Theodore Knatt v. Hospital Svc District No. 1, et

Case: 09-30891 Document: 00511077399 Page: 1 Date Filed: 04/12/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
April 12, 2010
No. 09-30891
Summary Calendar Lyle W. Cayce
Clerk
THEODORE KNATT,
Plaintiff - Appellee
v.
HOSPITAL SERVICE DISTRICT NO. 1 OF EAST BATON ROUGE PARISH,
doing business as Lane Memorial Hospital; HERBERT C OWEN, JR.,
Individually and in their capacity as the Board of Commissioners of Lane
Memorial Hospital; NICK F ADAMS, Individually and in their capacity as the
Board of Commissioners of Lane Memorial Hospital; ETTA K HEARN,
Individually and in their capacity as the Board of Commissioners of Lane
Memorial Hospital; STEVE STEIN, Individually and in their capacity as the
Board of Commissioners of Lane Memorial Hospital; CATHERINE A
POURCIAU, Individually and in their capacity as the Board of Commissioners
of Lane Memorial Hospital; ROBERT WILLIAMS, SR., Individually and in their
capacity as the Board of Commissioners of Lane Memorial Hospital; RICHARD
RATHBORNE, Individually and in their capacity as the Executive/Bylaws
Committee of Lane Memorial Hospital; JUAN MEDINA, Individually and in
their capacity as the Executive/Bylaws Committee of Lane Memorial Hospital;
DONALD FONTE, Individually and in their capacity as the Executive/Bylaws
Committee of Lane Memorial Hospital; A KEITH HEARTSILL, CPA, FHFMA,
Individually and in his capacity as an Employee and Chief Financial Officer of
Lane Memorial Hospital; TERRY WHITTINGTON, FACHE, Individually and
in his capacity as an Employee and Chief Executive Officer of Lane Memorial
Hospital; JENNIFER S JOHNSON, RN, MSHSA, Individually and in her
capacity as an Employee and Chief Nursing Officer of Lane Memorial Hospital;
KAREN REDMOND, R.N., Individually and in her capacity as an Employee of
Lane Memorial Hospital; JEANNE PARTIN, R.N., Individually and in her
capacity as Unit Director Employee of Lane Memorial Hospital; ELIZABETH
FAYE POLLARD, L.P.N., Individually and in her capacity as an Employee of
Lane Memorial Hospital; LAURA L PEEL, L.P.N., Individually and in her
capacity as an Employee of Lane Memorial Hospital; KATHLEEN MATTHEWS,
Case: 09-30891 Document: 00511077399 Page: 2 Date Filed: 04/12/2010
No. 09-30891
Individually and in her capacity as an Employee of Lane Memorial Hospital;
CLINO MELKER, CRNA, Individually and in her capacity as an Employee of
Lane Memorial Hospital; JULIE W AUSTIN, Individually and in her capacity
as an Employee of Lane Memorial Hospital; DENISE S DUNN, Individually and
in her capacity as an Employee of Lane Memorial Hospital,
Defendants - Appellants
-------------------------------------------------------------------------------------
THEODORE KNATT,
Plaintiff - Appellee
v.
HOSPITAL SERVICE DISTRICT NO. 1 OF EAST BATON ROUGE PARISH,
a political subdivision of the Parish of East Baton Rouge, State of Louisiana,
doing business as Lane Memorial Hospital
Defendant - Appellant
Appeal from the United States District Court
for the Middle District of Louisiana
USDC Nos. 3:03-CV-442, 3:05-CV-351
Before HIGGINBOTHAM, CLEMENT, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
About fifteen years ago, Dr. Theodore Knatt began providing orthopedic
surgery services to patients of Lane Memorial Hospital in Zachary, Louisiana.
He struck out on his own in 2001 to develop a physician-owned surgical facility,
but continued seeing patients at Lane. In 2002, Lane summarily suspended
Knatt from medical staff privileges for twenty-one days. These privileges were
later reinstated, and the summary suspension was removed from his record.
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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In 2003, Knatt filed the first of two lawsuits against Lane and several of
its agents and employees in state court, asserting eleven claims that arose out
of the events leading up to his suspension, including claims under the Louisiana
Unfair Trade Practices and Consumer Protection Act (LUTPA).1 The defendants
removed the case to federal court pursuant to 28 U.S.C. § 1441(c), which allows
removal of an “entire case” when it includes at least one claim over which the
federal district court has original jurisdiction.2 Knatt later attempted to amend
his complaint to allege a conspiracy to destroy his business by constructively
evicting him from office space that he leased from Lane. The district court
denied the motion to amend and Knatt instead filed a second lawsuit in state
court, alleging breach of contract, wrongful eviction, unfair trade practices, and
discrimination. The defendants removed this action, too, and the district court
consolidated Knatt’s lawsuits into one. Then, in a series of decisions, the district
court dismissed all of Knatt’s claims except three state-law contract and tortious
interference claims, which it remanded to state court.
In two opinions—in 2008 and 2009 3 —we affirmed these dismissals save
for Knatt’s LUTPA claims, which we sent back to the district court for
consideration along with the other remaining state-law claims. We reasoned:
The application of LUTPA to all of the defendants . . . presents difficult
issues of state law. As we uphold summary judgment on all of Knatt’s
federal claims, only state law claims remain. We therefore vacate the
district court’s dismissal of Knatt’s LUTPA claims and remand for
reconsideration to determine if, in comity, the district court should decline
to exercise jurisdiction over these claims.4
1
L A . REV . STAT . ANN . § 51:1401, et. seq., and 42 U.S.C. §§ 1983 and 1985.
2
28 U.S.C. § 1441(c).
3
Knatt v. Hosp. Serv. Dist. No. 1 of East Baton Rouge Parish (Knatt II), 327 F. App’x
472 (5th Cir. May 12, 2009) (unpublished); Knatt v. Hosp. Serv. Dist. No. 1 of E. Baton Rouge
Parish (Knatt I), 289 F. App’x 22 (5th Cir. July 24, 2008) (unpublished).
4
Knatt II, 327 F. App’x at 480.
3
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And, though we found “no error or abuse of discretion in the district court’s
remand” of the remaining state-law claims to state court, we vacated that
remand order and instructed the district court to take up the issue again. This
time the district court was to “consider all of the state law claims together,
including the . . . LUTPA claim.” 5
So, left without a single federal claim despite several years in the federal
system, Knatt moved for remand to state court. The district court, disagreeing
with a magistrate’s recommendation, granted the motion and the defendants
now appeal that order, seeking to keep Knatt’s lawsuit in federal court.
II
At the start, Knatt contends that we lack jurisdiction to consider the
defendants’ appeal altogether. He argues that the district court was obliged to
remand the state-law claims to state court because it lacked subject matter
jurisdiction over them and that we accordingly lack appellate jurisdiction to
review the remand order.6 Knatt is mistaken.
It is undisputed that when this case was removed to federal court, the
district court had original jurisdiction over Knatt’s federal claims, as well as
supplemental jurisdiction over his state-law claims because they were “so related
to claims in the action within such original jurisdiction that they form[ed] part
of the same case or controversy under Article III of the United States
Constitution.”7 The subsequent dismissal of all federal claims from Knatt’s suit
did not divest the district court of supplemental jurisdiction over the remaining
5
Id. at 487.
6
See 28 U.S.C. §§ 1447(c) and (d). See also Carlsbad Tech., Inc. v. HIF Bio, Inc., ___
U.S. ____, 129 S. Ct. 1862, 1866 (2009) (citing Quackenbush v. Allstate Ins. Co., 517 U.S. 706,
711–12 (1996)).
7
See 28 U.S.C. § 1367(a).
4
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state-law claims.8 Rather, the court retained its statutory supplemental
jurisdiction over those claims and “[i]ts decision declining to exercise that
statutory authority was not based on a jurisdictional defect but on its
discretionary choice not to hear the claims despite its subject-matter jurisdiction
over them.” 9
Our prior instructions in this case plainly contemplate that the district
court would employ discretion in making a remand determination.10 And on its
face the district court’s order is an exercise of discretion. Because the district
court had jurisdiction and retained discretion to adjudicate the state-law claims,
we have appellate jurisdiction to review its decision.
III
Our review is for abuse of discretion 11 and is guided by the statutory
factors set forth in 28 U.S.C. § 1367(c) as well as the common law factors of
judicial economy, convenience, fairness, and comity.12 Section 1367 authorizes
a court to decline supplemental jurisdiction over a state-law claim if: “(1) the
claim raises a novel or complex issue of State law, (2) the claim substantially
predominates over the claim or claims over which the district court has original
jurisdiction, (3) the district court has dismissed all claims over which it has
original jurisdiction, or (4) in exceptional circumstances, there are other
8
Carlsbad Tech., 129 S. Ct. at 1867.
9
Id. (citing Chicago v. Int’l College of Surgeons, 522 U.S. 156, 173 (1997)) (emphasis
added).
10
Knatt II, 327 F. App’x at 480 (citing 28 U.S.C § 1367(c) and the discretionary factors
of judicial economy, convenience, fairness, and comity).
11
Brookshire Bros. Holding, Inc. v. Dayco Prods., Inc., 554 F.3d 595, 601–02 (5th Cir.
2009) (citing Mendoza v. Murphy, 532 F.3d 342, 346 (5th Cir. 2008)).
12
Id. (citing Mendoza, 532 F.3d at 346).
5
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compelling reasons for declining jurisdiction.” 13 These interests are to be
considered on a case-by-case basis and no single factor is dispositive.14
A
In this case, section 1367’s first and third factors weigh in favor of
declining jurisdiction. In fact, when a district court eliminates all federal claims
before trial—as the district court did in this case—the “general rule” is that it
should then decline to exercise jurisdiction over any remaining state-law
claims.15 That said, “this rule is neither mandatory nor absolute,” 16 and here
there are other relevant concerns that we must address.
B
Most compelling in favor of remand to state court is the presence of a
“novel and complex issue of state law” involving LUTPA.17 As we noted, a
previous panel of this court has already explained that LUTPA’s application to
the facts of this case “presents difficult issues of state law” because it continues
to divide Louisiana appellate panels, without resolution from the state’s high
13
28 U.S.C. § 1367(c).
14
Brookshire Bros., 554 F.3d at 602.
15
Id.16
Id.17
28 U.S.C. § 1367(c). Compare Parker v. Parsley Petroleum Co. v. Dresser Indus. Co.,
972 F.2d 580, 587 (5th Cir. 1992) (reversing the district court’s decision to retain supplemental
jurisdiction in part because the remaining state issues were difficult), with Brookshire
Brothers, 554 F.3d at 602 (explaining that “the remaining state-law issues in this case do not
appear to be particularly novel or complex” and then deciding to retain federal jurisdiction),
Smith v. Amedisys, Inc., 298 F.3d 434, 447 (5th Cir. 2002) (affirming the district court’s
decision to retain supplemental jurisdiction because the remaining issues were not complex),
and Newport Ltd. v. Sears, Roebuck & Co., 941 F.2d 302, 308 (5th Cir. 1991) (approving of the
district court’s decision to retain supplemental jurisdiction even though “the matters
remaining in this lawsuit are solely questions of state law” because they “present no novel or
especially unusual questions”).
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court.18 More specifically, although “Knatt argues that all of the other
defendants were co-conspirators with [the hospital], and that he has standing to
sue them,” Louisiana courts “are split over whether co-conspirators may be sued
under LUTPA.” 19 The defendants have put forth no convincing argument to the
contrary.
C
Without support from section 1367, then, the defendants turn to the
common law, urging that adjudication of the remaining state claims in federal
court will best serve the interests of judicial economy, convenience, and fairness.
In support, they point to the fact that the parties have produced “over 7000
pages of discovery” and deposed twenty-nine witnesses. It is true that “the
amount of judicial resources that the case has consumed” is relevant to our
analysis, but that accounting is “most important . . . as an indication of the
familiarity of the forum with the case and its ability to resolve the dispute
efficiently.”20 And here, despite the magistrate judge’s involvement in overseeing
discovery, “there is no indication that the district judge ha[s] substantial
18
Knatt II, 327 F. App’x at 480.
19
Id. Compare Vermilion Hosp., Inc. v. Patout, 906 So.2d 688, 692 (La. App. 3d Cir.
2005) (not allowing conspirators to be sued), with Strahan v. State, 645 So.2d 1162, 1165 (La.
App. 1st Cir. 1994) (holding that the state, a non-competitor, could be sued for conspiring with
a competitor), and S. Tool & Supply, Inc. v. Beerman Precision, Inc., 862 So.2d 271, 276 (La.
App. 4th Cir. 2003) (finding that a supplier was liable to a distributor for “acting in concert”
with two other distributors).
20
Parker, 972 F.2d at 587. See also Waste Sys., Inc. v. Rollins Envtl. Servs., Inc., 683
F.2d 927, 928 (5th Cir. 1982) (“[T]here are no compelling reasons of judicial efficiency and
economy justifying the district court’s retention of jurisdiction. The action has not been tried.
The issues involve complex problems of Louisiana law best suited for decision by a Louisiana
court. Despite the age of the case, little litigation progress has been made. Whatever
discovery has been accomplished can be preserved for use in state court. Under these
circumstances . . . it would be an abuse of that discretion for a federal court to exercise it.”).
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familiarity with the merits of the case.” 21 The parties have not yet filed motions
in limine, the district court has not ruled on the admissibility of any significant
amount of evidence, the parties have yet to brief the remaining state law issues
on the merits, and no trial date has been set.22 As the district court put it, the
case—whittled to the few remaining state claims—has “only recently ‘re-started’”
and “trial is not imminent.” Nor do the defendants contend that the discovery
conducted in federal court will be unusable in subsequent state proceedings.23
D
Finally, the defendants argue that maintenance in federal court is
appropriate because they may benefit from a federal defense. In particular, the
defendants contend that they are each entitled to qualified immunity under the
federal Health Care Quality Improvement Act (HCQIA).24 Because the
willingness of medical professionals to review the performance of their peers is
essential to policing the quality of health care in this country, HCQIA grants
21
Id. (emphasis added).
22
This situation is very different from the one we examined in Brookshire Brothers
Holding, Inc. v. Dayco Products, Inc., 554 F.3d 595 (5th Cir. 2009). In that case, we held that
the district court had abused its discretion in remanding state-law claims to state court after
those claims spent three years in federal court. Id. at 603–04. While Knatt and the
defendants here have been in federal court for longer, the litigation in Brookshire Brothers
proceeded at a much faster clip and with fewer interruptions. Id. at 598. There, the litigation
“generat[ed] more than 1,300 entries in the district court docket,” while the “district court
decided forty-one dispositive motions, fourteen Daubert motions, and seven other motions in
limine.” Id. Moreover, “[d]iscovery had closed and the parties were making final preparations
for trial.” Id. Conversely in this case, discovery remains unfinished and the district court has
not calendared a trial or decided any Daubert motions or motions in limine. And, despite
several years in district court, the case has generated fewer than 350 docket entries.
23
See Parker, 972 F.2d at 587 (affirming the district court’s remand of supplemental
state claims where “the parties would not have to repeat the effort and expense of the
discovery process” under Texas law); Waste Sys., Inc., 683 F.2d at 931 (same under Louisiana
law).
24
42 U.S.C. § 11101 et seq.
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“limited immunity from suits for money damages to participants in professional
peer review actions.”25
Like the other claims remaining in this case, the parties did not brief the
HCQIA issue in the district court, although the defendants now attempt to
persuade us on appeal that the defense does indeed apply. It might, but without
the benefit of a district court decision and briefing on the subject, we cannot be
sure. For one, Knatt’s remaining claims, though centered on the hospital’s peer
review that resulted in his summary dismissal, stretch beyond that review
action—albeit somewhat marginally. It remains a possibility, then, that at least
some of Knatt’s factual allegations and claims fall outside the protection of the
federal defense.
And, even if HCQIA could provide total resolution in this case, it would be
odd to allow the mere potential for a federal defense to defeat the discretionary
remand of state-law claims to a state court. The defendants do not contend that
the Act falls under the complete preemption exception to the well-pleaded
complaint rule and thus do not urge that it would have allowed them to remove
the case to federal court in the first instance—rather than contest remand from
federal court.26 Although not a dispositive observation in this case, it is telling
nonetheless.
All of this is to say that the district court will be no more familiar with the
arguments associated with the defense than any given state court. For a court
to decide the issue, more briefing and argument is required, regardless of venue.
25
Poliner v. Tex. Health Sys., 537 F.3d 368, 376 (5th Cir. 2008) (quoting Mathews v.
Lancaster Gen. Hosp., 87 F.3d 624, 632 (3d Cir. 1996)) (quotation marks omitted).
26
See Zamanian v. Christian Health Ministry, No. 94-1781, 1994 U.S. Dist. LEXIS
10350 (E.D. La. 1994) (unpublished) (holding that HCQIA does not satisfy the complete
preemption exception).
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IV
After dismissing the claims that originally provided federal jurisdiction,
the district court did not abuse its discretion in finding no compelling reason to
maintain the dispute in the federal system.
AFFIRMED.
10