Sherwin-Williams Co. v. Holmes County
| Decision Date | 13 August 2003 |
| Docket Number | No. 02-60578.,02-60578. |
| Citation | 343 F.3d 383 |
| Parties | THE SHERWIN-WILLIAMS COMPANY, Plaintiff-Appellant, v. HOLMES COUNTY; Warren County; Claiborne County; Jefferson County; Bolivar County; the Jefferson County School District; John Does, John Doe Counties and School Districts, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
William F. Goodman, Jr. (argued), John G. Corlew, John L. Low, IV, Watkins & Eager, Jackson, MS, Charles H. Moellenberg, Jr., Paul M. Pohl, Jones Day, Pittsburg, PA, Traci Leigh Lovitt, Jones Day, New York City, for Plaintiff-Appellant.
Ronald S. Scott, Erin Glenn Busby (argued), Bracewell & Patterson, Sylvia Gerald Davidow, Anita Kawaja, Fleming & Associates, Houston, TX, for Defendants-Appellees.
Deborah Ann McDonald, Natchez, MS, for Holmes County.
Appeal from the United States District Court for the Southern District of Mississippi.
Before KING, Chief Judge, DAVIS, Circuit Judge, and ROSENTHAL,* District Judge.
This is an appeal from the dismissal of a declaratory judgment suit filed in federal court. Plaintiff, Sherwin-Williams Company, sought a declaratory judgment in federal court as to certain issues relating to its liability to the Mississippi school districts and counties named as defendants for the cost of lead paint abatement. The district court concluded that although it had jurisdiction and authority to decide the declaratory judgment action, it should decline to do so. We conclude that the district court gave insufficient weight to factors supporting the exercise of its jurisdiction to decide the declaratory judgment suit. We reverse the decision to dismiss and remand.
The declaratory judgment plaintiff, the Sherwin-Williams Company, is a long-time manufacturer and distributor of paint. The declaratory judgment defendants are school districts and counties in Mississippi. These districts and counties own and operate school buildings that may contain lead-based paint. In April 2001, the Jefferson County School District sued a number of paint manufacturers, including Sherwin-Williams, and a trade association, the Lead Industries Association, in the Circuit Court for Jefferson County, Mississippi. The school district alleged that the defendants had manufactured, distributed, and promoted dangerous lead paints used in Jefferson County schools and claimed the right to recover the costs of lead paint abatement. Sherwin-Williams, the other paint manufacturer defendants, and the trade association were all diverse to the school district. Although the school district had also sued a local hardware store, defendants removed, alleging that the school district had fraudulently joined the in-state store to defeat diversity. While the motion to remand was pending, Sherwin-Williams filed this declaratory judgment action in federal district court.
In its declaratory judgment complaint, Sherwin-Williams pleaded diversity of citizenship as the basis for federal jurisdiction. Sherwin-Williams alleged that statements by the school districts and counties and their lawyers, reported in the media, made clear their intention to file a number of lead paint abatement suits in different counties in Mississippi against Sherwin-Williams and other paint manufacturers. To avoid having to litigate numerous anticipated suits in different state courts, Sherwin-Williams asked the federal court to decide in a single declaratory judgment action four legal issues asserted to be common to all the suits. Sherwin-Williams framed the issues as follows:
1. The Counties and School Districts, cannot, consistent with the First Amendment of the United States Constitution, seek to impose liability on Sherwin-Williams based on its membership in the [Lead Industries Association, Inc.] or other trade association, its petitioning of any federal, state or local government agency, its public expressions of opinion or other activities protected by the First Amendment;
2. Any claim that Sherwin-Williams inadequately warned or labeled about the dangers of its products after the passage of the Federal Hazardous Substances Act is preempted by that Act, with which Sherwin-Williams's products complied;
3. Without identification of any product it made or sold creating a lead paint hazard in a particular facility owned by the Counties and School Districts that caused actual damages, Sherwin-Williams is not the proximate cause of their injuries; and
4. Sherwin-Williams has no duty to reimburse the Counties and School Districts for costs of maintenance, operations, renovations, repair, testing, inspection, or abatement associated with lead paint or pigment in their facilities.
Sherwin-Williams also sought a preliminary and permanent injunction prohibiting the school districts and counties from filing or proceeding with any suit in violation of the district court's declaration of Sherwin-Williams's rights and obligations.
After Sherwin-Williams filed this declaratory judgment suit, another Mississippi school district filed a second lead paint abatement suit in state court. In November 2001, the Quitman County School District sued the same paint manufacturer and trade association defendants that the Jefferson County School District had sued, in a different state court. Defendants, including Sherwin-Williams, removed that case to the United States District Court for the Northern District of Mississippi.
In March 2002, the federal district court denied the motion to remand the suit that the Jefferson County School District had filed, finding that the school district had fraudulently joined the nondiverse hardware store as a defendant. The motion to remand remained pending in the suit the Quitman County School District suit had filed, but no state court suits were pending.
The defendant school districts and counties moved to dismiss Sherwin-Williams's federal declaratory judgment suit, based on the Anti-Injunction Act, 28 U.S.C. § 2283, and "the principles of comity, federalism, and abstention." (Docket Entry No. 2 (Defendants' Motion to Dismiss), ¶¶ 1-2). The district court granted the motion to dismiss in May 2002. No parallel state court case was pending when the district court declined to exercise its jurisdiction over the federal declaratory judgment suit. In July 2002, the federal district court denied the motion to remand the case that the Quitman County School District had filed, again finding fraudulent joinder.
Sherwin-Williams timely appealed the federal court's dismissal of the declaratory judgment action.
In analyzing whether to decide or dismiss the declaratory judgment suit, the district court followed the three steps this court set out in Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). A federal district court must determine: (1) whether the declaratory action is justiciable; (2) whether the court has the authority to grant declaratory relief; and (3) whether to exercise its discretion to decide or dismiss the action. The district court properly concluded that Sherwin-Williams presented a justiciable claim; there was an actual controversy among the parties. Rowan Cos., Inc. v. Griffin, 876 F.2d at 26 (quoting Brown & Root, Inc. v. Big Rock Corp., 383 F.2d 662, 665 (5th Cir.1967)). The district court also properly concluded that it had the authority to decide the declaratory judgment suit. Diversity jurisdiction was present and the Anti-Injunction Act did not apply because there was no pending state court action between Sherwin-Williams and any of the declaratory judgment defendants.1 The district court analyzed the third step under Orix and concluded that it should decline jurisdiction over the declaratory judgment action. That analysis and conclusion is the basis of this appeal.
In St. Paul Ins. Co. v. Trejo, 39 F.3d 585 (5th Cir.1994), this court identified seven nonexclusive factors for a district court to consider in deciding whether to decide or dismiss a declaratory action. These factors are:
(1) whether there is a pending state action in which all of the matters in controversy may be fully litigated;
(2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant;
(3) whether the plaintiff engaged in forum shopping in bringing the suit;
(4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist;
(5) whether the federal court is a convenient forum for the parties and witnesses;
(6) whether retaining the lawsuit would serve the purposes of judicial economy; and
(7) whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending.
Id. at 590-91; See also Vulcan Materials Co. v. City of Tehuacana, 238 F.3d 382, 390 (5th Cir.2001); Travelers Ins. Co. v. Louisiana Farm Bureau Fed'n, Inc., 996 F.2d 774, 778 (5th Cir.1993).
The district court applied the Trejo factors, finding as follows:
(1) there was no pending state court action between Sherwin-Williams and the declaratory defendants at the time of its ruling;
(2) Sherwin-Williams "filed this lawsuit in anticipation of possible lawsuits by the declaratory plaintiffs";
(3) Sherwin-Williams engaged in forum-shopping, shown by the fact that "(1) [Sherwin-Williams] seeks declaratory relief against Mississippi counties that are frequently mentioned as being counties in which large jury verdicts are awarded, and (2) federal forums in the State of Mississippi are sought by some manufacturers in an attempt to avoid the state court system";
(4) there was no inequity in allowing the declaratory judgment to be decided in federal court;
(5) some of the defendants would be inconvenienced in the event that the district court heard the declaratory action;
(6...
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