstention principles only where the relief being sought is
equitable or otherwise discretionary.” Quackenbush v. Allstate Ins. Co., 517 U.S.
706, 731 (1996). In an action for money damages that otherwise implicates the
concerns underlying a particular abstention doctrine, a district court may do no more
than stay the federal litigation while it awaits the state court’s resolution of the state
proceeding. See id. at 730–31.
10
rule.” Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 817
(1976).
C. Private Agreements Preselecting Particular Fora or Venue
Finally, when a case finds subject matter jurisdiction and further does not
implicate interests underlying the abstention doctrines, a federal district court may
yet be required to give effect to the parties’ prior agreement that any disputes
between them be litigated in a particular venue or forum. An agreement of this sort
has absolutely no bearing on a federal court’s subject matter jurisdiction. Rather,
when parties select in advance the exclusive venue and/or forum for the resolution of
future disputes, and one party timely seeks enforcement of that agreement, federal
courts give effect to these provisions through a transfer of venue (when the provision
points to a different federal forum) or dismissal without prejudice under the doctrine
of forum non conveniens (when the provision identifies a state or foreign forum).9
See Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49,
59–60 (2013).
9
Appellees incorrectly suggest that the doctrine of forum non conveniens is
limited to circumstances involving foreign courts or law. In support, appellees rely
exclusively on cases that do not involve a purported forum selection clause. But
Intervenors invoke forum non conveniens as a mechanism to enforce what they
believe amounts to a forum selection clause—“the appropriate way to enforce a
forum-selection clause pointing to a state . . . forum.” See Atl. Marine Const. Co.,
Inc. v. U.S. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 60 (2013). When used for
this purpose, the forum non conveniens analysis relied on by appellees is “adjust[ed]”
in significant respects, and the forum selection clause is “given controlling weight in
all but the most exceptional cases.” Id. at 63 (quoting Stewart Org., Inc. v. Ricoh
Corp., 487 U.S. 22, 33 (1988) (Kennedy, J., concurring)).
11
D. Application
It is beyond reasoned dispute that the district court possessed subject matter
jurisdiction in this case—Congress clearly authorized the district court to adjudicate
this matter when it enacted the Class Action Fairness Act, 28 U.S.C. § 1332(d).10
And, as the above principles dictate, the Colorado state court—no matter the
language in the stipulated judgment approving the Lindauer SA—could not divest the
federal district court of subject matter jurisdiction. Thus, contrary to the apparent
misperceptions of both parties, the state and federal courts enjoy concurrent
jurisdiction over this matter. See BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1557
(2017) (explaining that concurrent jurisdiction is a well-known term of art long
employed by Congress and the courts to refer to subject matter jurisdiction); id. at
1553 (distinguishing venue provision of Federal Employers’ Liability Act (FELA)
from jurisdiction provision, and holding that the state and federal courts have
concurrent jurisdiction over FELA claims).
Accordingly, the only inquiries remaining in this appeal are (1) whether the
district court, pursuant to a doctrine of abstention or comity, should have stayed or
dismissed this action in favor of the state court litigation, and (2) whether the district
10
Intervenors do not dispute that this case meets the requirements of
§ 1332(d). But for the first time at any stage of this litigation, Intervenors assert in
their reply brief that removal was untimely because TEP did not remove the Lindauer
litigation to federal court in 2006, implicitly suggesting that TEP’s failure to remove
the Lindauer litigation precludes their removal of this action. This argument is
waived, but even if it were not it would fail because this case and the Lindauer action
are separate and distinct, and TEP was not barred from removing this case because it
declined to remove Lindauer.
12
court abused its discretion in denying Intervenors’ motion to dismiss based on forum
non conveniens. We consider each question in turn.
1. Younger Abstention
The Intervenors urged the district court to abstain pursuant to the doctrines
announced in Younger v. Harris, 401 U.S. 37 (1971), and Colorado River, 424 U.S.
800. On appeal, perhaps recognizing the broad discretion accorded a district court in
deciding whether to abstain under Colorado River, the Intervenors abandon any
reliance on that doctrine in favor of their argument that the district court was required
to abstain under Younger. “We review de novo the district court’s decision on
whether to abstain under Younger.” Planned Parenthood of Kan. v. Andersen, 882
F.3d 1205, 1221 (10th Cir. 2018).
Younger provides that a federal court must abstain from deciding a case
otherwise within the scope of its jurisdiction in “certain instances in which the
prospect of undue interference with state proceedings counsels against federal relief.”
Sprint Commc’ns, Inc. v. Jacobs, 571 U.S. 69, 72 (2013). It applies to three
categories of state cases: (1) “state criminal prosecutions,” (2) “civil enforcement
proceedings,” and (3) “civil proceedings involving certain orders that are uniquely in
furtherance of the state courts’ ability to perform their judicial functions.” Id. at 73
(quoting New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350,
367–68 (1989)). Only “exceptional” circumstances merit Younger abstention,
however, and in the ordinary case, the default rule applies: that “[T]he pendency of
an action in [a] state court is no bar to proceedings concerning the same matter in the
13
Federal court having jurisdiction.” Id. (alterations in original) (quoting Colorado
River, 424 U.S. at 817).
Category one—state criminal prosecutions—clearly does not apply to the state
civil case. Nor does category two; the Supreme Court clarified in Sprint
Communications that Younger extends to civil enforcement proceedings that are
“akin to criminal prosecution.” Sprint Commc’ns, 571 U.S. at 79 (“Our decisions
applying Younger to instances of civil enforcement have generally concerned state
proceedings ‘akin to a criminal prosecution’ in ‘important respects.’ Such
enforcement actions are characteristically initiated to sanction the federal plaintiff,
i.e., the party challenging the state action, for some wrongful act.” (citations omitted)
(quoting Huffman v. Pursue, Ltd., 420 U.S. 592, 604 (1975))).
That leaves category three: “civil proceedings involving certain orders that are
uniquely in furtherance of the state courts’ ability to perform their judicial
functions.” Id. at 73. Before turning to the Intervenors’ arguments in support of
Younger abstention under this category, we first review cases exhibiting this class’s
paradigm characteristics. “The prototypical examples of situations falling within this
third category are Juidice v. Vail, 430 U.S. 327 (1977), and Pennzoil [Co. v. Texaco
Inc., 481 U.S. 1 (1987)].” Aaron v. O’Connor, 914 F.3d 1010, 1016 (6th Cir. 2019).
In Juidice, a state court entered a default judgment against Vail, who failed to
satisfy the judgment and later failed to appear at a hearing to “show cause why he
should not be punished for contempt.” 430 U.S. at 329. Juidice, a state court judge,
entered orders holding Vail in contempt and ordering his arrest. Id. at 330. Vail and a
14
group of coplaintiffs also subject to state contempt proceedings brought suit in
federal district court “to enjoin . . . the use of the statutory contempt procedures
authorized by New York law and employed by [Juidice and other state court
judges].” Id. The federal district court “permanently enjoin[ed] the operation of
[those procedures].” Id. at 331.
The Supreme Court held that the federal district court should have abstained
under Younger based on the “State’s interest in the contempt process, through which
it vindicates the regular operation of its judicial system” and because “federal-court
interference with the State’s contempt process” would be “‘an offense . . . likely to be
every bit as great as it would be were this a criminal proceeding.’” Id. at 335, 336
(quoting Huffman, 420 U.S. at 604). “The contempt power lies at the core of the
administration of a State’s judicial system,” the Court explained, id. at 335, and
interference with this process would both disrupt “the legitimate activities of the
Stat[e]” and could be interpreted as “reflecting negatively upon the state courts’
ability to enforce constitutional principles,” id. at 336 (alteration in original) (first
quoting Younger, 401 U.S. at 44; then quoting Huffman, 420 U.S. at 604).
In Pennzoil, after receiving an adverse $11 billion judgment in Texas state
court, Texaco filed an action in federal district court “alleg[ing] that the Texas
proceedings violated rights secured to Texaco by the Constitution and various federal
statutes.” Pennzoil Co., 481 U.S. at 6. The district court determined Texaco had a
“clear probability of success” and accordingly issued a preliminary injunction barring
Pennzoil from attempting to collect its judgment through state court enforcement
15
processes. Id. at 8. “The principal issue,” the Court explained, was “whether a federal
district court lawfully may enjoin a plaintiff” who prevailed in state trial court “from
executing the judgment in its favor.” Id. at 3.
The Supreme Court held that the reasoning of Juidice required the district
court to abstain under Younger. Id. at 13.
Both Juidice and this case involve challenges to the processes by which the
State compels compliance with the judgments of its courts. Not only would
federal injunctions in such cases interfere with the execution of state
judgments, but they would do so on grounds that challenge the very process
by which those judgments were obtained.
Id. at 13–14 (footnote omitted).
Thus, both Juidice and Pennzoil involved requests to directly or indirectly
thwart state court compliance processes. See Joseph A. ex rel. Corrine Wolfe v.
Ingram, 275 F.3d 1253, 1272 (10th Cir. 2002) (“Younger governs whenever the
requested relief would interfere with the state court’s ability to conduct proceedings,
regardless of whether the relief targets the conduct of a proceeding directly.”); see
also Zeeco, Inc. v. JPMorgan Chase Bank, Nat’l Ass’n, No. 17-CV-384-JED-FHM,
2017 WL 6539504, at *2 (N.D. Okla. Dec. 21, 2017) (unpublished) (“What Younger,
Juidice, and Pennzoil have in common is that they all involved plaintiffs filing
separate federal suits in an attempt to enjoin ongoing state proceedings.”).
Here, there is no such interference. After the district court preliminarily
approved the Sefcovic SA,11 Intervenors moved in state court for an order requiring
11
As the district court noted, counsel for the Intervenors admitted “that,
although he was aware of this lawsuit within months of its filing, he decided to
16
TEP to “show cause why it should not be held in contempt of the [Lindauer SA].”
App. at 705. Intervenors argue that because this motion could eventually result in
“contempt proceedings under” Colorado law, the district court should have abstained
pursuant to the third Younger category. Aplt. Reply Br. at 21. In so arguing,
Intervenors suggest that the mere presence of contempt proceedings in state court
required the district court to abstain under Younger.
But Younger does not mechanically require abstention whenever a state court
conducts contempt proceedings in a related matter. Rather, as the above cases show,
the “exceptional circumstances” requiring abstention under Younger’s third category
are present only when the relief requested from the federal court would enjoin or
otherwise interfere with such proceedings. See Columbian Fin. Corp. v. Stork, 811
F.3d 390, 393 (10th Cir. 2016) (“Younger requires federal courts to refrain from
ruling when it could interfere with ongoing state proceedings.”); ReadyLink
Healthcare, Inc. v. State Comp. Ins. Fund, 754 F.3d 754, 759 (9th Cir. 2014) (stating
monitor what the outcome of the case would be, in order to determine what action
would be [in] his clients’ best interest.” App. at 1088. After preliminary approval of
the settlement agreement in this action, Intervenors first initiated contempt
proceedings in state court, omitting any reference to the federal litigation in their
motion for an order to show cause. In this regard, this case presents the opposite of
the paradigmatic Younger scenario in which a litigant requests injunctive relief from
a federal court to thwart the consequences of its loss in state court.
We hasten to add that TEP is not blameless with respect to litigation
gamesmanship. Upon removal, TEP did not apprise the federal district court that the
Lindauer SA was approved by a stipulated judgment that contained at least some
indication the state court contemplated a continuing role in the settlement’s
enforcement.
17
Younger abstention is only appropriate if “the federal action would have the practical
effect of enjoining the state proceedings”).
To be sure, Juidice tells us that contempt proceedings are “uniquely in
furtherance of the state courts’ ability to perform their judicial functions.” See Sprint
Commc’ns, 571 U.S. at 78. But Intervenors have not articulated, and we cannot
discern, any argument that the relief requested from the district court—approval of
the class settlement agreement—operates to enjoin or in any way interfere with the
state court’s ability to pursue contempt proceedings against TEP. Indeed, when
pressed at oral argument, counsel for the Intervenors conceded that the “the federal
court d[id not do] anything to enjoin the state court from proceeding with [the
contempt] motion.” Oral Argument at 15:01–15:16. Nevertheless, counsel argued that
Younger abstention applied because the federal court “exercised jurisdiction over the
subject matter and entered an order that amended—effectively amended—the
Lindauer settlement agreement.” Id. Although this assertion may raise concerns
relevant to the district court’s permissive decision to defer to the state court’s
concurrent jurisdiction, it is insufficient to mandate Younger abstention. Stated
simply, the “exceptional circumstances” requiring a court to abstain from exercising
its subject matter jurisdiction are not present every time a federal court is asked to
approve a private settlement agreement that resolves uncertainty flowing from an
earlier settlement agreement resolving state court litigation. See Sprint Commc’ns,
571 U.S. at 78 (“[O]nly exceptional circumstances . . . justify a federal court’s refusal
to decide a case in deference to the States.” (first alteration in original) (quoting New
18
Orleans Pub. Serv., Inc., 491 U.S. at 368)). Because Intervenors have not established
that the district court’s orders interfered with a civil proceeding “uniquely in
furtherance of the state courts’ ability to perform their judicial functions,” the district
court properly found that Younger abstention did not apply. See id.
2. Forum Non Conveniens
Finally, Intervenors suggest the district court should have dismissed this action
under the doctrine of forum non conveniens because the Lindauer SA and/or its
companion stipulated judgment embodied the parties’ agreement to litigate their
disputes exclusively in state court. We first review whether the Lindauer SA contains
an exclusive forum selection provision12 before analyzing the effect of similar
language in the state court’s stipulated judgment.
The Lindauer SA provides that the state court possesses “continuing
jurisdiction” to enforce provisions of the settlement related to “the description of past
and future royalty methodologies.” App. at 427–28. Under settled Colorado and
Tenth Circuit law,13 this language does not create a mandatory forum selection
clause.
12
We review the interpretation of a forum selection clause de novo, but review
for abuse of discretion a district court’s resolution of a motion to dismiss on forum
non conveniens grounds. Kelvion, Inc. v. PetroChina Can. Ltd., 918 F.3d 1088, 1092
(10th Cir. 2019).
13
Because the Lindauer SA contains a choice-of-law provision declaring that
Colorado law govern its interpretation, we apply Colorado law to interpret the forum
selection provision. See Yavuz v. 61 MM, Ltd., 465 F.3d 418, 430 (10th Cir. 2006)
(giving effect to a choice-of-law provision in a contract for the purpose of
interpreting its forum selection clause). But we cite to Tenth Circuit cases where
19
We have stated the general rule in interpreting forum selection clauses as
follows:
where venue is specified [in a forum selection clause] with mandatory or
obligatory language, the clause will be enforced; where only jurisdiction is
specified [in a forum selection clause], the clause will generally not be
enforced unless there is some further language indicating the parties’ intent
to make venue exclusive.
K & V Sci. Co., Inc. v. Bayerische Motoren Werke Aktiengesellschaft, 314 F.3d 494,
499 (alterations in original) (quoting Paper Express, Ltd. v. Pfankuch Maschinen
GmbH, 972 F.2d 753, 757 (7th Cir. 1992)). Thus, our principal inquiry is whether the
parties intended venue in the state court to be permissive or mandatory. See
Vanderbeek v. Vernon Corp., 25 P.3d 1242, 1247 (Colo. App. 2000), aff’d, 50 P.3d
866 (Colo. 2002) (“Contract language mandating suit in a different forum requires
dismissal whereas language merely permitting suit in such forum does not.”); K & V
Sci. Co., 314 F.3d at 498 (“This court and others have frequently classified forum
selection clauses as either mandatory or permissive.” (internal quotation marks
omitted)).
To find indicia of exclusivity, Colorado courts do not require any specific
incantation. See Vanderbeek, 25 P.3d at 1248 (“No specific language is required for a
provision to be mandatory. The clause need only contain clear language showing that
relevant because “there are no material discrepancies between Colorado law” and
federal law with regard to the validity and interpretation of forum selection clauses.
Excell, Inc. v. Sterling Boiler & Mech., Inc., 106 F.3d 318, 320 (10th Cir. 1997); see
Vanderbeek v. Vernon Corp., 25 P.3d 1242, 1247 (Colo. App. 2000), aff’d, 50 P.3d
866 (Colo. 2002) (citing to both Tenth Circuit and Colorado case law).
20
the appropriate forum consists of that which has been designated.”). For example, in
Vanderbeek, the court considered a forum selection clause stating, “The Partners
hereby expressly agree to submit any dispute or action arising between the Partners
. . . to the jurisdiction of the state or federal courts found within the State of
Delaware [or various other specified forums].” Id. at 1247. Although the clause did
not include the words “shall,” “exclusive,” or “only,” the court concluded that “the
language reflects an effort of all of the partners to agree to the most convenient,
reasonable, and mutually agreeable place for any lawsuit which may arise between or
among them.” Id. at 1247–48.
The putative forum selection clause in the Lindauer SA falls squarely outside
the general rule. Although the provision specifies that the state court have
“continuing jurisdiction” to enforce a portion of the Lindauer SA, it neither requires
that “all” actions be brought there, nor places any restriction on the parties’ ability to
bring suit elsewhere. See id. at 1248 (“[P]ermissive forum selection clauses authorize
suit in the designated forum, but do not prohibit litigation elsewhere.” (emphasis
added)). In short, the lack of any language suggesting exclusivity confirms that the
parties bargained for a permissive, but not mandatory, forum selection clause.
But Intervenors argue for a different result because they sought enforcement
not only of a forum selection provision in a private agreement, but also of a similar
provision in the state court’s judgment approving the Lindauer SA. That state court
judgment—which, the parties agree, amounts to a stipulated judgment or consent
decree—declares that “this Court shall retain continuing jurisdiction of this action to
21
address any issues concerning implementation of the Settlement Agreement and
enforcing this Final Judgment.” App. at 449. Intervenors urge that the two provisions
be read in pari materia, apparently arguing that language insufficient to establish an
exclusive forum selection clause in a private agreement does precisely that when
adopted by a court as part of a consent decree. We disagree.
The Supreme Court has explained that “[c]onsent decrees and orders have
attributes both of contracts and of judicial decrees.” United States v. ITT Cont’l
Baking Co., 420 U.S. 223, 236 n.10 (1975). “Because of this dual character, consent
decrees are treated as contracts for some purposes but not for others.” Id. For
enforcement purposes, however, the Court has directed that “a consent decree or
order is to be construed . . . basically as a contract.” Id. at 238. And by asking the
district court to dismiss the action under forum non conveniens based on the consent
decree, Intervenors undeniably sought “enforcement” of the jurisdiction-retention
provision.
Our conclusion that the retention of jurisdiction provision be interpreted like
an ordinary contract is bolstered by the fact that the state court merely adopted a
proposed judgment jointly drafted by the parties and submitted alongside the
settlement agreement. Indeed, the Intervenors relied on this fact below in urging the
district court to find indicia of exclusivity and to hold the parties to their agreement:
The parties reinforced the mandatory nature of their agreement that the
Garfield County District Court would have jurisdiction over the Lindauer
Settlement Agreement by attaching to that agreement the proposed form of
judgment, in which the Garfield County District Court expressly retained
22
jurisdiction. The court ultimately adopted that [proposed] form of judgment
and retained jurisdiction.
App. at 522 n.3 (record citations omitted). Thus, by the Intervenors’ own admission,
the parties bargained for and drafted both provisions. We therefore see no reason to
deviate from a contractual inquiry focusing on whether the parties intended that the
provision be permissive or mandatory. And this conclusion is dispositive because, as
with the provision in the Lindauer SA, the provision in the stipulated judgment
contains no indication that the parties intended to bind themselves to litigate
exclusively in the state court as required by Colorado law.
In summary, because neither the forum selection clause in the Lindauer SA nor
the related language in the stipulated judgment is mandatory, the district court did not
abuse its discretion in declining to dismiss this case under the doctrine of forum non
conveniens.
III. CONCLUSION
For the reasons articulated, the district court properly determined that it
possessed subject matter jurisdiction over this action, correctly declined to abstain
under Younger, and rightly found “no indication that the parties contemplated [the
state court] to [be] the exclusive forum” in which to litigate their contractual
disputes. App. at 1089. The judgment is AFFIRMED.
23