Source: https://casetext.com/case/patriot-cinemas-inc-v-general-cinema-corp
Timestamp: 2020-01-18 10:38:03
Document Index: 203473249

Matched Legal Cases: ['§ 3722', '§ 3533', '§ 2', '§ 2', '§ 38', '§ 3', '§ 1441', '§ 3']

Patriot Cinemas, Inc. v. General Cinema Corp., 834 F.2d 208 | Casetext
Court of Appeals for the First Circuit1987
Patriot Cinemas, Inc. v. General Cinema Corp.
Patriot Cinemas, Inc.v.General Cinema Corp.
United States Court of Appeals, First CircuitNov 24, 1987
Fieldwork Boston, Inc. v. U.S.
The doctrine of judicial estoppel or "preclusion of inconsistent positions" prevents a party from asserting a…
Wang Laboratories v. Applied Computer
"intentional self-contradiction" should not be "used as a means of obtaining unfair advantage in a forum…
holding appeal not moot even though plaintiff was pursuing identical claims in state court because the federal action "toll[ed] the statute of limitations 11 months earlier" than did the state court action
Summary of this case from ConnectU LLC v. Zuckerberg
holding party who stated it would not pursue claim in state court estopped from reasserting that claim in another forum
Summary of this case from Lockheed Sanders, Inc. v. U.S.
James M. Hughes, with whom Devin Drohan, P.C., was on brief for plaintiff, appellant.
Shepard M. Remis, with whom Mark W. Pearlstein and Goodwin, Procter Hoar, were on brief for defendants appellees Warner Brothers Distributing Corp., Columbia Pictures Industries, Inc., Paramount Pictures Corp., Twentieth Century Fox Corp., Universal Film Exchanges, Inc., MGM/UA Communications Co., Orion Pictures Corp., and Tri-Star Pictures, Inc.
Michael L. Weiner, with whom Richard G. Reid, Thomas J. Dougherty, Lori Weiner Lander and Skadden, Arps, Slate, Meagher Flom, were on brief for defendant, appellee Gen. Cinema Corp.
Plaintiff Patriot Cinemas ("Patriot") owns and operates a chain of seven movie theaters, all within Massachusetts. The defendants are General Cinemas — one of the largest movie theater chains in the United States — and several nationwide distributors of feature films ("distributor defendants"). Patriot claims that the defendants conspired to deny first-run films to one of Patriot's theaters, forcing the theater to close. Consequently, Patriot brought suit in the Massachusetts state court seeking relief under Massachusetts law. Defendants, claiming that the suit contained an artfully pled federal antitrust claim, removed the case to the federal district court. Then, under the strange and now defunct doctrine of "derivative jurisdiction," the defendants asked the federal court to dismiss the suit without prejudice for a lack of subject matter jurisdiction. The district court did so, and Patriot now appeals from the court's order of dismissal and also from the court's refusal to remand certain of Patriot's claims to the state court.
Artful pleading is when a plaintiff either "characterize[s] his necessarily federal cause of action solely in state law terms" or "fail[s] to make specific reference . . . to a source of federal law that clearly is applicable." 14A C. Wright, A. Miller E. Cooper, Federal Practice Procedure § 3722, at 243, 276 (1985).
Patriot first brought suit in the Massachusetts Superior Court in February 1986. Its complaint contained four counts, all allegedly based on Massachusetts state law: (1) unfair business practices under Mass. Gen. Laws ch. 93A (1987); (2) violation of a recently enacted statute regulating bidding practices in the movie theater industry, see Mass.Gen. Laws ch. 93F (1987); (3) violation of the state antitrust statute, see Mass. Gen. Laws ch. 93 (1987); and (4) common law tortious interference with contractual relations.
In April 1986, defendants removed the state action to the federal district court. In a joint petition for removal, defendants averred that Patriot's state law claims were "in essence disguised federal antitrust claims." Although the petition referred to all of Patriot's claims, it focused on the state antitrust claim under Mass. Gen. Laws ch. 93.
A month after removal, defendants requested the district court to dismiss the action for lack of subject matter jurisdiction. As, in their view, the complaint had stated a disguised federal antitrust claim, defendants contended that the state court had no jurisdiction over that claim. See, e.g., Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 379-80, 105 S.Ct. 1327, 1331-32, 84 L.Ed.2d 274 (1985). Thus, they urged the federal court to dismiss the action without prejudice, under the doctrine of "derivative jurisdiction." According to that doctrine, "a federal district court does not have removal jurisdiction over a claim that the state court lacked subject matter jurisdiction to decide in the first place." Pueblo International, Inc. v. Reichard De Cardona, 725 F.2d 823, 828 (1st Cir. 1984).
Defendants-appellees contend that Patriot is estopped from contradicting its intention, stated in the Massachusetts Superior Court in the course of the second state suit, that it would not pursue the antitrust count regardless of the outcome of this appeal. To reach this result, defendants rely on the doctrine known as "judicial estoppel" or "preclusion of inconsistent positions." In broad outline, the doctrine precludes a party from asserting a position in one legal proceeding which is contrary to a position it has already asserted in another. The specific requirements, however, are "rather vague" and vary from state to state and from circuit to circuit. 1A J. Moore, J. Lucas T. Currier, Moore's Federal Practice ¶ 405[8] (2d ed. 1984). See generally Comment, Precluding Inconsistent Statements: The Doctrine of Judicial Estoppel, 80 Nw.U.L. Rev. 1244 (1986). In fact, some circuits and jurisdictions have never recognized the doctrine. See, e.g., United States v. 49.01 Acres of Land, 802 F.2d 387, 390 (10th Cir. 1986) ("The Tenth Circuit, however, has rejected the doctrine of judicial estoppel."); Konstantinidis v. Chen, 626 F.2d 933 (D.C. Cir. 1980) (stating that the District of Columbia has not adopted the doctrine, and finding no tendency in favor of its adoption).
Id. at 689, 15 S.Ct. at 558. This circuit recognizes the doctrine. See, e.g., Hurd v. DiMento Sullivan, 440 F.2d 1322 (1st Cir.), cert. denied, 404 U.S. 862, 92 S.Ct. 164, 30 L.Ed.2d 105 (1971); Smith v. Boston Elevated Railway Co., 184 F. 387 (1st Cir. 1911).
We agree with Judge Hastie's description of the guiding principle of judicial estoppel in Scarano v. Central R. Co., 203 F.2d 510 (3d Cir. 1953). Judicial estoppel should be employed when a litigant is "playing fast and loose with the courts," and when "intentional self-contradiction is being used as a means of obtaining unfair advantage in a forum provided for suitors seeking justice." Id. at 513. Accord Allen v. Zurich Insurance Co., 667 F.2d 1162 (4th Cir. 1982); Jett v. Zink, 474 F.2d 149 (5th Cir.), cert. denied, 414 U.S. 854, 94 S.Ct. 153, 38 L.Ed.2d 104 (1973).
Patriot Cinema has filed the present case which no longer claims any violation of Massachusetts General Law, chapter 93. Consequently, this is a pure and straight-forward state case which will remain in the state courts. Plaintiff is a small company, it claims damages in excess of $700,000.00, and it cannot afford to wait for the defendants and their procedural maneuvers to end. It wishes to go forward with discovery and to conclude this case.
Defendants, however, argue that if the plaintiff's federal appeal is successful . . . the federal action will be sent back to the state courts and there might be a duplicate cause of action pending. If that occurs, the two actions would be substantially identical except for the presence of a Massachusetts anti-trust claim in one which is not present in this case. Plaintiff, however, does not intend to conduct any additional discovery whatsoever on that state anti-trust claim, and it does not intend to proceed on it at all. If and when the federal case is remanded to the state courts, an appropriate order can be entered at that time consolidating the two cases or making whatever orders are necessary to avoid duplicative discovery. Plaintiff presently anticipates that it will not proceed with that first case and would then agree to a voluntary dismissal in favor of this present case, which would have proceeded forward at least 12 months.
Now, however, Patriot wants to have it the other way: it wants to revive its antitrust claim and have it remanded to the state court while enjoying the benefit of the increased pace of its current state action — a benefit obtained by telling the superior court that it would not proceed with its antitrust claim. This is the sort of self-serving self-contradiction, or "playing fast and loose with the courts," that is barred by the doctrine of judicial estoppel.
There are two answers to this argument. First, defendants suffered some harm from Patriot's assertion: the assertion spelled clear defeat for defendants' stay motion. While defendants probably overstated the harm that would occur to them if a stay were not granted — a state trial was hardly likely to be scheduled before this court could decide the appeal — denial of the motion spelled the loss of something to which they attached value.
In connection with this decision, we discuss two other relevant matters. First, we recognize that holding a litigant to his stated intention not to pursue certain claims is different from the "classic" case of judicial estoppel. In the latter, a litigant asserts inconsistent statements of fact or adopts inconsistent positions on combined questions of fact and law. For example, in Hurd, we did not allow a litigant to claim both that a law firm did and did not represent her. See 440 F.2d at 1323. In Allen, the court prevented a party from claiming that he was both an employee and not an employee of the defendant. 667 F.2d at 1167. However, in recent years courts have also applied judicial estoppel to situations such as this, where a party declares an intention not to pursue a claim. See Matek v. Murat, 638 F. Supp. 775, 782-83 (C.D.Cal. 1986); Wade v. Woodings-Verona Tool Works, Inc., 469 F. Supp. 465 (W.D.Pa. 1979). In Wade the plaintiff brought an action for a breach of a trade secrets agreement. The defendant brought a counterclaim attacking the validity of a patent related to the trade secret. Plaintiff then moved for summary judgment on the counterclaim, arguing that he was not claiming nor would he claim patent infringement, and thus that the patent's validity was not in issue. The court granted the motion for summary judgement, but also stated its opinion that any future suit for infringement would be foreclosed by the doctrine of judicial estoppel. 469 F. Supp. at 467.
On reflection, representations such as were made here, that a party will abandon a claim, present a stronger argument than do the classic cases for application of the doctrine. An objection to the classic doctrine has been that it reflects the now-abandoned strict rules of pleading. See Total Petroleum, Inc. v. Davis, 822 F.2d 734, 737 n. 6 (8th Cir. 1987) (noting a "perceived conflict with the rule allowing parties to plead alternative legal theories"). See also Fed.R.Civ.P. 8(e)(2) (allowing alternative pleading). Estoppel in the present case, in contrast with, for example, Allen, does not clash with the policy which allows pleading in the alternative.
An apt analogy to the present judicial estoppel is to the policy which prohibits litigants from manipulating their pleadings in order to obtain unjust results. This policy is evident in Fed.R.Civ.P. 15(a) and 41(a)(2) which restrict a party's right to amend his pleadings or to dismiss his action without prejudice. Under these rules, a court has the discretion to deny dismissal without prejudice of either a claim or an entire action. See 3 Moore's Federal Practice ¶ 15.08[4] (listing the reasons for denying leave to amend a complaint); 5 Moore's Federal Practice ¶ 41.05[1] (listing reasons for refusal to grant a dismissal without prejudice); see also 5 Moore's Federal Practice ¶ 41.06-1 (noting that when a party moves to dismiss one of several claims, "the choice of rules is largely a formal matter").
In the present case, the course of proceedings is similar to the situation where a single suit is brought on several counts, and the plaintiff then asks the court to dismiss one count. In such a case, the court would have the discretion to dismiss the dropped count with prejudice. See, e.g., Etablissements Neyrpic v. Elmer C. Gardner, Inc., 175 F. Supp. 355, 358 (S.D.Tex. 1959). Cf. Reisner v. General Motors Corp., 671 F.2d 91, 96, 99 (2d Cir.) (holding that a claim was "withdrawn and waived" when the party stated it was dropping the claim in order to avoid sanctions for failing to answer interrogatories related to the claim), cert. denied, 459 U.S. 858, 103 S.Ct. 130, 74 L.Ed.2d 112 (1982).
A second point we have considered is whether, when judicial estoppel is being employed, as here, across jurisdictional lines, the proper estoppel law is state or federal. In diversity cases, courts disagree whether the proper estoppel law is state or federal. Compare Allen v. Zurich Insurance Co., 667 F.2d 1162, 1167 n. 4 (holding that federal law applies because judicial estoppel "relates to protection of the integrity of the federal judicial process") with Konstantinidis v. Chen, 626 F.2d 933, 937 (holding that Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947), "compel us to look to [state] law"). Since this case is before us on alleged federal question jurisdiction, we are not bound by the strictures of Erie. We recognize, however, that regardless of which side prevails in this appeal, the rest of the proceedings will be in the Massachusetts courts.
We have also considered whether to refuse to entertain the estoppel argument for the following reason: if we find Patriot was entitled to maintain the state antitrust claim and order a remand, the state court could itself decide whether or not to give effect to an estoppel based on Patriot's prior representations to that very court. We reject this argument because we are in as good a position as the state court to deal with the estoppel question. If, as we find, Patriot's conduct does not entitle it to proceed, the courts and the parties gain nothing from waiting a year or so longer to find this out, after the expenditure of more money and effort.
Still, given all the circumstances, we choose to use federal law. As a practical matter, Massachusetts law affords little guidance, since it remains an open question whether the Massachusetts courts would employ judicial estoppel. See Brown v. Gerstein, 17 Mass. App. Ct. 558, 568 n. 19, 460 N.E.2d 1043, 1051 n. 19 (1984). More important, we are not convinced that there is authority sufficient to allow us to adopt the state law of judicial estoppel in the exercise of our federal question jurisdiction.
Since Patriot is estopped from contradicting its statement that it will not pursue its antitrust count, we are presented with an appeal from the dismissal of a count which the plaintiff no longer wishes to litigate. Such an appeal does not present a live controversy. Thus, this portion of the appeal is moot. Cf. Consumers Union of U.S., Inc. v. Kissinger, 506 F.2d 136, 140-41 (D.C. Cir. 1974), cert. denied, 421 U.S. 1004, 95 S.Ct. 2406, 44 L.Ed.2d 673 (1975); 13A C. Wright, A. Miller E. Cooper, Federal Practice Procedure § 3533.2 (1984) ("There can be no doubt that an action is mooted if the plaintiff voluntarily withdraws.").
However, the two suits do differ in one respect: this action tolls the statute of limitations 11 months earlier than the action now in state court. This distinction does give Patriot a "legally cognizable interest in the outcome" of this appeal. Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 1951, 23 L.Ed.2d 491 (1969). Under the applicable statutes of limitations, the 11-month difference may matter. For example, Patriot's fourth count — tortious interference with contractual relations — is presumably governed by the three-year limit in Mass.Gen. Laws ch. 260, § 2A (1987). Patriot's complaint alleges that the anticompetitive conduct began on December 1, 1983. This suit began in February 1986, and thus covers the entire period of the alleged misconduct. In contrast, under the second state suit, Patriot may not pursue a tort cause of action that arose before January 20, 1984. Furthermore, we are unsure of the statute of limitations which is applicable to Patriot's Mass.Gen. Laws ch. 93F count. This provision was recently enacted, and has yet to be construed by the Massachusetts courts. Thus, due to the fact that this action tolls the statute of limitations earlier than the second suit, Patriot's appeal from the district court's dismissal of the three remaining state claims and its denial of Patriot's motion to remand is not moot.
Mass.Gen. Laws ch. 260, § 2A.
Under the doctrine of derivative jurisdiction, the district court would have been correct to dismiss the antitrust count, if (but only if) as it held, this count were the equivalent to a federal antitrust claim. See, e.g., General Investment Co. v. Lake Shore Michigan Southern Railway Co., 260 U.S. 261, 288, 43 S.Ct. 106, 117, 67 L.Ed. 244 (1922). The final question before us is the proper disposition of Patriot's other three claims. The district court dismissed these claims along with the state antitrust count. After considering the logic of the derivative jurisdiction doctrine, the recent amendment of the removal statute, and considerations of fairness, we conclude that the remaining claims should be remanded to state court.
Because Patriot's appeal on the antitrust count is moot, we lack jurisdiction to consider the substantive issue concerning the well-pleaded complaint rule.
The attorneys general of Massachusetts, Rhode Island, New Hampshire, and Maine have filed an amicus brief disputing the reasoning of the district court in its denial of Patriot's motion to remand. The states contend that if removal of state antitrust claims were to become common practice, state antitrust laws would be rendered virtually meaningless. Under the reasoning of the district court, only a tiny subset of cases — those where the alleged anticompetitive conduct had no effect on interstate commerce — could be tried upon state law in state court. Such a result, we are told, would fly in the face of the long tradition of joint federal-state enforcement of laws which regulate anticompetitive behavior. See, e.g., Giboney v. Empire Storage Ice Co., 336 U.S. 490, 495, 69 S.Ct. 684, 687, 93 L.Ed. 834 (1949) ("Agreements and combinations not to sell to or buy goods from particular persons . . . are well recognized trade restraint practices which both state and national legislation can and do prohibit."); Standard Oil Co. v. Tennessee, 217 U.S. 413, 421-22, 30 S.Ct. 543, 544, 54 L.Ed. 817 (1910) (Holmes, J.); 1 P. Areeda D. Turner, Antitrust Law ¶ 208 (1978).
Patriot filed an action comprised of four state law claims in a state court. Under the well-pleaded complaint rule, which was emphatically reaffirmed by a unanimous court in Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), a suit with state claims is only removable to federal court if the state law claims "necessarily turn on some construction of federal law." Id. at 9, 103 S.Ct. at 2846. See also Louisville Nashville Railroad Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). Although the Massachusetts state antitrust law is similar to federal antitrust law, the defendants did not claim that the resolution of this suit turned on federal law. Thus, the amici strenuously contend that under the well-pleaded complaint rule, Patriot's action was improperly removed.
We note that Franchise Tax Board only mentions one exception to the well-pleaded complaint rule. This exception is "if a federal cause of action completely preempts a state cause of action, any complaint that comes within the scope of the federal cause of action necessarily `arises under' federal law." Id. 463 U.S. at 24, 103 S.Ct. at 2854 (referring to Avco Corp. v. Aero Lodge No. 735, International Association of Machinists, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968), and federal preemption of state labor law); Hernandez-Agosto v. Romero-Barcelo, 748 F.2d 1 (1st Cir. 1984). As noted above, federal antitrust law has never been held to completely preempt state antitrust law. Thus amici argue that the principal exception to the well-pleaded complaint rule does not apply to Patriot's suit.
The district court also may have relied, as do the defendants, on footnote 2 of Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 397 n. 2, 101 S.Ct. 2424, 2427 n. 2, 69 L.Ed.2d 103 (1981). This footnote does have language about claims which are "federal in nature" or which have a "sufficient federal character to support removal." Id. Professor Wright calls this footnote "mystifying," C. Wright, The Law of Federal Courts § 38, at 212 n. 19 (1983). Whether it was meant to work a revolution in the law of federal removal jurisdiction must, in this circuit, await another case. Even if that were its intent, this radical change may have been overruled sub silentio in Franchise Tax Board, which so strongly reaffirmed the well-pleaded complaint rule. Franchise Tax Board, 463 U.S. at 7, 103 S.Ct. at 2845 (noting that the law of removal jurisdiction "has remained basically unchanged for the past century").
First, remand is dictated by the logic of the derivative jurisdiction rule. The rule states that upon removal, the federal court's jurisdiction is derived from that of the state court. Thus, dismissal of a removed claim is warranted when the state court had no jurisdiction over that claim. Accordingly, in keeping with that doctrine (and with its supposition that the state antitrust claim was "really" federal), the district court dismissed the antitrust claim. In addition to the antitrust claim, however, Patriot had three other claims, none of which were or are claimed to be federal. Perhaps the district court dismissed these additional claims because under the derivative jurisdiction rule, it had no pendent jurisdiction over these claims. However, the analysis must not stop here. Although lacking in pendent jurisdiction, the federal court did have that type of jurisdiction which allows and even requires a federal court to remand improperly removed state claims. See, e.g., Franchise Tax Board, 463 U.S. at 8, 103 S.Ct. at 2845; 1A Moore's Federal Practice ¶ 0.169[1], at 676-78 (2d ed. 1987) (noting that when a state suit is improperly removed, the federal district court should remand, rather than dismiss).
The only rationale under which dismissal would be required is if the antitrust claim somehow "taints" the remaining claims, thereby changing the normal preference for remand. We see no logic to this position, and have declined to follow it in a different context. In Pueblo International, Inc. v. Reichard De Cardona, 725 F.2d 823 (1st Cir. 1984), we employed the derivative jurisdiction doctrine and ordered dismissal of a removed federal antitrust count. Id. at 827. However, we did not then order a dismissal of the remaining counts. Instead, we looked at the suit comprised of the remaining counts, and based our decision on the attributes of these counts. Following that procedure in this case, we find a suit left with three state law counts. Such a suit is improperly removed to the federal court, and remand is in order.
In Pueblo, the truncated suit retained some additional federal counts. We instructed the district court to retain jurisdiction over these counts, and to assert pendent jurisdiction over the state law counts.
Second, Congress has amended the removal statute, effectively overruling the doctrine of derivative jurisdiction. See Judicial Improvements Act of 1985, Pub.L. No. 99-336, § 3(a), 100 Stat. 633, 637 (1986) (codified at 28 U.S.C. § 1441(e)). Although the new law does not apply to this case, it does evince Congress's belief that the derivative jurisdiction rule creates wasteful and illogical results. The House Report states that the rule "seems to further no intelligible policy, and it involves a wasteful requirement of dismissal and refiling." H.R. Rep. No. 423, 99th Cong., 1st Sess. 13 (citation omitted), reprinted in 1986 U.S. Code Cong. Admin.News 1545, 1553.
This suit was brought in February 1986. The amendment to the removal statute took effect on June 19, 1986. See Judicial Improvements Act § 3(b).
1. Patriot appealed from the district court's December 1, 1986 judgment, which denied Patriot's motion to remand and granted the defendants' motion to dismiss without prejudice. Because of the estoppel, Patriot's appeal with respect to the state antitrust count is moot. Therefore, the judgment of the district court with respect to the antitrust count is vacated, and this count is remanded with instructions to dismiss the count as moot. See Berkshire Cablevision of Rhode Island, Inc. v. Burke, 773 F.2d 382, 383 (1st Cir. 1985) (citing United States v. Munsingwear, Inc., 340 U.S. 36, 39, 71 S.Ct. 104, 106, 95 L.Ed. 36 (1950)). As to the remaining three counts, the judgment of the district court is also vacated. These three counts are remanded to the district court with instructions to grant Patriot's motion to remand to the superior court.