CSX Transp., Inc. v. Gen. Mills, Inc.
| Decision Date | 30 January 2017 |
| Docket Number | No. 15-12095, No. 15-14399,15-12095 |
| Citation | 846 F.3d 1333 |
| Parties | CSX TRANSPORTATION, INC., Plaintiff–Appellant, v. GENERAL MILLS, INC., Defendant–Appellee. CSX Transportation, Inc., Plaintiff–Appellant, v. General Mills, Inc., Defendant–Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Evan Mark Tager, Brian David Netter, Mayer Brown, LLP, Washington, DC, R. Stan Baker, Christopher Randall Jordan, Randall Athley Jordan, Karen Jenkins Young, The Jordan Firm, St Simons Is, GA, Grant Cox Buckley, Jordan & Moses, St Simons Is, GA, Eileen Margaret Crowley, Hall Bloch Garland & Meyer, LLP, Atlanta, GA, Ana Davis Johnson, David M. Wells, Gunster Yoakley & Stewart, PA, Jacksonville, FL, for Plaintiff–Appellant.
Jerry W. Blackwell, Emily A. Ambrose, Mary S. Young, Blackwell Burke, PA, Minneapolis, MN, Catherine Ann McCormack, Albert H. Parnell, Hawkins Parnell Thackston & Young, LLP, Atlanta, GA, for Defendant–Appellee.
Before WILLIAM PRYOR, and ROSENBAUM, Circuit Judges, and MARTINEZ,* District Judge.
Our caselaw contains discordant answers to the question whether federal common law borrows the doctrine of collateral estoppel as defined by state law, Palmer & Cay, Inc. v. Marsh & McLennan Cos. , 404 F.3d 1297, 1310 (11th Cir. 2005), or applies the doctrine only as defined by federal law, Tampa Bay Water v. HDR Engineering, Inc. , 731 F.3d 1171, 1179 (11th Cir. 2013), to determine the preclusive effect of an earlier judgment of a federal court that exercised diversity jurisdiction. This appeal requires that we resolve that discord. In an earlier action before a federal court that exercised diversity jurisdiction, a jury found CSX Transportation solely liable for injuries suffered by an employee of General Mills and awarded the employee damages. CSX filed this action for indemnification from General Mills. The district court dismissed this action on the ground that a contract between the parties barred indemnification for damages "arising from [CSX's] ... sole negligence." To reach this result, the district court applied a federal rule of collateral estoppel to bar relitigation of the relative fault of General Mills for the injury suffered by its employee. We reverse and remand because federal common law adopts the state rule of collateral estoppel to determine the preclusive effect of a judgment of a federal court that exercised diversity jurisdiction.
In 1989, CSX Transportation and General Mills entered into a Sidetrack Agreement for the construction, use, and maintenance of a sidetrack railway line. The sidetrack subject to the agreement is a "spur track"; it provides railway access from a rail line operated by CSX to a processing facility owned by General Mills. The Sidetrack Agreement grants General Mills the right to conduct "switching" on the sidetrack. Switching is "the process of moving railcars that have been previously delivered by a train ... in the proper order so that they can be coupled to a locomotive and pulled out of a customer's facility." To conduct switching, General Mills acquired a trackmobile, a "mobile railcar mover, capable of traveling on both roads and railroad tracks, fitted with couplers for moving small numbers of railcars."
Section 15 of the Sidetrack Agreement contains a specific liability provision for switching. In consideration for the use of the sidetrack, General Mills assumed "all risk of loss, damage, cost, liability, judgment and expense ... in connection with any personal injury to or death of any persons, or loss of or damage to any property, ... that may be sustained or incurred in connection with, ... the operation of [General Mills's] trackmobile or locomotive power." The Sidetrack Agreement also contains a general liability provision, Section 11, that relieves General Mills of liability "for all losses arising from [CSX's] ... sole negligence."
On June 5, 2005, two employees of General Mills, Doug Burchfield and Rodney Turk, were switching railcars on the sidetrack. Turk moved a railcar to a holding track with the trackmobile. The railcar, which Turk did not properly secure, rolled down the track, collided with two other railcars, and hit Burchfield who suffered serious injuries.
Burchfield filed a complaint against CSX for his injuries and invoked the diversity jurisdiction of the district court. Burchfield v. CSX Transp., Inc. , No. 107–CV–1263, 2009 WL 1405144, at *9 n.1 (N.D. Ga. May 15, 2009). Before trial, the district court granted Burchfield's motion for a partial summary judgment against the defense of CSX that General Mills was at fault for the accident. CSX prevailed at trial, but on appeal we reversed on evidentiary grounds and remanded. Burchfield v. CSX Transp., Inc. , 636 F.3d 1330, 1338 (11th Cir. 2011). At the retrial, a jury found CSX solely at fault and awarded Burchfield more than $20 million in damages. The parties later settled the claim for $16 million.
CSX then requested indemnification from General Mills. General Mills denied the request, and CSX filed this suit. The complaint alleged that the Sidetrack Agreement requires General Mills to indemnify CSX. General Mills moved to dismiss the complaint on the ground that the Sidetrack Agreement does not require indemnification because the jury found CSX solely at fault for Burchfield's injuries and collateral estoppel prohibits relitigation of the fault of General Mills. The district court dismissed the complaint.
CSX filed a motion for reconsideration or, in the alternative, leave to file an amended complaint, in which it argued that the district court erred because it applied collateral estoppel as defined by federal law, not state law. According to CSX, had the district court applied collateral estoppel as defined by the law of Georgia, CSX would have been permitted to relitigate the relative fault of General Mills. Unlike the federal rule of collateral estoppel, collateral estoppel as defined by Georgia law requires the earlier judgment to have been rendered in litigation between identical parties or their privies. Compare Parklane Hosiery Co. v. Shore , 439 U.S. 322, 331, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979), with ALR Oglethorpe, LLC v. Henderson , 336 Ga.App. 739, 783 S.E.2d 187, 192 (2016). The district court initially granted the motion to file an amended complaint, but on reconsideration later denied it.
"We review de novo the district court's grant of a Rule 12(b)(6) motion to dismiss for failure to state a claim, accepting the complaint's allegations as true and construing them in the light most favorable to the plaintiff." Chaparro v. Carnival Corp. , 693 F.3d 1333, 1335 (11th Cir. 2012) (quoting Cinotto v. Delta Air Lines Inc. , 674 F.3d 1285, 1291 (11th Cir. 2012) ). We review whether the doctrine of collateral estoppel is available de novo . Dailide v. U.S. Att'y Gen. , 387 F.3d 1335, 1341 (11th Cir. 2004).
Before we address the merits, we must first determine whether CSX preserved this issue for appeal. "A federal appellate court will not, as a general rule, consider an issue that is raised for the first time on appeal." In re Pan Am. World Airways, Inc., Maternity Leave Practices & Flight Attendant Weight Program Litig. , 905 F.2d 1457, 1461–62 (11th Cir. 1990). "[I]f a party hopes to preserve a[n] ... argument, ... [it] must first clearly present it to the district court ... in such a way as to afford the district court an opportunity to recognize and rule on it." Id. at 1462.
CSX argues, and we agree, that it preserved its argument that federal common law adopts the state rule of collateral estoppel to determine the preclusive effect of an earlier judgment of a federal court that exercised diversity jurisdiction. In footnote four of the brief CSX filed in response to the motion to dismiss of General Mills, CSX argued that our precedent bound the district court to apply collateral estoppel as defined by federal law, but that this precedent was wrong because state law should apply. Although CSX went on to argue in the same brief that collateral estoppel as defined by federal law did not bar relitigation of the negligence of General Mills, the footnote presented a full argument. It cited relevant authority and reasoned by syllogism. That the argument appeared in a footnote does not affect our conclusion. Cf. United States Sec. Exch. Comm'n v. Big Apple Consulting USA, Inc. , 783 F.3d 786, 812 (11th Cir. 2015) (). And in any event, the appropriate federal common law rule of collateral estoppel is a "pure question of law" that we "will consider" for the first time on appeal. Access Now, Inc. v. Sw. Airlines Co. , 385 F.3d 1324, 1331–32 (11th Cir. 2004) (quoting Wright v. Hanna Steel Corp. , 270 F.3d 1336, 1342 (11th Cir. 2001) ).
Whether federal common law borrows the state rule of collateral estoppel to determine the preclusive effect of a judgment rendered by a court that exercised diversity jurisdiction is unclear under our caselaw. Compare CSX Transportation, Inc. v. Brotherhood of Maintenance of Way Employees , 327 F.3d 1309, 1316 (11th Cir. 2003) (), and Tampa Bay Water , 731 F.3d at 1180 (), with SFM Holdings, Ltd. v. Banc of Am. Sec., LLC , 764 F.3d 1327, 1336 (11th Cir. 2014) (), and Palmer & Cay , 404 F.3d at 1309–10 (...
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