Barreiro v. Model Power Int'l, et al

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

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

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question of diversity in deciding subject matter
jurisdiction can never involve difficult legal
questions and must always be resolved before
personal jurisdiction. Even where personal
jurisdiction raises difficult questions of state
law, and subject matter jurisdiction is resolved
as easily as personal jurisdiction, a district
court need not always rule on the motion to
remand firstSSthe Ruhrgas Court noted that,
in such circumstances, the court ordinarily will
do so, but concerns of judicial economy and
rest raint may override that ordinary
chronology. See id. at 1571. This case is one
in which the court may properly defer
resolution of subject matter jurisdiction.
After months of discovery, Barreiro had not
produced evidence that Model Power or MDK
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
demonstrating personal jurisdiction because of
the limitation placed on jurisdictional
discovery. “[J]urisdictional discovery is within
the trial court’s discretion and will not be
disturbed ordinarily unless there are unusual
circumstances showing a clear abuse.”
Patterson, 764 F.2d at 1148 (internal
quotation marks omitted).
The court gave Barreiro several months to
conduct jurisdictional discovery, but he came
up with no evidence supporting personal
jurisdiction, while defendants produced
significant evidence refuting it. The court did
not abuse its discretion in limiting jurisdictional
discovery to a reasonable period of time.
AFFIRMED.
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).

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