Casas v. Mita
Case Date: 12/14/1994
Court: United States Court of Appeals
Docket No: 94-1067
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UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT ____________________ No. 94-1067 CASAS OFFICE MACHINES, INC., Plaintiff, Appellee, v. MITA COPYSTAR AMERICA, INC., ET AL., Defendants, Appellants. ____________________ APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Gilberto Gierbolini, U.S. District Judge] ___________________ ____________________ Before Torruella, Circuit Judge, _____________ Campbell, Senior Circuit Judge, ____________________ and Boudin, Circuit Judge. _____________ ____________________ Ricardo F. Casellas, with whom Mario Arroyo, and Fiddler, _____________________ _____________ ________ Gonzalez & Rodriguez, were on brief for appellants. ____________________ Luis A. Melendez-Albizu, with whom Luis Sanchez-Betances, Sanchez ________________________ _____________________ _______ Betances & Sifre, Nilda M. Cordero de Gomez, and Jorge E. Perez-Diaz, ________________ _________________________ ___________________ Federal Litigation Division, United States Department of Justice, were on brief for appellee. ____________________ December 14, 1994 ____________________ CAMPBELL, Senior Circuit Judge. Mita Copystar of _____________________ America, Inc. ("Mita") appeals from the district court's order granting summary judgment and issuing a permanent injunction in favor of Casas Office Machines, Inc. ("Casas"). The action began when Casas sued Mita and two fictitious defendants, John Doe and Richard Roe, in the Superior Court of Puerto Rico, San Juan Part. Organized under the laws of California and with its principal place of business in New Jersey, Mita removed the action to the United States District Court for the District of Puerto Rico. After removal, Casas, by an amendment to its complaint, replaced the fictitious defendants with two named defendants, Caguas Copy, Inc. and Oficentro J.P., Inc., which, like Casas, are Puerto Rico corporations. Complete diversity of citizenship between the parties was thus destroyed, although this fact was not called to the district court's attention at the time. The district court proceeded to deny Mita's motions to dismiss and for summary judgment, and it allowed Casas's motion for a permanent injunction enjoining Mita from impairing a contract entered into with Casas. Now, for the first time on appeal, Mita points out the jurisdictional problem caused by the addition of the nondiverse parties. Mita asks us to vacate the judgment below and order the district court to remand the action to the Superior Court of Puerto Rico. Mita also attacks the district court's decision on the merits, arguing -2- that summary judgment was improper and that the district court erred in granting the permanent injunction. I. Incorporated in Puerto Rico, Casas sells and distributes office and photocopying equipment in that Commonwealth. In 1983, Casas entered into an agreement with Mita, a supplier of office and photographic equipment, to distribute Mita products in Puerto Rico. As noted, Mita is a California corporation with its principal place of business in New Jersey. Following a period of strained business relations, Casas and Mita executed a second agreement in 1989 (the "1989 Agreement") granting Casas the exclusive right to distribute Mita's products in the "Greater San Juan" area. Paragraph 5 of the 1989 Agreement, however, provided that Casas's inability to meet or exceed 85% of a set sales quota would result in termination of the exclusivity provisions of the contract. Asserting that Casas had failed to achieve the 85% threshold, Mita terminated Casas's exclusive distribution rights but retained Casas as a distributor and designated two new distributors in the "Greater San Juan" area. Casas responded on February 1, 1991, by suing Mita, John Doe, and Richard Roe1 in the Superior Court of Puerto ____________________ 1. Paragraph 3 of Casas's complaint said: -3- Rico, San Juan Part. Casas alleged that (1) Mita had deprived Casas of its exclusive distribution rights without just cause in violation of P.R. Laws Ann. tit. 10, 278- 278d 91976) (referred to in the complaint and hereinafter as "Law 75"), (2) defendants had conspired to deprive Casas of its right to sell and distribute Mita products, (3) Mita had impaired Casas's exclusive distribution agreement, and (4) defendants had intentionally interfered with Casas's contractual relationship with Mita. Casas sought preliminary and permanent injunctive relief, as well as monetary damages. Alleging the existence of diversity jurisdiction, Mita removed the action to the United States District court for the District of Puerto Rico on March 6, 1991. Thereafter, Casas amended its complaint twice. An amendment ____________________ Codefendants John Doe and Richard Roe are fictitious names used to refer to defendants whose names are unknown at present. Said defendants are the natural persons and/or corporate and/or judicial entities who together with MITA have conspired, with knowledge of the contractual relationship between MITA and Casas, to deprive the latter of said contractual relationship, directly and indirectly interfering therewith, causing the damages hereinafter itemized. To __ plaintiff's best knowledge and _________________________________________ understanding, John Doe and Richard Roe _________________________________________ are citizens and residents of the _________________________________________ Commonwealth of Puerto Rico and are also _________________________________________ liable to plaintiff pursuant to the _________________________________________ allegations mentioned hereinafter. _________________________________ (emphasis added). -4- filed on March 9, 1992, added a fifth count,2 and eliminated Casas's request for a preliminary (but not a permanent) injunction. By a second motion to amend, brought on May 14, 1992, Casas sought to replace the fictitious defendants with Caguas Copy, Inc. ("Caguas") and Oficentro J.P., Inc. ("Oficentro") the corporations that Mita had designated as new distributors in the Greater San Juan area upon terminating Casas's exclusive distribution rights. Paragraph 3 of Casas's Second Amended Complaint read: Codefendants Caguas Copy, Inc. and _________________________________________ Oficentro J.P., Inc. are, upon _________________________________________ information and belief, corporate _________________________________________ entities organized pursuant to the laws _________________________________________ of the Commonwealth of Puerto Rico, with _________________________________________ Principal offices located at Suite B-3, _________________________________________ Goyco Street # 10, Caguas, P.R., and _________________________________________ Diamante Street # 24, Villa Blanca, _________________________________________ Caguas, P.R., respectively. Said ______________________________ defendants are the corporate and/or judicial entities who together with MITA have conspired, with knowledge of the contractual relationship between MITA and Casas, to deprive the latter of said contractual relationship, directly and indirectly interfering therewith, causing the damages hereinafter itemized. To __ plaintiff's best knowledge and _________________________________________ understanding, Caguas Copy, Inc. and _________________________________________ Oficentro J.P., Inc. are citizens and _________________________________________ residents of the Commonwealth of Puerto _________________________________________ Rico and are also liable to plaintiff ____ pursuant to the allegations mentioned hereinafter. ____________________ 2. Count Five alleged that defendants had illicitly and tortiously contracted for the distribution of Mita products in Puerto Rican territories in which Mita had granted Casas the exclusive right to distribute its products. -5- (emphasis added). Four days later, on May 18, 1992, Casas moved the district court for an expedited review of its second motion to amend its complaint. Such review was necessary, said Casas, because Oficentro was under the protection of the United States Bankruptcy Court for the District of Puerto Rico which had ordered that all creditors file their proof of claims on or before June 8, 1992 and Casas could not file a proof of claim until its motion to amend was granted. The district court allowed Casas's second amendment in early June 1992. In the meantime, Mita had moved for summary judgment on February 12, 1992. It argued primarily that (1) Mita did not impair its contractual relationship with Casas because it merely enforced its rights under the terms of the 1989 Agreement, (2) even if it were found that Mita impaired its contractual relationship with Casas, Mita had just cause to do so, and (3) Casas's suit was barred by the equitable doctrine of laches. On March 16, 1992, Casas opposed Mita's motion for summary judgment, and brought a cross-motion for partial interlocutory summary judgment on its Law 75 claims (Counts One and Three), renewing its request for a permanent injunction.3 Mita, in turn, filed, on April 13, 1992, an ____________________ 3. In its original complaint, Casas had requested the district court to issue a permanent injunction against Mita, ordering it [(1)] to cease and -6- opposition to Casas's cross-motion for summary judgment in which it maintained, inter alia, that (1) permanent _____ ____ injunctive relief is not available under Law 75, and (2) ordering permanent injunctive relief in this case would be unconstitutional. Finally, in a separate motion, filed on June 4, 1992, Mita sought to dismiss Casas's complaint on the grounds that Casas had engaged in a fraud upon the court. The United States magistrate judge reviewed Mita's motions to dismiss and for summary judgment, as well as Casas's cross-motion for summary judgment. In a report and recommendation issued on September 2, 1993, the magistrate judge concluded that (1) Casas had not committed fraud on the court, (2) Casas was not barred by the doctrine of laches from pursuing its claims under Law 75, (3) Mita did not have just cause under Law 75 to terminate Casas's exclusive distribution rights because it failed to demonstrate that the quota provision in the 1989 Agreement was reasonable at the ____________________ desist from continuing with the acts which constitute impairment of the terms of the distribution relationship existing between it and Casas, . . . [(2)] to abstain from appointing, choosing, designating or arranging for other additional distributors and/or in substitution of Casas[,] and . . . [(3)] to abstain from terminating and/or altering the distribution relationship existing between both parties or performing any act or omission whatsoever in impairment thereof, all pursuant to the provisions of Law 75. -7- time of Casas's nonperformance, (4) a permanent injunction may be ordered under Law 75, and (5) Mita had impaired its contractual relationship with Casas. Consequently, the magistrate judge recommended that the district court deny Mita's motions to dismiss and for summary judgment, and grant Casas's cross-motion for summary judgment. In its opinion and order filed on November 18, 1993, the district court adopted all of the magistrate judge's recommendations, thereby granting Casas's cross- motion for summary judgment on its Law 75 claims (Counts One and Three).4 Casas Office Machines v. Mita Copystar ________________________ ______________ Machines, 847 F. Supp. 981, 983 (D.P.R. 1993). In a judgment ________ entered the same day, the district court denied Mita's motions to dismiss and for summary judgment, and granted Casas's motion for an injunction permanently enjoining Mita from impairing the 1989 Agreement without just cause.5 ____________________ Mita, pursuant to 28 U.S.C. 1292(a)(1) (1988),6 appeals ____________________ 4. The district court did not decide Counts Two, Four, and Five of Casas's complaint, and, to our knowledge, they remain unresolved. 5. The district court emphasized in its opinion and order that it was not placing Mita in involuntary servitude. According to the district court, Mita could impair its contractual relationship with Casas in the future if it could demonstrate just cause for doing so. 6. Section 1292(a)(1) provides in relevant part: [T]he courts of appeals shall have jurisdiction of appeals from: -8- from this interlocutory decision. Mita argues principally: (1) that diversity jurisdiction was defeated when Caguas and Oficentro were substituted for the fictitious defendants; (2) that the district court improperly entered summary judgment; and (3) that the district court improperly issued a permanent injunction. II. Before we reach the issue of subject matter jurisdiction, we respond to Casas's challenge to our appellate jurisdiction. Casas maintains that, under Carson ______ v. American Brands, Inc., 450 U.S. 79, 101 S. Ct. 993, 67 L. ______________________ Ed. 2d 59 (1981), jurisdiction under 1292(a)(1) does not exist unless the appellant demonstrates that the district court's interlocutory order "might have a serious, perhaps irreparable, consequence, and that the order can be effectually challenged only by immediate appeal." 450 U.S. at 84 (internal quotations omitted). According to Casas, Mita has failed to satisfy these requirements. Casas's argument is not well taken. ____________________ (1) Interlocutory orders of the district courts of the United States . . ., or of the judges thereof, granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court. -9- The Supreme Court has said that 1292(a)(1) provides appellate jurisdiction over two types of orders: those "that grant or deny injunctions and [those] that have the practical effect of granting or denying injunctions and have `serious, perhaps irreparable, consequence[s].'" Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, __________________________ _______________ 287-88, 108 S. Ct. 1133, 99 L. Ed. 2d 296 (1988) (quoting Carson, 450 U.S. at 84). Thus, courts of appeals, in ______ determining whether they have appellate jurisdiction under 1292(a)(1), must, in the first instance, decide "`whether the order appealed from specifically [granted or] denied an injunction or merely had the practical effect of doing so.'" Morgenstern v. Wilson, 29 F.3d 1291, 1294 (8th Cir. 1994) ___________ ______ (quoting Kausler v. Campey, 989 F.2d 296, 298 (8th Cir. _______ ______ 1993)). If the interlocutory order in question "expressly grants or denies a request for injunctive relief, the Carson ______ requirements need not be met and the order is immediately appealable as of right under 1292(a)(1)." Morgenstern, 29 ___________ F.3d at 1294-95 (observing that the majority of the circuits agree with this principle, and citing cases); see Feinstein ___ _________ v. Space Ventures, Inc., 989 F.2d 49, 49 n.1 (1st Cir. 1993) ____________________ (accepting appellate jurisdiction under 1292(a)(1), and noting the distinction between "an interlocutory order which has the incidental effect of denying [or granting] injunctive relief" and an order that "clearly and directly grant[s] a[n] -10- . . . injunction"). On the other hand, "if an order merely has the practical effect of granting or denying an injunction, the Carson . . . test[s] must be satisfied." ______ Morgenstern, 29 F.3d at 1295. ___________ Here, the district court's order expressly granted Casas's motion for an injunction barring Mita from impairing the 1989 Agreement without just cause. Casas, 847 F. Supp. _____ at 990. Accordingly, for the reasons discussed, the district court's order was immediately appealable as of right, and Mita was not required to satisfy the Carson criteria. Thus, ______ we have appellate jurisdiction. We now consider our subject matter jurisdiction. III. Mita argues that there is no subject matter jurisdiction in federal court because complete diversity of citizenship was destroyed when the fictitious defendants were replaced with Caguas and Oficentro after removal. Although Mita raises this issue for the first time on appeal, we are obliged to address it because a defense of lack of jurisdiction over the subject matter is expressly preserved against waiver by Fed. R. Civ. P. 12(h)(3). E.g., Halleran ____ ________ v. Hoffman, 966 F.2d 45, 47 (1st Cir. 1992). Casas responds _______ that, diversity jurisdiction, once established at the time of removal, could not be lost by replacement of the fictitious defendants with Caguas and Oficentro, which Casas describes -11- as nondiverse, dispensable parties. Alternatively, if ___________ jurisdiction was indeed defeated by the substitution of Caguas and Oficentro after removal, Casas asks us to restore it, nunc pro tunc, by dismissing the diversity-spoiling _______________ defendants without prejudice. _________________ A. This case involves no federal question. Jurisdiction stands or falls upon diversity of citizenship. It has long been settled that a "lack of `complete diversity' between the parties deprives the federal courts of jurisdiction over the lawsuit." Sweeney v. Westvaco Co., 926 _______ ____________ F.2d 29, 41 (1st Cir.) (citing Strawbridge v. Curtiss, 7 U.S. ___________ _______ (3 Cranch) 267, 2 L. Ed. 435 (1806)), cert. denied, 112 S. _____________ Ct. 274, 116 L. Ed. 2d 226 (1991). There was complete diversity between the parties on March 6, 1991, when Mita removed the case to federal court: Casas is a Puerto Rico corporation, and Mita was incorporated in California and maintains its principal place of business in New Jersey. That the fictitious defendants, John Doe and Richard Roe, might reside in Puerto Rico as suggested by Casas in the original complaint was properly disregarded under 28 U.S.C. 1441(a) (1988), which provides in relevant part: "For purposes of removal . . ., the citizenship of defendants sued under fictitious names shall be disregarded." After removal, however, Casas replaced the fictitious defendants -12- with Caguas and Oficentro, which were clearly identified as Puerto Rico corporations, like Casas itself. The issue is whether this substitution, which unquestionably destroyed complete diversity, also defeated federal subject matter jurisdiction. We hold that it did. Casas argues that as diversity jurisdiction was established at the commencement of the proceeding, it was not later defeated by the mere naming of the fictitious parties, who were dispensable, not indispensable. E.g., Freeport- ____ _________ McMoRan Inc. v. K N Energy, Inc., 498 U.S. 426, 428, 111 S. _____________ ________________ Ct. 858, 112 L. Ed. 2d 951 (1991) (per curiam) (holding that, because there was complete diversity when the action commenced, diversity jurisdiction was not defeated by the addition of a nondiverse plaintiff, which was not indispensable); Wichita R.R. & Light Co. v. Public Util. __________________________ _____________ Comm'n, 260 U.S. 48, 54, 43 S. Ct. 51, 67 L. Ed. 124 (1922). ______ Under the general principle reflected in the above cases, the existence of federal jurisdiction here might seem to depend simply upon whether Caguas and Oficentro were dispensable or indispensable parties. But "[f]ederal courts are courts of limited jurisdiction, and . . . may exercise only the authority granted to them by Congress." Commonwealth of ________________ Mass. v. Andrus, 594 F.2d 872, 887 (1st Cir. 1979); e.g., _____ ______ ____ Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 __________________________ ______ S. Ct. 2396, 57 L. Ed. 2d 274 (1978) ("The limits upon -13- federal jurisdiction, whether imposed by the Constitution or by Congress, must be neither disregarded nor evaded."). Thus, specific legislative directives override the general principles announced in these cases, e.g., 28 U.S.C. ____ 1367(b) (Supp. V 1993) (supplemental jurisdiction).7 Here, as we explain below, Congress has indicated that federal diversity jurisdiction is defeated so long as, after removal, fictitious defendants are replaced with nondiverse, named defendants, regardless of whether they happen to be dispensable or indispensable to the action. As part of the Judicial Improvements and Access to Justice Act of 1988, Pub. L. No. 100-702, 102 Stat. 4669 (1988), Congress enacted 28 U.S.C. 1447(e) (1988), which provides: If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, ____________________ 7. Under 28 U.S.C. 1367(b), for instance, federal courts, sitting in diversity, "shall not have supplemental jurisdiction . . . over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure . . . when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332." This statute, which refers expressly to both compulsory and permissive joinder, "does not allow joinder of additional parties if to do so would defeat the rule of complete diversity." Charles A. Wright, Law of Federal Courts 9, at 38 (1994). Thus, _____________________ where Congress has specifically so provided, the addition of nondiverse, dispensable parties will defeat diversity jurisdiction, even if such jurisdiction has already been established at the start of the federal proceeding. -14- or permit joinder and remand the action to the State court. Although this provision relates expressly to joinder, the legislative history to the Judicial Improvements and Access to Justice Act of 1988 indicates that 1447(e) applies also to the identification of fictitious defendants after removal. H.R. Rep. No. 889, 100th Cong., 2d Sess. 72-73 (1988), reprinted in 1988 U.S.C.C.A.N. 5982, 6033 ("Th[e] provision ____________ also helps to identify the consequences that may follow removal of a case with unidentified fictitious defendants."); e.g., Lisa Combs Foster, Note, Section 1447(e)'s ____ ___________________ Discretionary Joinder and Remand: Speedy Justice or Docket _____________________________________________________________ Clearing?, 1990 Duke L.J. 118, 121, 132 ("[I]f after removal _________ the plaintiff identifies the Doe defendant as a nondiverse party, then pursuant to section 1447(e) the court may either deny joinder or permit joinder and remand."). Federal courts and commentators have concluded that, under 1447(e), the joinder or substitution of nondiverse defendants after removal destroys diversity jurisdiction, regardless whether such defendants are __________ dispensable or indispensable to the action. E.g., Yniques v. ____ _______ Cabral, 985 F.2d 1031, 1034 (9th Cir. 1993); Washington ______ __________ Suburban Sanitary Comm'n v. CRS/Sirrine, Inc., 917 F.2d 834, ________________________ _________________ 835 (4th Cir. 1990); Rodriguez by Rodriguez v. Abbott Lab., ______________________ ___________ 151 F.R.D. 529, 533 n.6 (S.D.N.Y. 1993); Vasilakos v. _________ Corometrics Medical Sys., Inc., No. 93-C-5343, 1993 WL _________________________________ -15- 390283, at *1-2 (N.D. Ill. 1993); Righetti v. Shell Oil Co., ________ _____________ 711 F. Supp. 531, 535 (N.D. Cal. 1989); David D. Siegel, Commentary on 1988 and 1990 Revisions of Section 1441, in 28 ______________________________________________________ __ U.S.C.A. 1441 (1994) (observing that when a plaintiff moves to substitute a nondiverse, named defendant for a fictitious defendant, "the plaintiff will meet the new subdivision (e) of 1447, which leaves it entirely to the court to determine whether to refuse the addition and keep the case or allow the addition and then remand the case for want of federal jurisdiction (caused by the loss of diversity)"); Foster, Note, supra, at 121 ("Significantly, section 1447(e) does not _____ require the court, in considering whether joinder of a nondiverse party should be permitted to deprive the court of jurisdiction, to determine whether the party is `indispensable' to the action according to Federal Rule 19(b). Unlike the approach under the Federal Rules, joinder of a non-indispensable party can deprive the court of jurisdiction."). We find these decisions persuasive. We conclude that diversity jurisdiction was lost in the present case when the court allowed Casas to identify the fictitious defendants as Caguas and Oficentro. Section 1447(e)'s legislative history supports this conclusion. In enacting 1447(e), Congress considered a proposal that would have allowed the joinder of certain nondiverse parties and, at the same time, permitted the -16- district court, in its discretion, to keep the case and decide it on the merits. H.R. Rep. No. 889, 100th Cong., 2d Sess. 72-73 (1988), reprinted in 1988 U.S.C.C.A.N. 5982, _____________ 6033-34 ("The most obvious alternative [to 1447(e)] would be to provide that `the court may deny joinder, dismiss the action, or permit joinder and either remand to the state court or retain jurisdiction.'"); see David D. Siegel, ___ Commentary on 1988 Revision of Section 1447, in 28 U.S.C.A. ___________________________________________ __ 1447 (1994); Foster, Note, supra, at 137-38. Congress _____ rejected the proposal, however, because it would have represented a "departure from the traditional requirement of complete diversity," and "provide[d] a small enlargement of diversity jurisdiction." H.R. Rep. No. 889, 100th Cong., 2d Sess. 72-73 (1988), reprinted in 1988 U.S.C.C.A.N. 5982, _____________ 6033-34. We think that, had Congress decided that federal courts could retain jurisdiction over cases in which plaintiffs joined or substituted dispensable, nondiverse defendants after removal, it would have made that plain in 1447(e). This is not to say that it is unimportant whether a nondiverse defendant whom a plaintiff seeks to join or substitute after removal is dispensable or indispensable to the action. If the defendant is indispensable, the district court's choices are limited to denying joinder and dismissing the action pursuant to Fed. R. Civ. P. 19, or else allowing -17- joinder and remanding the case to the state court pursuant to 1447(e). See Yniques, 985 F.2d at 1035. If, on the other ___ _______ hand, the defendant is dispensable, the district court has the options, pursuant to 1447(e), of denying joinder and continuing its jurisdiction over the case, or permitting joinder and remanding the case to state court.8 Id. A ___ district court may not, however, do what the court below did here, that is, substitute the nondiverse, named defendants for the fictitious defendants thereby defeating federal diversity jurisdiction and then continue to deal with the merits of the dispute. B. Although diversity jurisdiction was defeated when Caguas and Oficentro were substituted for the fictitious defendants after removal, jurisdiction could be restored retroactively in appropriate circumstances, if Caguas and Oficentro were dispensable parties, by dismissing them from the action. In Newman-Green, Inc. v. Alfonzo-Larrain, 490 __________________ _______________ U.S. 826 109 S. Ct. 2218, 104 L. Ed. 2d 893 (1989), the Supreme Court held that federal courts of appeals have the authority like that given to the district courts in Fed. ____________________ 8. "[A] district court, when confronted with an amendment to add a nondiverse nonindispensable party, should use its discretion in deciding whether to allow that party to be added." Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th ________ ___________ Cir. 1987) (describing factors that district courts may consider in deciding whether or not to permit the addition of dispensable, nondiverse parties). -18- R. Civ. P. 21 to dismiss dispensable, nondiverse parties ___________ to cure defects in diversity jurisdiction. 490 U.S. at 832- 38. Casas asks us to exercise this power here by dismissing Caguas and Oficentro without prejudice. _________________ Courts may not, of course, dismiss indispensable _____________ parties from an action in order to preserve federal jurisdiction. But, contrary to Mita's assertions, we conclude that Caguas and Oficentro are dispensable parties. Mita's principal contention is that Casas is barred by the doctrine of judicial estoppel from asserting that Caguas and Oficentro are dispensable parties because Casas, in a motion requesting relief from the automatic stay, represented to the United States Bankruptcy Court for the District of Puerto Rico that Oficentro is an indispensable party. In that motion, Casas argued in the bankruptcy court that: 2. Creditor CASAS wishes to duly serve process, litigate and try the above mentioned lawsuit in the U.S. District Court against Debtor [(Oficentro)], and the other defendants [(Mita and Caguas)] before a jury. If CASAS is not allowed ________________________ to serve process and litigate its claims _________________________________________ against Debtor, CASAS would be _________________________________________ effectively precluded from obtaining _________________________________________ recovery under its tortious interference _________________________________________ and contract in prejudice of third _________________________________________ party's claims, due to a lack of an _________________________________________ indispensable party. Concomitantly, _________________________________________ CASAS' constitutional right to have a _________________________________________ trial by jury on all its legally tenable _________________________________________ claims would be impaired. ________________________ (emphasis added). -19- While this assertion is manifestly at odds with Casas's present position, we are disinclined under all the circumstances to find that it created an estoppel. Judicial estoppel is a judge-made doctrine designed to prevent a party who plays "fast and loose with the courts" from gaining unfair advantage through the deliberate adoption of inconsistent positions in successive suits. See Scarano v. ___ _______ Central R.R. Co., 203 F.2d 510, 513 (3d Cir. 1953). Here, it ________________ does not appear that Casas succeeded in gaining any advantage as a result of its earlier inconsistent statement made to the bankruptcy court. While the court granted Casas's motion to lift the stay, it did so on grounds other than Casas's representation that Caguas and Oficentro were indispensable. Mita itself does not allege that it relied on or was prejudiced by the statement in any way. There is the further fact that Mita has played as "fast and loose" as has Casas with the issue of subject matter jurisdiction. It was Mita the party now seeking remand to the Commonwealth courts that removed the case here. After the fictitious parties were identified, it made no effort to remand. Only after the district court ruled against it did Mita decide that federal jurisdiction was a mistake. We conclude that Casas is not estopped from taking the position it adopts now. See Milgard ___ _______ Tempering, Inc. v. Selas Corp., 902 F.2d 703, 716-17 (9th _______________ ___________ -20- Cir. 1990); 18 Charles Wright et al., Federal Practice and _____________________ Procedure 4477, at 781 (Supp. 1994).9 _________ Mita next argues that Caguas and Oficentro are indispensable parties under a Federal Rules of Civil Procedure 19(b) analysis. It submits that, because the permanent injunction compels it to resume an exclusive distribution relationship with Casas in the Greater San Juan area, Caguas's and Oficentro's contractual rights to distribute Mita products in that area are necessarily canceled. Moreover, Mita points out that Casas is seeking a declaratory judgment decreeing Mita's distribution agreements with Caguas and Oficentro null and void. Under these circumstances, says Mita, this action cannot "in equity and good conscience" proceed without Caguas and Oficentro, which are entitled to protect their contractual interests. We are not persuaded. A leading commentator writes: When a person is not a party to the contract in litigation and has no rights or obligations under that contract, even though he may have obligated himself to abide by the result of the pending action by another contract that is not at issue, he will not be regarded as an indispensable party in a suit to determine obligations under the disputed ____________________ 9. We agree with Casas that International Travelers Cheque _______________________________ Co. v. Bankamerica Corp., 660 F.2d 215, 223-24 (7th Cir. ___ __________________ 1981) is distinguishable. In that case, the district court had expressly relied on plaintiff's previous statement that a party was indispensable. There was no such reliance in this case. -21- contract, although he may be a Rule 19(a) party to be joined if feasible. 7 Charles A. Wright et al., Federal Practice and Procedure ______________________________ 1613, at 199-200 (1986) (footnotes omitted) (citing cases); see Ferrofluidics Corp. v. Advanced Vacuum Components, Inc., ___ ___________________ _________________________________ 968 F.2d 1463, 1472 (1st Cir. 1992) ("`[I]t is generally recognized that a person does not become indispensable to an action to determine rights under a contract simply because that person's rights or obligations under an entirely separate contract will be affected by the result of the action.'" (quoting Helzberg's Diamond Shops, Inc. v. Valley ______________________________ ______ West Des Moines Shopping Ctr., Inc., 564 F.2d 816, 820 (8th ____________________________________ Cir. 1977) (explaining the rationale for the rule))). The present case fits within this principle. As to Casas's request for declaratory judgment, Casas, in its appellate brief, "voluntarily relinquishes its request for a declaratory judgment seeking the annulment of [Caguas's] and [Oficentro's] dealership agreements." Although the only claims before us on appeal are those alleging violation of Law 75, we note that Caguas and Oficentro are similarly dispensable parties with respect to the remaining claims. In each of the remaining claims, the defendants are alleged to be joint tortfeasors or co- conspirators and are thus jointly and severally liable. It is well-established that joint tortfeasors and co- conspirators are generally not indispensable parties. See ___ -22- Goldman, Antonetti, Ferraiuoli, Axtmayer & Hertell v. Medfit ___________________________________________________ ______ Int'l, 982 F.2d 686, 691 (1st Cir. 1993); 7 Charles Wright et _____ al., Federal Practice and Procedure 1623, at 346-47 (2d ed. ______________________________ 1986) ("[C]o-conspirators, like other joint tortfeasors, will not be deemed indispensable parties.") That Caguas and Oficentro are dispensable to this action does not, in and of itself, compel their dismissal. While the Supreme Court held in Newman-Green that "the courts ____________ of appeals have the authority to dismiss a dispensable nondiverse party," 490 U.S. at 837, it "emphasize[d] that such authority should be exercised sparingly," id. The Court ___ explained: "the appellate court should carefully consider whether the dismissal of a nondiverse party will prejudice any of the parties in the litigation. It may be that the presence of the nondiverse party produced a tactical advantage for one party or another." Id. at 838. In this ___ context, Mita argues that Casas gained a tactical advantage by Caguas's and Oficentro's presence in the case because Casas was able to obtain financial and business records under Federal Rules of Civil Procedure 33(a) and 34(a), which apply expressly to parties. We do not agree, however, with Mita's suggestion that these records would have been beyond Casas's reach had Caguas and Oficentro not been designated as parties. Under Fed. R. Civ. P. 34(c), "A person not a party to the action may be compelled to produce documents and -23- things or to submit to an inspection as provided in Rule 45."10 Thus, neither Casas nor Mita gained a significant tactical advantage by the presence of Caguas and Oficentro in the lawsuit. Nevertheless, we are concerned that Caguas and Oficentro could themselves face prejudice if dismissed from this suit. Caguas and Oficentro, while initially characterized as John Doe and Richard Roe, were contemplated as parties to this litigation from the start, and have actively participated in it since June of 1992, when they were substituted for the fictitious defendants. Had the jurisdictional defect been called to the district court's attention at that point, the district court would have either dismissed Caguas and Oficentro from this action, thereby requiring Casas to sue them separately in the commonwealth court, or joined them to this action, thereby remanding the entire case to the commonwealth court. Either way, Caguas and Oficentro would have had their liability determined in a single proceeding. Instead, because of the jurisdictional oversight, dismissal of Caguas and Oficentro at this stage could subject them to a new lawsuit before a new judge in the Superior Court of Puerto Rico. ____________________ 10. Mita baldly asserts that Casas could not have secured under Rule 45 the documents and information it obtained under Rules 33 and 34. Mita fails, however, to explain why this would be so. -24- In Newman-Green, there was a similar difficulty. ____________ The problem there was remedied by terminating the litigation against the dismissed defendant with prejudice. 490 U.S. at 838. A similar remedy may be appropriate in this case. We note, however, that Newman-Green presents a stronger case ____________ than this one for dismissing the nondiverse party with prejudice, since the nondiverse party in that case had already had its claim adjudicated by the district court. Here, by contrast, Caguas and Oficentro have not yet had their claims adjudicated by the district court. Since this case is closer than the case in Newman-Green and since this ____________ issue has not been argued by either party, we think it best to allow it to be decided initially by the district court, on remand, where the parties will have an opportunity to present their arguments. Accordingly, we dismiss Caguas and Oficentro from this action to preserve jurisdiction but direct the district court, on remand, to determine whether the injury to Caguas and Oficentro from being dismissed from this proceeding is such that their dismissal should be ordered to be with prejudice to any further suit by Casas. Caguas and Oficentro having been dismissed, complete diversity is restored per Newman-Green, and we retain subject matter jurisdiction over ____________ the claims between Casas and Mita. IV. -25- Having disposed of the jurisdictional issues, we come to the merits of Mita's appeal. This appeal, of course, is interlocutory, see note 6, supra, being taken solely from _____ the granting of the injunction against Mita. But the injunction can stand only if the court properly awarded summary judgment. We accordingly confront the merits of that ruling. On summary judgment, we review the district court's decision de novo. Velez-Gomez v. SMA Life Assur., Co., 8 __ ____ ___________ _____________________ F.3d 873, 874-75 (1st Cir. 1993). A court of appeals will uphold summary judgment only if the record, viewed in the light most favorable to the nonmovant, reveals that there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Celotex Corp. v. ______________ Catrett, 477 U.S. 317, 324-25, 106 S. Ct. 2548, 91 L. Ed. 2d _______ 265 (1986). Mita's primary argument is that genuine issues of material fact preclude the granting of summary judgment to Casas on its Law 75 claims. Specifically, Mita argues that genuine issues exist as to: (1) whether Mita impaired its contract with Casas and (2) whether Mita had "just cause" to do so. To understand these arguments, we will need to step back and take a look at the applicable law. Law 75 protects Puerto Rico-based dealers from summary cancellation of their dealership contracts by their -26- principal suppliers after the dealers have established a favorable market for the principal's goods. See Warner ___ ______ Lambert Co. v. Superior Court of Puerto Rico, 101 P.R. Dec. ___________ ______________________________ 378, 387 (1973), translated in, 1 Official Translations 527, ______________ 541 (1973). The stated purpose of the law is to protect local dealers from abusive practices by suppliers who are financially stronger than they are. See Medina & Medina v. ___ ________________ Country Pride Foods, Ltd., 88 J.T.S. 6162, 6168 (1988), ___________________________ translated in, 858 F.2d 817, 820 (1st Cir. 1988). Toward _____________ that end, Law 75 prohibits suppliers from taking any actions that would impair such contracts, unless they have "just cause" for doing so: Notwithstanding the existence in a dealer's contract of a clause reserving to the parties the unilateral right to terminate the existing relationship, no principal or grantor may directly or indirectly perform any act detrimental to the established relationship or refuse to renew said contract on its normal expiration, except for just cause. P.R. Laws Ann. tit. 10, 978a. Law 75 establishes a rebuttable presumption of impairment when a supplier a |