Court Opinion

ID: 38733
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:14:33+00
Date Added: 2024-06-11T17:16:05.072475
License: Public Domain

United States Court of Appeals
                                                                           Fifth Circuit
                                                                          F I L E D
                                  In the                                  June 22, 2005
             United States Court of Appeals                         Charles R. Fulbruge III
                        for the Fifth Circuit                               Clerk
                            _______________

                              m 04-30576
                            _______________

                        ELINA AUGUST, ET AL.,

                                                 Plaintiffs,

ELINA AUGUST; CASIMERE AUGUST, JR.; JASON AUGUST; MALCOLM AUGUST;
               ANASTASIA PRINGLE; CHANTELL PRINGLE;
                         KENTON COUSIN,
                   ON BEHALF OF BRANDON PRINGLE;
ANUSKA FAVORITE; ERANA GUATIER; DANIELLE JARROW; SCHWANN IRONS;
            MONICA LASALLE; AND THERESA MILLSAPS,

                                                 Plaintiffs-Appellants,

                                VERSUS

                    BOYD GAMING CORPORATION,

                                                 Defendant-Appellee.

                      _________________________

                Appeal from the United States District Court
                   for the Eastern District of Louisiana
                            m 2:03-CV-1431
                  ______________________________
Before SMITH, DENNIS, and PRADO,                         miss, finding that “equity would dictate that
  Circuit Judges.                                        both parties be tried together.”

JERRY E. SMITH, Circuit Judge:*                                                  II.
                                                             We review for abuse of discretion a dis-
   The plaintiffs appeal the dismissal of their          missal for failure to join an indispensable party
lawsuit under Federal Rule of Civil Procedure            under rule 12(b)(7). See HS Resources, Inc. v.
12(b)(7) for failure to join an indispensable            Wingate, 327 F.3d 432, 438 (5th Cir. 2003).
party. We reverse and remand.                            A prerequisite to a proper dismissal for failure
                                                         to join an indispensable party is that the absent
                       I.                                party, if added, would divest the court of sub-
   The plaintiffs, Louisiana residents, are dece-        ject-matter jurisdiction.
dents of Casimere August, who allegedly died
from injuries suffered when he hit his head on               Then, resolution of the motion requires a
a bathroom sink after slipping on water and              two-step inquiry. First a court must determine
urine that had accumulated on the floor at the           whether a party should be added under the re-
Treasure Chest Casino. Basing jurisdiction on            quirements of Federal Rule of Civil Procedure
diversity of citizenship, 28 U.S.C. § 1332,              19(a); then the court must determine whether
plaintiffs sued Boyd Gaming Corporation                  litigation can be properly pursued without the
(“BGC”), a Nevada corporation that is the                absent party under Federal Rule of Federal
parent of the subsidiary that owned the casino,          Procedure 19(b). See HS Resources, 327 F.3d
Treasure Chest Casino, LLC (“TCC”). The                  at 439. If the absent party should be joined
complaint alleged that BGC operated the ca-              under rule 19(a), but the suit cannot proceed
sino and that the personal injuries were a result        without that party under the requirements of
of BGC’s negligence in knowing of the alleg-             rule 19(b), the case must be dismissed.
edly hazardous condition but failing to take
necessary steps to correct it.                              The parties do not contest that adding TCC
                                                         would deprive the district court of federal jur-
   Plaintiffs filed an identical suit in Louisiana       isdiction because it would destroy complete di-
state court, adding as additional defendants             versity of citizenship. We therefore proceed to
TCC and Treasure Chest, Inc., both Louisiana             determine whether TCC should be joined
corporations. The state suit was stayed on               under rule 19(a).
BGC’s motion.
                                                            Plaintiffs argue that the district court abus-
    Shortly after the federal suit was filed, BGC        ed its discretion in finding that TCC was a nec-
moved to dismiss under rule 12(b)(7) for                 essary party under rule 19(a) because, they
failure to join TCC as an indispensable party.           claim, TCC was at most subject to joint-and-
The district court granted the motion to dis-            several liability along with BGC, and as a re-
                                                         sult is not a necessary party as a matter of law
                                                         under Temple v. Synthes Corp., 498 U.S. 5
   *                                                     (1990). In Temple, the plaintiff was injured af-
     Pursuant to 5TH CIR. R. 47.5, this court has
                                                         ter surgery that implanted a device into his
determined that this opinion should not be publis-
hed and is not precedent except under the limited
                                                         spine that broke inside his body. See id. at 5.
circumstances set forth in 5TH CIR. R. 47.5.4.           The plaintiff filed a federal diversity suit

                                                     2
against the manufacturer and simultaneously                and/or train the personnel, or maintain the
filed a negligence suit in state court against the         premises of the Treasure Casino, because TCC
hospital and the doctor who had performed the              is the only entity potentially liable for such.
operation. See id. at 6. The district court dis-           BGC cites the general tenet of Louisiana
missed the suit with prejudice based on the in-            corporate law that a parent corporation has no
terests of judicial economy, citing Provident              duty to control the activities of subsidiaries or
Tradesmens Bank & Trust Co. v. Patterson,                  to ensure that they are complying with duties
390 U.S. 102, 116-17 n.12 (1968), in which                 owed to third persons;2 BGC also relies on
the Court recognized that one goal of rule 19              evidence that TCC managed the casino. BGC
is “the interest of the courts and the public in           thus concludes that its tort liability is not joint
complete, consistent, and efficient settlement             and several and is at most derivative of and
of controversies.” Id. We affirmed on the                  secondary to TCC’s liability.
ground that the district court did not abuse its
discretion in ordering joinder under rule 19,                  Despite BGC’s arguments, there is suffi-
because the claims “overlapped.” Id. at 7.                 cient evidence in the record to support a the-
                                                           ory of direct liabilitySSevidence that BGC at
    The Supreme Court reversed for abuse of                least may have at least assumed a duty to op-
discretion, holding that joint tortfeasors are             erate and manage the casino. First, Plaintiffs
not necessary parties as a matter of law. See              point to a “Management Agreement” between
id. The Court cited the longstanding rule that             the parties according to which BGC assumed
“it is not necessary for all joint tortfeasors to          the duty and responsibility to “supervise and
be named as defendants in a single lawsuit”                direct the management and operation of the
and noted, by citing the advisory committee                [casino]” and to “hire, supervise and terminate
note to rule 19(a), that nothing in rule 19                all personnel of [the casino].” BGC claims this
“changed that principle.” The Court conclud-               agreement no longer represents the actual
ed that “no inquiry under Rule 19(b) [was]                 operating structure of the enterprise, but it
necessary, because the threshold requirements              does not point to anything in the record to
of Rule 19(a) [had] not been satisfied.” Id.               support this contention that the agreement is
                                                           no longer valid.
   Plaintiffs assert that because BGC and TCC
are potential joint tortfeasors,1 TCC is not a                Moreover, beyond the agreement, plaintiffs
necessary party under Temple, so the district              have identified evidence that the casino holds
court abused its discretion in dismissing.                 BGC out as its operator SSthe record reflects
Although BGC acknowledges the validity of                  that the casino’s website states that “[t]he
the Temple rule, it asserts that the rule is in-           Chest is owned and operated by parent com-
applicable here because it claims that BGC has
no direct tort liability for failure to supervise
                                                              2
                                                                Bujol v. Entergy Servs., Inc., 2004 La. LEXIS
                                                           1784, at *27-*28 (La. May 25, 2004) (“While gen-
   1
      In their state court complaint, plaintiffs al-       erally a parent corporation, by virtue of its owner-
leged that BGC and TCC jointly own and operate             ship interest, has the right, power, and ability to
the Treasure Chest Casino, are each responsible for        control its subsidiary, a parent corporation gener-
knowingly ignoring a dangerous condition; plain-           ally has no duty to control the actions of its subsid-
tiffs prayed for a judgment “jointly, severally, and       iary and thus no liability for a failure to control the
in solido . . . .”                                         actions of its subsidiary.”).

                                                       3
pany, Boyd Gaming Corporation, which is one
of the most highly respected in the gaming
industry.” The plaintiffs are not relying on
BGC’s mere status as the parent corporation
in establishing its ground for tort liability;
rather, they have alleged an independent, di-
rect ground for liability. Based on this theory,
TCC is a joint tortfeasor, and BGC’s attempt
to distinguish Temple fails.

   In sum, plaintiffs have adequately alleged a
ground for direct liability on the part of BGC,
based on evidence that it may have assumed a
duty through contract to supervise and train
employees and maintain the premises at the
casino. It follows that the district court
abused its discretion in deciding to dismiss
under rule 12(b)(7), because TCC is not a
necessary party as a matter of law, based on
the unqualified, broad rule established by Tem-
ple, that joint tortfeasors are not necessary
parties.

   REVERSED and REMANDED.

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