Central of Georgia Railway Company, Third-Party v. Riegel Textile Corporation, Third-Party

426 F.2d 935, 8 A.L.R. Fed. 701, 1970 U.S. App. LEXIS 9248

• Court: Court of Appeals for the Third Circuit
• Decided: May 13, 1970
• Docket: 28078_1
• Status: Published

Opinion

GODBOLD, Circuit Judge:

This case concerns the scope of the removal statute, 28 U.S.C. § 1441. 1

Steed filed an FELA claim against Central of Georgia Railway Company, his employer, in the Circuit Court of Jefferson County, Alabama. Central filed a third-party complaint against Riegel Textile Corporation, claiming indemnity in whole or in part, under the terms of a track agreement. 2

Riegel petitioned for removal of the case to the United States District Court for the Northern District of Alabama, alleging diversity of citizenship between itself and Central in that Central is a Georgia corporation and Riegel a Delaware corporation with principal place of business in New York. The District Court granted motions to remand urged by both Steed and Central, holding that the third party complaint did not raise a “separate and independent claim” as required for removal under § 1441(c).

Back in state court plaintiff Steed moved to strike the third party complaint on the grounds that it unduly prejudiced his claim. The Alabama trial court severed the third party complaint for trial purposes 3 and set the original action for trial.

Once again Riegel petitioned for removal, relying once more on § 1441(c). The District Court granted the motion of Steed to remand as to the FELA action, but denied the motion of Central to remand, retaining jurisdiction over the indemnity claim. The District Court certified, and we accepted, the ease for interlocutory appeal under 28 U.S.C. § 1292(b).

The cases are hopelessly divided on whether and under what circumstances a third party defendant may remove to federal court. 4 There are three thorny problems:

[I] s a third party defendant a defendant within the meaning of § 1441; is the application of § 1441(c) limited to claims joined by the plaintiff ; is a third party claim sufficiently unrelated to the main claim to be a separate and independent cause of action.

1A Moore, Federal Practice, § 0.167 [10] at 1049 (1961). 5 The District Court did not wrestle with these issues. We conclude that subsection (c) is inapplicable to the facts of this case, therefore we need reach only the first of the problems described by Moore. 6 Subsection (c) describes the conditions under which an “entire case may be removed.” It does not reach the issue of the removeability of a third party controversy which has been severed from the original action. The severance order of the Alabama trial court was a determination that expediency and the interests of the parties were best served by treating the case as two lawsuits. A federal court may respect that determination. 7

There remains Moore’s first question, whether Riegel is a defendant within the terms of § 1441(a). Moore argues for policy reasons that a third party defendant is outside section 1441(c), discussed above. His concern is that the filing of a third party action should not be allowed to defeat the plaintiff’s choice of forum. 1A Moore, swpra, at 1050 n. 12, quoting Brown v. Hecht Co., 78 F.Supp. 540, 544, 545 (D.Md. 1947). His argument that removal in such situations “is too much akin to the tail wagging the dog,” 1A Moore, supra, at 1052, has no application where by judicial surgery tail and dog have been separated. Where removal would not have the effect of defeating plaintiff’s choice of forum, the federal courts should recognize that a party in Riegel’s position is as much a “defendant” as if an original action had been brought against him. This is fully in accord with the policy behind the removal statute of providing a federal forum to an out-of-stater sued in state court.

In reaching this result, we have considered competing policies, state and federal, which might call for a different disposition. The state may wish to promote settlements by keeping in one court actions growing out of the same transaction. Industrial Lithographic Co. v. Mendelsohn, 119 F.Supp. 284 (D.N.J. 1954). To the extent that this is a real problem, it is a consideration for the state trial court in making its decision whether or not to sever.

There is a federal interest in seeing that the removal statute is applied uniformly to litigants in all states. As the Supreme Court said in Shamrock Oil & Gas Corp. v. Sheets,

The removal statute which is nationwide in its operation, was intended to be uniform in its application, unaffected by local law definition or characterization of the subject matter to which it is to be applied.

313 U.S. 100, 104, 61 S.Ct. 868, 870, 85 L.Ed. 1214, 1217 (1941). The question in Shamrock was whether the characterization of a plaintiff-respondent to a counterclaim as a “defendant” under Texas procedure would suffice to allow him to remove. With reference to this focal issue, the Supreme Court stated, immediately preceding the above quoted sentence, that

decision turns on the meaning of the removal statute and not upon the characterization of the suit or the parties to it by state statutes or decisions.

Id.

Ironically, as Moore points out, discrimination in another form is the consequence of Shamrock. While that decision forbids removal by plaintiffs defending counterclaims, however they may be characterized, it allows removal by defendants in separate actions which would have been brought as counterclaims had the procedure of the forum state allowed it. Therefore, removeability after Shamrock may turn on the forum state’s choice of the most expeditious way to handle multiple claims. See 1A Moore, supra, at 1052, n. 22. Our decision has the same consequences.

The order of the trial court denying remand of Central’s claim against Riegel is affirmed.

1 . “(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

“(c) Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of ac tion, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters not otherwise within its original jurisdiction.”

2 . “The Tenant [Riegel] also agrees to indemnify and hold harmless the Railway [Central] from loss, damage or injury from any act or omission of the Tenant, its employees or agents, to the person or property of the parties hereto and their employees and to the person or property of any other person or corporation, while on or about said track; and if any claim or liability other than from fire shall arise from the joint or concurring negligence of the parties hereto, it shall be borne by them equally.”

3 . “The court is of the opinion, and is reasonably satisfied that the trial of the two matters would prove to be unduly complicated and confusing; further that the 3rd party action was filed very belatedly (about 21 months after the original suit was filed) and that complications in respect thereto prevented a trial at the 1st setting on Jan. 6, 1969, and. it appears likely that unless the third party comp, is stricken or severed other complications will make it impossible to try this case at its next setting, accordingly the court is reasonably satisfied that the third party controversy should not be tried as a part of the original case.”

4 . For an array of opposing decisions, see Coleman v. A & D Machinery Co., 298 F. Supp. 234 (E.D.Calif.1969).

5 . For a discussion of the thorniest of the three, the elements of a separate and independent cause of action, see American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951).

6 . The District Court’s original remand order, finding that the third party claim did not bring the entire case within § 1441 (c), was not appealed from and is not here at issue.

7 . Central urges that the Alabama appellate courts have not had the opportunity to pass on the propriety of the severance procedure either in this case or in any other involving third party actions under Code of Ala., Tit. 7 § 259(2) (1967 Supp.). While such considerations might prompt a federal court to hold a case in abeyance pending final disposition in the state courts, they do not affect its removal jurisdiction.