Blanchette v. Cataldo, s. 83-1528

• Decision Date: 16 May 1984
• Docket Number: Nos. 83-1528,s. 83-1528
• Parties: Robert W. BLANCHETTE, et al., Trustees of the Penn Central Transportation Company, Plaintiffs, Appellants, v. John M. CATALDO, et al., Defendants, Appellees. Robert W. BLANCHETTE, et al., Trustees of the Penn Central Transportation Company, Plaintiffs, Appellees, v. John M. CATALDO, d/b/a National Freight Traffic Service, Defendant, Appellant. Robert W. BLANCHETTE, et al., Trustees of the Penn Central Transportation Company, Plaintiffs, Appellees, v. John M. CATALDO, et al., Defendants, Appellees. Community-Suffolk, Inc., Defendant, Appellant. to 83-1530.
• Court: U.S. Court of Appeals — First Circuit

Page 869

734 F.2d 869

Robert W. BLANCHETTE, et al., Trustees of the Penn Central

Transportation Company, Plaintiffs, Appellants, v. John M. CATALDO, et al., Defendants, Appellees.

Robert W. BLANCHETTE, et al., Trustees of the Penn Central

Transportation Company, Plaintiffs, Appellees, v. John M. CATALDO, d/b/a National Freight Traffic Service,

Defendant, Appellant.

Robert W. BLANCHETTE, et al., Trustees of the Penn Central

Transportation Company, Plaintiffs, Appellees, v. John M. CATALDO, et al., Defendants, Appellees.

Community-Suffolk, Inc., Defendant, Appellant.

Nos. 83-1528 to 83-1530.

United States Court of Appeals First Circuit.

Argued Jan. 4, 1984.

Decided May 16, 1984.

John R. Hally, P.C., Boston, Mass., with whom Laurence H. Reece III, R. Reed Baer, Nutter, McClennen & Fish, Boston, Mass., Bernard G. Heinzen, and Stassen, Kostos & Mason, P.C., Philadelphia, Pa., were on brief, for Robert W. Blanchette, et al.

Frank Infelise, Lynn, Mass., with whom Infelise & Strout, P.C., Lynn, Mass., was on brief, for Community-Suffolk, Inc.

Alan L. Lewis, Boston, Mass., with whom Lewis & Lewis, Boston, Mass., was on brief, for Mut. Produce, Inc.

Morris M. Goldings, Boston, Mass., with whom Richard S. Jacobs and Mahoney, Hawkes & Goldings, Boston, Mass., were on brief, for John M. Cataldo, d/b/a Nat. Freight Traffic Service.

Before COFFIN, BOWNES and BREYER, Circuit Judges.

BREYER, Circuit Judge.

This case arises out of some 13,000 law suits that defendant Cataldo filed between 1970 and 1978 against the Penn Central and other railroads. Cataldo is a freight claims agent, not a lawyer. He filed claims on behalf of freight receivers. The claims almost uniformly alleged that fresh vegetables, particularly lettuce, arrived late in Boston, their condition was poor, and the market price had dropped. For many years the railroads simply settled many of these claims for a few hundred dollars (or less) each. Then, in 1978, Penn Central brought this suit against Cataldo and several receivers alleging that this freight claim and litigation activity amounted to fraud, see 7 U.S.C. Secs. 499b, 499e (private right of action under Perishable Agricultural Commodities Act for dishonest practices by commodities receivers), abuse of process, unfair trade practices, see Mass.Gen.Laws ch. 93A, Secs. 2, 11, unauthorized practice of law, and champerty.

The district court, sitting without a jury, tried the case for sixteen days. The evidence, for the most part, sought to answer such questions as: What was Cataldo's system for deciding when to file claims or suits? Were the claims and suits filed unlikely to reflect legitimate legal entitlements? Was Cataldo reasonable in believing that the claims were legitimate? Did he take sufficient care to screen likely invalid from likely valid claims? The district court's opinion reflects a careful weighing of this evidence; it reflects a realization that plaintiff bore the burden of proving its allegations; and it reaches a result that is mostly, but not entirely, in defendant Cataldo's favor.

The court found that plaintiffs did not prove abuse of process or champerty. They did not prove fraud against Cataldo (with minor possible exceptions as to which they did not prove damages). But they did prove that Cataldo behaved unfairly, in violation of Mass.Gen.Laws ch. 93A, Sec. 2, in one respect, namely in having an employee file directly with the railroads 1,900 claims that he later withdrew without suit. The court assessed Cataldo $76,000 in damages to reimburse Penn Central for administrative costs related to these 1,900 'unsued-upon' claims.

The court also found that plaintiffs proved fraud against Community-Suffolk, one of the vegetable receivers. The fraud consisted of this receiver's having misled Penn Central about the proceeds it obtained when it disposed of vegetables that allegedly arrived late or damaged. The court assessed Community-Suffolk $55,000 as double damages.

The court further found that Frank Infelise, a lawyer associated with Cataldo, had violated Fed.R.Civ.P. 11, for he had allowed Cataldo's employees to sign his name to thousands of court-filed complaints that he had not examined to verify whether they stated legitimate claims. The court ordered, as a remedy, that Infelise review the many suits still on the district court's dockets and file appropriate affidavits.

Finally, the court found for defendant Cataldo on a counterclaim, charging Heinzen, a Penn Central attorney/investigator, with improper interference in Cataldo's efforts to settle a large batch of similar lawsuits against the Santa Fe Railroad. The court awarded Cataldo $17,500 damages.

Penn Central, Cataldo, and Community-Suffolk all appeal from the district court's judgment.

I.

The major issue on appeal is that raised by Penn Central: Does the record support the district court's findings that Cataldo's behavior was not (for the most part) abusive, fraudulent, unfair, or otherwise improper? We agree with Cataldo's characterization of what Penn Central has asked us to do, namely, in the Supreme Court's words, to

try the case de novo on the record, reject nearly all of the findings of the trial court, and substitute contrary findings of our own.

United States v. Yellow Cab Co., 338 U.S. 338, 340, 70 S.Ct. 177, 178, 94 L.Ed. 150 (1949). We also agree that the Supreme Court's response in Yellow Cab is appropriate here, namely:

The judgment below is supported by an opinion, prepared with obvious care, which analyzes the evidence and shows the reasons for the findings. To us it appears to represent the considered judgment of an able trial judge, after patient hearing, that the [plaintiff's] evidence fell short of its allegations--a not uncommon form of litigation casualty ....

Id. at 340-41, 70 S.Ct. at 179.

We add that we have reached this conclusion after studying the parties' briefs with care and after reading all of the nearly 4,000 pages of record material presented in the parties' briefs and appendices. We undertook this effort because familiarity with detail seemed necessary to understand the essence of the case and the likelihood of district court error, and because we wished to understand the details, given the relationship of the case to the administration of justice within the circuit. Having satisfied ourselves that the district court was correct on these basically factual and evidentiary matters, we see no need (given the one thousand or so other cases on this court's annual docket) to take the time to write a lengthy opinion reiterating all the facts. We shall instead simply mention a few features of the record, as we read it, which may help the parties understand why we believe the district court was correct.

First, the record shows that Penn Central tried to depict Cataldo as having filed thousands of suits, lacking in merit, primarily for their nuisance value, hoping for small settlements. Cataldo sought to depict Penn Central as having resisted thousands of likely legitimate claims, hoping through resistance to discourage receivers from pursuing proper claims for small amounts of damage. Under these circumstances, the likely merits of the claims were highly relevant to the propriety of Cataldo's methods.

Second, two important Penn Central efforts, designed to show that many Cataldo claims likely lacked merit, ended in stalemate. For one thing, Penn Central pointed to Cataldo's practice of filing thousands of claims based on late delivery when a carload arrived in Boston on the eighth morning after dispatch from California. Penn Central tried to show that "eighth morning delivery" was not "late." It pointed to schedules, to transportation methods, to delivery times elsewhere, and so forth. Cataldo, however, contended that case law established a standard for lateness--called "reasonable dispatch"--that required faster delivery from California to Boston than an "eighth morning schedule" provided. See Condakes v. Southern Pacific Co., 295 F.Supp. 121 (D.Mass.1968) (citing New York, P. & N. R.R. Co. v. Peninsula Produce Exchange, 240 U.S. 34, 36 S.Ct. 230, 60 L.Ed. 511 (1916)). We do not know whether or not Penn Central would have won its point about lateness, had it decided to contest and to appeal one or more of the thousands of lateness claims based upon "eighth morning delivery." At most, the railroad's schedule establishes a presumptive standard for reasonable dispatch, and here the parties disputed what the operative schedule was, whether Penn Central adopted it in good faith, and whether it realistically reflected actual railroad practices or reasonable railroad capabilities. Given these unresolved disputes, and the habitual delays to which Cataldo pointed, we see nothing erroneous in a district court conclusion that Penn Central failed to prove Cataldo unreasonable in believing he had a valid legal claim.

For another thing, Penn Central pointed out at some length that many "damage" suits were based upon lettuces that an "inspection service" stated suffered from 13% bruising. Penn Central sought to use the facts that this number appeared with amazing regularity, that it was just above the "rejection" level for sales to Canada, that vast numbers of lettuce carloads were sold to Canada anyway, and that the service was hired by the receivers, to suggest that something very fishy was afoot ("afin"?). Cataldo, however, introduced evidence that the 13% figure arose from the method of inspection: an inspector would take, say, six lettuce cartons out of a freight car; he would examine sixteen of the twenty-four lettuce heads in each carton, and if, say, two heads out of the sixteen in a carton were bruised, he would note that the carton sample was "13%" bruised. He might well mark his report on the six cartons as, "zero, zero, 13%, 6%, 6%, zero," denoting both the existence of one sample with 13% bruising and a 4% (four heads out of 96) bruising in the overall sample. It is not...