IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 93-5365
_____________________
UNDRAY D. FORD, Etc., ET AL.,
Plaintiffs-Appellants,
versus
ERNIE ELSBURY, ET AL.,
Defendants-Appellees.
_______________________________________________________
Appeal from the United States District Court for
the Western District of Louisiana
_______________________________________________________
(September 9, 1994)
Before REAVLEY, JONES and BENAVIDES, Circuit Judges.
REAVLEY, Circuit Judge:
In this appeal we decide whether the district court had
diversity jurisdiction because of the fraudulent joinder of a
defendant of non-diverse citizenship. We conclude that the
district court lacked jurisdiction and should remand the case to
state court.
BACKGROUND
On July 28, 1992, an explosion occurred at a fertilizer
plant in Westlake, Louisiana owned by appellee Arcadian
Corporation ("Arcadian"). The explosion was caused by the
rupture of the plant's urea reactor. Appellant Undray Ford and
numerous other named plaintiffs (the "Ford plaintiffs") filed a
class action suit in Louisiana state court shortly thereafter.
The named defendants were Arcadian, the plant's manager Ernie
Elsbury, and the plant's employee relations manager Paul Moore.
The defendants removed the case to federal court. Although
complete diversity was ostensibly lacking because the plaintiffs
and the individual defendants were Louisiana citizens, the
defendants claimed that Moore and Elsbury had been fraudulently
joined. Plaintiffs filed a motion to remand. After limited
discovery, the district court denied the motion to remand and sua
sponte granted summary judgment in favor of Moore and Elsbury.
The Ford plaintiffs complain on appeal that the district court
erred in dismissing the claims against Elsbury and denying the
motion to remand.
DISCUSSION
A. The Notice of Appeal
Appellees Arcadian and Elsbury argue that the notice of
appeal is defective because it did not sufficiently specify the
parties seeking appellate review. The style of the notice
identified the plaintiffs as "Undray D. Ford, et al.," and the
body of the notice identified the appealing parties as the
"`Ford' plaintiffs." Similar notices of appeal have been held
defective.1 However, as appellees recognize, effective December
1
E.g. Torres v Oakland Scavenger Co., 108 S. Ct. 2405,
2409 (1988); Samaad V. City of Dallas, 922 F.2d 216, 219 (5th
Cir. 1991).
2
1, 1993, FED. R. APP. P. 3(c) was amended.2 The intent of the
1993 Rule 3 amendments, as explained in the 1993 advisory
committee notes, is to liberalize the pleading requirements for a
notice of appeal. The notice of appeal in this case, an
uncertified class action, is sufficient as to all the Ford
plaintiffs under the amended Rule.
Arcadian argues that the notice of appeal was filed before
the effective date of the amendments, but the Supreme Court order
adopting the amendment states that it "shall govern all
proceedings in appellate cases thereafter commenced and, insofar
as just and practicable, all proceedings in appellate cases then
pending." 61 U.S.L.W. 4395 (U.S. Apr. 22, 1993). Appellees have
not shown that applying the amended Rule would operate as an
unfair surprise to them or otherwise be unjust. Throughout the
district court proceedings the plaintiffs consistently referred
to themselves as the "Ford" plaintiffs. We therefore hold that
2
The amended Rule 3(c) now provides:
A notice of appeal must specify the party or parties
taking the appeal by naming each appellant in either
the caption or the body of the notice of appeal. An
attorney representing more than one party may fulfill
this requirement by describing those parties with such
terms as "all plaintiffs," "the defendants," "the
plaintiffs A, B, et al.," or "all defendants except X"
. . . . In a class action, whether or not the class has
been certified, it is sufficient for the notice to name
one person qualified to bring the appeal as
representative of the class . . . . An appeal will not
be dismissed for informality of form or title of the
notice of appeal, or for failure to name a party whose
intent to appeal is otherwise clear from the notice.
3
the amended Rule should govern our case,3 and that the notice of
appeal was sufficient as to all the Ford plaintiffs.
B. The Rule 54(b) Certification
This appeal is interlocutory because the district court did
not dismiss Arcadian and retained jurisdiction over the claims
against that defendant. An appeal will lie from a partial
summary judgment under FED. R. CIV. P. 54(b) "only upon an express
determination that there is no just reason for delay and upon an
express direction for the entry of judgment." Appellees contend
that the partial summary judgment in favor of Elsbury and the
denial of the motion to remand are not appealable because they
were not properly certified for appeal under Rule 54(b).
The record confirms the following order of events. A
magistrate issued a report and recommendation on the then-pending
motions to remand and for leave to amend the complaint. He
recommended that the motions be denied. He further recommended
that summary judgment be granted sua sponte in favor of Elsbury
and Moore, since he concluded that a finding of fraudulent
joinder of these defendants necessarily meant that no valid claim
existed against them.4 The district court adopted the
3
We concluded that 1993 amendments to the Federal Rules
of Appellate Procedure should be applied retroactively in Garcia
v. Walsh, 20 F.3d 608, 609-10 (5th Cir. 1994)(concerning Rule 3
amendments), and Burt v. Ware, 14 F.3d 256, 257-60 (5th Cir.
1994) (concerning Rule 4 amendments).
4
Compare Carriere v. Sears, Roebuck and Co., 893 F.2d
98, 102 (5th Cir.) ("Because we have already concluded that
Sizeler was fraudulently joined, we need not consider appellant's
argument on this point further. Summary judgment will always be
appropriate in favor of a defendant against whom there is no
4
magistrate's recommendations, and entered a "Judgment" that,
inter alia, denied the motion to remand and granted summary
judgment in favor of Elsbury and Moore. Plaintiffs then filed a
motion to certify the denial of the motion to remand for
interlocutory appeal pursuant to 28 U.S.C. § 1292. After this
motion was filed, the district court on July 13, 1993 entered two
further orders -- an "Amended Judgment" and an order denying the
motion for § 1292 certification. The only change in the amended
judgment was the addition of a statement that "such judgment is
final and appealable" after the clause granting the partial
summary judgment. The order denying the motion for § 1292
certification contains the following handwritten note: "Denied
as moot. Under the amended judgment signed 7/13/93, plaintiffs
can appeal pursuant to Rule 54(b) of Fed. Rules of Civil
Procedure."
Our decision is governed by Kelly v. Lee's Old Fashioned
Hamburgers, Inc., 908 F.2d 1218 (5th Cir. 1990) (en banc):
If the language in the order appealed from, either
independently or together with related portions of the
record referred to in the order, reflects the district
court's unmistakable intent to enter a partial final
judgment under Rule 54(b), nothing else is required to
make the order appealable . . . . Counsel should know
that the district court has entered a partial final
judgment when the order alone or the order together
with the motion or some other portion of the record
referred to in the order contains clear language
reflecting the court's intent to enter the judgment
under Rule 54(b).
Id. at 1220-21.
possibility of recovery."), cert. denied, 111 S. Ct 60 (1990).
5
The record unmistakably reflects the intent of the district
court to enter Rule 54(b) final orders granting the partial
summary judgment and denying the motion to remand. Among other
things, the amended judgment states that the summary judgment "is
final and appealable." The district court's denial of the
request for § 1292 certification of the order denying the motion
to remand plainly states that the request is moot because
"plaintiffs can appeal pursuant to Rule 54(b)." Further, the
denial of the motion to remand and the granting of the partial
summary judgment were inextricably linked. Both grew out of the
same round of motions and briefing, both relied on the same
evidentiary showing, both are found in the same judgment and
amended judgment, and both turned on the district court's
conclusion that no claim existed against the non-diverse
defendants. In such circumstances we have held that we can
review on appeal the denial of the motion to remand along with
the grant of the final partial judgment.5
5
In Aaron v. National Union Fire Ins. Co. of Pittsburgh,
Pa., 876 F.2d 1157 (5th Cir. 1989), cert. denied, 110 S. Ct. 1121
(1990), we recognized that the denial of a motion to remand
ordinarily is not reviewable on appeal, but that such could be
reviewed when coupled with a FED. R. CIV. P. 12(b)(6) dismissal of
defendants that was certified as final under Rule 54(b). We
stated that "a final appealable order was entered along with the
denial of the motion to remand, and we can review the latter
without a need to resort to the extraordinary remedy of
mandamus." Id. at 1160. Similarly, in B, Inc. v. Miller Brewing
Co., 663 F.2d 545 (5th Cir. 1981), the district court, as in our
case, denied a motion to remand, entered final judgments against
the non-diverse defendants, and certified the judgments for
appeal under Rule 54(b). Id. at 547-48. We held that the
refusal to remand was appealable in such circumstances, vacated
one of the judgments, and remanded the case to the district court
with instructions to remand the case to state court. Id. at 548,
6
C. Fraudulent Joinder
The district court concluded that the two non-diverse
defendants, Moore and Elsbury, had been fraudulently joined as
defendants in order to defeat diversity jurisdiction. The Ford
plaintiffs raise no argument on appeal as to Moore. They
contend, however, that the district court erred in finding that
Elsbury had been joined fraudulently.
1. Required Proof
"The burden of persuasion placed upon those who cry
`fraudulent joinder' is indeed a heavy one." B., Inc. v. Miller
Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). The standards
for evaluating such a claim were summarized in Dodson v. Spiliada
Maritime Corp., 951 F.2d 40 (5th Cir. 1992):
Where charges of fraudulent joinder are used to
establish [federal] jurisdiction, the removing party
has the burden of proving the claimed fraud. . . . To
prove their allegation of fraudulent joinder [removing
parties] must demonstrate that there is no possibility
that [plaintiff] would be able to establish a cause of
action against them in state court. In evaluating
fraudulent joinder claims, we must initially resolve
all disputed questions of fact and all ambiguities in
the controlling state law in favor of the non-removing
party. We are then to determine whether that party has
any possibility of recovery against the party whose
joinder is questioned.
Id. at 42 (citations omitted). While we have cautioned against
"pretrying a case to determine removal jurisdiction," fraudulent
joinder claims can be resolved by "piercing the pleadings" and
considering summary judgment-type evidence such as affidavits and
deposition testimony. Carriere v. Sears, Roebuck and Co., 893
555.
7
F.2d 98, 100 (5th Cir.), cert. denied, 111 S. Ct. 60 (1990).
Such a procedure was followed here.
Elsbury was the plant manager when the explosion occurred.
The circumstances under which a corporate officer or employee can
be held individually liable for injuries to third persons under
Louisiana law were explained in Canter v. Koehring Co., 283 So.2d
716 (La. 1973). The court recognized that such individuals, like
all persons, have a general duty to exercise due care so as to
avoid injuries to third persons. Id. at 722 & n. 7. The court
also recognized that liability may be imposed on such individuals
where the duty breached arises solely because of the employment
relationship. In this latter situation the court adopted the
following criteria for imposing liability:
1. The principal or employer owes a duty of care to
the third person . . . breach of which has caused the
damage for which recovery is sought.
2. This duty is delegated by the principal or employer
to the defendant.
3. The defendant officer, agent, or employee has
breached this duty through personal (as contrasted with
technical or vicarious) fault. The breach occurs when
the defendant has failed to discharge the obligation
with the degree of care required by ordinary prudence
under the same or similar circumstances -- whether such
failure be due to malfeasance, misfeasance, or
nonfeasance, including when the failure results from
not acting upon actual knowledge of the risk to others
as well as from a lack of ordinary care in discovering
and avoiding such risk of harm which has resulted from
the breach of the duty.
4. With regard to the personal (as contrasted with the
technical or vicarious) fault, personal liability
cannot be imposed upon the officer, agent, or employee
simply because of his general administrative
responsibility for performance of some function of the
employment. He must have a personal duty towards the
8
injured plaintiff, breach of which specifically has
caused the plaintiff's damages. If the defendant's
general responsibility has been delegated with due care
to some responsible subordinate or subordinates, he is
not himself personally at fault and liable for the
negligent performance of this responsibility unless he
personally knows or personally should know of its non-
performance or mal-performance and has nevertheless
failed to cure the risk of harm.
Id. at 721.
In claiming fraudulent joinder, Arcadian and Elsbury did not
attempt to establish that no negligence whatsoever was involved
in the plant explosion. Nor can Arcadian dispute that it had a
duty to protect the general public from injuries resulting from
the negligent operation of its plant. The district court ruled,
and Arcadian does not dispute, that Arcadian would be liable as
respondeat superior for the negligence of its employees. Looking
to the state law criteria described in Canter, the liability of
Elsbury based on his employment as plant manager turns on such
factual issues as (1) whether Elsbury or others delegated with
due care the responsibility of safe maintenance and operation of
the urea reactor,6 and (2) whether Elsbury was aware or should
have been aware of a risk of harm and nevertheless failed to
respond to the risk in the manner in which a reasonably prudent
plant manager would respond in the same or similar circumstances.
A supervisor's knowledge of the dangers present "could give rise
to the personal duty contemplated in Canter." Hayden v. Phillips
6
See Nine v. Harper, 371 So.2d 320, 322-23 (La.Ct.App.),
writ denied, 373 So.2d 526 (La. 1979) (recognizing a cause of
action for delegation without due care and considering such
factors as the qualification, training, and experience of the
delegee)."
9
Petroleum Co., 788 F. Supp. 285, 287 (E.D. La. 1992). If the
elements for imposing individual liability on the corporate
employee are met, it does not matter that the corporation might
also be liable. H.B. "Buster" Hughes, Inc. v. Bernard, 318 So.2d
9, 12 (La. 1975).
2. Record to Be Reviewed
In reviewing the district court's ruling, we must first
determine what evidence it should have considered. The evidence
offered by the Ford plaintiffs in support of their motion to
remand included expert affidavits and certain OSHA documents
relating to the explosion, as well as excerpts from Elsbury's
deposition. Appellees relied on Elsbury's affidavits and
deposition testimony. This evidence was on file at the time the
magistrate entered his report and recommendation, as well as when
the district court entered its initial judgment and amended final
judgment. After the entry of the amended judgment, the Ford
Plaintiffs filed a document captioned "Motion to Reurge
Plaintiffs' Prior Motion for Leave to File Second Amending and
Supplemental Complaint and Motion to Remand Because of Newly
Discovered Evidence" ("motion to reurge"). Submitted with the
motion to reurge were five additional affidavits from Arcadian
employees. The district court denied the motion.
The motion to reurge is best characterized as a motion to
alter or amend judgment under FED. R. CIV. P. 59(e). We have held
that a "motion for reconsideration" should be so treated, and see
no reason to treat a "motion to reurge" differently. "A motion
10
for reconsideration filed within ten days of judgment is treated
as a motion to alter or amend under Rule 59(e). . . . Rule 59(e)
has been interpreted as covering motions to vacate judgments, not
just motions to modify or amend." Edward H. Bohlin Co. v.
Banning Co., 6 F.3d 350, 353, 355 (5th Cir. 1993).7 Here the
motion to reurge was filed within 10 days of the amended
judgment.8
The motion to reurge asserted that the employee affidavits
were newly discovered evidence. It did not attempt to show that
with greater diligence the affidavits could have been obtained
earlier. However, a Rule 59(e) motion need not make such a
showing:
Unlike Rule 60(b), Rule 59(e) does not set forth any
specific grounds for relief. Nor can we discern any
basis for engrafting the strict limitations of the
7
See also Lavespere v. Niagara Mach. & Tool Works, Inc.,
910 F.2d 167, 173 (5th Cir. 1990), cert. denied, 114 S. Ct. 171
(1993):
The Federal Rules do not recognize a "motion for
reconsideration" in haec verba. We have consistently
stated, however, that a motion so denominated, provided
that it challenges the prior judgment on the merits,
will be treated as either a motion "to alter or amend"
under rule 59(e) or a motion for "relief from judgment"
under Rule 60(b). Under which Rule the motion falls
turns on the time at which the motion is served. If
the motion is served within ten days of the rendition
of judgment, the motion falls under Rule 59(e); if it
is served after that time, it falls under Rule 60(b).
8
Rule 59(e) motions must be served within 10 days after
entry of the judgment. In our case the amended judgment was
entered on July 15, 1993, and the motion to reurge was served on
July 26. The service was "within 10 days" under Rule 59(e)
because under FED. R. CIV. P. 6(a) weekends are not counted when
the period of time prescribed by the Federal Rules is less than
11 days.
11
former onto the latter. We conclude, therefore, that
in order to reopen a case under Rule 59(e) on the basis
of evidentiary materials that were not timely
submitted, the mover need not first show that her
default was the result of mistake, inadvertence,
surprise, or excusable neglect or that the evidence is
such as to show that the judgment was manifestly wrong.
Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167, 174
(5th Cir. 1990), cert. denied, 114 S. Ct. 171 (1993).
The district court denied the motion to reurge and hence
refused to consider the additional affidavits.9 Of course, a
district court must be allowed to "enforce some limits on the
timely submission of appropriate evidence." Bernhardt v.
Richardson-Merrell, Inc., 892 F.2d 440, 444 (5th Cir. 1990). In
deciding whether to consider late-filed evidence, the district
court must strike a proper balance between two competing
interests: "the need to bring litigation to an end and the need
to render just decisions on the basis of all the facts."
Lavespere, 910 F.2d at 174.
We conclude that the district court abused its discretion in
refusing to consider the additional evidence proffered with
plaintiffs' motion to reurge. Lavespere instructs that in
striking the proper balance in these circumstances, the court
should consider, among other things, (1) the reasons for the
plaintiffs' default, (2) the importance of the evidence to the
plaintiffs' case, (3) whether the evidence was available to
plaintiffs before they responded to the summary judgment motion,
9
The court held in the alternative that even if it
considered the additional evidence it would not change its ruling
on the motion to remand.
12
and (4) the likelihood that the defendants will suffer unfair
prejudice if the case is reopened. Id.
The first and third factors may weigh against plaintiffs,
but we note that the motion to reurge was filed within the time
for filing a motion to alter or amend judgment, and therefore
plaintiffs were not required to make any particular showing of
inadvertence or excusable neglect. Further, the circumstances
here, as best we can glean from the record, cause us to question
the extent to which plaintiffs were on notice that they were
required to make an evidentiary showing in connection with the
motion to remand. Only after plaintiffs filed their initial
motion to remand, defendants filed their response, and both sides
filed supplemental pleadings, did the magistrate recommend that
the court sua sponte grant summary judgment in favor of the non-
diverse defendants. The filing of a motion for summary judgment
would have put plaintiffs on notice that they could not rely at
all on their pleadings and were required to submit competent
summary judgment evidence. Here, where no summary judgment
motion was ever filed, the extent to which plaintiffs could rely
on their pleadings was less clear. The court did instruct the
parties to submit summary judgment-type evidence, but the
decisions of our court are not crystal clear on this question.
For example, although in some cases we state that parties may
submit summary judgment-type evidence,10 we have also indicated
10
E.g. B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549
(5th Cir. 1981); Carriere v. Sears, Roebuck and Co., 893 F.2d 98,
100 (5th Cir.), cert. denied, 111 S. Ct. 60 (1990)
13
that the district court ordinarily should assume that all facts
alleged in a plaintiff's state court petition are true.11 We
further note that in this case discovery was at an early stage
and was beset by the usual share of discovery delays and
squabbles.
The second factor weighs heavily in plaintiffs' favor, since
the evidence offered with the motion to reurge, described further
below, was highly relevant to the fraudulent joinder question.
If considered it squarely contradicts the statements of Elsbury
offered by defendants and establishes that plaintiffs have at
least a "possibility" of establishing a state court cause of
action against Elsbury.
The fourth factor -- the likelihood that defendants will
suffer unfair prejudice if the case is reopened -- weighs in
favor of plaintiffs because defendants could not have countered
the evidence even if it had been timely presented. In other
words, if plaintiffs had submitted the affidavits on time, a
cause of action would have been at least "possible" regardless of
defendants' evidence.
11
In Green v. Amerada Hess Corp., 707 F.2d 201 (5th Cir.
1983), cert. denied, 104 S. Ct. 701 (1984), we held that a
district court erred in conducting a full evidentiary hearing on
a motion to remand. We stated that "the court must ordinarily
evaluate all of the factual allegations in the plaintiff's state
court pleadings in the light most favorable to the plaintiff,
resolving all contested issues of substantive fact in favor of
the plaintiff. . . . [T]he court must normally assume all the
facts as set forth by the plaintiff to be true . . . ." Id. at
205.
14
Considering all these circumstances we believe that the
district court should have allowed the proffer of additional
evidence.
3. Record Requires Remand
Based on our review of the evidence presented in the motion
to reurge and elsewhere, we conclude that appellees did not carry
their burden of establishing that there is no possibility that
the Ford plaintiffs could establish a cause of action against
Elsbury. Appellees submitted affidavits of Elsbury stating that
the responsibility for the safety, maintenance and operations of
the plant was delegated to properly trained and qualified
supervisors. He further states that he had no personal knowledge
that the reactor posed a potential hazard or risk. The
affidavits are conclusory, and do not explain whether Elsbury or
some other company official delegated safety and maintenance
matters to other supervisors. Nor do they provide any details on
what efforts were made to assure that due care was used in the
delegation of responsibility to these unnamed supervisors.
Elsbury later explained in his deposition that the plant had an
ammonia superintendent and a urea superintendent, and that the
urea superintendent was responsible for the safe operation of the
reactor. Elsbury admitted that he had authority to shut the
plant down for safety reasons, but denied any knowledge of safety
risks prior to the explosion. He admitted that he would expect
the urea superintendent to report any threat to the safety of
15
employees and others, and that he met daily with the
superintendents.
Appellants submitted expert affidavits by an accident
reconstruction engineer, opining that the explosion was caused by
leakage of process materials, and that with proper safeguards the
leakage should have been apparent. He further opined that the
leakage was obvious and that "it was highly likely and more
probable than not known to the operators of the plant prior to
the explosion." Elsbury denied any knowledge on his part, or on
the part of those responsible for the operation and maintenance
of the reactor, of a leak prior to the accident.
The five affidavits of Arcadian employees submitted with the
motion to reurge contradicted Elsbury's testimony. One employee
stated that he noticed that the reactor was leaking in June of
1992, that he notified the engineering superintendent, that
nothing was done, and that "[t]he whole thing that shut the plant
down was neglect and greed." A second employee stated that he
knew the reactor was leaking, that he complained to Elsbury about
having to work in an unsafe area, and that Elsbury told him:
"Sometimes you have to overlook safety to get the job done." A
third employee testified that when the plant was operated by a
previous owner (Olin Corporation) it had been shut down due to a
leak in the reactor, that the operations manual from the plant
designer called for such a shutdown, that after a second leak was
discovered under Arcadian management the plant continued to
operate in a normal fashion, and that the second leak was not
16
seriously considered. A fourth employee stated that Arcadian
management was aware of a leak in the reactor prior to the
explosion, and that at the time the price of urea was at an all-
time high. The fifth employee, a urea plant operator, stated
that a leak was found in May of 1992, that his supervisor ordered
the plant slowed down, and that the urea superintendent went into
Elsbury's office and then returned to direct the plant back to
full production. This employee also stated that the plant was
not shut down due to production demands, and that periodic
shutdowns for maintenance ceased to exist. All of this evidence,
viewed in a light most favorable to the Ford plaintiffs, at least
raises the possibility that they could succeed in establishing a
claim against Elsbury under Louisiana law.
CONCLUSION
We reverse the summary judgment granted in favor of Elsbury
and the order denying the motion to remand. We remand the case
to the district court with instructions to remand the case to
state court.
REVERSED AND REMANDED.
17