1 United States Court of Appeals

Fifth Circuit



## FILED

June 14, 2005

Charles R. Fulbruge III

Clerk IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

______________________

No. 04-40421

______________________

THOMAS J. BALLENGER ET AL.

Plaintiffs

ELLA RAY WHITEHEAD

Plaintiff-Appellant

versus

MOBIL OIL CORPORATION

Defendant

___________________________________________________

OZAN PATTERSON, ETC.; ET AL.

Plaintiffs

JOHN BALLENGER, Individually and as Rule 23 Class Representative on

behalf of all other similarly situated individuals.

Plaintiff-Appellant

versus

MOBIL OIL CORPORATION; FORUM INSURANCE COMPANY; MOBIL CORPORATION;

GLENDA MATOUSE, I ndividually and as Agent for Mobil Oil

Corporation; ROBERT GRONWALDT, Individually and as agent for Mobil

Oil Corporation; BEN STIFF, Individually and as agent for Mobil Oil

Corporation; CHARLES TEEPEES, Individually and as agent for Mobil

Oil Corporation; NATION AL UNION FIRE INSURANCE COMPANY OF

PITTSBURGH, PENNSYLVANIA; AIG NATIONAL INSURANCE COMPANY; AIG RISK

MANAGEMENT IN C.; AIG INC.; ENERGY PRINTING INC.; AMERICAN HOME

ASSURANCE COMPANY; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA

Defendants-Appellees* Pursuant to 5 TH C IR

. 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this opinion should not be published and is not precedent except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 5 TH C IR

. R. 47.5.4.

1 Whitehead’s name before remarriage was Mrs. Thomas

Ballenger and she is referred to as such in most of the prior

litigation.

2

___________________________________________________

Appeals from the United States District Court for

the Eastern District of Texas

(C.A. No. 1:71-CV-087 and C.A. No. 1:99-CV-156)

___________________________________________________

Before SMITH, DENNIS, and PRADO Circuit Judges.

DENNIS, Circuit Judge: *

The plaintiffs brought separate suits against the defendants

in federal court. The district court ruled against the plaintiffs,

the plaintiffs appeale d and this court affirmed the district

court’s judgment. Thereafter, the defendants applied to the

district court for an order enjoining the plaintiffs from pursuing

claims against the defendants in state court. The district court

granted the order and, finding no error, we AFFIRM.

BACKGROUND

The district court entered an order enjoining the plaintiffappellants, John Ballenger and Ella Ray Whitehead, 1 from pursuing

their pending litigation against Mobil Corporation, ExxonMobil Oil

Corporation, Forum Insurance Com pany and other defendants in the2 Mobil Corporation and ExxonMobil Oil Corporation are

jointly referred to as “Mobil” throughout this opinion as any

distinction between the two entities is irrelevant to our

decision.

3 See Ballenger v. Mobil Oil Corp ., 488 F.2d 707, 708-09 (5th

Cir. 1974).

4 Id., 713.

3 Texas courts. The district court concluded that the claims and/or

issues asserted in the Texas action had already been litigated in

the federal courts and, therefore, the defendants were entitled to

an injunction under the relitigation excepti on to the AntiInjunction Act, 22 U.S.C. § 2283.

The procedural history of this appeal is complicated,

involving multiple suits in multiple forums over a period of more

than twenty years. The litigation dates back to the 1970 death of

Thomas Ballenger, Whitehead’s husband and Ballenger’s father, as a

result of an accident at his assigned worksite, which was owned and

controlled by Mobil. 2 Whitehead sought and received workers'

compensation benefits from Forum, Mobil's workers’ compensation

carrier at that t ime. She also filed suit, on behalf of herself

and her minor children, against Mobil claiming gross negligence and

seeking punitive damages. 3 The jury found Mobil grossly negligent,

but this court reversed concluding that the evidence did not

support that finding. 4 In that suit, Mobil stated in its pleadings

that it was a subscriber under the Texas Workers' Compensation Act.5 Id., 708.

6 See Whitehead v. Mobil Corp ., No. B-159, 657 (60th Dist.

Ct., Jefferson County).

7 See McClelland v. Gronwalt , No. A-144, 481 (58th Dist. Ct.,

Jefferson County, Tex.).

8 The consolidated case is styled Whitehead v. Gronwalt

, Cause No. A-144, 481-C (60th Dist. Ct., Jefferson County, Tex.)

4 As a result, Whitehead was not entitled to any damages for

ordinary negligence. 5

In 1998, fourteen years after the final judgment was entered

in the wrongful death suit, Whitehead sought to intervene in Texas

court proceedings against Mobil and other defendants. 6 Thereafter,

Ballenger also sought intervention in a multiparty action against

Mobil, Forum and other defendants in the Texas courts. 7 The cases

w ere consolidated in 2002. 8 The central allegation in the Texas

case is that Mobil had misrepresented its status as a subscriber

und er the Texas Workers’ Compensation Act. According to the

plaintiffs, Forum was wholly owned by Mobil and, therefore, Mobil

was i llegally self-insuring. The plaintiffs asserted claims of

fraud, fraudulent inducement, conspiracy, violations of the Texas

Insurance Code, breach of contract and intentional infliction of

emotional distress.

On March 23, 1999, while the state court litigation was

pending, Whitehead filed a "Request for Relief from Judgm ent" in9 Patterson is not a party to this appeal.

10 Ballenger and Patterson brought the RICO suit as a class

action under Fed. R. Civ. P. 23, but this court vacated the

district court's class certification. See Patterson v. Mobil Oil

Corp ., 241 F.3d 417, 419 (5th Cir. 2001).

5 federal court under Fed. R. Civ. P. 60(b) ("the Rule 60(b)

motion"). She requested that the district court set aside the 1974

judgment in the wrongful death suit, arguing that Mobil had

perpetrated a fraud upo n the court by representing that it was a

workers' compensati on subscriber. On that same date, March 23,

1999, Ballenger and Ozan Patterson 9

, filed an action in federal

court alleging that Mobil violated the Rac keteer Influenced and

Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., by

conspiring with various insurers (including Forum) a n d claims

adjusters over a thirty-year period (hereinafter "the RICO suit"). 10

Specifically, they alleged that the defendants engaged in a

long-term scheme to deprive the pla intiffs of their common-law

negligence causes of action against Mobil for workplace injuries.

Patterson and Ballenger also filed a motion to intervene in

Whitehead’s case.

Both the RICO suit and the Rule 60(b) motion were ultimately

assigned to Judge Cobb. The plaintiffs in both cases filed motions

for his disqualification, which he denied. The defendants moved for

summary judgment in the RICO suit. Judge Cobb granted the motion

for summary jud gment, denied the motions for intervention, and11 335 F.3d 476, 480-483 (5th Cir. 2003).

12 Patterson v. Mobil Oil Corp ., 540 U.S. 1108 (2004)

.

6 denied Whitehead’s Rule 60(b) motion in a single opinion. The

plaintiffs appealed.

This court addressed both the RICO suit and the Rule 60(b)

motion in one opinion, Pat terson v. Mobil Oil Corp

. 11 The panel

concluded that Judge Cobb should have granted the plaintiffs’

motio ns to disqualify him. The panel also determined, however,

that Judge Cobb’s failure to recuse himself was harmless error

because the merits of the summary judgment motion would be reviewed

de novo by this court on appeal. Furthermore, because the Rule

60(b) motion was based on the same allegations as the summary

judgment motion, the merits of that motion would also be determined

by the de novo revie w of the summary judgment motion. Finally,

reviewing the grant of summary judgment to the defendants in the

RICO suit de novo

, the panel determined that Mobil was a subscriber

under the Texas Workers’ Compensation Act as a matter of law. The

Supreme Court denied the plaintiffs’ petition for a writ of

certiorari. 12

Meanwhile, the plaintiffs continued to pursue t heir state

court litigation. On December 9, 2003, the defendants filed in the

district court their “ First Amended Motion to Reopen Case and

Permanently Enjoin State Court Proceedings and Request for13 The plaintiffs argued in their briefs that the district

court also lacked jurisdiction under the Rooker-Feldman doctrine.

At oral argument, however, the plaintiffs conceded that the

Supreme Court’s decision in Exxon Mobil Corporation v. Saudi

Basic Industries Corp o ration

, 125 S. Ct. 1517 (2005), foreclosed

their argument.

14 United States v. Lee , 358 F.3d 315, 321 (5th Cir. 2004)

(quoting United States v. Matthews , 312 F.3d 652, 657 (5th Cir.

2002)).

7 Expedited Hearing.” According to the defendants, because the

issues raised by the plaintiffs in state court had already been

fully litigated in federal court, the plaintiffs should be enjoined

from pursuing their claims in the Texas courts. The district court

agreed and this appeal followed.

I.

The plaintiffs claim that the district court lacked

jurisdiction to consider the defendants’ motion. According to the

pl aintiffs, the district court lost subject matter jurisdiction

ove r the Rule 60(b) motion and the RICO suit when it entered

judgment following the remand issued by this court. 13 The

plaintiffs argue that the district court could not thereafter take

any further action in these cases without violat ing the mandate

rule. This argument lacks merit.

The mandate rule requires a lower court to "implement both the

letter and the spirit of the appellate court's mandate and

... not

disregard the explicit directives of that court." 14 The rule is15 See, e.g.

, Fine v. Bellefonte Underwriters Ins. Co.

,

758 F.2d 50, 52 (2d Cir. 1985).

16 Newball v. Offshore Logistics International , 803 F.2d 821,

826 (5th Cir. 1986).

17 See Butler Aviation Int'l v. Whyte , 6 F.3d 1119, 1128 (5th

Cir. 1993).

8 occasionally expressed in jurisdictional terms as providing that a

dis trict court lacks jurisdiction to review an appellate court’s

decision. 15 The reach of the ma ndate rule, however, is limited to

issues actually decided by the appellate court. Thus, “[a] mandate

controls on all matters within its scope, but a district court on

remand is free to pass upon any issue which was not expressly or

impliedly disposed of on appeal.” 16 In the previous appeal in this

case, this court did not expressly or impliedly pass on the issue

of whether the plaintiffs should be enjoi ned from pursuing their

claims against the defendants in the Texas courts. Therefore, the

mandate rule is not implicated in the present case.

The plaintiffs’ remaining arguments concerning the district

court’s jurisdict ion are actually procedural. Specifically, the

plainti ffs contend that the defendants could only request an

injunction by filing Rule 60(b) motions for relief from the final

judgments entered after remand from this court or by filing a new

action. The plaintiffs did not raise this objection below and

have, there fore, failed to preserve for appellate review any

objection to the form of the defendants’ motion. 1718 28 U.S.C. § 2283.

19 St. Paul Mercury Ins. Co. v. Williamson , 332 F.3d 304,

308-9 (5th Cir. 2003).

20 Id., 308.

9 II.

The Anti-Injunction Act provides that a "court of the United

States may not grant an injunction to stay proceedings in a State

court except as expressly authorized by Act of Congress, or where

necessary, in aid of its jurisdiction, or to protect or effectuate

its judgments." 18 “This statute is generally recognized to permit

a district court to enjoin state court proceedings on only three

bases: When it is (1) expressly authorized by a federal statute,

(2) necessary to assert jurisdiction, or (3) necessary to protect

or effectuate a prior judgment by a federal court.” 19 The district

court concluded that this case fits within the third condition,

commonly known as the relitigation exception to the Anti-Injunction

Act. The plaintiffs contend that the district court erred in

concluding that the relitiga tion exception applies and that the

injuncti on is therefore barred by the Anti-Injunction Act. The

application of the relitigation exception is a question of law that

this court reviews de novo

. 20

"The relitigation exception was designed to permit a federal

court to prevent state litigation of an issue that previously was21 Chick Kam Choo v. Exxon Corp. , 486 U.S. 140, 147 (1988).

22 Next Level Communs. L.P. v. DSC Communs. Corp ., 179 F.3d

244, 250 (5th Cir. 1999)(internal quotation marks omitted;

internal citations omitted).

10 presented to and decided by the federal court. It is founded in the

well-recognized concepts of res judicata and collateral estoppel." 21

Thus, the relitigation exc eption applies if a judgment of the

federal court precludes the claims (res judicata) or the issues

(collateral estoppel) raised in the state litigation. We conclude

that the plaintiffs are collaterally estopped by the federal

judgments from litigating the issue of Mobil’s subscriber status in

state court.

Collateral estoppel “is limited to matters distinctly put in

issue, litigated, and determined in the former action. This court

has determined that collateral estoppel encompasses three elements:

(1) the issue at stake must be identical to the one involved in the

prior action; (2) the issue must have been actually litigated in

the prior action; and (3) th e determination of the issue in the

prior ac tion must have been a necessary part of the judgment in

that earlier action. Moreover, the legal standard used to assess

the issue must be the same in both proceedings. However, the actual

claims and the subject matter of each suit may differ. Finally,

unlike claim preclusion, the doctrine of issue preclusion may not

always require complete identity of the parties." 22 Accordingly,23 The plaintiffs do not dispute that the issue was actually

litigated.

11 in determ ining whether the collateral estoppel branch of the

relitigation exception applies to the plaintiffs, we must consider

whether the issues raised in the Rule 60(b) motion, the RICO suit

and the state case are identical, whether that issue formed a

necessary part of the judgments in the federal cases and whether

the applicable legal standard is the same in the federal and state

cases. 23

Identical Issues

Whitehead’s Rule 60(b) motion sought to reopen the 1974

judgment against her on the grounds that Mobil had perpetrated a

fraud upon the court by misrepresenting its workers’ compensation

subscriber status. Ballenger’s federal complaint alleged that

Mobil and its insurers engaged in a long-term scheme to deprive him

and others of their common-law negligence causes of action for

workplace injuries. According to the complaint, Mobil allegedly

u s ed "fronting" insurance companies to obtain "sham" workers'

compensation policies in order to hide the fact that it was not a

workers’ co mpensation subscriber under Texas law. In the state

court litigati o n, the plaintiffs contend that the defendants,

including Mobil and Forum, fraudul ently stated that Mobil was a

subscriber under the Texas Wo rkers’ Compensation Act thereby

inducing them to forgo their common law causes of action against24 In their reply brief, both plaintiffs contend that the

injunction is overly broad because it prohibits them from

pursuing issues that are distinct from those raised in the

federal litigation. Specifically, the plaintiffs argue that the

state litigation includes claims based upon unfair claims

settlement practices and that they should be permitted to pursue

those claims in state court. Because this issue was first raised

in the reply brief, we need not consider the scope of the

injunction. See City of Abilene v. United States Envtl. Prot.

Agency , 325 F.3d 657, 661 n. 1 (5th Cir. 2003)(This court does

not consider arguments raised for the first time in a reply

brief). Moreover, the plaintiffs never argued in the district

court that some of the state court claims are unrelated to the

issue of Mobil’s subscriber status. Thus, we decline to consider

whether the injunction is overly broad. See Horton v. Bank One,

N.A. , 387 F.3d 426, 435 (5th Cir. 2004) ("Arguments not raised in

the district court cannot be asserted for the first time on

appeal.") (quoting In re Liljeberg Enters., Inc. , 304 F.3d 410,

427 n.29 (5th Cir. 2002)).

12 Mobil. The issue in the state case is therefore identical to that

raised by Whitehead’s Rule 60(b) motion and Ballenger’s RICO suit. 24

Necessary to the Judgment

The plaintiffs do not dispute that this court’s conclusion

r egarding Mobil’s subscriber status was necessary to the summary

judgment in the RICO suit. Whitehead, however, argues that her

R ule 60(b) motion was denied as untimely and that the issue of

Mobil’s subscriber st atus was not a necessary part of that

judgment. In her motion, Whitehead argued that the one year time

limit imposed by Rule 60 for motions brought under subsections 1,

2, and 3 should not be imposed in her case becaus e Mobil’s

frau d ulent scheme and conspiracy practices prevented her from25 Patterson v. Mobil Oil Corp ., No. 1:99-CV-156 and No.

1:71-CV-087, Eastern District of Texas, Beaumont Div. (March 28,

2002) at 4-5.

13 bringing her motion sooner. The district court noted that

precedent from the Supreme Court and this court establishes that a

plaintiff cannot evade the one-year time bar by alleging a fraud

upon the court. Thereafter the district court stated:

“Apart from these defects in the request, plaintiff’s factual

allegations do not, as a matter of law, set forth any illegal

conduct on the part o f Mobil. In short, plaintiff contends that

Mobil owned Forum, that Mobil absorbed all amounts paid as workers’

compensation benefits, and that Mobil was , in effect, an illegal

self-insurer. Fifth Circuit and Texas courts have held, however,

that workers’ compensatio n arrangements such as the Mobil-Forum

arrangement ar e perfectly lawful under the Texas Workers’

Compensation Act . . . . There is nothing improper, as the cases

explain, with an employer ultimately paying for 100% of all

workers’ compensation claims paid out by it s carrier . . . The

actual facts set forth in the request cannot, as a matter of law,

support the various labels of ‘fraud’ that plaintiffs pla ce upon

the Mobil-Forum workers’ compensation program.” 25

Whitehead subsequently appealed the judgment of the district

court to this court. In that appeal, however, Whitehead failed to

brief the merits of the Rule 60(b) motion and only briefed the26 Patterson v. Mobil Oil Corp. , 335 F.3d 476, 483 (5th Cir.

2003).

27 Id.

, 486 (emphasis added)

.

14 matter of Judge Cobb’s failure to recuse. Thus, the panel stated:

“we consider the Rule 60(b) ruling only as it relates to the

recusal issue.” 26 Whitehead cites that statement and argues that

this court did not consider the merits of her fraud allegations.

This is incorrect. This court considered the merits of the fraud

allegations upon which Whitehead’s Rule 60(b) motion was predicated

in determining whether Judge Cobb’s failure to recuse himself was

harmful error. This court concluded that any error was harmless

be cause “[t]he Rule 60(b) motion is premised on Mobil's alleged

fraud with respect to its subscriber status. Accordingly, t he

merits of the motion will be determined by our de novo evaluation

of the district court's summary judgment ruling, which was based on

the fraud issue.” 27 Thus, this court expressly ruled on the merits

of bo th the Rule 60(b) motion and the summary judgment when it

stated that: “ despite the plaintiffs’ vigorous arguments to the

contrary, we conclude that there is no genuine issue of material

fact with regard to Mobil’s subscriber status. And, in turn, there

is no genuine issue of material fact that Mobil was engaged in a

scheme to defraud it s employees by lying about its subscriber28 Id ., 492.

15

status.” 28 This ruling was necessary to the judgment affirming the

denial of Whiteh ead’s motion because, according to this court’s

decision, the de novo review of the fraud allegation, common to

both the Rule 60(b) motion and the summary judgment motion,

rendered Judge Cobb’s failure to recuse himself harmless error.

Same Legal Standard

The legal stan dard applied to the plaintiffs’ claims is the

same in both state and federal court. In either jurisdiction, the

question is whether Mobil was a subscriber under the Texas Workers’

Compensation Act. The plaintiffs argue that under RICO Ballard had

the burden of proving Mobil’s fraud but in the state court

litigation Mobil would have the burden of proving that it was a

workers’ compensation subscriber. Any difference in the applicable

standard of proof is immaterial, however, as both the district

court and this court concluded that, even assuming the plaintiffs’

f actual allegations were true

, Mobil was a subscriber und er the

Texas Workers’ Compensation Act as a matter of law. In other

words, there are no facts in dispute and the applicable burden of

proof is irrelevant.

In sum, because each of the plaintiffs has received a judgment

in federal court determining whether Mo bil fraudulently asserted

that it was a subscriber under the Texas Workers’ Compensation Act,29 Vines v. Univ. of La. at Monroe , 398 F.3d 700 (5th Cir.

2005)(Stating, in relitigation context, “complete identity of all

parties is not required, the party against whomthe collateral

estoppel would be applied generally must either have been a

party, or privy to a party, in the prior litigation.”(Emphasis

added)).

30 Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak

Dan Gas Bumi Negara , 335 F.3d 357, 363 (5th Cir. 2003).

16 the order enjoining the plaintiffs from litigating the same issue

in state court does not violate the Anti-Injunction Act. Moreover,

because the application of the relitigation exception in this case

is based on principles of collateral estoppel, the district court

did not err by enjoining Whitehead from raising the issue against

any of the defendants, e ven those who were not parties to the

wrongful death suit. 29

III.

The p laintiffs finally claim that the district court

erroneously granted the defendants’ motion for an i njunction

without considering the equitable requirements for an injunction.

In particular, the plaintiffs contend that the defendants failed to

plead or prove that they would suffer irreparable injury if forced

to continue with the state litigation or that they lack an adequate

remedy at law. This court reviews a district court’s decision to

grant an injunction for an abuse of discretion. 30

G enerally, to win a permanent injunction, a petitione r must

show “a clear threat of continuing illegality portending immediate31 Posada v. Lamb County , 716 F.2d 1066, 1070 (5th Cir.

1983).

32 See, e.g.

, Vasquez v. Bridgestone/Firestone, Inc. , 325

F.3d 665, 667 (5th Cir. 2003)(district court’s finding that

plaintiff was attempting to relitigate final judgment of federal

court is sufficient to support injunction); Quintero v. Klaveness

Ship Lines , 914 F.2d 717, 721 (5th Cir. 1990).

33 The plaintiffs also argue that the district court should

have accorded full faith and credit to an order of the state

court denying the defendants’ motion for abatement on the grounds

of collateral estoppel and res judicata. Such an order is not

entitled to full faith and credit. See 28 U.S.C. § 1738

(2004)(Federal courts must give state judicial proceedings "the

same full faith and credit in every court within the United

States and its Territories and Possessions as they have by law or

usage in the courts of such State, Territory or Possession from

which they are taken"; Frost Nat'l Bank v. Burge , 29 S.W.3d 580,

595 (Tex. App. 2000)(interlocutory judgments are not given

preclusive effect under Texas law); Serrano v. Union Planter's

Bank, N.A. , 155 S.W.3d 381, 381 (Tex. App. 2004)(denial of motion

17 harmful consequences irreparable in any other manner.” 31 This court

has held, however, that no independent demonstration of irreparable

harm or a l ack of alternative remedies is necessary to win an

injunction under the relitigation exception to the Anti-Injunction

Act. Rather, demonstrating that the state litigation concerns an

issue actually decided b y the federal courts is sufficient to

demons trate both the harm of continuing the state litigation and

the lack of an adequate remedy at law. 32 Accordingly, because the

district court correctly concluded that the plaintiffs are

attempting to relitigate matters in the Texas courts that have been

decided by the federal courts, it did not abuse its discretion by

granting the injunction. 33to abate is interlocutory in nature and not appealable).

18 AFFIRMED

.