Self v. General Motors Corp.

Decision Date30 March 1978
Docket NumberNo. 75-1572,75-1572
Citation588 F.2d 655
PartiesThomas L. SELF, Norman Self, and Deborah J. Self, a minor by her guardian ad litem, Thomas L. Self, and Christine Smith, and Frank N. Smith, Jr., Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Wendy Cole Wilner (argued), Ventura, Cal., for plaintiffs-appellants.

Richard A. Neumeyer (argued), Grace, Neumeyer & Otto, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before ELY, CHOY and SNEED, Circuit Judges.

CHOY, Circuit Judge:

This case comes before us on interlocutory appeal from the district court's denial of a motion to remand the case to state court. We reverse.

Appellant Christine Smith, a citizen of California, was one of several plaintiffs 1 who sued General Motors Corporation (GM), a citizen of Michigan and Delaware, and Vern Prior, a citizen of California, in California Superior Court for injuries sustained in an auto accident. Before trial, Smith signed a covenant not to execute judgment against Prior. Upon learning of the covenant, GM attempted to remove the case to federal district court, alleging that Prior was no longer a real party in interest and that his joinder was fraudulent. The district judge found that joinder was not fraudulent and that, in spite of the covenant, Prior was still a party to the suit, and remanded the case to the state court because of the continuing lack of complete diversity. 2

The state trial proceeded to final judgment against both Prior and GM. GM then filed a motion for, and was granted, a new trial. GM again attempted to remove the case to federal court, this time on the theory that, since a final judgment had been rendered against Prior, he had been eliminated from the case and complete diversity had thus been created. The federal court remanded once again, however, reasoning that the removal was "premature" because the state appeal process had to be exhausted before Prior's elimination from the case could be deemed truly final. See Saylor v. General Motors Corp., 416 F.Supp. 1173, 1175 (E.D.Ky.1976).

Smith then appealed the order granting GM a new trial to the California Court of Appeal and filed a protective appeal on the judgment against Prior. GM also appealed to that court, challenging the trial court's refusal to grant it judgment notwithstanding the verdict. The Court of Appeal affirmed the new trial order and the denial of GM's motion, leaving the disposition of the trial court undisturbed. Self v. General Motors Corp., 42 Cal.App.3d 1, 116 Cal.Rptr. 575 (1974). The California Supreme Court refused to hear the case, thus finalizing the intermediate appellate court's decision.

Finally, GM successfully removed the new trial concerning its liability to federal court. The instant appeal, in which Smith challenges the jurisdiction of the federal court to accept the case under the removal provisions of 28 U.S.C. § 1441, followed. 3

Rule that Plaintiff's Pleadings are Determinative

It has never been doubted that "the right of removal from the state courts to the United States courts is statutory. A suit commenced in a state court must remain there until cause is shown under some act of Congress for its transfer." Gold-Washing & Water Co. v. Keyes, 96 U.S. 199, 201, 24 L.Ed. 656 (1877). Under the Judiciary Act of March 3, 1875, 18 Stat. 470, ch. 137, either party could remove an action to federal court if his pleadings established that the determination of the controversy involved a question of federal law. See Southern Pac. R. R. Co. v. California, 118 U.S. 109, 111-13, 6 S.Ct. 993, 30 L.Ed. 103 (1886); Pacific R. R. Removal Cases, 115 U.S. 1, 11, 5 S.Ct. 1113, 29 L.Ed. 319 (1885); Ames v. Kansas, 111 U.S. 449, 462, 4 S.Ct. 437, 28 L.Ed. 482 (1884); Railroad Co. v. Mississippi, 102 U.S. 135, 139-40, 26 L.Ed. 96 (1880); Gold-Washing & Water Co., 96 U.S. at 202-04. This rule was changed by the Judiciary Act of March 3, 1887, 24 Stat. 552, ch. 373, As corrected, Judiciary Act of August 13, 1888, 25 Stat. 433, ch. 866, which abolished the plaintiff's right to remove and gave that right exclusively to the defendant. In addition, it was later held that a federal court would look only to the Plaintiff's pleadings in order to determine removability. See Chappell v. Waterworth, 155 U.S. 102, 107-08, 15 S.Ct. 34, 39 L.Ed. 85 (1894); Tennessee v. Union & Planters' Bank, 152 U.S. 454, 460-61, 14 S.Ct. 654, 38 L.Ed. 511 (1894).

It was soon established that neither act discussed above allowed a plaintiff to invoke federal jurisdiction by anticipating a federal defense which might be asserted by the defendant. In Louisville & Nashville R. R. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908), the Supreme Court stated:

It is not enough that the plaintiff alleges some anticipated defense to his cause of action and asserts that the defense is invalidated by some provision of the Constitution of the United States. Although such allegations show that very likely, in the course of the litigation, a question under the Constitution would arise, they do not show that the suit, that is, the plaintiff's original cause of action, arises under the Constitution.

As explained in Mottley, it is clear that the existence of federal jurisdiction is to be determined solely by an examination of the plaintiff's case, without recourse to the defendant's pleadings. See Phillips Petroleum Co. v. Texaco Inc., 415 U.S. 125, 127-28, 94 S.Ct. 1002, 39 L.Ed.2d 209 (1974); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 672-73, 70 S.Ct. 876, 94 L.Ed. 1194 (1950); Gully v. First Nat'l Bank, 299 U.S. 109, 112-13, 57 S.Ct. 96, 81 L.Ed. 70 (1936); Taylor v. Anderson, 234 U.S. 74, 34 S.Ct. 724, 58 L.Ed. 1218 (1914); Joy v. City of St. Louis, 201 U.S. 332, 340, 26 S.Ct. 478, 50 L.Ed. 776 (1906); Tennessee v. Union & Planters' Bank, 152 U.S. at 454, 14 S.Ct. 654.

"Voluntary-Involuntary" Rule

In another line of cases, the Supreme Court developed the "voluntary-involuntary" rule which requires that a suit remain in state court unless a "voluntary" act of the plaintiff brings about a change that renders the case removable. The rule is said to originate in the nineteenth century case of Powers v. Chesapeake & O. Ry., 169 U.S. 92, 18 S.Ct. 264, 42 L.Ed. 673 (1898). In Powers, when the action originally appeared in state court, there was not complete diversity between the parties. After the time period for removal to federal court had elapsed, however, the plaintiff dismissed the non-diverse defendant, leaving only diverse parties remaining in the action. In allowing removal to federal court, the Supreme Court held that the time period for removal begins to run only after complete diversity occurs and that the plaintiff's delay in dismissing one of the defendants did not defeat removal.

The next case in the development of the voluntary-involuntary rule was Whitcomb v. Smithson, 175 U.S. 635, 20 S.Ct. 248, 44 L.Ed. 303 (1900), where a directed verdict had been ordered in favor of the non-diverse defendant, arguably making the case appropriate for removal to federal court. The Court found the lower court's directed verdict in Whitcomb to require a result different from that resulting from the plaintiff's discontinuance in Powers:

This (the directed verdict) was a ruling on the merits, and not a ruling on the question of jurisdiction. It was adverse to plaintiff, and without his assent, and the trial court rightly held that it did not operate to make the cause then removable and thereby to enable the other defendants to prevent plaintiff from taking a verdict against them.

175 U.S. at 638, 20 S.Ct. at 250. That only a voluntary act of the plaintiff could bring about removal to federal court became the established rule in later cases. See American Car & Foundry Co. v. Kettelhake, 236 U.S. 311, 314-16, 35 S.Ct. 355, 59 L.Ed. 594 (1915); Lathrop, Shea & Henwood Co. v. Interior Constr. & Improvement Co., 215 U.S. 246, 30 S.Ct. 76, 54 L.Ed. 177 (1909); Kansas City Suburban Belt Ry. v. Herman, 187 U.S. 63, 69-70, 23 S.Ct. 24, 47 L.Ed. 76 (1902); Southern Pac. Co. v. Haight, 126 F.2d 900, 903-04 (9th Cir.), Cert. denied, 317 U.S. 676, 63 S.Ct. 154, 87 L.Ed. 542 (1942); Weems v. Louis Dreyfus Corp., 380 F.2d 545, 547 (5th Cir. 1967); 1A Moore's Federal Practice P 0.168(3. 5), at 487 (2d ed. 1974). See generally Note, Removal of Suits to Federal Courts After the Statutory Deadline: An Old Formula Re-examined, 60 Harv.L.Rev. 959 (1947). 4

It has been suggested that the rule promotes judicial efficiency by "prevent(ing) removal of those cases in which the issue of the resident defendant's dismissal has not been finally determined in the state courts." Weems, 380 F.2d at 546. See Saylor, 416 F.Supp. at 1175; Ennis v. Queen Ins. Co., 364 F.Supp. 964, 966 (W.D.Tenn.1973). If the finality of state court proceedings were the basis for the rule, it would seem that once the appellate process were ended in the state courts, removal would be possible. The Supreme Court, however, apparently does not rely on this basis as evidenced by Lathrop, Shea & Co., 215 U.S. at 249-51, 30 S.Ct. 76, where the voluntary-involuntary rule was invoked to prohibit removal even though the state appellate process was complete.

Common Origins of Both Rules

We must conclude that the voluntary-involuntary rule is based on a formalistic approach to pleadings similar to the Mottley line of cases and applies to the diversity requirement of 28 U.S.C. § 1332 in the same fashion that Mottley applies to the federal question requirement of 28 U.S.C. § 1331.

In Alabama Great Southern Ry. v. Thompson, 200 U.S. 206, 26 S.Ct. 161, 50 L.Ed. 441 (1906), a diversity case, the Supreme Court read Powers and Whitcomb to mean that "the right to remove depend(s) upon the case made In...

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    ...Second, the diversity jurisdiction must arise through the voluntary action of the plaintiff. See, e.g., Self v. General Motors Corp. , 588 F.2d 655 (9th Cir. 1978). Examples of voluntary acts are dismissal of a nondiverse defendant after settlement or abandonment of claims against a nondive......
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