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Aliota v. Graham

filed: January 22, 1993.

LOUIS J. ALIOTA AND PAULETTE ALIOTA,
v.
JACK D. GRAHAM, WILLIAM D. SHOEMAKE, KATHRYN FOWELLS, JANET WELLS, JOYCE BALL, UNITED STATES OF AMERICA, APPELLANTS IN NO. 91-3757; IN RE: UNITED STATES OF AMERICA, JACK D. GRAHAM, WILLIAM D. SHOEMAKE, KATHRYN FOWELLS, JANET WELLS AND JOYCE BALL, PETITIONERS IN NO. 92-3020



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA. (D.C. Civil No. 90-00244E).

Before: Becker, Hutchinson, and Alito, Circuit Judges.

Author: Alito

Opinion OF THE COURT

ALITO, Circuit Judge :

The United States has appealed and has filed a mandamus petition seeking review of a district court order in a defamation action that was originally begun in state court against five federal employees in their individual capacities. After the case was removed to federal court and the United States was substituted for the original defendants pursuant to a provision of the Federal Employees Liability Reform and Tort Compensation Act of 1988 (the "Westfall Act"), 28 U.S.C. § 2679(d)(1988), the district court resubstituted the original defendants and remanded the case to state court. We hold that the district court's resubstitution decision is appealable under the collateral order doctrine; that the remand was prohibited by 28 U.S.C. § 2679(d)(2)(1988) and is reviewable by mandamus; and that the district court applied incorrect legal standards in concluding that the originally named individual defendants were not acting within the scope of their employment when they allegedly engaged in the conduct in question. We will therefore vacate the order of the district court and remand for further proceedings.

I.

Louis J. Aliota served as chief of the pharmacy at the Veterans Affairs Medical Center in Erie, Pennsylvania, from 1980 until 1989. In 1989, Aliota was relieved of his duties as chief of the pharmacy and placed in another position.

In October 1990, Aliota and his wife began a civil action in the Court of Common Pleas for Erie County against five employees of the Medical Center. These individuals are Jack D. Graham, the director of the Medical Center; William D. Shoemake, the associate director of the Medical Center; and Joyce Ball, Kathryn Fowells, and Janet Wells, three other Medical Center employees. The plaintiffs subsequently served a motion stating that their suit was based on slander and conspiracy arising from statements made by the defendants during September and October 1989.

Represented by the Department of Justice, the defendants filed a notice of removal to the United States District Court for the Western District of Pennsylvania. In that notice, counsel for the defendants stated:

Plaintiffs' counsel represented to undersigned counsel in a telephone conversation . . . that the allegedly slanderous statements at issue were made by defendants at the Erie VA Medical Center to a pharmaceutical company representative in the course of that representative's regular business visit to the Erie VA Medical Center.

The plaintiffs subsequently filed a complaint in the federal court, alleging that "on or about September 23, 1989, Defendant Kathryn Fowells made statements to one Tim Nies to the effect that Plaintiff Louis J. Aliota had been removed from his duties due to his involvement in a 'drug scandal'." The complaint further alleged that "Defendants Jack D. Graham and William D. Shoemake communicated the aforementioned defamatory statement to Kathryn Fowells with knowledge that it was false and with the intent to injure Plaintiff in his reputation." The complaint did not contain any specific allegations concerning the remaining defendants.

The United States Attorney for the Western District of Pennsylvania, exercising authority delegated by the Attorney General of the United States, certified that the five individual defendants were acting within the scope of their employment when they allegedly engaged in the conduct in question. The district court then ordered that the United States be substituted as the sole defendant and that the claims against the individual defendants be dismissed.

The plaintiffs subsequently filed a motion to remand the case and to strike the substitution of the United States as the defendant, arguing that the individual defendants had not been acting within the scope of their employment. At an evidentiary hearing on this motion, both sides requested leave to take depositions. The court granted these requests, and after the depositions were completed, the court held that none of the defendants had been acting within the scope of their employment when they allegedly made the defamatory statements. The court therefore entered an order striking the substitution and remanding the case to the state court. The United States filed a notice of appeal, as well as a petition for mandamus seeking review of the remand.

II.

We first address the question whether the portion of the district court's order resubstituting the originally named defendants in place of the United States is reviewable by means of an appeal filed under 28 U.S.C. § 1291 (1988). This question may be divided into two subquestions: first, whether review of this portion of the district court's order is barred by 28 U.S.C. § 1447(d) (1988), which restricts review of remand orders, and second, whether this portion of the district court's order is "final" within the meaning of 28 U.S.C. § 1291 (1988).

A. We hold that review of the question of resubstitution is not barred by 28 U.S.C. § 1447(d)(1988). This provision concerns appellate review of "an order remanding a case to the State court from which it was removed. . . ." 28 U.S.C. § 1447(d)(1988). This provision says nothing about orders directing the resubstitution of parties. Accordingly, unless the question of resubstitution is viewed as somehow inextricably linked to the question of remand, 28 U.S.C. § 1447(d)(1988) does not bar review.

The Supreme Court considered a closely related issue in Waco v. United States Fidelity & Guar. Co., 293 U.S. 140 (1934). In Waco, the district court in a removed case issued a single order that dismissed a cross-claim and remanded the case to the state court for lack of diversity jurisdiction. The Supreme Court held that the portion of the district court's order dismissing the cross-claim was appealable despite the restriction on appellate review of remand ...


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