Iraola & CIA S.A. v. Kimberly-Clark Corp.

Decision Date09 November 2000
Docket NumberKIMBERLY-CLARK,No. 99-8127,99-8127
Citation232 F.3d 854
Parties(11th Cir. 2000) IRAOLA & CIA, S.A., Plaintiff-Counter-Defendant-Appellant-Cross-Appellee, v.CORPORATION, J.N. Anderson, Defendants-Counter-Claimants-Appellees- Cross-Appellants, George Semones, Defendant-Appellee-Cross-Appellant.
CourtU.S. Court of Appeals — Eleventh Circuit

[Copyrighted Material Omitted] Appeals from the United States District Court for the Northern District of Georgia.(No. 97-01347-CV-TWT-1), Thomas W. Thrash, Judge.

Before ANDERSON, Chief Judge, and BLACK and HALL*, Circuit Judges.

ANDERSON, Chief Judge:

Appellant Iraola & CIA, S.A. ("Iraola") appeals the district court's determination that subject matter jurisdiction in this action existed under 28 U.S.C. 1332. Iraola argues that 1332(a)(2) does not permit it, a foreign company, to bring suit against defendants from different states. Alternatively, it argues that the inclusion of foreign defendant Geo Med defeated jurisdiction. Appellees Kimberly- Clark, J.N. Anderson, and George Semones cross-appeal, challenging the district court's failure to award attorneys' fees.


Iraola is an Argentine company and Kimberly-Clark is a citizen of Delaware and Texas; Appellees Anderson and Semones, employees of Kimberly-Clark, are citizens of Georgia. Iraola contracted with Kimberly-Clark to distribute its medical products in Argentina. After Kimberly-Clark terminated the contract, Iraola sued, alleging that Kimberly-Clark tortiously interfered with its employee and business relations by distributing products through former Iraola employee Robert Alpert. Iraola named Kimberly-Clark, Anderson, and Semones as defendants in this action. Kimberly-Clark counterclaimed for payment of unsold supplies Iraola retained at the time of the contract termination.

Iraola also named as a defendant Geo Med, the company through which Kimberly-Clark distributed its products in Argentina before its contract with Iraola was terminated. Geo Med invoices that Iraola obtained showed a Georgia address and telephone number that Iraola learned belonged to defendant Semones, a Kimberly- Clark employee. Thus Iraola thought that Semones owned and operated Geo Med and that it was based in Georgia. It was unable to serve Geo Med and learned in discovery that the company was in fact owned by Iraola's former employee, Alpert, a citizen of Argentina. The Appellees maintain that Geo Med is a fictitious company, and that Alpert just used the name as a straw company for Kimberly-Clark to send its products for shipment to Argentina.

Iraola claims that it only learned in early August that Geo Med was owned by Alpert and thus arguably an Argentine entity. It claims that it acted promptly, advising the district court that the addition of Geo Med would destroy subject matter jurisdiction and suggesting to the Appellees that all of the parties should jointly dismiss the case so that it could be brought in state court. The Appellees refused to agree to a voluntary dismissal of the suit and thus Iraola made a motion to dismiss before the district court. The parties went ahead with the rest of discovery, and the Appellees filed a motion for summary judgment and default judgment on the counterclaim because Iraola never responded to it.

The district court ruled on the motions for dismissal, summary judgment, and default judgment at the same time. The court first granted a default judgment in favor of Kimberly-Clark on its counterclaim for payment for unsold supplies because Iraola had never responded to the counterclaim. Then the district court granted Iraola's motion for voluntary dismissal under Fed.R.Civ.P. 41(a)(2).1 The court did not rule on whether the Appellees were entitled to attorneys' fees in light of the voluntary dismissal.


A.Section 1332(a)(2) Diversity Where the Parties on One Side are Citizens of Different States and the Party on the Other Side is the Citizen or Subject of a Foreign State.

As noted above, Iraola, a citizen of a foreign state, sued Kimberly-Clark, a citizen of Delaware and Texas, and two Georgia citizens, Anderson and Semones. Iraola's primary argument on appeal is that there is no diversity jurisdiction here. Iraola argues that 28 U.S.C. 1332(a)(2) provides diversity jurisdiction, in a case where the parties on one side are citizens or subjects of a foreign state, only where the parties on the other side are citizens of a single state. In other words, Iraola argues that there is no diversity jurisdiction in a case involving citizens or subjects of a foreign state on one side where the parties on the other side are citizens of different states. Thus, Iraola argues that there is no diversity jurisdiction in the instant case because the parties on the Kimberly- Clark side of the case include citizens of several different states-Delaware and Texas in the case of Kimberly-Clark and Georgia in the case of Anderson and Semones. Section 1332(a)(2) provides, in pertinent part:

(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between -


(2) citizens of a State and citizens or subjects of a foreign state;

(Emphasis added). Iraola argues that the plain meaning of the statute is that all non-foreign parties must be from a single state. Iraola derives this argument from the statute's use of the article "a" in the phrase "citizens of a State."

This Court recently stated "[i]n construing a statute we must begin, and often should end as well, with the language of the statute itself." United States v. Steele, 147 F.3d 1316, 1318 (11th Cir.1998)(en banc)(internal quotation and citation omitted). However, we have held that where the language is ambiguous, resort to legislative history is appropriate. See Lyes v. City of Riviera Beach, Fla., 166 F.3d 1332, 1337 (11th Cir.1999)(en banc); United States v. DBB, Inc., 180 F.3d 1277, 1281 (11th Cir.1999)("We will only look beyond the plain language of the statute at extrinsic materials to determine the congressional intent if: (1) the statute's language is ambiguous; (2) applying it according to its plain meaning would lead to an absurd result; or (3) there is clear evidence of contrary legislative intent."); Bryant v. Avado Brands, Inc., 187 F.3d 1271 (11th Cir.1999)("When interpreting a statute, we look to its plain language, resorting to the legislative history in an attempt to discern congressional intent only when the language of the statute is unclear.").

Thus, we first examine the language of the statute for ambiguity. Certainly the meaning that Iraola has proffered is one possible reading of the statute. However, the same language is capable of another plausible interpretation: each non-foreign party must be the citizen of "a" State and cannot be a citizen of a foreign state or a stateless expatriate. See, e.g., Sadat v. Mertes, 615 F.2d 1176 (7th Cir.1980)(holding that jurisdiction under 1332(a)(2) did not exist over a stateless expatriate). In other words, in a case involving citizens of several states as plaintiffs, and citizens of a foreign state as defendants, one has a case fitting literally within the language of the statute: "citizens of a State and citizens of a foreign state." Each plaintiff is a "citizen of a State," i.e. a citizen of one of these United States. Because the language of the statute can be read in two plausible ways, we conclude that the statute is ambiguous, and thus we examine the structure and the purpose of the statute as well as its legislative history.

Congress first adopted the language at issue in 1875. See Act of March 3, 1875, ch. 137, 18 Stat. 470 (1875). At that time the statute was not limited to diversity jurisdiction and instead defined the original jurisdiction of the federal circuit courts. The statute only permitted diversity jurisdiction between "citizens of different States" and between "citizens of a State and foreign states, citizens, or subjects." Id. It was not until 1948 that Congress created 1332, a separate statute covering only diversity jurisdiction.2

Focusing on the statute as it existed in 1948, it is clear that its structure indicates that Congress intended to provide a federal forum where the parties were diverse. For example, 1332(a)(1) provides a federal forum where the opposing parties are "citizens of different States." Under this section, there is diversity jurisdiction where the opposing parties are diverse, regardless of whether the parties on any given side of the case are citizens of a single state or are citizens of several states. See, e.g., Glickstein v. Sun Bank/Miami, N.A. 922 F.2d 666, 668 (11th Cir.1991). The clear intent of Congress was to provide a federal forum where the parties are diverse. Similarly, 1332(a)(3)3 reinforces the proposition that the congressional intent was to provide a federal forum where the parties are diverse. In subparagraph (3), Congress explicitly indicates that the necessary diversity is present so long as the opposing parties are citizens of different states, and that this diversity is not undermined by the mere fact that there are additional parties who are citizens or subjects of a foreign state. Again, the structure of the statute reveals the congressional purpose to provide a federal forum where the opposing parties are diverse.

Additionally, the legislative history bolsters this interpretation that Congress intended to provide a federal forum for diverse parties. In 1948, when Congress reorganized and modified the existing statute on original jurisdiction, it clarified and broadened diversity jurisdiction. Previously, the statute had clearly covered actions between aliens and citizens as well as actions between citizens of different states. See 28 U.S.C. 41 (1940 ed.). However, the courts were split over whether the statute permitted actions where...

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