Jefferson v. Certain Underwriters at Lloyd's London, 082516 FED5, 15-30211

Docket Nº:15-30211
Opinion Judge:PER CURIAM.
Party Name:JOANNIE L. JEFFERSON; ADRAINE J. GEORGES; DERRIE K. JEFFERSON; RYAN F. JEFFERSON; THOMAS H. JEFFERSON, IV; KEVIN L. JEFFERSON; BRAD A. JEFFERSON; LISA M. WILLIAMS, Plaintiffs-Appellees, v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON, Defendant-Appellant.
Judge Panel:Before KING, CLEMENT, and OWEN, Circuit Judges.
Case Date:August 25, 2016
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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JOANNIE L. JEFFERSON; ADRAINE J. GEORGES; DERRIE K. JEFFERSON; RYAN F. JEFFERSON; THOMAS H. JEFFERSON, IV; KEVIN L. JEFFERSON; BRAD A. JEFFERSON; LISA M. WILLIAMS, Plaintiffs-Appellees,

v.

CERTAIN UNDERWRITERS AT LLOYD'S LONDON, Defendant-Appellant.

No. 15-30211

United States Court of Appeals, Fifth Circuit

August 25, 2016

Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:10-CV-4442

Before KING, CLEMENT, and OWEN, Circuit Judges.

PER CURIAM.[*]

Certain Underwriters at Lloyd's, London (Lloyd's) appeals the district court's remand of this case to state court. Arguing that complete diversity existed at the time of remand between the plaintiffs and Lloyd's, the only remaining defendant, Lloyd's contends that the court was without discretion to remand the case. Due to the absence of allegations or evidence that would allow us to conclusively address this claim, we vacate the district court's remand order and remand the case to district court for further proceedings.

I

Because we are concerned not with the merits of this case but with the district court's jurisdiction to decide it, an abbreviated rendition of the facts will suffice. Joannie Jefferson and other plaintiffs sued various defendants in Louisiana state court for various state-law claims related to asbestos exposure. The plaintiffs eventually amended their complaint to name Certain Underwriters at Lloyd's, London (Lloyd's) as an additional defendant on the theory that it was liable as an excess insurer. Subsequently, one of the original defendants named the Industrial Development Corporation of South Africa, Ltd. (IDC) and another entity as third-party defendants. IDC removed the case to federal district court under the Foreign Sovereign Immunities Act, asserting that it was a "political subdivision, agency or instrumentality" of the South African government.1 The propriety of that removal is not in question.

Once in federal court, the case was transferred to the court overseeing the multidistrict litigation on asbestos. That court granted summary judgment in favor of the South African entities and, exercising supplemental jurisdiction over the remaining claims, transferred the case back to the Eastern District of Louisiana. After more defendants were dismissed pursuant to a settlement, Lloyd's was the sole remaining defendant in the case. The district court then, sua sponte, remanded the matter back to Louisiana state court in accordance with 28 U.S.C. § 1367(c) after asserting that "the remaining parties in the matter are not diverse." Lloyd's timely appealed, arguing that the remaining parties were in fact diverse and the district court thus had no discretion to remand the case.

II

Before addressing the merits of this appeal, "we must first assure ourselves of our jurisdiction."2 The plaintiffs claim that 28 U.S.C. § 1447(d), which provides that "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal, " prohibits appellate review of the remand order in question here. But as they candidly acknowledge, [3] their jurisdictional challenge to this appeal is foreclosed by the Supreme Court's decisions in Thermtron Products, Inc. v. Hermansdorfer[4] and Carlsbad Technology v. HIF Bio, Inc.5 In accordance with these decisions, we have consistently exercised appellate jurisdiction to review remand orders in which "the district court declined to exercise supplemental jurisdiction after first concluding it lacked original subject matter jurisdiction."[6] Our obligation is to "determine whether the district court had original subject-matter jurisdiction over the remanded claims, "7 and we turn to that task.

III

"Whether a district court has the discretion to remand a case to state court is a legal question this court reviews de novo."8 When a district court has original subject-matter jurisdiction over a claim, it has no authority to remand the case to state court.9

Lloyd's asserts that the district court lacked authority to remand the suit to state court because there was diversity of citizenship between Lloyd's, the only remaining defendant in the case at the time the case was remanded, and the plaintiffs. Although the suit was originally removed to federal court on another basis, Lloyd's continues, diversity of citizenship is now an appropriate basis for subject-matter jurisdiction because the claims against the non-diverse defendants have been dismissed. Jefferson responds that the presence of non-diverse defendants at the time of filing is dispositive, and the district court therefore only had supplemental jurisdiction, which it properly declined to exercise.

Two basic principles guide our decision. First, as a general proposition, the dismissal of non-diverse parties may result in diversity jurisdiction, at least in some circumstances. In Newman-Green, Inc. v. Alfonzo-Larrain, the Supreme Court approved the practice of dismissing non-diverse defendants under Federal Rule of Civil Procedure 21 and exercising diversity jurisdiction over the controversy that remains.10 The Court, in Caterpillar Inc. v. Lewis, 11declined to disturb a judgment in a case that was improperly removed to federal court on diversity grounds despite the presence of non-diverse defendants. As the Court later explained in Grupo Dataflux v. Atlas Global Group, L.P., 12 "[t]he postsettlement dismissal of the diversity-destroying defendant" in Caterpillar "cured the jurisdictional defect" created by the presence of the non-diverse party.13 In neither Newman-Green nor Caterpillar did the absence of complete diversity at the time of filing or the time of removal preclude the later exercise of diversity jurisdiction.[14] Put differently, the absence of complete diversity at the time of commencement of an action can generally be cured-and diversity jurisdiction established-by the dismissal of non-diverse parties.

The plaintiffs argue otherwise, relying on the venerable rule that "the jurisdiction of the court depends upon the state of things at the time of the action brought."[15] This rule clearly applies, for example, to a party's attempts to create diversity with a post-filing change of citizenship, 16 to the addition of certain non-diverse parties after a suit is brought in federal court, 17 and to post-removal diminutions of the amount in controversy.18 But the time-of-filing rule cannot be applied indiscriminately to cases involving the dismissal of parties, as Newman-Green and Caterpillar indicate. Here, to be sure, the non-diverse parties were not-as in Newman-Green-dismissed pursuant to Rule 21, and we are...

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