Eikel v. States Marine Lines, Inc.

• Decision Date: 26 March 1973
• Docket Number: No. 72-2445.,72-2445.
• Citation: 473 F.2d 959
• Parties: Robert EIKEL and J. E. Davey, Plaintiffs-Appellants, v. STATES MARINE LINES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

473 F.2d 959 (1973)

Robert EIKEL and J. E. Davey, Plaintiffs-Appellants, v. STATES MARINE LINES, INC., Defendant-Appellee.

No. 72-2445.

United States Court of Appeals, Fifth Circuit.

February 12, 1973.

Rehearing and Rehearing Denied March 26, 1973.

Presley E. Werlein, Jr., Robert Eikel, Houston, Tex., for plaintiffs-appellants.

Royston, Rayzor, Cook & Vickery, E. D. Vickery, W. M. Jensen, Houston, Tex., for defendant-appellee.

Before GOLDBERG, AINSWORTH and INGRAHAM, Circuit Judges.

Rehearing and Rehearing En Banc Denied March 26, 1973.

GOLDBERG, Circuit Judge:

In this case involving the interaction of Rule 19, Fed.R.Civ.P. and diversity jurisdiction, plaintiffs, Eikel and Davey, two Texas lawyers, sued defendant corporation, States Marine, a citizen of Delaware and Connecticut, for attorneys' fees of some $82,500 owed for past legal services. Goller, also a Texas attorney and a former partner of Eikel and Davey at the time the legal services to States Marine were rendered, had previously made his own individual demand on defendant for some or all of the same fee; Goller, however, was not made a party to the original suit. The district court, acting on defendant's motion to dismiss for non-joinder of a necessary party, found (1) that Goller, the absent party, was needed in the suit for a just adjudication; (2) that joinder of Goller, an involuntary party to the suit, could be only as a defendant; and (3) that joinder of Goller, a citizen of Texas, as a defendant would defeat jurisdiction because plaintiff and one defendant would then be non-diverse. Finding that the joinder was both essential and diversity-destroying, the court dismissed the suit "for want of jurisdiction over the subject matter." Plaintiffs bring this appeal, urging that the dismissal was error.

We agree with the district court that Goller's presence is necessary for the just adjudication of the main claim and that Goller should therefore be brought into the suit as a defendant. We find, however, that the district court erred in treating Goller as a defendant for diversity purposes. Since Goller properly should be aligned as a plaintiff, after being served as a defendant, the case is reversed and remanded for trial.

I. NECESSITY OF JOINING GOLLER

Rule 19, as amended in 1966, provides, inter alia:

"(a) Persons to be joined if Feasible. A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.. . ."

Applying this Rule, the district court held that Goller, who apparently is claiming some or all of the same fee claimed by Eikel and Davey, must be joined in order for the action to proceed. With this conclusion we agree. The failure to join Goller could result in serious prejudice to States Marine by subjecting it to the possibility of Goller later coming in and collecting the same fee awarded to Eikel and Davey. On this appeal neither party is disputing either the necessity of Goller's joinder nor the impropriety of proceeding if Goller cannot be joined; it is therefore unnecessary to elaborate further on this point.

II. JOINDER UNDER RULE 19(a): INVOLUNTARY PLAINTIFF OR DEFENDANT?

Rule 19 makes the following provision regarding the status of a party who must be joined:

". . . If he should join as a plaintiff but refuses to do so, he may be made a defendant, or, in a proper case, an involuntary plaintiff. . . ."

Here, the district court apparently viewed the primary dispute as being between plaintiffs, Eikel and Davey, on the one hand and Goller on the other, and ruled that Goller must be joined as a defendant. Eikel and Davey argue that Goller's claim is like their own claim first and foremost against defendant, States Marine, and that therefore the court erred in not joining Goller, adverse to defendant, as an "involuntary plaintiff." Defendant, responding that the involuntary plaintiff device is extremely limited and does not cover this case, insists that the only way Goller could be joined is as a diversity-destroying defendant. Neither party is completely correct.

Rule 19 mandates the joinder of an absent party as an "involuntary plaintiff" only "in a proper case." Emphasis added. The precise scope of this "proper case" qualification has never been authoritatively resolved although it has engendered considerable discussion. See e. g., 3A Moore's Federal Practice ¶19.06; Wright & Miller, 7 Federal Practice and Procedure § 1606. Both of the above commentators recognize that while the precise boundaries of the qualification have never been adequately explored by the courts, the device is a limited one. The Rule clearly does not mean that whenever an absent party is properly alignable as a plaintiff in a lawsuit, he should be brought in under Rule 19(a) as an "involuntary plaintiff."

The cases, which rarely discuss this aspect of Rule 19(a) explicitly, have been anything but consistent. Compare Neal v. Trim-Master, N.D.Miss., 1969, 48 F.R.D. 392; Davila-Mendez v. Vatican Shrimp Co., S.D.Tex., 1966, 43 F.R. D. 294 (absent party joined as "involuntary plaintiff"), with Davis v. St. Louis-Southwestern Ry. Co., W.D.La., 1951, 99 F.Supp. 751; Rosen v. Rex Amusement Co., D.D.C., 1952, 14 F.R.D. 75 (refused to join as "involuntary plaintiff"). See also Morrison v. New Orleans Public Service Inc., 5 Cir. 1969, 415 F.2d 419; Reed v. Forcheimer, 5 Cir. 1966, 368 F.2d 982; Perkins v. Standard Oil Co. of Cal., D.Or., 1961, 29 F.R.D. 16, aff'd, 9 Cir. 1965, 347 F.2d 379.

From our reading of the relevant authorities, we believe that this is not a proper case for joinder of the absent party as a Rule 19(a) "involuntary plaintiff." The "proper case" is meant to cover only those instances where the absent party has either a duty to allow the plaintiff to use his name in the action or some sort of an obligation to join plaintiff in the action. E. g., Independent Wireless Telegraph Co. v. Radio Corp. of America, 1926, 269 U.S. 459, 46 S.Ct. 166, 70 L.Ed. 357; see, generally Moore's, supra; Wright & Miller, supra; Note, Diversity Jurisdiction in the Realignment of an Involuntary Plaintiff under Rule 19(a), 5 Utah L.Rev. 531 (1957).

The law generally disfavors forced joinder of a party as a plaintiff with whatever procedural handicaps that normally entails.¹ Under our adversary system the general rule is that only the party who initiates the lawsuit should be saddled with the procedural burdens of a plaintiff. For that reason, absent the "proper case" exception, where there is an obligation to join as a plaintiff, the preferred method is to designate and serve involuntary parties as defendants, regardless of their appropriate interest alignment. See generally Wright & Miller, 7 Federal Practice and Procedure § 1605 and cases cited therein. Although the scope of the involuntary plaintiff exception might possibly warrant broader treatment than it currently receives,² we do not believe that joinder as a Rule 19(a) "involuntary plaintiff" is appropriate in this case, where Goller is (a) under no pre-existing obligation to join Eikel and Davey's suit, and (b) amenable to the court's process as a defendant.

The interpretation urged by Eikel and Davey, that since Goller is a plaintiff vis-a-vis States Marine, he should be joined as an "involuntary plaintiff," is technically incorrect and would render the "in a proper case" qualification meaningless. For purposes of Rule 19(a), the district court did not err in joining Goller as a defendant.

III. STATUS OF GOLLER FOR DIVERSITY PURPOSES

While Goller would properly be designated a "defendant" under Rule 19(a) for purposes of process and procedure, in determining the status of the parties for diversity purposes, it is well established that the court must look beyond the pleadings to the matters actually in controversy. Alexander v. Washington, 5 Cir. 1960, 274 F.2d 349, 351; Scott v. Fancher, 5 Cir. 1966, 369 F.2d 842. As Wright and Miller state:

"When a person is made a defendant because of his refusal to join as a plaintiff and jurisdiction is based on diversity of citizenship, the question whether he should be realigned as a plaintiff may arise. This is an important consideration inasmuch as under the requirement of complete diversity realignment may oust the court of subject matter jurisdiction."

7 Federal Practice and Procedure 48.³ See also Davis v. St. Louis-Southwestern Ry. Co., supra; Standard Oil Co. of Cal. v. Perkins, supra; Ayers v. Ackerman, D.S.C.1971, 324 F.Supp. 814, 817; Amerada Petroleum Corp. v. Rio Oil Co., D.Wyo.1964, 225 F.Supp. 907; and cases cited in Wright & Miller, 7 Federal Practice and Procedure 97, n. 68. The appropriate inquiry therefore is not whether Goller should be joined as an "involuntary plaintiff" under Rule 19(a), rather the issue is on which side of the lawsuit should Goller be properly aligned once joined. Although both parties have joined issue on this point only in the Rule 19(a) context, where it is irrelevant, it has nonetheless been argued and it is the crucial question in the appeal.

The trial court in refusing to find Goller an "involuntary plaintiff" never explicitly reached the question of how to align him for diversity purposes. Defendant, although it wrongly directs its argument towards refuting Goller's status as an involuntary plaintiff, portrays the lawsuit as...