UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
filed: February 8, 1990.
THE SINDIA EXPEDITION, INC., APPELLANT
THE WRECKED AND ABANDONED VESSEL, KNOWN AS "THE SINDIA," WHICH RAN AGROUND OFF OCEAN CITY, NEW JERSEY, HER TACKLE, ARMANENT, APPAREL AND CARGO LOCATED WITHIN 3,000 YARDS OF A POINT AT COORDINATES 74O 35' 12" WEST LONGITUDE AND 39O 16' 00" NORTH LATITUDE
Appeal from the United States District Court for the District of New Jersey (Camden), D.C. Civil No. 86-2889.
Hutchinson, Cowen, and Rosenn, Circuit Judges.
Opinion OF THE COURT
ROSENN, Circuit Judge.
In 1901, the British-flagged ship, the Sindia, with its four towering masts, successfully and happily navigated the high seas from Shanghai, China to the seacoast of New Jersey. It is believed that when the 329 foot steel-hulled barque proudly sailed into the waters off New Jersey, her cargo hold swelled with fine porcelain, carved ivory, silk, camphor oil, and bamboo matting. Much of her exotic goods and antiquities is believed to have been brought aboard by British and American soldiers from plundering following the Chinese Boxer Rebellion.
When the ship was nearly within sight of its destination, apparently the crew began to prematurely celebrate their arrival. On December 15, 1901, the Sindia's sailing days sadly suffered a jarring end when she ran aground just off the beach of Ocean City, New Jersey. Today, the Sindia's tillerpost, still protruding from her steel hull and plainly visible in the relatively shallow waters in which she lies, marks her watery grave.*fn1
The Sindia Expedition (Expedition), a maritime treasure hunter incorporated in New Jersey, commenced this in rem admiralty action in the United States District Court for the District of New Jersey seeking either, or both, title to the vessel and a liberal salvage award.*fn2 Attempts to salvage the ship have continued sporadically since its unfortunate demise. Other hopefuls intervened. The Seaview Beach Condominium Association, Inc. (Seaview) and McHale, Kissane & Pennypacker (McHale) intervened on the basis of their claims to land on which the Sindia is embedded. Noreaster Marine Salvage L.P. intervened as a competing salvor.
Although the Expedition's complaint contains a request that all "governmental agencies be enjoined from interfering with the Plaintiff's title, possession and property," the Expedition did not specifically name any state, state agency, or state official in its complaint. The State of New Jersey (the State), however, informed the district court by letter that it claimed ownership to the wreck of the Sindia and its cargo and that it would not waive its eleventh amendment immunity by appearing in the litigation.
Thereafter, McHale filed a motion to dismiss the action contending that the district court lacked jurisdiction, that service of process was defective and that the Expedition had failed to join the State of New Jersey, an indispensable party. The court granted McHale's motion on the ground that the State had colorable title and, therefore, the Expedition had failed to join an indispensable party as required under Federal Rule of Civil Procedure 19(b). The Expedition appeals. We reverse and remand.
On appeal, the Expedition vigorously contends that New Jersey does not have colorable title to the Sindia and, therefore, is not an indispensable party to the action. Upon request of this court and reserving its right to asserts its rights to sovereign immunity, the State submitted a memorandum statement and participated at oral argument. In its statement, the State informs us that its claim to colorable title of the wrecked vessel rests on a number of bases, including New Jersey's abandoned property law, N.J.S.A. 2A:37-13, New Jersey common law, the Federal Submerged Lands Act of 1953, 43 U.S.C. § 1311(a), and finally an agreement reached with the Expedition in 1988 granting the Expedition salvage rights.*fn3 The agreement, however, provides that it will terminate upon final order of the district court or on appeal in the Expedition's admiralty action. Although it asserts that the district court lacks jurisdiction to decide New Jersey's claims because of the eleventh amendment,
the State suggests that the district court could exercise jurisdiction over all the non-state parties before it so that the primacy of one salvage group versus another could be decided, leaving to the State the option of protecting its rights through negotiations or contract.
Rather than focus on the question, as did the district court, of whether New Jersey has a colorable claim of title to the Sindia so as to make it an indispensable party, we believe that there is a more direct and pragmatic resolution of this appeal. Relying on the opinion of the Supreme Court in its landmark decision in Florida Dep't of State v. Treasure Salvors, Inc., 458 U.S. 670, 73 L. Ed. 2d 1057, 102 S. Ct. 3304 (1982), we prefer to assume for the purpose of our discussion that the State has colorable title, as held by the district court here, and meet the dominant issue whether the eleventh amendment deprives the court of jurisdiction because the State, though a non-party, asserts an interest in the res. We therefore consider whether the Expedition's complaint in rem is barred by the eleventh amendment of the Constitution with the consequential effect that this would per se render the State an indispensable party to the action.
A. The Eleventh Amendment
The district court did not expressly address whether the action was barred by the eleventh amendment but instead focused its attention on the Expedition's failure to join an indispensable party. Although New Jersey and the Expedition are satisfied that the federal court has jurisdiction over the action, we have "a special obligation" to satisfy ourselves of our own and the district court's jurisdiction, "even though the parties are prepared to concede it." Bender v. Williamsport Area School Dist., 475 U.S. 534, 541, 89 L. Ed. 2d 501, 106 S. Ct. 1326 (1986), quoting Mitchell v. Maurer, 293 U.S. 237, 244, 79 L. Ed. 338, 55 S. Ct. 162 (1934). We will, therefore, sua sponte, consider the effect of the eleventh amendment on our jurisdiction. See Fitchik v. New Jersey Transit Rail Operations, Inc., 873 F.2d 655, 658 n.1 (3d Cir.), cert. denied, 493 U.S. 850, 107 L. Ed. 2d 107, 110 S. Ct. 148 (1989).
The eleventh amendment provides:
The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
Congress enacted the eleventh amendment to protect the sovereign immunity of the individual states. Over the years, the rule has evolved that suits of private parties seeking to impose a liability which must be met by public funds of the state treasury are barred by the eleventh amendment. Edelman v. Jordan, 415 U.S. 651, 662-63, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974), Fitchik v. New Jersey Transit Rail Operations, Inc., 873 F.2d at 659. The States' eleventh amendment protection extends to actions brought under federal admiralty jurisdiction. In re New York, No. 1, 256 U.S. 490, 500, 65 L. Ed. 1057, 41 S. Ct. 588 (1921). Thus, a private party may not bring an in personam action, even in admiralty, against an unconsenting state. Id.
The Court in Florida Dep't of State v. Treasure Salvors, Inc., 458 U.S. 670, 73 L. Ed. 2d 1057, 102 S. Ct. 3304 (1982), directly addressed the issue of whether an admiralty in rem action may be barred by the eleventh amendment. In Treasure Salvors, the plaintiffs filed an admiralty in rem action in federal district court seeking declaration of title to an abandoned vessel. Two Florida state officials of the Florida Division of Archives held possession of some of the artifacts of the vessel recovered from the floor of the ocean in international waters. However, neither the state agency nor the State of Florida was named as a party to the suit.
The Treasure Salvor plaintiffs requested the district court to "arrest" the artifacts held by the two named state officials. The court issued the warrant and denied the State's motion to quash. Florida appealed the arrest order claiming Eleventh Amendment immunity. The Court of Appeals for the Fifth Circuit affirmed, 621 F.2d 1340, and the Supreme Court granted certiorari. 451 U.S. 982 (1981).
A plurality of the Supreme Court held that the eleventh amendment did not bar the warrant. Justice Stevens, for the plurality, explained that a classic admiralty in rem action in which the plaintiffs claim only an ownership interest in property and are not seeking personal jurisdiction over the State by seizure of the vessel is not barred by the eleventh amendment. See Treasure Salvors, 458 U.S. at 699. On the other hand, an admiralty action brought in rem solely for the purpose of giving the court jurisdiction over a damage claim against a State is barred by the eleventh amendment. Id. The reasoning behind such a bar is that the action has no connection to the typical admiralty in rem action, but is a calculated attempt by the plaintiff to acquire personal jurisdiction by doing an "end-run" around the eleventh amendment by seizing property. See In re New York, 256 U.S. 490, 501, 65 L. Ed. 1057, 41 S. Ct. 588 ("the proceedings . . . have no element of a proceeding in rem").
The Treasure Salvor plurality held that a legitimate admiralty in rem action directed only to the derelict property is not barred by the eleventh amendment for two reasons. First, the in rem arrest warrant merely seeks possession of specific property; it does not "seek any attachment of state funds and . . . impose[s] no burden on the state treasury." Treasure Salvors, 458 U.S. at 698. Second, the Treasure Salvors plurality implicitly endorsed the admiralty doctrine of personification under which an in rem action is characterized as an action against the ship not the owner.*fn4 Absent circumstances which suggest an illegitimate circumvention of the eleventh amendment, an admiralty in rem action in which a State claims an interest in a res is not an action against the State but merely against the property.*fn5 Nonetheless, the Court explained that although the district court was not barred in issuing process to secure possession of the artifacts held by the named state officials, the resolution of the case did not permit, because of the eleventh amendment, the determination of the State's ownership of the artifacts.
The result in Treasure Salvors was that, although the State of Florida claimed an interest in the property, the court held that the in rem proceeding could proceed. Curiously, the court held that the in rem proceeding could determine title to the vessel as far as non-State parties were concerned, but it could not determine the State's interest in the property without its consent. Treasure Salvors, 458 U.S. at 682, 698.
On remand, the Court of Appeals for the Fifth Circuit gave possession of the contested artifacts to Treasure Salvors although noting that "the State of Florida asserts extrajudicially a claim to own them." Florida, Dep't of State v. Treasure Salvors, Inc., 689 F.2d 1254, 1256 (1982). The Fifth Circuit explained:
Unless the State elects voluntarily to appear and to litigate ownership, the court shall enter final judgment in the usual form for in rem actions, decreeing Treasure Salvors to be owner of the artifacts as against all claimants except the State of Florida, but declaring expressly: "This judgment does not determine in any way whether the State of Florida is the owner of these artifacts."
We hold that under the law of Treasure Salvors the Expedition's admiralty complaint in rem is not barred by the eleventh amendment. Here, the Expedition has claimed an ownership interest in the vessel under the law of finds and also seeks to enforce a lien against the ship under the laws of maritime salvage.*fn7 Therefore, the action is a genuine admiralty in rem action against the property and not a circuitous in personam action to obtain jurisdiction over the State for purposes of money damages.*fn8
In addition, the Expedition did not specifically name the State or a New Jersey state agency as a party to the present action. Indeed, the action was brought solely against the vessel and no process has been served on the State. Although an action may be against a State even if it is not a named party, the Treasure Salvor plurality considered it significant that the State was not named. See Treasure Salvors, 458 U.S. at 691.
Finally, the record reveals that the rights to the Sindia are contested by other parties. Thus, the effect of the proceeding will be, if the Expedition is successful, to award it possession to the Sindia as against these parties and not against the State. Cf. In re New York (I), 256 U.S. at 500 (whether a State is a party is to be determined "by the essential nature and effect of the proceedings, as it appears from the entire record"). We must, however, address whether New Jersey's non-record assertion of an interest in the vessel, although not a party to the proceeding, makes it an indispensable party to the Expedition's in rem action.
B. Is the State an indispensable party?
The district court dismissed the Expedition's action for failure to join the State as an indispensable party. Fed. R. Civ. P. 19(b). We review a district court's determination of indispensability for abuse of discretion. Steel Valley Auth. v. Union Switch & Signal Div., American Standard, Inc., 809 F.2d 1006, 1010 (3d Cir. 1987), cert. dismissed, American Standard, Inc. v. Steel Valley Auth., 484 U.S. 1021, 98 L. Ed. 2d 756, 108 S. Ct. 739 (1988).
Before a district court can dismiss an action for failure to join an indispensable party, the court must determine if a missing party is a "party which must be joined" under 19(a).*fn9 Abel v. American Art Analog, Inc., 838 F.2d 691, 695 (3d Cir. 1988). If a district court failed to make an explicit 19(a) determination but dismissed an action on 19(b) grounds, the appellate court must independently analyze whether an absent party was required to be joined under 19(a). See Steel Valley, 809 F.2d at 1010. Because the district court failed to engage in any analysis of 19(a), we will determine if the State is a necessary party under that section.
1. Subdivision (a) (1) of Rule 19
When determining whether a absent person must be joined to an action, the court must consider if in the person's absence complete relief can be accorded "among the those already parties." Fed. R. Civ. P. 19(a)(1). The Advisory Committee Notes to Rule 19 state that subdivision (a)(1) was enacted to avoid partial or hollow relief. Professor Moore has explained that "complete relief":
3A Moore's Federal Practice P19.07-1, at 93-98 (2d ed. 1989).
Under the facts of this case, a determination of possession or salvage rights amongst the intervenors and the plaintiff, without the State, would not be "hollow." As to possession or title issues among them under the law of finds, the court may completely determine who has superior rights.*fn10 See Florida, Dep't of State v. Treasure Salvors, Inc., 689 F.2d 1254, 1256 (5th Cir. 1982). New Jersey would not be adversely affected because the district court cannot make a determination of the State's right to or interest in the property without its consent. Treasure Salvors, 458 U.S. at 700. The possibility that a successful party may have to defend its rights to the Sindia in a subsequent suit brought by the State does not make New Jersey a necessary party to this action. See Field v. Volkswagenwerk AG, 626 F.2d 293, 300-301 (3d Cir. 1980); see also 3A Moore's Federal Practice P19.07-1, at 93-96 (2d ed. 1989).
A complete determination can also be made as to which party before the court has salvage rights. We note that New Jersey actually requests the court to adjudicate the "primacy of one salvage group" so it can then negotiate a salvage agreement with the victor.*fn11 (New Jersey Letter Brief p.4) Compare 3A Moore's Federal Practice P19.07 1 97-98 (2d ed. 1989) (joinder not necessary where meaningful relief can still be provided). The State is therefore not a required party under Rule 19(a)(1).
2. Subdivision (a) (2) of Rule 19
Federal Rule of Civil Procedure 19 (a)(2)(i) & (ii) provides that an absent person who is subject to process and whose joinder will not deprive the court of jurisdiction over the subject matter must be joined to an action if:
the person claims an interest relating to the subject matter of the action and is so situated that the disposition of the action in the person's absence:
(i) may as a practical matter impair or impede the person's ability to protect that interest or
(ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.
Subdivision (a)(2)(i) of Rule 19 clearly does not apply to this case because the State may always protect its interest in the Sindia by voluntarily appearing and asserting its rights. The State is manifestly unconcerned about the effect of the litigation on its interest in the Sindia. In its letter brief and at oral argument to this court, New Jersey was wholly unconcerned with any adjudication in its absence and actually pressed the court to remand the case because it believed the adjudication of the rights of the partes of record would not harm New Jersey's interest.
Subdivision (a)(2)(ii) is primarily aimed at protecting parties before the court. Moore's Federal Practice P19.07-[2.2], at 111 (2d ed. 1989). The subdivision was enacted to protect parties from a "substantial" risk of multiple or inconsistent obligations, not merely a possible risk. The subdivision also helps to protect defendants from "needless" multiple litigation. Schutten v. Shell Oil Co., 421 F.2d 869 (5th Cir. 1970), cited in Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 1602. A court considering 19(a)(2)(ii) must balance the plaintiff's choice of forum against the policies of judicial economy and fairness to other parties. See Field v. Volkswagenwerk AG, 626 F.2d 293, 302 (3d Cir. 1980).
On balance, we find that 19(a)(2)(ii) does not apply to this case. The Expedition brought this admiralty in rem action in federal court because federal courts have exclusive jurisdiction over this form of action. Madruga v. Superior Court, 346 U.S. 556, 560, 98 L. Ed. 290, 74 S. Ct. 298 (1954). Therefore, the Expedition does not have an alternative forum to pursue its action and avoid "needless" multiple litigation.
As noted, New Jersey is the only potential non-party who could assert an interest in the wreck once this litigation is concluded. See supra note 10. The victorious party may have to face the State in another forum at another time. A decision in this case cannot impose any "obligation" as described in 19(a)(2)(ii) in the event of future litigation with the State. See Boone v. General Motors Acceptance Corp., 682 F.2d 552, 554 (5th Cir. 1982) (threat of inconsistent obligations, not the possibility of multiple litigation which determines Rule 19 considerations); see also Field v. Volkswagenwerk, AG, 626 F.2d 293, 300-302 (3d Cir. 1980).
We are convinced that upon the conclusion of this litigation no present party faces a "substantial risk" of incurring multiple or inconsistent obligations due to New Jersey's absence. The district court will decide who, amongst the parties of record, has superior rights to the vessel. No "substantial risk" exists that a present party will pay, as a consequence of this suit, additional money to the State or any other non-party. The risk of any present party incurring inconsistent or multiple obligations due to the State's absence is, indeed, remote. New Jersey is also fully able, and it has so expressed itself, to protect its interests. Therefore, subdivision (a)(2) of Rule 19, in addition to subdivision (a)(1), is not applicable to this case. This does not end the matter, however, and we turn to the district court's order dismissing the action.
The district court premised its dismissal order on Rule 19(b) of the Federal Rules of Civil Procedure. Subdivision (b) of Rule 19 provides in relevant part:
If a person as described in subdivision (a)(1)-(2) hereof cannot be made a party, the court shall determine whether in equity or in good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable. (Emphasis supplied).
As discussed above, New Jersey was not a person described in Rule 19 subdivisions (a) (1) & (2). Therefore, the district court erred in considering 19(b) and, consequently, in dismissing the Expedition's case on 19(b) grounds.*fn12
Accordingly, the district court's order dismissing the Expedition's complaint will be reversed and the case remanded for proceedings consistent with this opinion.
The Expedition (appellant) will bear its own costs.