Miller v. Davis
| Decision Date | 26 November 1974 |
| Docket Number | Nos. 73-2009,s. 73-2009 |
| Parties | 88 L.R.R.M. (BNA) 2451 Stafford MILLER, Plaintiff-Appellant, v. C.W. DAVIS et al., Defendants-Appellees. Estill HALL, Plaintiff-Appellant, v. C.W. DAVIS et al., Defendants-Appellees. Clay D. SELLERS, Plaintiff-Appellant, v. C.W. DAVIS et al., Defendants-Appellees. Herbert BARGER, Floyd White, and all other persons similiarly affected, Plaintiffs-Appellants, v. C.W. DAVIS et al., Defendants-Appellees. to 73-2012. |
| Court | U.S. Court of Appeals — Sixth Circuit |
John W. Collis, Anggelis & Vimont, Lexington, Ky., for plaintiffs-appellants.
H. B. Noble, Hazard, Ky., Joseph T. McFadden, Washington, D.C., M. E. Boiarsky, Charleston, W. Va., for defendants-appellees.
Before CELEBREZZE and MCCREE, Circuit Judges, and WALINSKI, District Judge. *
The question in these consolidated appeals is whether a federal court sitting in Kentucky has subject-matter jurisdiction over suits by Kentucky residents for pension benefits allegedly wrongfully withheld by the Trustees of the United Mine Workers of America Welfare and Retirement Fund (hereafter 'the Fund'). The District Court dismissed the complaints on the ground that Kentucky law would not permit them to be brought in a Kentucky state court and that it was bound to follow this Kentucky rule. 1
We reverse the District Court's dismissal of Appellants' complaints. Even assuming that Kentucky law bars a Kentucky state court's jurisdiction over these claims, a question we do not reach, 2 a federal court is not foreclosed from adjudicating them.
Before discussing this conclusion, we face a question which was not considered by the parties or the District Court. Appellants asserted jurisdiction under 29 U.S.C. 185(c). This provision merely describes where labor organizations may be sued and does not establish subject matter jurisdiction over claims of improper administration of union trust funds. Nor do Appellants cite a statute which makes federal law the test of Appellant's claims. See Giordani v. Hoffmann, 295 F.Supp. 463, 469-470 (E.D.Pa.1969); Employing Plasterers' Ass'n v. Journeymen Plasterers' Local 5, 279 F.2d 92 (7th Cir. 1960); Rittenberry v. Lewis, 222 F.Supp. 717, 721 n. 2 (E.D.Tenn.1963), aff'd, 333 F.2d 573 (6th Cir. 1964); Palnau v. Detroit Edison Co., 301 F.2d 702 (6th Cir. 1962).
It appears, however, that jurisdiction could have been alleged under 28 U.S.C. 1332 (1966), the diversity of citizenship provision. Appellants are most probably citizens of Kentucky (since they are 'residents' of Kentucky), Appellees are not Kentucky citizens, and the Fund is situated in the District of Columbia. Under 28 U.S.C. 1653 (1966) 'Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.' Amendment to establish jurisdiction is broadly permitted, so as to effectuate Congress' intent in enacting 1653-- to avoid dismissals on technical grounds. Blanchard v. Terry & Wright, Inc., 218 F.Supp. 910 (W.D.Ky.), aff'd, 331 F.2d 467 (6th Cir. 1963), cert. denied, 379 U.S. 831, 85 S.Ct. 62, 13 L.Ed.2d 40 (1964). While we proceed to the merits of this appeal, Appellants must file, within ten days of this decision, a proper amendment in this Court alleging diversity jurisdiction. If appellants fail to do so, the case will be placed on the rehearing docket, and the question of jurisdiction will be reconsidered. See Kaufman v. Western Union Telegraph Co., 224 F.2d 723 (5th Cir. 1955). Should the allegations of $10,000 in controversy prove defective on remand, the District Court will be free to dismiss the complaints.
Since jurisdiction is based solely on diversity of citizenship, Kentucky conflict of laws rules determine what substantive law governs the merits of Appellants' claims. Klaxon Co. v. Stentor Electric Mfg. Co., Inc.,313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). It is undisputed that the law which Kentucky courts would apply to determine the merits of these claims is that of the District of Columbia, under whose jurisdiction the Fund is administered. 3 Wilder v. United Mine Workers Welfare and Retirement Fund, 346 S.W.2d 27 (Ky. 1961).
The District Court went beyond application of Kentucky's conflict rules in its holding. Applying the decision of the Kentucky Court of Appeals in Wilder, the District Court determined that 'Kentucky courts have no jurisdiction to entertain an action concerning a trust with a situs outside the Commonwealth,' and that it consequently had no jurisdiction over these cases. Thus, the District Court held that its very jurisdiction as a federal court was circumscribed by Kentucky law.
This conclusion has serious implications concerning the power of the federal judiciary and the relationship of state and federal law. We feel it important to treat the issue in depth, despite the lack of argument from counsel on this point.
The Rules of Decision Act, 28 U.S.C. 1652 (1966) states:
The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.
Under this statute a federal court must apply state law in deciding the merits of a diversity case.
Until the Supreme Court's decision in Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), it was hornbook law that the jurisdiction of the federal courts depended entirely on the Constitution and acts of Congress and that state law could not limit the federal judicial power. See David Lupton's Sons Co. v. Automobile Club of America, 225 U.S. 489, 32 S.Ct. 711, 56 L.Ed. 1177 (1912); Barrow Steamship Co. v. Kane, 170 U.S. 100, 18 S.Ct. 526, 42 L.Ed. 964 (1898); Chicago & N.W. Ry. v. Whitton, 80 U.S. (13 Wall.) 270, 20 L.Ed. 571 (1871); Union Bank v. Vaiden, 59 U.S. (18 How.) 503, 15 L.Ed. 472 (1855); Suydam v. Broadnax, 39 U.S. (14 Pet.) 67, 10 L.Ed. 357 (1840); Dobie, Federal Jurisdiction and Procedure 336 (1928). 4
With the advent of Erie, a wholesale re-evaluation of the interrelationship of federal and state law began. Erie itself simply extended the Rules of Decision Act to state judge-made law, so that a federal court was required to apply state law as pronounced not only by legislatures but also by state judges.
It soon became clear that Erie was much more than a holding, as the 'Erie doctrine' became a broad principle governing the distribution of federal and state law-making power. In Guaranty Trust Co. v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079 (1945), the Supreme Court announced that
the intent of (Erie) was to ensure that, in all cases where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a state court . . . a block away.
Two years later, the Supreme Court faced a problem somewhat similar to that before us. In Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947), a North Carolina statute forbade deficiency judgments on contracts for the purchase of real estate. When, Bullington, the Virginia vendor, sued Angel, the North Carolina purchaser, in a North Carolina state court to collect the deficiency on the purchase contract (which had not been satisfied through sale of the foreclosed-upon land) the North Carolina Supreme Court held that the statute ousted the state courts from jurisdiction over the complaint. 220 N.C. 18, 16 S.E.2d 411 (1941). The vendor then sued in a North Carolina federal court, under diversity of citizenship jurisdiction. The United States Supreme Court held that the state jurisdictional Court held that the state jurisdictional bar applied to the North Carolina federal court sitting in diversity, both because of the former adverse adjudication in the state court and because of the premise that such state statutes should be given effect in federal court.
In Woods v. Interstate Realty Co., 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524 (1949), decided the same day as Ragan v. Merchants Transfer Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949), and Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949) (), the Supreme Court required a federal court to apply a Mississippi statute which provided that a foreign corporation doing business in Mississippi could not bring suit in a Mississippi court unless it had designated in writing an agent for service of process in that state. The majority opinion cited Angel for the proposition that 'the policy of Erie R. Co. v. Tompkins precluded maintenance in the federal court in diversity cases of suits to which the State had closed its courts.' 337 U.S. at 537, 69 S.Ct. at 1237.
We believe that a broad 'outcome-determinative' test derived from York, Angel, and Woods would bar federal jurisdiction over these claims. Indeed, our Circuit applied this view of Erie in Atkins v. Schmutz Mfg. Co., 372 F.2d 762 (6th Cir. 1967), and Still v. Rossville Crushed Stone Co., 370 F.2d 324 (6th Cir. 1966).
York, however, is not the Supreme Court's final word on 'the policy of Erie.' In Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958), the Supreme Court held that a federal court sitting in diversity should grant a jury trial on a crucial issue of fact which the state court would have determined without a jury. 5 The Court limited York by holding that although application of a state rule would by required of federal courts in diversity cases when the rule is 'bound up with (the) rights and obligations' at issue, federal courts need not adopt state procedural rules which did not have substantive import and...
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