author: SOBELOFF, Senior Circuit Judge:

text:
    KENROSE MFG. CO., INC., a New York Corporation, et al., Appellants. v. FRED WHITAKER COMPANY, INC., v. KILODYNE, INC., Appellees.
    No. 72-1007.
    United States Court of Appeals, Fourth Circuit.
    Argued May 31, 1972.
    Decided Aug. 7, 1972.

      Ralph Masinter, Roanoke, Va. (Masinter & Masinter, Roanoke, Va., on brief), for appellants.
    William B. Poff, Roanoke, Va. (Woods, Rogers, Muse, Walker & Thornton and B. K. Cruey, and Bates, Cruey & Lee, Roanoke, Va.,- on brief), for appellee, Kilodyne, Inc.
    S. D. Roberts Moore, Roanoke, Va. (Gentry, Locke, Rakes & Moore, and Raymond R. Robrecht, Roanoke, Va., on brief), for appellee, Fred Whitaker Company, Inc.
    Before SOBELOFF, Senior Circuit Judge, and WINTER and CRAVEN, Circuit Judges.
   SOBELOFF, Senior Circuit Judge:

Our task here is to determine whether independent subject-matter jurisdiction is necessary for a plaintiff in a federal court to maintain a claim directly against a third-party defendant. Notwithstanding the acknowledged relaxation of jurisdictional requirements in federal third-party practice, we agree with the District Judge that the course of action proposed by plaintiff would exceed the limits of the court’s power. We therefore affirm the District Court’s order dismissing the amended complaint against the third-party defendant for lack of subject-matter jurisdiction.

I

The factual setting in which this issue arises is as follows. In August of 1970, Kenrose Manufacturing Company, a New York corporation regularly doing business in Virginia, joined by 60 of its employees, all Virginia residents, instituted an action for injunctive and monetary relief against Fred Whitaker Company, Inc., a Pennsylvania corporation. Plaintiffs sought an injunction to halt the discharge of certain gaseous effluents by Whitaker’s nearby synthetic fabric and dye plant and, in addition, claimed compensation for damages allegedly sustained by them through prior discharges of the gas.

After Whitaker served its answer, it moved for and was granted permission to file a third-party complaint against Kilodyne, Inc., a Virginia corporation operating its industrial plant in close proximity to Kenrose’s dressmaking plant. In its third-party complaint against Kilo-dyne, Whitaker alleged, in the language of F.R.Civ.P. 14, that, should Kenrose recover judgment against Whitaker, Kilodyne “is or may be liable for all or part of” the plaintiff’s claim against defendant Whitaker.

Seven days later, Kenrose amended the complaint to expand its original cause of action for nuisance to include a direct claim against the third-party defendant Kilodyne for injunctive and monetary relief. Kilodyne thereupon moved to dismiss the amended complaint as to it on the ground that diversity between it and the plaintiff Kenrose was absent. The court took the motion under advisement. In the meantime, third-party plaintiff Whitaker, after further investigation, moved for a voluntary dismissal, without prejudice, of its own third-party action against Kilodyne. Kilodyne supported this motion.

After a court-appointed master had taken evidence, the District Judge granted Whitaker’s motion to dismiss its third-party action without prejudice as well as Kilodyne’s motion to dismiss Kenrose’s amended complaint.

The trial court certified that its rulings on the above motions involved “a controlling question of law as to which there is a substantial ground for a difference of opinion.” This court, agreeing that an immediate appeal would advance “the ultimate termination of the litigation,” granted Kenrose permission to bring this interlocutory appeal, pursuant to 28 U.S.C. § 1292(b).

II

Kilodyne based its motion to dismiss Kenrose’s amended complaint as to it on the undisputed fact that all the individual plaintiffs in the action, as well as Kilodyne itself, are Virginia citizens. As no other basis for jurisdiction appears to exist if there is no diversity of citizenship, Kilodyne argues that there is no subject-matter jurisdiction for Kenrose’s action against it. Kenrose replies that a proper view of the law includes no requirement of diversity as between a plaintiff and a third-party defendant where plaintiff asserts an affirmative claim against the third-party defendant. Kenrose submits that Kilodyne’s presence in the case rests on jurisdiction ancillary to the main action between Ken-rose and Whitaker. The next step in Kenrose’s argument is that, since the third-party defendant was already validly in the case when the amended complaint was served, no independent basis of jurisdiction is needed to support plaintiff’s subsequent direct action against Kilodyne. We proceed to test these assertions against the background of available precedent.

Rule 14 of the Federal Rules of Civil Procedure governs third-party practice and it has indeed been held under that rule that, where there is diversity as between plaintiff and defendant, defendant may implead a third party of the same citizenship as the plaintiff. In such case, it may be said that ancillary jurisdiction confers power upon the court over the third-party action.

Rule 14 also contains language permitting a plaintiff to

assert any claim against the third-party defendant arising out of the transaction or occurrence that is the subject matter of the plaintiff’s claim against the third-party plaintiff.

There is, however, no indication in the rule whether a basis of jurisdiction independent of the main action must be alleged to support plaintiff’s claim against the third-party defendant. Where jurisdiction does not otherwise appear, mere permission, in the rules, to assert a claim, does not itself confer jurisdiction over that claim. By express provision the rules are not to be read as a source of jurisdiction. See Rule 82. To illuminate this point, we must necessarily look elsewhere.

Many courts have considered whether an independent basis of jurisdiction is necessary to support a plaintiff’s action against a third-party defendant. With impressive consistency the overwhelming majority has held an independent jurisdictional basis to be a prerequisite to the maintenance of such a claim. See, e. g., Stemler v. Burke, 344 F.2d 393, 395 — 396 (6 Cir. 1965); McPherson v. Hoffman, 275 F.2d 466, 470 (6 Cir. 1960); Patton v. B & O R.R. Co., 197 F.2d 732, 743 (3 Cir. 1952); United States v. Lushbough, 200 F.2d 717, 721-722 (8 Cir. 1952); Friend v. Middle Atlantic Transportation Co., 153 F.2d 778, 779-780 (2 Cir.), cert. denied, 328 U.S. 865, 66 S.Ct. 1370, 90 L.Ed.2d 1635 (1946); Corbi v. United States, 298 F.Supp. 521 (D.C.Pa.1969); Palumbo v. W. Md. Ry. Co., 271 F.Supp. 361 (D.C.Md.1967).

Several supporting reasons have been advanced by courts holding the majority view on this question. Among them are that: (1) plaintiff should not be allowed, by an indirect route, to sue a co-citizen under diversity jurisdiction when he is not permitted to sue that party directly; (2) the majority rule prevents collusion between plaintiff and defendant to obtain federal jurisdiction over a party who would otherwise not be within the court’s reach; (3) the rule which generally does not require diversity as between plaintiff and third-party defendant proceeds on the assumption that the plaintiff is seeking no relief against the third-party defendant; and (4) federal dockets are so overcrowded that the federal courts should not reach out for state law based litigation.

Appellant Kenrose presses upon us the minority view and would have us recognize what it terms “a definite trend toward” allowing a plaintiff to assert claims directly against a third-party defendant without showing an independent ground of jurisdiction. Kenrose argues that such an approach would give currency to the philosophy of the law seeking, in the interest of efficiency, to avoid multiplicity of suits and piecemeal litigation.

The value of efficiency in the disposition of lawsuits by avoiding multiplicity may be readily conceded, but that is not the only consideration a federal court should take into account in assessing the presence or absence of jurisdiction. Especially is this true where, as here, the efficiency plaintiff seeks so avidly is available without question in the state courts. The majority view, as outlined above, has its own valid supporting reasons and we fail to discern any movement away from the well-established rule, which is directly contrary to appellant’s contention.

It is true that four lower court cases have favored appellant’s view. However, not only are these in the minority among the decided cases, but they have been far from convincing to other judges in the very jurisdictions where they were rendered. Other authorities relied upon by appellant are found to be unrelated to the point at issue, or are readily distinguishable.

If this were the sum of the matter, we would feel entirely justified in affirming the District Court simply on the authority of the uniform precedents mentioned above. But, on the specific facts of this case, there is an even stronger reason for applying the majority rule.

Kenrose’s only colorable claim to jurisdiction for its action against Kilodyne was that the action came within the ancillary jurisdiction emanating from the suit between Whitaker and Kilodyne — ■ the third-party action.4 ******** Once the District Court, upon third-party plaintiff Whitaker’s motion and with Kilodyne’s consent, dismissed the third-party complaint, any basis for the exercise of ancillary jurisdiction completely evaporated. Kilodyne thereupon lost its status as a third-party defendant and became no more than a co-defendant of Whitaker. Under these circumstances, it is plain that diversity would be required as between Kilodyne and Kenrose. Straw-bridge v. Curtiss, 7 U.S. 266, 2 L.Ed. 435 (1806).

To avert this inevitable result, plaintiff contends that the District Court abused its discretion in granting Whitaker’s motion to dismiss because dismissal prejudiced Kenrose by depriving it of a jurisdictional basis for its claim against Kilodyne. We are not impressed by this logic. Under Rule 41(a), prior to the service of an answer to the third-party complaint, Whitaker would have been entitled as of right to a voluntary dismissal of his third-party complaint against Kilodyne. Since Whitaker did not make its request for dismissal until after Kilodyne had answered, it was for the District Court to decide whether dismissal of the third-party action would prejudice any party. American Cyanamid Co. v. McGhee, 317 F.2d 295, 298 (5 Cir. 1963); Southern Ry. v. Chapman, 235 F.2d 43 (4 Cir. 1956). If no prejudice appeared, dismissal was in order.

Demonstrably, no prejudice resulted to any party from the order of dismissal. As heretofore noted, the firmly established rule would require Kenrose to show an independent jurisdictional basis for its claim against Kilo-dyne even if Kilodyne remained in the case as a third-party defendant. Thus, the dismissal order did not disadvantage Kenrose, for, as we have seen, its jurisdictional position was the same whether Kilodyne was in the case as an initial co-defendant or as a third-party defendant. Under the standards of Federal Rule 41, therefore, the District Court acted well within the range of its discretion in dismissing the third-party action despite Kenrose’s opposition.

To summarize: the District Court acted with complete propriety, committing no abuse of discretion in granting Whitaker’s motion for a voluntary dismissal of its third-party cause of action. This being so, there remained not even an arguable jurisdictional footing for Ken-rose’s amended complaint against the third-party defendant, Kilodyne. The District Court, as a result, correctly granted Kilodyne’s motion to dismiss Kenrose’s amended complaint for lack of subject-matter jurisdiction.

Affirmed.

      . According to Whitaker, the voluntary dismissal was sought because, after pre-trial discovery was completed, it became apparent that Whitaker had no valid indemnification claim against Kilodyne under Virginia law. This lack was fatal to the third-party action because a possibility of indemnification is the only basis upon which a third party may be impleaded under Rule 14. McPherson v. Hoffman, 275 F.2d 466 (6 Cir. 1960); Nat’l Mut. Life Ins. Co. of D.C. v. Liberty Mut. Life Ins. Co., 90 U.S.App.D.C. 362, 196 F.2d 597, cert. denied, 344 U.S. 819, 73 S.Ct. 15, 97 L.Ed. 638 (1952). Although federal law provides the procedures to be used in an impleader action, it is necessary to look to state law, in a diversity case such as this, for the requisite right of indemnification. General Dynamics Corp. v. Adams, 340 F.2d 271 (5 Cir. 1965); Brooks v. Brown, 307 F.Supp. 907 (E.D.Va.1969).
      Virginia law plainly denies the defendant in a nuisance action any right to indemnification from another party unless the third party and the defendant were acting in concert when the nuisance was created. See Finley v. Waddell, 207 Va. 602, 151 S.E.2d 347 (1966). After the testimony of various experts was available, it became evident that Whitaker and Kilodyne did not act in concert to produce the pollution damage complained of by Kenrose. Thus, Virginia law would recognize no indemnification right as between Whitaker and Kilo-dyne and the third-party action was inappropriate.
      Realizing that, for this reason, its third-party action was defective, Whitaker moved for a dismissal.

      . Agraskell, Inc. v. Bernard Sirotta Co., 344 F.2d 583, 586 (2 Cir. 1965); Stemmier v. Burke, 344 F.2d 393 (6 Cir. 1965). See also 3 J. Moore, Federal Practice ¶ 14.26 at 701-702 (1968).

      . These rules shall not be construed to extend or limit the jurisdiction of the United States district court * * * .
      Rule 82, Federal Rules of Civil Procedure.

      . The notes of the Advisory Committee to the 1946 Amendments to the Rules of Civil Procedure also indicate the necessity of such an independent basis of jurisdiction.

      . McPherson v. Hoffman, 275 F.2d 466 (6 Cir. 1960).

      . Heintz & Co. v. Provident Tradesman Bank & Trust Co., 30 F.R.D. 171 (E.D.Pa.1962).

      . Stemmier v. Burke, 344 F.2d 393 (6 Cir. 1965); Peter Pan Fabrics, Inc. v. Kay Windsor Frocks, Inc., 187 F.Supp. 763 (S.D.N.Y.1959).

      . Ayoub v. Helm’s Express, Inc., 300 F.Supp. 473 (W.D.Pa.1969).

      . Buresch v. American LaFrance, 290 F.Supp. 265 (W.D.Pa.1968); Olson v. United States, 38 F.R.D. 489 (D.C.Neb.1965); Myer v. Lyford, 2 F.R.D. 507 (M.D.Pa.1942); and Sklar v. Hays, 1 F.R.D. 594 (E.D.Pa.1941).

      . For example, subsequent to the Buresch case, cited in note 9, two decisions issuing from the same court specifically rejected Buresch. See Schwab v. Erie Lackawanna R.R., 303 F.Supp. 1398 (W.D.Pa.1969), and Ayoub v. Helm’s Express, Inc., 300 F.Supp. 473 (W.D.Pa.1969). In Ayoub, the court said:
      There is no diversity of citizenship between the plaintiff and the present third-party defendant against whom plaintiff wishes to assert a direct claim. The great weight of authority requires that there be diversity of citizenship between such parties. Although such a claim was allowed to be asserted in Buresch * * * I do not believe that this opinion represents the view of a majority of the members of this District Court or the view of the majority of the federal courts.
      * * * % * *
      [Wjhile. convenience and saving of time can be accomplished by having ail claims redressed in one suit, the result can be obtained as a matter of right in the state courts. In view of our crowded docket I see no reason to enlarge the business of this court to invite additional state claim litigation. 300 F.Supp. at 473 — 474.

      . Appellant relies upon Agraskell, Inc. v. Bernard Sirotta Co., 344 F.2d 583 (2 Cir. 1965); Dery v. Wyer, 265 F.2d 804 (2 Cir. 1959); and Thompson v. United Artists Theatre Circuit, Inc., 43 F.R.D. 197 (S.D.N.Y.1967) for support of his position. This reliance is misplaced, as each of these cases stands for no more than the conceded proposition that a third-party suit is ancillary to the main action between plaintiff and defendant and, as such, needs no independent juridisctional ground. But in none of these cases did the plaintiff attempt to assert a claim directly against the third-party defendant.

      . Revere Copper & Brass, Inc. v. Aetna Casualty & Surety Co., 426 F.2d 709 (5 Cir. 1970) and Union Bank and Trust Co. v. St. Paul Fire & Marine Ins. Co., 38 F.R.D. 486 (D.C.Neb.1965), also cited by appellant, deal with a situation different from that before us. In each the court considered the necessity of an independent ground of federal jurisdiction to support a third-party defendant’s claim against the plaintiff, holding no such independent ground was required. That these decisions should be limited to their own facts is indicated by the court’s discussion of the point in Revere Copper:

      [Appellant] argues that since there must be an independent ground of jurisdiction to support the original plaintiffs claim against a third-party defendant, the same requirement must be met by the third-party defendant in asserting a counterclaim against the original plaintiff. Suffice it to say that the two situations are the converse of each other only superficially and that there are differences which militate against identical treatment. First of all, the plaintiff has the option of selecting the forum where he believes he can most effectively assert his claims, he has not been involuntarily brought to a forum, faced with the prospect of defending himself as best he can under the rules that forum provides, or defending himself not at all. Since a plaintiff could not initially join a non-diverse defendant, it is arguable he should not be allowed to do so indirectly by way of a fortuitous impleader. Moreover, there is the possibility, whether real or fanciful, of collusion between the plaintiff and an overly cooperative defendant impleading just the right third party. * * * Consequently, this decision is to be strictly limited to the precise question decided. 426 F.2d at 716 (footnote omitted).

      . In its brief on appeal, Kenrose argued that any objection Kilodyne might have had to the subject-matter jurisdiction of the court was waived when Kilodyne answered the amended complaint against it without raising the point. It is now plain, beyond the necessity for citation of authority, that lack of subject-matter jurisdiction can never be waived and may be raised by any party at any stage of the litigation.

      . Rule 41, governing the voluntary dismissal of actions, applies in terms to third-party claims also. Rule 41(c).


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellant, v. The TEXAS EDUCATION AGENCY et al., Defendants, Richardson Independent School District, Defendant-Appellee.
    No. 74-3686.
    United States Court of Appeals, Fifth Circuit.
    April 22, 1975.

      Frank D. McCown, U. S. Atty., Dallas, Tex., Judy Wolf, Brian K. Landsberg, Dept, of Justice, Civ. Rights Div., App. Section, Washington, D. C., for plaintiff-appellant.
    Henry D. Akin, Jr., Dallas, Tex., for defendant-appellee.
    Before BELL, AINSWORTH and GODBOLD, Circuit Judges.
   PER CURIAM:

The District Court denied a motion for supplemental relief filed by the United States asking that the Richardson (Texas) Independent School District be ordered to desegregate Hamilton Park Elementary School, the only all-black school in the district. The United States appeals. We reverse.

The school district includes the City of Richardson, a suburb of Dallas; Hamilton Park, an all-black subdivision located within the City of Dallas; and part of the City of Garland, another Dallas suburb. As of April 1974 the district had 32,319 students. Only a relatively small number — 1,069 — were black, approximately 3%. Of the black elementary students, 71%, or 367, attend Hamilton Park Elementary.

Hamilton Park Elementary had no white students when this case was tried in August 1974. It has never had a white student. The Board of Trustees does not project that under the present zoning system it will ever have a white student. It has never had a white principal. It did not have a white teacher until 1969. Of 25 other elementary schools in the system, 24 are all white or substantially all white.

Swann v. Charlotte-Mecklenburg Board of Education, 402 U.S. 1, 91 S.Ct. 1267, 28 L.Ed.2d 554 (1971), requires the courts to give close scrutiny to one-race and predominantly one-race schools located in districts with mixed population. In a system with a history of segregated schools — and the Richardson district has such a history — a plan of converting from dual to unitary system that permits the continued existence of one-race schools places upon the school authority the burden of showing that such assignments are genuinely nondiscriminatory. The school authorities must be able to satisfy the court that the one-race composition is not the result of present or past discrimination on their part. 402 U.S. at 26, 91 S.Ct. at 1281, 28 L.Ed.2d at 572. The Richardson district urges that it passes this strict scrutiny test because while the Hamilton Park school was originally constructed in a single-race neighborhood, the character of the neighborhood is not the result of state action. The district correctly points out that, beginning around 1951, Hamilton Park was promoted by the Dallas Interracial Council as a preconceived and planned model community for black residents. In time it became the only substantial black neighborhood in the Richardson school district. The Board’s argument, however, gives no recognition to other vital facts. Beginning with its initial opening in 1955, as a grade 1-12 school, the Hamilton Park school became the place of assignment for not merely the black students residing in Hamilton Park but those from all over the district. It was employed as a means to perpetrate the segregated character of a school system theretofore kept segregated by other means. It continued in that role for ten years.

Negro students living more than two miles from the school were provided transportation by the school district, without regard to the proximity of white schools to their residences.

Between 1955 and 1963 Hamilton Park school was expanded by the addition of more classrooms pursuant to seven different contracts. All the classrooms were occupied by black scholastics. While more and more black students were assigned to the growing facility in Hamilton Park, the district was constructing more white elementary schools with white students assigned to them on a geographic basis. No whites were assigned to Hamilton Park school.

In 1965 the district adopted a desegregation plan based on a geographic zone system. Hamilton Park was made into a zone, and has continued to be maintained as such, with knowledge that not a single white student resided therein.

In 1969 the senior high portion of Hamilton Park school was closed and thereafter Negro high school students were bussed to other high schools in the district.

In 1970 the United States filed a suit challenging the segregated character of the Richardson system. The court approved the government’s proposal that the junior high portion of Hamilton Park school be closed and the Hamilton Park zone divided into three parts for purposes of assigning black junior high students to three other junior high schools in the district. This meant that Hamilton Park school would be a facility for elementary students only. The court denied the government’s proposal that Hamilton Park Elementary be paired, three grades per school, with a predominantly white elementary school in the adjacent district, Stults Road Elementary, approximately three miles and 15 minutes’ driving time away.

In the same order the court directed desegregation of staff and faculty, construction of buildings to promote desegregation, and creation of a biracial advisory committee.

Since 1970 Hamilton Park Elementary has continued to serve students residing within the Hamilton Park zone. It has continued to be 100% black. All but one of the district’s 25 other elementary schools have been virtually all white. Three other elementary schools are in adjacent zones, none more than approximately three miles from Hamilton Park Elementary. A majority to minority transfer policy in effect since 1970 has produced a handful of black transfers out of Hamilton Park, no white transfers in.

Both before and after efforts to desegregate, the burden of movement out of their immediate neighborhoods to other schools has been placed entirely upon the black citizenry. Before zoning, Negro students were transported as necessary to keep them in all-black schools. Since the 1969 closing of the high school grades at Hamilton Park school, and the 1970 order, black junior and senior high students must go out of the Hamilton Park neighborhood to schools in non-black neighborhoods.

Since 1970 the district has operated under the order then issued that permitted Hamilton Park Elementary to continue as an all-black island. The district has made no study of other alternatives. Nevertheless, an official of the district testified when this case was heard in 1974 that pairing or clustering Hamilton Park Elementary with one or more of the nearby white schools would present no problems of capacity and would require some transportation but that the logistical problem could be solved.

The order of the District Court is reversed and the cause is remanded with directions that the racially segregated character of Hamilton Park Elementary be eliminated effective with the beginning of the 1975-76 school year. Within 60 days from the date of the mandate in this case the Richardson District shall file with the District Court for its consideration proposed arrangements to achieve the result required.

      . Previously, all the Negro elementary students in the district attended a single all-black school (no longer in existence). All the Negro high school students were bussed to an all-black high school in Dallas.

      . It had only one white elementary school in 1955.


text:
    Wendell Douglas FRITH, a minor, by Alton Frith, adult next friend, Plaintiff-Appellant, v. BLAZON-FLEXIBLE FLYER, INC. and Western Auto Supply Company, Inc., Defendants-Appellees.
    No. 75-1667
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    May 8, 1975.
    Rehearing and Rehearing En Banc Denied June 24, 1975.
    James W. Nobles, Jr., Jackson, Miss., Eugene C. Tullos, Raleigh, Miss., Crymes G. Pittman, Jackson, Miss., for plaintiff-appellant.
    John B. Clark, Jackson, Miss., for defendants-appellees.
    Before THORNBERRY, MORGAN and RONEY, Circuit Judges.

       Rule 18, 5 Cir., see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409, Part I.

   PER CURIAM:

This case comes to us styled as a “petition for dissolution of a prohibitory injunction,” supposedly pursuant to F.R.A.P. 8(a). That section, however, only authorizes stays or injunctions pending appeal. It does not provide for the relief sought in appellant’s petition for dissolution: in effect, a vacation of an injunction entered by the district court. Nevertheless, we are empowered by 28 U.S.C.A. § 2106 to vacate or set aside any decree lawfully brought before this Court for review. Furthermore, under Local Rule 11(b) we may sua sponte expedite the consideration of any case. Since this case is properly and lawfully before the Court in the form of an interlocutory appeal from an injunction entered by the district court, 28 U.S.C.A. § 1292(a)(1), and as the sole legal issue for decision has been fully briefed by both parties, we have considered the merits of the appeal and vacate the injunction issued by the district court.

This tort suit for personal injuries was first filed in a Mississippi state court in September 1974. The only alleged resident defendant was “Western Auto Associate Store of Raleigh, Mississippi.” The suit was timely and lawfully removed to the United States District Court for the Southern District of Mississippi, Jackson Division, and assigned to Judge Cox. A motion to remand the case to state court was filed by plaintiff and was overruled by the district court on the grounds that Western Auto was only a trade name and not a legal entity and that since no individual or legal entity domiciled in Mississippi was a party, diversity of citizenship therefore existed. Plaintiff has not challenged this ruling.

In November 1974, some two weeks after Judge Cox’s order holding that there was federal diversity jurisdiction, plaintiff filed a subsequent suit in Mississippi state court. In this action a Mississippi resident, Mrs. Eunice Sistrunk, owner and operator of the Western Auto store, was joined as a party defendant. The declarations in the two causes are substantially identical, with the exception of the addition of Mrs. Sistrunk as a defendant. Subsequently the defendants again remove the action to federal district court on the grounds of a fraudulent joinder in violation of 28 U.S.C.A. § 1446(e). The case was assigned to Judge Russell.

In January 1975, defendants filed in the first case, the one assigned to Judge Cox, a motion to enjoin the plaintiff from proceeding in any case except that cause, and a motion to consolidate the two cases then pending in federal district court. Judge Cox took these motions under advisement while Judge Russell considered a motion to remand which had been filed in the action pending before him.

In February 1975, Judge Russell issued an opinion and entered an order granting plaintiff’s motion to remand to state court. Relying on Parks v. New York Times Co., 308 F.2d 474 (5th Cir. 1962), cert. denied, 376 U.S. 949, 84 S.Ct. 964, 11 L.Ed.2d 969 (1964), Judge Russell expressly found, on the basis of the evidence before him and after familiarizing himself with the proceedings pending before Judge Cox, that there was no fraudulent joinder.

Shortly thereafter, Judge Cox issued an opinion and entered an order enjoining plaintiff from any further proceeding on the cause of action against defendants in state court or otherwise, except in the case pending before him. In his order he stated:

The Court finds as a fact that cause number 2881 [the second suit] was filed for the specific purpose of divesting this Court of jurisdiction, and was in violation of 28 U.S.C. Section 1446(e). This action of plaintiff, if permitted, would make a sham of this Court’s removal jurisdiction, and therefore it will not be permitted.

This appeal was brought following the entry of the order granting the injunction. See 28 U.S.C.A. § 1292(a)(1). Plaintiff asks that we dissolve Judge Cox’s prohibitory order enjoining him from prosecuting his suit against defendants in state court.

Although the anti-injunction statute, 28 U.S.C.A. § 2283, generally prohibits federal courts from enjoining or staying state court proceedings, an exception is made where an injunction is expressly authorized by an Act of Congress. One of the long recognized statutory exceptions to the prohibition of the anti-injunction statute is the language in 28 U.S.C.A. § 1446(e) that upon removal from state to federal court “the State court shall proceed no further unless and until the case is remanded.” See Toucey v. New York Life Insurance Co., 314 U.S. 118, 133, 62 S.Ct. 139, 86 L.Ed. 100 (1941); Armstrong v. Alliance Trust Co., 126 F.2d 164, 169 (5th Cir. 1942); 1A Moore, Federal Practice 10.210 (2d ed. 1974). Consequently, where a district court finds that a second suit filed in state court is an attempt to subvert the purposes of the removal statute, it is justified and authorized by § 1446(e) in enjoining the proceedings in the state court. See, e. g., Brown v. Seaboard Coast Line R.R., 309 F.Supp. 48 (N.D.Ga. 1969). Judge Cox, therefore, was not prohibited by the anti-injunction statute from enjoining plaintiff from prosecuting an action in state court after the original suit had been removed to federal court.

In this case, however, at the time Judge Cox entered his injunction, Judge Russell had already found, on the basis of his familiarity with both pending suits, that the joinder of the resident defendant in the state court suit was not fraudulent. Implicit in this finding is the fact that the second suit was not brought in an attempt to subvert the purposes of the removal statute and was not aimed at defeating federal jurisdiction. Normally, where no fraud is found, the second action brought in state court should not be enjoined. See Jett v. Zink, 474 F.2d 149 (5th Cir.), cert. denied, 414 U.S. 854, 94 S.Ct. 153, 38 L.Ed.2d 104 (1973); Parks v. New York Times Co., 308 F.2d 474 (5th Cir. 1962), cert. denied, 376 U.S. 949, 84 S.Ct. 964, 11 L.Ed.2d 969 (1964). Under these circumstances, we are convinced that collateral estoppel principles required that Judge Cox not redetermine the fact which had been so recently litigated in the same court by the same parties. See generally, IB Moore, Federal Practice H 9.441[2] (2d ed. 1974).

In effect, Judge Cox .“reviewed” Judge Russell’s order remanding the case to the state court from which it was removed. Such an order, however, is “not reviewable on appeal or otherwise.” 28 U.S.C.A. § 1447(d). Judge Russell’s remanding order was final and was not reviewable in a collateral attack. See Moffett v. Robbins, 14 F.Supp. 60S (D.Kan.1935), aff’d, 81 F.2d 431 (10th Cir.), cert. denied, 298 U.S. 675, 56 S.Ct. 940, 80 L.Ed. 1397 (1936); 1A Moore, Federal Practice 110.169[2 — 1] (2d ed. 1974).

The injunction enjoining plaintiff from prosecuting his state court action is vacated and the case is remanded for proceedings consistent with this opinion.

Vacated and remanded.


author: COLEMAN, Circuit Judge.

text:
    Bill L. BALLARD, Plaintiff-Appellee-Cross Appellant, v. EL DORADO TIRE COMPANY, Defendant-Appellant-Cross Appellee.
    No. 74-2052.
    United States Court of Appeals, Fifth Circuit.
    May 9, 1975.

      Eli H. Subin, Emery H. Rosenbluth, Jr., Orlando, Fla., for defendant-appellant-cross appellee.
    J. Thomas Cardwell, George T. Eidson, Jr., Orlando, Fla., for plaintiff-appelleecross appellant.
    Before TUTTLE, COLEMAN and SIMPSON, Circuit Judges.
   COLEMAN, Circuit Judge.

This diversity action resulted from the allegedly wrongful discharge of plaintiff, Bill L. Ballard, a Florida citizen, by El Dorado Tire Company, a Michigan corporation. The District Court, sitting without a jury, awarded Ballard $46,352.20 in damages.

We affirm the award of damages and remand for further consideration of the other benefits hereinafter discussed.

El Dorado appeals, contending that the District Judge erred in failing to reduce Ballard’s damages by the amount he might have earned in other employment during the unexpired term of his contract. Ballard cross appeals, contending that the District Court’s calculation of damages erroneously failed to take into account certain fringe benefits due under the employment contract.

The employment contract was executed on May 31, 1969. It called for Ballard, an experienced tire salesman, to work in Orlando, Florida, for a 5 year term as Executive Vice President and General Manager of El Dorado’s Florida subsidiary. The contract provided Ballard with generous compensation:

COMPENSATION: BALLARD shall receive a base salary of $18,-000.00 per year. ... In addition to the base salary, BALLARD shall receive a commission based upon one per cent of the gross sales of the Florida subsidiary corporation .... In addition to the base salary and commission, BALLARD shall receive additional compensation in the form of a credit towards the purchase of stock in the Florida subsidiary company and hereinafter provided.
BENEFITS: EL DORADO will provide BALLARD with a fully paid group life insurance policy in the amount of $20,000.00, payable to such beneficiary as BALLARD may designate and also a fully paid health, accident and hospitalization policy to cover BALLARD and his family. In addition, BALLARD shall be eligible in the thirteenth month of his employment, and thereafter, to participate in the EL DORADO pension fund and to participate in the benefits thereof as provided in EL DORADO’S Pension Plan as filed with Internal Revenue Service. At the appropriate time EL DORADO shall furnish BALLARD with a copy of said pension plan. BALLARD’s non-contributory portion will be invested by EL DORADO in the pension fund to the extent of twenty per cent of BALLARD’s base salary, annually, not including commissions and other forms of compensation.

In addition Ballard was entitled, upon meeting certain conditions, to 20% of the subsidiary stock.

Other relevant contract provisions dealt with termination and non-competition:

TERMINATION: BALLARD may terminate this employment agreement at any time, upon thirty days written notice to EL DORADO. EL DORADO may, at its option, accept any such resignation without said thirty day notice. EL DORADO may terminate this employment agreement for just cause with either thirty days notice or thirty days base salary in lieu of notice. Upon termination of this agreement by either party as provided herein, BALLARD shall promptly account to EL DORADO and/or the Florida subsidiary corporation for all property of EL DORADO and/or its subsidiary corporation in his hands effective as of the termination date. Upon such termination, BALLARD shall no longer be entitled to any salary or benefits except as may be provided herein or except as may be provided in the aforesaid El Dorado Pension Plan.
NON-COMPETITION: BALLARD agrees that upon his voluntary termination of this agreement or upon the expiration of this agreement by the passage of time and the failure of BALLARD to renew the same, he will refrain from, directly or indirectly, carrying on or engaging in the tire business and from soliciting old customers of EL DORADO and/or its Florida subsidiary within the State of Florida for a period of two years, or for so long as EL DORADO and/or its Florida subsidiary continue to engage in the tire business in the State of Florida, if for less than two years. EL DORADO may enforce this agreement by injunction in a court of competent jurisdiction.
This stipulation does not prevail in the event of termination by El Dorado, /s/ H.W.D.

The Ballard-El Dorado relationship was soon jeopardized by negotiations between El Dorado and one of its stockholders, Dodenhoff, who wanted to move to Florida to take over management of the Florida subsidiary. These negotiations culminated in El Dorado’s selling all its stock in the Florida subsidiary to Dodenhoff. The contract of sale was executed on July 11, 1971. The sales price included the 31,000 shares Dodenhoff held in El Dorado.

Ballard filed this action to determine his rights under his employment contract on October 19, 1971.

Upon receiving a copy of the complaint, Dodenhoff wrote Ballard telling him that the filing of suit constituted a “breach of contract” and a “voluntary resignation”.

The District Court did not agree with Dodenhoff’s assessment. It held El Dorado’s sale of the subsidiary constituted a breach of contract, and that holding is not appealed.

El Dorado does appeal the Court’s refusal to mitigate Ballard’s damages by what he might have earned in other employment.

Ballard cross appeals the Court’s holding that he was not entitled to compensation for loss of pension benefits and stock in El Dorado.

I. The El Dorado Appeal — Did the District Court err in failing to mitigate Ballard’s damages by the amount he might have earned in other employment?

The District Court found as a fact that Ballard has not sought other employment. Furthermore, the Court took note of the general principle that an employee’s damages will be mitigated by what he could have earned in similar employment. E. g., 11 Williston on Contracts (3rd ed.) § 1358; Lerman v. Fruit Processors, Inc., D.C.Cir., 89 U.S.App.D.C. 188, 191 F.2d 349, citing Rest. Contracts, § 336, cert. denied, 342 U.S. 877, 72 S.Ct. 168, 96 L.Ed.2d 659 (1951); Latimer v. York Cotton Mills, 66 S.C. 135, 44 S.E. 559 (1903). The District Court’s refusal to allow mitigation was based upon the theory that the burden to prove the existence of similar employment was upon the employer, and that El Dorado had failed to show that similar employment was available.

Our examination of the cases and of other authorities demonstrates that the District Court was correct. The universal rule is that an employee’s damages will be mitigated only if the employer proves that similar employment opportunity was available. As explained in Dobbs, Remedies, § 12.25, p. 925:

The recovery is based on contract price, not on the contract price/market value differential so commonly used in sales cases. The employee need only prove the breach and the contract price when he is wrongfully discharged and this will warrant a judgment in his favor for all future installments due him, reduced to present value. If the employee has obtained a substitute job, or could obtain one by reasonable effort, he is chargeable with the income he obtains or could reasonably obtain in this fashion, but only if the employer sustains the burden of proving these facts.
According to the Third Circuit,
“ ‘[T]he plaintiff is prima facie entitled to the stipulated compensation for the whole time. If so, the burden of proof in regard to his employment elsewhere, or his ability to obtain employment, must necessarily rest on the defendant. All evidence in mitigation is for a defendant to give. In its nature it is affirmative, and hence it is for him to prove who asserts it.’ ” McAleer v. McNally Pittsburg Manufacturing Co., 3 Cir., 1964, 329 F.2d 273, quoting King v. Steiren, 44 Pa. 99.

For an extensive list of cases that have placed the burden to prove that similar employment was available upon the employer, see 11 Williston on Contracts § 1360.

Sensing the weight of authority against its position, El Dorado attempts to escape the burden of proving the existence of similar employment in two ways.

First, it points to the Non-Competition Clause in the contract. El Dorado says that by preventing Ballard from engaging in similar employment, the clause gave rise to a duty to mitigate by seeking any employment. It says, in other words, that the effect of an agreement not to compete in similar work is to change the employee’s common law duty to mitigate by seeking similar employment to a duty to mitigate by seeking any employment. Ballard’s damages therefore should be mitigated not by what he could have earned in similar employment but by what he could have earned in any employment.

The ready answer to this contention is that there is no such term in the contract. The contract speaks of a negative duty — the duty not to compete with the former employer by seeking similar employment. It does not include an affirmative promise to mitigate damages by seeking dissimilar employment.

A second and equally persuasive answer to El Dorado’s argument is that the non-competition clause did not govern this termination. By its literal terms, the promise not to compete applied only to a voluntary termination. Ballard’s termination was not voluntary. El Dorado’s sale of the subsidiary made it impossible for it to perform its promises to Ballard. Ballard was powerless to prevent the contract termination. His employment termination was involuntary; therefore, the contract promise not to seek similar employment did not come into play.

As its next argument for escaping the burden of proving existence of similar employment, El Dorado cites our decision in Nello L. Teer Company v. Hollywood Golf Estates, Inc., 5 Cir., 1963, 324 F.2d 669, 672, cert. denied, 377 U.S. 909, 84 S.Ct. 1169, 12 L.Ed.2d 178, where we said that an independent contractor, whose contract had been breached, must prove the non-existence of similar employment opportunities in order to escape mitigation. This language is consistent with the holdings of many courts which have reasoned that an independent contractor is in a much more favorable position to know the availability of other contracts than is his employee who is likely to be unfamiliar with the contracting business. See, e. g., the leading case of Green v. Nelson, 120 Utah 155, 232 P.2d 776 (1951).

Decisions like Teer and Green have always been distinguished from master-servant contracts since “the employer may in fact know as much or more about the job market than the employee”, Dobbs, Remedies, § 12.25, p. 925. The independent contractor cases are simply an exception to the general rule that the burden to prove the existence of similar employment opportunity is upon the employer.

This reduces the present inquiry to the question of whether the evidence, introduced by defendant, constituted legally sufficient proof of similar employment opportunity. The only substantial proof of the existence of similar employment was the testimony of an expert witness who reported that employment statistics showed an extremely low rate of unemployment in Orlando for “professional technicians and managers” — the general class of potential employees to which plaintiff belongs.

Accepting this evidence as a proven fact, our inquiry is whether the availability of employment in the general employment category (here managerial, professional, and technical) is “similar employment” opportunity, such that an employee’s damages must be reduced by what the employee might have earned in that general category.

All the authorities which have addressed the question answer that an employee’s damages are reduced only if the employer proves with reasonable certainty that employment was available in the specific line of work in which the employee was engaged. See, e. g., Williams v. Leaf Tobacco Co., 293 Ky. 270, 168 S.W.2d 570 (1943); H. J. McGrath Co. v. Merchant, 117 Md. 472, 83 A. 912 (1912); Stoffel v. Metcalfe, 145 Neb. 450, 17 N.W.2d 3 (1945); Parker v. Twentieth Century Fox Film Corp., 3 Cal.3d 176, 89 Cal.Rptr. 737, 474 P.2d 689 (1970); Annot. 44 A.L.R.3rd 629.

This means that El Dorado could meet its burden of proof only by showing the availability of a managerial type position in the tire industry. Were the contrary true, the rule requiring the employer to prove the availability of similar employment would be meaningless. The employer could always meet the so-called “burden” simply by introduction of the help-wanted ads of a local newspaper. The law does not allow contract breachers to escape consequences of their wrongful acts in such a perfunctory fashion.

The District Court was correct in refusing to mitigate Ballard’s damages by what he might have earned in other employment.

II. The Ballard Appeal — Did the District Court err in failing to take into account certain fringe benefits in the contract?

The Stock Provision

Paragraph 6 of the contract reads:
STOCK OPTION: It is the intention of both EL DORADO and BALLARD that BALLARD shall eventually become a stockholder in the Florida subsidiary corporation to the extent of
twenty per cent of its capital as determined at the end of the first twelve months of the subsidiary’s existance. To enable BALLARD to purchase such stock, he shall receive from the Florida subsidiary corporation additional compensation measured by twenty per cent of the subsidiary corporation’s net profit after taxes annually. Said additional compensation shall not be paid to BALLARD but shall be retained as credit to BALLARD’s account on the books of said subsidiary corporation. Stock certificates reflecting ownership of fifteen per cent of the authorized capital stock of the Florida subsidiary corporation shall be issued to BALLARD when BALLARD’s credits computed as aforesaid shall be equal to fifteen per cent of the capital of the Florida subsidiary corporation as determined at the end of the first twelve months of its existance. Thereafter BALLARD shall have an option to purchase an additional five per cent of the capital stock of the Florida subsidiary corporation and the option price for said stock shall be determined by the book value of the stock at the time the original fifteen per cent stock is issued to BALLARD. The additional five per cent stock shall be issued to BALLARD when the credits computed as aforesaid shall equal the option price of said stock. Any and all stock issued to BALLARD under the provisions of this agreement shall be nontransferable and shall be redeemed by the Florida subsidiary from BALLARD in the event of the termination of this employment agreement or any extensions hereof, or from his estate in the event of his death, at book value as of the date of such redemption. In the event that BALLARD’s employment with EL DORADO shall be terminated prior to the issuance of either the first fifteen per cent stock interest or the additional five per cent stock interest in the subsidiary corporation as provided above, then any accrued credit to BALLARD on the books of the company on account of acquisition of such stock interest shall be terminated and be null and void and BALLARD shall not have any claim against the subsidiary corporation or against EL DORADO for any interest in said credit whatsoever.

Despite this provision, the District Court refused to award any damages for the loss of stock in the company. This refusal was based on the fact that the contract rendered Ballard’s credit toward stock “null and void” if his employment was terminated before the stock was issued.

We find ourselves in disagreement with that interpretation. The stock provision is a conditional promise. El Dora-do promised to issue the stock to Ballard on the condition that his contract not be terminated before his credits entitled him to it.

Fulfillment of a contract promise, here to issue stock, is not excused by failure of a condition (non-termination) which the promisor himself causes to happen.

It is a principle of fundamental justice that if a promisor is himself the cause of the failure of performance, either of an obligation due him or of a condition upon which his own liability depends, he cannot take advantage of the failure.
In reflecting upon this jural proposition, a federal court has observed that “Where liability under a contract depends upon a condition precedent one cannot avoid his liability by making the performance of the condition precedent impossible, or by preventing it”. The illustrations of this principle are legion. 5 Williston on Contracts § 677, pp. 224-225, quoting Gulf Oil Corp. v. American Louisiana Pipe Line Co., 6 Cir., 1960, 282 F.2d 401.

In this case, the failure of the condition is the product of the promisor’s (El Dorado’s) own act. Hence, El Dora-do cannot rely upon it to escape performance. Ballard is entitled to recover for loss of stock if he would have earned the stock but for El Dorado’s prevention of his fulfilling the condition of non-termination.

The Provision for Issuance of 15% of Company Stock

The event that was to trigger payment of 15% of company stock was the subsidiary’s making enough profits so that 20% of the net profits would amount to 15% of the “capital” as determined at the end of the first year. Use of the term “capital” causes difficulty since the term is susceptible of several meanings.

Defendant contends, and the District Judge held, that the value of the “capital” is the book value of the capital stock; i. e., the difference between the value of the assets and the value of the liabilities. This amount is $40,000. Plaintiff suggests that capital means the fair market value of the stock, an amount he claims to be $300,000, the amount for which defendant once offered to sell the subsidiary.

We think that a seller’s asking price is no indication of a corporate value, and that in view of the lack of any other evidence on the question of market value, the only reliable way to determine the value of the capital was to consider the corporation’s stock’s book value as being the “capital”. Hence, we hold that the District Judge was correct in deciding $40,000 to be the value of the capital.

This means that Ballard is entitled to the value of 15% of the “authorized capital stock” if, during the five year term of his employment contract, 20% of the company’s net profits would have amounted to 15% of the value of the authorized capital stock.

Since we have determined the trial judge correctly found $40,000 to be the value of the capital, $40,000 is also the value of the “authorized capital stock” regardless of how many shares are authorized. Eisner v. Macomber, 252 U.S. 189, 40 S.Ct. 189, 64 L.Ed. 521 (1920).

Thus, Ballard is entitled to 15% of $40,000 or $6000, if 20% of the company’s net profits during the term of Ballard’s contract have amounted to $6000. There is no finding in the record on this question. We therefore remand with directions to determine whether 20% of the company’s net profits during the term of Ballard’s contract would have amounted to $6000 (the value of 15% of “authorized capital stock”). If so, the District Judge is to add $6000 to Ballard’s damages.

The Provision to Issue an Additional 5% of Company Stock

The provision for issuance of an additional 5% of company stock provides another complication. Under it, the Judge must determine whether, during the contract term, 20% of the company net profits would have amounted to $6000 (15% of the book value of the stock at end of the first year) plus the book value of an additional 5% of the company stock (as determined at the time the first 15% of stock would have been issued). If so, he is to award plaintiff the book value of the additional 5% of company stock (as determined at the time the 15% of authorized capital stock would have been issued). This question must also be determined on remand.

Pension Benefits

The contract provided that, beginning with the second year, employer El Dorado would contribute 20% of Ballard’s salary to the company’s pension plan. However, the contract made no provision for distribution of the benefits. Provision for benefits was contained only in the pension plan itself. The plan promised benefits only to those employees who worked to within five years of normal retirement (age 65).

Ballard’s employment contract was for 5 years, and he was 41 years old when hired. Thus, there was no promise either in the contract or in the pension plan that was incorporated in the contract to include Ballard within the category of employees to whom pension benefits would be paid. There can be no damages for loss of benefits not promised. Ballard is entitled to nothing for loss of pension benefits.

Affirmed in part; and in part remanded for further proceedings not inconsistent herewith.

      . Ballard’s inaction is the result of the advice of a lawyer who told him that seeking similar employment might violate the non-competition clause in the contract, thereby subjecting Ballard to a law suit. The lawyer’s advice was based in part on a letter by Dodenhoff telling Ballard that his filing suit constituted a “voluntary resignation”. Voluntary resignation is the act that triggered the operation of the non-competition clause.

      . Nevertheless, a Florida court has indicated that a non-competition clause has the effect El Dorado attributes to it. See Reed Construction Corporation v. Zimmerman, 133 So.2d 579, 580 (Fla.App.1961). In Reed, the employee had actually obtained other work, so the Issue of whether damages is mitigated by any type work where the work is not actually obtained was not at issue.

      . The District Judge made no specific finding on the question whether work in plaintiff’s general employment category was available. Since the testimony on the subject was credible and uncontradicted, and to avoid a superfluous remand, we assume the Judge accepted the testimony.

      . The reason for this result is that the law implies a promise not to frustrate occurrence of an explicit promise. One who promises to do a thing if a given condition occurs has impliedly promised not to prevent the performance of the condition. Otherwise, any conditional promise would be illusory, not real.

      . Article IX of Plan 1. If a Participant shall cease to be an Employee for any cause except death, retirement on the Normal Retirement Date or retirement prior to his Normal Retirement Date as provided in paragraph (7) of Article IV, then his participation in the Trust shall terminate and he shall be entitled to receive the Contracts issued on his life. [Life insuranee contracts were purchased by the employee at his option.]
      2. However, if terminations of employment shall occur within five years of the Normal Retirement Date of the Participant, he shall, in addition, be entitled to his share of the Auxiliary Fund [monetary benefits paid into the fund], regardless of the number of years he shall have been a Participant hereunder.


author: JAMES HUNTER, III, Circuit Judge:

text:
    Richard A. ASH, on behalf of himself, and on behalf of Bethlehem Steel Corporation, Plaintiff-Appellant, v. Stewart S. CORT et al., Defendants-Appellees, and Bethlehem Steel Corporation, Nominal Appellee.
    No. 74-1836.
    United States Court of Appeals, Third Circuit.
    Submitted Under Third Circuit Rule 12(6) Jan. 24, 1975.
    Decided Feb. 26, 1975.

      Cletus P. Lyman, Lyman & Ash, Philadelphia, Pa., for plaintiff-appellant.
    Edwin P. Rome, Jerome R. Richter, William H. Roberts, Blank, Rome, Klaus & Comisky, Philadelphia, Pa., Curtis H. Barnette, Bethlehem, Pa., for defendants-appellees.
    Before VAN DUSEN, GIBBONS and HUNTER, Circuit Judges.
   OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge:

In this case we must decide whether a district court order denying a motion to perpetuate testimony pending appeal under F.R.Civ.P. 27(b) is a final order, appealable under 28 U.S.C. § 1291. We conclude that it is a final order. Having jurisdiction to review the order, we must next decide whether denial of the motion to perpetuate testimony was an abuse of discretion in this case. We find no abuse of discretion and, therefore, affirm the district court’s denial of the Rule 27(b) motion.

I

Plaintiff-appellant is a shareholder in Bethlehem Steel Corporation who seeks derivative damages in favor of the corporation against the directors for allegedly illegal political contributions and injunctive relief prohibiting future contributions allegedly violative of 18 U.S.C. § 610.

This is the third time this case has come before us. In a per curiam opinion filed in 1973, this court affirmed the district court’s denial of plaintiff’s motion for preliminary injunction. Ash v. Cort, 471 F.2d 811 (3d Cir., 1973). The district court subsequently granted defendant appellee’s motion for summary judgment on grounds that no cause of action had been stated. This court reversed in an opinion by Chief Judge Seitz. 496 F.2d 416 (3d Cir., 1974).

On July 20, 1974 defendant filed a petition for a writ of certiorari in the Supreme Court seeking to review this court’s 1974 holding that a cause of action had been stated. The writ was granted on November 11, 1974, sub nom. Cort v. Ash, 419 U.S. 992, 95 S.Ct. 302, 42 L.Ed.2d 264 (1974).

On June 13, 1974 plaintiff filed the instant Rule 27(b) motion in the district court. The motion was denied and the present appeal followed.

Plaintiff-appellant asserts that denial of its Rule 27(b) motion was an abuse of discretion. Defendant-appellees move to dismiss the appeal on grounds that there has been no final appealable order. In the alternative, they allege that the denial was not an abuse of discretion.

II

Appealability

Rule 27(a) provides for perpetuation of testimony prior to trial, Rule 27(b) in turn deals with perpetuation of testimony pending appeal. The scope of discovery allowed under Rule 27 is much narrower than that available under the general discovery provisions of Rule 26. Rule 27 applies

to situations where, for one reason or another, testimony might be lost to a prospective litigant unless taken immediately . . . . Such testimony would thereby be perpetuated or kept in existence and, if necessary, would be available for use at some subsequent time. Petition of Ferkauf, 3 F.R.D. 89, 91 (S.D.N.Y., 1943).

Rule 27 properly applies only in that special category of cases where it is necessary to prevent testimony from being lost.

Unlike the usual discovery motion, the denial or grant of which has been considered interlocutory and non-appeal-able, motions to perpetuate testimony must be judged by different standards. In Mosseller v. United States, 158 F.2d 380 (2nd Cir., 1946), the Second Circuit held appealable the granting of a Rule 27(a) motion to perpetuate testimony in advance of trial. The court reasoned that the district court order authorizing depositions was a final order under 28 U.S.C. § 1291 “because it grant[ed] all the relief sought in the petition and dispose[d] of the proceeding.” 158 F.2d at 383. Accord Martin v. Reynolds Metals Corporation, 297 F.2d 49, 52 (9th Cir., 1961).

The denial of a motion to perpetuate testimony would also seem to require immediate review. “An action refusing relief under Rule 27 would appear to be even more final [than the granting of such a motion], for it may have the effect of making it impossible for the petitioner to maintain an action or defense.” Moore 9 Federal Practice K 110.13[3] at 159 (1970).

Although there are no cases specifically addressing the question of appealability of Rule 27(b) orders, we perceive no reason for treating these differently than Rule 27(a) motions. The same narrow purpose of perpetuating testimony for later use obtains under both 27(a) and 27(b). The Rule 27(a) order is deemed final because it is the only matter pending in the district court at a time when no complaint has yet been filed. Similarly, when an appeal has been lodged in a higher court, a Rule 27(b) motion is the only matter pending before the district court. Since it is the only matter in the district court, a denial or grant of a Rule 27(b) motion is final in just the way the Second Circuit characterized as final, the grant of a 27(a) motion in Mosseller.

As such we conclude that we have jurisdiction under 28 U.S.C. § 1291 to review the instant denial of Rule 27(b) relief.

Abuse of Discretion

We reiterate that Rule 27 is not a substitute for discovery. It is available in special circumstances to preserve testimony which could otherwise be lost. In addition, the text of the Rule makes it clear that reversal is warranted only when the trial judge has committed an abuse of discretion. The Rule states that the trial court “may allow the taking of the depositions of witnesses to perpetuate their testimony [i]f the court finds that the perpetuation of the testimony is proper to avoid a failure or delay of justice . . . (Emphasis added.) F.R.C.P. 27(b).

The present appeal must fail both because appellant misperceives Rule 27 as a substitute for general discovery and because he has failed to show any abuse of discretion by the trial court.

In support of his abuse of discretion charge appellant asserts that there has been “no discovery in two years of litigation.” (Appellant’s brief at 5). Without some showing that continued delay in granting discovery is likely to result in a loss of evidence, the assertion that no discovery has yet taken place is plainly irrelevant to Rule 27. Appellant makes almost no attempt to show why the requested testimony must be perpetuated. In conclusory terms, appellant’s brief merely states:

There exists a substantial risk that testimonial evidence will become unavailable if discovery is further postponed. It is probable that the officers and directors having first hand knowledge are over fifty years of age. They are all senior officers of a large industrial corporation. One director has already died. Memories may fade. (Appellant’s brief at 12).

Although age may be a relevant factor in showing that testimony must be perpetuated to avoid loss, we simply cannot agree that these conclusory remarks in any way show that evidence is likely to be lost while the appeal is pending.

Since plaintiff failed to assert reasons why it was necessary to perpetuate this testimony, we find no abuse of discretion in the trial court’s denial of the motion.

III

For the foregoing reasons, we find that the district court order denying a Rule 27(b) motion to perpetuate testimony pending appeal was not an abuse of discretion. The motion to dismiss the appeal will be denied and the district court order affirmed.

      . 28 U.S.C. § 1291 provides:
      The courts of appeals shall have jurisdiction of appeals from all final decisions of the district courts of the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, and the District Court of the Virgin Islands, except where a direct review may be had in the Supreme Court. June 25, 1948, c. 646, 62 Stat. 929; Oct. 31, 1951, c. 655, § 48, 65 Stat. 726; July 7, 1958, Pub.L. 85-508, § 12(e), 72 Stat. 348.

      . 18 U.S.C. § 610 makes it unlawful for any corporation “to make a contribution or expenditure in connection with any election to any political office . . . .” In this civil suit, plaintiff-appellant challenges advertising allegedly violative of § 610, a criminal statute.

      . The district court’s denial of the preliminary injunction motion is reported at 350 F.Supp. 227 (E.D.Pa., 1972).

      . The questions presented for review by the Supreme Court are (1) whether the Court of Appeals erred in implying a private cause of action from the Corrupt Practices Act, 18 U.S.C. § 610, for advertising expenditures allegedly violative of the Act; (2) whether the Act itself violates freedom of speech, of press, and of association; (3) whether on its face the Act deprives corporations of equal protection of the laws. 419 U.S. 992, 95 S.Ct. 302, 42 L.Ed.2d 264.

      . The Rule 27(b) motion was filed on June 13, 1974. It was denied by the district court without opinion on June 26, 1974. This appeal was filed on July 11.
      On October 28, 1974, appellant filed a petition asking the court to treat the appeal as a petition for a writ of mandamus. Since this petition was so untimely filed, we decline to consider it.

      . Rule 27(b) states:
      Pending Appeal. If an appeal has been taken from a judgment of a district court or before the taking of an appeal if the time therefor has not expired, the district court in which the judgment was rendered may allow the taking of the depositions of witnesses to perpetuate their testimony for use in the event of further proceedings in the district court. In such case the party who desires to perpetuate the testimony may make a motion in the district court for leave to take the depositions, upon the same notice and service thereof as if the action was pending in the district court. The motion shall show (1) the names and addresses of persons to be examined and the substance of the testimony which he expects to elicit from each; (2) the reasons for perpetuating their testimony. If the court finds that the perpetuation of the testimony is proper to avoid a failure or delay of justice, it may make an order allowing the depositions to be taken and may make orders of the character provided for by Rules 34 and 35, and thereupon the depositions may be taken and used in the same manner and under the same conditions as are prescribed in these rules for depositions taken in actions pending in the district court. (Emphasis added).

      . The scope of Rule 26 is much broader than Rule 27. Rule 26(b)(1) specifically states:
      Parties may obtain discovery regarding any matter . . . which is relevant to the subject matter involved in the pending action . . . . (Emphasis added.)

      . In Borden Co. v. Sylk, 410 F.2d 843 (3d Cir., 1969), this court held a discovery order interlocutory and not appealable under § 1291. See United States v. Fried, 386 F.2d 691 (2nd Cir., 1967).

      . In Texaco, Inc. v. Borda, 383 F.2d 607 (3d Cir., 1967), this court reviewed the denial of a Rule 27 motion to perpetuate the testimony of a 71-year old witness. Since review was afforded through a writ of mandamus, questions of finality under § 1291 were not addressed but the case clearly shows that review of Rule 27 motions is possible. See In Re Sims, 389 F.2d 148 (5th Cir., en banc, 1967).

      . The court in Mosseller added as further reason for its holding of finality:
      If such orders were not held final and appealable, a plaintiff who had taken a deposition could wait several years before deciding to bring suit and the putative defendant could not during this time question the propriety of the order by an appeal. So a plaintiff might later be able to bring the suit in another district, thus cutting off a direct right of appeal and leaving serious question as to the defendant’s right to make a collateral attack upon the order by objection to introduction of the evidence in the second district. We see no conflict between this conclusion and the emphasis, noted above, upon the ancillary nature of the proceeding. Necessarily a proceeding for ancillary relief may often result in a final order which is reviewed on appeal. 158 F.2d at 383.

      . In Rose v. McNamara, 126 U.S.App.D.C. 179, 375 F.2d 924, 925 n. 2 (1967), the court considered an appeal from a denial of a Rule 27(b) motion. The question of finality was not reached, however, since the motion was considered at the same time as the appeal on the merits. See Minnesota Mining and Manufacturing Co. v. Technical Tape Corp., 309 F.2d 55, 59 (7th Cir., 1962) affirming 200 F.Supp. 753 (N.D.Ill., 1961).

      . Our holding that Rule 27 relief is reviewable is compatible with traditional rules of finality as stated in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974), Cohen v. Beneficial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), and most recently by this Court in Samuel v. University of Pittsburgh, 506 F.2d 355 (3d Cir. 1974). Eisen states a two pronged test for determining finality. The district court’s order must not be tentative, informal or incomplete and it must deal with a collateral matter, which could not effectively be reviewed on appeal from the final judgment. 417 U.S. at 171, 94 S.Ct. 2140. Clearly the district court’s order on this matter is not incomplete. The possibility that testimony will be lost forever unless review is afforded immediately brings this case within the second Eisen test. Review of the final judgment can, in no way, mitigate a loss of testimony from a witness’ death, or from the destruction of evidence sought to be preserved by the Rule 27 motions.

      . Texaco, Inc. v. Borda, supra n. 9 indicates an abuse of discretion standard by which Rule 27 motions are judged. See Rose v. McNamara, supra n. 11, W. H. Elliott & Sons v. E. & F. King & Co., 22 F.R.D. 280 (D.N.H., 1957).

      . In its motion for leave to take depositions, reproduced at page 56 of the appendix, plaintiff-appellant requested testimony from three named directors concerning “all matters relevant to the subject matter involved in the above action.” Such a broad request is more compatible with Rule 26 discovery, supra n. 7 than with Rule 27’s limited purpose of perpetuating testimony which might be lost.

      . For example, in Texaco, Inc. v. Borda, supra n. 9 this court deemed relevant the witness’ 71-year old age. In Mosseller, supra the Second Circuit was concerned with the grave illness of the prospective witness.

      . Although Rule 27(b) would seem to require some verification for a claim that testimony would be lost if unrecorded, none was supplied in the instant case. In dicta, the Fifth Circuit states that some verification must accompany a Rule 27 motion. Mercantile National Bank at Dallas v. Franklin Life Insurance Co., 248 F.2d 57, 59 n. 5. We agree.


author: PER CURIAM.

text:
    STATE OF MINNESOTA et al., Appellees, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY and Robert W. Fri, Appellants.
    No. 73-1446.
    United States Court of Appeals, Eighth Circuit.
    Submitted Feb. 13, 1974.
    Decided March 5, 1975.

      Edmund W. Kitch, Atty., Dept, of Justice, Washington, D. C., for appellants.
    Jonathan H. Morgan, Sol. Gen., Minnesota Pollution Control Agency, Minneapolis, Minn., for appellees.
    Jon Mills, Center for Governmental Responsibility, Gainesville, Fla., amici curiae.
    Before GIBSON, Chief Judge, MEHAFFY, Senior Circuit Judge, and LAY, HEANEY, BRIGHT, ROSS, STEPHENSON, and WEBSTER, Circuit Judges.
   PER CURIAM.

The State of Minnesota and the Minnesota Pollution Control Agency brought this action against the United States Environmental Protection Agency and its Acting Administrator seeking to compel the defendants to allot to Minnesota the full sums “authorized to be appropriated” for the construction of sewage treatment plants under sections 205(a) and 207 of the Federal Water Pollution Control Act Amendments of 1972, 33 U.S.C. §§ 1285(a) and 1287. The full sums under the statutory scheme would have provided Minnesota with allotments of approximately $100.6 million for fiscal year 1973 and $121 million for fiscal year 1974. However, the Administrator, acting pursuant to the order of President Nixon that he allot among all the states only $5 billion of the $11 billion authorized by Congress for the two years, allotted to Minnesota only $40.6 million for fiscal year 1973 and $60 million for fiscal year 1974.

In an unpublished memorandum and order the district judge determined that the Administrator had acted outside the scope of his authority under the Act in refusing to allot all of the funds authorized by Congress to be appropriated. He, therefore, ordered the defendants to allot to Minnesota the full sums authorized by the Act. This appeal followed.

After hearing oral argument en banc this Court delayed rendering a decision until the Supreme Court decided two cases which involved the identical issue of whether the Administrator had exceeded the scope of his authority under sections 205(a) and 207 of the Act when he allotted to the states less than the full amount authorized by Congress.

The Supreme Court announced its decisions in these cases on February 18, 1975, holding that the Act does not permit the Administrator to allot to the states under section 205 less than the entire amounts authorized to be appropriated by section 207. Train v. City of New York, 420 U.S. 35, 95 S.Ct. 839, 43 L.Ed.2d 1 (1975). See also Train v. Campaign Clean Water, Inc., 420 U.S. 136, 95 S.Ct. 847, 43 L.Ed.2d 82 (1975).

In accordance with this holding of the Supreme Court the judgment of the district court is affirmed. Mandate shall issue forthwith.


text:
    SOCIETY FOR ANIMAL RIGHTS, INC., et al., Appellants, v. James SCHLESINGER, Secretary of Defense of the United States, et al.
    No. 75-1105.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Feb. 12, 1975.
    Decided Feb. 13, 1975.
    As Amended Feb. 27, 1975.
    Bruce J. Terris, Washington, D. C., for appellant.
    Larry G. Gutterridge, Atty., Dept, of Justice, for appellee Schlesinger. Thomas L. Osborne, Hopkinsville, Ky., of the bar of the Supreme Court of Kentucky, pro hac vice by special leave of court and R. Stan Mortenson, Washington, D. C., for appellees, Christian County Department of Health et al.
    Before BAZELON, Chief Judge, and WRIGHT and LEVENTHAL, Circuit Judges.
   ORDER

On consideration of appellants’ motion for an injunction pending appeal, it is

Ordered by the Court that the injunction entered by this Court on February 10, 1975, is dissolved, and that appellants’ motion is denied. A statement of our reasons for denying injunctive relief is attached.

PER CURIAM:

Appellants filed suit on February 3, 1975, seeking to halt the planned destruction of blackbirds on two military bases and in three counties of Kentucky and Tennessee. The project was originally scheduled for the night of February 3, but was delayed by order of the District Court so that a hearing could be held to determine whether a preliminary injunction should issue.

The crux of the case before us is the program of the Department of Defense for the projects to be conducted on the military bases. An initial decision was made to eliminate the birds. The Council of Environmental Quality advised that in its opinion the program could only proceed after preparation of an environmental impact statement, in accordance with the National Environmental Policy Act. The statement was prepared on an expedited schedule, which was approved by the Council. Comments were solicited from interested and informed sources. After preparation of the final statement on January 27, 1975, an additional seven-day period was allowed for comments.

The district judge heard evidence and argument on February 7, and on Saturday, February 8, he denied the motion for a preliminary injunction. He granted temporary relief until noon Monday, February 10, to permit appellants to bring the matter to this court under 28 U.S.C. § 1292(a). Appellants timely sought an injunction pending appeal. On February 10, we issued injunctive relief to preserve the status quo pending argument on the motion. That argument was held on February 12, 1975. Today we dissolve the injunction, and thus permit the Defense Department to proceed with its project, although as will appear we express concerns which we presume will be heeded.

The appellants who brought the lawsuit include, in addition to the Society for Animal Rights, Inc., a New York corporation, individual residents of Kentucky and Tennessee who allege an interest in being able to observe and enjoy the presence of blackbirds.

Appellants attack the Army’s planned elimination of up to ten million birds primarily on the grounds (a) that the environmental impact statement is inadequate, and (b) that the proposed action is arbitrary and an abuse of discretion.

Appellants have raised many questions, and we identify some of the contentions and assertions as points that give us concern. Appellants claim, inter alia, that the effect of the avian control agent, Tergitol, represents a potential threat to people living in the vicinity of the areas to be sprayed. The chemical, which is still in the experimental stage, may end up in the lakes and streams as rain washes it from the dead birds. The birds themselves may carry it into the cities if they leave the roost after being sprayed.

Another concern is the removal of the carcasses of the birds that are killed. The statement contemplates a removal program from the roost at one of the bases if the kill is too large for aerobic disposal. There appears to be no provision for such action at the other base. Appellants claim that the presence of millions of dead bodies provides insects with a fertile breeding ground and rodents with a convenient food source, which may culminate in a possible environmental impact that has not been adequately considered.

The Defense Department's contention is that the material ecological consequences of its proposed action have been adequately identified in its environmental impact statement, and that its proposed áction, while it may present risks, cannot be condemned as arbitrary in view of the evidence linking the presence of the birds to impairment of the quality of the environment of those living near the present roosts, including damage to crops and incidence of histoplasmosis.

There are interventions in support of the Government’s proposed action by the communities involved, and numerous organizations, including a county department of health and the local chapter of the Audubon Society. Such risks to the local community as there may be from the chemicals are apparently risks it is prepared to accept in its conception of the larger good.

None of the parties contend that the Defense Department’s proposed control program on the two military bases poses a threat to any species of blackbird.

In denying a preliminary injunction, the district court held that there was not a strong enough showing by appellants of probability of success on the merits, on the claims that the impact statement failed to adduce the material ecological consequences, or that the action proposed by the Defense Department, and its balancing of conflicting dangers and risks, was arbitrary.

The district court did not purport to make a ruling on the merits. This court, also, is not now engaged in a ruling on the merits. Indeed, even if we were now determining the appeal from the denial of the preliminary injunction, we could not reverse unless we were able to identify an error of law, or to conclude on some other basis that the district judge abused his discretion. Cox v. Democratic Central Committee of the District of Columbia, 91 U.S.App.D.C. 416, 200 F.2d 356 (1952). This would present a narrow question, and a great burden on appellants. The question is still more narrow, and the burden is still greater for litigants, like appellants, seeking an injunction pending the disposition of the appeal from the denial of the temporary injunction. See Virginia Petroleum Jobbers Ass’n v. FPC, 104 U.S.App.D.C. 106, 259 F.2d 921 (1958).

At this juncture of the litigation, taking into account the scanty record before us and the narrowness of our review function, we cannot conclude that there was such a likelihood that the ruling by the district judge represented an abuse of judicial discretion that this court should intervene with an injunction pending further proceedings. See Committee for Nuclear Responsibility, Inc. v. Seaborg, 149 U.S.App.D.C. 393, 395, 463 F.2d 796, 798 (1971) (Amchitka Island Case).

Factors indicate that “issuance of a stay would have a serious adverse effect on other interested persons.” Virginia Petroleum Jobbers Ass’n, supra, at 110, 259 F.2d at 925. The threats posed by the birds to human health and to the seed stores and feedlots of farmers seem significant. As we noted above, the Government’s action is supported by the county health department and the local chapter of the Audubon Society. And unless the Government is allowed to act soon, it will lose the opportunity to act at all, due to the migratory habits of the birds and changes in weather conditions required for the planned control measures. We recognized in Committee for Nuclear Responsibility, supra, that circumstances of particular urgency might lead a court to withhold injunctive relief despite serious questions about the adequacy of the environmental impact statement.

While we cannot condemn appellees out of hand as proposing action that is illegal, we feel warranted in suggesting; that the public interest may well warrant their seeking the advice of impartial scientists before proceeding with the spraying. We have already identified • matters that give us particular concern, notably the possibility of danger from the chemical spray, and the ecological consequences of permitting carcasses to rot without removal.

Although the Defense Department may go ahead with its plans, it has a continuing responsibility to gather information both from independent experts and through its own experiments. Prior to any subsequent applications of PA — 14, it must incorporate new findings of significance into its analysis, perhaps by way of amending the existing EIS, with opportunity for comment by other agencies and members of the public. And, consistent with NEPA, it must reassess its determination to go forward in light of any changes in environmental impact analysis occasioned by its discoveries. See Calvert Cliffs’ Coordinating Comm. v. AEC, 146 U.S.App.D.C. 33, 43, 449 F.2d 1109, 1119 (1971).

We assume that the case will proceed forward expeditiously in the district court despite the pendency of the § 1292(a) appeal in this court. Appellants advise that they will seek to amend their complaint to broaden their challenge to the role of the Department of the Interior. Hopefully, the trial of this cause will provide information that will be helpful in the event governmental officers and agencies are involved in any similar control project in the future.

In considering this motion, we have given due consideration to a number of factual, scientific and legal contentions on each side that have not been spelled out in this opinion. Our result is governed by our approach, that the court does not have the function of determining what should be done, or the latitude to substitute its appraisals and conclusions for those of the executive branch. The function of the court, even on the merits, is to consider whether there is a showing that proposed executive action is contrary to law or an abuse of discretion. And for purposes of considering whether there should be relief pending determination on the merits, the judicial function is even more narrow. In the circumstances, the injunctive relief heretofore granted appellants, in order that we might hear and consider orál argument, is dissolved.

So ordered.

       Appellants propose to attack the sufficiency of the justification for the use of an experimental chemical in this manner, and the failure of the Department of the Interior to prepare an impact statement before undertaking a wide program of giving, to local government authorities, the approval of the Department of Interior that appellants claim is necessary for lawful use of the chemical under the EPA’s.