Court Opinion

ID: 6917700
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:48:44.597375+00
Date Added: 2024-06-11T16:06:42.884458
License: Public Domain

LUMBARD, Circuit Judge
(dissenting).
I would reverse the judgment of the district court and remand with directions to dismiss the third-party complaint because the district court at the outset lacked jurisdiction over the impleaded state claim.1 My colleagues fail to recognize that the invocation of ancillary *811power by a federal court cannot be justified on the ground that it serves the convenience of the litigants. Ancillary jurisdiction over an impleaded claim must rest upon the need to avoid the substantial likelihood of prejudice to a federal litigant which may flow from his being compelled to relitigate in a state court facts which have been once determined in a federal court; but no such likelihood exists in this case.
Under the applicable state law the facts upon which the Railroad’s federal liability to the plaintiff rests cannot be relitigated in a subsequent action held in a state court to determine whether both the Railroad and the Lumber Company are responsible for any or all of the $30,-000 settlement under the provisions of the indemnity agreement or whether one of them must bear the full loss. Since it therefore appears that no prejudice could have resulted from the denial of ancillary jurisdiction, it was error for the district court to retain jurisdiction over the indemnity claim, however convenient it may have been for the litigants to try the state claim in a federal court.
The exercise of federal jurisdiction over a state claim, without statutory authorization, requires the use of the court’s ancillary power to extend federal jurisdiction to its constitutional limits. Hart and Weschler, The Federal Courts and the Federal System (1953) p. 804. The invocation of such extrastatutory power cannot turn on the mere exercise of discretion, as would be the case if the litigants’ convenience were the test, but must be justified by a compelling and definable federal interest. There is an undoubted federal interest, for example, in the exercise of ancillary power to protect one who, because he is required to litigate a claim in a federal court, may be compelled to reestablish in a state court the facts upon which his federal liability rested and thus may be subject to the hazard of inconsistent verdicts. Walmac Co. v. Isaacs, 1 Cir., 1955, 220 F.2d 108, 113-114.2 In Hurn v. Oursler, 1933, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148, the Supreme Court held that it was appropriate to exercise ancillary jurisdiction over a state claim in the absence of diversity if it concerned substantially the same set of facts as the federal claim, not merely to achieve economy of effort but also to avoid the possibility of prejudice to a federal litigant arising from the problems of res judicata and finality of judgment that would be posed should the federal court decline jurisdiction over the pendant state claim. See, Musher Foundation, Inc. v. Alba Trading Co. Inc., 2 Cir., 1942, 127 F.2d 9, 11 (dissenting opinion of Judge Clark).
Here Judge HINCKS, in my view misconstruing the rationale of Hurn v. Our-sler, maintains that merely because the third-party dispute grows out of the “same core of facts” as the federal claim, a federal court may exercise ancillary jurisdiction over both disputes. But the application of the principle of Hurn v. Oursler depends not on the mere identity of facts that may happen to underlie *812both a federal and state claim, but on the necessity to prevent a federal litigant from being subjected to the risk of inconsistent verdicts or other prejudice which may stem from his being compelled to prove the same facts twice. As a consequence, Judge HINCKS fails to inquire into whether the railroad would be prejudiced by being required to reestablish the facts on which its federal liability is based in an action on the indemnity contract in a state court.
By its motion to implead the third-party defendant, the Railroad seeks to protect itself from the hazards of reliti-gation. The question the district court should have asked in passing on the motion was whether the Railroad, the defendant in the main action, would be subject to the risk of substantial injury if its motion were denied. Had this question been asked in this case it would have appeared, on the inspection of New York law which governs the state indemnity claim, that none of the facts relevant to the establishment of the federal claim could be relitigated in a state court. Under the law of New York, although the indemnitor does not expressly stipulate in the indemnity contract to be bound by a recovery against the indemnitee in an action to which he is not a party, the indemnitee may make such a recovery conclusive against the indemnitor by giving him notice of the pending action and an opportunity to defend against it. Culver Contracting Corp. v. Humphrey, 1935, 268 N.Y. 26, 41, 196 N.E. 627; MacArthur Brothers Co. v. Kerr, 1915, 213 N.Y. 360, 364, 107 N.E. 572. Cf. Sears, Roebuck & Co. v. 9 Ave. 31 Street Corp., 1937, 274 N.Y. 388, 407-408, 9 N.E.2d 20. Once such notice was given to the Lumber Company, any subsequent federal judgment that the Railroad breached its non-delegable duty under the Federal Employers Liability Act to provide a safe place for plaintiff’s intestate to work would be conclusive against the Lumber Company.3
It is apparent from the face of plaintiff’s complaint that proof of her F. E. L. A. claim would turn on whether the gatepost was located too close to the track along which plaintiff’s intestate was riding at the time he collided with the post and was killed. To establish the Railroad’s liability, the plaintiff would neither be required to prove, nor would it have any interest in proving, whether it was the Railroad or the Lumber Company which was primarily re*813sponsible for the location of the gatepost, or whether both were equally at fault. In a subsequent action in the state court on the indemnity contract, the only issue the Lumber Company could litigate would be whether the liability already established against the Railroad in the federal suit was one against which it had indemnified the Railroad. MacArthur Brothers Co. v. Kerr, supra, 213 N.Y. 364, 107 N.E. 573. Thus, any state court action for indemnity would be limited to the issue which would not be determined in the federal action, namely whether the location of the gatepost was the joint fault of both companies or the sole responsibility of either and any defenses on the indemnity contract that the Lumber Company might be able to assert. There is no risk, therefore, that if the implead-ed claim were tried in a state court that any of the facts relevant to proof of the federal claim would be relitigated. It should thus be apparent that, because of its indemnity contract and the New York law regarding the vouching in of an in-demnitor, no prejudice to the defendant Railroad, which seeks the impleader, can result from the denial of jurisdiction over the indemnity claim.
Of course, if, under the indemnity contract as construed by New York law, there was a substantial risk that the refusal to hear the indemnity claim in a federal court would prejudice the defendant, the exercise of ancillary power would be warranted. But in this case, in support of its motion to implead the Lumber Company, the Railroad can only plead a very different and lesser interest, its own convenience in being able to litigate all its rights in this case in a single forum. Weighted against the cardinal principle that the federal jurisdiction is limited by the Constitution and Congressional enactment, the convenience of the Railroad is an insufficient interest to justify the exercise of a federal court’s ancillary powers. See Friend v. Middle Atlantic Transportation Co., 2 Cir., 1946, 153 F.2d 778, 779; Note Multiparty Litigation in the Federal Courts, 71 Harv.L. Rev. 874, 906, 911, 976, 992-993 (1958). See also 4 Moore’s Federal Practice 136, 140, 145-46, discussed in fn. 3 supra.
For these reasons, I think that my colleagues erroneously treat the assumption of jurisdiction as a matter of discretion turning on the convenience that may be achieved. It seems to me most unfortunate that the basic rationale of ancillary jurisdiction is thus obscured.
My colleagues have reached their result in order to accomplish what may well be a desirable objective. In view of the crowded calendars in many state and federal courts, the demand to ease the litigation burden of the parties and the need to conserve judicial time, there is undoubtedly much to be said for trying these two actions together. But the real question and the source of this controversy is whether these interests are sufficient to justify the extension of federal jurisdiction accomplished by my brethren without statutory authorization.
The assumption of federal jurisdiction over an impleaded state claim raises a serious question as to the constitutional scope of the federal judicial power, and the interest of convenience which is asserted here in support of jurisdiction is insufficient to justify our reaching such a problem. Therefore it seems to me that it is for Congress to take the step of extending federal jurisdiction to take account of the litigants’ or the court’s convenience.
If the district court dismissed the third-party complaint there would still be ample time for the Railroad to bring its indemnity action in the New York courts as the liability of the Lumber Company did not arise until the Railroad was compelled to pay the plaintiff and hence the New York six year statute of limitations for actions on a contract has not run.4
Accordingly, I would reverse the judgment of the district court and remand with instructions to dismiss the third-party complaint for lack of jurisdiction.

. In Wanser v. Long Island Railroad Co., 2 Cir., 1956, 238 F.2d 467, the question of ancillary jurisdiction over an impleaded state claim was never even mentioned in the court’s opinion. In Bernstein v. N. V. Nederlandsche, Amerikaansehe Stoomvaart-Maatschappij, 2 Cir., 1949, 173 F.2d 71, 78, we sustained jurisdiction over the impleaded claim upon the basis of diversity of citizenship. The court’s statement that “diverse citizenship between the original plaintiff and the third-party defendant is not necessary to support jurisdiction based upon diverse citizenship between the plaintiff and the main defendant” cannot be given the meaning Judge HINCKS apparently attributes to it. The citation of Sheppard v. Atlantic States Gas Co. of Pennsylvania, 3 Cir., 1948, 167 F.2d 841, 845 and Friend v. Middle Atlantic Transportation Co., 2 Cir., 1946, 153 F.2d 778, 779, 780, following this sentence make it plain that we merely held that in a case in which jurisdiction over the main claim is founded on diversity, the lack of diverse citizenship between the original plaintiff and the third-party defendant will not destroy the court’s jurisdiction of the main claim if the plaintiff asserts no claim against the third-party defendant. Lesnik v. Public Industrials Corporation, 2 Cir., 1944, 144 F.2d 968 *811involved the very different question of ancillary jurisdiction over a compulsory counterclaim. See footnote 2, infra. None of these cases can be treated as expressing or even indicating implicitly this circuit’s views on the question whether a federal court may exercise ancillary jurisdiction over an impleaded state claim.

. Another example of such an interest is reflected in the compulsory counterclaim cases erroneously relied on by Judge HINCKS. Those cases turn on the fact that if ancillary jurisdiction over a compulsory counterclaim were declined, the defendant would either be foreclosed from presenting his state claim in any court because of the application of res judicata or the federal adjudication would be deprived of the quality of finality because in order to avoid the harshness of applying res judicata in such situation, a state court would permit the relitigation of the facts on which the federal judgment is based. See 71 Harv.L.Rev. 874, 969 (1958). In order to avoid either of these results, both of which would impair the quality of federal justice, a federal court may be justified in exercising its ancillary powers. For still another example, see Dugas v. American Surety Co., 1937, 300 U.S. 414, 428, 57 S.Ct. 515, 81 L.Ed. 720.

. If the railroad gives the Lumber Company notice of the plaintiff’s pending suit, the Lumber Company would be entitled to intervene of right in the defense of the F. E. L. A. claim if the Railroad did not adequately represent its interests. Rule 24(a) (2), Federal Rules of Civil Procedure. No independent basis of jurisdiction would be necessary to sustain the Lumber Company’s intervention in the F. E. L. A. action because the court’s jurisdiction would rest on the federal nature of the plaintiff’s claim rather than the diverse citizenship of the litigants. The question posed by the Lumber Company’s intervention would be one of the sufficiency of its interest to participate in the federal action rather than of jurisdiction. Note, however, that even should jurisdiction of the main claim be founded upon diversity of citizenship, an independent basis of jurisdiction would not be required to sustain intervention in the defense of the main claim by an indemnitor of the same citizenship as the plaintiff. In such a case, since the indemnitor intervenes of right, the exercise of ancillary jurisdiction would be appropriate in order to avoid the risk that he would otherwise be bound by a judgment in an action to which he was not a party. However, an applicant for permissive intervention would have to demonstrate an independent basis of federal jurisdiction. Thus it is apparent that the risk of injury is sufficient to justify jurisdiction over a non-diverse in-tervenor of right but that the interest of convenience is not sufficient to sustain jurisdiction over a permissive intervenor in the absence of an independent basis of jurisdiction. See 4 Moore’s Federal Practice 136, 140, 145-46 ; 71 Harv.L. Rev. 874, 908 (1958). The interest of the potential intervenor, the Lumber Company, though sufficient to justify its participation to protect itself from injury cannot be urged by the defendant Railroad in support of its motion to implead, ás the absence of the intervenor will not result in harm to the Railroad.

. New York Civil Practice Act, § 48, subdivision 1.