Allendale Mut. Ins. Co. v. Bull Data Systems, Inc.

• Decision Date: 19 August 1994
• Docket Number: No. 94-2752,94-2752
• Citation: 32 F.3d 1175
• Parties: ALLENDALE MUTUAL INSURANCE COMPANY and Factory Mutual International, Plaintiffs-Appellants, v. BULL DATA SYSTEMS, INCORPORATED, Zenith Data Systems France, Zenith Data Systems Europe, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1175

32 F.3d 1175

30 Fed.R.Serv.3d 26

ALLENDALE MUTUAL INSURANCE COMPANY and Factory Mutual International, Plaintiffs-Appellants, v. BULL DATA SYSTEMS, INCORPORATED, Zenith Data Systems France Zenith Data Systems Europe, et al., Defendants-Appellees.

No. 94-2752.

United States Court of Appeals Seventh Circuit.

Submitted July 28, 1994.

Decided Aug. 19, 1994.

Robert Michael Kalec (submitted), Altheimer & Gray, Chicago, IL, Franklin M. Sachs, Podvey, Sachs, Meanor, Catenacci, Hildner & Cocoziello, Newark, NJ, for plaintiffs-appellants.

Bruce E. Fader, Steven C. Krane, Nancy J. Kilson, James F. Parver, Pamela L. Dreizen, Patricia J. Clarke, Proskauer, Rose, Goetz & Mendelsohn, New York City, George L. Saunders, Jr., Thomas F. Bush, Jr., Thomas A. Doyle, Saunders & Monroe, Chicago, IL, for Bull Data Systems, Inc., Zenith Data Systems France, Zenith Data Systems Europe.

Marc L. Fogelberg, Nancy L. Pionk, William M. Stevens, McBride, Baker & Coles, Chicago, IL, for Alexander & Alexander, Inc.

Before POSNER, Chief Judge, and CUMMINGS and FAIRCHILD, Circuit Judges.

POSNER, Chief Judge.

Marx once said that every great event or character in history appears twice, the first time as tragedy and the second as farce (he had in mind Napoleon and his nephew). This case bids fair to illustrate the adage. In its previous appearance before this court, we were asked to set aside an injunction against the defendants' trying to litigate before a French arbitral tribunal their dispute with the plaintiff insurance company (Allendale) over liability for the damage caused by a fire which destroyed the contents of the warehouse in France in which the defendants, collectively Groupe Bull, had stored their huge inventory of unsold computers and related goods. Allendale had brought suit in this country to establish its nonliability on the ground that the fire was due to arson committed by the defendants themselves. Groupe Bull brought a countersuit in the same court. Discovery was proceeding apace, and the date of trial was drawing near; the question was whether the defendants should, nevertheless, be allowed to pursue a parallel suit in France. The district judge thought not, and we upheld his injunction. 10 F.3d 425 (7th Cir.1993).

The most important witness to the fire--the only person inside the warehouse when it started and spread--was the nightwatchman, a Frenchman named Pascal Thomas. With the trial rapidly approaching (it is scheduled to begin on September 19), Allendale, which apparently had not tried to depose Thomas, invited him to come to the United States, at its expense, to discuss his testimony. According to the defendants, Allendale offered Mr. Thomas up to $10 million for favorable testimony, as well as trying to soften him up with an all-expenses Grand Tour of the United States and secreting him from the defendants' lawyers, who wanted to depose him. The defendants asked the district judge to order Allendale to disclose Thomas's whereabouts to them so that they could depose him, and to desist from its ex parte dealings with him. The judge issued the order requested by the defendants, and Allendale has appealed. A stay of the order being denied, Thomas was disclosed and, on July 26, deposed. At his deposition, he answered all interesting questions by pleading the Fifth Amendment. The defendants speculate that if permitted to resume ex parte contacts with Thomas, Allendale will "somehow persuade Mr. Thomas to surrender his rights and provide them with the useful 'information' that they have been trying to get from him for nearly three years." One imagines that $10 million would be a pretty powerful persuader.

These are lurid accusations, in fact defamatory, but it is privileged defamation, and, for all we know, true. But with that we shall have nothing to do; we start and end with the question of our appellate jurisdiction. Section 1292(a)(1) confers appellate jurisdiction over interlocutory injunctions. An injunction is an order to do or not to do something, and the order that Allendale seeks to appeal is both: it orders Allendale to disclose Thomas's whereabouts, and it orders Allendale to stop meeting with him privately. The first part of the order is now moot, but the second is not and Allendale argues that it is an injunction and therefore appealable.

We do not agree. It is a discovery order, and such orders, while they have the form of an injunction (an order to do or not to do something, as distinct from an award of damages or a sentence of a fine or imprisonment), are deemed not to be injunctions within the meaning of section 1292(a)(1). Reise v. Board of Regents, 957 F.2d 293 (7th Cir.1992); Aurora Bancshares v. Weston, 777 F.2d 385, 386 (7th Cir.1985) (per curiam); International Products Corp. v. Koons, 325 F.2d 403, 406 (2d Cir.1963) (Friendly, J.); Casey v. Planned Parenthood, 14 F.3d 848, 854 (3d Cir.1993) (dictum). Most discovery orders become moot in the course of the proceeding in which they are issued, and so do not inflict irreparable harm, the justification for allowing an interlocutory order to be appealed immediately, interrupting the litigation in the district court and raising the specter of multiple appeals in the same case. In the unusual case in which a discovery order does have serious, irrevocable consequences, immediate appellate review can be obtained by disobeying the order and appealing the judgment of contempt that is bound to ensue. United States Catholic Conference v. Abortion Rights, Inc., 487 U.S. 72, 76, 108 S.Ct. 2268, 2270-71, 101 L.Ed.2d 69 (1988); United States v. Ryan, 402 U.S. 530, 532, 91 S.Ct. 1580, 1581-82, 29 L.Ed.2d 85 (1971); R.R. Donnelly & Sons Co. v. FTC, 931 F.2d 430, 432 (7th Cir.1991); Crowder v. Sullivan, 897 F.2d 252, 253 (7th Cir.1990) (per curiam). A final order does not lose its appealability by virtue of arising from a discovery dispute. Aurora Bancshares Corp. v. Weston, supra, 777 F.2d at 386. Allendale could have refused to disclose Thomas's whereabouts or stop meeting with him in secret; the district judge would have adjudged Allendale in criminal contempt of its order; and Allendale could then have appealed. Or if, as is more plausible, the order did not inflict an irreparable harm on Allendale, Allendale could have waited till the end of the case and if it lost argue on appeal from the final judgment that the order was a reversible error. The order that Allendale wants to appeal is not, as in our hypothetical case of contempt, a final order related to discovery; it is a discovery order.

Allendale cites Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd., 970 F.2d 273, 276 (7th Cir.1992), for the proposition that discovery orders are injunctions. The case had nothing to do with discovery. The issue was not, as Allendale would have it, whether a discovery order is appealable if disobeying it would result in a judgment of contempt. It was whether the injunction sought to be appealed in that case was sufficiently definite that disobedience could have been punished as a contempt; for if not, the injunction had no coercive effect and therefore could not be appealed consistent with Article III of the Constitution, which requires a tangible stake at all stages of a lawsuit in federal court.

Allendale works the other side of the street as well, arguing that the provisions of the Federal Rules of...