Baris v. Sulpicio Lines, Inc.

• Decision Date: 23 January 1996
• Docket Number: No. 94-20498,94-20498
• Citation: 74 F.3d 567
• Parties: Victor C. BARIS, et al., Plaintiffs-Appellees, v. SULPICIO LINES, INC., et al., Defendants, Caltex Petroleum, Inc., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 567

74 F.3d 567

Victor C. BARIS, et al., Plaintiffs-Appellees, v. SULPICIO LINES, INC., et al., Defendants, Caltex Petroleum, Inc., et al., Defendants-Appellants.

No. 94-20498.

United States Court of Appeals,

Fifth Circuit.

Jan. 23, 1996.

Charles Alan Wright, Austin, TX, Bruce Dixie Smith, John A. Barrett, Fulbright & Jaworski, Houston, TX, Richard Zook, Houston, TX, for Caltex Petroleum, Inc., et al.

Ted C. Litton, Houston, TX, for Steamship Mutual Underwriting Assoc., Ltd.

Wayne Fisher, Michael John Maloney, Fisher, Gallagher & Lewis, Houston, TX, A. Glenn Diddel, III, Christopher Tramonte, Houston, TX, for appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before SMITH and EMILIO M. GARZA, Circuit Judges, and STAGG, ^* District Judge.

JERRY E. SMITH, Circuit Judge:

Caltex Petroleum, Inc. ("Caltex"), and Steamship Mutual Underwriting Association (Bermuda), Ltd. ("Steamship Mutual"), appeal the district court's denial of an injunction to bar plaintiffs' suit in Louisiana state court. Concluding that the district court did not reversibly err, we affirm.

I.

In December 1987, the M/V DONA PAZ collided with the M/T VECTOR in the Tablas Strait in the Philippines; approximately 5,000 Filipino citizens lost their lives. The M/V DONA PAZ was a ferry boat owned and operated by Sulpicio Lines, Inc., a Philippines corporation; the M/T VECTOR was a tanker owned and operated by Vector Shipping Corp., also a Philippines corporation. At the time of the collision, the tanker was carrying petroleum products for Caltex Petroleum, Inc., Caltex Petroleum Corporation, and Caltex Oil Corporation, corporations with their principal place of business in Texas.

II.

Plaintiffs, family members of those who perished, filed suit in Louisiana state court in December 1988 but withheld service of process for five years. In December 1989, plaintiffs, individually and on behalf of a class purported to number up to 5,000 Filipinos, sued in Texas state court, naming nine Caltex defendants (collectively "Caltex") and seventeen other defendants. The class, however, has never been certified. Claims were made pursuant to general maritime law, the Death on the High Seas Act, and other provisions of state and federal law pursuant to the saving to suitors clause, 28 U.S.C. Sec. 1331(1). Plaintiffs asserted that Caltex was negligent in entrusting its cargo for shipment on the M/T VECTOR.

The case was removed to federal court in February 1990. The district court upheld its subject matter jurisdiction and dismissed on forum non conveniens ("f.n.c.") grounds in June 1990.

Plaintiffs appealed on the grounds that the district court lacked subject matter jurisdiction and, in the alternative, had failed to apply the correct analysis to the f.n.c. claim. In Baris v. Sulpicio Lines, Inc., 932 F.2d 1540 (5th Cir.), cert. denied, 502 U.S. 963, 112 S.Ct. 430, 116 L.Ed.2d 449 (1991) ("Baris I "), we upheld the district court's jurisdiction but vacated and remanded on the f.n.c. issue. We expressed concern that the district court had not imposed conditions that would guarantee the plaintiffs a fair opportunity to litigate in the Philippines. Id. at 1552.

While the appeal was pending, plaintiffs filed another suit in Texas state court against Caltex in August 1990; process was served five months later. This suit was similar to the first Texas state action and was removed in January 1991, then consolidated with the first matter in July 1991.

Caltex again moved for a dismissal on f.n.c. grounds. On March 3, 1992, the district court determined that the Philippines was the proper situs for the litigation and that the Philippines provided an adequate and available forum. The motion to dismiss was granted with prejudice.

The dismissal was conditioned on five things that would ensure that the defendants would be amenable to suit in the Philippines. Defendants had to certify that each would (1) submit to service of process and jurisdiction in the Philippines; (2) formally waive any statute of limitations defense; (3) agree that discovery already taken could be used in the Philippines; (4) make available in the Philippines all relevant documents and witnesses under its control; and (5) formally agree to satisfy any final judgment rendered by the Philippine courts. Caltex agreed to the conditions and has fully complied with the court order. Moreover, the plaintiffs have initiated litigation in the Philippines.

Plaintiffs failed timely to appeal the dismissal. As a result, this court dismissed their appeal. See Baris v. Sulpicio Lines, Inc., 996 F.2d 308 (5th Cir.1992) (per curiam) (unpublished).

The Louisiana state suit that had been filed in December 1988 was served on Caltex in late December 1993. Apparently, the suit was a secret until two defendants, Sulpicio Lines, Inc. ("Sulpicio"), and Steamship Mutual happened upon it in February 1990. Those defendants attempted to remove, but in September 1990 the Louisiana federal court remanded the matter to state court. Caltex had not yet been served and was not a party to the removal and remand proceedings. The suit was dormant until Caltex was served in December 1993.

In January 1994, Caltex attempted to remove the case to Louisiana federal court. On May 13, 1994, the matter again was remanded on the ground that the Caltex removal was untimely because more than one year had passed since suit was filed. The court did not address the argument that the Louisiana suit had been revived merely in order to avoid the preclusive effect of the Texas dismissal.

Caltex returned to Texas to seek relief from the federal district court that had entered the f.n.c. dismissal with prejudice. Caltex filed a motion for a hearing to force the plaintiffs to show why they should not be enjoined from pursuing their claims in any American court. The court denied injunctive relief, apparently thinking that it was powerless to grant it.

The court stated that it thought that the dismissal with prejudice applied only to the relitigation of the f.n.c. issue. Although the court found the plaintiffs' tactics "repugnant," it held that it had no jurisdiction to enforce its prior decision because it concluded that in dismissing on f.n.c. grounds, it had not entered a final judgment on a substantive point of law. The defendants now appeal the refusal to grant injunctive relief.

III.

The Anti-Injunction Act states:

A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.

28 U.S.C. Sec. 2283. The last exception, "to protect or effectuate its judgments," is commonly referred to as the "relitigation exception." District courts can enter injunctions as a means to enforce prior judgments. Royal Ins. Co. of Am. v. Quinn-L Capital Corp., 3 F.3d 877, 881 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1541, 128 L.Ed.2d 193 (1994); Santopadre v. Pelican Homestead & Sav. Ass'n, 937 F.2d 268, 273 (5th Cir.1991). Res judicata operates as a bar--enforceable by federal injunction--to a state proceeding in which a party seeks to relitigate claims that have been decided by a federal court.

As a general matter, federal courts have ancillary jurisdiction ¹ to enjoin relitigation in state court; they do not need a basis for jurisdiction that is independent of the jurisdiction that supported the original judgment. Mooney Aircraft, Inc. v. Foster, 730 F.2d 367, 374 (5th Cir.1984). Ancillary jurisdiction enables a court "to manage its proceedings, vindicate its authority, and effectuate its decrees." Kokkonen v. Guardian Life Ins. Co. of Am., --- U.S. ----, ----, 114 S.Ct. 1673, 1676, 128 L.Ed.2d 391 (1994).

In this case, the district court's prior judgment, which Caltex argues can support an injunction against the Louisiana proceedings, dismissed the claims "with prejudice," provided certain conditions allowing litigation in the Philippines were met. The Caltex defendants maintain that this dismissal precludes the plaintiffs from litigating their claims in any court, state or federal, in the United States.

A dismissal "with prejudice" has important consequences: "It is clear that a stipulation of dismissal with prejudice, or, for that matter, a dismissal with prejudice at any stage of a judicial proceeding, normally constitutes a final judgment on the merits which bars a later suit on the same cause of action." Astron Indus. Assoc. v. Chrysler Motors Corp., 405 F.2d 958, 960 (5th Cir.1968); see also 1B JAMES W. MOORE & JO D. LUCAS, MOORE'S FEDERAL PRACTICE p 0.409 [1.-2], at III-140 (2d ed. 1995). We conclude, however, that the dismissal on f.n.c. grounds in this case, whether designated as "with prejudice" or "without prejudice," cannot serve as the res judicata foundation for a later injunction against the Louisiana state proceedings.

Generally, res judicata acts as a bar to a subsequent suit when the resolution of the initial proceeding has been "on the merits," which suggests that the substantive claims have been addressed by the court. See generally 18 CHARLES A. WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE Sec. 4435 (1981). The common law venue rule of f.n.c., by contrast, is a doctrine "of procedure rather than substance." American Dredging Co. v. Miller, --- U.S. ----, ----, 114 S.Ct. 981, 988, 127 L.Ed.2d 285 (1994).

Our inquiry is not ended, however, as the use and application of the phrase "on the merits" has been imprecise at best. See 18 WRIGHT, MILLER & COOPER, supra, at 329-30. This court has held that certain dismissals that do not reach the substantive issues of the litigation still may be regarded as "on the merits" for purposes of res judicata and preclusion. See, e.g., Anthony v. Marion County Gen. Hosp., 617 F.2d 1164, 1168-69 (5th Cir.1980).

Defendants cite several cases ...