Central of Georgia Ry. Co. v. Riegel Textile Corp.

• Decision Date: 13 May 1970
• Docket Number: No. 28078.,28078.
• Citation: 426 F.2d 935
• Parties: CENTRAL OF GEORGIA RAILWAY COMPANY, Third-Party Plaintiff-Appellant, v. RIEGEL TEXTILE CORPORATION, Third-Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

426 F.2d 935 (1970)

CENTRAL OF GEORGIA RAILWAY COMPANY, Third-Party Plaintiff-Appellant, v. RIEGEL TEXTILE CORPORATION, Third-Party Defendant-Appellee.

No. 28078.

United States Court of Appeals, Fifth Circuit.

May 13, 1970.

W. J. Sullivan, Jr., W. H. Sadler, Jr., Birmingham, Ala., for plaintiff-appellant.

London, Yancey, Clark & Allen, James E. Clark, Birmingham, Ala., for defendant-appellee.

Before JOHN R. BROWN, Chief Judge, and AINSWORTH and GODBOLD, Circuit Judges.

GODBOLD, Circuit Judge:

This case concerns the scope of the removal statute, 28 U.S.C. § 1441.¹

Steed filed an FELA claim against Central of Georgia Railway Company, his employer, in the Circuit Court of Jefferson County, Alabama. Central filed a third-party complaint against Riegel Textile Corporation, claiming indemnity in whole or in part, under the terms of a track agreement.²

Riegel petitioned for removal of the case to the United States District Court for the Northern District of Alabama, alleging diversity of citizenship between itself and Central in that Central is a Georgia corporation and Riegel a Delaware corporation with principal place of business in New York. The District Court granted motions to remand urged by both Steed and Central, holding that the third party complaint did not raise a "separate and independent claim" as required for removal under § 1441(c).

Back in state court plaintiff Steed moved to strike the third party complaint on the grounds that it unduly prejudiced his claim. The Alabama trial court severed the third party complaint for trial purposes³ and set the original action for trial.

Once again Riegel petitioned for removal, relying once more on § 1441(c). The District Court granted the motion of Steed to remand as to the FELA action, but denied the motion of Central to remand, retaining jurisdiction over the indemnity claim. The District Court certified, and we accepted, the case for interlocutory appeal under 28 U.S.C. § 1292(b).

The cases are hopelessly divided on whether and under what circumstances a third party defendant may remove to federal court.⁴ There are three thorny problems:

Is a third party defendant a defendant within the meaning of § 1441; is the application of § 1441(c) limited to claims joined by the plaintiff; is a third party claim sufficiently unrelated to the main claim to be a separate and independent cause of action.

1A Moore, Federal Practice, § 0.16710 at 1049 (1961).⁵ The District Court did not wrestle with these issues. We conclude that subsection (c) is inapplicable to the facts of this case, therefore we need reach only the first of the problems described by Moore.⁶ Subsection (c) describes the conditions under which an "entire case may be removed." It does not reach the issue of the removeability of a third party controversy which has been severed from the original action. The severance order of the Alabama trial court was a determination that expediency and the interests of the parties were best served by treating the case as two lawsuits. A federal court may respect that determination.⁷

There remains Moore's first question, whether Riegel is a defendant within the terms of § 1441(a). Moore argues for policy reasons that a third party defendant is outside section 1441(c), discussed above. His concern is that the filing of a third party action should not be allowed to defeat the plaintiff's choice of forum. 1A Moore, supra, at 1050 n. 12, quoting Brown v. Hecht Co., 78 F.Supp. 540, 544, 545 (D. Md. 1947). His argument that removal in such situations "is too much akin to the tail wagging the dog," 1A Moore, supra, at 1052, has no application where by judicial surgery tail and dog have been separated. Where removal would not have the effect of defeating plaintiff's choice of forum, the federal courts should recognize that a party in Riegel's position is as much a "defendant" as if an original action had been brought against him. This is fully in accord with the policy behind the removal statute of providing a federal forum to an out-of-stater sued in state court.

In reaching this result, we have considered competing policies, state and federal, which might call for a different disposition. The state may wish to promote settlements by keeping in one court actions growing out of the same transaction. Industrial Lithographic Co. v. Mendelsohn, 119 F.Supp. 284 (D.N.J. 1954). To the extent that this is a real problem, it is a consideration for the state trial court in making its decision whether or not to sever.

There is a federal interest in seeing that the removal statute is applied uniformly to litigants in all states. As the Supreme Court said in Shamrock Oil & Gas Corp. v. Sheets,

The removal statute which is nationwide in its operation, was intended to be uniform in its application, unaffected by local law definition or characterization of the subject matter to which it is to be applied.

313 U.S. 100, 104, 61 S.Ct. 868, 870, 85 L.Ed. 1214, 1217 (1941). The question in Shamrock was whether the characterization of a plaintiff-respondent to a counterclaim as a "defendant" under Texas procedure would suffice to allow him to remove. With reference to this focal issue, the Supreme Court stated, immediately preceding the above quoted sentence, that

decision turns on the meaning of the removal statute and not upon the characterization of the suit or the parties to it by state statutes or decisions.

Id.

Ironically, as Moore points out, discrimination in another form is the consequence of Shamrock. While that decision forbids removal by plaintiffs defending counterclaims, however they may be characterized, it allows...