August, et al v. Boyd Gaming Corp

United States Court of Appeals
Fifth Circuit
F I L E D
June 22, 2005
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 04-30576
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ELINA AUGUST, ET AL.,
Plaintiffs,
ELINA AUGUST; CASIMERE AUGUST, JR.; JASON AUGUST; MALCOLM AUGUST;
ANASTASIA PRINGLE; CHANTELL PRINGLE;
KENTON COUSIN,
ON BEHALF OF BRANDON PRINGLE;
ANUSKA FAVORITE; ERANA GUATIER; DANIELLE JARROW; SCHWANN IRONS;
MONICA LASALLE; AND THERESA MILLSAPS,
Plaintiffs-Appellants,
VERSUS
BOYD GAMING CORPORATION,
Defendant-Appellee.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
m 2:03-CV-1431
______________________________

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Before SMITH, DENNIS, and PRADO,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:*
The plaintiffs appeal the dismissal of their
lawsuit under Federal Rule of Civil Procedure
12(b)(7) for failure to join an indispensable
party. We reverse and remand.
I.
The plaintiffs, Louisiana residents, are dece-
dents of Casimere August, who allegedly died
from injuries suffered when he hit his head on
a bathroom sink after slipping on water and
urine that had accumulated on the floor at the
Treasure Chest Casino. Basing jurisdiction on
diversity of citizenship, 28 U.S.C. § 1332,
plaintiffs sued Boyd Gaming Corporation
(“BGC”), a Nevada corporation that is the
parent of the subsidiary that owned the casino,
Treasure Chest Casino, LLC (“TCC”). The
complaint alleged that BGC operated the ca-
sino and that the personal injuries were a result
of BGC’s negligence in knowing of the alleg-
edly hazardous condition but failing to take
necessary steps to correct it.
Plaintiffs filed an identical suit in Louisiana
state court, adding as additional defendants
TCC and Treasure Chest, Inc., both Louisiana
corporations. The state suit was stayed on
BGC’s motion.
Shortly after the federal suit was filed, BGC
moved to dismiss under rule 12(b)(7) for
failure to join TCC as an indispensable party.
The district court granted the motion to dis-
miss, finding that “equity would dictate that
both parties be tried together.”
II.
We review for abuse of discretion a dis-
missal for failure to join an indispensable party
under rule 12(b)(7). See HS Resources, Inc. v.
Wingate, 327 F.3d 432, 438 (5th Cir. 2003).
A prerequisite to a proper dismissal for failure
to join an indispensable party is that the absent
party, if added, would divest the court of sub-
ject-matter jurisdiction.
Then, resolution of the motion requires a
two-step inquiry. First a court must determine
whether a party should be added under the re-
quirements of Federal Rule of Civil Procedure
19(a); then the court must determine whether
litigation can be properly pursued without the
absent party under Federal Rule of Federal
Procedure 19(b). See HS Resources, 327 F.3d
at 439. If the absent party should be joined
under rule 19(a), but the suit cannot proceed
without that party under the requirements of
rule 19(b), the case must be dismissed.
The parties do not contest that adding TCC
would deprive the district court of federal jur-
isdiction because it would destroy complete di-
versity of citizenship. We therefore proceed to
determine whether TCC should be joined
under rule 19(a).
Plaintiffs argue that the district court abus-
ed its discretion in finding that TCC was a nec-
essary party under rule 19(a) because, they
claim, TCC was at most subject to joint-and-
several liability along with BGC, and as a re-
sult is not a necessary party as a matter of law
under Temple v. Synthes Corp., 498 U.S. 5
(1990). In Temple, the plaintiff was injured af-
ter surgery that implanted a device into his
spine that broke inside his body. See id. at 5.
The plaintiff filed a federal diversity suit
* Pursuant to 5TH CIR. R. 47.5, this court has
determined that this opinion should not be publis-
hed and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.

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against the manufacturer and simultaneously
filed a negligence suit in state court against the
hospital and the doctor who had performed the
operation. See id. at 6. The district court dis-
missed the suit with prejudice based on the in-
terests of judicial economy, citing Provident
Tradesmens Bank & Trust Co. v. Patterson,
390 U.S. 102, 116-17 n.12 (1968), in which
the Court recognized that one goal of rule 19
is “the interest of the courts and the public in
complete, consistent, and efficient settlement
of controversies.” Id. We affirmed on the
ground that the district court did not abuse its
discretion in ordering joinder under rule 19,
because the claims “overlapped.” Id. at 7.
The Supreme Court reversed for abuse of
discretion, holding that joint tortfeasors are
not necessary parties as a matter of law. See
id. The Court cited the longstanding rule that
“it is not necessary for all joint tortfeasors to
be named as defendants in a single lawsuit”
and noted, by citing the advisory committee
note to rule 19(a), that nothing in rule 19
“changed that principle.” The Court conclud-
ed that “no inquiry under Rule 19(b) [was]
necessary, because the threshold requirements
of Rule 19(a) [had] not been satisfied.” Id.
Plaintiffs assert that because BGC and TCC
are potential joint tortfeasors,1 TCC is not a
necessary party under Temple, so the district
court abused its discretion in dismissing.
Although BGC acknowledges the validity of
the Temple rule, it asserts that the rule is in-
applicable here because it claims that BGC has
no direct tort liability for failure to supervise
and/or train the personnel, or maintain the
premises of the Treasure Casino, because TCC
is the only entity potentially liable for such.
BGC cites the general tenet of Louisiana
corporate law that a parent corporation has no
duty to control the activities of subsidiaries or
to ensure that they are complying with duties
owed to third persons;2 BGC also relies on
evidence that TCC managed the casino. BGC
thus concludes that its tort liability is not joint
and several and is at most derivative of and
secondary to TCC’s liability.
Despite BGC’s arguments, there is suffi-
cient evidence in the record to support a the-
ory of direct liabilitySSevidence that BGC at
least may have at least assumed a duty to op-
erate and manage the casino. First, Plaintiffs
point to a “Management Agreement” between
the parties according to which BGC assumed
the duty and responsibility to “supervise and
direct the management and operation of the
[casino]” and to “hire, supervise and terminate
all personnel of [the casino].” BGC claims this
agreement no longer represents the actual
operating structure of the enterprise, but it
does not point to anything in the record to
support this contention that the agreement is
no longer valid.
Moreover, beyond the agreement, plaintiffs
have identified evidence that the casino holds
BGC out as its operatorSSthe record reflects
that the casino’s website states that “[t]he
Chest is owned and operated by parent com-
1 In their state court complaint, plaintiffs al-
leged that BGC and TCC jointly own and operate
the Treasure Chest Casino, are each responsible for
knowingly ignoring a dangerous condition; plain-
tiffs prayed for a judgment “jointly, severally, and
in solido . . . .”
2 Bujol v. Entergy Servs., Inc., 2004 La. LEXIS
1784, at *27-*28 (La. May 25, 2004) (“While gen-
erally a parent corporation, by virtue of its owner-
ship interest, has the right, power, and ability to
control its subsidiary, a parent corporation gener-
ally has no duty to control the actions of its subsid-
iary and thus no liability for a failure to control the
actions of its subsidiary.”).

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pany, Boyd Gaming Corporation, which is one
of the most highly respected in the gaming
industry.” The plaintiffs are not relying on
BGC’s mere status as the parent corporation
in establishing its ground for tort liability;
rather, they have alleged an independent, di-
rect ground for liability. Based on this theory,
TCC is a joint tortfeasor, and BGC’s attempt
to distinguish Temple fails.
In sum, plaintiffs have adequately alleged a
ground for direct liability on the part of BGC,
based on evidence that it may have assumed a
duty through contract to supervise and train
employees and maintain the premises at the
casino. It follows that the district court
abused its discretion in deciding to dismiss
under rule 12(b)(7), because TCC is not a
necessary party as a matter of law, based on
the unqualified, broad rule established by Tem-
ple, that joint tortfeasors are not necessary
parties.
REVERSED and REMANDED.

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