
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-1462        No. 92-1771                          RAFAELA TRINIDAD-DELGADO, ET AL.,                               Plaintiffs, Appellants,                                          v.                              SK&F LAB COMPANY, ET AL.,                                Defendants, Appellees.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                  [Hon. Juan M. Perez-Gimenez, U.S. District Judge]                                               ___________________                                 ____________________                                        Before                                 Stahl, Circuit Judge,                                        _____________                           Campbell, Senior Circuit Judge,                                     ____________________                         and Skinner,* Senior District Judge.                                       _____________________                                 ____________________            Luis Angel Lopez Olmedo for appellants.            _______________________            Gregory T. Usera with whom Ramon  L. Velasco and Goldman Antonetti            ________________           _________________     _________________        Ferraiuoli & Axtmayer were on brief for appellees.        _____________________                                 ____________________                                    April 29, 1993                                 ____________________        _____________________        * Of the District of Massachusetts, sitting by designation.             SKINNER, Senior District Judge.                      ______________________                       This  appeal  is   from  a  summary  judgment   of             dismissal  for lack  of  subject matter  jurisdiction.   The             plaintiffs brought an  action in the  District Court of  the             District  of  Puerto  Rico   to  recover  damages  from  the             defendants for  injuries to  the plaintiff Rafaela  Trinidad             Delgado resulting from exposure to cimetidine hydrochloride,             a  toxic  substance  used  in the  manufacture  of  Tagamet.             Tagamet was  manufactured by the plaintiff's  employer.  The             other plaintiffs  are Mrs. Trinidad's husband and  son.  The             original  defendants were  "SK&F  Lab Co.,  Smith Kline  and             French - U.S., Smith Kline Beecham Mellon and or other Smith             Kline Corporation family and it insurers [sic]."                       Without challenge by the parties, the relationship             of  the various  Smithkline  corporations was  found by  the             district judge to be as follows:                         Mrs. Trinidad's employer,  originally called  SK&F             Lab Co.,  merged with  SK&F Co.  to form  Smithkline Beecham             Pharmaceutical   Co.,  a   Delaware  corporation   with  its             principal  place   of  business  in  Puerto   Rico.    (This                                         -2-                                          2             corporation   and  its   predecessors   were   referred   to             collectively by the court below as "Pharmco," and we will do             the same.)   Pharmco is  a subsidiary of  SKB, Puerto  Rico,             Inc., a  holding company incorporated in  Delaware, and with             its principal  place of business  there.  SKB,  Puerto Rico,             Inc.,   is  itself  a   subsidiary  of   Smithkline  Beecham             Corporation (formerly Smithkline Beckman Corporation), which             is a Pennsylvania corporation  having its principal place of             business in Pennsylvania.   There is no such corporation  as             the named defendant, Smithkline Beecham Mellon.    There are             two other  corporations referred  to by the  district court,             Smithkline and French  International Company and its  wholly             owned   subsidiary,   Smithkline   &  French   Interamerican             ("Interamerican"), a Delaware corporation with its principal             place of business in Puerto Rico.  Interamerican  is engaged             in  the sale  and distribution  of products  manufactured by             Pharmco.                        Several months after the case was filed, and after             the  original  defendants   had  filed  their  answer,   the             plaintiff moved to  amend the complaint by including  all of             the above named Smithkline  corporations as defendants.  The             record reveals neither allowance  of this motion nor service             on the added defendants.   Nevertheless, after the filing of                                         -3-                                          3             this  motion,  all  parties  and  the  court  treated  these             corporations  as properly before the court, at least for the             purpose of presenting their  motions for summary judgment on             jurisdictional grounds  and to dismiss for  failure to state             claims  against certain  of the  defendants.   Counsel never             filed an  answer with respect  to the added  defendants, but             did  file a  motion to  dismiss or  for summary  judgment on             behalf  of  all  named  defendants.   For  purposes  of this             appeal, we too will treat all parties as properly before the             court.                       About a month  after the motion to dismiss  or for             summary judgment was filed by the defendants, the plaintiffs             filed a motion  under Fed.  R. Civ. P.  41(a) for  voluntary             dismissal of Pharmco and Interamerican, the two corporations             having their  principal places  of business in  Puerto Rico.             This motion  was filed  for the  avowed purpose of  creating             complete  diversity of  citizenship, the  lack of  which had             been  cited by the defendants  as a basis  for dismissal for             lack of subject matter jurisdiction.  The plaintiffs did not             specify  upon  which  paragraph  of Rule  41(a)1  they  were                                              ____________________             1   The pertinent provisions of Rule 41(a) are as follows:                       Rule 41. Dismissal of Actions                       Rule 41. Dismissal of Actions                       (a) Voluntary Dismissal: Effect Thereof.                       (a) Voluntary Dismissal: Effect Thereof.                                         -4-                                          4             relying.  The motion was referred to a magistrate judge, who             endorsed  the motion,  "Denied.   Rule  41(a)(1)(ii)."   The             magistrate  judge apparently  did not  consider whether  the             motion should be granted on conditions under Fed. R. Civ. P.             41(a)(2).                       The district  judge thereafter entered  a judgment             for the  defendants upon  the allowance  of their motion  to             dismiss or for summary  judgment.   He ruled  (1) that since             the motion under Rule  41(a) had been properly denied  under             Rule 41(a)(1), the two local corporations  were still in the             case, so that subject matter jurisdiction failed for lack of             diversity; and (2), alternatively, that the complaint failed                                              ____________________                            (1)  By Plaintiff;  by Stipulation.                            (1)  By Plaintiff;  by Stipulation.                       Subject to the provisions of Rule 23(e),                       of Rule  66, and  of any statute  of the                       United   States,   an   action  may   be                       dismissed by the plaintiff without order                       of  court (i)  by  filing  a  notice  of                       dismissal at any  time before service by                       the  other party  of an  answer or  of a                       motion  for summary  judgment, whichever                       first  occurs,  or   (ii)  by  filing  a                       stipulation of dismissal  signed by  all                       parties who have appeared in the action.                       . . .                             (2)  By Order  of Court.  Except as                            (2)  By Order  of Court.                         provided  in  paragraph   (1)  of   this                       subdivision  of  this  rule,  an  action                       shall   not   be   dismissed    at   the                       plaintiff's instance save upon  order of                       the  court  and  upon  such   terms  and                       conditions as the court deems proper.                                         -5-                                          5             to  state a  claim  against Pharmco  and Interamerican,  and             there was no personal jurisdiction over the other Smithkline             corporations.   This appeal followed.                       It   would  appear  from  the  magistrate  judge's             endorsement that the  magistrate intended  to determine  the             motion.    This  was  error,  because  under  28   U.S.C.                636(b)(1)(A)  and  (B), a  motion  to  dismiss  may  not  be             referred  for  determination,   but  only  for   report  and             recommendation to  the district judge.   Accordingly we will             treat the magistrate judge's endorsement as a recommendation             to  the district judge.  The magistrate judge was correct in             recommending denial of  the motion  for voluntary  dismissal             under Rule 41(a)(1), since a motion for summary judgment had             been filed and the parties had filed no stipulation.                         The  plaintiffs  may well  have  been entitled  to             dismiss non-diverse  parties for the purpose of establishing             diversity  jurisdiction  under  Rule  41(a)(2),  absent  any             showing  of prejudice  to  the  defendants2.   Newman-Green,                                                            _____________                                              ____________________                  2   The   defendants'   argument   that   Pharmco   and             Interamerican   were   indispensable   parties  is   totally             insupportable  on the  record.   Mrs.  Trinidad Delgado  had             received  workers'  compensation  from the  State  Insurance             Fund,  which,  as  the  defendants correctly  argued,  is  a             complete defense to a direct claim against her employer,  of             which Pharmco  is the corporate successor. 11 L.P.R.A.   21.             Moreover, it is   difficult to understand how Interamerican,             which  was a sales organization, had anything to do with the                                         -6-                                          6             Inc. v.  Alfonzo-Larrain, 490 U.S. 826,  833 (1989); Sweeney             ________________________                             _______             v. Westvaco Co., 926  F.2d 29, 41 (1st Cir.),  cert. denied,             _______________                                ____________             112 S. Ct.  274 (1991); cf. Leroux v. Lomas & Nettleton Co.,                                         _______________________________             626 F. Supp. 962, 965 (D. Mass. 1986).                        The plaintiffs never sought reconsideration by the             district  judge of the  magistrate's recommendation  to deny             plaintiffs' voluntary motion to dismiss, however.  Under the             Local  Rules  of  Puerto  Rico  510.1,  an   appeal  from  a             determination by a magistrate judge must be filed within ten             days, or the  determination becomes a  ruling of the  court;             but   under  Local   Rule  501.2(A),   an  objection   to  a             recommendation  and report  must  also be  filed within  ten             days, and "[f]ailure to file objections within the specified             time waives the right to appeal the District Court's order."                       Not  only did  the plaintiffs  fail to  follow the             local  rule, they failed  to honor the  rationale behind it,             which as the Supreme Court pointed out in Thomas v. Arn, 474                                                       _______________             U.S. 140, 147-48 (1985), is to                        enable  [ ] the  district judge to focus                       attention on those issues -- factual and                       legal --  that are  at the heart  of the                       parties'  dispute.   The  [  ] rule,  by                                              ____________________             manufacturing  process in  which Mrs.  Trinidad  Delgado was             injured.                                         -7-                                          7                       precluding appellate review of any issue                       not contained in objections,  prevents a                       litigant from 'sandbagging' the district                       judge  by failing  to  object  and  then                       appealing.                       As we  have said, the magistrate  judge's decision             must  be treated  as no  more than  a recommendation  to the             district judge.  Because of the plaintiffs' complete failure             to protect their  rights under Local Rule 510.2(A) (or under             Rule 501.1  either,  for that  matter),  the ruling  of  the             district judge is not  appealable.  Keating v. Secretary  of                                                 ________________________             Health and Human Serv.,  848 F.2d 271, 275 (1st  Cir. 1988).             ______________________             For  purposes   of  this  appeal,  therefore,   Pharmco  and             Interamerican remain parties in the case.                         Given this state of the record, the court's ruling             that there  was no  subject matter jurisdiction  must stand.             The  uncontradicted affidavits  submitted by  the defendants             firmly establish that Puerto Rico was the principal place of             business of both Pharmco and Interamerican.  For purposes of             diversity,  they are  citizens of  Puerto Rico, 28  U.S.C.               1332(c)(1),  as  are   the  plaintiffs.    Absent   complete             diversity  of citizenship,  there  is no  basis for  subject             matter jurisdiction.                         There is no need  to examine the court's alternate             grounds for dismissal.                                           -8-                                          8                       The  judgment  of  dismissal  is  affirmed.    The             appellees shall recover their costs.                                         -9-                                          9
