Opposition Brief — Walker v. Texas, 119 S. Ct. 865 (1999) (No. 98-350)

FILED

. NOV 19 Bys

No. 98-350 7

OFFICE OF THE CLERK

IN THE SUPREME COURT, U.S.

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1998

WILLIAM E. WALKER, M.D.,

Petitioner,

v.

THE STATE OF TEXAS,

Respondent.

On Petition For Writ of Certiorari To The

United States Court of Appeals For The Fifth Circuit

RESPONDENT’S BRIEF IN OPPOSITION TO

WALKER’S PETITION FOR WRIT OF CERTIORARI

DAN MORALES

Attorney General of Texas

JORGE VEGA

First Assistant Attorney General

DAVID A. TALBOT, JR.

Deputy Attorney General for Litigation

TONI HUNTER

Chief, General Litigation Division

ANTOINETTE HUNTER

RONALD R. DEL VENTO

CHRISTOPHER JOHNSEN

MARK BROWNING

Assistant Attorneys General

P.O. Box 12548, Capitol Station

Austin, Texas 78711-2548

(512) 463-2120

Counsel for Respondent

QUESTIONS PRESENTED FOR REVIEW

Was removal by counter-defendant proper under 28 U.S.C.

§ 1441(c)?

Did the Court of Appeals view the summary judgment

evidence in the light most favorable to the non-movant?

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW .............. i

ey Pb fe foe 3s) ey wEeyreee Pere gE rc ee ii

TABLE GP AUTHRIRE ls so 5 805 oi iisks cs. iii

STATUTORY PROVISIONS INVOLVED .............. 1

STATICS CO Se GA feo c i ck ci sub cies taneeeee 2

ARGUMENTS FOR DENYING THE PETITION ......... 7

I. Removal by Counter-Defendant Low Was

Proper Under 28 U.S.C. § 1441(c). ......... 7

Wan ROROVE PIOGET «. 6 iccrccas esses swipes 9

Il. The Court of Appeals Viewed the Disputed

Evidence in the Light Most Favorable to

the Non-Movant When it Affirmed the

District Court’s Grant of Qualified

Immunity .. 0... cece cece tee ee eees 16

Walker’s Substantive Due Process Claims ..... Pee |

Walker’s Equal Protection Claims ............... 20

LA ES 9 be haces ca O8 Ae seb aE teens eee 21

APPENDIX

TABLE OF AUTHORITIES

CASES

Aldens, Inc. v. Packel, 524 F.2d 38, (3 Cir. 1975) ......... 8

American Fire & Casualty Co. v. Finn, 341 U.S. 6,

eM EOD se vs viv vo os ccicn nc 6, 10, 11

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

Te ME OU ens os ss oo os eG 16

Bender v. Williamsport Area School Dist., 475 U.S.

ee ee Oe BP ee 8

Berger v. Reynolds Metals Co., 39 F.R.D. 313

tees LESS SES SSS ta a a 8

Carl Heck Engineers, Inc. v. Lafourche Parish

Police Jury, 622 F.2d 133 (Sth Cir. 1980) .......... 11-14

Caterpillar, Inc. v. Lewis, 519 U.S. 61,

ME NEG TSE as en 6

Channell v. Citicorp. National Services, Inc.,

CT Ot, BD ee 12

Crawford-El v. Britton_U.S. _, 118 S.Ct. 1584 (1998) ..... 17

Federal Deposit Insurance Corp. v. La Rambla

Shopping Center, Inc., 791 F.2d 215 (1" Cir. 1986) ....... 8

First Federal Savings and Loan Assoc. of Boston

v. Greenwald, 591 F.2d 417 (1" Cir. 1979) ............ 15

iv

Ford Motor Credit Co. v. Aaron-Lincoln

Mercury, Inc., 563 F.Supp. 1108 (N.D. Tl. 1983) ....... 14

Franchise Tax Bd. of the State of California v.

Constr. Laborers Vacation Trust for Southern Cal.,

463 U.S. 1, 103 S.Ct. 2841 (1983) .............. 9, 13, 15

Gentry v. Smith, 487 F.2d 571, 579 (5™ Cir. 1973) ........ 12

Green v. McKaskle, 788 F.2d 1116 (5" Cir. 1986) ........ 20

Grubbs v. General Electric Credit Corp.,

405 U.S. 699, 702, 92 S.Ct. 1344 (1972) ............... 6

Gully v. First Nat. Bank in Meridian,

S98 UB. POR as es DOCH Cisse AeA 9,15

Hafer v. Melo, 502 U.S. 21, 112 S.Ct. 358 (1991) ......... 8

Harlow vy. Fitzgerald, 457 U.S. 800, 102 S.Ct.

BEET ROPE 5 Eb oa es C5 EL lee A Ee Reece 16

Heller v. Doe, 509 U.S. 312, 113 S.Ct. 2637 (1993) ....... 11

Hercules Incorp. v. Dynamic Export Corp.,

FE A CECT Be SUPER Sei e i ikea sce he iets ox 12

Iglesias v. Mutual Life Insurance Company

of New York, 156 F.3d 237 (1" Cir. 1998) ............. 12

Johnson v. Rodriguez, 110 F.3d 299 (5 Cir. 1997) ....... 20

Kentucky v. Graham, 473 U.S. 159, 105 S.Ct. 3099 (1985) .. 8

Vv

Kersey v. Shipley, 673 F.2d 730 (4th Cir. 1982),

cert. denied, 459 U.S. 836, 103 S.Ct. 80 (1982) ......

Lesnick v. Public Indus. Corp., 144 F.2d 968

oa a cs hob By nn AER TIPS OPE CEE ES

Levitt v. University of Texas at El Paso,

759 F.2d 1224 (Sth Cir. i) RS Pee ee ee eee

Lewis v. Windsor Door, 926 F.2d 729 (8" Cir. 1991) ...

Malley v. Briggs, 475 U.S. 335, 106 S. Ct. 1092 (1986) .

Matsushita Electrical Industrial Co. v. Zenith

Radio Corp., 475 U.S. 574, 106 S.Ct. 1348 (1986) ...

Mongo Band of Mission Indians y. Calif. State

Bd. of Equalization, 858 F.2d 1376 (9" Cir. 1988),

cert. denied, 488 U.S. 1006, 109 S.Ct. 787 $3). | eee

Newman-Green, Inc. y. Alfonzo-Larrain,

490 U.S. 826, 109 S.Ct. 2218 Sey Se Pee

Pioche Mines Consol., Inc. v. F idelity-Philadelphia

Trust Co., 206 F.2d 336 (9" Cir. 1953), cert. denied,

346 U.S. 899, 74 S.Ct. 225 (1953) ................

Radio Shack Franchise Dept., A Division of Tandy

Corp. v. Williams, 804 F.Supp. 151 (D. Kan. 1992) . . .

Regents of Univ. of Mich. v. Ewing,

474 U.S. 214, 106 S.Ct. 507 RRP s oasac anes he,

Shamrock Oil & Gas Corp. v. Sheets,

313 U.S. 100, 61 S.Ct. 868 (1941) ................

13,14

17, 19

vi

Siegert v. Gilley, 500 U.S. 226, 111 S.Ct. 1789 (1991) ..... 16

State of Texas v. Walker, 142 F.3, 813

had & | RR sa ee ge ear ene emer 12-14,19, 20

Thomas v. Shelton, 740 F.2d 478 (7" Cir. 1984) ....... 13, 14

United Artists Corp. v. Masterpiece Productions, Inc.,

ris @ ue Gok, os A... s ers Peer cer ee 12

Weiss v. Anker, 421 F.Supp. 1040 (E.D.N.Y. 1976) ....... 18

West v. Aurora City, 6 Wall. 139, 18 L.Ed. 819 (1867)..... 10

Will v. Michigan Dept. of State Police,

eg eh Re RG Re ys el ae ee oar 8

Wong v. Bacon, 445 F.Supp. 1177 (N.D. Cal. 1977) ....... 15

Woods v. Johnson, 75 F.3d 1017 (5" Cir. 1996),

cert. denied, . US... 175.02: ISO CIS9G) i wes 20

Rules

Ee OD XS Br tener Ae eer wie SO A 12

Pe CR SAS NSCS Oa Bs Calchs FAS ERS FUN UN 12

I HONUD sais W's 0 08 6 095 EERNS oA aad ee 5 Pe >

POC sa 6s teas ab lode senawer ec iereaves 12, 18

pi A SS A | Peery aes eared Seg en tera oe 7

a PURE VAKA 6G AKER KAA N KEE ERRORS 7

Vii

Statutes

seybec csp Tigi ECO EEE OE OE POO Da a ES 9

Be NESE ORR eins fs ested Fiauees ioe nk 5, 19

BE CS SAMONG) woes cc ce 1911 U.S.C. § 523(a)(6)19

WOR MEE Sees dt ise vise kl ee 15

“eabbntecigtcns cng. EP TPR Oe CoG Te eet Ne ee 9

sept ene oy Long SEE EER OT Fo ee Tse 8

WEP ORO so oie aye og ee ee a 12

eee PND Ss ae a ie 4,10

We Seis © OOOO oo i ioe ec 2, 4, 6, 7, 9-11, 15

witlet 3. cs gicte heh CET URES DR TRE RET 4

RONNIE eis hess pis dkeeue es 15

28 U.S.C. § 1447(c) PORE WO EUNS OAS SURE CESS Coke Cea 6

Other Authorities

Wright, Miller, Kane, 6 Federal Practice and Procedure

Seduidtas hedinn abode, Ee Te Er ee ee 8, 12

aephtD weiter ss 4 dt tevettis PM fe

satel ta tS

Sor ee

No. 98-350

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1998

WILLIAM E. WALKER, M.D.,

Petitioner,

Vv

THE STATE OF TEXAS,

Respondent.

On Petition For Writ of Certiorari To The

United States Court of Appeals For The Fifth Circuit

RESPONDENT’S BRIEF IN OPPOSITION TO

WALKER’S PETITION FOR WRIT OF CERTIORARI

STATUTORY PROVISIONS INVOLVED

11 U.S.C. § 523

28 U.S.C. § 1331

28 U.S.C. § 1441(a)

28 U.S.C. § 1441(c)

2

STATEMENT OF THE CASE

Petitioner Dr. William Walker asks this Court to vacate a

judgment, affirmed by the Court of Appeals for the Fifth Circuit,

dismissing his counterclaims against the individual members of

the Board of Regents of the University of Texas System, and the

President of the University of Texas Health Science Center at

Houston, M. David Low. He challenges the federal court’s

removal jurisdiction over this case, which was removed by the

counter-defendants pursuant to 28 U.S.C. § 1441(c). In the

alternative, he challenges the district court and the court of appeals

in their evaluation of the summary judgment evidence before

them. Because the court of appeals did not err in its opinion and

judgment, Respondents respectfully request that this Court deny

Walker’s petition for writ of certiorari.

Dr. Walker was a tenured cardiologist at the University of

Texas Health Science Center in Houston (UTHSC). As a

condition of his employment, he signed a contract with UTHSC in

which he joined the Medical Services, Research, and Development

Plan (MSRDP). This plan required him to remit any outside

professional fees he earned to UTHSC, which included appearance

fees for court appearances, depositions, and other legal

consultations. Walker earned significant fees while employed at

UTHSC, but he failed to remit any to the university. When

UTHSC learned of his and other faculty members’ non-

compliance with the MSRDP, it engaged in a survey of the

faculty’s outside earnings. Several faculty were found by UTHSC

to be in non-compliance and UTHSC entered into negotiations

with them to recover the funds. All faculty entered into sizeable

settlements with the University except Walker. Walker did offer

to remit approximately 5% of the fees UTHSC had estimated he

owed, but he refused to provide the University with an accounting

of his outside earnings. With no accounting verifying his

earnings, the University rejected his offer and started termination

proceedings. A UTHSC hearing tribunal found that Walker had

—————— a ee ae "?

3

violated the terms of the MSRDP, but that several faculty had

done so, and that there was some confusion about its terms, and

thus termination was improper. UTHSC rejected this

recommendation and presented Walker’s termination to a formal

meeting of the University of Texas Board of Regents. After a

hearing that included testimony from both the UTHSC and

Walker, the regents voted to terminate his employment.

See Memorandum and Order of the District Court, State of Texas’

Petition for Writ of Certiorari, Appendix at A2-A3 and A27-3 l.

Prior to the University’s informal actions to recover the

MSRDP funds from Walker, he filed for bankruptcy relief under

Chapter 7. It is undisputed that he never listed the University as

a creditor, and the University never filed a proof of claim.

The State of Texas, by and through the University of Texas

System Board of Regents in their official capacities and UTHSC,

filed an original petition in Harris County, Texas district court on

February 8, 1995. This petition sought an accounting of funds the

University believed Walker converted to his own use, in breach of

his employment contract. On August 10, 1995, Walker filed an

"Original Counter Claim and Third-Party Claim" against the

Board of Regents in both their official and individual capacities,

and UTHSC President M. David Low in both his individual and

official capacities.' Walker’s claims related to his allegations that

his constitutional right to due process was violated by the named

"Walker labeled President Low as the only third-party defendant in his

Original Counter Claim and Third-Party Claim, and labeled the Board of

Regents in their official and individual Capacities as counter-defendants.

The members of the Board of Regents in their individual capacities have no

authority to be and were not parties to the original action for conversion and

breach of contract. The Original Petition identified the plaintiff as: "Plaintiff

is the State of Texas acting through its agency the Board of Regents of the

University of Texas System, established pursuant to Tex. Educ. Code § 65.11,

and charged with the management of the University of Texas Health Science

Center at Houston." Original Petition at q 2.

eR

4

parties when they terminated him from his tenured faculty

position. On September 25, 1995, the Counter-Defendants

UTHSC and the Board of Regents, in their official capacities

moved the state court to sever the original action from Walker’s

Counterclaims and third-party claims.’ Those motions were never

ruled on by the Harris County district court before the removal

calendar elapsed. On September 29, 1995, this action was timely

removed pursuant to 28 U.S.C. § 1441(a), later amended to |

§ 1441(c).?

On April 30, 1996, UTHSC, the Board of Regents, and

President Low filed a motion for partial summary judgment for

those claims brought against them by Walker. Approximately a

month later Walker moved for summary judgment on the

conversion and breach of contract disputes, claiming any monies

owed had been discharged in bankruptcy. The State of Texas,

through UTHSC, filed a response to Walker’s motion for summary

judgment, arguing that the interests were non-dischargeable under

11 U.S.C. § 523. On December 24, 1996, the district granted in

part, and denied in part, the pending motions for summary

7On the same day the third-party defendants (President Low in both

capacities and the Board of Regents in their individual capacities) moved to

strike Walker’s third-party claims as barred by the state district court’s

scheduling order.

>The parties filed their Rule 26(f) Joint Report with the district court on

March 18, 1996. In this Joint Report the UTHSC, the Board of Regents, and }

President Low all acknowledged that they had erred in their allegation of '

removal jurisdiction, and indicated that they had corrected this allegation by,

pursuant to 28 U.S.C. § 1653, substituting 28 U.S.C. § 1441(c) for the original i

§ 1441(a) basis of jurisdiction. See Newman-Green, Inc. v. Alfonzo-Larrain, ’

490 U.S. 826, 830-32, 109 S.Ct. 2218, 2222 (1989). Their motion for leave to

file an amended notice of removal, alleging 28 U.S.C. § 1441(c) as the basis for

jurisdiction, was granted by the district court on March 29, 1996. In their Rule

26(f) Joint Report, Walker contested § 1441(c) jurisdiction, and indicated he

would file a motion to remand. He did not.

5

part, and denied in part, the pending motions for summary

judgment. The court dismissed several claims against UTHSC and

the regents and President Low in their official capacities pursuant

to the Eleventh Amendment, and granted summary judgment on

all constitutional claims against the regents and President Low in

their individual capacities based on qualified immunity. The court

also granted Walker’s motion for summary judgment on the

conversion claim, finding those interests had been discharged in

an earlier bankruptcy proceeding. Final judgment was entered on

December 30, 1996.

On January 29, 1997, UTHSC and Walker filed appeals.

The University appealed the district court’s finding on the

discharge in bankruptcy, while Walker appealed the dismissal of

his due process and equal protection claims pursuant to qualified

immunity. The Fifth Circuit affirmed the district court’s judgment

on the constitutional claims, finding that the summary judgment

evidence before it amply demonstrated that the officials exercised

professional judgment, and that it was objectively reasonable for

them to have acted as they did. The Fifth Circuit reversed and

remanded the discharge in bankruptcy issue, finding that there

were disputed questions of material fact precluding summary

judgment. In reaching that issue, the court of appeals found that

the Eleventh Amendment did not bar the bankruptcy court from

having discharged interests of the state.‘

The central question raised by Walker in his Petition is

whether the counter-defendants below could remove the federal

“The State of Texas has petitioned for writ of certiorari on this issue.

claims present in Walker’s counter-claims petition.* The Fifth

Circuit was correct in permitting removal by non-original-plaintiff

counter-defendant President Low. Section 1441 (c) does not

preclude such removals. Earlier versions of this provision which

limited removal to the "defendant or defendants" were amended by

Congress to delete that language. The counter-claims on which

removal was based meet the statutory requirements. Although the

court of appeals did not decide the issue, removal would have been

proper by the non-original-plaintiff counter-defendant regents in

their individual capacities as well. In fact, respondents can find no

authority for the argument that an original-plaintiff counter-

defendant is precluded from removing a claim pursuant to 28

U.S.C. § 1441(c) that is within the original jurisdiction of the

federal court.

‘Although Congress provided for the expedited, 30 day consideration of

procedural defects in removal, 28 U.S.C. § 1447(c), subject matter jurisdiction

can be raised at any time. Caterpillar, Inc. v. Lewis, 519 U.S. 61, _, 117 S.Ct.

467, 474-74 (1996)(citing American Fire & Casualty Co. v. Finn, 341 U.S. 6,

18, 71 S.Ct. 534, 542 (1951). Walker never filed a motion to remand, instead

waiting until the case was on appeal to object to the removal to federal court.

Longstanding decisions of this Court make clear . . . that where after

removal a case is tried on the merits without objection and the federal

court enters judgment, the issue in subsequent proceedings on appeal

is not whether the case was properly removed, but whether the federal

district court would have had original jurisdiction of the case had it

been filed in that court.

Caterpillar, Inc. v. Lewis, 519U.S >i, _,117S.Ct. 467, 474-75 (1996)(quoting

Grubbs v. General Electric Credit Corp., 405 U.S. 699, 702, 92 S.Ct. 1344,

1347 (1972)). However, neither Caterpillar nor Grubbs addressed the situation

before this Court: where original jurisdiction only arose in the defendant’s

counter-claims. Nonetheless, Walker cannot dispute that the district court

would have had original jurisdiction had his claims been filed in federal court.

Moreover, all the policy considerations this Court found “overwhelming” in

Caterpillar, “considerations of finality, efficiency, and economy", are present

in this action. 519 U.S. at _, 117 S.Ct. at 476. Walker has waived his

complaints about removal.

7

Walker’s argument is that only an original plaintiff can "join"

claims, and that only an original defendant can remove an action.

This argument does not withstand scrutiny. There is no basis to

force such a constricted view of "joinder" on the language of the

Statute. Walker’s counterclaims raise claims under the original

jurisdiction of the federal court. Respondents can locate no basis

in either Article III or § 1441(c) that precludes the federal district

court from exercising jurisdiction over this case. Moreover,

liberal joinder rules and public policy promoting the efficient

litigation of multiple and related claims support a less artificial

interpretation of the statute.

ARGUMENTS FOR DENYING THE PETITION

I. REMOVAL BY COUNTER-DEFENDANT LOW WAS PROPER

UNDER 28 U.S.C. § 1441(c).

As a preliminary matter, the nature of the parties should be

clarified. Walker labeled his petition as comprising counterclaims

and third-party claims, and this label has remained in the pleadings

of all parties, creating some confusion. None of Walker’s claims

seek indemnification or to transfer his liability for conversion to

another party. Instead, Walker seeks remedies for his termination,

both from the original plaintiffs as well as new parties. Although

the issue has not been briefed, it seems unlikely that the claims

against the university and the regents in their official Capacities are

compulsory counterclaims, and thus those claims were brought in

as permissive counterclaims pursuant to Tex.R.Civ.P. 97(b).

His claims against the regents in their individual Capacities and

President Low in both capacities, since they are new parties, must

have been brought in pursuant to Tex.R.Civ.P. 97(f), the state

counterpart to FED.R.Civ.P. 13¢h).

The regents in their individual capacities were not parties to

the original action in state court. In their official capacities, the

regents embody the state office they hold. "[T]Jhe real party in

interest in an official-capacity suit is the governmental entity and

not the named official ...." Hafer v. Melo, 502 U.S. 21, 25, 112

S.Ct. 358, 361 (1991); Kentucky v. Graham, 473 U.S. 159, 165,

105 S.Ct. 3099, 3105 (1985). The distinction is more than a "mere

pleading device". Hafer, 502 U.S. at 27, 112 S.Ct. at 362 (quoting

Will v. Michigan Dept. of State Police, 491 U.S. 58, 71, 109 S.Ct.

2304, 2311 (1989)); see also Bender v. Williamsport Area School

Dist., 475 U.S. 534, 543 n.6, 106 S.Ct. 1326, 1332 n.6

(1986)(Actions of individual capacity defendants and official

capacity defendants "are generally treated as the transactions of

two different legal personages"); Mongo Band of Mission Indians

v. Calif. State Bd. of Equalization, 858 F.2d 1376, 1382 n. 5 (9®

Cir. 1988)(disregard the citizenship of individual board members

in determining diversity jurisdiction under 28 U.S.C. § 1335), cert.

denied, 488 U.S. 1006, 109 S.Ct. 787 (1989). Because the regents,

when they acted as plaintiffs, could only be acting in their official

capacities, they were not plaintiffs in their individual capacities

and had not appeared as such in the original action. President Low

was not a plaintiff in any capacity in the original state court action.

The authorities are divided as to whether Walker’s claims can

be "true" counterclaims. See Pioche Mines Consol., Inc. v.

Fidelity-Philadelphia Trust Co., 206 F.2d 336 (9 Cir. 1953), cert.

denied, 346 U.S. 899, 74 S.Ct. 225 (1953); Aldens, Inc. v. Packel,

524 F.2d 38, 50-51 (3 Cir. 1975); Federal Deposit Insurance

Corp. v. La Rambla Shopping Center, Inc., 791 F.2d 215, 220 (1*

Cir. 1986); Berger v. Reynolds Metals Co. , 39 F.R.D. 313, 314-15

(E.D.Penn. 1966). See also Wright, Miller, Kane, 6 Federal

Practice and Procedure § 1404 (West 1990). Nonetheless, except

for the effort by the University, the regents and President Low to

sever the original action against Walker from his counterclaim suit

and to strike his pleading as untimely as per the state district

court’s scheduling order, no objection was made to the form of the

9

pleadings denoting some parties or claims as counter-claim or

third-party in nature, and no objection as to process was made.

The counter-claims meet jurisdictional requirements for

permissive counterclaims. They "arise under" the F ourteenth

Amendment. 28 U.S.C. § 1331; Franchise Tax Bd of the State of

California v. Constr. Laborers Vacation Trust Sor Southern Cal.,

463 U.S. 1, 7-8, 103 S.Ct. 2841, 2845 ( 1983); Gully v. First Nat.

Bank in Meridian, 299 U.S. 109, 97, 57 S.Ct. 96, 97 (1936).

Was Removal Proper?

Respondents removed this action pursuant to 28 U.S.C.

§ 1441(c). Section 1441(c) provides:

Whenever a separate and independent claim or cause of

action within the jurisdiction conferred by section 1331 of

this title is joined with one or more non-removable claims

or causes of action, the entire case may be removed and

the district court may determine all issues therein, or, in its

discretion, may remand all matters in which State law

predominates.°

Nothing in the language of § 1441(c) precludes a counter-

defendant from removing the entire case. Although this Court has

not addressed the ability of a counter-defendant to remove an

action pursuant to the current § 1441(c), it has addressed the issue

in a removal action by a counter-defendar* based upon diversity

jurisdiction pursuant to 28 U.S.C. § 71, a precursor to § 1441(c).

*Section 1441(c) read as follows prior to the Judicial Improvements Act of

1990 [Pub. L. No. 101-650, 104 Stat. 5089}:

Whenever a separate and independent claim or cause of action, which

would be removable if sued upon alone, is joined with one or more

otherwise non-removable claims or causes of action, the entire case

may be removed and the district court may determine all issues

therein, or, in its discretion, may remand all matters not otherwise

within its original jurisdiction.

10

Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868

(1941). The Shamrock Oil Court noted that Congress, in drafting

§ 71, had amended the statute to add the language requiring

removal by the "defendant or defendants" instead of by "either

party". The Court further noted that it had already held under an

earlier version of the statute that a "plaintiff, having submitted

himself to the jurisdiction of the state court, was not entitled to

avail himself of a right of removal conferred only on a defendant

who has not submitted himself to the jurisdiction" of the state

court. /d. at 106, 61 S.Ct. at 871 (citing West v. Aurora City, 6

Wall. 139, 18 L.Ed. 819 (1867)). The Shamrock Oil Court

determined that it was the clear intent of Congress to limit removal

under § 71 to the original defendant. /d. at 106-07, 61 S.Ct. at 871.

Surely Congress was just as clear in their intent when they added

the "defendant or defendants" language to § 1441(a) but deleted it

from the current version of § 1441(c).

Walker’s § 1983 claims are separate and independent of the

original accounting and conversion action. In American Fire &

Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534 (1951), this Court

addressed the issue of what constituted a "separate and

independent" claim for purposes of § 1441(c). The Court

determined that "where there is a single wrong to plaintiff, for

which relief is sought, arising from an interlocked series of

transactions, there is no separate and independent claim or cause

of action under § 1441(c)". Jd. at 14, 71 S.Ct. at 540. Walker

appears to rely on American Casualty for the proposition that the

"single wrong to him - he lost his tenured faculty position" cannot

constitute the separate and independent claim necessary for

§ 144i(c). American Casualty found in pertinent part that:

[i]n making this determination we look to the plaintiff's

pleading, which controls . . . The single wrong for which

relief is sought is the failure to pay compensation for the

loss on the property. Liability lay among three parties, but

it was uncertain which one was responsible. Therefore, all

were joined as defendants in one petition.

11

Id. at 14, 71 S.Ct. at 540. American Casualty was not a counter-

claim action; the Court’s focus was on the single wrong to the

party seeking relief, the original plaintiff. American Casualty does

not support Walker’s implicit contention that, in determining

whether the claims are separate and independent, this Court should

look to his complaint only and ignore the original action by the

original plaintiff, UTHSC. The original wrong forming the basis

of the initial state court suit was the alleged conversion of funds

belonging to UTHSC. Walker then sued over his termination.

Whether Walker’s due process rights were violated is answered by

reviewing the process he received, not the outcome of the process

(his termination), nor a derivative result of the process (the

litigation to recover the lost funds). E.g., Heller v. Doe, 509 U.S.

312, 332, 113 S.Ct. 2637, 2649 (1993).

Whether a third-party claim was "separate and independent"

was addressed by the Fifth Circuit in Carl Heck Engineers, Inc. v.

Lafourche Parish Police Jury, 622 F.2d 133 (Sth Cir. 1980), in

which the court made clear that the "a claim essentially seeking

indemnity should be considered separate and independent" from

the original complaint. Jd. at 136. That is, the analysis was not

artificially restricted to only the counter-plaintiff s complaint, but

compared the original request for relief to the third-party

indemnification requested relief.

This issue begins to resemble the one Walker presents in his

petition: whether the federal claims in his counter-claim petition

can be "joined" in the meaning of § 1441(c). Walker argues that

only the original plaintiff can "join" a claim, and that only the

original defendant can remove.’ This argument, of course,

elevates form over substance and has little authority in support.

"American Casualty does state that "the plaintiff's pleading . . . controls"

whether the multiple claims are separate and independent, 341 U.S. at 14, 71

S.Ct. at 540, but there was only one complaint in American Casualty.

ae 12

FED.R.CIv.P. 13(h) permits the "joinder" of additional parties as

defendants to counter-claims. Rule 13(h) has been construed

liberally to further the consolidation of related litigation into one

suit. Gentry v. Smith, 487 F.2d 571, 579-80 (5" Cir. 1973); United

Artists Corp. v. Masterpiece Productions, Inc., 221 F.2d 213, 217

(2nd Cir. 1955); Lesnick v. Public Indus. Corp., 144 F.2d 968, 973

(C.C.A.2 N.Y. 1944); Hercules Incorp. v. Dynamic Export Corp.,

71 F.R.D. 101, 105-06 (S.D. N.Y. 1976); Wright, Miller, Kane

§ 1434. Counter-claims seek affirmative relief. They are subject

to FED.R.Civ.P. 8, and subject to potential dismissal under

FED.R.CIv.P. 12 and 56. Until the adoption of 28 U.S.C. § 1367,

they required an independent basis for jurisdiction. Jglesias v.

Mutual Life Insurance Company of New York, 156 F.3d 237, 241

(1* Cir. 1998); Channell v. Citicorp. National Services, Inc., 89

F.3d 379, 384 (7™ Cir. 1996); Wright, Miller, Kane § 1422.

The Fifth Circuit held that although counter-defendants who

were the original plaintiffs could not remove an action because

such rationale would violate the well-pleaded complaint rule,

counter-defendants who were not original plaintiffs would not

violate the rule. State of Texas v. Walker, 142 F.3, 813, 816 (5"

Cir. 1998). The Fifth Circuit determined that President Low,

added in both his capacities as a counter-defendant by Walker,

could remove the entire case pursuant to the rationale of Carl Heck

Engineers v. Lafourche Parish Police Jury, 622 F.2d 133 (5™ Cir.

1980).* In Carl Heck Engineers the court of appeals found that

there was diversity between the third-party plaintiff and third-party

defendant, and that the third-party indemnification claim was

sufficiently separate and independent, and thus the case was

removable pursuant to § 1441(c). The Carl Heck Engineers court

discussed the authority to the contrary, which they characterized

as arguing either that the third-party claim was "merely incidental

*The court of appeals assumed without deciding that the regents in their

individual capacities were invalidated from removing because of their official

capacity plaintiff status in the original action. 142 F.3d at 816.

13

or ancillary to the main claim and is not a separable controversy"

or that it was "unjust" to allow a party the original plaintiff had not

sued to determine the forum for the plaintiff's case. 622 F.2d at

135. The Carl Heck Engineers court determined that, as long as

the third-party claim satisfied the separate and independent

requirement of the statute and contained the basis for federal court

jurisdiction, the action was removable. The Fifth Circuit in State

of Texas v. Walker extended this logic to non-original plaintiffs

such as President Low.’

Walker relies on Thomas v. Shelton, 740 F.2d 478 (7 Cir.

1984) and Lewis v. Windsor Door, 926 F.2d 729 (8" Cir. 1991), as

well as the opinions of some commentators. Walker Petition at 5.

Thomas was originally a tort action in Indiana state court.

Because the United States ultimately incurred the medical

expenses at issue, it sued the defendant tortfeasor as well, in

federal court, to recover its expenses. To avoid double liability,

the defendant interpleaded the United States in the original state

court action. The United States then removed the state court

action to federal court and consolidated it with its own action

against the defendant. The removing party in Thomas was a third-

party defendant, unlike the case before the Court. Furthermore,

unlike Walker, the third-party claims in Thomas were apparently

state law tort claims, not federal questions. The Thomas court

doubted that a third party defendant could ever remove under

§ 1441(c), because of the dependent nature of typical third-party

claims means those claims are not "independent" and thus cannot

be "joined" with the nonremovable claims of the original plaintiff.

*Respondents would suggest to the Court that allowing original-plaintiff

counter-defendants to remove would not violate the well-pleaded complaint

rule. The well-pleaded complaint rule addresses the search for federal

jurisdiction in the complaint and rules out establishing jurisdiction in the

defendant’s answer or in anticipated defenses. E.g., Franchise Tax Bd., 463

U.S. at 9-10, 103 S.Ct. at 2846. Nothing in the well-pleaded complaint rule

mandates that it’s locus is required to be on the original plaintiff's complaint.

14

Thomas, 740 F.2d at 486.'° Uf course, the Thomas court’s

observation regarding the faulty separate and independent nature

of third-party claims, even if true, is inapplicable to counter-

claims, which are not as constrained to issues of indemnity as

third-party claims are. The Thomas court’s concern over proper

"joinder" of claims is less clear, though it appears that the court

felt § 1441(c) required (in some unexplained and limited way) that

the third party-claims be joined with the nonremovable claim of

the original plaintiff. Jd. See also 1A Moore’s Federal Practice 4

0.167[10] (2™ ed. 1979)(cited in Carl Heck Engineers, 622 F.2d

at 135).

Another concern of the Thomas court was that allowing

removal of an action "the main part of which" was outside the

court’s jurisdiction would "enlarge federal jurisdiction at the

expense of state jurisdiction in a rather dramatic way." Thomas,

740 F.2d at 486. This federalism concern seems misplaced in

State of Texas v. Walker, as the $88 million dollar constitutional

counter-claims Walker brought against the regents and President

Low dwarf the original $90,000 action UTHSC brought in state

court. The Eighth Circuit has adopted the reasoning of Thomas.

Lewis v. Windsor Door Co., 926 F.2d 729 (8" Cir. 1991).""

Neither Thomas nor Lewis discuss the rationale that would

explain why it is proper to deny the counter-defendants who were

not original plaintiffs their choice of a federal forum to defend

themselves. Nor do they satisfactorily explain why it is unfair to

"The Thomas court acknowledges that the circuits and district courts are

in conflict on the ability of third-party defendants to remove pursuant to

§ 1441(c). Thomas, 740 F.2d at 486 (citing Ford Motor Credit Co. v. Aaron-

Lincoln Mercury, Inc., 563 F.Supp. 1108, 1110 nn.6 & 8 (N.D. Ill. 1983) for

a compilation of cases).

''At least one district court has applied Thomas to bar removal by counter-

defendants. Radio Shack Franchise Dept., A Division of Tandy Corp. v.

Williams, 804 F.Supp. 151 (D. Kan. 1992).

ON eh RS DET oe eee

15

allow the original plaintiff to remove a federal question counter-

claim.

Although it did not consider it, the Franchise Tax Bd. Court

did note in passing the possibility of the argument at hand.

The defendants below in Franchise Tax Bd. had filed a motion to

dismiss in the district court, and suggested to the Court that it be

considered as a counterclaim under the Employment Retirement

Income Security Act of 1974 [28 U.S.C. §§ 1001 ef seq.], and

"which might then provide an independent jurisdictional basis for

reaching the merits of the preemption issue in this case."

Franchise Tax Bd., 463 U.S. at 22 n.24, 103 S.Ct. at 2853 n.24

(citing First Federal Savings and Loan Assoc. of Boston v.

Greenwald, 591 F.2d 417 (1* Cir. 1979), and Wong v. Bacon, 445

F.Supp. 1177, 1183-84 (N.D. Cal. 1977)).'? There is no indication

the Court accepted this invitation.

In summary, by treating Walker’s § 1983 counter-claims as

any other claim for relief in terms of removal jurisdiction under

§ 1441(c), federal courts would realize the "common-sense

accommodation of judgment to kaleidoscopic s:tuations which

characterizes the law in its treatment of causation . . . a selective

process which picks the substantial causes out of the web and lays

the other ones aside." Franchise Tax Bd., 463 U.S. at 20-21, 103

S.Ct. 2852 (quoting Gully, 299 U.S. at 117-18, 57 S.Ct. 99-100)).

"In Greenwald, the defendant removed claims against it brought under

Massachusetts interest laws, arguing that its defense was primarily a question

of federal law. The First Circuit, noting that the removal, pursuant to

§ 1441(b), may have been improvident under Gully v. First National Bank, 299

U.S. 109, 57 S.Ct. 96 (1936), observed nonetheless that subsequent to removal

the defendants had filed a counterclaim pursuant to the Declaratory Judgment

Act, 28 U.S.C. §§ 2201, 2202, and that the district court "clearly had

jurisdiction over the associations’ separate declaratory judgment action". 591

F.2d at 423. In Wong, the district court found federal question jurisdiction

based upon the defendants’ counterclaims. However, the suit was commenced

in federal district court, so no removal question presented itself.

a a aS ST

16

Nothing in § 1441(c) precludes a counter-claim defendant from

exercising his right to a federal forum to defend federal claims.

II. THE COURT OF APPEALS VIEWED THE DISPUTED EVIDENCE

IN THE LIGHT MOST FAVORABLE TO THE NON-MOVANT

WHEN IT AFFIRMED THE DISTRICT COURT’S GRANT OF

QUALIFIED IMMUNITY

Walker asserts that the court of appeals (and, implicitly, the

district court) determined disputed questions of material fact in the

light most favorable to the movant, in contradiction to the well

known standards of this Court. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 106 S.Ct. 2505 (1986); Matsushita Electrical

Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct.

1348 (1986). Walker provides this Court with no support for this

conclusory allegation, which is contradicted by detailed factual

determinations made by the district court. See Memorandum and

Order of the District Court, State of Texas’ Petition for Writ of

Certiorari, Appendix at A27-A31.

Walker makes no contention in his Petition that the Fifth

Circuit misapplied either qualified immunity law or substantive

law. As public officials exercising discretionary functions, the

regents and President Low are shielded from suit and from liability

unless Walker can show that the constitutional rights the officials

are accused of violating were clearly established at the time of the

alleged offenses. Harlow v. Fitzgerald, 457 U.S. 800, 807, 102

S.Ct. 2727, 2732 (1982). The "touchstone" of this analysis is the

objective reasonableness of the officials’ conduct. Anderson v.

Creighton, 483 U.S. 635, 637-41, 107 S.Ct. 3034, 3038-39 (1987).

The current analytical framework for qualified immunity requires

courts to determine, first, whether the plaintiff has a cognizable

claim for deprivation of liberty or property interests without due

process, and second, if so, whether that claim was clearly

established under federal constitutional law in at the time. Siegert

17

v. Gilley, 500 U.S. 226, 231-233, 111 S.Ct. 1789, 1793-1794

(1991). So long as public officials of reasonable competence

could differ on these issues, the defendants are immune from suit

and liability. Malley v. Briggs, 475 U.S. 335, 341, 106 S. Ct.

1092, 1096 (1986)."

It was undisputed that UTHSC determined that he owed the

MSRDP $98,350, which was the most of all the faculty found to

be in violation of the MSRDP agreement. See Memorandum and

Order of the District Court, State of Texas’ Petition for Writ of

Certiorari, Appendix at A27-A31. It was undisputed that the other

faculty cooperated with UTHSC and paid sizeable amounts to the

MSRDP almost immediately. Jd. It was undisputed that Walker

was the only one who retained counsel and engaged in contentious

negotiations with President Low. /d. It was undisputed that, even

after negotiations, Walker only offered to pay $5,000 of the

$98,350 estimate. Jd. It was also undisputed that Walker was the

only faculty member who resisted supplying UTHSC with an

accounting of his earnings. /d.

Walker’s Substantive Due P Clai

Walker argues that the Fifth Circuit inappropriately resolved

disputed facts regarding his substantive due process claims.

Walker complains that the regents and President Low acted in an

arbitrarily manner when they terminated him from his tenured

faculty position at UTHSC, in violation of the Fourteenth

Amendment’s protection from arbitrary and capricious state

action. Regents of Univ. of Mich. v. Ewing, 474 U.S. 214, 220-23,

106 S.Ct. 507, 511-12 (1985). However, as detailed supra, the

regents had plenty of evidence before them that would allow them

to exercise their discretion and still apply professional and

'This Court’s recent Crawford-El v. Britton decision is not applicable to

the qualified immunity analysis of the substantive due process and rational

basis equal protection claims in this case. _U.S._, 118 S.Ct. 1584 (1998).

A aia Ns ots

reasoned judgment. Most facts were not in dispute. Walker’s

argument is that his "offer" to settle, his "defense" that his

bankruptcy erased most of his obligations to the MSRDP, and his

"defense" that his subsequent licensing as an attorney shielded his

professional earnings somehow created a question of material fact.

The regents, however, were addressing the relatively undisputed

situation that Walker alone was not forthcoming with information

nor a reasonable remittance. As the court of appeals determined,

Walker’s "defenses" were not clearly established, and reasonable

regents sitting in judgment could disagree as to their application

to Walker’s situation. The regents were not required by

FED.R.CIv.P. 56 to show that there were no disputed issues before

them when they considered Walker’s termination.

Walker also claims that the mere fact that an administrative

hearing tribunal at UTHSC had found in his favor created a fact

question that the regents acted arbitrarily when they proceeded to

terminate him nonetheless. UTHSC rejected the hearing tribunal’s

recommendation and put Walker’s termination on the agenda of

the board of regents. Memorandum and Order of the District

Court, State of Texas’ Petition for Writ of Certiorari, Appendix at

A31. The regents held a hearing, heard from both Walker and the

university, and, exercising their discretion, chose to agree with the

institution and terminated Walker. As long as Walker received the

process due under the Constitution, the clearly established law in

the Fifth Circuit that it is not actionable to cite any deviation by

the Board of Regents from the System’s own rules and

regulations. Levitt v. University of Texas at El Paso, 759 F.2d

1224, 1230-31 (Sth Cir. 1985), cert. denied, 474 U.S. 1034, 106

S.Ct. 599 (1985). Moreover, it is not per se a violation of the Due

Process Clause for the Regents to reject the findings and

recommendations of an advisory hearing tribunal. Kersey v.

Shipley, 673 F.2d 730, 733 (4th Cir. 1982), cert. denied, 459 U.S.

836, 103 S.Ct. 80 (1982); Weiss v. Anker, 421 F.Supp. 1040 |

(E.D.N.Y. 1976). Given the facts that were undisputed, supra,

Walker presents this Court with no reason to disturb the Fifth

19

Circuit’s determination that Walker’s case presented the regents

with a fact pattern that reasonable officials could disagree, and

thus qualified immunity was proper. State of Texas v. Walker, 142

F.3d at 819 (citing Malley, 475 U.S. at 341, 106 S.Ct. at 1096).

Walker also complained that the regents’ rejection of his

discharge in bankruptcy defenses must be arbitrary behavior.

State of Texas v. Walker, 142 F.3d at 819 n.6. Walker never listed

the State or UTHSC as a creditor in his bankruptcy, and the State

never participated in his proceeding. UTHSC then filed the

original action in state court for conversion and breach of conu act,

and Walker asserted his affirmative defense that whatever he owed

UTHSC had been discharged in bankruptcy. State of Texas v.

Walker, 142 F.3d at 820. UTHSC argued that his claims were

non-dischargeable under 11 U.S.C. § 523. The district court

granted Walker’s motion for summary judgment on this issue.

The Fifth Circuit held that, as the nature of the law regarding

his discharge claims was not clearly established, the UTHSC

officials were entitled to qualified immunity. The court of appeals

noted that "because the state was never notified of the bankruptcy

and never had the opportunity to file a timely claim, bankruptcy

law should ordinarily expressly protect the state’s claim from

being discharged." Jd. at 822 & n.16. Once the court of appeals

determined that the Eleventh Amendment did not prohibit the

bankruptcy court from discharging a debt owed the state, the

discharge could be raised by Walker as a defense to UTHSC’s

original state court action for conversion and breach of contract.

Id. at 820. The court determined that a fact question existed as to

whether Walker had engaged in "willful and malicious injury" as

defined by 11 U.S.C. § 523(a)(6). Walker does not appeal this

determination. The court of appeals also found that the state of the

law was sufficiently unclear regarding these defenses that a

reasonable official could have concluded that his obligations had

not been discharged. State of Texas v. Walker, 142 F.3d at 819 n.6.

The court of appeals addressed this issue extensively, Jd. at

20

823-24, and Walker does not brief this Court as to why the court

of appeals erred.

Walker’s Equal Protection Claims

Finally, Walker complains that the court of appeals improperly

determined fact questions in the movants’ favor regarding his

Equal Protection claims. Walker’s Petition at 9. Specifically,

Walker argues that the court of appeals (and, implicitly, the district

court) decided disputed questions of material facts regarding

whether he was similarly situated with other faculty at UTHSC."

Id. The district court determined, and it is undisputed, that Walker

is not a member of any protected class. Memorandum and Order

of the District Court, State of Texas’ Petition for Writ of

Certiorari, Appendix at A38 n.32. The district court dismissed this

claim on that basis, citing Woods v. Johnson, 75 F.3d 1017, 1036

(5" Cir. 1996), cert. denied, U.S._, 117 S.Ct. 150 (1996); and

Green v. McKaskle, 788 F.2d 1116, 1125 (5" Cir. 1986).

The Fifth Circuit affirmed, but on different grounds, determining

that the rational basis test was appropriate for Walker’s equal

protection claims. State of Texas v. Walker, 142 F.3d at 819

(citing Johnson v. Rodriguez, 110 F.3d 299, 306 (5" Cir. 1997)).

Based upon the undisputed facts before the district court, Walker

was so far removed from the other colleagues who were found to

be in violation of the MSRDP that he was simply not similarly

situated. It was not difficult to show that the regents and President

Low acted in an objectively reasonable manner when they

undertook to terminate Walker, and the district court and the court

of appeals properly found them to be entitled to qualified

immunity for this claim.

It is undisputed that he was the only medical school faculty member

terminated at that time for failure to reimburse UTHSC for monies withheld

from the MSRDP.

21

~ CONCLUSION

Removal of federal question counter-claims by counter-

defendants was proper in this case. The court of appeals did not

inappropriately resolved disputed issues of material fact. Walker’s

Petition for Writ of Certiorari should be denied.

Respectfully submitted,

DAN MORALES

Attorney General of Texas

JORGE VEGA

First Assistant Attorney General

DAVID A. TALBOT, JR.

Deputy Attorney General for Litigation

Bie ht.

ANTOINETTE HUNTER

Chief, General Litigation Division

State Bar 10295900

RONALD R. DEL VENTO

Chief, Bankruptcy & Collections Division

CHRISTOPHER JOHNSEN

MARK BROWNING

Assistant Attorneys General

P.O. Box 12548, Capitol Station

Austin, Texas 78711-2548

(512) 463-2120

Counsel for Respondent

APPENDIX

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TEXAS RULES OF CIVIL PROCEDURE

RULE 97. COUNTERCLAIM AND CROSS-CLAIM

(b) Permissive Counterclaims. A pleading may state as a

counterclaim any claim against an opposing party whether or not

arising out of the transaction or occurrence that is the subject

matter of the opposing party’s claim.

(f) Additional Parties. Persons other than those made parties

to the original action may be made parties to a third party action,

counterclaim or cross-claim in accordance with the provisions of

Rules 38, 39 and 40.

RULE 38. THIRD-PARTY PRACTICE

(a) When Defendant May Bring in Third Party. At any

time after commencement of the action a defending party, as a

third-party plaintiff, may cause a citation and petition to be served

upon a person not a party to the action who is or may be liable to

him or to the plaintiff for all or part of the plaintiff's claim against

him. The third-party plaintiff need not obtain leave to make the

service if he files the third-party petition not later than thirty (30)

days after he serves his original answer. Otherwise, he must

obtain leave on motion upon notice to all parties to the action.

The person served, hereinafter called the third-party defendant,

shall make his defenses to the third-party plaintiff's claim under

the rules applicable to the defendant, and his counterclaims against

the third-party plaintiff and cross-claims against other third-party

defendants as provided in Rule 97. The third-party defendant may

assert against the plaintiff any defenses which the third-party

plaintiff has to the plaintiff's claim. The third-party defendant

may also assert any claim against the plaintiff arising out of the

transaction or occurrence that is the subject matter of the

A2

plaintiff’ s claim against the third-party plaintiff. The plaintiff may

assert any claim against the third-party defendant arising cut of the

transaction or occurrence that is the subject matter of the

plaintiff's claim against the third-party plaintiff, and the third-

party defendant thereupon shall assert his defenses and his

counterclaims and cross-claims. Any party may move to strike the

third-party claim, or for its severance or separate trial. A third-

party defendant may proceed under this rule against any person

not a party to the action who is or who may be liable to him or to

the third-party plaintiff for all or part of the claim made in the

action against the third-party defendant.

(b) When Plaintiff May Bring in Third Party. When a

counterclaim is asserted against a plaintiff, he may cause a third

party to be brought in under circumstances which under this rule

would entitle a defendant to do so.

(c) This rule shall not be applied, in tort cases, so as to permit

the joinder of a liability or indemnity insurance company, unless

such company is by statute or contract liable to the person injured

or damaged.

(d) This rule shall not be applied so as to violate any venue

statute, as venue would exist absent this rule.

RuLE 39. JOINDER OF PERSONS NEEDED FOR JUST

ADJUDICATION

(a) Persons te Be Joined if Feasible. A person who is

subject to service of process shall be joined as a party in the action

if (1) in his absence complete relief cannot be accorded among

those already parties, or (2) he claims an interest relating to the

subject of the action and is so situated that the disposition of the

action in his absence may (1) as a practical matter impair or

impede his ability to protect that interest or (ii) leave any of the

persons already parties subject to a substantial risk of incurring

A3

double, multiple, or otherwise inconsistent obligations by reason

of his claimed interest. If he has not been so joined, the court shall

order that he be made a party. If he should join as a plaintiff but

refuses to do so, he may be made a defendant, or, in a proper case,

an involuntary plaintiff.

(b) Determination by Court Whenever Joinder Not

Feasible. Ifa person as described in subdivision (a)(1)-(2) hereof

cannot be made a party, the court shall determine whether in

equity and good conscience the action should proceed among the

parties before it, or should be dismissed, the absent person being

thus regarded as indispensable. The factors to be considered by

the court include: first, to what extent a judgment rendered in the

person’s absence might be prejudicial to him or those already

parties; second, the extent to which, by protective provisions in the

judgment, by the shaping of relief, or other measures, the

prejudice can be lessened or avoided; third, whether a judgment

rendered in the person’s absence will be adequate; fourth, whether

the plaintiff will have an adequate remedy if the action is

dismissed for non-joinder.

(c) Pleading Reasons for Nonjoinder. A pleading asserting

a claim for relief shall state the names, if known to the pleader, of

any persons as described in subdivision (a)(1)-(2) hereof who are

not joined, and the reasons why they are not joined.

(d) Exception of Class Actions. This rule is subject to the

provisions of Rule 42.

RULE 40. PERMISSIVE JOINDER OF PARTIES

(a) Permissive Joinder. Ail persons may join in one action

as plaintiffs if they assert any right to relief j«.ntly, severally, or in

the alternative in respect of or arising out of the same transaction,

occurrence, or series of transactions or occurrences and if any

question of law or fact common to all of them will arise in the

A4

action. All persons may be joined in one action as defendants if

there is asserted against them jointly, severally, or in the

alternative any right to relief in respect of or arising out cf the

same transaction, occurrence, or series of transac*ions or

occurrences and if any question of law or fact common to all of

them will arise in the action. A plaintiff or defendant need not be

interested in obtaining or defending against all other relief

demanded. Judgment may be given for one or more of the

plaintiffs according to their respective rights to relief, and against

one or more defendants according to their respective liabilities.

(b) Separate Trials. The court may make such orders as will

prevent a party from being embarrassed, delayed, or put to

eynense by the inclusion of a party against whom he asserts no

claim and who asserts no claim against him, and may order

seyarate trials or make other orders to prevent delay or prejudice.

UNITED STATES CODE ANNOTATED

TITLE 11 BANKRUPTCY

§ 523. EXCEPTIONS TO DISCHARGE

(a) A discharge under section 717, 1141,, 1228(a), 1228(b), or

1328(b) of this title does not discharge an individual debtor from

any debt -

(3) neither listed nor scheduled under section 521(1) of

this title, with the name, if known to the debtor, of the

creditor to whom such debt is owed, in time to

permit --

(A) If such debt is not of a kind specified in paragraph

(2), (4), or (6) of this subsection, timely filing of a

proof of claim, unless such creditor had notice or

actual knowledge of the case in time for such

timely filing; or

(B) if such debt is of a kind specified in paragraph (2),

(4), or (6) of this subsection, timely filing of a

A5

proof of claim and timely request for a

determination of dischargeability of such debt

under one of such paragraphs, unless such creditor

had notice or actual knowledge of the case in time

for such timely filing and request;

(6) for willful and malicious injury by the debtor to

another entity or to the property of another entity.