Begay v. Kerr-McGee Corp.

• Decision Date: 11 June 1982
• Docket Number: KERR-M,No. 80-6059,80-6059
• Citation: 682 F.2d 1311
• Parties: Esther Lee BEGAY, etc., et al., Plaintiffs-Appellants, v. ThecGEE CORPORATION, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1311

682 F.2d 1311

Esther Lee BEGAY, etc., et al., Plaintiffs-Appellants, v. The KERR-McGEE CORPORATION, et al., Defendants-Appellees.

No. 80-6059.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 5, 1982.

Decided June 11, 1982.

Stewart L. Udall, Phoenix, Ariz., for plaintiffs-appellants.

B. J. Rothbaum, Jennings, Strouss & Salmon, Jose Cardenas, Lewis & Roca, Alvin H. Shrago, Evans, Kitchell & Jenckes, P. C., Phoenix, Ariz., argued, for defendants-appellees; Steven C. Lester, Douglas L. Irish, Newman R. Porter, Phoenix, Ariz., Raymond E. Tompkins, Linn, Helms, Kirk & Burkett, Richard F. Campbell, III, Kerr-McGee Corp., Oklahoma City, Okl., John R. Greer, Law Offices of Robert K. Park, Phoenix, Ariz., on brief.

Appeal from the United States District Court for the District of Arizona.

Before WALLACE, HUG, and ALARCON, Circuit Judges.

WALLACE, Circuit Judge:

The central issues in this appeal concern federal jurisdiction and choice-of-law under Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) (Erie). Over 200 disabled Navajo miners and their wives, including thirty-nine surviving widows of deceased miners (the Indians), appeal the district court's order dismissing their amended complaint. We affirm.

I

The Indians claim that during their employment between 1948 and 1966 at uranium mines in the Navajo reservation leased and operated by appellees, Kerr-McGee Corp. and several other mining corporations (the companies), the miners were exposed to substantial amounts of radon radiation, causing lung cancer, other severe radiation-related injuries and, in some instances, death. Their second amended complaint alleged jurisdiction based upon diversity of citizenship and sought damages on theories of negligence, strict liability and intentional tort. Applying Arizona substantive law as required by Erie, the district court dismissed this complaint, "without prejudice," for lack of subject matter jurisdiction, concluding that the sole remedy provided by Arizona law for the Indians' alleged injuries is an administrative claim for workers' compensation vested in the exclusive jurisdiction of the Industrial Commission of Arizona (the Commission). 499 F.Supp. 1325 (D.Ariz.1980).

Subsequently, the Indians filed a fourth amended complaint alleging that their claims fell within certain statutory exceptions to the Commission's exclusive jurisdiction, and added an assertion of federal question jurisdiction under 28 U.S.C. § 1331, alleging that the case arises under the Constitution, the Navajo Treaty, 15 Stat. 667 (1868), and the Arizona Enabling Act, 36 Stat. 568, ch. 310, §§ 19-35 (1910). The district court dismissed this complaint but granted leave to file another amended complaint alleging the failure of the companies to comply with Arizona's workers' compensation statutory notice requirement, Ariz.Rev.Stat. § 23-906(D), (E) (Supp.1981). 499 F.Supp. 1317 (D.Ariz.1980). Following the filing of this final amended complaint and substantial discovery, the parties stipulated that the notice requirement had not been violated. The district court then ordered the complaint dismissed "with prejudice." The Indians now appeal pursuant to 28 U.S.C. § 1291.

II

Although the parties have not raised the issue, we must first determine whether we have jurisdiction over this appeal. "(G)enerally a mere dismissal of a complaint without expressly dismissing the action is not an appealable final order" under section 1291. Mark v. Groff, 521 F.2d 1376, 1379 (9th Cir. 1975). Nonetheless, we may "treat the order as final" where, as here, "special circumstances" unmistakably demonstrating finality exist. Id. See Marshall v. Sawyer, 301 F.2d 639, 642 (9th Cir. 1962). Once the parties had, in effect, stipulated that the lack of statutory notice allegations added to the complaint could not be proven, the district court ordered the complaint dismissed with prejudice. Having already permitted three substantive amendments and two adding additional parties, the district court's order "preclude(d) any possible salvaging of the action by (further) amendments to the complaint." Mark v. Groff, supra, 521 F.2d at 1379. Adding "with prejudice" evidently meant no additional amendments would be allowed. We therefore have jurisdiction to entertain this appeal pursuant to section 1291. We emphasize, however, that the proper procedure is to dismiss the action and not simply the complaint, even with prejudice. See Fed.R.Civ.P. 12(h)(3) (lack of subject matter jurisdiction).

III

We next address the issue of federal question jurisdiction. The district courts are vested with jurisdiction to hear all cases and controversies, regardless of amount in controversy, arising under the Constitution and laws of the United States. 28 U.S.C. § 1331. A case does not arise under federal law within the meaning of section 1331 if the complaint merely anticipates or replies to a probable defense which would be based on federal law. See, e.g., Phillips Petroleum Co. v. Texaco Inc., 415 U.S. 125, 127-29, 94 S.Ct. 1002, 1003-04, 39 L.Ed.2d 209 (1974) (per curiam); Gully v. First National Bank, 299 U.S. 109, 113, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936); Louisville &amp Nashville R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908). Here, the Indians' claim falls squarely outside this so-called "well-pleaded complaint" rule. Their cause of action is one sounding only in tort, and manifestly arises under state law. The federal law they would rely on simply anticipates the companies' federal defense-that 40 U.S.C. § 290 permits Arizona to apply its workers' compensation laws, including the restriction of remedies to a claim for compensation before the Commission, to employment-related injuries occurring on Indian reservations-and responds to it by asserting that such application of state law violates the Indian commerce clause, U.S.Const., Art. I, § 8, cl. 3, the Navajo Treaty and the Arizona Enabling Act, and is preempted by the "infringement" test announced in Williams v. Lee, 358 U.S. 217, 220, 79 S.Ct. 269, 270, 3 L.Ed.2d 251 (1959), and its progeny. ¹ "Such is not the stuff of federal jurisdiction." Alton Box Board Co. v. Esprit de Corp., No. 80-4338, --- F.2d ---- at ---- (9th Cir. April 23, 1982). See Guinasso v. Pacific First Federal Savings & Loan Ass'n, 656 F.2d 1364, 1366 (9th Cir. 1981). We therefore affirm the district court's dismissal, for lack of jurisdiction, of those portions of the fourth amended complaint asserting jurisdiction pursuant to section 1331. See 499 F.Supp. at 1321-22.

IV

The parties and the district court have mistakenly approached the next issue in this case-the choice of applicable law under Erie -as one of subject matter jurisdiction. See id. at 1323. Unlike their assertion of federal question jurisdiction, however, it is clear that the Indians properly invoked the district court's diversity jurisdiction. Each plaintiff in this case is a citizen of a different state from each defendant, 28 U.S.C. § 1332(a)(1), (c); Munoz v. Small Business Admin., 644 F.2d 1361, 1365 (9th Cir. 1981), and the amount-in-controversy requirement is satisfied. Since the district court therefore had jurisdiction, it was improper to dismiss the complaint for lack of subject matter jurisdiction.

The district judge apparently concluded that because Arizona law would deprive an Arizona court of jurisdiction in a like case filed in state court, the federal court lacked diversity jurisdiction. Here, he erred. The question is whether the Indians' complaint stated a claim for relief under Arizona law pursuant to Erie, rather than whether the district court lacked subject matter jurisdiction. See Black v. Payne, 591 F.2d 83, 86 n.1 (9th Cir. 1979) (federal question). Although the states have the power to prevent the federal court from granting relief in a diversity case by denying the substantive right of action asserted, they "have no power to enlarge or contract the federal jurisdiction." Markham v. City of Newport News, 292 F.2d 711, 713 (4th Cir. 1961). See Railway Co. v. Whitton's Adm'r, 80 U.S. (13 Wall.) 270, 286, 20 L.Ed. 571 (1871); Greyhound Lines, Inc. v. Lexington State Bank & Trust Co., 604 F.2d 1151, 1154-55 (8th Cir. 1979); Poitra v. DeMarrias, 502 F.2d 23, 25-27 (8th Cir. 1974), cert. denied, 421 U.S. 934, 95 S.Ct. 1664, 44 L.Ed.2d 93 (1975). "State rules will not be applied 'to thwart the purposes of statutes of the United States.' " Pankow Constr. Co. v. Advance Mortgage Corp., 618 F.2d 611, 613 (9th Cir. 1980), quoting Sola Elec. Co. v. Jefferson Co., 317 U.S. 173, 176, 63 S.Ct. 172, 173, 87 L.Ed. 165 (1942). Thus, state law may not control or limit the diversity jurisdiction of the federal courts. The district court's diversity jurisdiction is a creature of federal law under Article III and 28 U.S.C. § 1332(a). Pursuant to the supremacy clause, section 1332(a) preempts any contrary state law. Nothing in Erie compels a different conclusion. "The Erie doctrine does not extend to matters of jurisdiction or, generally, to matters of procedure.... Erie requires that the federal court grant or withhold relief as the state courts would. It does not require relegation of the diversity jurisdiction to the mercies of the legislatures of fifty separate states." Markham v. City of Newport News, supra, 292 F.2d at 718.

Indeed, the Erie doctrine rests upon the premise that the jurisdiction of the federal diversity court is satisfied, and addresses only the question whether federal or state law provides the substantive rules of decision in the case. See Erie, supra, 304 U.S. at 74-77, 58 S.Ct. at 820-822. Regardless of whether Erie primarily involves interpretation of the Constitution or the Rules of Decision Act, 28 U.S.C. § 1652, see P. Bator, P. Mishkin, D. Shapiro & H. Wechsler, Hart & Wechsler's The Federal Courts and the Federal System 706-08 (2d ed. 1973), it does not purport to permit...