Court Opinion

ID: 194692
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:22:53+00
Date Added: 2024-06-11T09:42:43.977917
License: Public Domain

UNITED STATES COURT OF APPEALS
                   FOR THE FIRST CIRCUIT
                                        

No. 92-1462
No. 92-1771

             RAFAELA TRINIDAD-DELGADO, ET AL.,

                  Plaintiffs, Appellants,

                             v.

                 SK&F LAB COMPANY, ET AL.,

                   Defendants, Appellees.

                                        

       APPEALS FROM THE UNITED STATES DISTRICT COURT

              FOR THE DISTRICT OF PUERTO RICO

     [Hon. Juan M. Perez-Gimenez, U.S. District Judge]
                                                     

                                        

                           Before

                    Stahl, Circuit Judge,
                                        
              Campbell, Senior Circuit Judge,
                                            
            and Skinner,* Senior District Judge.
                                               

                                        

Luis Angel Lopez Olmedo for appellants.
                      
Gregory T. Usera with whom Ramon  L. Velasco and Goldman Antonetti
                                                                 
Ferraiuoli & Axtmayer were on brief for appellees.
                

                                        

                       April 29, 1993
                                        

                
* Of the District of Massachusetts, sitting by designation.

SKINNER, Senior District Judge.
                               

          This  appeal  is   from  a  summary  judgment   of

dismissal  for lack  of  subject matter  jurisdiction.   The

plaintiffs brought an  action in the  District Court of  the

District  of  Puerto  Rico   to  recover  damages  from  the

defendants for  injuries to  the plaintiff Rafaela  Trinidad

Delgado resulting from exposure to cimetidine hydrochloride,

a  toxic  substance  used  in the  manufacture  of  Tagamet.

Tagamet was  manufactured by the plaintiff's  employer.  The

other plaintiffs  are Mrs. Trinidad's husband and  son.  The

original  defendants were  "SK&F  Lab Co.,  Smith Kline  and

French - U.S., Smith Kline Beecham Mellon and or other Smith

Kline Corporation family and it insurers [sic]."

          Without challenge by the parties, the relationship

of  the various  Smithkline  corporations was  found by  the

district judge to be as follows:  

          Mrs. Trinidad's employer,  originally called  SK&F

Lab Co.,  merged with  SK&F Co.  to form  Smithkline Beecham

Pharmaceutical   Co.,  a   Delaware  corporation   with  its

principal  place   of  business  in  Puerto   Rico.    (This

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corporation   and  its   predecessors   were   referred   to

collectively by the court below as "Pharmco," and we will do

the same.)   Pharmco is  a subsidiary of  SKB, Puerto  Rico,

Inc., a  holding company incorporated in  Delaware, and with

its principal  place of business  there.  SKB,  Puerto Rico,

Inc.,   is  itself  a   subsidiary  of   Smithkline  Beecham

Corporation (formerly Smithkline Beckman Corporation), which

is a Pennsylvania corporation  having its principal place of

business in Pennsylvania.   There is no such corporation  as

the named defendant, Smithkline Beecham Mellon.    There are

two other  corporations referred  to by the  district court,

Smithkline and French  International Company and its  wholly

owned   subsidiary,   Smithkline   &  French   Interamerican

("Interamerican"), a Delaware corporation with its principal

place of business in Puerto Rico.  Interamerican  is engaged

in  the sale  and distribution  of products  manufactured by

Pharmco. 

          Several months after the case was filed, and after

the  original  defendants   had  filed  their  answer,   the

plaintiff moved to  amend the complaint by including  all of

the above named Smithkline  corporations as defendants.  The

record reveals neither allowance  of this motion nor service

on the added defendants.   Nevertheless, after the filing of

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this  motion,  all  parties  and  the  court  treated  these

corporations  as properly before the court, at least for the

purpose of presenting their  motions for summary judgment on

jurisdictional grounds  and to dismiss for  failure to state

claims  against certain  of the  defendants.   Counsel never

filed an  answer with respect  to the added  defendants, but

did  file a  motion to  dismiss or  for summary  judgment on

behalf  of  all  named  defendants.   For  purposes  of this

appeal, we too will treat all parties as properly before the

court.

          About a month  after the motion to dismiss  or for

summary judgment was filed by the defendants, the plaintiffs

filed a motion  under Fed.  R. Civ. P.  41(a) for  voluntary

dismissal of Pharmco and Interamerican, the two corporations

having their  principal places  of business in  Puerto Rico.

This motion  was filed  for the  avowed purpose of  creating

complete  diversity of  citizenship, the  lack of  which had

been  cited by the defendants  as a basis  for dismissal for

lack of subject matter jurisdiction.  The plaintiffs did not

specify  upon  which  paragraph  of Rule  41(a)1  they  were

                    

1   The pertinent provisions of Rule 41(a) are as follows:

          Rule 41. Dismissal of Actions

          (a) Voluntary Dismissal: Effect Thereof.

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relying.  The motion was referred to a magistrate judge, who

endorsed  the motion,  "Denied.   Rule  41(a)(1)(ii)."   The

magistrate  judge apparently  did not  consider whether  the

motion should be granted on conditions under Fed. R. Civ. P.

41(a)(2).

          The district  judge thereafter entered  a judgment

for the  defendants upon  the allowance  of their motion  to

dismiss or for summary  judgment.   He ruled  (1) that since

the motion under Rule  41(a) had been properly denied  under

Rule 41(a)(1), the two local corporations  were still in the

case, so that subject matter jurisdiction failed for lack of

diversity; and (2), alternatively, that the complaint failed

                    

               (1)  By Plaintiff;  by Stipulation.
          Subject to the provisions of Rule 23(e),
          of Rule  66, and  of any statute  of the
          United   States,   an   action  may   be
          dismissed by the plaintiff without order
          of  court (i)  by  filing  a  notice  of
          dismissal at any  time before service by
          the  other party  of an  answer or  of a
          motion  for summary  judgment, whichever
          first  occurs,  or   (ii)  by  filing  a
          stipulation of dismissal  signed by  all
          parties who have appeared in the action.
          . . . 

               (2)  By Order  of Court.  Except as
               (2)  By Order  of Court.  
          provided  in  paragraph   (1)  of   this
          subdivision  of  this  rule,  an  action
          shall   not   be   dismissed    at   the
          plaintiff's instance save upon  order of
          the  court  and  upon  such   terms  and
          conditions as the court deems proper.

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to  state a  claim  against Pharmco  and Interamerican,  and

there was no personal jurisdiction over the other Smithkline

corporations.   This appeal followed.

          It   would  appear  from  the  magistrate  judge's

endorsement that the  magistrate intended  to determine  the

motion.    This  was  error,  because  under  28   U.S.C.   

636(b)(1)(A)  and  (B), a  motion  to  dismiss  may  not  be

referred  for  determination,   but  only  for   report  and

recommendation to  the district judge.   Accordingly we will

treat the magistrate judge's endorsement as a recommendation

to  the district judge.  The magistrate judge was correct in

recommending denial of  the motion  for voluntary  dismissal

under Rule 41(a)(1), since a motion for summary judgment had

been filed and the parties had filed no stipulation.  

          The  plaintiffs  may well  have  been entitled  to

dismiss non-diverse  parties for the purpose of establishing

diversity  jurisdiction  under  Rule  41(a)(2),  absent  any

showing  of prejudice  to  the  defendants2.   Newman-Green,
                                                            

                    

     2   The   defendants'   argument   that   Pharmco   and
Interamerican   were   indispensable   parties  is   totally
insupportable  on the  record.   Mrs.  Trinidad Delgado  had
received  workers'  compensation  from the  State  Insurance
Fund,  which,  as  the  defendants correctly  argued,  is  a
complete defense to a direct claim against her employer,  of
which Pharmco  is the corporate successor. 11 L.P.R.A.   21.
Moreover, it is   difficult to understand how Interamerican,
which  was a sales organization, had anything to do with the

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Inc. v.  Alfonzo-Larrain, 490 U.S. 826,  833 (1989); Sweeney
                                                            

v. Westvaco Co., 926  F.2d 29, 41 (1st Cir.),  cert. denied,
                                                           

112 S. Ct.  274 (1991); cf. Leroux v. Lomas & Nettleton Co.,
                                                           

626 F. Supp. 962, 965 (D. Mass. 1986). 

          The plaintiffs never sought reconsideration by the

district  judge of the  magistrate's recommendation  to deny

plaintiffs' voluntary motion to dismiss, however.  Under the

Local  Rules  of  Puerto  Rico  510.1,  an   appeal  from  a

determination by a magistrate judge must be filed within ten

days, or the  determination becomes a  ruling of the  court;

but   under  Local   Rule  501.2(A),   an  objection   to  a

recommendation  and report  must  also be  filed within  ten

days, and "[f]ailure to file objections within the specified

time waives the right to appeal the District Court's order."

          Not  only did  the plaintiffs  fail to  follow the

local  rule, they failed  to honor the  rationale behind it,

which as the Supreme Court pointed out in Thomas v. Arn, 474
                                                         

U.S. 140, 147-48 (1985), is to 

          enable  [ ] the  district judge to focus
          attention on those issues -- factual and
          legal --  that are  at the heart  of the
          parties'  dispute.   The  [  ] rule,  by

                    

manufacturing  process in  which Mrs.  Trinidad  Delgado was
injured.

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          precluding appellate review of any issue
          not contained in objections,  prevents a
          litigant from 'sandbagging' the district
          judge  by failing  to  object  and  then
          appealing.

          As we  have said, the magistrate  judge's decision

must  be treated  as no  more than  a recommendation  to the

district judge.  Because of the plaintiffs' complete failure

to protect their  rights under Local Rule 510.2(A) (or under

Rule 501.1  either,  for that  matter),  the ruling  of  the

district judge is not  appealable.  Keating v. Secretary  of
                                                            

Health and Human Serv.,  848 F.2d 271, 275 (1st  Cir. 1988).
                      

For  purposes   of  this  appeal,  therefore,   Pharmco  and

Interamerican remain parties in the case.  

          Given this state of the record, the court's ruling

that there  was no  subject matter jurisdiction  must stand.

The  uncontradicted affidavits  submitted by  the defendants

firmly establish that Puerto Rico was the principal place of

business of both Pharmco and Interamerican.  For purposes of

diversity,  they are  citizens of  Puerto Rico, 28  U.S.C.  

1332(c)(1),  as  are   the  plaintiffs.    Absent   complete

diversity  of citizenship,  there  is no  basis for  subject

matter jurisdiction.  

          There is no need  to examine the court's alternate

grounds for dismissal.  

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          The  judgment  of  dismissal  is  affirmed.    The

appellees shall recover their costs.

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