United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
June 14, 2005
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
______________________ Clerk
No. 04-40421
______________________
THOMAS J. BALLENGER ET AL.
Plaintiffs
ELLA RAY WHITEHEAD
Plaintiff-Appellant
versus
MOBIL OIL CORPORATION
Defendant
___________________________________________________
OZAN PATTERSON, ETC.; ET AL.
Plaintiffs
JOHN BALLENGER, Individually and as Rule 23 Class Representative on
behalf of all other similarly situated individuals.
Plaintiff-Appellant
versus
MOBIL OIL CORPORATION; FORUM INSURANCE COMPANY; MOBIL CORPORATION;
GLENDA MATOUSE, Individually and as Agent for Mobil Oil
Corporation; ROBERT GRONWALDT, Individually and as agent for Mobil
Oil Corporation; BEN STIFF, Individually and as agent for Mobil Oil
Corporation; CHARLES TEEPEES, Individually and as agent for Mobil
Oil Corporation; NATIONAL UNION FIRE INSURANCE COMPANY OF
PITTSBURGH, PENNSYLVANIA; AIG NATIONAL INSURANCE COMPANY; AIG RISK
MANAGEMENT INC.; AIG INC.; ENERGY PRINTING INC.; AMERICAN HOME
ASSURANCE COMPANY; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
Defendants-Appellees
1
___________________________________________________
Appeals from the United States District Court for
the Eastern District of Texas
(C.A. No. 1:71-CV-087 and C.A. No. 1:99-CV-156)
___________________________________________________
Before SMITH, DENNIS, and PRADO Circuit Judges.
DENNIS, Circuit Judge:*
The plaintiffs brought separate suits against the defendants
in federal court. The district court ruled against the plaintiffs,
the plaintiffs appealed and this court affirmed the district
court’s judgment. Thereafter, the defendants applied to the
district court for an order enjoining the plaintiffs from pursuing
claims against the defendants in state court. The district court
granted the order and, finding no error, we AFFIRM.
BACKGROUND
The district court entered an order enjoining the plaintiff-
appellants, John Ballenger and Ella Ray Whitehead, 1 from pursuing
their pending litigation against Mobil Corporation, ExxonMobil Oil
Corporation, Forum Insurance Company and other defendants in the
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
1
Whitehead’s name before remarriage was Mrs. Thomas
Ballenger and she is referred to as such in most of the prior
litigation.
2
Texas courts. The district court concluded that the claims and/or
issues asserted in the Texas action had already been litigated in
the federal courts and, therefore, the defendants were entitled to
an injunction under the relitigation exception to the Anti-
Injunction Act, 22 U.S.C. § 2283.
The procedural history of this appeal is complicated,
involving multiple suits in multiple forums over a period of more
than twenty years. The litigation dates back to the 1970 death of
Thomas Ballenger, Whitehead’s husband and Ballenger’s father, as a
result of an accident at his assigned worksite, which was owned and
controlled by Mobil.2 Whitehead sought and received workers'
compensation benefits from Forum, Mobil's workers’ compensation
carrier at that time. She also filed suit, on behalf of herself
and her minor children, against Mobil claiming gross negligence and
seeking punitive damages.3 The jury found Mobil grossly negligent,
but this court reversed concluding that the evidence did not
support that finding.4 In that suit, Mobil stated in its pleadings
that it was a subscriber under the Texas Workers' Compensation Act.
2
Mobil Corporation and ExxonMobil Oil Corporation are
jointly referred to as “Mobil” throughout this opinion as any
distinction between the two entities is irrelevant to our
decision.
3
See Ballenger v. Mobil Oil Corp., 488 F.2d 707, 708-09 (5th
Cir. 1974).
4
Id., 713.
3
As a result, Whitehead was not entitled to any damages for
ordinary negligence.5
In 1998, fourteen years after the final judgment was entered
in the wrongful death suit, Whitehead sought to intervene in Texas
court proceedings against Mobil and other defendants.6 Thereafter,
Ballenger also sought intervention in a multiparty action against
Mobil, Forum and other defendants in the Texas courts.7 The cases
were consolidated in 2002.8 The central allegation in the Texas
case is that Mobil had misrepresented its status as a subscriber
under the Texas Workers’ Compensation Act. According to the
plaintiffs, Forum was wholly owned by Mobil and, therefore, Mobil
was illegally self-insuring. The plaintiffs asserted claims of
fraud, fraudulent inducement, conspiracy, violations of the Texas
Insurance Code, breach of contract and intentional infliction of
emotional distress.
On March 23, 1999, while the state court litigation was
pending, Whitehead filed a "Request for Relief from Judgment" in
5
Id., 708.
6
See Whitehead v. Mobil Corp., No. B-159, 657 (60th Dist.
Ct., Jefferson County).
7
See McClelland v. Gronwalt, No. A-144, 481 (58th Dist. Ct.,
Jefferson County, Tex.).
8
The consolidated case is styled Whitehead v. Gronwalt,
Cause No. A-144, 481-C (60th Dist. Ct., Jefferson County, Tex.)
4
federal court under Fed. R. Civ. P. 60(b) ("the Rule 60(b)
motion"). She requested that the district court set aside the 1974
judgment in the wrongful death suit, arguing that Mobil had
perpetrated a fraud upon the court by representing that it was a
workers' compensation subscriber. On that same date, March 23,
1999, Ballenger and Ozan Patterson9, filed an action in federal
court alleging that Mobil violated the Racketeer Influenced and
Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., by
conspiring with various insurers (including Forum) and claims
adjusters over a thirty-year period (hereinafter "the RICO suit").10
Specifically, they alleged that the defendants engaged in a
long-term scheme to deprive the plaintiffs of their common-law
negligence causes of action against Mobil for workplace injuries.
Patterson and Ballenger also filed a motion to intervene in
Whitehead’s case.
Both the RICO suit and the Rule 60(b) motion were ultimately
assigned to Judge Cobb. The plaintiffs in both cases filed motions
for his disqualification, which he denied. The defendants moved for
summary judgment in the RICO suit. Judge Cobb granted the motion
for summary judgment, denied the motions for intervention, and
9
Patterson is not a party to this appeal.
10
Ballenger and Patterson brought the RICO suit as a class
action under Fed. R. Civ. P. 23, but this court vacated the
district court's class certification. See Patterson v. Mobil Oil
Corp., 241 F.3d 417, 419 (5th Cir. 2001).
5
denied Whitehead’s Rule 60(b) motion in a single opinion. The
plaintiffs appealed.
This court addressed both the RICO suit and the Rule 60(b)
motion in one opinion, Patterson v. Mobil Oil Corp.11 The panel
concluded that Judge Cobb should have granted the plaintiffs’
motions to disqualify him. The panel also determined, however,
that Judge Cobb’s failure to recuse himself was harmless error
because the merits of the summary judgment motion would be reviewed
de novo by this court on appeal. Furthermore, because the Rule
60(b) motion was based on the same allegations as the summary
judgment motion, the merits of that motion would also be determined
by the de novo review of the summary judgment motion. Finally,
reviewing the grant of summary judgment to the defendants in the
RICO suit de novo, the panel determined that Mobil was a subscriber
under the Texas Workers’ Compensation Act as a matter of law. The
Supreme Court denied the plaintiffs’ petition for a writ of
certiorari.12
Meanwhile, the plaintiffs continued to pursue their state
court litigation. On December 9, 2003, the defendants filed in the
district court their “First Amended Motion to Reopen Case and
Permanently Enjoin State Court Proceedings and Request for
11
335 F.3d 476, 480-483 (5th Cir. 2003).
12
Patterson v. Mobil Oil Corp., 540 U.S. 1108 (2004).
6
Expedited Hearing.” According to the defendants, because the
issues raised by the plaintiffs in state court had already been
fully litigated in federal court, the plaintiffs should be enjoined
from pursuing their claims in the Texas courts. The district court
agreed and this appeal followed.
I.
The plaintiffs claim that the district court lacked
jurisdiction to consider the defendants’ motion. According to the
plaintiffs, the district court lost subject matter jurisdiction
over the Rule 60(b) motion and the RICO suit when it entered
judgment following the remand issued by this court.13 The
plaintiffs argue that the district court could not thereafter take
any further action in these cases without violating the mandate
rule. This argument lacks merit.
The mandate rule requires a lower court to "implement both the
letter and the spirit of the appellate court's mandate and ... not
disregard the explicit directives of that court."14 The rule is
13
The plaintiffs argued in their briefs that the district
court also lacked jurisdiction under the Rooker-Feldman doctrine.
At oral argument, however, the plaintiffs conceded that the
Supreme Court’s decision in Exxon Mobil Corporation v. Saudi
Basic Industries Corporation, 125 S. Ct. 1517 (2005), foreclosed
their argument.
14
United States v. Lee, 358 F.3d 315, 321 (5th Cir. 2004)
(quoting United States v. Matthews, 312 F.3d 652, 657 (5th Cir.
2002)).
7
occasionally expressed in jurisdictional terms as providing that a
district court lacks jurisdiction to review an appellate court’s
decision.15 The reach of the mandate rule, however, is limited to
issues actually decided by the appellate court. Thus, “[a] mandate
controls on all matters within its scope, but a district court on
remand is free to pass upon any issue which was not expressly or
impliedly disposed of on appeal.”16 In the previous appeal in this
case, this court did not expressly or impliedly pass on the issue
of whether the plaintiffs should be enjoined from pursuing their
claims against the defendants in the Texas courts. Therefore, the
mandate rule is not implicated in the present case.
The plaintiffs’ remaining arguments concerning the district
court’s jurisdiction are actually procedural. Specifically, the
plaintiffs contend that the defendants could only request an
injunction by filing Rule 60(b) motions for relief from the final
judgments entered after remand from this court or by filing a new
action. The plaintiffs did not raise this objection below and
have, therefore, failed to preserve for appellate review any
objection to the form of the defendants’ motion.17
15
See, e.g., Fine v. Bellefonte Underwriters Ins. Co.,
758 F.2d 50, 52 (2d Cir. 1985).
16
Newball v. Offshore Logistics International, 803 F.2d 821,
826 (5th Cir. 1986).
17
See Butler Aviation Int'l v. Whyte, 6 F.3d 1119, 1128 (5th
Cir. 1993).
8
II.
The Anti-Injunction Act provides that a "court of the United
States may not grant an injunction to stay proceedings in a State
court except as expressly authorized by Act of Congress, or where
necessary, in aid of its jurisdiction, or to protect or effectuate
its judgments."18 “This statute is generally recognized to permit
a district court to enjoin state court proceedings on only three
bases: When it is (1) expressly authorized by a federal statute,
(2) necessary to assert jurisdiction, or (3) necessary to protect
or effectuate a prior judgment by a federal court.”19 The district
court concluded that this case fits within the third condition,
commonly known as the relitigation exception to the Anti-Injunction
Act. The plaintiffs contend that the district court erred in
concluding that the relitigation exception applies and that the
injunction is therefore barred by the Anti-Injunction Act. The
application of the relitigation exception is a question of law that
this court reviews de novo.20
"The relitigation exception was designed to permit a federal
court to prevent state litigation of an issue that previously was
18
28 U.S.C. § 2283.
19
St. Paul Mercury Ins. Co. v. Williamson, 332 F.3d 304,
308-9 (5th Cir. 2003).
20
Id., 308.
9
presented to and decided by the federal court. It is founded in the
well-recognized concepts of res judicata and collateral estoppel."21
Thus, the relitigation exception applies if a judgment of the
federal court precludes the claims (res judicata) or the issues
(collateral estoppel) raised in the state litigation. We conclude
that the plaintiffs are collaterally estopped by the federal
judgments from litigating the issue of Mobil’s subscriber status in
state court.
Collateral estoppel “is limited to matters distinctly put in
issue, litigated, and determined in the former action. This court
has determined that collateral estoppel encompasses three elements:
(1) the issue at stake must be identical to the one involved in the
prior action; (2) the issue must have been actually litigated in
the prior action; and (3) the determination of the issue in the
prior action must have been a necessary part of the judgment in
that earlier action. Moreover, the legal standard used to assess
the issue must be the same in both proceedings. However, the actual
claims and the subject matter of each suit may differ. Finally,
unlike claim preclusion, the doctrine of issue preclusion may not
always require complete identity of the parties."22 Accordingly,
21
Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 147 (1988).
22
Next Level Communs. L.P. v. DSC Communs. Corp., 179 F.3d
244, 250 (5th Cir. 1999)(internal quotation marks omitted;
internal citations omitted).
10
in determining whether the collateral estoppel branch of the
relitigation exception applies to the plaintiffs, we must consider
whether the issues raised in the Rule 60(b) motion, the RICO suit
and the state case are identical, whether that issue formed a
necessary part of the judgments in the federal cases and whether
the applicable legal standard is the same in the federal and state
cases.23
Identical Issues
Whitehead’s Rule 60(b) motion sought to reopen the 1974
judgment against her on the grounds that Mobil had perpetrated a
fraud upon the court by misrepresenting its workers’ compensation
subscriber status. Ballenger’s federal complaint alleged that
Mobil and its insurers engaged in a long-term scheme to deprive him
and others of their common-law negligence causes of action for
workplace injuries. According to the complaint, Mobil allegedly
used "fronting" insurance companies to obtain "sham" workers'
compensation policies in order to hide the fact that it was not a
workers’ compensation subscriber under Texas law. In the state
court litigation, the plaintiffs contend that the defendants,
including Mobil and Forum, fraudulently stated that Mobil was a
subscriber under the Texas Workers’ Compensation Act thereby
inducing them to forgo their common law causes of action against
23
The plaintiffs do not dispute that the issue was actually
litigated.
11
Mobil. The issue in the state case is therefore identical to that
raised by Whitehead’s Rule 60(b) motion and Ballenger’s RICO suit.24
Necessary to the Judgment
The plaintiffs do not dispute that this court’s conclusion
regarding Mobil’s subscriber status was necessary to the summary
judgment in the RICO suit. Whitehead, however, argues that her
Rule 60(b) motion was denied as untimely and that the issue of
Mobil’s subscriber status was not a necessary part of that
judgment. In her motion, Whitehead argued that the one year time
limit imposed by Rule 60 for motions brought under subsections 1,
2, and 3 should not be imposed in her case because Mobil’s
fraudulent scheme and conspiracy practices prevented her from
24
In their reply brief, both plaintiffs contend that the
injunction is overly broad because it prohibits them from
pursuing issues that are distinct from those raised in the
federal litigation. Specifically, the plaintiffs argue that the
state litigation includes claims based upon unfair claims
settlement practices and that they should be permitted to pursue
those claims in state court. Because this issue was first raised
in the reply brief, we need not consider the scope of the
injunction. See City of Abilene v. United States Envtl. Prot.
Agency, 325 F.3d 657, 661 n. 1 (5th Cir. 2003)(This court does
not consider arguments raised for the first time in a reply
brief). Moreover, the plaintiffs never argued in the district
court that some of the state court claims are unrelated to the
issue of Mobil’s subscriber status. Thus, we decline to consider
whether the injunction is overly broad. See Horton v. Bank One,
N.A., 387 F.3d 426, 435 (5th Cir. 2004) ("Arguments not raised in
the district court cannot be asserted for the first time on
appeal.") (quoting In re Liljeberg Enters., Inc., 304 F.3d 410,
427 n.29 (5th Cir. 2002)).
12
bringing her motion sooner. The district court noted that
precedent from the Supreme Court and this court establishes that a
plaintiff cannot evade the one-year time bar by alleging a fraud
upon the court. Thereafter the district court stated:
“Apart from these defects in the request, plaintiff’s factual
allegations do not, as a matter of law, set forth any illegal
conduct on the part of Mobil. In short, plaintiff contends that
Mobil owned Forum, that Mobil absorbed all amounts paid as workers’
compensation benefits, and that Mobil was, in effect, an illegal
self-insurer. Fifth Circuit and Texas courts have held, however,
that workers’ compensation arrangements such as the Mobil-Forum
arrangement are perfectly lawful under the Texas Workers’
Compensation Act . . . . There is nothing improper, as the cases
explain, with an employer ultimately paying for 100% of all
workers’ compensation claims paid out by its carrier . . . The
actual facts set forth in the request cannot, as a matter of law,
support the various labels of ‘fraud’ that plaintiffs place upon
the Mobil-Forum workers’ compensation program.”25
Whitehead subsequently appealed the judgment of the district
court to this court. In that appeal, however, Whitehead failed to
brief the merits of the Rule 60(b) motion and only briefed the
25
Patterson v. Mobil Oil Corp., No. 1:99-CV-156 and No.
1:71-CV-087, Eastern District of Texas, Beaumont Div. (March 28,
2002) at 4-5.
13
matter of Judge Cobb’s failure to recuse. Thus, the panel stated:
“we consider the Rule 60(b) ruling only as it relates to the
recusal issue.”26 Whitehead cites that statement and argues that
this court did not consider the merits of her fraud allegations.
This is incorrect. This court considered the merits of the fraud
allegations upon which Whitehead’s Rule 60(b) motion was predicated
in determining whether Judge Cobb’s failure to recuse himself was
harmful error. This court concluded that any error was harmless
because “[t]he Rule 60(b) motion is premised on Mobil's alleged
fraud with respect to its subscriber status. Accordingly, the
merits of the motion will be determined by our de novo evaluation
of the district court's summary judgment ruling, which was based on
the fraud issue.”27 Thus, this court expressly ruled on the merits
of both the Rule 60(b) motion and the summary judgment when it
stated that: “despite the plaintiffs’ vigorous arguments to the
contrary, we conclude that there is no genuine issue of material
fact with regard to Mobil’s subscriber status. And, in turn, there
is no genuine issue of material fact that Mobil was engaged in a
scheme to defraud its employees by lying about its subscriber
26
Patterson v. Mobil Oil Corp., 335 F.3d 476, 483 (5th Cir.
2003).
27
Id., 486 (emphasis added).
14
status.”28 This ruling was necessary to the judgment affirming the
denial of Whitehead’s motion because, according to this court’s
decision, the de novo review of the fraud allegation, common to
both the Rule 60(b) motion and the summary judgment motion,
rendered Judge Cobb’s failure to recuse himself harmless error.
Same Legal Standard
The legal standard applied to the plaintiffs’ claims is the
same in both state and federal court. In either jurisdiction, the
question is whether Mobil was a subscriber under the Texas Workers’
Compensation Act. The plaintiffs argue that under RICO Ballard had
the burden of proving Mobil’s fraud but in the state court
litigation Mobil would have the burden of proving that it was a
workers’ compensation subscriber. Any difference in the applicable
standard of proof is immaterial, however, as both the district
court and this court concluded that, even assuming the plaintiffs’
factual allegations were true, Mobil was a subscriber under the
Texas Workers’ Compensation Act as a matter of law. In other
words, there are no facts in dispute and the applicable burden of
proof is irrelevant.
In sum, because each of the plaintiffs has received a judgment
in federal court determining whether Mobil fraudulently asserted
that it was a subscriber under the Texas Workers’ Compensation Act,
28
Id., 492.
15
the order enjoining the plaintiffs from litigating the same issue
in state court does not violate the Anti-Injunction Act. Moreover,
because the application of the relitigation exception in this case
is based on principles of collateral estoppel, the district court
did not err by enjoining Whitehead from raising the issue against
any of the defendants, even those who were not parties to the
wrongful death suit.29
III.
The plaintiffs finally claim that the district court
erroneously granted the defendants’ motion for an injunction
without considering the equitable requirements for an injunction.
In particular, the plaintiffs contend that the defendants failed to
plead or prove that they would suffer irreparable injury if forced
to continue with the state litigation or that they lack an adequate
remedy at law. This court reviews a district court’s decision to
grant an injunction for an abuse of discretion.30
Generally, to win a permanent injunction, a petitioner must
show “a clear threat of continuing illegality portending immediate
29
Vines v. Univ. of La. at Monroe, 398 F.3d 700 (5th Cir.
2005)(Stating, in relitigation context, “complete identity of all
parties is not required, the party against whom the collateral
estoppel would be applied generally must either have been a
party, or privy to a party, in the prior litigation.”(Emphasis
added)).
30
Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara, 335 F.3d 357, 363 (5th Cir. 2003).
16
harmful consequences irreparable in any other manner.”31 This court
has held, however, that no independent demonstration of irreparable
harm or a lack of alternative remedies is necessary to win an
injunction under the relitigation exception to the Anti-Injunction
Act. Rather, demonstrating that the state litigation concerns an
issue actually decided by the federal courts is sufficient to
demonstrate both the harm of continuing the state litigation and
the lack of an adequate remedy at law.32 Accordingly, because the
district court correctly concluded that the plaintiffs are
attempting to relitigate matters in the Texas courts that have been
decided by the federal courts, it did not abuse its discretion by
granting the injunction.33
31
Posada v. Lamb County, 716 F.2d 1066, 1070 (5th Cir.
1983).
32
See, e.g., Vasquez v. Bridgestone/Firestone, Inc., 325
F.3d 665, 667 (5th Cir. 2003)(district court’s finding that
plaintiff was attempting to relitigate final judgment of federal
court is sufficient to support injunction); Quintero v. Klaveness
Ship Lines, 914 F.2d 717, 721 (5th Cir. 1990).
33
The plaintiffs also argue that the district court should
have accorded full faith and credit to an order of the state
court denying the defendants’ motion for abatement on the grounds
of collateral estoppel and res judicata. Such an order is not
entitled to full faith and credit. See 28 U.S.C. § 1738
(2004)(Federal courts must give state judicial proceedings "the
same full faith and credit in every court within the United
States and its Territories and Possessions as they have by law or
usage in the courts of such State, Territory or Possession from
which they are taken"; Frost Nat'l Bank v. Burge, 29 S.W.3d 580,
595 (Tex. App. 2000)(interlocutory judgments are not given
preclusive effect under Texas law); Serrano v. Union Planter's
Bank, N.A., 155 S.W.3d 381, 381 (Tex. App. 2004)(denial of motion
17
AFFIRMED.
to abate is interlocutory in nature and not appealable).
18
Ballenger v. Mobil Oil Corp.
Court: Court of Appeals for the Fifth Circuit
Date filed: 2005-06-14
Citations: 138 F. App'x 615
Copy CitationsCombined Opinion