                    IN THE UNITED STATES COURT OF APPEALS

                             FOR THE FIFTH CIRCUIT

                                 _______________

                                   No. 91-8194
                                   No. 91-8460
                                 _______________


                   PARKER & PARSLEY PETROLEUM CO., et al.,

                                       Plaintiffs-Appellees,
                                       Cross-Appellants

                                      VERSUS

                          DRESSER INDUSTRIES, et al.,

                                       Defendants-Appellants,
                                       Cross-Appellees,

                                        and

                      BJ-TITAN SERVICES COMPANY, et al.,

                                       Defendants-Third Party
                                       Plaintiffs-Appellants,
                                       Cross-Appellees,

                                      VERSUS

                               GARY LANCASTER,
                         a/k/a Gary "Zeke" Lancaster,

                                       Third Party Defendant-Appellee.

                           _________________________

               Appeals from the United States District Court
                     for the Western District of Texas
                          _________________________
                 (September 3, 1992)


Before SMITH and EMILIO M. GARZA, Circuit Judges, and RAINEY,*
District Judge.

JERRY E. SMITH, Circuit Judge:

        *
            District Judge of the Southern District of Texas, sitting by designa-
tion.
      On behalf of itself and the other interest-holders in 523

West Texas oil wells, Parker & Parsley Petroleum Company ("Parker

& Parsley") filed suit in federal district court against Dresser

Industries, Inc., Titan Services, Inc., BJ Services U.S.A., Inc.,

BJ-Hughes Holding Company, Baker Hughes Production Tools, Inc.,

and   Baker   Hughes    Incorporated        (hereinafter    collectively

"Dresser"), charging that Dresser defrauded Parker & Parsley by

shorting it on materials used in oil well stimulation procedures.

Parker & Parsley based federal jurisdiction upon violations of

the Racketeer Influenced and Corrupt Organizations Act ("RICO"),

18 U.S.C. § 1961 et seq., and appended Texas state claims for

fraud,   breach   of   contract,        breach   of   implied   warranty,

negligence, and gross negligence.

      The district court dismissed the RICO claims but retained

pendent jurisdiction over the state claims.           After a jury trial

on the state claims, the district court entered judgment awarding

$85 million actual and $100 million punitive damages.            After a

separate proceeding, the court awarded the plaintiffs attorneys'

fees of approximately $1.8 million.         We vacate the judgment and

dismiss for lack of federal jurisdiction.



                                   I.

      Parker & Parsley operated a large number of oil wells in

West Texas.   Some of the wells were not as productive as the

company wished, so it contracted with Dresser in 1983 and 1984 to

"fracture" the wells to stimulate them.          Apparently through the


                                    2
efforts    of    Dresser's    Odessa     division       manager,    Gary    "Zeke"

Lancaster, Dresser shorted Parker & Parsley, using less sand and

gel than it had agreed to use for the fracturing, which, Parker

asserted, reduced the amount of oil that eventually could be

extracted.1

      In   1985,     Dresser's    Titan      subdivision     entered       into     a

partnership with a BJ-Hughes Holding Co. subsidiary and remained

in the business as BJ-Titan.          In 1986 and 1987, Parker & Parsley

awarded its fracturing contracts to BJ-Titan, and the shorting

apparently      continued.       In    1987,    Baker     Hughes    Incorporated

acquired BJ Holding Co. and later became the corporate parent of

all the    BJ-Titan    partners.       The     company   fired     Lancaster      for

embezzling, and it seems that his attorney informed Dresser of

the shorting, which he said had been approved by high executives

of his former employers.



                                       II.

      The RICO claim was dismissed about nine months after the

suit was filed and a month before trial was scheduled to begin.

The   district     court   retained    jurisdiction      over    the   state      law

fraud, contract, and tort claims, but then continued the case for

three months.       Dresser appeals the court's retention of pendent

jurisdiction and challenges the award of punitive damages, the

measure of actual damages, and the exclusion of evidence relating


      1
        On June 23, 1992, Lancaster pleaded guilty to one count of conspiracy
to commit mail fraud, in violation of 18 U.S.C. § 371, and was sentenced to 33
months' imprisonment.

                                        3
to    a    witness's          alleged       bias    and,      in   a    separate      appeal    now

consolidated, attorneys' fees.



                                                   III.

          Parker    &       Parsley   grounded          its   RICO      claims   on    18    U.S.C.

§ 1962(a) and (c).              The district court held that Parker & Parsley

had failed to allege a proper RICO enterprise or a cognizable

RICO injury, that the BJ-Titan partners were not "persons" for

purposes of the statute, and that, because Parker & Parsley's

substantive claims had failed, its conspiracy claims should be

dismissed as well.               Parker & Parsley cross-appeals, arguing that

its RICO claim should have survived the dismissal motion.                                        We

affirm the dismissal.

          As stated in Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479,

496       (1985),       a    viable     claim      under      section       1962(c)    "requires

(1) conduct             (2) of an enterprise (3) through a pattern (4) of

racketeering            activity.       a    viable       claim    under      section       1962(c)

"requires (1) conduct (2) of an enterprise (3) through a pattern

(4) of racketeering activity."                          Parker & Parsley averred three

potential enterprises.                First, it alleged an association-in-fact

composed of the "servicing entity's" field employees who carried

out   the     shortchanging.                Alternatively,             it   pleaded    that    each

respective corporate defendant, as the servicing entity, was the

enterprise.         Third, it alleged that the BJ-Titan partnership, as

the servicing entity, was the enterprise.                                   The district court

held first that the only bases for the association-in-fact were


                                                    4
the employees' relationship with the defendant companies and the

alleged   wrongful    conduct.            The    court     noted    that   such   an

association    must   be    "an    entity       separate    and    apart   from   the

pattern   of   activity     in    which    it    engages,"    see     Atkinson     v.

Anadarko Bank & Trust Co., 808 F.2d 438, 441 (5th Cir.) (quoting

United States    v.   Turkette,       452     U.S.   576,    583    (1981)),   cert.

denied, 483 U.S. 1032 (1987), and that the acts of the members of

the alleged association took place within the course of their

conduct as employees, which basis this court disallowed in Elliot

v. Foufas, 867 F.2d 877, 881 (5th Cir. 1989).                 The district court

rejected the other possible enterprises because the alleged acts

were "committed" by the "enterprise" in the course of its regular

business and because the RICO "persons" that were alternatively

alleged were not claimed to have committed the predicate acts.

     We agree that Parker & Parsley alleged no RICO enterprise

under section 1962(c).           The initial averred association-in-fact,

consisting of the shortchanging field employees, either has no

existence as an entity separate and apart from the actual pattern

of racketeering, see, e.g., Old Time Enters. v. International

Coffee Corp., 862 F.2d 1213, 1217 (5th Cir. 1989); Delta Truck &

Tractor v. J.I. Case Co., 855 F.2d 241, 243 (5th Cir. 1988),

cert. denied, 489 U.S. 1079 (1989), or is the defendant corporate

entity functioning through its employees in the course of their

employment.    See Old Time Enters,             See Old Time Enterprises, 862

F.2d at 1217; see          also Atkinson, 808 F.2d at 441.                  Because

neither of these can constitute a RICO enterprise, see Elliot,


                                          5
867 F.2d at 881,2 and because a corporation cannot be both the

enterprise and the RICO perpetrator, Bishop v. Corbitt Marine

Ways, 802 F.2d 122, 123 (5th Cir. 1986), this association cannot

be a RICO enterprise.3

     The alternative RICO enterprises also fail.                     The corporate

partners in the servicing entity, or alternatively, BJ-Titan,

committed the predicate acts, if such acts may be attributed to

them, in the course of their regular business.                 Additionally, as

the district court noted, if the corporations or partnership are

to be held liable as RICO "persons," they must have committed the

predicate acts, but Parker & Parsley, despite the claim in its

brief, has not alleged that the partners did so.                       See United

States v. Cauble, 706 F.2d 1322, 1332-33 (5th Cir. 1983), cert.

denied, 465 U.S. 1005 (1984).

     The    acts   of   the   servicing       entity,     or   the    partnership,

cannot,    for   RICO   purposes,   be       attributed    vicariously     to   the


        2
          Parker asserts that Elliot stands only for the proposition that a
plaintiff cannot simply allege that "some or all" of the RICO defendant's
employees constitute an association-in-fact enterprise.    This is incorrect.
First, the plaintiff's claim in that case was significantly more specific,
although conclusionary.   Second, our analysis in the case was much broader
and, relying principally upon Atkinson, stated that "[t]he fact that officers
or employees of a corporation, in the course of their employment, associate to
commit predicate acts does not establish an association-in-fact enterprise
distinct from the corporation." 867 F.2d at 881.
      3
        Parker relies upon some Third Circuit cases for the proposition that a
group of employees can be an association separate from the corporate
defendant.   E.g. Brittingham v. Mobil Corp., 943 F.2d 297 (3d Cir. 1991);
Petro-Tech, Inc. v. Western Co., 824 F.2d 1349 (3d Cir. 1987). Brittingham
does state that "[i]t is theoretically possible for a corporation to take a
separate 'active' role in RICO violations also committed by its employees."
At the same time, however, the court held that the Petro-Tech court "clearly
did not intend for plaintiffs to circumvent this rule merely by alleging the
enterprise as an association-in-fact consisting of the corporation and the
individual employees who acted on its behalf."     943 F.2d at 302.   A useful
basis for the distinction comes from Elliot, 867 F.2d at 881: The employees
must not be acting in the usual course of business to constitute part of the
enterprise association separate from the employer.

                                         6
individual partners.             See Schofield v. First Commodity Corp., 793

F.2d 28, 32 (1st Cir. 1986).                   Having determined that the claims

were properly dismissed for failure to state a RICO enterprise,

we need not address Parker & Parsley's other arguments regarding

the section 1962(c) claims.

     Heretofore           we    have    not    explicitly     applied      the   foregoing

analysis to a section 1962(a) claim, but we need not do so now in

order to affirm, for the district court also dismissed Parker &

Parsley's       section 1962(a) claims for failure to allege a RICO

injury.      We see no reason to disturb this ruling.                              Section

1964(c) states, "Any person injured in his business or property

by reason of a violation of section 1962 of this chapter may sue

therefor    .    .    .    and    shall       recover   threefold     the     damages    he

sustains."      Section 1962(a) provides,

     It shall be unlawful for any person who has received
     any income derived, directly or indirectly, from a
     pattern of racketeering activity or through collection
     of an unlawful debt . . . to use or invest, directly or
     indirectly, any part of such income, or the proceeds of
     such income, in acquisition of any interest in, or the
     establishment or operation of, any enterprise which is
     engaged in, or the activities of which affect,
     interstate or foreign commerce.

     As    the       district         court    noted,   it    is    obvious      from   the

complaint    and      the      RICO    case    statement     that    the    only   damages

Parker & Parsley is attempting to recover are those caused by

inadequate fracturing jobs, not from any investment of income

derived    from      the       alleged   shorting.       As    all    but    one   of   the




                                                7
circuits that have considered the issue have held,4 the causal

language of section 1964(c) requires that the compensable injury

stem from the violation of the RICO section in question, so any

injury under section 1962(a) must flow from the use or investment

of racketeering income.                Parker & Parsley's injury does not stem

from the investment of the income from racketeering activity;

therefore,      it     has      pleaded      no    cause       of    action   under       section

1962(a),    and      the     district        court      properly         dismissed      the     RICO

claims.



                                               IV.

                                                  A.

     The district court refused to surrender jurisdiction over

the pendent5 state claims, noting that the suit had been filed

more than nine months earlier, since which time it had survived a

"serious     attack          upon      the    propriety             of    venue,"       "rigorous

deposition schedules," "ungodly amounts of discovery documents,"

and a hearing on discovery disputes.                                The court stated that

dismissal    would         be    a    tremendous        financial         drain    to    all    the

parties    as    well      as     a   waste       of    judicial         resources;      it     thus

concluded       that       "the       equities         weigh        heavily   in        favor     of


      4
        Danielson v. Burnside-Ott Aviation Training Ctr., 941 F.2d 1220, 1229
(D.C. Cir. 1991); Craighead v. E.F. Hutton & Co., 899 F.2d 485, 494 (6th Cir.
1990); Ouknine v. MacFarlane, 897 F.2d 75, 82-83 (2d Cir. 1990); Rose v.
Bartle, 871 F.2d 331, 357-58 (3d Cir. 1989); Grider v. Texas Oil & Gas Co.,
868 F.2d 1147, 1150-51 (10th Cir.), cert. denied, 493 U.S. 820 (1989). Contra
Busby v. Crown Supply, 897 F.2d 833, 837-38 (4th Cir. 1990).
      5
        What was formerly called "pendent jurisdiction" is now included within
the term "supplemental jurisdiction." See Samaad v. City of Dallas, 940 F.2d
925, 928 n.2 (5th Cir. 1991).

                                                  8
maintenance of the case."        Dresser argues that the court erred in

exercising its pendent jurisdiction.6



                                     B.

     We   review    the   decision   to    retain   jurisdiction   over   the

pendent state claims for abuse of discretion.              Rosado v. Wyman,

397 U.S. 397, 401 (1970); La Porte Constr. Co. v. Bayshore Nat'l

Bank, 805 F.2d 1254, 1257 (5th Cir. 1986).              The Supreme Court

explained   the    extent   of   pendent    jurisdiction   in   United    Mine

Workers v. Gibbs, 383 U.S. 715, 726 (1966), noting that the

justification for pendent jurisdiction

     lies in considerations of judicial economy, convenience
     and fairness to litigants; if these are not present a
     federal court should hesitate to exercise jurisdiction
     over state claims, even though bound to apply state law

       6
         Citing Williamson v. Tucker, 645 F.2d 404 (5th Cir. May 1981), cert.
denied, 454 U.S. 897 (1981), Dresser argues that the RICO claim was so
insubstantial that it never provided any ground for federal jurisdiction, so
we need not even consider the exercise of pendent jurisdiction. We disagree.
As the Supreme Court has stated,
     Jurisdiction . . . is not defeated . . . by the possibility that
     the averments might fail to state a cause of action on which
     petitioners could actually recover. For it is well settled that
     the failure to state a proper cause of action calls for a judgment
     on the merits and not for a dismissal for want of jurisdiction.
     Whether the complaint states a cause of action on which relief
     could be granted is a question of law and just as questions of
     fact it must be decided after and not before the Court has assumed
     jurisdiction over the controversy . . . . The previously carved
     out exceptions are that a suit may sometimes be dismissed for want
     of jurisdiction where the alleged claim under the Constitution or
     federal statutes clearly appears to be immaterial and made solely
     for the purpose of obtaining jurisdiction, or where such a claim
     is wholly insubstantial and frivolous.
Bell v. Hood, 327 U.S. 678, 682-83 (1946) (cited in Williamson, 645 F.2d at
415).
      We have held that the Hood standard is met only where the plaintiff's
claim "has no plausible foundation" or is clearly foreclosed by a prior
Supreme Court decision. Williamson, 645 F.2d at 416 (citing Bell v. Health-
Mor, Inc., 549 F.2d 342, 344-45 (5th Cir. 1977)). In light of our preceding
discussion, we cannot say that Parker & Parsley's complaint, particularly as
to § 1962(a), meets that onerous standard.     See Employers Ins. v. Suwanee
River Spa Lines, 866 F.2d 752, 759 (5th Cir. 1989).

                                      9
      to them.   Needless decisions of state law should be
      avoided both as a matter of comity and to promote
      justice between the parties, by procuring for them a
      surer-footed reading of applicable law. Certainly, if
      the federal claims are dismissed before trial, even
      though not insubstantial in a jurisdictional sense, the
      state claims should be dismissed as well. [Footnotes
      and citations omitted.]

      The Court has not treated Gibbs as establishing a bright-

line rule for pendent jurisdiction but has called for a more

flexible analysis, balancing the values of economy, convenience,

fairness, federalism, and comity.               See, e.g., Carnegie-Mellon

Univ. v. Cohill, 484 U.S. 343, 350 & n.7 (1988) (citing Rosado,

397   U.S.   at   403-05).     The    Carnegie-Mellon     Court    did    state,

though, that when the single federal-law claim is eliminated at

an "early stage" of the litigation, the district court has "a

powerful     reason   to     choose     not    to   continue      to   exercise

jurisdiction."     Id. at 351.       Our general rule is to dismiss state

claims when the federal claims to which they are pendent are

dismissed.    Wong v. Stripling, 881 F.2d 200, 204 (5th Cir. 1989).



                                       C.

      Dresser argues that the federal claim was dismissed at a

"preliminary stage" in the proceedings and that the district

court failed to articulate specific considerations of judicial

economy, convenience, and fairness that would support pendent

jurisdiction, perhaps because there were none.                 Thus, Dresser

contends that when the RICO claims were dismissed, there had been

no    "substantial    commitment       of     judicial   resources       to   the

nonfederal claims," W.R. Grace & Co. v. Continental Casualty Co.,

                                       10
896 F.2d 865, 872 (5th Cir. 1990), as the court had conducted

only one hearing, other proceedings having been held before a

magistrate judge.

       Parker & Parsley responds that the court did not abuse its

discretion in maintaining jurisdiction over the state-law claims.

It    stresses    our     deference      to    the   discretion      of   the   district

court, see id. at 870, and argues that weighing the equities and

factors set out in Carnegie-Mellon should lead us to affirm.



                                              D.

       The instant case is distinguishable from the cases each

party finds dispositive.            Parker & Parsley argues that we should

follow Hudak v. Economic Research Analysts, Economic Research

Analysts , 499 F.2d 996, 1001 (5th Cir. 1974), cert. denied, 419

U.S. 1122 (1975), in which the district court tried the state

claims with the federal claims in a seemingly appropriate use of

pendent jurisdiction.           When we found that the limitations period

had run on the federal claim, in which the district court tried

the    state     claims     with    the       federal   claims,      in   a     seemingly

appropriate use of pendent jurisdiction.                     When we found that the

limitation period had run on the federal claim, so that the claim

should have been dismissed at the beginning of the litigation, we

held    that     to   dismiss      the    state      claim   would    not     serve   the

interests of judicial economy, convenience, and fairness.                         Id.

       Hudak is not controlling here, however.                  In the instant case

the court knew that it had no federal question before it before


                                              11
trial began, while in Hudak the court conducted a trial as though

the   federal   claim       were   before      it.      It   makes       no    sense,   for

purposes of judicial economy, convenience, or comity, to "punish"

a district court for abusing discretion it does not know it has;

given the apparent vitality of the federal claim, the Hudak court

properly retained jurisdiction.7

       Dresser asserts that this case is indistinguishable from La

Porte   Construction,        where   we     stated      that      when    a    litigant's

federal cause        of   action    has   been       dismissed     at    a    preliminary

stage, we must remand with instructions to dismiss the state

claims for lack of subject matter jurisdiction.                               805 F.2d at

1257.    La Porte Construction is persuasive but does not control

our decision, either; it predated Carnegie-Mellon and did not

establish a rule that where federal claims are dismissed before

trial, the pendent state claims must be treated similarly.

       Rather, we stated that where the federal claim was dismissed

at an "early stage" of the proceedings (which we did not define),

so    that   there    had    been    no     commitment       of    federal       judicial

resources, dismissal would not prejudice the litigants (namely,

the non-moving defendants), who had not devoted much effort to


       7
         Parker & Parsley also directs our attention to Newport Ltd. v. Sears,
Roebuck & Co., 941 F.2d 302 (5th Cir. 1991), cert. denied, 112 S. Ct. 1175
(1992), holding that a district court had abused its discretion when it
declined to exercise its pendent jurisdiction over state-law claims after it
had dismissed a RICO claim. Newport is distinguishable, though, on all of the
Carnegie-Mellon factors. In Newport, the district court dismissed the state
claims on the eve of trial, after the case had consumed hundreds of hours of
the court's time during over four years of litigation, and after the
preparation of a pretrial order exceeding 200 pages, as well as 14 motions to
compel   and   for  protective   orders,  three   protective  orders,   and  a
confidentiality designation.     Additionally, we noted that the remaining
matters were pedestrian questions of state law, issues that the federal court
could readily and routinely resolve. Id. at 307-08.

                                          12
defending the claim.           Thus, dismissal was required, particularly

in   light    of    the   Gibbs      Court's    caution   against   unnecessary

decisions of state law.           Accordingly, we must weigh the equities

as laid out in Gibbs and Carnegie-Mellon.



                                         V.

       As the Supreme Court noted in Carnegie-Mellon, under Gibbs a

court "should consider and weigh in each case, and at every stage

of the litigation, the values of judicial economy, convenience,

fairness,     and   comity"     to    decide   whether    to   exercise   pendent

jurisdiction.       484 U.S. at 350.           The Court further stated that

"in the usual case in which all federal-law claims are eliminated

before trial, the balance of factors to be considered under the

pendent jurisdiction doctrine SQ judicial economy, convenience,

fairness, and comity SQ will point toward declining to exercise

jurisdiction over the remaining state-law claims."                   Id. at 350

n.7.

       No single factor )) such as whether the case is in an "early

stage" or involves novel issues of state law )) is dispositive.

Rather,      we    look   to    all    the     factors    under   the     specific

circumstances of a given case.            Having done so here, we conclude

that this matter justified no departure from the usual rule that

dismissal was required.




                                         13
                                       A.

       Obviously, to retry in state court a matter that already has

been   tried   in    the   federal   courts    would    not   in    itself   serve

judicial economy.          But that is not the issue; a court cannot

obtain jurisdiction over a case merely by trying it; otherwise,

its    decision     to   retain   jurisdiction       would    be,   effectively,

unreviewable.       Thus we must look at the case as of the filing of

the motion to dismiss and not with the benefit of hindsight.

       At the stage of the proceedings when the motion was filed,

judicial economy would have been better served by dismissal.                      It

is true that some substantial development had occurred in this

case, which was pending before a district judge with a reputation

for moving cases promptly to trial.                 For example, a number of

discovery matters had been presented to, and decided by, the

magistrate     judge.       Nonetheless,      the    proceedings     were    at    a

relatively early stage compared to those in, e.g., Newport.                       The

case had been pending for only nine months, not four years; trial

was scheduled soon but was still a few weeks away; and discovery

had not been completed.        In short, the parties were not ready for

trial.

       Second, only one week before Dresser filed its motion to

dismiss, Parker & Parsley filed a second amended complaint that

markedly revised its theories of recovery.              That complaint added

new theories as to damages, including an assertion that they

should be measured by the reduction in the market value of the

damaged wells; added claims involving acidizing treatments for


                                       14
wells;      and    requested        that      the    district      court     "pierce       the

corporate     veils"    of        several     of     the   defendants.        The     second

amended complaint also appended an allegation that a defendant

shorted other customers besides Parker & Parsley, added two bases

for liability stemming from the relationship of the defendants

and Lancaster, and changed the number of wells included in the

underlying dispute by roughly ten percent.

      The    filing    of     a    pleading         that   so   substantially        changed

important aspects of the case meant that the case was at an

earlier stage than the parties and the court previously might

have thought, for the new theories needed development before

trial.      We also note that by filing the second amended complaint,

Parker & Parsley brought this problem upon itself.

      Third, although the magistrate judge had been active in

overseeing        discovery       and    other      related     matters,     there    is    no

indication that the district judge had substantial familiarity

with the merits of the case when the motion to dismiss was filed.

For example, the judge had conducted only one hearing on the

case, a June 8 status conference.                      In any event, the amount of

judicial resources that the case has consumed is most important

for our analysis as an indication of the familiarity of the forum

with the case and its ability to resolve the dispute efficiently.

See Shaffer v. Board of School Directors, 730 F.2d 910, 912 (3d

Cir. 1984).        Here, the trial court was not so intimately involved

in,   and    familiar    with,          the   case    that      proceeding    further       in

federal court would have prevented redundancy and would have


                                               15
conserved substantial judicial resources.                    Nor would it serve

judicial    economy   to   reward      a    plaintiff    by    allowing      it    into

federal court when it pleads a baseless RICO suit.



                                           B.

     Dismissal would not have caused undue inconvenience to the

litigants.      The   district       court       emphasized        the    "tremendous

financial    drain"   to   the   parties,         but   we    do    not    find    that

convincing.    Little new legal research would be necessary, as the

surviving claims were governed by state law, in either forum, and

any additional factual research would have had to be conducted

anyway.     See Financial Gen. Bankshares v. Metzger, 680 F.2d 768,

774 (D.C. Cir. 1982).

     Additionally,     the    most     expensive        element      of    the    trial

preparation,     discovery,      was       largely      usable      in    the     state

proceeding, as we discuss below.                Moreover, while in some cases

the likelihood that backlogged state courts could not resolve the

dispute promptly might be a factor weighing against dismissal,

the record reflects no such factor here.



                                           C.

     The fairness factor concerns the prejudice to the parties

that would arise from dismissal, and it too weighs in favor of

dismissal.     Parker & Parsley argues that it would be prejudiced

by having to start over in state court, fearing that it would

have to relitigate all the procedural motions that already had


                                           16
been ruled upon.          It also argues that it might have a statute of

limitations        problem,       because          Texas       Civ.     Prac.     &    Rem.    Code

§    16.064(b)     does    not    block        a       limitations      defense       if    federal

claims      were      "made       with     intentional              disregard         of      proper

jurisdiction."            Thus,    Parker          &    Parsley     might   have       to    oppose

Dresser's claim that it intentionally filed suit in the wrong

court and if it fails, it would lose the right to litigate its

claims altogether.

       We do not agree.            The proscription problem is limited, as

Parker &     Parsley's        claim      would          not    be   time-barred.            Section

16.064(a) provides that the statute of limitations is tolled

while a case is pending in a court that lacks jurisdiction.

Although section 16.064(b) says that the tolling does not apply

if    the   plaintiff       filed        its       initial       suit     "with       intentional

disregard of proper jurisdiction," that should not be a problem

here.

       Parker & Parsley asserts that it will be prejudiced because

it will have to prove that it was not guilty of such intentional

disregard.       First, however, that claim is speculative.                                 Second,

and more significantly, the plain language of the statute puts

the    burden    of    proof      on     the       party      asserting     the       intentional

disregard, not on Parker & Parsley.                           Third, given the widespread

abuse of civil RICO, it does not seem unreasonable to require

that a party risk losing its state claims if it insists upon

bringing a groundless RICO claim.

       Parker & Parsley also asserts that it will be prejudiced


                                                   17
because it will have wasted some of its discovery, as the Texas

Rules of Civil Procedure provide only for the use of depositions

in   later-filed     state    court    proceeding,    not    for   the   blanket

admissibility of all discovery.               See Tex. R. Civ. P. 207(b).

Thus, the defendants would have the opportunity to re-contest the

procedural motions and discovery rulings. the defendants would

have the opportunity to recontest the procedural motions and

discovery rulings.

      This    argument   is   not     compelling.     Not    all   discovery    is

admissible, anyway.      The point is that the parties would not have

to repeat the effort and expense of the discovery process.                     See

Waste Sys. v. Clean Land Air Water Corp., 683 F.2d 927, 931 (5th

Cir. 1982) (fact that discovery could be used in state court

proceeding weighs in favor of dismissal of case from federal

court).      See also Financial Gen. Bankshares, 680 F.2d at 774.               In

any event, the state court is a "surer-footed" arbiter of the

relevance of pieces of evidence for state law claims.                See Gibbs,

383 U.S. at 726.

      Moreover, we do not expect the relitigation of other matters

to   pose    undue   hardship.        The    defendants   can   hardly   contest

jurisdiction, and we do not see other obstacles to resolution of

the case in the state court, save those that ought to be there,

as we discuss next.



                                        D.

      Finally, although it appears that the                 district court did


                                        18
not consider the matter, dismissal would serve the important

interests of federalism and comity.8                     The federal courts are

courts of limited jurisdiction, Aldinger v. Howard, 427 U.S. 1,

14-15       (1976),   and       often     are    not   as       well   equipped   for

determinations of state law as are state courts.                       Aside from the

state       courts'     superior        familiarity      with     their    respective

jurisdictions' law, the federal courts' construction of state law

can be "uncertain and ephemeral."                Pennhurst State School & Hosp.

v. Halderman, 465 U.S. 89, 122 n.32 (1984).                       "[F]ederal courts

are not the authorized expositors of state law; there is no

mechanism by which their errors in such matters can be corrected

on    appeal     by     state     courts."         Herbert       Wechsler,    Federal

Jurisdiction and the Revision of the Judicial Code, 13 Law &

Contemp. Prob. 216, 232 (1948) (cited in Gibbs, 383 U.S. at 726

n.15, and quoted in Financial Gen. Bankshares, 680 F.2d at 776).

See United Gas Pipe Line Co. v. Ideal Cement Co., 369 U.S. 134,

135   (1962)     (per     curiam)       (state   court      defines     authoritative

meaning of state law).9


        8
        See Shaffer, 730 F.2d at 913 (after federal claim dismissed, district
court abused its discretion in retaining jurisdiction over state claims, where
claims presented issue of first impression, notwithstanding inconvenience and
expense to plaintiffs).
       9
         The framers of the Constitution did not contemplate that a federal
trial court could assume jurisdiction over exclusively state-law claims in the
absence of diversity jurisdiction.    Alexander Hamilton, for example, states
that the judicial power of the United States ought to extend only
      1st, to all those which arise out of the laws of the United
      States, passed in pursuance of their just and constitutional
      powers of legislation; 2nd, to all those which concern the
      execution of the provisions expressly contained in the articles of
      Union; 3rd, to all those in which the United States are a party;
      4th, to all those which involve the PEACE of the CONFEDERACY,
      whether they relate to the intercourse between the United States
      and foreign nations or to that between the States themselves; 5th,

                                            19
      In the instant case, the interests of federalism and comity

point strongly toward dismissal.                  All of the remaining legal

issues of the case, of course, are of state law, and as the

district court later acknowledged, they are difficult ones.10

      Among      the    most    significant     issues     that   arose   from   the

complaint are, first, whether the claim sounds in contract, for

which        punitive   damages     were    not     available     in   Texas,    see

Bellefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d 742, 745

(Tex. 1986), or is a tort claim for fraud, for which punitive

damages may be awarded. Although Texas courts base their analysis

of the distinction upon the nature of the injury, Jim Walter

Homes v. Reed, 711 S.W.2d 617, 618 (Tex. 1986), and the conduct

of the defendant, Spoljaric v. Percival Tours, 708 S.W.2d 432,

434   (Tex.      1986),   the    state     courts   have    not   given   us    plain

guidance.         The Texas rule that where a party enters into a

contract with no intention of performing, that misrepresentation

may give rise to a tort action, see Crim Truck & Tractor Co. v.

Navistar Int'l Transp. Corp., 823 S.W.2d 591, 597 (Tex. 1992),

does not tell us how to address claims that may turn out to be

fraud in performance.11


      to all those which originate on the high seas, and are of
      admiralty or maritime jurisdiction; and lastly, to all those in
      which the State tribunals cannot be supposed to be impartial and
      unbiased.
The Federalist No. 80, at 475 (Alexander Hamilton) (Clinton Rossiter ed.,
1961).
      10
         During the proceedings addressing the motion for attorneys' fees, even
Parker & Parsley stressed the complexity and difficulty of the case.
        11
         We note that the Texas Supreme Court did not decide Crim Truck until
January 22, 1992, well after the trial in the instant case had ended.

                                           20
     Second, as the defendants noted in their motion to strike

the second amended complaint, Parker & Parsley was proposing a

measure of market value that seems non-standard, at best.                   Under

Texas law, the usual measure of damages is the difference in the

reasonable     cash   market    value   of   an   oil     well,   "as   equipped,

immediately before and immediately after" the damaging event.

Atex Pipe & Supply v. Sesco Prod. Co., 736 S.W.2d 914, 917 (Tex.

App. )) Tyler 1987, writ denied).

     Parker     &   Parsley's     methodology,       as   put   forward    by    its

expert, was a method of calculation based upon a different set of

dates.     Although     we     note   that   where    the   normal      method    of

calculating damages would result in an unjust outcome, a court

may vary the method, B.A. Mortg. Co. v. McCullough, 590 S.W.2d

955, 957 (Tex. Civ. App. )) Fort Worth 1979, no writ), comity

would be better served if the federal court avoided making such

exceptions.

     The measure-of-damages difficulty was to re-occur.                    As the

district court recognized, the measure-of-market-value damages

that it ultimately sent to the jury constituted an exception to

the Texas general rule, as it compared the market value of each

well (as that well would have been if properly serviced) with its

value to a buyer who knew only that it had been improperly

fractured.12

        12
           We express no opinion as to the merits of the district court's
decisions. Nor do we imply that a court may not make such determinations of
state law, when state legal issues are properly before it, as such is the
essence of, for example, diversity jurisdiction. We merely stress that the
interests of comity and federalism are better served when federal courts avoid
unnecessary determinations of state law.

                                        21
                                   VII.

     After considering and weighing all the factors present in

this case, we thus conclude that the district court, with the

admirable intention of moving its docket, abused its discretion

in retaining jurisdiction over the state law claims after it had

dismissed   the   federal   RICO   claims.   Because   we   find   that,

consequently, the court had no jurisdiction, we cannot reach any

of the other issues raised on appeal.        The judgment is VACATED,

and a judgment of dismissal is hereby RENDERED.




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