In re Joint E. & So. Dist. Asbestos Litigation, NYAL-PH-8888.

• Decision Date: 02 July 1991
• Docket Number: No. NYAL-PH-8888.,NYAL-PH-8888.
• Citation: 769 F. Supp. 85
• Parties: In re JOINT EASTERN AND SOUTHERN DISTRICTS ASBESTOS LITIGATION.
• Court: U.S. District Court — Eastern District of New York

769 F. Supp. 85

In re JOINT EASTERN AND SOUTHERN DISTRICTS ASBESTOS LITIGATION.

No. NYAL-PH-8888.

United States District Court, E. and S.D. New York.

July 2, 1991.

Steven J. Phillips, Levy, Phillips & Konigsberg, New York City, for plaintiffs.

Steven L. Lapidus, Robinson St. John & Wayne, Newark, N.J., for third-party defendants.

AMENDED MEMORANDUM AND ORDER

WEINSTEIN, District Judge:

Some 700 asbestos cases in which workers were allegedly exposed to asbestos while working in New York state powerhouses were consolidated for trial and settlement by Judge Charles P. Sifton. Some of these cases were pending in the Southern District of New York and others were pending in the Eastern District of New York. After Judge Sifton, a judge of the Eastern District of New York, was designated by the Chief Judge of the Court of Appeals to sit in the Southern District of New York, he was designated by the Chief Judges of the Eastern and Southern District courts of New York to supervise all asbestos cases in the districts. The first forty-eight of these cases are on trial before Judge Sifton. Judge Sifton's designation to serve as a judge in the Southern District has temporarily lapsed as a result of clerical error.

All 700 cases are before Judge Jack B. Weinstein for purposes of settlement. He has been designated by the Chief Judge of the Court of Appeals to sit in the Eastern and Southern Districts to hear asbestos cases.

Several third-party defendants have moved to dismiss defendant Owens Corning Fiberglas' (OCF) third-party contribution claims against them on the grounds that the courts lack subject matter jurisdiction. Additionally, they claim that the order of consolidation previously entered must be vacated because actions pending in different districts cannot be consolidated. Neither contention warrants dismissal.

I: SUBJECT MATTER JURISDICTION

All parties agree that there is no federal question, nor is there complete diversity among plaintiffs, OCF and the moving third-party defendants. Diversity between the plaintiffs and OCF is conceded. The question is whether a district court can hear the third-party claims exercising "ancillary" or "supplemental" jurisdiction.

When a defendant seeking contribution in a federal suit impleads a third party there is "ancillary jurisdiction" over the new claim. The court exercises this jurisdiction over the third-party suit because the

third-party complaint depends at least in part upon the resolution of the primary lawsuit. Its relation to the original complaint is thus not mere factual similarity but logical dependence.

Owen Equipment and Erection Co. v. Kroger, 437 U.S. 365, 376, 98 S.Ct. 2396, 2404, 57 L.Ed.2d 274 (1978).

The Court of Appeals for the Second Circuit has endorsed the use of ancillary jurisdiction to hear third-party claims for contribution in order to "avoid piecemeal litigation." Federman v. Empire Fire and Marine Ins. Co., 597 F.2d 798, 810 (2d Cir.1979).

The concept of ancillary jurisdiction allows a district court once it has acquired jurisdiction over a case or controversy to decide matters incident to the main claim which otherwise could not be asserted independently.

Id. Since third-party claims

arise from the same transaction or occurrence, or from a common nucleus of operative facts, with the underlying claim which properly invoked the federal court's jurisdiction, there is ancillary federal jurisdiction over those federal claims.

3 J. Moore & R. Freer, Moore's Federal Practice § 14.26 at 14-118 (1991) (citing United States v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966)).

A more restrictive ancillary jurisdiction rule might require at least two lawsuits, one to decide plaintiff's claims against the defendant and the second the defendant's claim for contribution. In addition to added burdens on the courts and the defendant of two litigations, the defendant might have to pay a judgment and wait unnecessarily for the reimbursement it was entitled to under the law of contribution.

The recent Supreme Court decision in Finley v. United States, 490 U.S. 545, 109 S.Ct. 2003, 104 L.Ed.2d 593 (1989), does not vitiate this sound impleader practice. Finley addressed "pendent party" jurisdiction in a Federal Tort Claims Act case brought by a plaintiff in a federal court which had federal question jurisdiction. Subsequently, plaintiff sought to amend the federal complaint to include claims against private nondiverse parties she had sued in a state action. Id. 109 S.Ct. at 2005. The Finley Court held in a 5-4 decision that relatedness of parties, without more, would not justify the exercise of "pendent party" jurisdiction on behalf of the plaintiff. Id. at 2008-10. The party seeking pendent jurisdiction in that case was the same primary plaintiff who had brought the original federal claim. She sought to circumvent the rule requiring diversity with respect to plaintiff and each defendant.

Finley does not invalidate long accepted principles of ancillary jurisdiction which do not undercut diversity requirements between plaintiffs and defendants. See Associated Dry Goods v. Towers Financial Corp., 920 F.2d 1121, 1125 (2d Cir.1990). The Court expressly distinguished the pendent party case it was deciding in Finley from "ancillary" jurisdiction cases. Finley, 109 S.Ct. at 2008. The Court of Appeals in the Associated Dry Goods case has held that "Finley did not signal a retreat from established third-party practices." Associated Dry Goods, 920 F.2d at 1125. See also Huberman v. Duane Fellows, Inc., 725 F.Supp. 204, 205-06 (S.D.N.Y.1989).

Third-party defendants here attempt to distinguish Associated Dry Goods by noting that it involved compulsory counter claims rather than optional third-party claims. This ignores the broad language of the Second Circuit's decision:

Congress did not intend to confine the jurisdiction of federal courts so inflexibly that they are unable to protect legal rights or effectively to resolve an entire, logically entwined lawsuit. Those practical needs are the basis of ancillary jurisdiction.

Id. at 1126 (quoting Kroger, 437 U.S. at 377, 98 S.Ct. at 2404).

Congress reached the same conclusion as has this circuit. It recently codified the traditional ancillary jurisdiction power in Section 1367 of Title 28 of the United States Code, giving the old rule a new name. "Supplemental jurisdiction" may now be exercised in cases traditionally encompassed by ancillary jurisdiction. The section states in pertinent part:

(a) Except as provided in ... (b) ... or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.

28 U.S.C. § 1367. Subdivision (b) of Section 1367 excepts from (a) claims involving new parties brought by plaintiffs in diversity actions. The legislative history indicates that Congress sought to eliminate some of the confusion that followed the Supreme Court's decision in Finley. See H.R.Rep. No. 734, 101st Cong., 2d Sess. (1990), U.S.Code Cong. & Admin.News 1990, p. 6802. (This section would authorize jurisdiction in a case like Finley, as well as essentially restore the pre-Finley understandings of the authorization for and limits on other forms of supplemental jurisdiction.)

Movants contend that since Section 1367 applies to civil actions commenced on or after December 1, 1990, these cases, which were filed prior to that date, are not subject to its terms. The third-party complaints that brought these defendants into the litigation were filed in March of 1991, after the effective date of the statute. Such third-party claims should be treated as "actions" filed after the operative date of the statute to avoid unnecessary hardship to defendants. In any event, since it is clear that Congress enacted a provision with the same effect as the Second Circuit's continuing rule last enunciated after Finley in Associated Dry Goods, the operative date does not affect the outcome in the case at bar.

The district court has jurisdiction to hear the third-party claims.

II: LEGITIMACY OF CONSOLIDATION

Third-party defendants' second and more novel argument is that the February 27, 1991 order of consolidation — which consolidated the Eastern and Southern asbestos powerhouse cases for trial and settlement — was without legal authority.

Consolidations have become increasingly common as the courts struggle to meet the challenges posed by the asbestos litigation crises. See, e.g., Judicial Conference Ad Hoc Asbestos Report (1991). Presently, over 30,000 asbestos personal injury cases are pending in federal courts nationwide. Extraordinary steps, such as this large consolidation, are necessary to cope with the current judicial asbestos emergency. Cf. Findley v. Blinken (Johns-Manville), 129 B.R. 710, 745 (E. & S.D.N.Y.1991) (Memorandum, Order & Final Judgment) (extensive discussion of background of asbestos litigation, problems it has created and need for innovative solutions).

Rule 42 of the Federal Rules of Civil Procedure permits a court to order consolidation of actions pending before the court involving a "common question of law or fact." Fed.R.Civ.P. 42(a). The powerhouse cases all involve common questions of law and fact.

Nevertheless, it is asserted that prior cases deny power to consolidate cases pending in different districts. See, e.g., Town of Warwick v. New Jersey DEP, 647 F.Supp. 1322, 1324-25 (S.D.N.Y.1986); Facen v. Royal Rotterdam Lloyd S.S. Co., 12 F.R.D. 443, 443 (S.D.N.Y.1952). One 1936 case addressed the problem not of consolidation, but of the power to try a...