Denny v. Ford Motor Co.

• Decision Date: 13 August 2013
• Docket Number: No. 3:11–CV–1239.,3:11–CV–1239.
• Parties: Nancy and Robert DENNY, Plaintiffs, v. FORD MOTOR COMPANY, Defendant.
• Court: U.S. District Court — Northern District of New York

959 F.Supp.2d 262

Nancy and Robert DENNY, Plaintiffs,
v.
FORD MOTOR COMPANY, Defendant.

No. 3:11–CV–1239.

United States District Court,
N.D. New York.

Aug. 13, 2013.

[959 F.Supp.2d 265]

John Scarzafava, Esq., Scarzafava & Basdekis Law Firm LLP, Oneonta, NY, for Plaintiffs.

Brian P. Crosby, Esq., Robert G. Scumaci, Esq., Gibson, McAskill & Crosby, LLP, Buffalo, NY, Edward C. Stewart, Esq., Wheeler Trigg O'Donnell LLP Denver, CO, for Defendants.

MEMORANDUM–DECISION and ORDER
DAVID N. HURD, District Judge.

TABLE OF CONTENTS

INTRODUCTION	266
FACTUAL BACKGROUND	266
STANDARD OF REVIEW	267
DISCUSSION	267

Fraud on the Court—Third Cause of Action	267
Res Judicata	268
Collateral Estoppel	270
Statute of Limitations	272

Fraud—First Cause of Action	272
Fraudulent Non–Disclosure of a Material Fact—Fourth Cause of Action	273
Civil Conspiracy—Fifth Cause of Action	273
Violations of RICO—Seventh Cause of Action	273
Conspiracy to Violate RICO—Eighth Cause of Action	274

Punitive Damages—Ninth Cause of Action
275

CONCLUSION
275

[959 F.Supp.2d 266]

I. INTRODUCTION

On October 17, 2011, plaintiffs Nancy and Robert Denny (“the Dennys” or “plaintiffs”) filed this action against Ford Motor Company (“Ford” or “defendant”), asserting causes of action sounding in fraud and violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). An amended complaint was filed on February 28, 2012. Defendant filed a motion to dismiss pursuant to Federal Rule of Civil Procedure (“Rule ––––”) 12(b)(6) for failure to state a claim. Plaintiffs opposed, and defendant replied. Oral argument was heard in Utica, New York. Decision was reserved.

II. FACTUAL BACKGROUND

On June 9, 1986, Nancy Denny was injured when she swerved to avoid hitting a deer on the road. The Ford Bronco II (“Bronco II”) she was driving rolled over. In 1988, the Dennys brought a products liability action (“Denny I”) against Ford in the Northern District of New York. The complaint alleged negligence, strict products liability, and breach of implied warranty. The central issue of the case, and similar litigation all over the country, was whether the Bronco II was defective in design due to its propensity to roll over. On November 17, 1992, after a three week jury trial before District Judge Thomas J. McAvoy in Binghamton, New York, the jury found for plaintiffs on the breach of implied warranty claim, and in favor of Ford on the strict products liability and negligence claims. The jury awarded plaintiffs $3 million in compensatory damages, but found Nancy Denny sixty percent at fault for her injuries, due to her maneuver to avoid the deer. Thus, her award was reduced to $1.2 million. Judgment was entered consistent with the verdict, and that judgment was ultimately affirmed by the Second Circuit Court of Appeals on March 19, 1996. Denny v. Ford Motor Co., 79 F.3d 12, 13 (2d Cir.1996). Ford subsequently satisfied the judgment.

Plaintiffs now bring suit (“Denny II”) against Ford, arguing that but for Ford's fraud and conspiracy during the pre-trial and trial phases of Denny I, plaintiffs would have recovered more damages because the jury would not have found Nancy Denny comparatively negligent and would have awarded punitive damages. Specifically, plaintiffs allege the following fraudulent and unlawful conduct: (1) Ford knowingly purchased and used the false and misleading testimony of former Ford engineer David J. Bickerstaff (“Bickerstaff”) during its defense of Denny I (and concealed this from the court and plaintiffs); (2) Ford fraudulently concealed, destroyed, and misrepresented to the court and plaintiffs the existence of critical documents that provided evidence that was favorable to plaintiffs' case and evidence that Ford knew, or should have known, would harm their defense; (3) Ford surreptitiously collected and destroyed critical documents and misrepresented the legitimacy of that collection and destruction process to the court; and (4) Ford concealed the fact that they knew the Bronco II was unsafe before they allowed it to be sold to the American public.

Plaintiffs allege that their counsel recently discovered Ford's unlawful conduct in the process of due diligence for the preparation of a new Bronco II case. They point to five pieces of evidence which they allege Ford, its attorneys, and Bickerstaff hid during Denny I: (1) a letter from Bickerstaff to Ford detailing his retention rate of $5,000 per day to “assist you [Ford] in preparing myself, in Ford's favor,” which the Dennys contend shows Bickerstaff was paid to give misleading testimony, Pls.' Am. Compl., Ex. A, ECF No. 15–1 (“Bickerstaff Letter”); (2) a vehicle

[959 F.Supp.2d 267]

design and testing memo from one of Ford's departments to the Arizona Proving Ground (where Ford attempted to test drive the Bronco II) prepared for release of the Ford Explorer, which plaintiffs contend acknowledges the Bronco II's problems with jacking, stability, and design, and could have been used to attack Ford's defense and support plaintiffs' expert's testimony (“Vehicle Design and Testing Memo”); (3) Ford's surreptitious method of collecting Bronco II-related documents, many of which were destroyed, which was unprecedented by the company; (4) Ford's own statistics showing that the Bronco II was experiencing jacking at ten times the rate of the Chevrolet Blazer; and (5) that the Bronco II ceased to be tested on the track by professional drivers, not because Ford developed a computer program which eliminated the need to do so—as they argued in Denny I—but because the vehicles were unsafe even for professional drivers.

In the amended complaint, the Dennys allege nine causes of action: fraud ( First Cause of Action); intentional non-disclosure of a material fact ( Second Cause of Action); fraud on the court ( Third Cause of Action); fraudulent non-disclosure of a material fact ( Fourth Cause of Action); civil conspiracy ( Fifth Cause of Action); spoliation of evidence ( Sixth Cause of Action); violations of RICO ( Seventh Cause of Action); conspiracy to violate RICO ( Eighth Cause of Action); and punitive damages ( Ninth Cause of Action). In their opposition to Ford's motion, plaintiffs withdrew their claims of intentional non-disclosure of a material fact (Second Cause of Action) and spoliation of evidence ( Sixth Cause of Action). Pls.' Mem. Opp'n Summ. J. 18, 23 (“Pls.' Mem.”).

III. STANDARD OF REVIEW

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 663, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007)). All reasonable inferences must be drawn in favor of the complainant. See Bank of N.Y. v. First Millennium, Inc., 607 F.3d 905, 922 (2d Cir.2010) (citing Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir.2010)). However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. Instead, “[w]hile legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. at 679, 129 S.Ct. at 1950.

IV. DISCUSSIONA. Fraud on the Court—Third Cause of Action

An analysis of plaintiffs' claims cannot proceed without first addressing the question of whether the Denny I judgment is still valid. Plaintiffs are essentially claiming that the Denny I judgment is invalid and request that this judgment be set aside for fraud on the court pursuant to Rule 60(d)(3). “ ‘[F]raud upon the court’ as distinguished from fraud on an adverse party is limited to fraud which seriously affects the integrity of the normal process of adjudication.” Gleason v. Jandrucko, 860 F.2d 556, 559 (2d Cir.1988). Fraud on the court is exclusively confined to “only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases.” Hadges v. Yonkers Racing Corp., 48 F.3d 1320, 1325 (2d Cir.1995) (internal quotation marks omitted).

[959 F.Supp.2d 268]

Examples of conduct that reach this high standard include “bribery of a judge, jury tampering, or hiring an attorney for the sole purpose of improperly influencing the judge.” United States v. Bennett, No. S197CR639, 2004 WL 736928, at *2 (S.D.N.Y. Apr. 5, 2004). “After-discovered evidence of alleged perjury by a witness is simply not sufficient for a finding of ‘fraud upon the court.’ ” Gleason, 860 F.2d at 559;see also Chamberlain v. Univ. of Rochester, Ret. Plan Comm., No. 01–CV–6090, 2004 WL 1574540, at *7 (W.D.N.Y. May 26, 2004) (holding that evidence of fraudulent witness statements do not support a finding of fraud on the court). Moreover, “allegations of nondisclosure during pretrial discovery do not constitute grounds for an independent action.” Gleason, 860 F.2d at 559.

Plaintiffs allege that Bickerstaff perjured himself and that Ford failed to disclose documents during discovery. Am. Compl. ¶¶ 37, 51. Such conduct, however, does not establish the “requisite interference with the judicial machinery” to constitute a claim for fraud on the court. Gleason, 860 F.2d at 560. Although witness perjury and concealment of responsive documents would hardly merit praise, “even fairly despicable conduct will not qualify as fraud on the court.” 12 James Wm. Moore et al., Moore's Federal Practice § 60.21[4][c] (3d ed. 2004). Plaintiffs contend that Ford led an “orchestrated effort” with its attorneys to thwart the “normal process of adjudication.” Pls.' Mem. 19. This blanket assertion, however, does not change the fact that plaintiffs have only alleged perjury and non-disclosure of documents. Indeed, “neither perjury nor nondisclosure ... amounts to anything more than fraud involving...