IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
___________________
No. 96-40281 Summary Calendar
ELIZABETH ELIZONDO, Plaintiff-Counter Defendant-Appellee,
versus
THE PILGRIM’S GROUP, INC.; D. L. TOURS, INC., TEXAS, Defendants-Counter Claimants-Appellants.
________________________________________________
Appeal from the United States District Court for the Southern District of Texas (B-95-CV-162) ________________________________________________ October 1, 1996
Before GARWOOD, JOLLY and DENNIS, Circuit Judges.*
GARWOOD, Circuit Judge:
Plaintiff tourist sued two Arizona travel service corporations
in state court for unspecified damages arising from injuries
sustained in a bus accident in Spain. The defendant corporations
removed to federal court, alleging that the amount in controversy
exceeded $50,000 excluding interest and costs. The corporations
* Pursuant to Local Rule 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in Local Rule 47.5.4. also filed a motion to transfer the case to Arizona. Plaintiff
requested a remand to state court, stating that her claim involved
no federal question and that her damages were less than the
jurisdictional amount. The parties agreed to a proposed order for
remand and submitted it to the magistrate judge. While the motions
to remand and transfer were pending, the magistrate judge held a
pretrial conference at which counsel for the defendants failed to
appear. The magistrate judge denied both the remand and transfer
motions and entered its scheduling order, setting separate dates
for the final pretrial conference, jury selection, and trial.
Counsel for the defendants subsequently failed to appear at the
final pretrial conference. Upon a motion by the plaintiff, the
magistrate judge entered judgment for plaintiff in the amount of
$75,000. The defendant corporations bring this appeal.
Facts and Proceedings Below
On August 3, 1995, plaintiff Elizabeth Elizondo1 (Elizondo),
a resident and citizen of Texas, filed suit in Texas state court
against The Pilgrim’s Group, Inc., and D.L. Tours, Inc.
(collectively Pilgrims), both Arizona corporations. Elizondo
sought damages arising from a bus accident that occurred in Spain
1 At various stages of these proceedings, papers filed with the court, including papers filed by counsel for plaintiff, have alternately spelled plaintiff’s name “Elizando” and “Elizondo.” See, e.g., Plaintiff’s Original Complaint (Elizando); Plaintiff’s Motion To Remand (Elizondo). Final judgment was entered for “Elizondo.”
2 while she was on a tour of Spanish religious sites arranged by
Pilgrims. Elizondo’s complaint alleged that Pilgrims held
themselves out to be experts in world travel arrangements.
Elizondo alleged that she purchased a tour package arranged by
Pilgrims that was to include visits to sites in Spain and France
with transportation provided by various entities selected by
Pilgrims. According to Elizondo, she was “seriously injured” when
a tour bus on which she was a passenger tipped over. Elizondo
further alleged that the bus accident, which occurred when the tour
group was en route from Barcelona to Lourdes, killed several tour
participants and injured many others, including Elizondo.
According to Elizondo, Pilgrims did not “carefully select tour
elements” and this failure was evidenced by the “inebriated,
grossly negligent driver” of the tour bus. Elizondo sought
unspecified damages2 for breach of contract, violations of the
Texas Deceptive Trade Practices Act (DTPA), personal injuries and
medical expenses, mental anguish, and lost employment time. In
addition, Elizondo sought punitive damages, DTPA penalties,
attorneys’ fees, and court costs.
On October 2, 1995, Pilgrims removed the case to the United
States District Court for the Southern District of Texas. The
notice of removal alleged that the defendants were both Arizona
2 Texas law requires that complaints seeking unliquidated damages not state a specific amount. Tex. R. Civ. P. 47(b); Capitol Brick, Inc. v. Fleming Mfg. Co., 722 S.W.2d 399, 401 (Tex. 1986).
3 corporations with their principal places of business in that state.
The notice of removal further alleged that the amount in
controversy, excluding costs and interest, exceeded $50,000, so
that the requirements for diversity of citizenship jurisdiction
were met. See 28 U.S.C. §§ 1332, 1441. The parties subsequently
consented to a trial by magistrate judge and set the date for the
initial pretrial conference.
On October 30, 1995, defendants filed a motion to transfer the
case to the United States District Court for the District of
Arizona on the grounds that Arizona was more convenient for both
the parties and the witnesses and that Arizona was the judicial
district with the most significant ties to the litigation. See 28
U.S.C. § 1404(a).
On November 8, 1995, while defendants’ motion to transfer was
still pending, Elizondo filed a motion to remand the case to state
court. Elizondo alleged that she had filed her complaint in a
state court of limited jurisdiction “because of the small amount of
money involved.”3 Elizondo further alleged that the case involved
“damages of less than $50,000,” but did not otherwise alter her
original complaint. The next day counsel for defendants notified
the court that defendants would submit an “Agreed Order To Remand.”
Another pretrial conference was set for November 21, 1995.
3 The state court had jurisdiction up to $100,000. Tex. Govt. Code § 25.0003(c)(1).
4 Counsel for defendants failed to appear at the November 21
pretrial conference. The magistrate judge signed the scheduling
order which was in turn mailed to counsel for both parties. The
scheduling order, in addition to setting deadlines for discovery
and motions, set the final pretrial settlement conference date for
January 25, 1996; set the final pretrial conference date for
February 1, 1996; set jury selection date for February 2, 1996; and
set jury trial date for February 12, 1996. The transfer and remand
motions were denied on January 4, 1996.
Counsel for defendants again failed to appear at the January
25 pretrial settlement conference. The magistrate judge instructed
counsel for Elizondo to send a copy of the Joint Pretrial Order to
counsel for defendants for his participation. On February 1, 1996,
the pretrial order was received by the court.
Once again, counsel for defendants failed to appear at the
February 1 Final Pretrial Conference. According to the record,4
counsel for Elizondo initially moved for a default judgment, then
chose to waive her right to a jury trial and proceeded to present
the case to the magistrate judge on the merits, calling Elizondo as
a witness and presenting three documentary exhibits to the court.
The magistrate judge ordered final judgment for Elizondo on
February 1, 1996, in the amount of $75,000, plus costs and post-
judgment interest. Final judgment was entered on February 8, 1996.
4 No transcript was made of the February 1 proceedings.
5 On February 14, 1996, defendants moved for a new trial, which
was subsequently denied.
Defendants appeal the denial of their motion to transfer, the
denial of the proposed order to remand, and the magistrate judge’s
decision to conduct the trial on the merits prior to the scheduled
date.
Discussion
I.
The preliminary question presented is whether the district
court should have granted the plaintiff’s motion to remand the case
to Texas state court because the amount in controversy was below
the threshold amount required to support diversity jurisdiction
under 28 U.S.C. 1332(b). The legal basis for the magistrate
judge’s implicit finding of jurisdiction under 28 U.S.C. § 1332(b)
is subject to de novo review. Harvey Const. Co. v. Robertson-Ceco
Corp., 10 F.3d 300, 303 (5th Cir. 1994). Although ordinarily the
removing party bears the burden of establishing the basis for
federal jurisdiction, see Asociacion Nacional de Pescadores a
Pequena Escala O Artesanales de Colombia (ANPAC) v. Dow Quimica
S.A., 988 F.2d 559, 563 (5th Cir. 1993), cert. denied, 510 U.S.
1041, 114 S.Ct. 685 (1994), the district court also “has a duty to
make the inquiries necessary to establish its own jurisdiction,”
Foret v. Southern Farm Bureau Life Ins. Co., 918 F.2d 534, 537 (5th
Cir. 1990). Given the procedural posture of this case, it is the
6 defendant removers who, as losers below, object to the denial of
the motion to remand.
A.
Resolution of this issue is aided by this Court’s decisions in
ANPAC, 988 F.2d 559, and Marcel v. Pool Co., 5 F.3d 81 (5th Cir.
1993). In ANPAC, as here, Texas law prohibited the original
complaint from specifying the precise amount of damages. ANPAC, 5
F.3d at 562 & n.1. The ANPAC defendant removed, asserting only the
parties’ citizenship and that the amount in controversy exceeded
$50,000. Id. The ANPAC plaintiffs filed a motion to remand,
attaching an affidavit from their attorney stating that there was
no individual plaintiff or claimant who had suffered a loss greater
than $50,000. Id. This Court reversed the district court’s denial
of the motion to remand, noting that the alleged injuries were
unlikely to meet the jurisdictional amount.5 Id.
This Court’s ANPAC decision reiterated the test set forth in
St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289,
58 S.Ct. 586, 590 (1938):
“[I]f, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring
5 The alleged personal injuries were “skin rashes” and the alleged economic injuries to the individual Colombian fisherman were extremely unlikely to have amounted to the required $50,000. Id. at 565.
7 jurisdiction, the suit will be dismissed.”
The ANPAC court acknowledged that “a plaintiff may not defeat
removal by subsequently changing his damage request[] because post-
removal events cannot deprive a court of jurisdiction once it has
attached,” but held that the affidavit supplied by the plaintiffs’
attorney merely clarified the original complaint that, because of
the Texas rule, was previously ambiguous as to the jurisdictional
amount. ANPAC, 988 F.2d at 565 (emphasis in original); St. Paul
Mercury, 303 U.S. at 295, 58 S.Ct. at 593 (“[S]ubsequent reduction
of the amount claimed cannot oust the district court’s
jurisdiction.”).
The removing party in ANPAC also failed to state facts in
support of the jurisdictional amount in its notice of removal.
ANPAC, 988 F.2d at 565 (noting that the notice of removal “merely
states, without any elaboration, that ‘the matter in controversy
exceeds $50,000 exclusive of interest and costs’”). Finally, the
ANPAC court made the following conclusion:
“[A]t least where the following circumstances are present, [the removing party’s] burden has not been met: (1) the complaint did not specify an amount of damages, and it was not otherwise facially apparent that the damages sought or incurred were likely above $50,000; (2) the defendants offered only a conclusory statement in their notice of removal that was not based on direct knowledge about the plaintiffs’ claims; and (3) the plaintiffs timely contested removal with a sworn, unrebutted affidavit indicating that the requisite amount in controversy was not present.”
Id. at 566.
8 In Marcel, this Court revisited the issue raised by ANPAC.
Observing the factual distinctions between the two cases, the
Marcel court considered the conditions set forth in ANPAC. First,
the court noted:
“While in the present case, as in ANPAC, the complaint did not, and indeed, could not, specify an amount of damages, it is facially apparent here that, based upon the complaint and viewing the case as of the time of removal, the damages easily could exceed $50,000. In fact, any one of several injuries alleged——not to mention the requested exemplary damages——alone could have topped that amount . . . .”
Marcel, 5 F.3d at 84 (emphasis in original). Second, the court
observed that, unlike the defendant in ANPAC, the defendant in
Marcel buttressed its notice of removal by listing the types of
injury plaintiff claimed. Although the facts in the notice of
removal were not detailed, the defendant’s response to the
plaintiff’s motion to remand provided a more detailed basis from
which the court was able to assess whether the claim met the
jurisdictional threshold. Id. at 84-85. Finally, as in ANPAC, the
plaintiff in Marcel offered to stipulate that the claim was for
less than the jurisdictional amount, but the court considered the
stipulation to be rebutted by other evidence presented. Id. at 85.
B.
St. Paul Mercury, ANPAC, and Marcel govern the result in this
case. Under the rationale of these cases, it is apparent that the
magistrate judge properly denied Elizondo’s motion to remand. As
9 in Marcel, an examination of the conditions set forth in ANPAC
leads to the conclusion that none of them are sufficiently present
to require a remand to state court. First, although Elizondo’s
original complaint contained no specific amount of damages, her
allegations could easily have exceeded the jurisdictional
threshold. Elizondo’s complaint was not limited to expectation
damages for breach of contract regarding her unrefunded tour
package, but rather included claims for her “serious injur[ies],”
attorneys’ fees, DTPA penalties, lost employment time, mental
anguish, medical expenses, and, significantly, punitive damages.
The factual context of Elizondo’s claims involved an allegedly
inebriated tour bus driver whose gross negligence caused several
deaths and multiple injuries. As in Marcel, some of these claims,
alone, could have reached the jurisdictional threshold.
ANPAC’s second condition is likewise unsatisfied. Although
the defendants’ notice of removal recited the general
jurisdictional amount, both Elizondo’s original complaint and the
defendants’ subsequent transfer motion and accompanying affidavits
provided sufficient detail for the magistrate judge to conclude the
claim presented a potential for recovery far in excess of $50,000.
Finally, ANPAC’s third condition——an unrebutted affidavit
indicating an insufficient amount in controversy——cannot be said to
be present here. Although the parties submitted a proposed “Agreed
Order To Remand” apparently conceding the monetary limits of
10 Elizondo’s claims, the documents in the magistrate judge’s
possession at the time of the denial belied such a stipulation.
This type of postremoval shenanigans is precisely the conduct
precluded by St. Paul Mercury. St. Paul Mercury, 303 U.S. at 292,
58 S.Ct. at 592 (“[T]hough, as here, the plaintiff after removal,
by stipulation, by affidavit, or by amendment of his pleadings,
reduces the claim below the requisite amount, this does not deprive
the court of jurisdiction.”). ANPAC should not be read as obliging
a district court to consider postremoval affidavits or
stipulations; rather, ANPAC involved “an unusual case” in which the
complaint left the jurisdictional amount ambiguous. See Marcel, 5
F.3d at 85. In the absence of such an ambiguity, postremoval
stipulations and affidavits are of questionable sufficiency.6
Here, as in Marcel but not in ANPAC, the original complaint
adequately evinced an amount in controversy in excess of the
jurisdictional threshold and obviated the need to consider material
outside of the pleadings, the notice of removal, and the transfer
motion.
Accordingly, we conclude that, at the time of removal, at
least $50,000 was in controversy. The subsequent proposed “Agreed
6 Needless to say, plaintiff’s loyalty to her limited damage concession in the “Agreed Motion To Remand” waned at the prospect of receiving a $75,000 judgment. See Appellee’s Brief at 5 (arguing that a federal court “must itself endeavor not to permit a circumvention of removal jurisdiction”). Although not properly considered in determining removal jurisdiction, it nevertheless demonstrates the diminished value of postremoval affidavits.
11 Order To Remand” did not defeat removal, and the magistrate judge
was correct in denying the motion to remand.
II.
The next issue raised by defendants concerns their motion to
transfer pursuant to section 1404(a).7 Section 1404(a) provides:
“For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.”
“‘A motion to transfer venue is addressed to the discretion of the
trial court and will not be reversed on appeal absent an abuse of
discretion.’” Gundle Lining Const. Corp. v. Adams County Asphalt,
Inc., 85 F.3d 201, 209 n.5 (5th Cir. 1996) (quoting Peteet v. Dow
Chem., 868 F.2d 1428, 1436 (5th Cir.), cert. denied, 493 U.S. 935,
110 S.Ct. 328 (1989)). We have long emphasized the subjective
nature of the district court’s inquiry and accordingly afford a
presumption of correctness to its decision. See, e.g., Howell v.
Tanner, 650 F.2d 610, 616 (5th Cir. 1981) (“Appellate review is
limited because it serves little purpose to reappraise such an
inherently subjective decision.”), cert. denied, 456 U.S. 918, 102
S.Ct. 1775 (1982).
The magistrate judge, when considering defendants’ section
7 On October 30, 1995, defendants filed a motion styled "Motion To Transfer pursuant to 28 U.S.C. § 1401(a)." Section 1401(a), of course, deals with stockholder derivative actions. Their memorandum in support of the motion, however, makes clear that the motion sought a transfer pursuant to section 1404(a).
12 1404(a) motion to transfer was entitled, indeed required, to
consider “all relevant factors” that might bear on the convenience
of the forum. These factors included not only the situs of the
defendants’ corporate offices and witnesses, but also the
plaintiff's choice of forum, potential delays, prior consent by the
parties, and the proper allocation of judicial resources. Peteet,
868 F.2d at 1436. After a thorough review of the record, we
conclude that the magistrate judge did not abuse his discretion.
Although defendants, as Arizona corporations, argue that the venue
is inconvenient,8 other factors——such as Elizondo’s choice of forum,
the potential for delay, the parties’ consent to trial by
magistrate judge, and the progress made in the litigation prior to
the defendants’ transfer motion——are sufficient to support the
magistrate judge’s determination that venue should remain in the
Southern District of Texas.
III.
The final issue presented is whether the magistrate judge
erred by conducting a trial on the merits when defendants failed to
appear at the February 1 Pretrial Conference. As a preliminary
8 Defendants did not move for transfer or dismissal pursuant to 28 U.S.C. § 1406(a). Section 1406(a) allows a district court to transfer or dismiss a case brought in an improper venue. The general venue statute is 28 U.S.C. § 1391. We need not address whether venue was proper in the Southern District of Texas because defendants have raised no such objection. Speaking broadly, section 1404(a) applies when venue is properly laid in the original district court and section 1406(a) applies in all other situations. In the former situation, the district court is entitled to exercise its discretion, in the latter it is not.
13 matter, it should be noted that it is not entirely clear whether
the magistrate judge entered default judgment pursuant to Rule 55,9
Rule 16(f), or simply chose to accelerate the date for trial on the
merits by eleven days as some other form of sanction. Because the
failure of counsel for defendants to appear at the February 1
Pretrial Conference provided the impetus for the magistrate judge’s
order, however, the propriety of the order is most appropriately
addressed by a Rule 16(f) analysis.
Rule 16 provides a trial judge with broad discretion to use
pretrial conferences to expedite actions, discourage wasteful and
protracted pretrial activities, improve the quality of trial
preparation, and facilitate settlement. Fed. R. Civ. P. 16(a). In
order to ensure the trial judge has the ability to achieve the
objectives set forth in Rule 16(a), Rule 16(f) provides that a
court may impose certain sanctions:
“If a party or party’s attorney fails to obey a scheduling or pretrial order, or if no appearance is made on behalf of a party at a scheduling or pretrial conference, or if a party or party’s attorney is substantially unprepared to participate in the conference, or if a party or party’s attorney fails to participate in good faith, the judge, upon motion or the judge’s own initiative, may make such orders with regard thereto as are just, and among others any of the orders provided in Rule 37(b)(2)(B), (C), (D).
9 Under Rule 55(b)(2), of course, the magistrate judge would have been required to give three days notice of a default judgment. Fed. R. Civ. P. 55(b)(2). Accordingly, the “default judgment” must be justified, if at all, as a sanction under Rule 16(f).
14 Fed. R. Civ. P. 16(f). This Court reviews a lower court’s entry of
sanctions under Rule 16(f) for an abuse of discretion. See
Securities and Exchange Comm’n v. First Houston Capital Resources
Fund, Inc., 979 F.2d 380, 381-82 & n.3 (5th Cir. 1992).
In First Houston, this Court reviewed the general standard by
which a trial judge should assess the appropriateness of a
dismissal or default judgment sanction. Observing the discretion
afforded a trial judge, we noted that “courts ‘have generally
permitted it only in the face of a clear record of delay or
contumacious conduct by the [party].’” Id. at 382 (quoting Durham
v. Florida East Coast Ry Co., 385 F.2d 366, 368 (5th Cir. 1967)).
There are, however, two remaining prerequisites to the award
of a dismissal or default judgment sanction. First, “even with a
clear record of delay or contumacious conduct,” a trial judge
cannot impose the sanction of a dismissal or a default judgment
“unless the court first finds that a lesser sanction would not have
served the interests of justice.” McNeal v. Papasan, 842 F.2d 787,
793 (5th Cir. 1988). Second, the trial judge must “‘expressly
consider[] alternative sanctions and determine[] that they would
not be sufficient.’” Id. (quoting Callip v. Harris County Child
Welfare Dep’t, 757 F.2d 1513, 1521 (5th Cir. 1985)). In other
words, the trial judge must make findings on the record that
alternative sanctions would not enable the court to accomplish the
objectives of Rule 16(a), or, absent such findings, the record must
15 demonstrate that the trial court employed lesser sanctions that
ultimately proved fruitless. Callip, 757 F.2d at 1521.
Considering the first element, there is insufficient evidence
of the type of contumacious behavior envisioned by our prior cases
addressing the use of dismissals and default judgments as a
sanction. Although the magistrate judge may have been justifiably
provoked by the three consecutive, unexcused absences of Mr.
Pyland, counsel for defendant, absent findings of delay or
contumacious conduct the drastic sanction imposed was
inappropriate. The only incidents of improper behavior on the part
of Mr. Pyland were his unexcused absences from pretrial conferences
on November 21, 1995, January 25, 1996, and February 1, 1996.
There is evidence in the record that Mr. Pyland's absences were
inadvertent and, “while careless, inconsiderate, and understandably
exasperating to a conscientious trial judge, [the absences] more
closely approximate[] the kind of negligence that does not warrant
[a default judgment] than the stubborn resistance to authority that
does.” John v. Louisiana, 828 F.2d 1129, 1131-32 (5th Cir. 1987).
Significantly, there is no evidence in the record of delay
caused by Mr. Pyland’s absences; the dates set by the scheduling
order were not compromised prior to February 1 and his absence on
that date would not have precluded his attendance and participation
at jury selection the next day. The trial itself was not scheduled
16 to begin until February 12. The record lacks any indication that
Mr. Pyland’s absence threatened the timeliness of the action or
that the magistrate judge was even concerned in this regard. It is
therefore difficult to see how delay of the kind that justifies the
imposition of such a drastic sanction was present. A case-ending
sanction pursuant to Rule 16(f) is not warranted when the rights of
the party in compliance are not prejudiced, the progress of the
case has not been delayed, and the noncompliant party has not acted
with brazen defiance to the court’s authority. See, e.g., Brinkman
v. Abner, 813 F.2d 744, 749 (5th Cir. 1987) (affirming dismissal
where, after warning, attorney defied presiding judge’s order and
threatened to prejudice defendants’ trial preparation); Price v.
McGlathery, 792 F.2d 472, 474 (5th Cir. 1986) (affirming dismissal
where, after warning, counsel failed to certify compliance with
pretrial instructions and failed to show up at the pretrial
conference).
Nor is there any evidence in the record that the magistrate
judge made any effort to achieve compliance with the pretrial
scheduling order prior to imposing the sanction. See Silas v.
Sears, Roebuck & Co., 586 F.2d 382, 385 (5th Cir. 1978). As we
observed in First Houston:
“This Court in Callip has excused the absence of express findings concerning alternative sanctions when the district court had previously imposed lesser sanctions and had issued an ultimatum, although we noted in that case that express findings are required. That is not this case. Here, there is nothing in his order to show
17 that the district judge contemplated any sanction but the most severe one. He swung the axe less than one half- hour after [the defendant] had failed to appear.”
979 F.2d at 383. The case at hand is indistinguishable; the
magistrate judge’s failure to consider, on the record, his reasons
for imposing as his initial sanction the most severe one available
is fatal to the legitimacy of the judgment.10
IV.
Upon a careful review of the record we have determined that
the remainder of Pilgrims’ contentions are without merit.
Conclusion
Because the magistrate judge failed to consider patently
available alternatives to accelerating the date of trial and
entering judgment as a sanction and because there is insufficient
evidence of contumacious conduct or delay warranting such a
sanction, we VACATE the judgment and REMAND the case for further
proceedings not inconsistent herewith.
VACATED and REMANDED
10 Many alternatives were available to the magistrate judge. “Assessment of fines, costs, or damages against the [defendant] or his counsel, attorney disciplinary measures, . . . and explicit warnings are preliminary means or less severe sanctions that may be used to safeguard a court’s undoubted right to control its docket.” Rogers v. Kroger Co., 669 F.2d 317, 321-22 (5th Cir. 1982). The magistrate judge could also have had the trial governed by plaintiff’s proposed pretrial order.