Attwood v. Mendocino Coast Dist. Hosp.

• Decision Date: 22 September 1989
• Docket Number: No. 88-2776,88-2776
• Parties: Dort ATTWOOD, Plaintiff-Appellant, v. MENDOCINO COAST DISTRICT HOSPITAL, a Public Local Hospital District; Dorel Freeman, an Individual; Bud T. D'Arezzo, an Individual; Morris Boynoff, an Individual; Dan Belli, an Individual; Elizabeth Irwin, an Individual; R. Camille Ranker Hathaway, an Individual, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 241

886 F.2d 241

Dort ATTWOOD, Plaintiff-Appellant, v. MENDOCINO COAST DISTRICT HOSPITAL, a Public Local Hospital

District; Dorel Freeman, an Individual; Bud T. D'Arezzo,

an Individual; Morris Boynoff, an Individual; Dan Belli,

an Individual; Elizabeth Irwin, an Individual; R. Camille

Ranker Hathaway, an Individual, Defendants-Appellees.

No. 88-2776.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 10, 1989.

Decided Sept. 22, 1989.

Deborah S. Ballati, C. Brandon Wisoff, Farella, Braun & Martel, San Francisco, Cal., for plaintiff-appellant.

David C. Culver, Corbett & Kane, Emeryville, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before WALLACE and NOONAN, Circuit Judges, and DWYER, ^* District Judge.

WALLACE, Circuit Judge:

Attwood appeals from the district court's dismissal of her action arising from her termination by Mendocino Coast District Hospital (the Hospital). Relying on Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) (Colorado River ), the district court declined to exercise its jurisdiction because of ongoing duplicative state court litigation. Attwood does not contest the district court's deference to the state proceedings, but does challenge the decision to dismiss rather than stay her action. We have jurisdiction over this timely appeal pursuant to 28 U.S.C. Sec. 1291. We reverse the order of dismissal, and remand to the district court with instructions to enter an order staying further proceedings pending completion of the state lawsuit.

I

While on disability leave for a high-risk pregnancy, Attwood resigned from her job as director of the Hospital's Human Resources Department. Both her state and federal actions arise from this "resignation." Attwood alleges that Freeman, the Hospital administrator, threatened to fire her and terminate all medical benefits immediately if she did not resign within 24 hours. If she agreed to resign, she would receive medical benefits for six months. Attwood submitted a letter of resignation stating that she had no choice but to resign due to the threatened loss of benefits. The letter expressly reserved her "right to due process."

After exhausting her administrative remedies, Attwood filed a complaint in state court against the Hospital, Freeman, and Doe defendants. The complaint contained claims for tort and contract relief as well as a claim for deprivation of property without due process in violation of the United States and California Constitutions.

Shortly before the expiration of the one year limitations period following her "resignation," Attwood decided to name the Hospital's board members as defendants, and to add a 42 U.S.C. Sec. 1983 claim premised on the deprivation of her property interest in her job without due process. The defendants refused Attwood's request for a stipulation permitting these amendments to her state court complaint. Attwood then pursued two courses of action. In the state court, she filed motions to substitute the board members' names for Doe defendants in her original complaint and to file an amended complaint containing the new section 1983 claim. Attwood also filed, but did not serve, an action in federal court naming as defendants the Hospital, Freeman, and the individual board members. The federal complaint contained the same tort, contract, and due process claims as the state court complaint, and added the section 1983 claim.

The state court denied Attwood's motions to substitute the board members for the Doe defendants and to add the section 1983 claim. The court held that the request was tardy pursuant to California Code of Civil Procedure section 474 and that the proposed section 1983 claim "fails to state a claim against the Defendants and is a sham." After the state court denied her motions, Attwood then served her federal complaint on the defendants, including the board members. Citing Colorado River, the defendants then moved to dismiss or stay the federal court action pending resolution of the state court action. The district court dismissed Attwood's action without prejudice. This appeal followed.

The notice of appeal was filed prematurely. While the district court entered its "Memorandum and Order" dismissing the action on April 27, 1988, it did not enter its judgment on a separate paper pursuant to Fed.R.Civ.P. 58 until December 20, 1988. Attwood filed her notice of appeal nearly seven months before on May 27, 1988. However, Fed.R.App.P. 4(a)(2) provides that with certain exceptions not applicable here, we must treat a notice of appeal "filed after the announcement of a decision or order but before the entry of the judgment or order" as timely. We thus have jurisdiction to consider Attwood's premature but timely appeal.

II

The issue before us is narrow, but a question of first impression in this circuit: when a district court declines to exercise its jurisdiction under Colorado River, may it dismiss the action without prejudice or must the court merely stay it? The Supreme Court has twice reserved this question. Arizona v. San Carlos Apache Tribe, 463 U.S. 545, 570 n. 21, 103 S.Ct. 3201, 3215 n. 21, 77 L.Ed.2d 837 (1983) (San Carlos Apache Tribe ); Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 28, 103 S.Ct. 927, 943, 74 L.Ed.2d 765 (1983) (Cone ).

We review as a matter of law the question whether the district court must stay or may dismiss an action when it declines to exercise its jurisdiction under Colorado River. Matters of law are reviewed independently. See United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).

The Colorado River doctrine is an exception to "the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them." Colorado River, 424 U.S. at 817, 96 S.Ct. at 1246. Thus, it should be invoked only in exceptional circumstances. Cone, 460 U.S. at 19, 103 S.Ct. at 738-39; Colorado River, 424 U.S. at 818, 96 S.Ct. at 1246-47. Although this doctrine is sometimes referred to as an abstention doctrine, the Supreme Court has rejected this categorization. See Cone, 460 U.S. at 14-15, 103 S.Ct. at 936-37; Colorado River, 424 U.S. at 817, 96 S.Ct. at 1246; Nakash v. Marciano, 882 F.2d 1411, 1415 n. 5 (9th Cir.1989) (amended Aug. 23, 1989) (Nakash ) ("the Supreme Court has flatly rejected this [abstention] categorization"); 17A C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure Sec. 4247 at 150-51 (2d ed. 1988). Unlike abstention, which rests on "regard for federal-state relations" and "considerations of proper constitutional adjudication," Colorado River rests on "considerations of '[w]ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.' " Colorado River, 424 U.S. at 817, 96 S.Ct. at 1246, quoting Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 72 S.Ct. 219, 221, 96 L.Ed. 200 (1952) (Kerotest ); see also Cone, 460 U.S. at 14-15, 103 S.Ct. at 936-37. The Supreme Court and this circuit have identified and explained how to apply a nonexclusive list of relevant criteria for determining whether exceptional circumstances exist to justify invoking Colorado River. See Cone, 460 U.S. at 15-16, 19-27, 103 S.Ct. at 936-37, 938-43; Nakash, 882 F.2d at 1415-16; American International Underwriters (Philippines), Inc. v. Continental Insurance Co., 843 F.2d 1253, 1257 (9th Cir.1988).

In a case where a district court invokes Colorado River, it makes no difference to the state proceeding whether the federal action is stayed or dismissed.

[A] stay is as much a refusal to exercise federal jurisdiction as a dismissal. When a district court decides to dismiss or stay under Colorado River, it presumably concludes that the parallel state-court litigation will be an adequate vehicle for the complete and prompt resolution of the issues between the parties. If there is any substantial doubt as to this, it would be a serious abuse of discretion to grant the stay or dismissal at all. Thus, the decision to invoke Colorado River necessarily contemplates that the federal court will have nothing further to do in resolving any substantive part of the case, whether it stays or dismisses.

Cone, 460 U.S. at 28, 103 S.Ct. at 943. (citations omitted). For purposes of appellate jurisdiction, a stay under Colorado River is as much a final, appealable order as a dismissal under that doctrine. See id. at 8-10, 103 S.Ct. at 932-34.

By conceding that the district court correctly invoked Colorado River, Attwood has agreed that beyond "any substantial doubt," the parallel state court proceedings will provide complete and prompt resolution of the issues in her case. See id. at 28, 103 S.Ct. at 943. The purpose of her appeal is to ensure that if for some reason the state forum turns out to be inadequate, the federal court will remain open to her. Otherwise, she fears, expiration of the statute of limitations may bar her return to federal court, and thus neither the state court nor the federal court will reach the merits of all her claims.

We hold that the district court should have stayed rather than dismissed Attwood's action. This holding ensures that the federal forum will remain open if "for some unexpected reason the state forum does turn out to be inadequate." Cone, 460 U.S. at 28, 103 S.Ct. at 943.

The Supreme Court has strongly hinted that invocation of Colorado River is contingent on keeping the federal forum open if necessary. See San Carlos Apache Tribe, 463 U.S. at 570 n. 21, 103 S.Ct. at 3215 n. 21 ("resort to the federal forum should remain available if warranted"); Cone, 460 U.S. at 28, 103 S.Ct. at 943 ("It is highly questionable whether this Court would have approved a dismissal of a federal suit in...