Court Opinion

ID: 7803213
Source: CourtListenerOpinion
Date Created: 2022-08-24 18:00:36.246903+00
Date Added: 2024-06-11T16:29:36.078334
License: Public Domain

Case: 20-30796    Document: 00516445448        Page: 1     Date Filed: 08/24/2022

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

                                                                              FILED
                                                                        August 24, 2022
                                No. 20-30796                             Lyle W. Cayce
                                                                              Clerk

   Paige Lee; Business Moves Consulting, Incorporated;
   Brandmixer, Incorporated; Curtis Bordenave,

                                                         Plaintiffs—Appellants,

                                    versus

   Anthony Lawrence Collection, L.L.C.; Defron Fobb;
   Thaddeus Reed, also known as Reed Enterprise; Collegiate
   Licensing Company, L.L.C., incorrectly sued as Learfield
   Communications, L.L.C.,

                                                     Defendants—Appellees.

                 Appeal from the United States District Court
                    for the Eastern District of Louisiana
                           USDC No. 2:20-CV-839

   Before Jolly, Elrod, and Oldham, Circuit Judges.
   Jennifer Walker Elrod, Circuit Judge:
         Curtis Bordenave and Paige Lee are in the business of owning
   trademarks. They petitioned the United States Patent and Trademark Office
   for federal registration of the mark “THEEILOVE” (and other similar
   marks). That phrase, “Thee I Love,” comes from the alma mater of Jackson
   State University.   They then sued the University’s licensing agent
   (Collegiate Licensing Company) and a few of the licensees in charge of
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   producing and selling the University’s merchandise (Anthony Lawrence
   Collection, Defron Fobb, and Thaddeus Reed, together “the Licensees”).
   But they did not sue the University itself. Collegiate and the Licensees moved
   to dismiss under Federal Rule of Civil Procedure 12(b)(7). The district court
   granted the motion and dismissed the suit without prejudice. We AFFIRM.
                                          I.
          Curtis Bordenave, by his telling, licenses trademarks “from time to
   time.” He owns Business Moves Consulting, a “branding business[]” which
   “protect[s] the identity of the products” it sells “by consistent, deliberate
   federal trademark registration.” In 2017, Business Moves applied for the
   design mark “THEEILOVE,” which the USPTO granted the next year.
   Business Moves then licensed use of the mark to Brandmixer (also a branding
   business) and Paige Lee, all of which claim to sell apparel with the registered
   design. In 2019, Business Moves and Brandmixer together applied for
   another “THEE I LOVE” mark, this time for several other uses, such as on
   license plates. (That application is still pending with the USPTO.)
          This posed a problem for Jackson State University. Founded in 1877,
   the University is one of the largest historically black colleges or universities
   in the country. Its football team, led by Head Coach Deion Sanders (also
   known as “Prime Time” or “Neon Deion”), runs onto the field each game
   to the music of the University’s marching band, the Sonic Boom of the South.
   And when the Tigers secured the Southwestern Athletic Conference
   championship last season, the Sonic Boom of the South played “Thee I
   Love,” the University’s alma mater, for the team and all its loyal fans. That
   phrase plays a significant role in the University’s lore, as it has served as the
   University’s alma mater for roughly eighty years. Students and alumni wear
   shirts bearing the phrase, and the State of Mississippi even issues vanity
   plates with “Thee I Love” and the school’s logo to the University’s most

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   loyal fans. The University does not handle the licensing of its trademarks or
   make its own merchandise. It instead works with Collegiate Licensing
   Company to license out the University’s “trademarks and other indicia” to
   manufacturers to make (and sometimes sell) its merchandise.               The
   University and Collegiate have since authorized several licensees, including
   Anthony Lawrence Collection, LLC, Defron Fobb, and Thaddeus Reed, to
   produce and sell the University’s merchandise.
          Despite this history, the University never applied to have the phrase
   registered as a federal mark until after Business Moves had already done so.
   The University did register a mark under Mississippi law in 2015 for use on
   vanity plates, and in 2019 (after Business Moves had already secured the
   federal mark) for use on merchandise. It also claims to have common-law
   rights to the mark under the Lanham Act. The University applied in late
   2019 for the same federal marks as it secured under state law, but the USPTO
   preliminarily refused the applications because Business Moves and
   Brandmixer beat it to the punch.
          Business Moves (along with Brandmixer, Bordenave, and Lee) sued
   Collegiate and the Licensees for various claims centered on their licensing,
   manufacturing, and selling of “Thee I Love” merchandise. The primary
   claims were brought under the Lanham Act for trademark infringement and
   unfair competition. Along with damages, plaintiffs requested the court
   permanently enjoin the defendants from producing or selling any more
   “infringing” merchandise, and that the court declare that defendants were
   infringing on the plaintiffs’ federally registered marks.
          Collegiate and the Licensees moved to dismiss under Rule 12(b)(1)
   and (7). They argued that they were merely the University’s agents, and that
   these claims are premised on a not-yet-fought battle over who “Thee I Love”
   rightfully (and lawfully) belongs to. Because defendants said they could not

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   adequately fight that battle for the University, they contended that the
   University was a required party under Rule 19(a)(1)(A) and (B). But because
   the University enjoys sovereign immunity (and thus cannot be joined),
   defendants urged that the court should, “in equity and good conscience,”
   dismiss the case. Plaintiffs responded that Collegiate and the Licensees were
   merely joint tortfeasors, and that plaintiffs were not required to include every
   joint tortfeasor. Plaintiffs went on to say that even if the University was a
   required party, the district court could proceed without it because these
   claims would not affect the University’s claimed right to the phrase “Thee I
   Love” and would not preclude it from claiming that interest.
           The district court granted the motions to dismiss under Rule 12(b)(7).
   The court first held that, under Rule 19(a)(1)(B)(i), the University claimed
   an interest in the “Thee I Love” phrase, and without the University present,
   its interests could be practically impaired—especially because of “the
   ongoing petition process between [the University] and plaintiffs over the
   trademark.” Because the court could not join the University, the court then
   considered under Rule 19(b) whether “‘equity and good conscience’
   mandate dismissal.” It ultimately concluded that each of Rule 19(b)’s four
   factors counseled in favor of dismissal and dismissed the case without
   reaching the Rule 12(b)(1) issue. 1

           1
              Dismissing under Rule 12(b)(7) without resolving the Rule 12(b)(1) issue is
   appropriate. That is because the dismissal was without prejudice. See Fed. R. Civ. P. 19(b);
   id. R. 41(b). And “in an ordinary civil case, all dismissals [without prejudice] are created
   equal—they all equally prevent the exercise of jurisdiction where there is none.” Davis v.
   Sumlin, 999 F.3d 278, 280 (5th Cir. 2021); see Mowrer v. DOT, 14 F.4th 723, 733–43 (D.C.
   Cir. 2021) (Katsas, J., concurring) (detailing principles of judicial sequencing).

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                                          II.
          We review a district court’s assessment of whether a party is
   “required” under Rule 19 for abuse of discretion. Moss v. Princip, 913 F.3d
   508, 514–15 (5th Cir. 2019). Rule 12(b)(7) allows for dismissal of a suit when
   the plaintiff fails to join a required party under Rule 19. Fed. R. Civ. P.
   12(b)(7). There are three types of “required” parties: (1) parties needed to
   give complete relief to the existing parties, id. R. 19(a)(1)(A); (2) parties who
   claim interests which could be practically impaired or impeded if not joined,
   id. R. 19(a)(1)(B)(i); and (3) parties necessary to ensure that existing parties
   are not exposed to multiple or inconsistent obligations, id. R. 19(a)(1)(B)(ii).
   The burden of proof starts with the movants, but if at first glance it appears a
   “possibly necessary party is absent,” the burden shifts to the nonmovant to
   dispute that “initial appraisal” of the facts. Hood ex rel. Mississippi v. City of
   Memphis, 570 F.3d 625, 628 (5th Cir. 2009).
          If an absent party is “required” under Rule 19(a), but joinder would
   destroy the court’s jurisdiction (as is the case here), the court has two
   options: continue without the absent party or dismiss the litigation. HS Res.,
   Inc. v. Wingate, 327 F.3d 432, 439 (5th Cir. 2003). Rule 19(b) tells courts to
   make this decision “in equity and good conscience,” weighing these factors:
                (1) the extent to which a judgment rendered in the
                person’s absence might prejudice that person or the
                existing parties;
                (2) the extent to which any prejudice could be
                lessened or avoided by:
                       (A) protective provisions in the judgment;
                       (B) shaping the relief; or
                       (C) other measures;
                (3) whether a judgment rendered in the person’s
                absence would be adequate; and

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                (4) whether the plaintiff would have an adequate
                remedy if the action were dismissed for nonjoinder.
   Fed. R. Civ. P. 19(b)(1)–(4). With no prescribed formula for balancing these
   factors, the inquiry is “[g]uided by common sense” and is highly case-
   specific, requiring a “flexible and pragmatic” evaluation of the facts. Moss,
   913 F.3d at 515, 517.
                                            A.
          The first question is whether the University was a required party
   under Rule 19(a). The district court held that the University has “an interest
   relating to the subject of the action” which, if the University is not joined,
   the suit “may as a practical matter impair or impede [its] ability to protect
   the interest.” We agree.
          First, the inquiry at this stage is more about whether the absent party
   claims a non-frivolous interest, not the ultimate merit of the claim. See, e.g.,
   Republic of Philippines v. Pimentel, 553 U.S. 851, 868–69 (2008); White v. Univ.
   of Cal., 765 F.3d 1010, 1026–27 (9th Cir. 2014). The University here claims
   an interest in the mark that is the basis of each of appellants’ claims.
   Appellants spend much of their briefing arguing that because the University
   has no interest in the mark, it cannot be a required party. But that begs the
   question: the very basis of appellants’ claims require that they prove their
   ownership of the mark, and the University’s consistent usage (and purported
   state- and common-law rights) reveal the ownership dispute lurking beneath
   the surface. The ongoing dispute over the federal mark is already underway.
   Rule 19 allows courts to consider these facts, and the district court was not
   required to blind itself to the realities of that litigation in reaching its result.
          Second, appellants argue that even if the University has an interest in
   this suit, the University’s absence would not keep it from protecting that
   interest later on. They make two points along these lines: (1) the University

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   can sue to challenge appellants’ mark in federal court apart from this
   litigation; and (2) the University would not be precluded from challenging
   the federal mark if it is not joined here. But Rule 19 is not concerned with
   preclusive effect as much as it is “practical[]” impairment. 2 Fed. R. Civ. P.
   19(a)(1)(B)(i). Even if the University remains free to challenge Business
   Moves’s ownership of “Thee I Love” elsewhere, it could still face challenges
   protecting its interest if it is not joined here. For instance, if the University
   was part of the lawsuit, there would be no need to challenge Business
   Moves’s trademark in other fora. A loss here, in its absence, could put
   pressure on the University in the short term to abandon or capitulate to
   appellants, as it could all but halt their use of the mark in commerce. Because
   ownership of the mark is what this case is ultimately about, Rule 19’s interest
   in “protect[ing] interested parties and avoid[ing] waste of judicial resources”
   would counsel in favor of the University’s inclusion. Askew v. Sheriff of Cook
   Cnty., Ill., 568 F.3d 632, 634 (7th Cir. 2009) (quotation omitted).
           Thus, the district court did not abuse its discretion in concluding that
   the University was a required party under Rule 19(a)(1)(B)(i). And because
   everyone agrees that the University enjoys sovereign immunity, the question
   becomes whether the district court abused its discretion in dismissing the
   case rather than proceeding without the University.
                                              B.
           When a required party cannot be feasibly joined, the district court
   “must determine whether, in equity and good conscience, the action should

           2
            Even short of preclusive effect, we have previously explored the circumstances
   under which the stare decisis effect of a decision could justify joinder, highlighting the
   “practical disadvantage” that a previous non-preclusive decision could pose. See Atlantis
   Dev. Corp. v. United States, 379 F.2d 818, 829 (5th Cir. 1967).

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   proceed among the existing parties or should be dismissed.” Fed. R. Civ. P.
   19(b). We again agree with the district court’s conclusion.
                                           1.
          Predominating our analysis is the fact that the University is an arm of
   the State of Mississippi. See Whiting v. Jackson State Univ., 616 F.2d 116, 127
   n.8 (5th Cir. 1980). It thus enjoys sovereign immunity. Daniel v. Univ. of
   Tex. Sw. Med. Ctr., 960 F.3d 253, 257 (5th Cir. 2020). That sovereign
   immunity “does not exist solely in order to ‘preven[t] federal-court
   judgments that must be paid out of a State’s treasury’; it also serves to avoid
   the ‘indignity of subjecting a State to the coercive process of judicial tribunals
   at the instance of private parties.’” Seminole Tribe of Fla. v. Florida, 517 U.S.
   44, 58 (1996) (first quoting Hess v. Port Auth. Trans-Hudson Corp., 513 U.S.
   30, 48 (1994), then quoting Puerto Rico Aqueduct & Sewer Auth. v. Metcalf &
   Eddy, Inc., 506 U.S. 139, 146 (1993)). Because the University cannot enter
   the scrum without waiving its immunity, its sovereign interest is necessarily
   impaired when plaintiffs try to use the state’s sovereign immunity to lure it
   into a lawsuit against its will. Cf. Gensetix, Inc. v. Bd. of Regents of Univ. of
   Tex. Sys., 966 F.3d 1316, 1322–23 (Fed. Cir. 2020) (a university cannot be
   made an involuntary plaintiff under Rule 19(a)(2) because of its sovereign
   immunity).
          The Supreme Court in Republic of Philippines v. Pimentel said that
   “where sovereign immunity is asserted, and the claims of the sovereign are
   not frivolous, dismissal of the action must be ordered where there is a potential
   for injury to the interests of the absent sovereign.” 553 U.S. at 867 (emphasis
   added). Even before Pimentel, other courts of appeals left “very little room
   for balancing of other factors set out in Rule 19(b) where a necessary party
   under Rule 19(a) is immune from suit because immunity may be viewed as
   one of those interests compelling by themselves.” Kickapoo Tribe of Indians

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   v. Babbitt, 43 F.3d 1491, 1496 (D.C. Cir. 1995) (quotation omitted). And
   more recently, in an adjacent context, another court recognized the “wall of
   circuit authority” favoring dismissal of actions “in which a necessary party
   cannot be joined due to tribal sovereign immunity.” Dine Citizens Against
   Ruining Our Env’t v. Bureau of Indian Affs., 932 F.3d 843, 857 (9th Cir. 2019)
   (citing White, 765 F.3d at 1028).
           The same can be said for state sovereign immunity. As compelled by
   Pimentel, as discussed above, the University has a non-frivolous claim here.
   As a practical matter, this suit would impair or impede its ability to protect
   its interest in the “Thee I Love” mark. That is enough to require dismissal
   of the action because “there is a potential for injury to” the University’s
   “interests [as] the absent sovereign.” See Pimentel, 553 U.S. at 867; see also
   Gensetix, 966 F.3d at 1331–34 (Taranto, J., dissenting in part). 3 Under Rule

           3
              In a thorough dissenting opinion, Judge Taranto explains how Pimentel commands
   that where, as here, a state “sovereign entity is a required party under Rule 19(a), is
   protected against joinder by sovereign immunity, and makes a non-frivolous assertion that
   it will be prejudiced by a suit proceeding in its absence, a district court” must dismiss the
   suit under Rule 19(b). Gensetix, 966 F.3d at 1331–34 (Taranto, J., dissenting in part). The
   majority opinion, by contrast, concluded that the sovereign’s interests in that case were not
   substantial enough to justify dismissal “in equity and good conscience.” Id. at 1324–
   27. Specifically, the majority determined that the prejudice to the absent state sovereign
   was “greatly reduced” because the party had an “identical” (rather than “overlapping”)
   interest in the property at issue. Id. at 1325–27.
            We disagree with the Gensetix majority opinion’s treatment of the state’s sovereign
   status as insufficient to justify dismissal for several reasons. First, it differs from several of
   our sister circuits’ cases pre- and post-Pimentel. See, e.g., Fla. Wildlife Fed’n Inc. v. U.S.
   Army Corps of Eng’rs, 859 F.3d 1306, 1317–20 (11th Cir. 2017); Two Shields v. Wilkinson,
   790 F.3d 791, 798 (8th Cir. 2015); Gensetix, 966 F.3d at 1331–34 (Taranto, J., dissenting in
   part) (collecting cases). Second, Pimentel involved foreign sovereign immunity while this
   case and Gensetix involved state sovereign immunity. This matters because “the States’
   sovereign immunity is a historically rooted principle embedded in the text and structure of
   the Constitution,” while a foreign nation’s sovereign immunity is by “consent or
   compact” (i.e., not grounded in the Constitution). Franchise Tax Bd. of Cal. v. Hyatt, 139
   S. Ct. 1485, 1497, 1499 (2019). Third, the Gensetix majority opinion’s contention that a

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   19(b), in the interest of “equity and good conscience,” the suit should be
   dismissed.
                                                2.
           The outcome is the same when considering the Rule 19(b) factors.
   The aim is to weigh those factors “seeking to avoid manifest injustice while
   taking full cognizance of the practicalities involved.” Pulitzer–Polster v.
   Pulitzer, 784 F.2d 1305, 1312 (5th Cir. 1986). The district court concluded
   that all four of Rule 19(b)’s factors favored dismissal, and we again agree.
           Under the first factor, the district court considered “the extent to
   which a judgment rendered in [the University’s] absence might prejudice
   [the University] or the existing parties.” Fed. R. Civ. P. 19(b)(1). On this
   point, the district court said that both the University and Collegiate would be
   prejudiced without the University’s involvement. The court pointed to
   appellants’ own complaint to cast doubt on their contention that this case is
   only about their federal trademark rights; appellants, for instance, complain
   about “Thee I Love” vanity plates, even though appellants conceded the
   University has a trademark on those plates under Mississippi law.
           Appellants do not highlight that concession, but instead focus on the
   fact that Collegiate is well-equipped to defend the University’s interest on its

   state interest is “identical” to a non-governmental party is unpersuasive. For one thing,
   whether there is identity or not, a court’s “consideration of the merits was itself an
   infringement on [state] sovereign immunity.” Pimentel, 553 U.S. at 864. And if anything,
   for state sovereign immunity, identity is worse because we would allow indirect adjudication
   of the state’s interest, even though state sovereign immunity would forbid direct
   adjudication of that interest. For another, the notion that a state entity’s interest in
   property is “identical” to a non-government party’s is perplexing, to put it mildly. In any
   event, as discussed in the next section, we conclude that the University’s interests here are
   substantial enough even under each of the Rule 19(b) factors. See Gensetix, 966 F.3d at
   1324–27 (evaluating factors).

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   own. Collegiate responds that it is “merely a licensing agent with limited
   rights” which would struggle to establish the University’s “use [of ‘Thee I
   Love’] in commerce over some eight decades.” Cf. Two Shields, 790 F.3d at
   799; Tell v. Trs. of Dartmouth Coll., 145 F.3d 417, 419 (1st Cir. 1998)
   (“[W]ithout a perfect identity of interests, a court must be very cautious in
   concluding that a litigant will serve as a proxy for an absent party.”).
          This point, on balance, favors the University. To appellants’ credit,
   there does not seem to be a risk that appellees would take a position
   inconsistent with the University. See Tell, 145 F.3d at 419. Foundational to
   appellants’ claims is their ownership of the mark, and appellees and the
   University both want to disprove that ownership. So if the University was
   joined, it is unlikely that Collegiate or the Licensees would take a different
   position on who owns the mark. On the other hand, the battle over ownership
   of the mark is the University’s, and as the commercial agents for the
   University’s use of that mark, neither Collegiate nor the Licensees have the
   same personal stake in that battle as the University.
          Many of the arguments center on whether the University and
   appellees have nonidentical interests.       Two Federal Circuit cases are
   instructive. Gensetix, 966 F.3d 1316; A123 Sys., Inc. v. Hydro-Quebec, 626 F.3d
   1213 (Fed. Cir. 2010). The court in Gensetix held that a patent licensee could
   proceed without the patent owner (the University of Texas) because the
   owner had given the licensee a license “in every field,” and thus the interests
   of the owner and licensee were “identical.” 966 F.3d at 1326. The court in
   A123, by contrast, held that a patent owner was a required party when the
   owner gave only a “field-of-use license” to the licensee, so their interests
   were “overlapping” but not “identical.” 626 F.3d at 1221. Here, the
   University has an agreement with Collegiate to be its exclusive agent for
   licensing out the University’s “indicia” “in connection with the marketing
   of various articles of merchandise and to conduct certain [p]romotions.”

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   Collegiate has no interest in the ownership of the mark, and the University
   maintains sole discretion to grant licensees access to the mark. It is unclear
   at this stage whether the University could use this mark for any reason other
   than merchandise, but it at least maintains sole rights to use of the mark itself.
   Like the owner/licensee relationship in A123, the University and Collegiate
   have “overlapping” but not “identical” interests in ownership of the mark,
   which counsels in favor of dismissal. See id.
          The district court next considered the second factor: “the extent to
   which any prejudice could be lessened or avoided by: (A) protective
   provisions in the judgment; (B) shaping the relief; or (C) other measures.”
   Fed. R. Civ. P. 19(b)(2). The district court noted that the University’s
   interest in this suit was “implicated not only by potential judgment or the
   form of relief, but by the necessary inquiry into ownership of the trademark
   itself.” Appellants provide only a brief retort, that this factor “isn’t useful
   with a sovereign nonparty” and that the University is “protected from
   liability” by their agency agreement with Collegiate.           The indemnity
   provision, however, does not have much to do with the University’s
   continued interest in owning the rights to “Thee I Love,” so this factor also
   weighs in the University’s favor.
          The third factor concerns “whether a judgment rendered in the
   [University’s] absence would be adequate.”           Fed. R. Civ. P. 19(b)(3).
   Appellants again urge that a judgment would be adequate because appellees
   are mere joint tortfeasors with the University, and appellees again respond
   that it does not fully share the University’s interests. As with the other
   discussions of the differing interests, the district court concluded that the
   University and appellees did not have the same interests in the phrase “Thee
   I Love.” The defendant in Gensetix had a patent “in every field,” and thus
   its interests were “identical” to the absent party. 966 F.3d at 1326. The
   defendant in A123, on the other hand, had only a “field-of-use license,” so

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   its interests were “overlapping” but not “identical” to those of the absent
   party. 626 F.3d at 1221. The district court likened this case to A123 and
   distinguished it from Gensetix, concluding it could not “presume the
   licensees fully stand in [the University’s] shoes.” That comparison is sound:
   The University still retains interests in “Thee I Love” and retains control
   over which companies receive its licenses. With that said, appellants’ joint-
   tortfeasor point has purchase here: there is not any evidence that appellees
   cannot carry out the specific relief requested, or that the University’s joinder
   would somehow enhance their ability to do so. On balance, it was not an
   abuse of discretion to disregard that fact, but this factor is at least more
   neutral than the others.
          The final factor is about “whether the plaintiff[s] would have an
   adequate remedy if the action were dismissed for nonjoinder.” Fed. R. Civ.
   P. 19(b)(4). Appellants on this point focus on the futility of requiring it to
   take this dispute elsewhere. As the district court noted, the basis of this
   dispute is which party “Thee I Love” belongs to. Though the parties dispute
   whether appellants could bring these claims in state court, the proper forum
   for determining the proper owner of these trademark rights is the USPTO.
   Because appellants can presumably bring these claims against Collegiate and
   the Licensees after they have established their superior rights to the mark,
   this factor too weighs in favor of dismissal.
          Thus, even setting aside the University’s sovereign status, the balance
   of the Rule 19(b) factors weigh in favor of dismissal. As a result, the district
   court did not abuse its discretion in dismissing the case.
                                   *        *         *
          Because the University is a required party under Rule 19(a) and the
   suit was properly dismissed under Rule 19(b), we AFFIRM.

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