Diaz v. Sheppard

United States Court of Appeals,

Eleventh Circuit.

No. 94-3308.

Enrique DIAZ, Plaintiff-Appellant,

v.

William J. SHEPPARD, Defendant-Appellee.

June 25, 1996.

Appeal from the United States District Court for the Middle
District of Florida. (No. 94-756-Civ-J-20), Harvey E. Schlesinger,
Judge.

Before EDMONDSON and DUBINA, Circuit Judges, and LOGAN*, Senior
Circuit Judge.

EDMONDSON, Circuit Judge:

This appeal is about a lawyer's professional responsibility

and about federal jurisdiction. Plaintiff Enrique Diaz, a Florida

prisoner, appeals the district court's denial of his motion for

remand to state court and dismissal of his case for failure to

state a claim. Because the federal court lacked jurisdiction to

hear this case, we reverse and remand with instructions to the

district court to remand this case to state court.

Background

For the facts we look to the complaint's allegations. Diaz

was a member of the class in a class action suit filed by inmates

of the Florida Department of Corrections ("DOC") in the United

States District Court for the Middle District of Florida

challenging the DOC's physical and mental health care delivery

system. The case was known as Celestineo and Costello v.

*
Honorable James K. Logan, Senior U.S. Circuit Judge for the
Tenth Circuit, sitting by designation.
Singletary, 147 F.R.D. 258 (M.D.Fla.1993) ("Costello "). The class

was represented by Defendant William Sheppard.1
In 1984, the Costello court ordered a committee of doctors and

experts to review DOC's health care system. The committee filed an

"Interim Medical Team Report" recommending that all DOC inmates

receive at least one hour per day of large muscle exercise outside

of their cells. Three months later, the DOC decreased the amount

of yard time for those on close management ("CM") from four hours

to two hours per week.

In 1992, the Costello court issued a notice of proposed

stipulated final judgment which proposed closing the case based on

findings that the DOC had a constitutionally adequate system of

delivering physical and mental health care. The court ordered

notification of the proposed judgment to class members and

established a time for class members to file comments or

objections. Diaz wrote Sheppard a letter "begging" him not to

agree to the proposed final judgment because it did not provide for

one hour of outdoor exercise per day; nor did it prevent CM

inmates from being placed on the Yard Suspension List ("YSL").

Sheppard, however, did not contest the lack of outdoor exercise.

After reviewing the objections during a hearing, the district court

entered a final judgment closing the Costello case.

1
Diaz is on close management ("CM"), that is, long term,
single-cell confinement apart from the general population. He
receives a maximum of two hours of outdoor exercise per week. CM
inmates are often denied all outdoor exercise when placed on the
Yard Suspension List (YSL). The amount of outdoor exercise was
an issue in the Costello suit. Before the Costello suit was
initiated, CM inmates were entitled to receive four hours of
outdoor exercise per week.
 In 1994, Diaz sued Sheppard in Florida state court alleging

(1) legal malpractice, (2) negligence, and (3) breach of contract.

Diaz claims that in agreeing to the stipulated final judgment

upholding just two hours per week of CM out-of-cell exercise,

Sheppard, in effect, negligently settled too cheaply. Diaz says

Sheppard ignored (1) a "large body of case law" that requires

prison administrators to provide all CM inmates with at least one

hour of out-of-cell exercise per day: a mistake about the legal

strength of the prisoners' claim and (2) the opinions in the

Costello case of the district court's "own appointed medical

experts:" a mistake about the evidentiary strength of the

prisoners' claim.

Sheppard's motion to remove Diaz's case to federal court

pursuant to 28 U.S.C. § 1441, on the ground that the district court

had original jurisdiction under 42 U.S.C. § 1983 and 28 U.S.C. §

1331, was granted. Sheppard then moved to dismiss Diaz's complaint

under Rule 12(b)(6) for failure to state a claim. Diaz moved to

remand the case to state court. The district court, stating that

Diaz would have to establish the relief he seeks is required by the

United States Constitution, denied the motion to remand. The

district court then granted Sheppard's motion to dismiss on the

ground that class counsel owes no duty to individual class members.

Discussion

Sheppard claims that jurisdiction is proper in the district

court because Diaz is attempting to relitigate matters determined

in Costello. Sheppard claims that Diaz had the opportunity to

object to the proposed final judgment in Costello and that the
malpractice action is just an untimely objection to the settlement

in Costello.2 In addition, Sheppard says this case arises under

federal law because resolution of Diaz's claims necessarily turns

on the construction of federal law, that is, the Eighth Amendment

to the United States Constitution. See Franchise Tax Board v.

Construction Laborers Vacation Trust, 463 U.S. 1, 8-10, 103 S.Ct.

2841, 2846, 77 L.Ed.2d 420 (1983).

Diaz says he is seeking not outdoor exercise or declaration

of some constitutional right, but only money damages for Sheppard's

malpractice. Diaz contends that even if a court must, in deciding

a case, interpret federal law, that fact does not necessarily mean

the claim is sufficient to confer federal jurisdiction. See

generally Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S.

804, 813-14 & n. 11, 106 S.Ct. 3229, 3234-35 & n. 11, 92 L.Ed.2d

650 (1986). Then Diaz stresses that, to the extent federal law is

mentioned in his complaint, it is only to point out a way that

Sheppard neglected his legal duty of care (an essential element of

Diaz's state law malpractice claim): to establish that the federal

law at issue in Costello—exercise requirements under the Eighth

Amendment—was settled, was favorable to prisoners like Diaz, and

should have been known by Sheppard.

2
Res judicata, collateral estoppel and estoppel defenses are
affirmative defenses in both Florida and federal courts. See
Palmer v. McCallion, 645 So.2d 131, 133 (Fla.Dist.Ct.App.1994);
Troxler v. Owens-Illinois, Inc., 717 F.2d 530, 533 n. 2 (11th
Cir.1983). These potential defenses have no impact on the
question of whether the action set out in the complaint arises
from federal law for jurisdictional purposes. See Caterpillar
Inc. v. Williams, 482 U.S. 386, 393-94, 107 S.Ct. 2425, 2430, 96
L.Ed.2d 318 (1987) (case may not be removed on the basis of a
federal defense).
 Diaz basically argues that no interpretation of federal law is

necessary to adjudicate his state law claims: the fundamental

legal standards are substantially undisputed. He says that, in the

light of well-settled federal case law, Sheppard ignored the

Costello court's appointed experts who recommended one hour of

exercise per day. Briefly stated, Diaz charges that Sheppard

unreasonably underestimated the strength of the prisoners' case

and, as a result, stipulated to a judgment that was too

unfavorable.

On a motion to remand, the removing party bears the burden of

establishing jurisdiction. See Tapscott v. MS Dealer Serv. Corp.,

77 F.3d 1353, 1356 (11th Cir.1996). The removal statute should be

construed narrowly with doubt construed against removal. See

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 107-09, 61 S.Ct.

868, 872, 85 L.Ed. 1214 (1941). We look at the complaint. As a

general rule, a case arises under federal law only if it is federal

law that creates the cause of action. See Franchise Tax Board, 463

U.S. at 8-10, 103 S.Ct. at 2846. The case, however, may arise

under federal law "if a well-pleaded complaint established that

[the] right to relief under state law requires resolution of a

substantial question of federal law in dispute between the

parties." Id. at 13, 103 S.Ct. at 2848. But, the "mere presence

of a federal issue in a state cause of action does not

automatically confer federal-question jurisdiction." Merrell Dow,

478 U.S. at 813, 106 S.Ct. at 3234. See also Moore v. Chesapeake

& Ohio Ry. Co., 291 U.S. 205, 212-15, 54 S.Ct. 402, 405-06, 78

L.Ed. 755 (1934) (that part of state statutory scheme requires some
analysis of federal law is insufficient to invoke federal

jurisdiction).3
The district court erred in denying Diaz's motion to remand.

The nature of Diaz's complaint is that Sheppard is guilty of

malpractice, negligence and breach of contract under Florida law.

(We do not hint that Diaz's claim has merit or even that he has

stated a claim upon which relief can be granted under Florida law).

No substantial question of federal law must be answered to

determine plaintiff's claims, and federal jurisdiction is lacking.

See Ray v. Tennessee Valley Authority, 677 F.2d 818, 825-26 (11th

Cir.1982) (holding, pre-Franchise Tax Board, that district court

had no federal jurisdiction to hear malpractice case arising from

defendant attorney's representation, per appointment by court, of

plaintiff in 42 U.S.C. § 1983 action).

Whether Sheppard in Costello misread or disregarded federal

law in such an unreasonable way so as to constitute legal

malpractice in Florida is ultimately a question of state law. In

the complaint, the Eighth Amendment is mentioned only to support an

3
The Costello litigation was a class action suit certified
under Federal Rule of Civil Procedure 23. We note that the
Federal Rules of Civil Procedure do not create an independent
basis for federal subject matter jurisdiction. See Fed.R.Civ.P.
82. See also Creswell v. Sullivan & Cromwell, 922 F.2d 60, 70
(2nd Cir.1990) (Federal Rules do not create independent basis for
federal question jurisdiction); Pineville Real Estate Operation
Corp. v. Michael, 32 F.3d 88, 90 (4th Cir.1994) (same). Diaz
does not allege that his lawyer's error was one of failing to
comply with the mechanisms set out in Rule 23 or some other rule
of federal procedure. Cf. Zimmer Paper Products, Inc. v. Berger
and Montague, P.C., 758 F.2d 86 (3d Cir.1985) (considering,
without discussing basis for federal subject matter jurisdiction,
whether class counsel breached duty, not by misunderstanding
substantive issues about the merits, but by failing to follow
procedures of Rule 23 in class action).
element of Diaz's state law claim. Cf. Hill v. Marston, 13 F.3d

1548, 1550 (11th Cir.1994) (complaint alleging violations by

defendant lawyer of state securities registration statutes did not

arise under federal law for purposes of federal question

jurisdiction, even though elements of state law claim included

alleged knowledge of, and failure to comply with, federal

securities laws); Berg v. Leason, 32 F.3d 422, 426 (9th Cir.1994)

(malicious prosecution action does not arise under federal law

because one element requires proof that underlying federal action

was legally untenable).

If the pertinent Eighth Amendment law was debatable, to decide

whether Sheppard's understanding of the applicable law in Costello

was within the range of the reasonable will require no precise

determination of what the pertinent federal law was in reality; so

no substantial question of federal law needs to be decided. If the

pertinent Eighth Amendment law truly was clearly settled before the

stipulated judgment was entered in Costello, no substantial

question of federal law is presented: the question has already

been answered. We have no doubt that a state court can, if need

be, resolve matters of federal constitutional law to the point

necessary to determine whether Sheppard's understanding of the law

was unreasonable.

More important, because Diaz contends that Sheppard wrongfully

ignored the opinion evidence of the court-appointed experts, the

professional responsibility claims in the complaint do not hinge on

the substance of the Eighth Amendment (whatever it may be exactly

and about which there may be no controversy). Instead, they hinge
on his lawyer's alleged negligence in evaluating the prisoners'

case and in basically agreeing to an inadequate settlement given

all the circumstances in the Costello case—including the expert

opinions supporting the need for more exercise and the status, in

fact, of the law (uncertain or debatable or settled) at the time.4
See Hudson Ins. Co. v. American Elec. Corp., 957 F.2d 826, 829

(11th Cir.1992) (no federal jurisdiction in declaratory judgment

action to determine insurer's liability because right to relief did

not depend on resolution of CERCLA).

The district court lacked subject-matter jurisdiction over

Diaz's complaint.5 We vacate and remand to the district court with

4
For a case describing a court's decree as more analogous to
a settlement, see Pettway v. American Cast Iron Pipe Co., 576
F.2d 1157, 1168-75 (5th Cir.1978). By the way, whether the
stipulated final judgment in Costello is in the nature of a
consent settlement or the Costello court's own judgment is not,
itself, a substantial federal question that might give the
district court jurisdiction. (No one has made this argument
anyway.) The core allegation advanced in the pro se complaint is
that Sheppard agreed to (or perhaps acquiesced in) the judgment
because he negligently failed to evaluate properly and to pursue
the prisoners' exercise claim. In either event, the cause of
action arises from state law.
5
We have read the dissent and personally would not be sorry
if the law compelled the result Judge Logan advocates for this
case. But, we think the cases he cites—none of which we contend
reached the wrong result—are too different from this case to be
of much help. Most important, none involve the removal from
state court of a case in which a complaint for legal malpractice
has been plead invoking state law. See Laskey v. UAW, 638 F.2d
954 (6th Cir.1981) (direct appeal by class of summary judgment
granted to defendants in federal class action); McNeil v.
Guthrie, 945 F.2d 1163 (10th Cir.1991) (mandamus action to
require clerk of federal court to file pro se papers to enforce
consent decree in federal class action); Guthrie v. Evans, 815
F.2d 626 (11th Cir.1987) (attempted pro se direct appeal by
unnamed class member of settled federal class action); Adams
Extract Co. v. Pleasure Hours, Inc. (In re Corrugated Container
Antitrust Litigation), 643 F.2d 195 (5th Cir.1981) (direct appeal
by objectors to settlements in federal class action). And we are
unprepared to declare as a matter of law that counsel in a class
instructions to remand the case to state court.

VACATED and REMANDED.

LOGAN, Senior Circuit Judge, dissenting:

If I could view this as simply a case of a client suing his

lawyer, a resident of the same state, for malpractice I would

concur in the majority opinion. But the malpractice action here is

by a member of a class certified under Federal Rule of Civil

Procedure 23 in a federal court suit alleging unconstitutional

prison conditions; the alleged malpractice is that class counsel

did not secure more out-of-cell exercise time in negotiating a

settlement approved by the district court.

Only one court has held that a Rule 23 class member can bring

a malpractice action against class counsel. Zimmer Paper Products,

Inc. v. Berger and Montague, P.C., 758 F.2d 86 (3d Cir.), cert.

denied, 474 U.S. 902, 106 S.Ct. 228, 88 L.Ed.2d 227 (1985). That

case involved an alleged negligent failure to give notice to a

class member; the court denied relief after finding that counsel

had complied with court orders. In dicta the D.C. Circuit has

indicated that it might recognize such a claim, citing Zimmer Paper

Products. Peters v. National R.R. Passenger Corp., 966 F.2d 1483,

1487 n. 3 (Fed.Cir.1992). No case, however, has ever held class

counsel liable for malpractice. See Susan B. Koniak, Through the

Looking Glass of Ethics and the Wrong with Rights We Find There, 9

Geo.J.Legal Ethics 1, 14 (1995) (hereinafter Koniak).

action suit has no professional obligations except those set out
by Rule 23. None of the cases cited to us has gone that far.

We do also stress that we do not today hold Mr.
Sheppard liable for malpractice.
 In contrast, Laskey v. UAW, 638 F.2d 954 (6th Cir.1981),

rejected a legal malpractice claim against the UAW, which

represented plaintiffs in a federal class action, in the following

words:

Since appellants had the opportunity to object to the legal
representation at the prior settlement hearing and since a
finding that the class was adequately represented is necessary
for finding the settlement was fair and reasonable, which in
turn was essential to approving the settlement, appellants are
collaterally estopped from now asserting that the legal
representation was not adequate and that the UAW committed
legal malpractice.

Id. at 957 (citation omitted). In McNeil v. Guthrie, 945 F.2d 1163

(10th Cir.1991), the court held that a plaintiff prisoner

dissatisfied with actions of class counsel has two options: to

"seek to intervene in the class action" or to "file a collateral

suit alleging that class counsel is not adequately representing the

class." Id. at 1167. These were regarded as the only available

remedies because of the potential for abuse of class counsel.

"Class counsel is entitled to be free from harassment by class

members." Id.

Although no Eleventh Circuit cases have involved a suit

against class counsel, Eleventh Circuit precedent is consistent

with McNeil. In fact, McNeil cited Guthrie v. Evans, 815 F.2d 626

(11th Cir.1987), in which a dissatisfied class member sought to

appeal a district court's judgment in a prison conditions class

action. The court ruled that the class member lacked standing,

stating that "[t]he procedures for class actions are carefully set

forth in Fed.R.Civ.P. 23." Id. at 628. It held the class member

(who could not opt out of the class) had only two available avenues

of relief: a motion to intervene or a collateral proceeding to
challenge the adequacy of the representation. Nonrecognition of a

malpractice action against class counsel would also seem compelled

by the following oft-cited comments of the Fifth Circuit, binding

in the Eleventh Circuit, in Adams Extract Co. v. Pleasure Hours,

Inc. (In re Corrugated Container Antitrust Litigation), 643 F.2d

195, 212 (5th Cir.1981):

It is, ultimately, in the settlement terms that the class
representatives' judgment and the adequacy of their
representation is either vindicated or found wanting. If the
terms themselves are fair, reasonable and adequate, the
district court may fairly assume that they were negotiated by
competent and adequate counsel; in such cases, whether
another team of negotiators might have accomplished a better
settlement is a matter equally comprised of conjecture and
irrelevance.

Despite the general rule that federal rules of procedure do

not create causes of action, clearly whether a class member may sue

class counsel for malpractice arising out of a federal

court-approved settlement is a federal question. The one court

that has explicitly recognized the possibility of a malpractice

suit against class counsel indicates that "the bounds of a class

counsel's fiduciary duty with respect to notice are determined in

large part by due process and Rule 23 requirements." Zimmer Paper

Products, 758 F.2d at 91. One commentator who favors such an

action states that "the class action court's responsibility under

Federal Rule of Civil Procedure 23 to assess the adequacy of class

counsel makes it unlikely that the court will use malpractice

actions as a means of enforcing class counsels' obligations."

Koniak at 15. In arguing for recognition that author indicates a

malpractice action must be based upon an interpretation of the

requirements of Rule 23. Id. Thus, if the courts are to recognize
the existence of a malpractice action on behalf of class members

against class counsel, it must be grounded on federal law. The

federal courts administering Rule 23 class actions could not

tolerate different views on recognition of such an action from

different state courts.

Thus, I would hold that the complaint in the instant case is

a claim derived from federal law and that the case was properly

removed to federal court. I would affirm the district court's

dismissal of the action for the reason that we would not recognize

a malpractice claim against class counsel.

For these reasons I respectfully dissent.