Patriot Cinemas, Inc. v. General Cinema Corp., 87-1105

Decision Date29 July 1987
Docket NumberNo. 87-1105,87-1105
Citation834 F.2d 208
Parties1987-2 Trade Cases 67,769 PATRIOT CINEMAS, INC., Plaintiff, Appellant, v. GENERAL CINEMA CORP., et al., Defendants, Appellees. . Heard
CourtU.S. Court of Appeals — First Circuit

James M. Hughes, with whom Devin & Drohan, P.C., was on brief for plaintiff, appellant.

Dorothy Anderson, Asst. Atty. Gen., Antitrust Div., with whom James M. Shannon, Atty. Gen., Com. of Massachusetts; Stephen E. Merrill, Atty. Gen., Amy L. Ignatius, Sr. Asst. Atty. Gen., Consumer Protection and Antitrust Bureau, State of New Hampshire; James E. O'Neil, Atty. Gen., State of Rhode Island; James E. Tierney, Atty. Gen., and Stephen L. Wessler, Asst. Atty. Gen., Chief, Consumer and Antitrust Div., State of Maine, were on brief for the Com. of Massachusetts, State of New Hampshire, State of Rhode Island, and the State of Maine, amici curiae.

Shepard M. Remis, with whom Mark W. Pearlstein and Goodwin, Procter & Hoar, were on brief for defendants appellees Warner Brothers Distributing Corp., Columbia Pictures Industries, Inc., Paramount Pictures Corp., Twentieth Century Fox Corp., Universal Film Exchanges, Inc., MGM/UA Communications Co., Orion Pictures Corp., and Tri-Star Pictures, Inc.

Michael L. Weiner, with whom Richard G. Reid, Thomas J. Dougherty, Lori Weiner Lander and Skadden, Arps, Slate, Meagher & Flom, were on brief for defendant, appellee Gen. Cinema Corp.

Before CAMPBELL, Chief Judge, TORRUELLA and NOONAN, * Circuit Judges.

LEVIN H. CAMPBELL, Chief Judge.

This is an appeal from the district court's dismissal without prejudice of an action that was removed from the Massachusetts Superior Court to the United States District Court for the District of Massachusetts.

Plaintiff Patriot Cinemas ("Patriot") owns and operates a chain of seven movie theaters, all within Massachusetts. The defendants are General Cinemas--one of the largest movie theater chains in the United States--and several nationwide distributors of feature films ("distributor defendants"). Patriot claims that the defendants conspired to deny first-run films to one of Patriot's theaters, forcing the theater to close. Consequently, Patriot brought suit in the Massachusetts state court seeking relief under Massachusetts law. Defendants, claiming that the suit contained an artfully pled federal antitrust claim, 1 removed the case to the federal district court. Then, under the strange and now defunct doctrine of "derivative jurisdiction," the defendants asked the federal court to dismiss the suit without prejudice for a lack of subject matter jurisdiction. The district court did so, and Patriot now appeals from the court's order of dismissal and also from the court's refusal to remand certain of Patriot's claims to the state court.

I. PROCEDURAL HISTORY

Defendants' argument that this appeal must be dismissed under the doctrine of judicial estoppel causes us to set forth its procedural history in detail.

Patriot first brought suit in the Massachusetts Superior Court in February 1986. Its complaint contained four counts, all allegedly based on Massachusetts state law: (1) unfair business practices under Mass.Gen.Laws ch. 93A (1987); (2) violation of a recently enacted statute regulating bidding practices in the movie theater industry, see Mass.Gen.Laws ch. 93F (1987); (3) violation of the state antitrust statute, see Mass.Gen.Laws ch. 93 (1987); and (4) common law tortious interference with contractual relations.

In April 1986, defendants removed the state action to the federal district court. In a joint petition for removal, defendants averred that Patriot's state law claims were "in essence disguised federal antitrust claims." Although the petition referred to all of Patriot's claims, it focused on the state antitrust claim under Mass.Gen.Laws ch. 93.

A month after removal, defendants requested the district court to dismiss the action for lack of subject matter jurisdiction. As, in their view, the complaint had stated a disguised federal antitrust claim, defendants contended that the state court had no jurisdiction over that claim. See, e.g., Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 379-80, 105 S.Ct. 1327, 1331-32, 84 L.Ed.2d 274 (1985). Thus, they urged the federal court to dismiss the action without prejudice, under the doctrine of "derivative jurisdiction." According to that doctrine, "a federal district court does not have removal jurisdiction over a claim that the state court lacked subject matter jurisdiction to decide in the first place." Pueblo International, Inc. v. Reichard De Cardona, 725 F.2d 823, 828 (1st Cir.1984).

Patriot responded by moving to have its action remanded to the Massachusetts Superior Court. Insisting that its state claims were not artfully pled federal claims, Patriot contended that its state action should never have been removed to a federal court. Defendants filed a joint memorandum of law in opposition to Patriot's motion to remand. In this, defendants emphasized that the count based on Massachusetts state antitrust law was a disguised federal claim. Insofar as the remaining three counts were genuine state claims, defendants stated that the federal court had pendent jurisdiction over them.

On December 1, 1986, the district court granted the defendants' motion to dismiss the removed action without prejudice, and it denied plaintiff's motion to remand to the state court. Underlying the district court's order was the rationale that the state antitrust count was tantamount to a federal antitrust claim.

On December 10, Patriot asked the district court to reconsider its dismissal of the removed action and its refusal to remand. Patriot at this time tendered an amended complaint to the district court which omitted the antitrust count. According to Patriot, its reason for not simply filing this new complaint in the Massachusetts Superior Court was its fear that defendants would immediately remove to the federal court any new state suit based on the remaining three counts. Hence Patriot wanted the district court to remand the truncated complaint to the Massachusetts Superior Court, a procedure ensuring that the amended complaint, at least, remained in the hands of the state court.

Also on December 10, Patriot filed a notice to appeal from the district court's order. This had no effect because the motion for reconsideration was pending. See Fed.R.App.P. 4(a)(4).

The distributor defendants and General Cinemas filed memoranda in opposition to Patriot's motion for reconsideration. They did not argue that the remaining three state counts were artfully pled federal claims. Instead, they argued that under the doctrine of derivative jurisdiction, the district court lacked any jurisdiction to remand the state claims.

On December 30, the district court denied Patriot's motion for reconsideration in a one sentence order. The court stated that it adopted the reasoning set forth in the defendants' opposition.

On January 20, 1987, Patriot filed in the district court a second notice of appeal. In the notice, Patriot appealed both from the December 1 order and from the December 30 denial of its motion for reconsideration.

Also on January 20, Patriot filed a fresh action in the Massachusetts Superior Court. The complaint in that case was virtually the same as the amended complaint that it had presented to the district court with Patriot's motion for reconsideration. On March 6, the distributor defendants requested the superior court to stay the new proceeding while this appeal was pending. They argued that allowing the state action to proceed on the three counts while this court debated the fate of the remaining state antitrust count could result in duplicative discovery and a waste of judicial resources if, eventually, we were to vindicate Patriot's right to proceed in a state tribunal with the latter.

Patriot responded to the motion by filing in the superior court a memorandum which has now become the focus of the defendants' estoppel claim. Arguing against any stay of the state proceeding involving the three counts, Patriot represented that it would not pursue a separate claim based on state antitrust law regardless of the outcome of its pending federal appeal.

On March 18, 1987, the Massachusetts Superior Court denied the distributor defendants' motion for a stay. The court gave no reason for its denial.

On April 13, 1987, 14 months after Patriot had filed its original complaint in the Massachusetts state court, the defendants filed their answers in the second state proceeding. The defendants pled multiple defenses, including "the applicable statute of limitations."

On April 14, 1987, the defendants-appellees in this court filed a joint motion to dismiss the instant federal appeal as moot. They supported this motion with a three-step argument. First, Patriot is bound by its representation to the superior court that it would not pursue the state antitrust count. Second, since Patriot is bound by its representation, the dispute over whether the antitrust count should have been remanded to the superior court rather than dismissed has become moot. Third, once that count is dismissed as moot, the entire appeal becomes moot because the pending state suit and the remaining counts in this appeal are identical. Whether the latter are remanded to the state court is of no consequence. Thus, defendants argue, Patriot has no legally cognizable interest in this appeal.

On April 17, 1987, Patriot filed in this court a memorandum in opposition to the motion for dismissal. In the memorandum, Patriot pulled back from its assertion that it would not pursue the state antitrust count. Although it continued to have "no real desire" to do so, it would prosecute the antitrust claim if "developments in the litigation make it appropriate." These "developments" were the possibility that defendants' defenses set forth in their answers would defeat...

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