filed: August 23, 1993; As Corrected September 13, 1993.
On Appeal From the United States District Court For the Eastern District of Pennsylvania. (D.C. Civ. No. 92-01717).
Before: Becker, Alito, Circuit Judges, and Atkins, District Judge.*fn*
This seemingly routine slip and fall case presents a difficult and somewhat novel question of appellate jurisdiction. Plaintiff Charles Powers, who sustained personal injuries in a 7-Eleven store, brought suit with his wife Marguerite Powers in state court against The Southland Corporation, which owns the 7-Eleven name and both operates and franchises 7-Eleven stores. Southland removed the action to federal court. Southland and its franchisee, Robert Yeager, appeal from an order of the district court granting the motion of plaintiffs for leave to amend their complaint to add Yeager as a defendant under a relation back theory, even though the statute of limitations governing the action against Yeager had expired prior to the motion to amend. Because the addition of Yeager destroyed diversity jurisdiction, 28 U.S.C. §§ 1332, 1441, the district court's order also remanded the case to state court.
The plaintiffs submit that it was proper for the district court to remand the case with Yeager installed as a defendant. More importantly for present purposes, they argue that, irrespective of the propriety of the district court's order, we lack jurisdiction over the present appeal. Yeager and Southland, while not contesting the remand, respond that we have jurisdiction and that the district court erred in permitting the relation back amendment.
Before we can review the merits of the district court's order, we must first determine our jurisdiction. The defendants concede that 28 U.S.C. § 1447(d) bars our review of the remand portion of the order, but they submit that the portion of the order granting the motion for a "relation back amendment" under Fed. R. Civ. P. 15(c) is, for purposes of review, separable from the remand under the holding in City of Waco v. United States Fidelity & Guar. Co., 293 U.S. 140, 55 S. Ct. 6, 79 L. Ed. 244 (1934), and that under this theory remand is not barred by 28 U.S.C. § 1447(d). We agree. But we must still dismiss the appeal for lack of appellate jurisdiction (over defendants' opposition) because the portion of the order allowing the relation back amendment was not final within the meaning of 28 U.S.C. § 1291. We reach this Conclusion because we are aware of no doctrine that would bar the state courts from reviewing the district court's decision, and hence that decision will both have no preclusive effect on the parties and may be effectively reviewed by the state appellate courts. Since the present appeal is interlocutory, it will be dismissed for lack of appellate jurisdiction.
I. FACTUAL AND PROCEDURAL BACKGROUND
The plaintiffs, both residents of Pennsylvania, filed this action against Southland in the Court of Common Pleas of Montgomery County, Pennsylvania. The case arises from personal injuries Mr. Powers sustained when he slipped and fell while inside a 7-Eleven store in North Hills, Pennsylvania, on April 9, 1990. The original complaint, which was filed on February 20, 1992, alleged that Southland was negligent in failing to maintain the property in a condition free from hazardous or dangerous conditions -- specifically, that the floor was allowed to remain wet after mopping without warning customers or taking other preventive measures to eliminate the hazard. On March 24, 1992, Southland, a Texas corporation with its principal place of business in Texas, removed the action to the United States District Court for the Eastern District of Pennsylvania on diversity grounds.
On April 20, 1992, plaintiffs' counsel learned for the first time that the store in which Powers had fallen was not owned by Southland, but instead was owned by a franchisee, Robert Yeager.*fn1 On April 21, 1992, the plaintiffs notified Yeager by certified mail that they had sued Southland and that they intended to amend their complaint to name Yeager as a co-defendant. On April 29, 1992, the plaintiffs mailed a copy of the proposed amended complaint to Yeager as specific notice of the plaintiffs' intent to add Yeager as a defendant. The only substantive change to the complaint was the addition of Yeager.
On April 30, 1992, twenty-one days after the expiration of Pennsylvania's two year statute of limitations for personal injury actions, see 42 Pa. Cons. Stat. Ann. § 5524(2) (West Supp. 1993), the plaintiffs moved for leave to amend the complaint. The district court, in a memorandum opinion and order filed on June 15, 1992, granted the motion and permitted the amendment to relate back to the date on which the original complaint was filed, pursuant to Fed. R. Civ. P. 15(c). The court reasoned that the claim against Yeager arose from the same transaction; that there was nothing actually known to the plaintiffs that put them on notice that Southland was not the sole responsible party; that they were diligent in seeking to amend once they had learned of Yeager's possible responsibility; and, finally, that because Southland and Yeager had such a strong commonality of interests, notice to one should have constituted notice to the other. See Powers v. The Southland Corp., No. 92-1717, slip op. at 3-7 (E.D. Pa. June 15, 1992). The plaintiffs thus were able, because of the relation back, to add Yeager as a defendant even though the statute of limitations had expired by the time the motion to amend was filed.
The district court went on to hold, however, that the addition of Yeager, who is a resident of Pennsylvania, destroyed the court's diversity jurisdiction. Id., slip op. at 7. In response to Southland's argument that the court could not destroy its jurisdiction in this manner, the court pointed to 28 U.S.C. § 1447(e), which gives the court discretion to join a party even though joinder would destroy subject matter jurisdiction. Applying a general equities analysis, the court found that allowing joinder that would necessitate remand was proper here because the plaintiffs were not joining the party as a means of destroying jurisdiction; rather, they had bona fide claims against both defendants. Id., slip op. at 7-8. Thus, in a single order the district court granted the motion for the relation back amendment to add Yeager and, because Yeager's joinder destroyed diversity (federal subject matter jurisdiction), remanded the case to the state court.*fn2
II. APPELLATE JURISDICTION
The plaintiffs advance two alternative arguments asserting lack of appellate jurisdiction. First, they contend that consideration of any portion of the district court's order is barred by 28 U.S.C. § 1447(d), which provides:
An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1443 of this title shall be reviewable by appeal or otherwise.*fn3
Second, they submit that even if § 1447(d) does not prohibit our review of the district court's decision to allow the relation back amendment, we nevertheless lack jurisdiction because that decision was not a final order within the meaning of 28 U.S.C. § 1291.
Is Review of the District Court's Decision Permitting the Relation Back Amendment Barred by 28 U.S.C. § 1447(d)?
It is well established that an order of remand is not reviewable except for certain narrow exceptions. See Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 96 S. Ct. 584, 46 L. Ed. 2d 542 (1976); see also Aliota v. Graham, 984 F.2d 1350, 1354-55 (3d Cir. 1993), petition for cert. filed, 124 L. Ed. 2d 656, 61 U.S.L.W. 3820, 113 S. Ct. 2437 (U.S. May 19, 1993) (No. 92-1863); In re TMI Litig. Cases Consol. II, 940 F.2d 832, 840-42 (3d Cir. 1991), cert. denied, 112 S. Ct. 1262 (1992). The defendants concede that the remand portion of the district court's order is not reviewable. However, relying on City of Waco v. United States Fidelity & Guar. Co., 293 U.S. 140, 55 S. Ct. 6, 79 L. Ed. 244 (1934), they submit that notwithstanding 28 U.S.C. § 1447(d), we may review the portion of the court's order permitting the relation back amendment because that decision preceded, and therefore is severable from, the remand decision.*fn4 In addressing this argument, we must determine whether, as in City of Waco, the decision allowing the relation back amendment is severable, both "in logic and fact," from the remand.
The underlying cause of action in City of Waco was a suit by Curtis Boggs against the City of Waco, Texas, and its contractor, Combs & Glade, for damages Boggs allegedly suffered in a collision with a street obstruction. By way of a "cross-action," the City of Waco brought the Fidelity Company into the suit, alleging that Fidelity "was liable under the bond to pay whatever amount might be adJudged due by the City by reason of the fault of the contractors [co-defendant Combs & Glade]." City of Waco, 293 U.S. at 141, 55 S. Ct. at 6. Fidelity removed the case to federal court, where Boggs filed a motion asking for a variety of relief, including that the case as a whole be remanded or that the case against Fidelity be dismissed and then the remainder of the case be remanded to state court. Id. at 141-42, 55 S. Ct. at 6-7. The district court entered a single order which resolved three separate issues. The court first denied Boggs' motion to remand the entire case. However, it went on to consider and grant the motion to dismiss the cross-complaint, finding "that as to the plaintiff's cause of action the Fidelity Company was an unnecessary and improper party." Since upon dismissal there was no longer diversity of citizenship, the court remanded the remainder of the case to state court on the ground that it no longer had jurisdiction. Id. at 142, 55 S. Ct. at 7.
The City of Waco appealed the order dismissing the Fidelity Company, but not the remand. The court of appeals nevertheless dismissed the appeal "holding that, as no appeal lies from an order of remand, the cause was irrevocably out of the District Court, the action of that court in dismissing the city's cross-action was moot, and its propriety could not be reviewed." Id. at 142-43, 55 S. Ct. at 7.*fn5 The Supreme Court reversed, holding that review should be permitted of the dismissal that led to the remand:
The record contradicts the statement [that the District Court remanded "all matters concerning the entire controversy"]. If the District Court's order stands the cross-action will be no part of the case which is remanded to the state court. Indeed, if the District Court was right, the cause could not have been remanded except for the exclusion of the Fidelity Company as a party. True, no appeal lies from the order of remand; but in logic and in fact the decree of dismissal preceded that of remand and was made by the District Court while it had ...