## Facts

- An investment banking firm entered an agreement with a parent corporation to provide advisory services to obtain private placement financing for the parent and its subsidiaries, including a named subsidiary.
- The agreement provided for a contingent fee if a financing transaction was completed.
- The parent and subsidiary became dissatisfied with the firm’s progress and pursued financing through another financial institution, which arranged financing for the subsidiary.
- The firm claimed its services substantially contributed to the financing and demanded the contingent fee; the parent and subsidiary denied any obligation.
- Related litigation arose, including a state-court fee action against the parent and subsidiary and a separate federal tortious-interference action against the later financial institution.
- In this action, the firm sued the subsidiary alone in federal court on a contract theory to recover the contingent fee.
- The subsidiary moved for judgment on the pleadings under Rule 12(c), arguing dismissal was required for failure to join the parent under Rule 19.
- The district court dismissed, finding the parent was required under Rule 19(a) and indispensable under Rule 19(b) because joinder was not feasible.
- The firm appealed.

## Issues

1. Whether the absent parent corporation was a required party under Federal Rule of Civil Procedure 19(a) in a contract action against the subsidiary alone.
2. Whether the possibility of parallel litigation, collateral estoppel effects, or inconsistent results created a substantial risk of “inconsistent obligations” requiring joinder under Rule 19(a)(2)(ii).
3. Whether the district court could dismiss under Rule 19(b) without first correctly determining requirement under Rule 19(a).

## Decision

- The court of appeals reversed the dismissal and remanded.
- The parent corporation was not a required party under Rule 19(a).
- Because a party cannot be indispensable under Rule 19(b) unless it is first required under Rule 19(a), the court did not reach Rule 19(b).

## Legal Principles

- Rule 19 imposes a sequential inquiry: a court must determine whether an absent person is required under Rule 19(a) before considering indispensability under Rule 19(b).
- Complete relief under Rule 19(a)(1) focuses on relief between existing parties; a plaintiff may obtain full relief against one alleged joint obligor without joining all joint obligors.
- The risk contemplated by Rule 19(a)(2)(ii) is “inconsistent obligations” (inability to comply with one court’s order without violating another), not merely inconsistent adjudications or outcomes across separate actions.
- The mere possibility that a judgment may have issue-preclusive effects in separate litigation does not, by itself, make an absent person required under Rule 19(a)(2)(i) absent a concrete showing of impaired ability to protect an interest.

## Conclusion

The court held that the contract action against the subsidiary could proceed without joining the parent because complete relief was available between the parties present, and the prospect of parallel proceedings, issue preclusion, or inconsistent results did not create the type of prejudice or inconsistent obligations that makes an absent party required under Rule 19(a).


Janney Montgomery Scott, Inc. v. Shepard Niles, Inc., 11 F.3d 399 (3d Cir. 1993)