Moore v. Ashland Oil, Inc., 89-1910

• Decision Date: 14 May 1990
• Docket Number: No. 89-1910,89-1910
• Parties: Vesper MOORE, et al., Plaintiffs-Appellants, v. ASHLAND OIL, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1445

901 F.2d 1445

16 Fed.R.Serv.3d 731

Vesper MOORE, et al., Plaintiffs-Appellants, v. ASHLAND OIL, INC., Defendant-Appellee.

No. 89-1910.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 22, 1990.

Decided May 14, 1990.

Maurice E. Doll, John F. Sievers, Doll & Sievers, Vincennes, Ind., for plaintiffs-appellants.

Mark W. Rietman, Berger & Berger, Evansville, Ind., for defendant-appellee.

Before BAUER, Chief Judge, CUMMINGS, Circuit Judge, and PELL, Senior Circuit Judge.

CUMMINGS, Circuit Judge.

Ashland Oil, Inc. ("Ashland"), the defendant in this matter, purchased crude oil from seven oil and gas leaseholds located in Gibson County, Indiana. In 1981, Ashland was added as a defendant to an Indiana state court action ("the Gibson County suit"). The plaintiffs in that action alleged, among other things, that the interests in six (later all seven) of these seven leases had been oversold and that proceeds from the sale of oil from these leases had been converted. Seeking assurance that it was paying the proper parties for the oil it was purchasing, Ashland filed an answer and crossclaim in interpleader on April 22, 1981. The litigation in the Gibson County suit was still proceeding when, on August 19, 1988, the federal diversity suit at issue here was filed. The plaintiffs in this suit include some, but not all, of the original plaintiffs in the Gibson County suit. The allegations in the federal complaint, while not identical to those in the Gibson County suit, would require for their resolution a determination of the rightful owner or On October 7, 1988, Ashland moved to dismiss the federal proceeding under Federal Rule of Civil Procedure 19(b), on the ground that it was a citizen of Indiana and that individuals needed for a just adjudication of the issues before the court were also citizens of Indiana. On March 15, 1989, the parties consented to have the matter resolved by the United States Magistrate. The magistrate concluded that the plaintiffs had failed to join indispensable parties and therefore granted Ashland's motion to dismiss on March 30, 1989. ² We affirm.

owners of the same seven leases that are the subject of the Gibson County suit. ¹

DISCUSSION

The purpose of Federal Rule of Civil Procedure 19 is to permit joinder of all materially interested parties to a single lawsuit so as to protect interested parties and avoid waste of judicial resources. To achieve those ends Rule 19(a) provides for joinder of specified parties whose addition to the suit will not deprive the court of jurisdiction. Such persons are denominated "persons to be joined if feasible." Rule 19(b) then sets forth the appropriate procedure to be followed if a party who should be joined under Rule 19(a) is a party whose joinder would deprive the court of jurisdiction:

If a person as described in subdivision (a)(1)-(2) hereof cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable.

Rule 19(b) then sets forth four factors to be considered in determining whether an action must be dismissed. These factors are: 1) the extent to which a judgment entered in the absence of a party will be prejudicial to those currently before the court; 2) the extent to which such prejudice can be lessened or avoided by reshaping the judgment; 3) whether a judgment entered in a party's absence will be adequate; 4) whether the plaintiff will have an adequate remedy if the action is dismissed.

The appellants argue that the magistrate misapplied the provisions of Rule 19 and that dismissal was therefore clearly erroneous. This Court has not explicitly established the appropriate standard of review of a Rule 19 determination. See Sokaogon Chippewa Community v. Wisconsin, 879 F.2d 300, 303-304 (7th Cir.1989) (discussing paucity of caselaw on the subject and considering various alternatives). The standard of review was not made an issue in this case and it is not necessary to resolve the question here since even when viewed de novo, we agree with the magistrate's disposition of the case.

The crux of the appellants' argument is that the magistrate began his analysis with a determination that the absent parties were "indispensable" and then analyzed whether "in equity and good conscience" the case could proceed without them. The appellants contend that this is contrary to the provisions of Rule 19, which first require a determination of "persons to be joined if feasible" followed by an analysis of whether the case can proceed in the absence of those persons. Only if it has been determined that the action cannot proceed in the absence of those persons will the label "indispensable" be applied to them. 7 Wright, Miller & Kane, Federal Practice and Procedure Sec. 1604 ("[T]he term 'indispensable' is used in Rule 19(b) only in a conclusory sense.").

The appellants' reading of the Rule is correct but their reading of the magistrate's memorandum is not. It is true that the magistrate describes the first step of the analysis as a determination of "whether an absent person is 'indispensable.' " Memorandum at 4. The ensuing analysis demonstrates, however, that the magistrate's use of the term "indispensable" in place of the correct "persons to be joined if feasible" is a mere inadvertence and not evidence of any fundamental confusion about the manner in which the rule is to be applied.

To support the proposition that the absent parties in this case meet the requirements of Rule 19(a) the magistrate cites Schutten v. Shell Oil Co., 421 F.2d 869 (5th Cir.1970). In Schutten the Fifth Circuit thoroughly discussed the relationship between Rules 19(a) and 19(b), noting that the term "indispensable" is not definitive but conclusory. Id. at 873. The Fifth Circuit specifically found that an absent lessor, who claimed title to the oil well in question in that case, was a party "to be joined if feasible." Id. at 874. The magistrate's reliance on this case coupled with his own citations from Rule 19(a) demonstrate that in spite of his apparent inadvertent use of the term "indispensable" the magistrate correctly determined that the absent parties in this case were parties who met the requirements of Rule 19(a), and who therefore had to be joined if feasible.

Having so concluded, and having noted that some of the absent parties were persons who would deprive the court of diversity jurisdiction, the magistrate properly analyzed the four factors of Rule 19(b) to determine whether the action could proceed without the absentees. First, the magistrate discussed the possibility of prejudice to Ashland if the state proceedings and the federal proceedings resulted in contradictory conclusions about the rightful owners of the oil leaseholds. Second, the magistrate concluded that there would be no way to shape a...