Opinion ID: 1290821
Heading Depth: 2
Heading Rank: 2

Heading: Dismissal of Eight Counts From Scenic's Third Amended Complaint

Text: Scenic next argues the district court erred in dismissing eight new causes of action from Scenic's third amended complaint by (1) improperly applying state substantive law to the federal procedural question of joinder, (2) erroneously applying state law in determining seven of the eight counts sounded in tort and in dismissing those claims, and (3) abusing its discretion by dismissing the eight counts as a sanction. We review for abuse of discretion a district court's dismissal under Federal Rule of Civil Procedure 19(b). United States ex rel. Steele v. Turn Key Gaming, Inc., 135 F.3d 1249, 1251 (8th Cir.1998) (per curiam). To the extent the district court justified its dismissal of the eight additional counts as a sanction, we also review for abuse of discretion. Hairston v. Alert Safety Light Prods., Inc., 307 F.3d 717, 718 (8th Cir.2002). Scenic first contends where, as here, a district court sits in diversity, federal procedural law governs the dispute, see Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and thus, the district court improperly applied state substantive law to the federal procedural question of joinder in determining whether Arvest was a necessary and indispensable party. We agree with Scenic that in a diversity case the question of joinder is one of federal procedural law. Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 125 n. 22, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968). Nonetheless, in determining the interests of an outside party, state law may provide assistance. Id. (To be sure, state-law questions may arise in determining what interest the outsider actually has, but the ultimate question whether, given those state-defined interests, a federal court may proceed without the outsider is a federal matter. (internal citation omitted)). Such was the case here. Under Arkansas law, when an assignment is not authorized by statute, the assignor must be a plaintiff or a defendant. See Ark.Code Ann. § 16-61-112(a). The plain words of this statutory requirement have been applied by the Supreme Court of Arkansas both where the assigned thing was based on contract and where on tort. Young v. Garrett, 149 F.2d 223, 228 (8th Cir.1945) (footnotes omitted) (interpreting Pope's Dig. § 1306, the predecessor to Ark.Code Ann. § 16-61-112(a), and holding assignments of [tort] claims are not authorized by any statute of Arkansas (internal quotation marks omitted)). Scenic fails to cite any Arkansas statutory provisions authorizing the assignment of the eight additional claims asserted in Scenic's third amended complaint. Thus, because Scenic lacked standing to pursue the claims, Arkansas law required Arvest be made a party to the action. The addition of Arvest would then have destroyed diversity among the parties. Furthermore, the assignment of Scenic's new causes of action in the third amended complaint were based on the second general assignment, which was not disclosed until the third day of trial. The circumstances surrounding the second general assignment troubled the district court: namely, the assignment's acknowledgment on April 14, 2006, the Friday before trial began, after the Intervenor Trustees alleged Superior had not assigned the new causes of action to Scenic and Scenic therefore lacked standing to sue on them. Arvest also refused to join in the action, thereby forcing Scenic to attempt to join Arvest as an involuntary plaintiff. To preserve diversity jurisdiction, give the defendants a fair trial, and avoid creating an unstable relationship between Scenic's counsel and Arvest, the district court dismissed the eight new causes of action and allowed the case to proceed on the remaining count. In doing so, the district court considered Scenic's failure to disclose the second general assignment as required under Federal Rule of Civil Procedure 26(a)(1)(B), and concluded, Scenic's failure to comply with the Federal Rules was conscious, intentional, and willful[,] and that defendants have been prejudiced due to Scenic's dilatory conduct which prevented defendants from preparing for trial. We cannot say the district court abused its discretion in dismissing the eight new causes of action as a sanction. See Mann v. Lewis, 108 F.3d 145, 147 (8th Cir.1997) (recognizing the right of parties not to suffer prejudice due to an opposing party's dilatory conduct, and noting the district court's dismissal power based on a party's failure to comply with the court's rules).