Court Opinion

ID: 38229
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:04:56+00
Date Added: 2024-06-11T17:15:56.478253
License: Public Domain

United States Court of Appeals
                                                                                       Fifth Circuit
                                                                                    F I L E D
                    IN THE UNITED STATES COURT OF APPEALS
                                                                                      May 2, 2005
                                 FOR THE FIFTH CIRCUIT                          Charles R. Fulbruge III
                                                                                        Clerk

                                         No. 04-50341

       MAURO VARGAS,

                                                      Plaintiff-Appellant - Cross-Appellee,

                                             versus

       STONE CONTAINER CORPORATION,

                                                      Defendant - Appellee,

       RAUL PINION,

                                                      Defendant-Appellee - Cross-Appellant.

                   Appeal from the United States District Court for
                            the Western District of Texas
                           (USDC No. 3-02-CV-559-DB)
           _______________________________________________________

Before REAVLEY, JONES and GARZA, Circuit Judges.

PER CURIAM:*

       Mauro Vargas filed this workplace injury suit against the Stone Container

Corporation (hereinafter, “Stone Container”) and Paul Pinon. Stone Container operates a

       *
        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 R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
corrugated box manufacturing plant, and Paul Pinon is its plant manager. Vargas was

employed by D.M. Dickason Personnel Services (hereinafter, “Dickason”) and was on

assignment at Stone Container on the day he was injured. Vargas was seriously injured

when, at Pinon’s direction, Vargas entered an unsecured cage that slipped off of a forklift

and fell more than thirteen feet to the concrete floor.

       Vargas subsequently filed a claim for workers compensation against Dickason, and

the claim was accepted. Vargas then filed suit against Stone Container and Pinon in

Texas state court, asserting state law claims of negligence. Stone Container and Pinon

removed the case to federal court based upon diversity jurisdiction, in spite of the fact

that Pinon and Vargas are both citizens of Texas. Vargas responded by filing a motion to

remand the case, arguing that the district court lacked subject matter jurisdiction because

Pinon’s Texas residency destroyed diversity and the amount in controversy did not

exceed $75,000. Stone Container and Pinon countered by arguing that the value of

Vargas’s injury did exceed the statutory minimum, and that Vargas, knowing that he did

not have a state law cause of action against Pinon as an individual employee, improperly

joined Pinon to destroy diversity.

       While the motion to remand was pending, Stone Container and Pinon filed a joint

motion for summary judgment, arguing that because Vargas was working as a borrowed

servant, they were shielded by the exclusive remedy provision of the TWCA.

       The district court eventually denied Vargas’s motion to remand, finding that

Vargas had no state law cause of action against Pinon and had improperly joined Pinon to

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destroy diversity. The district court then granted Stone Container and Pinon’s motion for

summary judgment in favor of Stone Container and Pinon.

       Vargas then filed a Rule 59 motion for reconsideration, arguing that the district

court erred in holding that Pinon was improperly joined. The district court reconsidered

and granted Vargas’s motion, but only as to Pinon, finding that Vargas might have state

law negligence claims against Pinon as an individual employee, and that Pinon had not

been improperly joined. The district court then reasoned that due to the previous

summary judgment in favor of Stone Container and the fact that the district court no

longer had original jurisdiction over the case, the district court should decline to exercise

supplemental jurisdiction over the remaining claims against Pinon. The district court then

remanded Vargas’s state law negligence claims against Pinon to Texas state court.

       Vargas timely appealed, arguing that the district court erred in denying his remand

motion as to Stone Container and by granting Stone Container and Pinon’s motion for

summary judgment. Pinon also appealed the district court’s order remanding Vargas’s

state law negligence claims against him to the state court.

                                              I.

                                   Diversity Jurisdiction

       This court must first address the issue of whether the district court had jurisdiction

to hear Vargas’s suit. The district court originally determined that it did have jurisdiction

when it denied Vargas’s motion to remand and determined that Pinon had been

improperly joined. However, Vargas argues that the district court overturned its previous

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jurisdictional determination when the district court determined that Pinon was not

improperly joined.

       This court reviews a district court’s determination of federal diversity jurisdiction

based solely on a legal question de novo.1 The federal diversity statute, 28 U.S.C. §

1332(a)(2), provides that district courts have original jurisdiction over all civil actions

where the matter in controversy exceeds $75,000 and is between citizens of a state and

citizens or subjects of a foreign state. It is well-established that the diversity statute

requires "complete diversity" of citizenship: A district court cannot exercise diversity

jurisdiction if one of the plaintiffs shares the same state citizenship as any one of the

defendants.2

       When a plaintiff files a civil action in state court over which the federal district

courts would have original jurisdiction based on diversity of citizenship, the defendants

may remove the action to federal court, based upon § 1441(a), provided that no defendant

"is a citizen of the State in which such action is brought."3

       If the plaintiff then contests the removal by filing a motion to remand, the district

court must immediately address the issue of jurisdiction prior to addressing the merits of

       1
           Hart v. Bayer Corp., 199 F.3d 239, 243 (5th Cir. 2000).
       2
         Whalen v. Carter, 954 F.2d 1087, 1094 (5th Cir. 1992) (citing Strawbridge v.
Curtiss, 7 U.S. 267 (1806); Mas v. Perry, 489 F.2d 1396, 1398-99 (5th Cir. 1974)).
       3
           28 U.S.C. § 1441(b).

                                               4
the case.4 The Supreme Court has held that federal courts should not assume without

deciding jurisdiction over a claim and then reject it on the merits.5 Jurisdiction must be

decided first. The existence of even a single valid cause of action against an in-state

defendant requires remand of the entire case to state court.6

       Acting under the assumption that it had subject matter jurisdiction, the district

court granted Stone Container and Pinon’s motion for summary judgment. Vargas’s

motion for reconsideration of the district court’s grant of summary judgment and holding

that Pinon was improperly joined was also a challenge to the district court’s original

jurisdiction to enter such a judgment. When the district court reconsidered and found that

Pinon was not improperly joined, the district court’s diversity jurisdiction was destroyed,

and its judgment in favor of Stone Container and Pinon should have been vacated.

       If a district court lacks subject matter jurisdiction both at the time of removal and

at the time it enters a judgment, the judgment cannot stand.7 The consequence of the

district court's lack of jurisdiction is that the judgment in favor of Stone Container and

       4
        Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 93-102 (1998); see Sierra
Club v. Glickman, 156 F.3d 606, 613 (5th Cir. 1998).
       5
           Steel Co., 523 U.S. at 93-94.
       6
         Gray ex rel. Rudd v. Beverly Enterprises-Miss., Inc., 390 F.3d 400, 412 (5th Cir.
2004) (citing Green v. Amerada Hess Corp., 707 F.2d 201, 208 (5th Cir. 1983) ("If even
one of [the plaintiff's] many claims might be successful, a remand to state court is
necessary.")).
       7
        Caterpillar Inc. v. Lewis, 519 U.S. 61, 76-77 (1996); see Grubbs v. General Elec.
Credit Corp., 405 U.S. 699, 700 (1972).

                                              5
Pinon must be vacated and the entire suit remanded to state court.8

                                              II.

                                     The Remand Order

       Following this same logic — that when the district court remanded Vargas’s state

law negligence claims against Pinon, the district court vacated its prior judgement in

favor of Stone Container and Pinon — this court does not have jurisdiction to review the

district court’s order remanding Vargas’s claims against Pinon.

       A remand order on the ground that the district court lacks jurisdiction cannot be

reviewed on appeal or otherwise.9 Pinon argues, however, that the order to remand was

issued after a final judgment and is thus subject to review by this court. Section 1447(d)

bars only review of remand orders issues under § 1477(c). Section 1447(c) provides that

“[i]f at any time before final judgment it appears that the district court lacks subject

matter jurisdiction, the case shall be remanded.”10 Thus, a remand order issued after

entry of final judgment does not fall within the prohibition of § 1447(c).11 In this case,

the district court had not finally disposed of the claim against one party, Pinon, until the

Rule 59 motion was decided. The district court therefore lacked jurisdiction both at the

       8
           Gray, 390 F.3d at 412.
       9
        28 U.S.C. § 1447(d); Hays County Guardian v. Supple, 969 F.2d 111, 124 (5th
Cir. 1992).
       10
            28 U.S.C. § 1447(c).
       11
            Hayes, 969 F.2d at 124-25.

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time of the removal and at the time it entered final judgment. The remand order was

entered prior to a valid final judgment, and thus, cannot be reviewed by this court.12

       Pinon’s appeal is DISMISSED. The district court’s summary judgment in favor of

Stone Container and Pinon are VACATED. The case is REMANDED to the district

court with instructions to remand the entire case to state court.

       12
            See Hays, 969 F.2d at 124.

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