Indiana Harbor Belt R. Co. v. American Cyanamid Co.

• Citation: 860 F.2d 1441
• Decision Date: 07 November 1988
• Docket Number: Nos. 87-2252,87-2316,s. 87-2252
• Parties: , 57 USLW 2307, 12 Fed.R.Serv.3d 1524 INDIANA HARBOR BELT RAILROAD COMPANY, Plaintiff-Appellee, v. AMERICAN CYANAMID COMPANY, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1441

860 F.2d 1441

28 ERC 1909, 57 USLW 2307, 12

Fed.R.Serv.3d 1524

INDIANA HARBOR BELT RAILROAD COMPANY, Plaintiff-Appellee, v. AMERICAN CYANAMID COMPANY, Defendant-Appellant.

Nos. 87-2252, 87-2316.

United States Court of Appeals, Seventh Circuit.

Argued May 17, 1988.

Decided Nov. 7, 1988.

Thomas D. Allen, Ann C. Petersen, Ruth E. VanDemark, Wildman, Harrold, Allen & Dixon, Chicago, Ill., for defendant-appellant.

David G. Norrell, Kirkland & Ellis, Washington, D.C., amicus curiae.

Anna M. Kelly, Indiana Harbor Belt R.R. Co., Chicago, Ill., for plaintiff-appellee.

Before CUDAHY, POSNER, and FLAUM, Circuit Judges.

FLAUM, Circuit Judge.

Indiana Harbor Belt Railroad Company ("IHB") moved for summary judgment on one of two counts seeking recovery from American Cyanamid Company ("Cyanamid") for cleanup costs resulting from a chemical leak. The district court granted IHB's motion and entered judgment against Cyanamid. Cyanamid appeals under Federal Rule of Civil Procedure 54(b). Because we find that the requirements of Rule 54(b) have not been met, we dismiss this appeal for lack of jurisdiction.

I.

On January 9, 1979, IHB employees discovered that a railroad tank car was leaking in IHB's Blue Island railroad yard. The tank car was owned by North American Car Corporation but was leased to Cyanamid. The car had been transported to the Blue Island yard by Missouri Pacific Railroad ("MoPac") where it was to be picked up by Consolidated Rail Corporation ("Conrail") to be delivered to Cyanamid's facility in New Jersey. Shortly after the leak was discovered, IHB employees determined that the tank car contained acrylonitrile, a chemical used extensively in the manufacture of fabrics and plastics. Acrylonitrile is toxic and very flammable. Its vapors can form explosive mixtures with air and are easily ignited. Over 3000 people were temporarily evacuated from the area surrounding the Blue Island yard. IHB employees, with the assistance of the local fire department, were able to safely stop the leak. In order to clean up the yard and reduce the concentration of acrylonitrile in the area's groundwater to within the limits established by the Illinois Environmental Protection Agency, IHB incurred approximately one million dollars in total expenses.

On April 23, 1980, IHB filed a three-count complaint in federal district court seeking to recover the cleanup costs it incurred. ¹ Counts I and II sought recovery from Cyanamid. Count I asserted that Cyanamid had negligently loaded acrylonitrile into a defective tank car, had failed to properly secure the tank car openings to prevent leakage, and had failed to inspect the car before releasing it to MoPac. Count II alleged that the transportation of acrylonitrile in interstate commerce is an ultra-hazardous activity and therefore Cyanamid should be held strictly liable for the damages which resulted from this activity.

On May 22, 1980, Cyanamid moved to dismiss count II. The district court denied this motion. Indiana Harbor Belt Railroad Co. v. American Cyanamid Co., 517 F.Supp. 314 (N.D.Ill.1981). Shortly thereafter, Cyanamid filed a counterclaim against IHB contending that IHB had negligently handled the tank car. Cyanamid also sought indemnification. In addition, Cyanamid filed a cross-claim against MoPac based on four theories: negligence, participation in an ultra-hazardous activity, indemnification, and contribution. Finally, Cyanamid filed a third-party complaint against North American Car Company seeking indemnification and contribution as well as damages for breach of an implied warranty of merchantability.

IHB then moved for summary judgment against Cyanamid on the strict liability theory set forth in Count II of its complaint. See Indiana Harbor Belt Railroad Co. v American Cyanamid Co., 662 F.Supp. 635, 639 (N.D.Ill.1987) (commenting on IHB's failure to seek summary judgment on the negligence count). The court granted IHB's motion, holding that "Illinois law would impose strict liability for injuries resulting from the transportation of acrylonitrile in bulk through a Chicago residential area." Id. at 644. On June 29, 1987, Cyanamid filed a motion requesting that the district court certify its order on count II for immediate appeal under 28 U.S.C. Sec. 1292(b), or alternatively, under Federal Rule of Civil Procedure 54(b). ² The district court expressly determined that there was no just reason for delay in hearing an appeal and directed that judgment be entered against Cyanamid pursuant to Rule 54(b) for $981,022.75.

II.

Neither party questioned our ability to hear this case under Rule 54(b), but as we have frequently pointed out, we have an independent duty to determine whether we have jurisdiction over an appeal. See, e.g., United States General, Inc. v. Albert, 792 F.2d 678, 680 (7th Cir.1986); Minority Police Officers Assoc. v. City of South Bend, 721 F.2d 197, 199 (7th Cir.1983). When an action involves multiple claims for relief, Rule 54(b) permits the district court to enter a final judgment "as to one or more but fewer than all the claims...." At oral argument we asked whether IHB's negligence and strict liability counts constituted only "one claim for relief" under Rule 54(b). If so, the district court had not entered a final judgment on one claim because IHB's negligence count still remains before the court. We requested supplemental briefing on this jurisdictional issue and the parties have complied.

Prior to the adoption of the Federal Rules of Civil Procedure, judgments issued by a court in a lawsuit involving multiple claims and/or multiple parties were generally not appealable until all claims against all parties had been resolved. See, e.g., Collins v. Miller, 252 U.S. 364, 370, 40 S.Ct. 347, 349, 64 L.Ed. 616 (1920) (In order to be appealable, a judgment "should be final not only as to all the parties, but as to the whole subject-matter and as to all the causes of action involved"). When the Federal Rules were under consideration, the drafters recognized that the liberal joinder rules proposed therein would lead to more complex lawsuits and create a greater potential for injustice for litigants who had to await the conclusion of the entire litigation even though their rights on certain issues had been conclusively resolved early on. See, e.g., Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 511-12, 70 S.Ct. 322, 324-25, 94 L.Ed. 299 (1950). Rule 54(b) was adopted to meet these concerns. It provides for an immediate appeal from a judgment in the district court in certain circumstances even if other claims in the lawsuit are unresolved. As amended, the rule provides in part:

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.

Fed.R.Civ.P. 54(b).

In evaluating whether the district court properly certified the judgment in favor of IHB on count II under Rule 54(b), we first determine whether the judgment the court entered was final under 28 U.S.C. Sec. 1291. ODC Communications Corp. v. Wenruth Investments, 826 F.2d 509, 511-12 (7th Cir.1987). "It must be a 'judgment' in the sense that it is a decision upon a cognizable claim for relief, and it must be 'final' in the sense that it is 'an ultimate disposition of an individual claim entered in the course of a multiple claims action.' " Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 7, 100 S.Ct. 1460, 1464, 64 L.Ed.2d 1 (1980) (quoting Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 436, 76 S.Ct. 895, 900, 100 L.Ed. 1297 (1956) (emphasis added)). We review this determination de novo. Curtiss-Wright, 446 U.S. at 7-8, 100 S.Ct. at 1464-65; ODC Communications, 826 F.2d at 512. If the judgment was final, we then determine whether the district court abused its discretion in finding that there was "no just reason for delay." Curtiss-Wright, 446 U.S. at 7-8, 100 S.Ct. at 1464-65. ³

The critical issue in this case is the definition of the phrase "one claim for relief." The meaning of this phrase is essential to determining whether Rule 54(b) applies to a given situation. First, the action must involve multiple claims for relief. In determining whether more than one claim for relief is presented, counterclaims, cross-claims, and third-party claims are considered in addition to and in the same manner as the claims presented in the plaintiff's complaint. Id.; ODC Communications, 826 F.2d at 512. Cyanamid has filed all three. It has counterclaimed against IHB, cross-claimed against MoPac and named North American Car Company as a third-party defendant. Assuming that more than one claim for relief is presented, the district court is authorized to "direct the entry of a final judgment as to one or more but fewer than all of the claims...." Fed.R.Civ.P. 54(b). In other words, if two counts constitute one claim for relief for purposes of Rule 54(b), the district court must resolve both counts in order for the rule to apply; the rule does not cover a partial adjudication of a single claim, even if other claims are presented in the case. Local P-171, Amalgamated Meat Cutters v. Thompson Farms Co., 642 F.2d 1065, 1069 (7th Cir.1981); Rieser v. Baltimore and Ohio Railroad Co., 224 F.2d 198 (2nd Cir.1955); 6 Moore's Federal Practice p 54.34 (2d ed. 1987). ⁴

Although the application of Rule 54(b) hinges on the definition of a "claim for relief," the Supreme Court has never conclusively defined this phrase. Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737, 96 S.Ct. 1202, 47 L.Ed.2d 435 (1976); Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698, 701-02 (7th Cir.), cert. denied, 469 U.S. 1018, 105 S.Ct. 432, 83 L.Ed.2d 359 ...