Glenny v. American Metal Climax, Inc.

• Decision Date: 19 March 1974
• Docket Number: No. 73-1494.,73-1494.
• Parties: Ray L. GLENNY et al., Plaintiffs-Appellants, v. AMERICAN METAL CLIMAX, INC., and AMAX Lead & Zinc, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

494 F.2d 651 (1974)

Ray L. GLENNY et al., Plaintiffs-Appellants, v. AMERICAN METAL CLIMAX, INC., and AMAX Lead & Zinc, Inc., Defendants-Appellees.

No. 73-1494.

United States Court of Appeals, Tenth Circuit.

Argued and Submitted January 10, 1974.

Decided March 19, 1974.

Raymond T. Dahlberg, Great Bend, Kan. (H. Lee Turner, Great Bend, Kan., B. J. Cooper, Oklahoma City, Okl., and Arthur W. Skaer, Jr., Wichita, Kan., on the brief), for plaintiffs-appellants.

Ben L. Burdick and Clyde A. Muchmore, Oklahoma City, Okl. (L. E. Stringer, Oklahoma City, Okl., on the brief), for defendants-appellees.

Before HILL, BARRETT and DOYLE, Circuit Judges.

HILL, Circuit Judge.

Appellants, landowners in the vicinity of the smelter belonging to Blackwell Zinc Company, brought this action against the smelter's parent companies American Metal Climax, Inc. (AMAX) and AMAX Lead & Zinc, Inc. (ALZ) to enjoin the operation of the smelter and to recover compensatory and punitive damages totaling $4,998,414. Appellees AMAX and ALZ thereafter filed a motion to dismiss pursuant to Rule 19(b), F.R.Civ.P., on the ground that the smelter's owner and operator, Blackwell Zinc Company, was an indispensable party to the lawsuit. The United States District Court for the Western District of Oklahoma, after determining that Blackwell Zinc was an indispensable party and that appellants have a satisfactory alternative forum in state district court, sustained appellees' motion to dismiss. This appeal followed.

Plaintiffs filed their original action on March 31, 1972, against Blackwell Zinc and AMAX. The complaint in that action alleged both defendants were corporations incorporated under the laws of New York and had their principal place of business in the State of New York. On May 8, 1972, defendant Blackwell Zinc moved to dismiss the plaintiffs' action on the basis that the federal courts lacked subject matter jurisdiction, alleging a lack of diversity of citizenship between the parties since Blackwell Zinc's principal place of business was in Oklahoma and most of the plaintiffs were Oklahoma residents. The district court thereafter entered a protective order limiting discovery to matters relating to the question of jurisdiction. In compliance with the protective order appellants took depositions of James E. Gorman, Blackwell Zinc's plant manager, and James M. Frazier, Blackwell Zinc's plant controller. In addition answers to interrogatories were filed.

On October 26, 1972, defendant Blackwell Zinc's motion to dismiss for lack of subject matter jurisdiction was granted. Notice of appeal from the order was filed but later voluntarily dismissed by appellants upon filing their second action, the case presently under consideration. The second action was filed against defendants AMAX and ALZ. Appellants asserted in this action that ALZ was a wholly owned, operated and controlled subsidiary of AMAX. Furthermore, plaintiffs asserted Blackwell Zinc was a wholly owned, operated and controlled subsidiary of ALZ; that ALZ was nothing more than a subdivision, division, or department of AMAX; and that Blackwell Zinc occupied the same position in relationship to ALZ. Because of these relationships appellants asserted that at all times material to their action Blackwell Zinc, in its activities connected with the smelter, had operated as a mere agent, instrumentality and alter ego of appellees.

On April 5, 1973, defendants moved to dismiss the instant proceeding pursuant to Rule 19(b), F.R.Civ.P. for want of an indispensable party. During arguments on this motion all parties agreed that the partial discovery of the first action should be included in the record. From all the evidence before the court the trial judge determined that Blackwell Zinc was an indispensable party and accordingly dismissed the action.

Prior to dismissal of the instant case, appellants commenced a substantially identical action in the District Court of Kay County, Oklahoma, against Blackwell Zinc. Subsequent to the dismissal, appellants joined AMAX and ALZ in the state court action. That action is still pending.

On appeal we note that two issues are presented for our consideration. First, did the district court err in holding that Blackwell Zinc was an indispensable party to the instant proceedings? Second, did the district court err in dismissing appellants' complaint against AMAX and ALZ for want of an indispensable party? We answer both these questions in the negative and accordingly affirm the district court's decision.

Under Rule 19(a) we must first determine whether Blackwell Zinc is a person to be joined if feasible. Rule 19(a)(2)(i) provides that a person should be joined if "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 as a practical matter impair or impede his ability to protect that interest." The evidence shows that Blackwell Zinc is a multi-million dollar corporation which has existed and operated in Kay County, Oklahoma, for over half a century. It employs 800 people, all of whom work at its smelting plant near Blackwell, Oklahoma. Its principal place of business is located near Blackwell and it has no plant, equipment or operating assets outside the State of Oklahoma. Because appellants are demanding monetary and injunctive relief for damages caused solely by this smelter, we believe that Blackwell Zinc, although a wholly owned subsidiary of ALZ and AMAX, has at least an interest in the subject of this action. Without its joinder, Blackwell Zinc's ability to protect that interest may be impaired.

The second question confronting us is whether or not under Rule 19(b) the action should be dismissed for want of an indispensable party. Rule 19(b) enumerates four factors to be evaluated by the court once it has determined that the joinder of a person or persons described in Rule 19(a) is desirable but not feasible. These factors include:

. . . first, to what extent a judgment rendered in the person\'s absence might be prejudicial to him or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person\'s absense will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.

Rule 19(b) does not state what weight is to be given each factor, 7 Wright, Federal Practice and Procedure, § 1608 (1972), and thus we must determine the importance of each factor on the facts of each particular case and in light of equitable considerations. In making this determination we recognize that operation of Rule 19(b) depends to a large degree on the careful exercise of discretion by the district court. Broussard v. Columbia Gulf Transmission Co., 398 F. 2d 885 (5th Cir. 1968).

The first test to be considered is the extent to which "a judgment rendered in the person's absence might be prejudicial to him or those already parties." This test considers the need to protect absent persons from litigation adversely affecting their interests and the need to protect those who are parties from the threat of multiple actions. This test does not allow for mere theoretical possibilities but rather...