Court Opinion

ID: 9556385
Source: CourtListenerOpinion
Date Created: 2023-08-17 00:00:32.470771+00
Date Added: 2024-06-11T17:18:20.667288
License: Public Domain

Case: 22-30436      Document: 00516860884         Page: 1    Date Filed: 08/16/2023

           United States Court of Appeals
                for the Fifth Circuit                                 United States Court of Appeals
                                                                               Fifth Circuit

                                 ____________                                FILED
                                                                       August 16, 2023
                                  No. 22-30436                          Lyle W. Cayce
                                 ____________                                Clerk

   Montie Spivey,

                                                            Plaintiff—Appellant,

                                       versus

   Chitimacha Tribe of Louisiana; Cypress Bayou Casino &
   Hotel; April Wyatt; Jacob Darden; Toby Darden;
   Jacqueline Junca,

                                            Defendants—Appellees.
                   ______________________________

                  Appeal from the United States District Court
                     for the Western District of Louisiana
                            USDC No. 6:22-CV-491
                  ______________________________

   Before Clement, Oldham, and Wilson, Circuit Judges.
   Andrew S. Oldham, Circuit Judge:
          The question presented in this appeal is whether 28 U.S.C. § 1447(c)
   includes an unwritten futility exception. It does not.
                                         I.
          Appellant Montie Spivey is the former Chief Financial Officer of the
   Cypress Bayou Casino. The Casino is owned by the Chitimacha Tribe of
   Louisiana. The Chitimacha Tribe is one of four federally recognized Indian
   tribes in Louisiana. The Chitimacha tribal council is the governing body over
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                                    No. 22-30436

   all the Tribe’s enterprises including the Casino. Chitimacha tribal law
   prohibits a tribal council member from working in the Casino or receiving any
   funds in the form of payments from the Casino.
          According to the allegations in Spivey’s complaint, the Chitimacha
   tribal council authorized Spivey (as CFO of the Casino) to make a $3,900
   bonus payment to the then-newly elected chairman of the tribal council,
   O’Neil Darden. Chairman Darden was an employee of the Casino until he
   took his seat on the tribal council. Spivey made the bonus payment.
          Spivey claims that several members of the tribal council turned around
   and reported the bonus payment to federal and state law enforcement.
   According to Spivey, this was all part of a conspiracy against him by these
   councilmembers. And the conspiracy worked. A law enforcement
   investigation into the bonus payment led to Spivey’s arrest and the
   suspension of his gaming license. This effectively froze Spivey out of the
   casino industry.
          Spivey initially sued the Tribe, the Casino, and four tribal council
   members in federal court under 42 U.S.C. §§ 1983 and 1985 and Louisiana
   tort law. The magistrate judge recommended the dismissal of all Spivey’s
   claims because tribal sovereign immunity barred them. The district court
   adopted the magistrate judge’s recommendation and dismissed the case
   without prejudice.
          After the magistrate judge made her recommendation but before the
   federal court entered the dismissal order, Spivey filed a materially identical
   complaint in Louisiana state court. The defendants removed, and Spivey
   moved to remand. The same magistrate judge recommended denying
   Spivey’s remand motion. She concluded “sua sponte that these claims should
   be dismissed with prejudice” because Spivey’s complaint was “essentially
   identical to the previous complaint filed in federal court” and “[a]ll claims

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   are barred by tribal immunity.” The district court, over Spivey’s objections,
   again adopted the magistrate judge’s recommendations, denied Spivey’s
   remand motion, and dismissed all Spivey’s claims with prejudice.
          Spivey timely appealed the with-prejudice dismissal. We review de
   novo the district court’s denial of Spivey’s remand motion. See Allen v.
   Walmart Stores, LLC, 907 F.3d 170, 182 (5th Cir. 2018). We review for abuse
   of discretion the district court’s choice to dismiss claims with prejudice
   rather than without prejudice. See Club Retro, LLC v. Hilton, 568 F.3d 181,
   215 n.34 (5th Cir. 2009). “A district court by definition abuses its discretion
   when it makes an error of law.” Koon v. United States, 518 U.S. 81, 100 (1996).
                                         II.
          As separate, dependent sovereigns, Indian tribes enjoy sovereign
   immunity “subject to plenary control by Congress.” Michigan v. Bay Mills
   Indian Cmty., 572 U.S. 782, 788 (2014). And “[s]overeign immunity is
   jurisdictional in nature.” FDIC v. Meyer, 510 U.S. 471, 475 (1994); accord
   Carver v. Atwood, 18 F.4th 494, 497 (5th Cir. 2021). These two propositions
   mean that—absent a waiver or congressional authorization—federal courts
   lack subject matter jurisdiction over a suit against (1) a tribe, (2) an arm or
   instrumentality of the tribe, or (3) tribal employees acting in their official
   capacities. Bay Mills, 572 U.S. at 789; Lewis v. Clarke, 581 U.S. 155, 162
   (2017). The parties don’t dispute that tribal sovereign immunity bars
   Spivey’s claims against the Tribe, the Casino, and the tribal council members
   in federal court.
          The question is what a district court should do when it determines that
   it lacks subject matter jurisdiction over a removed case. Here, the district
   court committed two independent errors. First, it held that remanding the
   case would be futile because the state courts (like the federal ones) would be
   barred by the Tribe’s sovereign immunity from adjudicating the suit. Second,

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   the district court dismissed Spivey’s claims with prejudice. We consider each
   error in turn.
                                         A.
          First, when a district court determines that it lacks subject matter
   jurisdiction over a removed case, it must remand. Congress expressly said so:
   “If at any time before final judgment it appears that the district court lacks
   subject matter jurisdiction [over a case removed from state court], the case
   shall be remanded.” 28 U.S.C. § 1447(c) (emphasis added). It uses the
   mandatory “shall” rather than the permissive “may.” See Antonin
   Scalia      &    Bryan       A.    Garner,        Reading       Law:      The
   Interpretation of Legal Texts 112 (2012) (“Mandatory words
   impose a duty; permissive words grant discretion.”); id. at 114 (“[W]hen the
   word shall can reasonably be read as mandatory, it ought to be so read.”).
   Moreover, § 1447(c)’s text includes no exceptions. If Congress’s inclusion
   of one exception precludes judicial imagination of others, see TRW Inc. v.
   Andrews, 534 U.S. 19, 28 (2001), then Congress’s omission of any exceptions
   emphatically forbids us from writing a futility exception into the statute.
          Precedent supports what the plain text says. The Supreme Court has
   noted that “the literal words of § 1447(c), [ ] on their face, give . . . no
   discretion to dismiss rather than remand an action. The statute declares that,
   where subject matter jurisdiction is lacking, the removed case shall be
   remanded.” Int’l Primate Prot. League v. Adm’rs of Tulane Educ. Fund, 500
   U.S. 72, 89 (1991) (quotation omitted). We’ve said the same thing on several
   occasions. See, e.g., Hexamer v. Foreness, 981 F.2d 821, 822 (5th Cir. 1993)
   (agreeing “that the district court does not have jurisdiction over the case”
   but holding that “instead of dismissal, 28 U.S.C. § 1447(c) requires remand
   to state court” (emphasis added)); Delgado v. Shell Oil Co., 231 F.3d 165, 175
   (5th Cir. 2000) (“If we conclude that the district court lacked subject matter

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   jurisdiction, we have no choice but to remand the cases to state court.”
   (emphasis added)).
           True, neither Hexamer nor Delgado involved allegedly futile remands.
   And when it comes to allegedly futile remands, there appears to be some
   confusion over the Fifth Circuit rule. For example, we have invoked the
   futility exception in unpublished cases. See, e.g., Underhill v. Porter, 1994 WL
   499742, at *1 (5th Cir. 1994) (per curiam) (dismissing because a remand
   would be futile); Boaz Legacy, LP v. Roberts, 628 F. App’x 318, 320 (5th Cir.
   2016) (per curiam) (similar). And we have published cases that some—
   including, most troublingly, the leading treatise on federal courts—cite as our
   official recognition of the futility exception. See, e.g., Asarco, Inc. v. Glenara,
   Ltd., 912 F.2d 784, 787 (5th Cir. 1990); Nolan v. Boeing Co., 919 F.2d 1058,
   1070 (5th Cir. 1990); see also Randolph v. ING Life Ins. & Annuity Co., 486 F.
   Supp. 2d 1, 11 (D.D.C. 2007) (citing Asarco to say we’ve embraced the futility
   exception to § 1447(c)); 14C Charles Alan Wright & Arthur R.
   Miller, Federal Practice & Procedure § 3739.1 n.43 (4th ed.
   2009) [Wright & Miller] (citing Nolan for the same proposition); In re
   Halo Wireless, Inc., 872 F. Supp. 2d 558, 563 (W.D. Tex. 2012) (also citing
   Nolan). But our published cases do not even cite § 1447(c), much less discuss
   it, much less hold that it contains an unwritten futility exception. See Asarco,
   912 F.2d at 787; Nolan, 919 F.2d at 1070.
           Given that our published decisions have never squarely confronted
   today’s question, our rule of orderliness imposes no obstacle to following the
   plain text of § 1447(c). We therefore hold, in accordance with the statute’s
   plain text and the great weight of authority from across the country, * that

           _____________________
           *
             See Hudson Sav. Bank v. Austin, 479 F.3d 102, 108–09 (1st Cir. 2007); Bromwell
   v. Mich. Mut. Ins. Co., 115 F.3d 208, 213 (3d Cir. 1997); Roach v. W. Va. Reg’l Jail & Corr.
   Facility Auth., 74 F.3d 46, 48–49 (4th Cir. 1996); Coyne v. Am. Tobacco Co., 183 F.3d 488,

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   § 1447(c) means what it says, admits of no exceptions, and requires remand
   even when the district court thinks it futile.
                                                B.
           The district court’s second error is that it dismissed Spivey’s
   complaint with prejudice.
           The judicial power vested in us by Article III is “the power to render
   final judgments.” Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 231 (1995);
   see, e.g., United States v. O’Grady, 89 U.S. (22 Wall.) 641, 647–48 (1874)
   (“Judicial jurisdiction implies the power to hear and determine a cause” and
   render “judgment in a court of competent jurisdiction.”). When a court has
   jurisdiction, its judgment power includes the power to reach the merits of a
   party’s claim, to adjudicate those merits, and to render a judgment that
   carries res judicata effect—including, as relevant here, a dismissal with
   prejudice. See also, e.g., 9 Wright & Miller, supra, § 2373 (noting a
   court can issue with-prejudice dismissal only when it has jurisdiction and
   with-prejudice dismissal carries res judicata effect).
           Contrariwise, when a district court lacks jurisdiction, it is
   emphatically powerless to reach the merits. “Without jurisdiction the court
   cannot proceed at all in any cause.” Ex parte McCardle, 74 U.S. (7 Wall.) 506,

           _____________________
   496 (6th Cir. 1999); Smith v. Wis. Dep’t of Agric., Trade & Consumer Prot., 23 F.3d 1134,
   1139–40 (7th Cir. 1994); Fent v. Okla. Water Res. Bd., 235 F.3d 553, 557 (10th Cir. 2000);
   Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999); see also Randolph,
   486 F. Supp. 2d at 10–11 (rejecting the futility exception and collecting cases); 14C
   Wright & Miller, supra, § 3739.1 (collecting cases). Only the Ninth Circuit has gone
   the other way, and even then, it has been inconsistent. Compare, e.g., Glob. Rescue Jets, LLC
   v. Kaiser Found. Health Plan, Inc., 30 F.4th 905, 920 n.6 (9th Cir. 2022) (applying futility
   exception), with Bruns v. Nat’l Credit Union Admin., 122 F.3d 1251, 1257–58 (9th Cir. 1997)
   (rejecting it).

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   514 (1868) (emphasis added). That’s why the Supreme Court has
   admonished the federal courts:
          The statutory and (especially) constitutional elements of
          jurisdiction are an essential ingredient of separation and
          equilibration of powers, restraining the courts from acting at
          certain times, and even restraining them from acting
          permanently regarding certain subjects. For a court to [reach
          the merits] when it has no jurisdiction to do so is, by very
          definition, for a court to act ultra vires.
   Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101–02 (1998) (quotation
   omitted).
          And it’s precisely because the jurisdiction-less court cannot reach the
   merits that it also cannot issue with-prejudice dismissals that would carry res
   judicata effect. So we’ve repeatedly insisted that “a jurisdictional dismissal
   must be without prejudice to refiling in a forum of competent jurisdiction.”
   Carver, 18 F.4th at 498 (emphasis added). “This rule applies with equal force
   to sovereign-immunity dismissals.” Ibid.; see also, e.g., Block v. Tex. Bd. of L.
   Exam’rs, 952 F.3d 613, 620 (5th Cir. 2020) (“Claims barred by sovereign
   immunity are dismissed without prejudice, not with prejudice.” (emphasis
   added and quotation omitted)); United States v. $4,480,466.16 in Funds
   Seized from Bank of Am. Acct. Ending in 2653, 942 F.3d 655, 666 (5th Cir.
   2019) (same); In re Great Lakes Dredge & Dock Co. LLC, 624 F.3d 201, 209
   (5th Cir. 2010) (“[I]f the district court had held that it lacked subject matter
   jurisdiction, it should have entered dismissal without prejudice . . . .”);
   Mitchell v. Bailey, 982 F.3d 937, 944 (5th Cir. 2020) (“[A] lack of subject
   matter jurisdiction is not a determination of the merits and does not prevent
   the plaintiff from pursuing a claim in a court that does have proper
   jurisdiction. Accordingly, such a dismissal should be made without
   prejudice.” (quotation omitted)); Cox, Cox, Filo, Camel & Wilson, LLC v.

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   Sasol N. Am., Inc., 544 F. App’x 455, 456 (5th Cir. 2013) (per curiam) (“A
   dismissal with prejudice is a final judgment on the merits. Accordingly, to
   dismiss with prejudice under Rule 12(b)(1) is to disclaim jurisdiction and then
   exercise it.” (quotation omitted)).
          The Tribe nonetheless contends that the “best-case exception”
   allows jurisdictional dismissals with prejudice. The best-case exception
   allows a district court sua sponte to dismiss a complaint on the merits and with
   prejudice where the plaintiff (1) “repeatedly declared the adequacy of that
   complaint in . . . response to [the] defendant’s motion to dismiss” and
   (2) “refused to file a supplemental complaint even in the face of a motion to
   dismiss.” Brown v. Taylor, 829 F.3d 365, 370 (5th Cir. 2016); see also Carroll
   v. Fort James Corp., 470 F.3d 1171, 1177 (5th Cir. 2006). But it’s precisely
   because a best-case dismissal is with prejudice that a district court can never
   render one without first establishing its jurisdiction. The limitations on
   district courts in dismissing cases on the merits after establishing jurisdiction
   (as in Brown and Carroll) say nothing about the limitations on district courts
   that do not have jurisdiction to reach the merits (as here).
          For these reasons, the district court’s with-prejudice dismissal is
   REVERSED, and the case is REMANDED with instructions to remand it
   to state court.

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