Case: 11-40115 Document: 00511417912 Page: 1 Date Filed: 03/21/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 21, 2011
No. 11-40115 Lyle W. Cayce
Clerk
In re: CRYSTAL POWER COMPANY, LTD.
Petitioner
Petition for Writ of Mandamus to the
United States District Court for the Southern District of Texas
Before HIGGINBOTHAM, SMITH, and PRADO, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Crystal Power Company, Ltd. filed this suit in Texas state court in 2002.
The case was removed to federal court in 2010 by an intervening plaintiff who
became named as the defendant on several cross-claims. Because the removal
statute may only be invoked by a true defendant, not a cross-defendant, we grant
the petition for writ of mandamus and instruct the district court to remand the
case to state court.
I
Crystal Power, a corporation based in El Salvador, retained attorney Vidal
Martinez in June 2002 to pursue litigation against several parties in the United
States. In October 2002, Crystal Power filed this suit against Coastal
Salvadoran Power, Ltd. and Coastal Nejapa, Ltd.
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Shortly after filing the complaint, Martinez moved his practice to the law
firm now known as McFall, Breitbell & Smith, P.C. and took this case with him.
In April 2003, the McFall firm and Crystal Power signed a new engagement
agreement with a contingency fee replacing hourly billing. In February 2004,
Martinez left the McFall firm, again taking this case with him. The McFall firm
then filed a separate suit against Crystal Power to recover time and resources
invested in the case. As part of a mediated settlement, the parties agreed that
the McFall firm would retain a 5% interest in any recovery in this case, with
further disputes to be resolved through arbitration.
Seeking to protect its interest, the McFall firm petitioned to intervene in
this suit in state court. Crystal Power responded with a series of cross-claims
against the McFall firm for conspiracy, fraud, malpractice, and breach of
fiduciary duty, all resolvable by arbitration pursuant to the prior settlement
agreement. The McFall firm filed a notice of removal under the Convention on
the Recognition and Enforcement of Foreign Arbitral Awards,1 which creates
original federal jurisdiction over certain international arbitration agreements,2
including removal of suits filed in state court.3 Crystal Power moved to remand
the case to state court, arguing that an intervening plaintiff is not entitled to
removal because the removal provision may only be invoked by “the defendant
or defendants.”4 The district court denied the motion. Crystal Power now seeks
a writ of mandamus instructing remand.5
1
See 9 U.S.C. §§ 201 et seq.
2
Id. §§ 202–203.
3
Id. § 205.
4
Id.
5
After initially opposing remand, the McFall firm settled with Crystal Power and filed
a notice of non-opposition. The cross-claims against the McFall firm have been dismissed.
Because we review subject-matter jurisdiction based on the claims alleged at the time of
2
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II
We strictly construe removal statutes because removing an action that was
duly filed in state court raises significant federalism concerns.6 The burden of
demonstrating that removal is proper rests on the party seeking the federal
forum.7 Although the removal provision in the Convention is broader in certain
respects than the general federal removal statute,8 both the Convention and the
general removal statute allow removal to be invoked only by “the defendant or
defendants.”9 Because the Convention’s removal provision uses language with
a well-established legal meaning, we presume Congress intended these terms to
carry the same meaning they have been given under the general removal
statute.10
removal, the dismissal of these claims does not affect our jurisdiction. See Cavallini v. State
Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995). Several other parties have filed
responses in opposition to the petition.
6
Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365–66 (5th Cir. 1995)
(citing Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 809 (1986)); see also Shamrock
Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09 (1941).
7
Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988).
8
Unlike the general removal statute, 28 U.S.C. § 1441, the Convention’s removal
provision does not incorporate the well-pleaded complaint rule. Compare 9 U.S.C. § 205
(“[T]he ground for removal need not appear on the face of the complaint . . . .”), with Louisville
& Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1908). It also does not impose the general
removal statute’s strict time limit on filing a notice of removal. Compare 9 U.S.C. § 205
(permitting removal “at any time before the trial”), with 28 U.S.C. § 1446(b) (“The notice of
removal of a civil action or proceeding shall be filed within thirty days . . . .”). See generally
Carnigal v. Karteria Shipping, Ltd., 108 F. Supp. 2d 651, 653–54 & n.5 (E.D. La. 2000).
9
9 U.S.C. § 205; 28 U.S.C. § 1441.
10
See First Bank v. DJL Properties, LLC, 598 F.3d 915, 917 (7th Cir. 2010); Palisades
Collections LLC v. Shorts, 552 F.3d 327, 332–34, 337 (4th Cir. 2008) (en banc); Progress W. Ins.
Co. v. Preciado, 479 F.3d 1014, 1017–18 (9th Cir. 2007). When seeking to authorize removal
by parties other than true defendants, Congress has made use of broader language. See, e.g.,
28 U.S.C. § 1452(a) (“A party may remove any claim or cause of action . . . .” (emphasis added)).
3
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The district court reasoned that the McFall firm could invoke the
Convention’s removal provision, despite entering this litigation as an
intervening plaintiff, because it had subsequently been named as a defendant
in cross-claims filed by Crystal Power. This was incorrect under the Supreme
Court’s decision in Shamrock Oil & Gas Corp. v. Sheets.11 The plaintiff in
Shamrock initially filed suit in state court, but later, after the defendant raised
a federal-law counter-claim, sought to remove the case to federal court. Like the
McFall firm, it argued that it could invoke the federal removal statute despite
filing suit as plaintiff because it was also a counter-defendant. The Supreme
Court disagreed, holding that a counter-claim does not allow a plaintiff to invoke
the right of removal granted to defendants by the federal removal statute.12
Although this case involves a cross-claim rather than a counter-claim, the
answer is the same.13 The controlling legal principle from Shamrock is that “the
plaintiff, having submitted himself to the jurisdiction of the state court, [is] not
entitled to avail himself of a right of removal conferred only on a defendant who
has not submitted himself to the jurisdiction.”14 If the McFall firm wished for a
11
313 U.S. 100 (1941).
12
See generally id.
13
Cf. Progressive W. Ins. Co., 479 F.3d at 1017 (referring to “Shamrock’s longstanding
rule that a plaintiff/cross-defendant cannot remove an action to federal court”).
14
Id. 106; see id. at 107–08 (reaffirming West v. Aurora City, 6 Wall (73 U.S.) 139
(1867)). This principle distinguishes the case of an intervening plaintiff seeking removal based
on a cross-claim from removal by a third-party defendant that has not voluntarily submitted
itself to state jurisdiction. Cf. Carl Heck Eng’rs, Inc. v. Lafourche Parish Police Jury, 622 F.2d
133 (5th Cir. 1980) (permitting removal by a third-party defendant under 28 U.S.C. § 1441(c)
(1988)), superseded on other grounds by Judicial Improvements Act of 1990, Pub. L. 101-650
(amending § 1441(c) to prohibit removal based on diversity jurisdiction); Cent. of Ga. Ry. Co.
v. Riegel Textile Corp., 426 F.2d 935, 938 (5th Cir. 1970) (holding that third-party defendants
are defendants within the terms of 28 U.S.C. § 1441). But see, e.g., Palisades Collections, 552
F.3d at 332–33 (holding that Shamrock prohibits removal by third-party defendants); First
Nat’l Bank of Pulaski v. Curry, 301 F.3d 456, 461–463 (6th Cir. 2002) (holding that third-party
defendants are not defendants for purposes of 28 U.S.C. § 1441(a)); 14B CHARLES ALAN
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federal forum, it was required to pursue a separate action in federal court.
Having chosen to intervene as a plaintiff in state court, the firm forfeited its
right to removal.
III
To obtain a writ of mandamus, the petitioner must establish (1) that there
is no other adequate means to obtain the relief it desires, (2) that its right to
issuance of the writ is “clear and indisputable,” and (3) that, to the court’s
satisfaction, the writ is appropriate under the circumstances.15 All three
requirements are satisfied here.
Beginning with the second requirement, we have already explained why
the district court erred in refusing remand. The district court thereby exceeded
its limited jurisdiction. We have stated in the past that “‘when the writ of
mandamus is sought from an appellate court to confine a trial court to a lawful
exercise of its prescribed authority, the court should issue the writ almost as a
matter of course.’” 16
Turning to the first requirement, we are convinced that the writ of
mandamus is the only adequate means for Crystal Power to obtain relief. We
have used the mandamus procedure on numerous past occasions to review and
WRIGHT ET AL ., FEDERAL PRACTICE & PROCEDURE § 3722.3 (4th ed. 2008) (“A majority of the
considerable number of cases decided by the courts of appeals and the district courts also have
concluded that a third-party defendant or cross-claim defendant is not entitled to remove a
case using Section 1441(c).”); 16 JAM ES W. MOORE ET AL ., MOORE ’S FEDERAL PRACTICE
§ 107.11[1][b][iv] (3d ed. 2000) (“[T]hird-party defendants are not defendants within the
meaning of the removal statute . . .”).
15
In re Volkswagen of Am., Inc., 545 F.3d 304, 311 (5th Cir. 2008) (en banc) (citing
Cheney v. U.S. Dist. Ct., 542 U.S. 367, 380–81 (2004)).
16
In re Reyes, 814 F.2d 168, 170 (5th Cir. 1987) (alteration omitted) (quoting United
States v. Denson, 603 F.2d 1143, 1145 (5th Cir. 1979) (en banc)).
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correct erroneous rulings on motions to remand.17 Appeal is not an adequate
remedy because, although it may be possible for the parties to try this case to
verdict in federal court before addressing the lack of federal jurisdiction on
appeal, this would demand time and resources to an end that cannot be upheld.
As we have said in the past under similar circumstances, “[w]e need not enforce
such an absurd result and require petitioner[] to go to trial in federal court and
await an appellate remedy.” 18
Finally, we think mandamus appropriate under the circumstances of this
case. The district court asserted jurisdiction over numerous claims between
Crystal Power and the true defendants based on cross-claims that have little
connection to the subject matter of the original complaint. Those original claims
were pending in state court for nearly eight years before they were abruptly
removed to federal court as a result of the McFall firm’s intervention. Even if
jurisdiction over the cross-claims were proper, the federal court would have had
no authority to rule on the substance of those claims after compelling
arbitration, and in any event the cross-claims have since been dismissed from
the lawsuit. The remaining claims are properly returned to the state court that
has overseen them for much of the past decade.
The petition for writ of mandamus is hereby GRANTED. The district
court is instructed to remand the case to Brazoria County state court for further
proceedings.
17
See In re Dutile, 935 F.2d 61 (5th Cir. 1991) (granting writ of mandamus where
remand was incorrectly denied); see also, e.g., In re Excel Corp., 106 F.3d 1197 (5th Cir. 1997);
In re Allstate Ins. Co., 8 F.3d 219 (5th Cir. 1993); In re Digicon Marine, Inc., 966 F.2d 158 (5th
Cir. 1992); In re Shell Oil Co., 932 F.2d 1518 (5th Cir. 1991); In re Allied Signal, Inc., 919 F.2d
277 (5th Cir. 1990).
18
Dutile, 935 F.2d at 64.
6