Aliota v. Graham, 91-3757

Decision Date22 January 1993
Docket NumberNos. 91-3757,No. 92-3020,No. 91-3757,92-3020,91-3757,s. 91-3757
Citation984 F.2d 1350
PartiesLouis J. ALIOTA and Paulette Aliota, v. Jack D. GRAHAM, William D. Shoemake, Kathryn Fowells, Janet Wells, Joyce Ball, United States of America, Appellants inIn re UNITED STATES of America, Jack D. Graham, William D. Shoemake, Kathryn Fowells, Janet Wells and Joyce Ball, Petitioners in
CourtU.S. Court of Appeals — Third Circuit

Thomas W. Corbett, Jr., U.S. Atty., Bonnie R. Schlueter, Office of U.S. Atty., Pittsburgh, PA, Stuart M. Gerson, Asst. Atty. Gen., Barbara L. Herwig, Civ. Div., Malcolm L. Stewart (argued), Robert V. Zener, Christine N. Kohl, Appellate Section, Civ. Div., Dept. of Justice, Washington, DC, for appellants/petitioners.

Timothy D. McNair (argued), Vendetti, Talarico and McNair, Erie, PA, for appellees/respondents.

Before: BECKER, HUTCHINSON, and ALITO, Circuit Judges.

OPINION OF THE COURT

ALITO, Circuit Judge:

The United States has appealed and has filed a mandamus petition seeking review of a district court order in a defamation action that was originally begun in state court against five federal employees in their individual capacities. After the case was removed to federal court and the United States was substituted for the original defendants pursuant to a provision of the Federal Employees Liability Reform and Tort Compensation Act of 1988 (the "Westfall Act"), 28 U.S.C. § 2679(d) (1988), the district court resubstituted the original defendants and remanded the case to state court. We hold that the district court's resubstitution decision is appealable under the collateral order doctrine; that the remand was prohibited by 28 U.S.C. § 2679(d)(2) (1988) and is reviewable by mandamus; and that the district court applied incorrect legal standards in concluding that the originally named individual defendants were not acting within the scope of their employment when they allegedly engaged in the conduct in question. We will therefore vacate the order of the district court and remand for further proceedings.

I.

Louis J. Aliota served as chief of the pharmacy at the Veterans Affairs Medical Center in Erie, Pennsylvania, from 1980 until 1989. In 1989, Aliota was relieved of his duties as chief of the pharmacy and placed in another position.

In October 1990, Aliota and his wife began a civil action in the Court of Common Pleas for Erie County against five employees of the Medical Center. These individuals are Jack D. Graham, the director of the Medical Center; William D. Shoemake, the associate director of the Medical Center; and Joyce Ball, Kathryn Fowells, and Janet Wells, three other Medical Center employees. The plaintiffs subsequently served a motion stating that their suit was based on slander and conspiracy arising from statements made by the defendants during September and October 1989.

Represented by the Department of Justice, the defendants filed a notice of removal to the United States District Court for the Western District of Pennsylvania. In that notice, counsel for the defendants stated:

Plaintiffs' counsel represented to undersigned counsel in a telephone conversation ... that the allegedly slanderous statements at issue were made by defendants at the Erie VA Medical Center to a pharmaceutical company representative in the course of that representative's regular business visit to the Erie VA Medical Center.

... Plaintiffs' cause of action, if any, appears to arise from actions taken by defendants in the course of their employment and, therefore, is subject to federal jurisdiction pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 2679.

The plaintiffs subsequently filed a complaint in the federal court, alleging that "[o]n or about September 23, 1989, Defendant Kathryn Fowells made statements to one Tim Nies to the effect that Plaintiff Louis J. Aliota had been removed from his duties due to his involvement in a 'drug scandal'." The complaint further alleged that "Defendants Jack D. Graham and William D. Shoemake communicated the aforementioned defamatory statement to Kathryn Fowells with knowledge that it was false and with the intent to injure Plaintiff in his reputation." The complaint did not contain any specific allegations concerning the remaining defendants.

The United States Attorney for the Western District of Pennsylvania, exercising authority delegated by the Attorney General of the United States, certified that the five individual defendants were acting within the scope of their employment when they allegedly engaged in the conduct in question. The district court then ordered that the United States be substituted as the sole defendant and that the claims against the individual defendants be dismissed.

The plaintiffs subsequently filed a motion to remand the case and to strike the substitution of the United States as the defendant, arguing that the individual defendants had not been acting within the scope of their employment. At an evidentiary hearing on this motion, both sides requested leave to take depositions. The court granted these requests, and after the depositions were completed, the court held that none of the defendants had been acting within the scope of their employment when they allegedly made the defamatory statements. The court therefore entered an order striking the substitution and remanding the case to the state court. The United States filed a notice of appeal, as well as a petition for mandamus seeking review of the remand.

II.

We first address the question whether the portion of the district court's order resubstituting the originally named defendants in place of the United States is reviewable by means of an appeal filed under 28 U.S.C. § 1291 (1988). This question may be divided into two subquestions: first, whether review of this portion of the district court's order is barred by 28 U.S.C § 1447(d) (1988), which restricts review of remand orders, and second, whether this portion of the district court's order is "final" within the meaning of 28 U.S.C. § 1291 (1988).

A. We hold that review of the question of resubstitution is not barred by 28 U.S.C. § 1447(d) (1988). This provision concerns appellate review of "[a]n order remanding a case to the State court from which it was removed...." 28 U.S.C. § 1447(d) (1988). This provision says nothing about orders directing the resubstitution of parties. Accordingly, unless the question of resubstitution is viewed as somehow inextricably linked to the question of remand, 28 U.S.C. § 1447(d) (1988) does not bar review.

The Supreme Court considered a closely related issue in Waco v. United States Fidelity & Guar. Co., 293 U.S. 140, 55 S.Ct. 6, 79 L.Ed. 244 (1934). In Waco, the district court in a removed case issued a single order that dismissed a cross-claim and remanded the case to the state court for lack of diversity jurisdiction. The Supreme Court held that the portion of the district court's order dismissing the cross-claim was appealable despite the restriction on appellate review of remand orders contained in the statutory predecessor of 28 U.S.C. § 1447(d) (1988). 1 The Supreme Court wrote (id. at 143, 55 S.Ct. at 7):

True, no appeal lies from the order of remand; but in logic and in fact the decree of dismissal preceded that of remand and was made by the District Court while it had control of the cause. Indisputably this order is the subject of an appeal; and, if not reversed or set aside, is conclusive upon the petitioner.

See also In re TMI Litigation Cases, 940 F.2d 832, 841-42 (3d Cir.1991), cert. denied sub nom. Gumby v. General Pub. Utils. Co., --- U.S. ----, 112 S.Ct. 1262, 117 L.Ed.2d 491 (1992).

Applying this reasoning, we conclude that review of the question of resubstitution in the present case is not barred by 28 U.S.C. § 1447(d) (1988). This question is separate from and logically precedes the question of remand. We note that the Fifth Circuit reached the same conclusion in Mitchell v. Carlson, 896 F.2d 128, 132-33 (5th Cir.1990).

B. We also hold that the order of the district court, insofar as it resubstituted the originally named defendants, was "final" within the meaning of 28 U.S.C. § 1291 (1988) because it fell within the collateral order doctrine of Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). In order to fall within this exception to the general finality requirement, "[t]he order must conclusively determine the disputed question, resolve an important issue [that is] completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1978). See also Lauro Lines S.R.L. v. Chasser, 490 U.S. 495, 498, 109 S.Ct. 1976, 1978, 104 L.Ed.2d 548 (1989); Mitchell v. Forsyth, 472 U.S. 511, 524-25, 105 S.Ct. 2806, 2814-15, 86 L.Ed.2d 411 (1985). In addition, the order must involve a claim of right that is "too important to be denied review." Cohen, 337 U.S. at 546, 69 S.Ct. at 1225-26.

We believe that the district court's decision concerning the resubstitution question in this case satisfies all of these requirements. First, the district court's determination represented its final word on the resubstitution. Second, the question of resubstitution is completely separate from the merits of the defamation action. Third, the district court's decision that the individual defendants should be resubstituted would be effectively unreviewable on appeal from a final judgment. Such is the case when an order involves "an asserted right the legal and practical value of which would be destroyed if it were not vindicated before trial." United States v. MacDonald, 435 U.S. 850, 860, 98 S.Ct. 1547, 1552, 56 L.Ed.2d 18 (1978) (footnote omitted). See also Lauro Lines, 490 U.S. at 498-99, 109 S.Ct. at 1977-79. The denial of a government official's motion to dismiss an action...

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