BOGAN v. KEENE CORP

Citation Codes

Equivalent Citations

citation codes

Docket Number

No. 87-5829.

Attorney(S)

Michael L. Goldberg and Charles B. O'Reilly, Greene, O'Reilly, Broillet, Paul, Simon, McMillan, Wheeler Rosenberg, Los Angeles, Cal., for plaintiff-appellant. Scott D. Baskin, Irell Manella, Los Angeles, Cal., for defendants-appellees.

Judges

Harry Pregerson

See more information ...

Smart Summary

Factual and Procedural Background

John Bogan filed a complaint in California state court alleging breach of contract, breach of the implied covenant of good faith and fair dealing, interference with contractual relations, and intentional infliction of emotional distress against four corporate defendants and Does 1 through 20. The defendants removed the case to the United States District Court for the Central District of California based on diversity jurisdiction. Bogan moved to remand the case to state court, arguing that the presence of Doe defendants destroyed diversity jurisdiction. The defendants moved to dismiss the complaint for improper venue, citing a forum selection clause in the contract requiring disputes to be heard in New York. The district court denied remand, finding subject matter jurisdiction because it deemed the Doe defendants to be shams and the named defendants diverse. The court then dismissed the complaint for improper venue. Bogan appealed, challenging only the district court’s jurisdiction to consider venue and enforce the forum selection clause.

Legal Issues Presented

Whether the district court had subject matter jurisdiction to consider the venue issue and enforce the forum selection clause despite the presence of Doe defendants.
Whether the presence of Doe defendants defeated diversity jurisdiction or whether they could be disregarded as shams under controlling precedent.
Whether the district court erred in finding the Doe defendants to be shams and thus properly disregarding them for jurisdictional purposes.

Arguments of the Parties

Appellant's Arguments

Bogan argued that the district court lacked jurisdiction to consider the venue issue because the presence of Doe defendants defeated diversity jurisdiction.
He contended the case should have been remanded to state court since the Doe defendants had not been named, abandoned, or dismissed.
Bogan alternatively argued that the district court erred in finding the Doe defendants to be shams, asserting that his complaint adequately identified the Does through allegations of agency and vicarious liability.

Appellees' Arguments

Defendants argued that the district court had diversity jurisdiction because the Doe defendants were shams and could be disregarded for jurisdictional purposes.
They maintained that California was an improper venue due to a forum selection clause requiring disputes to be heard in New York.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bryant v. Ford Motor Co., 844 F.2d 602 (9th Cir. 1988) (en banc)	Overruled sham Doe exceptions; Doe defendants defeat diversity jurisdiction unless named, abandoned, or dismissed.	Applied to hold that absent naming or dismissal, Does defeat diversity jurisdiction, but district court’s prior finding of sham Does allowed jurisdiction here.
Brandchaft v. E.F. Hutton Co., 841 F.2d 886 (9th Cir. 1988)	Remand unnecessary if district court struck Doe allegations before Bryant II.	Extended to cases where district court found Doe defendants were shams before Bryant II.
Johnson v. Mutual Benefit Life Ins. Co., 847 F.2d 600 (9th Cir. 1988)	District court’s ruling that Does were shams is tantamount to striking Doe allegations, supporting jurisdiction.	Controlled outcome; court held jurisdiction existed because Does were found to be shams before Bryant II.
Grigg v. Southern Pac. Co., 246 F.2d 613 (9th Cir. 1957)	Doe defendants can be disregarded if wholly fictitious.	Referenced as precedent supporting sham Doe exception before Bryant II.
Hartwell Corp. v. Boeing Co., 678 F.2d 842 (9th Cir. 1982)	Doe defendants considered shams if complaint fails to identify them or link them to claims.	Applied to determine complaint did not adequately identify Does or their relationship to claims.
Chism v. National Heritage Life Ins. Co., 637 F.2d 1328 (9th Cir. 1981)	Similar standard for sham Does as in Hartwell.	Supported conclusion that Doe defendants were shams.
Preaseau v. Prudential Ins. Co., 591 F.2d 74 (9th Cir. 1979)	Allegations of agency relationship may prevent Doe defendants from being considered shams if complaint sufficiently links them.	Distinguished from current case where complaint failed to provide such linkage.
Gerritsen v. de la Madrid Hurtado, 819 F.2d 1511 (9th Cir. 1987)	Subject matter jurisdiction is a question of law reviewed de novo.	Standard of review applied to jurisdictional determination.

Court's Reasoning and Analysis

The court began by recognizing that subject matter jurisdiction is a prerequisite to considering venue issues. Bogan challenged jurisdiction based on the presence of Doe defendants, citing the Bryant II rule that Doe defendants defeat diversity jurisdiction unless named, abandoned, or dismissed. However, the court noted binding precedent from Johnson v. Mutual Benefit Life Ins. Co. and Brandchaft v. E.F. Hutton Co. that a district court’s prior finding that Doe defendants are shams effectively removes them from the jurisdictional analysis, allowing diversity jurisdiction to stand.

The district court had found the Doe defendants in Bogan’s complaint to be shams before Bryant II was decided and had determined that the named parties were diverse. This finding was not appealed. The court thus concluded that the district court had jurisdiction.

Regarding whether the Does were properly found to be shams, the court analyzed Bogan’s complaint and found it failed to sufficiently identify the Doe defendants or link them to the alleged wrongs. The complaint’s vague allegations of agency and vicarious liability were insufficient to prevent the Does from being considered shams. The court distinguished this case from Preaseau, where the complaint clearly linked Doe defendants to the claims. Here, the complaint did not provide even a speculative basis for identifying the Does.

Consequently, the court affirmed the district court’s dismissal for improper venue, concluding that jurisdiction existed and the forum selection clause was enforceable.

Holding and Implications

The court affirmed the district court’s dismissal of Bogan’s complaint for improper venue.

The holding confirms that a district court’s prior finding that Doe defendants are shams removes them from the diversity jurisdiction analysis, even under the stricter rule articulated in Bryant II. The decision directly affects the parties by upholding the dismissal and enforcing the forum selection clause, requiring the dispute to be resolved in the designated forum. The opinion does not establish new precedent beyond clarifying the application of existing rules to sham Doe defendants and jurisdictional analysis.

Show full summary ...

JOHN BOGAN, PLAINTIFF/APPELLANT, v. KEENE CORPORATION, ET AL., DEFENDANTS/APPELLEES.

PREGERSON, Circuit Judge:

The district court dismissed Bogan's complaint for improper venue. Bogan appeals, arguing that the district court lacked jurisdiction to reach the venue question. Bogan contends that the case should have been remanded to state court because the presence of Doe defendants defeated diversity jurisdiction. We affirm.

I [2] FACTS AND PROCEDURAL HISTORY

Bogan filed in a California state court a complaint alleging breach of contract, breach of the implied covenant of good faith and fair dealing, interference with contractual relations, and intentional infliction of emotional distress. In addition to naming four corporate defendants, Bogan included as defendants Does 1 through 20. Defendants removed the case to district court on the basis of diversity jurisdiction.

Bogan filed a motion to remand the case back to state court. Bogan argued that the presence of Doe defendants defeated diversity jurisdiction. Defendants filed a motion to dismiss the complaint for improper venue. Defendants noted that Bogan's causes of action arose out of a business agreement. Defendants argued that California was an improper venue because the agreement contained a forum selection clause, which stipulated that disputes arising out of the agreement would be heard in New York. Bogan contended that the court could not reach the venue question unless it had subject matter jurisdiction.

The district court denied Bogan's motion for remand. The court acknowledged that it needed subject matter jurisdiction to consider the venue question. It concluded that it had subject matter jurisdiction over the case because it found that the Doe defendants were shams and the named defendants were diverse. Sitting in diversity, the court granted defendants' motion and dismissed the complaint for improper venue.

On appeal, Bogan does not challenge the district court's enforcement of the forum selection clause except as it relates to the jurisdictional issue. Bogan argues that the district court did not have jurisdiction to consider the enforceability of the forum selection clause, and therefore erred in dismissing his complaint.

II [7] STANDARD OF REVIEW

Whether subject matter jurisdiction exists is a question of law reviewable de novo. Gerritsen v. de la Madrid Hurtado, 819 F.2d 1511, 1515 (9th Cir. 1987).

III [9] DISCUSSION [10] A. Bryant II

Bogan presents two arguments as to why the district court lacked subject matter jurisdiction. His first argument relies on Bryant v. Ford Motor Co., 844 F.2d 602 (9th Cir. 1988) (en banc) (as amended) (hereinafter Bryant II).

Before Bryant II, we followed the general rule that Doe defendants defeat diversity jurisdiction, but we recognized several exceptions. Bryant II, 844 F.2d at 605. For example, a district court could disregard Does for purposes of diversity jurisdiction if it found that the Does were wholly fictitious, see, e.g., Grigg v. Southern Pac. Co., 246 F.2d 613, 619 (9th Cir. 1957), or that the charges against them were so general as to give no clue of their identity or their relationship to the action, see, e.g., Hartwell Corp. v. Boeing Co., 678 F.2d 842, 842-43 (9th Cir. 1982); Chism v. National Heritage Life Ins. Co., 637 F.2d 1328, 1330 (9th Cir. 1981). When a complaint insufficiently identified the Does, they often were called "shams."

In Bryant II, we overruled the sham Doe exceptions to the general rule that Doe defendants defeat diversity jurisdiction. 844 F.2d at 605. The rule under Bryant II is that Does defeat diversity jurisdiction unless "all Doe defendants are either named, unequivocally abandoned by the plaintiff, or dismissed by the state court." Id. at 605-06 (footnotes omitted). Bogan argues that the Doe defendants in his complaint defeated the diversity jurisdiction of the district court because they had not been named, abandoned, or dismissed by the state court.

Bogan correctly summarizes the rule announced in Bryant II. Since Bryant II, however, we have issued two opinions that clarify how we will handle cases in which the district court took some action regarding the Doe defendants before Bryant II was decided.

We first decided that remand to a state court is unnecessary if the district court struck the Doe allegations before Bryant II was decided. Brandchaft v. E.F. Hutton Co., 841 F.2d 886 (9th Cir. 1988). We then decided that Brandchaft should be extended to cover cases in which the district court ruled that the Doe defendants were shams before Bryant II was decided.

In Johnson v. Mutual Benefit Life Ins. Co., 847 F.2d 600, 602 (9th Cir. 1988), we stated that "[t]he district court's ruling that the Does were shams was tantamount to striking the Doe allegations." We therefore held that the district court had jurisdiction to reach the merits of the case because it found that the Does were shams before Bryant II was decided and that the named parties were diverse. Id.

Our holding in Johnson is directly on point and controls this case. The district court declared that the Doe defendants in Bogan's complaint were shams before Bryant II was decided. It also found that the named parties were diverse. Accordingly, as in Johnson, we need not remand this case to a state court.

Bogan did not appeal the district court's finding that the named parties were diverse. Bogan also does not appeal the merits of the district court's dismissal of his complaint. He challenges only the district court's jurisdiction to dismiss the complaint.

B. The Sham Doe Exceptions

In the alternative, Bogan argues that the district court erred in determining that the Does in Bogan's complaint were shams. If Bryant II does not require a remand of the case, Bogan contends that the pre- Bryant II cases defining the sham Doe exceptions require a remand because Bogan adequately identified the Does in his complaint.

Does will be considered shams if the complaint gives no indication of who they might be or how their activities might have given rise to the causes of action. See Hartwell, 678 F.2d at 842-43; Chism, 637 F.2d at 1330. We agree with the district court that Bogan's complaint fails adequately to identify his Does or link them to the alleged wrongs.

In his complaint, Bogan states that the Does are "individuals and/or some form of business entity . . . who are responsible in some actionable manner for the damages and injuries hereinafter alleged." The complaint then goes on to link the Does to the named defendants "either through agency and/or other principles of vicarious or imputed liability including alter-ego and/or successor liability." After making these sweeping statements, Bogan never again explicitly refers to the Doe defendants.

Bogan contends that the allegations of an agency relationship between the named defendants and the Doe defendants is sufficient to identify the Does and their relationship to the causes of action. We disagree.

In distinguishing dicta from another case, we once noted that allegations of an agency relationship could prevent us from dismissing Does as shams. See Hartwell, 678 F.2d at 843-44 (distinguishing Preaseau v. Prudential Ins. Co., 591 F.2d 74, 77 n. 2 (9th Cir. 1979)). In Preaseau, however, the complaint alleged that an insurance company, or its agents or employees, had wrongfully denied insurance coverage to the plaintiff. 591 F.2d at 75, 77 n. 2. Given the nature of the cause of action, it was not difficult to see how an agent or an employee of an insurance company might become a named party at a later point in the proceedings.

In contrast, we must agree with the district court that Bogan's complaint "does not even provide fuel for an imaginative court to speculate as to who the Does might be." We therefore agree with the district court that it was unnecessary, under the sham Doe exceptions, to consider the Does in Bogan's complaint for the purposes of determining diversity jurisdiction.

IV [25] CONCLUSION

Bryant II does not require the remand of this case to a state court because the district court correctly found that the Does in Bogan's complaint were sham Does before Bryant II was decided. The district court, therefore, had diversity jurisdiction and did not err in enforcing the forum selection clause and dismissing Bogan's complaint.

AFFIRMED.