Barreiro v. Model Power Int'l

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _______________

m 98-50615 Summary Calendar _______________

PEDRO DIAZ BARREIRO, Plaintiff-Appellant, VERSUS

MODEL POWER INTERNATIONAL CORPORATION, etc., et al., Defendants, MODEL POWER INTERNATIONAL CORPORATION, a division of ATI Model Products, Inc; and MDK, INC., Defendants-Appellees. _________________________

Appeal from the United States District Court for the Western District of Texas (DR-97-CV-84-01) _________________________

February 9, 2000

Before SMITH, BARKSDALE, and jurisdiction. Barreiro claims the court erred PARKER, Circuit Judges. both in limiting jurisdictional discovery and in deciding personal jurisdiction before resolving PER CURIAM:* subject-matter jurisdiction.

Following a period of discovery, the district II. court, without addressing subject matter Federal courts have discretion to avoid a jurisdiction, dismissed for want of personal difficult question of subject matter jurisdiction jurisdiction. We affirm. when the absence of personal jurisdiction is the surer ground, and we review the decision to I. do so for abuse of discretion. See Ruhrgas, Pedro Barreiro sued Model Power 526 U.S. at ___, 119 S. Ct. at 1572. International Corporation (“Model Power”), M.D.K., Inc. (“MDK”), and SKI Industrial [I]n cases removed from state court to Company (“SKI”) in state court for breach of federal court, as in cases originating in contract and conversion. Model Power and federal court, there is no unyielding MDK removed the action to federal court on jurisdictional hierarchy. Customarily, a the basis of diversity of citizenship: Barreiro federal court first resolves doubts about is domiciled in Mexico, Model Power is its jurisdiction over the subject matter, incorporated in New York, MDK is but there are circumstances in which a incorporated in North Carolina, and SKI is district court appropriately accords incorporated in Hong Kong. Because the priority to a personal jurisdiction presence of an alien plaintiff and an alien inquiry. defendant destroys the “complete diversity” required by 28 U.S.C. § 1332, removal was A State’s dignitary interest bears proper only if, as Model Power and MDK consideration when a district court claimed, SKI was fraudulently joined. See exercises discretion in a case of this Ruhrgas AG v. Marathon Oil Co., 526 U.S. order. If personal jurisdiction raises 574, ___ n.2, 119 S. Ct. 1563, 1567 n.2 difficult questions of state law, and (1999). Therefore, Barreiro filed a motion for subject-matter jurisdiction is resolved as remand; Model Power and MDK filed motions easily as personal jurisdiction, a district to dismiss for lack of personal jurisdiction. court will ordinarily conclude that federalism concerns tip the scales in After several months of discovery, Barreiro favor of initially ruling on the motion to had failed to produce any evidence supporting remand. In other cases, however, the a prima facie case of personal jurisdiction over district court may find that concerns of Model Power or MDK, so the court dismissed judicial economy and restraint are those defendants for lack of personal overriding. See, e.g., Asociacion jurisdiction, leaving SKI as the only remaining Nacional de Pescadores v. Dow defendant. As an alien corporation, SKI had Quimica, 988 F.2d 559, 566-567 (C.A.5 to be served process pursuant to the Hague 1993) (if removal is nonfrivolous and Convention protocols, but this had not yet personal jurisdiction turns on federal been accomplished. Because the only plaintiff constitutional issues, “federal intrusion and only defendant were aliens, the court into state courts’ authority . . . is remanded for want of subject-matter minimized.”). The federal design allows leeway for sensitive judgments of this sort. * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be Id. at 1566, 1571 (internal citation and published and is not precedent except under the quotation marks omitted). limited circumstances set forth in 5TH CIR. R. 47.5.4. Barreiro incorrectly asserts that the

question of diversity in deciding subject matter demonstrating personal jurisdiction because of jurisdiction can never involve difficult legal the limitation placed on jurisdictional questions and must always be resolved before discovery. “[J]urisdictional discovery is within personal jurisdiction. Even where personal the trial court’s discretion and will not be jurisdiction raises difficult questions of state disturbed ordinarily unless there are unusual law, and subject matter jurisdiction is resolved circumstances showing a clear abuse.” as easily as personal jurisdiction, a district Patterson, 764 F.2d at 1148 (internal court need not always rule on the motion to quotation marks omitted). remand firstSSthe Ruhrgas Court noted that, in such circumstances, the court ordinarily will The court gave Barreiro several months to do so, but concerns of judicial economy and conduct jurisdictional discovery, but he came rest raint may override that ordinary up with no evidence supporting personal chronology. See id. at 1571. This case is one jurisdiction, while defendants produced in which the court may properly defer significant evidence refuting it. The court did resolution of subject matter jurisdiction. not abuse its discretion in limiting jurisdictional discovery to a reasonable period of time. After months of discovery, Barreiro had not produced evidence that Model Power or MDK AFFIRMED. was subject to personal jurisdiction under the Texas long-arm statute.1 In contrast, Model Power and MDK produced significant evidence that such jurisdiction was lacking. The court reviewed this evidence, concluding not only that neither Model Power nor MDK had the requisite minimum contacts with the forum state, but that even if such contacts had been established, it would not have been fair and reasonable to exert jurisdiction. See Patterson v. Dietze, Inc., 764 F.2d 1145, 1146 (5th Cir. 1985).

In contrast to this straightforward analysis, the court, to determine subject matter jurisdiction, would have had to consider the claim that the alien party SKI was fraudulently joined, when SKI had not yet been served and therefore was not even before the court. See Jernigan v. Ashland Oil Inc., 989 F.2d 812, 815-16 (5th Cir. 1993) (discussing the test for fraudulent joinder). Resolving personal jurisdiction first was not an abuse of discretion.

III. Barreiro claims he was prevented from

1 TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (1997). The statute authorizes personal jurisdiction to the extent allowed by the Due Process Clause. See Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 200 (Tex. 1985).