Lackey v. Atlantic Richfield Co.

Opinion

UNITED STATES COURT OF APPEALS For the Fifth Circuit

Nos. 92-2219 & 92-2511

SHERRY LACKEY, WILLIAM DAUGHTRY, JR., and THE ESTATE OF WILLIAM DAUGHTRY, SR., by and through the ADMINISTRATOR THOMAS HENDERSON,

Plaintiffs-Appellants,

VERSUS

ATLANTIC RICHFIELD COMPANY, ARCO OIL & GAS CORPORATION, ATLANTIC RICHFIELD INDONESIA, INCORPORATED McDERMOTT, INCORPORATED AND P.T. LEKOM MARAS,

Defendants-Appellees.

Appeals from the United States District Court for the Southern District of Texas

(ON PETITION FOR REHEARING)

(Opinion January 29, 1993, 5th Cir., ________F.2d_______)

(April 26, 1993)

Before REYNALDO G. GARZA, HIGGINBOTHAM, AND EMILIO M. GARZA, Circuit Judges.

REYNALDO G. GARZA, Circuit Judge:

We hereby deny petitioners' motion for rehearing. However,

due to some concerns that have been expressed, we withdraw our

prior opinion issued in this case, which was reported at Lackey

v. Atlantic Richfield, Nos. 92-2219, 92-2511, slip. op. 2479 (5th

Cir. Jan. 29, 1993). We now substitute the following opinion in

its place.

Plaintiffs-appellants brought suit in state court alleging violations of the Jones Act, maritime law, and Texas law. The

defendants-appellees removed the case to federal court. Once in

federal court, the plaintiffs moved for the case to be remanded

back to state court on the ground that it was an unremovable

Jones Act case. The district court denied the plaintiffs request

and then granted summary judgment for the defendants on the

merits. We find that the district court improperly retained

jurisdiction over the case because Jones Act claims are non-

removable. Therefore, we REVERSE and REMAND to the district

court with directions that the entire case should in turn be

remanded back to state court.

I. FACTS

This case arises out of the death of William Daughtry, Sr.

("Daughtry"). Daughtry died of heart attack aboard a derrick

barge in Indonesian waters. Allegedly, Daughtry had been working

continuously for a period of thirty two hours prior to his death.

Daughtry was hired by Lekom Maras ("Lekom") to work as an

inspector. At the time of his death, Daughtry was aboard the DB-

26, which was owned by Hydro Marine Services. Hydro contracted

the barge to another entity, who in turn chartered the barge to

P.T. McDermott Indonesia. At the time of Daughtry's death the

barge was operated by McDermott Indonesia.

The contractual agreement between Daughtry and Lekom was

executed in Indonesia. It contemplated that Daughtry would work

2 aboard the DB-26 on projects contracted by ARCO and ARII.1 The

substance of Daughtry's allegations are that he was forced to

work excessive hours, which caused his heart attack. Further,

Daughtry has named numerous corporate defendants in the action

contending that he was a "borrowed servant."

II. PROCEEDINGS

In September of 1991, appellants brought suit against Lekom

and four other corporations. The four corporations named in the

original complaint were ARCO, ARII, AROG,2 and McDermott

Incorporated (the parent).3 Subsequently, appellants named

McDermott Indonesia in their amended complaint.4 Two suits were

originally commenced in state court alleging claims under the

Jones Act, maritime law, and Texas law. The suits were brought

by both of the decedent's children Sherry Lackey and William

Daughtry, Jr. The two suits were then removed to federal court

and consolidated.

On November 26, 1991, the district court notified the

parties that a Rule 16 hearing would be held on December 9, 1991.

The plaintiffs made a motion to remand the case back to state

court at the December 9th hearing. The plaintiffs contended that

1 ARII is Atlantic Richfield Indonesia, Inc. 2 AROG is Atlantic Richfield Oil & Gas. 3 In an amended complaint filed after consolidation the plaintiffs dropped AROG and named McDermott Indonesia. 4 McDermott Indonesia and Lekom were never served and therefore they never entered appearances. 3 the Jones Act precluded the original removal from state court.

See 28 U.S.C. § 1445(a). Judge Hughes denied the plaintiffs'

request for remand.5 During the course of the hearing Judge

Hughes took the plaintiffs to task for naming AROG, McDermott

(the parent), and ARCO. The plaintiffs argued that they were

going to pursue a "borrowed servant theory."

It was at the December 9th hearing that Judge Hughes told

the plaintiffs that he would give them until December 20th to

amend the complaint, which they failed to do. Further, he told

them "the hypothetical possibility that ARCO . . . might have

done something that showed they exercised control over somebody

that might have been an employer is not enough to keep them in

the lawsuit. But on January 10th I will take up that question of

who to eliminate and who to keep in . . . ."

The plaintiffs failed to circulate their amended complaint

until January 13, 1992, the day of the second hearing. In their

amended complaint, the plaintiffs dropped AROG and added

McDermott Indonesia. At the hearing Judge Hughes reprimanded

the plaintiffs because of their dilatory circulation of the

amended complaint. The plaintiffs had said at the first hearing

that they were going to contact the decedent's coworkers in order

to ascertain information they needed to support their borrowed

servant theory. The court then dismissed the claims against ARCO

5 Judge Hughes stated: I am going to deny the motion to remand . . . but at the moment we need to perceive the substance of the claims against the people who are properly here. 4 and McDermott because the plaintiffs had failed to adequately

support their borrowed servant theory. The final order

dismissing plaintiffs' motion to set aside the judgment was

entered on March 2, 1992.

Subsequently, the plaintiffs filed this appeal. On March 5,

1992 they filed their original notice of appeal. The plaintiffs

headed their appeal with the two styles from each of the cases

that were consolidated. In the first style they named "Sherry

Lackey et. al." as the plaintiff, and in the second they named

"William Daughtery" [sic] as the plaintiff. In each style the

plaintiffs named "Atlantic Richfield et. al." as the defendants.

Further, in the body of the notice of appeal it stated that

"plaintiffs" were appealing.

On April 8, 1992, The Fifth Circuit directed the parties to

brief whether or not the plaintiffs had perfected an appeal. On

April 14, 1992, the plaintiffs responded with a Fed. R. App. P.

4(a)(5) motion seeking to correct their original notice of

appeal. The defendants objected, contending that the plaintiffs

had failed to demonstrate excusable neglect. Eventually, on May

28, 1992, the district court granted the plaintiffs' 4(a)(5)

motion.

III. DISCUSSION

On appeal, the plaintiffs-appellants contend that the case

is a non-removable Jones Act case. Therefore, the removal from

state court was improper, the district court's retention of the

case was improper and, thus, all of the actions taken by the

5 district court were a nullity. The defendants counter-argue that

the notice of appeal did not properly invoke appellate

jurisdiction because: (i) all of the parties were not named in

the original notice of appeal; and (ii) the district court abused

its discretion by allowing appellants to amend their notice of

appeal without sufficiently showing excusable neglect. Although,

there were other points of error raised on appeal, because each

of these issues are dispositive we need not pursue those

additional points.6

Whether the notice of appeal is sufficient to invoke appellate

jurisdiction?

The defendants argue that the original notice of appeal did

not sufficiently invoke appellate jurisdiction because: (i) it

failed to list all of the appealing parties individually in the

original notice of appeal;7 and (ii) the district court abused

its discretion when it allowed the appellants to file an amended

notice of appeal. The plaintiffs counter, arguing that: (i) the

original notice of appeal was sufficient to invoke appellate

jurisdiction because both parties were named; and (ii) the

district court properly granted the extension to file an amended

notice of appeal. We find that the trial judge did not abuse his

6 The appellants raise subtantive contentions that go to the merits of the summary judgment; however, we need not address the merits of the summary judgment because we find that the district court did not have jurisdiction to entertain these claims. 7 The defendants contend that Sherry Lackey is the only party entitled to appellate jurisdiction because she is the only party named in the notice of appeal. While William Daughtery [sic] is named on the notice of appeal his name is misspelled and it does not specify whether he is Jr. or Sr. 6 discretion in granting an extension to the appellants, allowing

them to file an amended notice of appeal; therefore, we properly

have jurisdiction over all of the parties herein.

The failure of the appellants to list the parties

individually in their original notice of appeal was undeniably

insufficient. See Torres v. Oakland Scavenger Co., 487 U.S. 312,

314, 108 S. Ct. 2405, 2407 (1988). In Torres the plaintiffs

named fifteen out of sixteen plaintiffs, but omitted the

sixteenth party by clerical error. Id. at 317; 108 S. Ct. at

2409. The Supreme Court held that the failure to name the 16th

party was insufficient to invoke appellate jurisdiction as to

that party. Id.

The plaintiffs in Torres also attempted to argue that the

designation of "et. al." remedied their omission. Id. at 317-18;

108 S. Ct. at 2409. The court flatly rejected this contention

noting that the phrase "et. al." does not provide the requisite

notice required by Fed. R. App. P. Rule 3(c). Id.; see also

Delancey v. State Farm Mut. Auto. Ins., 918 F.2d 491, 493 (5th

Cir. 1990) (use of "et. al." insufficient); Morales v. Pan Am.

Life Ins. Co., 914 F.2d 83, 85 (5th Cir. 1990) (same). Further,

extensive authority exists for the proposition that naming

"plaintiffs" in the body of a notice of appeal is insufficient.

See, e.g., Samaad v. City of Dallas, 922 F.2d 216, 219 (5th Cir.

1991).

The defendants seem to argue that failure to name the

defendants individually also precludes appellate jurisdiction as

7 to them. This argument is entirely incorrect because only

appealing parties must be listed individually. See Fed. R. App.

P. 3(c) (the notice of appeal need only "specify the party or

parties taking appeal")

The defendants then contend that the Rule 4(a)(5) motion,

which permitted the plaintiffs an extension to file an amended

notice of appeal, was improvidently granted because the

plaintiffs did not establish excusable neglect. We will not

disturb the district court's decision to grant a Rule 4(a)(5)

motion unless there has been an abuse of discretion. See, e.g.,

Matter of Missionary Baptist Found. of Am., 792 F.2d 502, 507

(5th Cir. 1986).

The defendants argue that the district court abused its

discretion because the plaintiffs do not point to any excusable

neglect, other than inadvertence, and the case law requires

something more. The plaintiffs did file a timely notice of

appeal in this case. Although, the original notice of appeal was

insufficient to invoke appellate jurisdiction they sought to

remedy that defect via the Rule 4(a)(5) motion. The district

judge could have properly found that the defendants were not

prejudiced by the extension because they were already on notice,

within the prescribed time period, that the plaintiffs were

waging an appeal. Furthermore, the Rule 4(a)(5) motion was not

made long after the original defective notice of appeal was

filed. We cannot conclude that the district judge abused his

discretion and, thus, all of the plaintiffs are properly before

8 us.

Did the district court err in retaining this case because it

was improperly removed from state court?

The appellants-plaintiffs contend that the case should not

have been removed from state court because it was a Jones Act

case. It is axiomatic that Jones Act suits may not be removed

from state court because 46 U.S.C. § 688 (the Jones Act)

incorporates the general provisions of the Federal Employer's

Liability Act, including 28 U.S.C. § 1445(a), which in turn bars

removal. See, e.g., Lirette v. N.L. Sperry Sun, Inc., 820 F.2d

116, 117 (5th Cir. 1987)(en banc)("Lirette II"); Addison v. Gulf

Coast Contracting Servs., Inc., 744 F.2d 494, 498 n.3 (5th Cir.

1984). Further, in determining whether a Jones Act claim has

been alleged our inquiry is usually limited to a review of the

plaintiffs' pleadings. See Addison, 744 F.2d at 498; Preston v.

Grant Advertising, Inc., 375 F.2d 439, 440 (1967)(per curiam).

That limitation on the scope of the inquiry, however, exists

only "in the absence of any issue of a fraudulent attempt to

evade removal." Preston, 375 F.2d at 440. Long before Preston,

it was settled that district courts may look beyond plaintiffs'

pleadings in order to determine whether a FELA claim had been

fraudulently asserted. See e.g., Boyle v. Chicago, R.I. & P.

Ry., 42 F.2d 633, 634-35 (8th Cir. 1930); Farmers' Bank & Trust

Co. v. Atchison, T. & S.F. Ry., 25 F.2d 23, 27 (8th Cir. 1928).

Preston echoed the FELA rule that removability is determined from

the face of the complaint "in the absence of fraud." See Porter

9 v. St. Louis-San Francisco Ry., 354 F.2d 840, 843 (5th Cir.

1966); Chacon v. Atchison, T. & S.F. Ry., 320 F.2d 331, 332 (10th

Cir. 1963).

Thus, while federal courts ordinarily look only to the

plaintiffs' pleadings in determining whether a Jones Act claim

has been stated, defendants may pierce the pleadings to show that

the Jones Act claim has been fraudulently pleaded to prevent

removal. The fact that Jones Act claims are ordinarily not

removable does not prevent this inquiry. Lawsuits in which non-

diverse defendants have been joined are ordinarily non-removable

as well. Nonetheless defendants are permitted to demonstrate

that parties--or claims--are baseless in law and in fact and

"serve[] only to frustrate federal jurisdiction." Dodd v.

Fawcett Publications, Inc., 329 F.2d 82, 85 (10th Cir. 1964).

This right, however, exists in tension with the Jones Act

plaintiff's right to choose a state court forum. Defendants may

abuse the assertion of fraud in the hope of achieving a federal

adjudication of the merits of a disputable Jones Act claim. For

that reason, "the mere assertion of fraud is not sufficient to

warrant removing the case to federal court." Yawn v. Southern

Ry., 591 F.2d 312, 316 (5th Cir. 1979)(FELA case). Defendants

must prove that the allegations of the complaint were

fraudulently made, and any doubts should be resolved in favor of

the plaintiff. Id. As in fraudulent joinder cases, defendants'

burden of persuasion is a heavy one. The district court must

resolve disputed questions of fact from the pleadings and

10 affidavits in favor of the plaintiff. See B., Inc. v. Miller

Brewing Co., 663 F.2d 545 (5th Cir. 1981). The removing party

must show that there is no possibility that plaintiff would be

able to establish a cause of action. Id.

The defendants here contended that plaintiffs fraudulently

asserted a Jones Act claim. Defendants came forward with

affidavits establishing that Daughtry Sr. was hired by Lekom and

was not on any of their payrolls. In their amended complaint,

plaintiffs' allege that Daughtry Sr. was a borrowed servant of

defendants, subjecting them to liability under the Jones Act.

As amended, plaintiffs' complaint sets forth that: (i) Daughtry

Sr. was a seaman; (ii) Daughtry Sr. was injured in the course and

scope of his employment in violation of the Jones Act; and (iii)

Daughtry Sr. was a borrowed servant of the defendants. These

allegations suffice to state a Jones Act claim. See Addison, 744

F.2d at 498-99; see also Porter, 354 F.2d at 843.

In Porter, the court remanded a FELA claim based upon a

borrowed servant theory. Defendant Frisco maintained that

because plaintiff's complaint admitted his employment by Union,

it failed to state a claim against Frisco.8 The court rejected

this contention. In this case, defendants similarly attack the

Jones Act claim by demonstrating that Daughtry Sr. was employed

by Lekom. We are not persuaded, however, that defendants'

affidavits establish beyond dispute that no borrowed servant

8 Frisco maintained that the complaint failed to state a FELA claim and did not assert fraudulent pleading.

11 employment relationship existed. Their evidence did not disprove

plaintiffs' theory of liability.

The fraudulent pleading inquiry is capable of summary

determination. Carriere v. Sears, Roebuck & Co., 893 F.2d 98,

100 (5th Cir. 100). We established a procedure for doing so in

Miller Brewing, 663 F.2d at 549-551. Although plaintiffs "may

submit affidavits and deposition transcripts along with the

factual allegations in the verified complaint," id. at 549, there

is no requirement that they do so. Moreover, this court

disapproved attempts to resolve factual disputes "where the

disputed factual issues relate to matters of substance." Id. at

551 n.14. "[J]urisdictional inquiry must not subsume substantive

determination." Id. at 550. The court must resolve all disputed

questions of fact from the pleadings and affidavits in favor of

the plaintiff, and then determine whether there could possibly be

a valid claim against the defendant in question.

Plaintiffs alleged that Daughtry Sr. was a borrowed servant

in the employ of the defendants. Plaintiffs were not required to

produce evidence proving that claim at this stage of the

litigation. The defendants failed to meet their burden of

demonstrating that the allegations were undisputedly false.

IV. CONCLUSION

The district court did not abuse its discretion when it

granted the plaintiffs an extension to amend their original

timely notice of appeal. Thus, we have appellate jurisdiction

over all of the plaintiffs. Moreover, defendants have failed to

12 demonstrate that plaintiffs fraudulently pleaded a Jones Act

claim. Plaintiffs have sufficiently pleaded a Jones Act claim,

therefore this case must be remanded to state court. Therefore,

we REVERSE the district court and REMAND to the district court,

which should in turn remand the case back to state court where it

belongs.