Opinion ID: 754748
Heading Depth: 1
Heading Rank: 3

Heading: Motion to Dismiss for Lack of an Indispensable Party

Text: 22 WAPA argues that under Federal Rule of Civil Procedure 19(b) the district court should have dismissed this case because the United States is an indispensable party which cannot be joined. WAPA maintains that because the United States was not a party, WAPA was not able to demonstrate that Gardiner contracted with the United States instead of with WAPA. WAPA bases this claim in part on the fact that it had only limited discovery against the United States. WAPA also contends that this action will impact the United States because the decision will resolve some of the terms of the contract, such as the amount that Gardiner is entitled to recover. Finally, WAPA claims that failure to include the United States as a party forces WAPA to assume the risk of inconsistent obligations. 23 In determining whether a district court should have dismissed a case under Rule 19(b) for failure to join an indispensable party, we must make a preliminary determination that the non-joined party cannot be joined under Rule 19(a). Only if a party cannot be joined under Rule 19(a), does Rule 19(b) come into play. 3 Shetter v. Amerada Hess Corporation, 14 F.3d 934, 941 (3d Cir.1994); Janney Montgomery Scott, Inc. v. Shepard Niles, Inc., 11 F.3d 399, 404 (3d Cir.1993). 24 We exercise plenary reviews over a Rule 19(a) determination to the extent that it is based on conclusions of law; as to subsidiary findings of fact we apply a clear error standard. HB General Corp. v. Manchester Partners, L.P., 95 F.3d 1185, 1189 (3d Cir.1996) (citing Janney, 11 F.3d at 404). Rule 19(b) determinations are reviewed for an abuse of discretion. HB General Corp., 95 F.3d at 1189. 25 Even assuming that the United States could not have been joined under Rule 19(a), we cannot conclude that the district court abused its discretion in refusing to dismiss under Rule 19(b). See Schulman v. J.P. Morgan Inv. Management, Inc., 35 F.3d 799, 806 (3d Cir.1994). Under Rule 19(b), the district court had to decide whether the United States's participation in the litigation was so important that in equity and good conscience the action ... should be dismissed, the absent person being thus regarded as indispensable. The four factors listed in the Rule are not exhaustive, but they are the most important considerations in deciding whether to dismiss the action. Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1608 at 91 (2d Ed.1986). 26 The first and second factors under Rule 19(b) are to what extent a judgment rendered in the person's absence might be prejudicial to the person or those already parties, and to what extent such prejudice can be avoided. Here, there is little danger of prejudice to the absent party--the United States--if this case goes forward without it. Indeed, the United States does not want to become a party to the suit, strongly suggesting that its interests will not be impeded if the suit goes forward without it. See Sindia Expedition v. Wrecked & Abandoned Vessel, 895 F.2d 116, 121 (3d Cir.1990) (reasoning that Rule 19(a)(2)(I) did not apply because New Jersey was manifestly unconcerned with any adjudication in its absence); 4 see also Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 49 (2d Cir.1996). Moreover, there is no prejudice to Gardiner in excluding the United States. Gardiner can recover fully from WAPA, the party with whom Gardiner claims it has a contract. 27 WAPA, on the other hand, argues that the absence of the United States has seriously hampered WAPA's effort to show that there was no contract between WAPA and Gardiner. WAPA has not, however, come forward with much to support this claim. Indeed, as Gardiner points out, WAPA deposed a number of federal officials: Fred Rounsaville, Edward Orchowski, Steve Singer, Thomas Barbee, Adair Martin, David Shriver, Wynn Fuller, Colonel Cox, and Gerald Connolly. Despite the depositions, WAPA claims that it was unable to obtain relevant internal documents from the government, but WAPA has not presented specific evidence of prejudice. Although we do not suggest that WAPA must identify beforehand the contents of the documents that it seeks, WAPA must nonetheless identify with greater specificity the information that it needs. For example, WAPA might, argue that it could not show which federal officials had the implied authority to contract with Gardiner because it was not given information about their jobs and responsibilities. Or WAPA might assert that it could not learn who the contracting officers on St. Croix were immediately after Hugo hit. WAPA has not, however, made any such contention. Given the extensive discovery permitted in this case, WAPA should be able to identify any missing information with more detail than the phrase internal documents. 28 WAPA also argues that it runs the risk of inconsistent adjudication of its rights if the United States is not joined because, if Gardiner prevails, WAPA must then pursue a remedy against the United States in a different action. The risk of inconsistent judgments, although mentioned specifically in Rule 19(a)(2)(ii), is relevant under Rule 19(b) as well. Schulman, 35 F.3d at 806. In general, however, a defendant's right to contribution or indemnity from an absent non-diverse party does not render that absentee indispensable pursuant to Rule 19. Janney, 11 F.3d at 412. In Janney, we considered an agreement in which Janney would serve as an advisor to Underwood and its subsidiary, Shepard Niles. Janney sued Shepard Niles, and Shepard Niles contended that Underwood, as a co-obligor to the contract, was a party to be joined if feasible under Rule 19(a). If joined, Underwood would have destroyed diversity jurisdiction. 29 We concluded that the outcome of the case would be res judicata or collateral estoppel as between Janney and Shepard Niles, but that Janney remain[ed] free to claim contribution or indemnity from Underwood. We went on the explain that a defendant's right to contribution or indemnity from an absent non-diverse party does not render that absentee indispensable pursuant to Rule 19. 11 F.3d at 412 (quoting Bank of America National Trust and Savings Association v. Hotel Rittenhouse Associates, 844 F.2d 1050, 1054 (3d Cir.1988)). A defendant may implead the absent party under Federal Rule of Civil Procedure 14, but is not required to do so, and if it does not, its right to bring a separate action for contribution or indemnity is unaffected. Id. 5 30 In this case, unlike Janney, the defendant does not have the option to implead the absent party because we lack jurisdiction over the United States. Indeed, the third-party complaint which WAPA filed against FEMA, the Army Corps of Engineers, and the United States Geological Society, was dismissed for lack of jurisdiction. But the reasoning of Janney--if a defendant does not implead an absent party, there is no legal effect on its rights of contribution or indemnification--applies with equal force here. 6 WAPA is free to pursue any claim it has against the United States in a separate action. We recognize that this is a less convenient remedy for WAPA. Nevertheless, it is a means of resolving WAPA's claim of the risk of inconsistent obligations. 31 WAPA's final argument on the issue of prejudice is that the district court did not permit it to present its defense that Gardiner contracted not with WAPA, but with the United States. In support, WAPA points to the district court's statements that the involvement of the United States was not material or pertinent. These statements reflect, however, the district court's conclusion that Gardiner had demonstrated that Gardiner and WAPA had a contract, making summary judgment appropriate. If the district court determined that a contract existed between WAPA and Gardiner, Gardiner was entitled to summary judgment, regardless of what agreement WAPA may have had with the United States. We will consider the district court's grant of summary judgment in the next section. We note only that whatever prejudice may have enured from the district court's conclusions on materiality and pertinence goes only to the issue of the propriety of summary judgment. The district court's statement that certain activities by federal officials were not material to its determination that Gardiner's contract was with WAPA was made in the context of the consideration of summary judgment and it has no bearing on whether joinder of the United States was feasible under Rule 19(b). 32 The third factor under Rule 19(b) is whether a judgment rendered in the person's absence will be adequate. This element allows the court to consider whether the relief it may grant will be an adequate remedy for the plaintiff. Provident Bank & Trust Co. v. Patterson, 390 U.S. 102, 112, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968). Wright, Miller & Kane, Federal Practice & Procedure § 1608 at 116. This factor weighs, in our view, in favor of WAPA. WAPA's claim, as construed by the district court, will be resolved in one action. Moreover, as we note above, the possibility that the defendant may have a claim for contribution or indemnity does not render an absentee indispensable. The right to contribution and indemnity should not, therefore, be considered to cause inadequacy of the resulting judgment. 33 The fourth Rule 19(b) factor, whether the plaintiff has a remedy if the action is dismissed, counsels strongly against dismissal in this case. WAPA argues that Gardiner could have filed the same action in the Court of Federal Claims, where all parties could be joined in one action, for a conclusive and mutually consistent resolution of their rights and responsibilities. The problem with this argument, however, is that Gardiner does not allege that he had a contract of any sort with the United States. Gardiner has not alleged a cause of action against the United States; thus, he does not have a remedy in the Court of Claims. Unless Gardiner claims a contractual relationship with the United States, the Court of Claims simply has no jurisdiction over the case. The Court of Appeals for the Federal Circuit reversed Judge Brotman's transfer of the case to the Court of Claims for exactly this reason--that court had no jurisdiction over a dispute between WAPA and Gardiner. Decision of the Court of Appeals for the Federal Circuit, September 2, 1993; Appendix at 2167, 2171-2172. WAPA's argument that Gardiner should file in the Court of Claims implies that Gardiner has to rewrite his claim to assert that his contract was with the United States. Such a revision would, however, provide no remedy for the claim that Gardiner makes against WAPA for breach of contract. 34 With these considerations in mind, we conclude that the district court did not abuse its discretion in denying the Rule 19(b) motion. Gardiner would have had to have alleged an entirely new cause of action against the United States in order to bring this suit in the Court of Claims. Indeed, Gardiner would have had to have alleged something that it maintains did not exist--a contract with the United States. Moreover, WAPA's claim of prejudice in discovery matters, as we have seen, adds little. For these reasons, it was well within the discretion of the district court to deny WAPA's motion.