Allen v. R & H Oil & Gas Co., 94-60444

• Citation: 63 F.3d 1326
• Decision Date: 29 August 1995
• Docket Number: No. 94-60444,94-60444
• Parties: Barbara ALLEN, et al., Plaintiffs-Appellants, v. R & H OIL & GAS COMPANY, Farrar Oilfield Service and Equipment Co., and Tri-State Oil Services, Inc., Defendants, Tri-State Oil Services, Inc., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1326

63 F.3d 1326

64 USLW 2178

Barbara ALLEN, et al., Plaintiffs-Appellants, v. R & H OIL & GAS COMPANY, Farrar Oilfield Service and Equipment Co., and Tri-State Oil Services, Inc., Defendants Tri-State Oil Services, Inc., Defendant-Appellee.

No. 94-60444.

United States Court of Appeals Fifth Circuit.

Aug. 29, 1995.

Richard M. Martin, Jr., Cummings, Cummings & Dudenhefer, New Orleans, LA, for appellants.

Michael B. Wallace, Walker W. Jones, III, Joseph A. Ziemianski, Todd C. Richter, Chuck D. Barlow, Phelps Dunbar, Jackson, MS, for appellee.

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

Before JOLLY, SMITH and DeMOSS, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

The 512 plaintiffs of a joint, state-law tort action (the "Allen plaintiffs" or "plaintiffs") appeal the removal of their claims to federal court. They contend that the district court erred in finding federal subject-matter jurisdiction under 28 U.S.C. Sec. 1332 (diversity of citizenship), because it improperly "aggregated" their claim for punitive damages as a "whole" in reaching the $50,000.01 amount-in-controversy mark for each plaintiff. They also claim the district court misapplied the standard for assessing the amount in controversy when plaintiffs challenge defendants' assertion of removal jurisdiction. Because we find that each plaintiff has an undivided claim for the full amount of the alleged punitive damages, which on the face of the complaint more likely than not exceeds the jurisdictional amount, we affirm.

I.

On May 20, 1990, an oil and gas well exploded near the town of Heidelberg, Mississippi, causing evacuation of the area. According to the plaintiffs, who are local residents, they suffered property damage and wide-ranging, physical and mental injuries from the explosion and release of toxic fumes.

Subsequently, the 512 Allen plaintiffs jointly filed suit in Mississippi state court against R & H Oil & Gas Company, Farrar Oilfield Service and Equipment Company, and Tri-State Oil Services, Inc. (collectively, the "defendants"), which operated the well. The Allen plaintiffs' individual claims--the suit is not a class action--are based upon theories of negligence and strict liability, and they seek compensatory and punitive damages. No specific amount of damages was pled.

The defendants, which are Louisiana corporations, petitioned for removal to federal court, asserting that there was complete diversity of citizenship between the set of plaintiffs and the set of defendants. See 28 U.S.C. Secs. 1441, 1446. They also contended, in conclusory terms, that the $50,000.01 amount-in-controversy requirement was met. Removal was granted.

The plaintiffs, in the discovery phase of the case before a magistrate judge, then moved to remand on the ground that the amount-in-controversy requirement was not met. The gravamen of their motion was that the defendants had failed to present any evidence that showed that each plaintiff's claim exceeded Sec. 1332's $50,000 requirement.

The defendants, in response, made two arguments. First, they contended that the alleged punitive damage award could be assessed against each individual plaintiff. In the alternative, they argued that an exception to the amount-in-controversy's non-aggregation principle applied, so that each individual plaintiff's potential punitive damage award could be aggregated and applied to the $50,000 requirement.

After considering the parties' memoranda, the magistrate judge, in a "bare bones" order, recommended denying remand. In upholding the order, the district court reasoned that the aggregation of the potential punitive damages award was proper, as each plaintiff shared in a common and undivided interest in the claim. ¹

The court also considered the plaintiffs' motion to "clarify" their complaint by amendment to seek explicitly less than the requisite amount in compensatory and punitive damages. This motion likewise was denied on the ground that such post-petition amendments were mooted by the finding that the punitive damages alone met the requisite amount. Finally, the district court, recognizing the split among district courts in this circuit on the issue of aggregation of punitive damages, certified this case for immediate appeal via 28 U.S.C. Sec. 1292(b).

II.

Removal is controlled by 28 U.S.C. Sec. 1441, which provides, in relevant part, that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States...." Such original jurisdiction exists, for example, if there is "diversity of citizenship," such as where the suit is between citizens of different states and the amount-in-controversy exceeds $50,000. 28 U.S.C. Sec. 1332. Here, plaintiffs do not dispute diversity but question the application of the amount-in-controversy standard. ²

A.

The Supreme Court has long interpreted Sec. 1332's phrase "matter in controversy" not to allow multiple plaintiffs to add together "separate and distinct demands, unite[d] for convenience and economy in a single suit," to meet the requisite jurisdictional level. See Snyder v. Harris, 394 U.S. 332, 336, 89 S.Ct. 1053, 1057, 22 L.Ed.2d 319 (1969) (quoting Troy Bank v. G.A. Whitehead & Co., 222 U.S. 39, 40, 32 S.Ct. 9, 9, 56 L.Ed 81 (1911)); Zahn v. International Paper Co., 414 U.S. 291, 301, 94 S.Ct. 505, 512, 38 L.Ed.2d 511 (1973) ("[O]ne plaintiff may not ride in on another's coattails.") (citation omitted). ³ The general rule is that each plaintiff who invokes diversity of citizenship jurisdiction must allege damages that meet the dollar requirement of Sec. 1332.

"Aggregation" of damages allegedly owed to separate plaintiffs, however, may be permitted in the limited situation where "two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest." Snyder, 394 U.S. at 335, 89 S.Ct. at 1056. ⁴ Unfortunately, the "common and undivided" test retains an amorphous quality. In applying this standard, many courts have failed to eschew labels. And stating the maxim is far easier than determining the principles that undergird it. The standards that have developed in this area largely have their origins in pre-Federal Rules caselaw and take their modern day form by only judicial application. Accordingly, we address the recognized guidelines that so far have evolved before applying them to the punitive damages claim here.

Courts generally agree that the plaintiffs' claims of right must be "integrated," meaning that their respective rights to damages arise from the same legal source. See Texas & Pac. Ry. v. Gentry, 163 U.S. 353, 362-63, 16 S.Ct. 1104, 1107, 41 L.Ed. 186 (1896) (holding aggregation proper where plaintiffs "all claimed under one and the same title"). ⁵ The application of this standard depends upon the history-laden notion of what constitutes an individual cause of action. ⁶ Therefore, a necessary first step is an examination of the configuration of the state-law right at issue. See, e.g., Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia (ANPAC) v. Dow Quimica de Colombia S.A., 988 F.2d 559, 563-64 (5th Cir.1993) (examining Texas state law to determine whether fishermen had common property right in fishing stock harmed by oil spill), cert. denied, --- U.S. ----, 114 S.Ct. 685, 126 L.Ed.2d 653 (1994) (hereinafter "ANPAC "). Again, the purpose of this inquiry is to determine whether the state law claim creates one right of recovery. Id. at 564.

Another factor that courts long have used to determine whether a claim is common or separate is the apportionment of the award. A claim is more likely to be integrated if the defendant has no interest in the apportionment of an award among the plaintiffs. ⁷

Plaintiffs, of course, may have strong interests in the eventual distribution of awards, but the ultimate separability of a claim does not defeat its integrated quality. "Occasionally, plaintiffs seek to enforce a common interest that is separable amongst themselves. In such cases, the common nature of the plaintiffs' interest vis-a-vis the defendant dictates that aggregation is proper." 1 MOORE, supra, p 0.97, at 921. ⁸

B.

Keeping these standards in mind, we must decide whether joint claims for punitive damages under Mississippi law present a united claim for a common and undivided interest. This question is an issue of first impression on the appellate level in this circuit. ⁹ We begin by examining the nature of punitive damages.

Punitive damages punish. The almost unanimous rule is that "[p]unitive damages by definition are not intended to compensate the injured party, but rather to punish the tortfeasor whose wrongful action was intentional or malicious, and to deter him and others from similar extreme conduct." City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 266-267, 101 S.Ct. 2748, 2759, 69 L.Ed.2d 616 (1981). ¹⁰

Mississippi's controlling law on punitive damages follows the majority rule. According to the Mississippi Supreme Court, a reasonable instruction on the state's law of punitive damages is as follows:

Punitive damages are added damages awarded for public service in bringing a wrongdoer to account, as an example to warn and deter others from repeating the same act. They are never awarded to benefit the injured party or as a matter of right, but rather to punish and to compel the wrongdoer to have due and proper regard for the rights of the public.

McGowan v. Estate of Wright, 524 So.2d 308, 310 (Miss.1988); see also Wesson v. United States, 48 F.3d 894, 899-900 (5th Cir.1995) (examining nature of punitive damages under Mississippi law). Mississippi's legislature recently codified this view of the law, fully effective as of July 1, 1994. See MISS.CODE ANN. Sec. 11-1-65 (Supp.1994).

Punitive damages in Mississippi therefore are...