Court Opinion

ID: 2683613
Source: CourtListenerOpinion
Date Created: 2014-07-15 05:01:16.058797+00
Date Added: 2024-06-11T13:13:33.207882
License: Public Domain

Case: 14-20010        Document: 00512691889         Page: 1    Date Filed: 07/09/2014

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                             United States Court of Appeals
                                                                                      Fifth Circuit

                                                                                    FILED
                                      No. 14-20010                               July 9, 2014
                                    Summary Calendar
                                                                               Lyle W. Cayce
                                                                                    Clerk
TRACIE JACKSON; LINDA DUNSON,
                                                   Plaintiffs–Appellants,

v.

NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF COLORED
PEOPLE, doing business as NAACP; NAACP HOUSTON BRANCH;
YOLANDA SMITH,
                               Defendants–Appellees.

                     Appeal from the United States District Court
                          for the Southern District of Texas
                               USDC No. 4:11-CV-2474

Before WIENER, OWEN, and HAYNES, Circuit Judges.
PER CURIAM: *
       Tracie Jackson and Linda Dunson appeal the district court’s denial of
their motion to alter or amend the court’s order dismissing their case for lack
of subject matter jurisdiction. We affirm.
                                               I
       The facts underlying this litigation, now before this court for the second
time, are discussed in depth in our first opinion. 1 As relevant to the sole issue

       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
       1   See Jackson v. NAACP, 546 F. App’x 438, 439-40 (5th Cir. 2013).
    Case: 14-20010               Document: 00512691889     Page: 2   Date Filed: 07/09/2014

                                          No. 14-20010

before us, Jackson and Dunson filed suit in federal court against the National
Association       for      the    Advancement       of   Colored   People   (NAACP),    the
organization’s Houston Branch (the Houston Branch), and Yolanda Smith, the
Houston Branch’s executive director. 2 Their complaint alleged violations of the
Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962,
as well as various state law claims. 3
      After filing a first amended complaint, Jackson and Dunson attempted
to amend their complaint a second time, but the magistrate judge denied their
motion, finding inter alia that the plaintiffs had made misrepresentations
regarding whether their motion was unopposed and had mischaracterized the
changes to the complaint.               The magistrate judge also recommended the
dismissal of Jackson and Dunson’s claims for failure to state a cause of action. 4
The district court adopted this recommendation and dismissed all of Jackson
and Dunson’s claims under Federal Rule of Civil Procedure (Rule) 12(b)(6). 5
      We affirmed the denial of Jackson and Dunson’s motion for leave to
amend as well as the dismissal of the plaintiffs’ RICO claim. 6 Concluding,
however, that the district court erred by analyzing Jackson and Dunson’s state
law claims under Texas law rather than New York law, we vacated the district
court’s dismissal of those claims and remanded. 7 In doing so, we noted that “it
is well-within the district court’s discretion on remand to dismiss the state law
claims by declining to exercise supplemental jurisdiction.” 8 On remand, the

      2   See id. at 440.
      3   Id. at 440.
      4   Id.
      5   Id.
      6   Id. at 441-44.
      7   Id. at 444.
      8   Id.

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district court exercised this discretion and dismissed Jackson and Dunson’s
claims pursuant to 28 U.S.C. § 1367(c).
       Jackson and Dunson thereafter filed a motion pursuant to Federal Rules
of Civil Procedure 59(e) and 60(b) to alter or amend the judgment or grant relief
from it. Citing 28 U.S.C. § 1653 and Rules 15 and 21, Jackson and Dunson
claimed that the district court was required to permit them to amend their
complaint so as to remove Smith and the Houston Branch as defendants and
thereby create complete diversity. Jackson and Dunson attached an amended
complaint to the motion.            The amended complaint not only dropped the
Houston Branch and Smith as parties, but also added a new cause of action,
namely fraud under state law. Nowhere in the motion to amend, however, did
Jackson and Dunson alert the court to the addition of this new claim. The
district court denied the motion and this appeal followed.
                                               II
       Because Jackson and Dunson filed their motion within 28 days of the
district court’s order, we review it as a motion to alter or amend under Rule
59(e). 9 We review a district court’s disposition of such motions for abuse of
discretion. 10 However, when that disposition is a denial of a party’s motion to
amend its complaint, “the considerations for a Rule 59(e) motion are governed
by Rule 15(a).” 11 Although we also review the disposition of a Rule 15(a)
motion for abuse of discretion, “the district court’s discretion is considerably
less under Rule 15(a).” 12 “The Supreme Court lists five considerations in
determining whether to deny leave to amend a complaint: ‘undue delay, bad

       9   See Demahy v. Schwarz Pharma, Inc., 702 F.3d 177, 182 n.2 (5th Cir. 2012).
       10 Rosenzweig v. Azurix Grp., 332 F.3d 854, 863 (5th Cir. 2003); S. Constructors Grp.,
Inc. v. Dynalectric Co., 2 F.3d 606, 611 (5th Cir. 1993).
       11   See Rosenzweig, 332 F.3d at 864.
       12   Id. at 863.

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faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the
opposing party by virtue of the allowance of the amendment, [and] futility of
the amendment.’” 13 “Absent such factors, the leave sought should, as the rules
require, be freely given.” 14
                                                III
       We conclude that the district court did not abuse its discretion in denying
Jackson and Dunson’s motion to alter or amend. Although the district court
did not articulate the reasons for its denial, it need not do so “‘[w]hen the reason
for the denial is readily apparent.’” 15 In this case, there were numerous,
readily apparent reasons to deny the motion to amend. Jackson and Dunson
had already been given two opportunities to amend their complaint, and in one
of those instances acted in bad faith by misrepresenting substantive changes
as “corrections.” Despite this court’s admonition to the plaintiffs that such
surreptitious actions constitute bad faith, 16 Jackson and Dunson again tried to
add a substantive cause of action while telling the district court that they were
merely curing jurisdictional defects. The district court was not required to
condone such actions. Moreover, Jackson and Dunson have offered no reason
why they were not able to allege fraud in their earlier complaints or what new
facts came to light that established fraud. 17

       13   Id. at 864 (alteration in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)).
       14   Id. (citation and internal quotation marks omitted).
       15Cent. Laborers’ Pension Fund v. Integrated Elec. Servs. Inc., 497 F.3d 546, 556 (5th
Cir. 2007) (quoting Mayeaux v. La. Health Serv. & Indem. Co., 376 F.3d 420, 426 (5th Cir.
2004)).
       16   Jackson v. NAACP, 546 F. App’x 438, 441 (5th Cir. 2013).
        See Rosenblatt v. United Way of Greater Hous., 607 F.3d 413, 419-20 (5th Cir. 2010);
       17

Rosenzweig, 332 F.3d at 864-65.

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       Nor do Jackson and Dunson explain why they did not drop Smith and
the Houston Branch in their first or second amended complaints, thereby
curing the impediment to diversity jurisdiction. They assert, rather, that 28
U.S.C. § 1653 and Rule 21 entitle them to drop parties at any point in the
litigation in order to create diversity. We disagree. As the Supreme Court has
held, § 1653 permits a party to “remedy inadequate jurisdictional allegations,
but not defective jurisdictional facts.” 18 Accordingly, the statute permits a
party to amend her complaint so as to allege diversity jurisdiction when
complete diversity existed from the beginning, but was not alleged because
there were other grounds for jurisdiction. 19 It does not, however, permit a
party to create diversity. As we have stated, “The danger against which a court
must guard is that a party will attempt to use § 1653 to retroactively create
subject matter jurisdiction.” 20 That is precisely what Jackson and Dunson seek
to do in this case. Having had their first theory of jurisdiction fail, they now
seek to create diversity jurisdiction. As we have repeatedly held, the district
court is well within its discretion to deny such attempts to present legal
theories seriatim. 21
       Rule 21 likewise does not entitle Jackson and Dunson to drop Smith and
the Houston Branch. First, Rule 21 likely does not apply in this case, as we
have held that Rule 15 takes precedence over Rule 21 when a party “falls
within Rule 15 confines.” 22 Moreover, to the extent Rule 21 does apply, the

       18   Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 831-32 (1989).
       19   See Whitmire v. Victus Ltd., 212 F.3d 885, 887-89 (5th Cir. 2000).
       20   Id. at 888.
       21See, e.g., Rosenzweig, 332 F.3d at 865; S. Constructors Grp., Inc. v. Dynalectric Co.,
2 F.3d 606, 612 (5th Cir. 1993); Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981).
       22See Bibbs v. Early, 541 F.3d 267, 274 n.39 (5th Cir. 2008) (citing McLellan v. Miss.
Power & Light Co., 526 F.2d 870, 872-73 (5th Cir. 1976), modified on reh’g on other grounds,
545 F.2d 919 (5th Cir. 1977)).

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                                        No. 14-20010

district court has broad discretion under that provision. 23 As we hold that the
court acted within its more limited Rule 15 discretion in denying Jackson and
Dunson’s motion, it a fortiori acted within the discretion provided by Rule 21.
                             *      *     *
       For the foregoing reasons, the judgment of the district court is
AFFIRMED.

       23 See, e.g., Brunet v. United Gas Pipeline Co., 15 F.3d 500, 505 (5th Cir. 1994); see also
Scott v. Pfizer Inc., 182 F. App’x 312, 315 (5th Cir. 2006) (“[T]o the extent that Scott’s motion
to amend was a request to drop the nondiverse parties pursuant to FED. R. CIV. P. 21, the
district court did not abuse its discretion in denying the request, given Scott’s myriad of
shifting theories regarding the basis of jurisdiction.”).

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