Fraley v. American Cyanamid Co.

• Decision Date: 25 August 1983
• Docket Number: Civ. A. No. 81-K-2071.
• Citation: 570 F. Supp. 497
• Parties: Monika FRALEY, Plaintiff, v. AMERICAN CYANAMID COMPANY d/b/a Lederle Laboratories, Defendant.
• Court: U.S. District Court — District of Colorado

570 F. Supp. 497

Monika FRALEY, Plaintiff, v. AMERICAN CYANAMID COMPANY d/b/a Lederle Laboratories, Defendant.

Civ. A. No. 81-K-2071.

United States District Court, D. Colorado.

August 25, 1983.

Robert P. Manning and C. Scott Crabtree, Cogswell & Wehrle, Denver, Colo., for plaintiff.

Robert W. Harris, Hall & Evans, Denver, Colo., for defendant.

ORDER GRANTING SUMMARY JUDGMENT

KANE, District Judge.

In this products liability case plaintiff Monika Fraley seeks summary judgment on collateral estoppel grounds. Fraley contracted Type II poliomyelitis sometime in 1971, shortly after her daughter had been vaccinated with Orimune polio vaccine on July 13 and July 24, 1971. The vaccine was manufactured by Lederle Laboratories, a division of American Cyanamid Company. The parties have stipulated that Fraley contracted poliomyelitis as a result of contact with her child.

By this motion Fraley seeks collaterally to estop Lederle from litigating the issue of the adequacy of the warning it gave regarding the risk of use of Orimune polio vaccine. The basis for Fraley's motion is a jury determination in an earlier diversity case that the warnings Lederle provided in its package inserts and in the Physician's Desk Book were inadequate. Givens v. Lederle Laboratories, No. 73-59 Civ. T-K (M.D.Fla.1975), app. decision at 556 F.2d 1341 (5th Cir.1977).

The Givens plaintiff, a woman in her mid-twenties, contracted polio from an infant daughter who had recently received the Orimune vaccine. A jury returned a verdict of $250,000 in damages. In response to a special interrogatory, the Givens jury ruled that the warning regarding Orimune was inadequate. In response to Fraley's third request for admissions, Lederle has admitted that:

1. The Givens Orimune warning was identical to the Orimune warning in this case;

2. The adequacy of the Orimune warnings was actually litigated and essential to the final judgment in Givens; and

3. No court has ever entered a final judgment which included a finding that the Orimune warnings, either as a package insert or as a portion of the Physician's Desk Reference, was legally adequate.

From these admissions, Fraley argues that Lederle cannot relitigate the adequacy of the Orimune warnings in this case. She asserts that all the requirements of offensive issue preclusion have been met: a final judgment on the merits; an identicality of issues in the two actions; privity of defendants; and a full and fair opportunity to litigate. Parklane Hosiery Co. Inc., v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979); Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971).

Lederle disagrees. It argues that 28 U.S.C. § 1738, implementing the full faith and credit clause, requires me to treat the Givens decision as a Florida state court would, applying Florida law to determine the extent issue preclusion can be raised by one not a party to the earlier adjudication. Florida, in contrast to federal and Colorado law, has not abandoned the mutuality requirement of issue preclusion. Mobil Oil Corp. v. Shevin, 354 So.2d 372 (Fla.1978). Thus, Lederle contends it is free to relitigate the issue of the adequacy of the warnings accompanying the Orimune vaccine.

Lederle also claims that the issues are different here than in the Givens case, and, for a raft of reasons, that it would be unfair to permit the use of collateral estoppel in this case.

I.

At the outset, I note that there are three possible ways to decide the issue before me. First, I can apply Colorado law, as the law of the jurisdiction in which I sit. Second, I can apply Florida law in deference to the full faith and credit act. Third, I can apply federal law.

For the reasons annunciated below, I reject the first and second alternatives. I hold that where a federal diversity judgment is followed by a second action in diversity jurisdiction, it is incumbent upon the federal court to apply federal rules of res judicata and collateral estoppel.

This precise issue has not been addressed by the United States Supreme Court. On two occasions, it has recognized the problem. In Heiser v. Woodruff it said:

We need not consider whether, apart from the requirements of the full faith and credit clause of the Constitution, the rule of res judicata applied in the federal courts, in diversity of citizenship cases, under the doctrine of Erie ... can be other than that of the state in which the federal court sits.

327 U.S. 726, 731-32, 66 S.Ct. 853, 855, 90 L.Ed. 970 (1974). Several years later, in Blonder-Tongue, supra, the court said:

Many federal courts, exercising both federal question and diversity jurisdiction, are in accord on doing away with mutuality unless in a diversity case bound to apply a conflicting state rule requiring mutuality. (Footnote omitted.)

402 U.S. 313, 325, 91 S.Ct. 1434, 1440, 28 L.Ed.2d 788 (1971). I do not understand this latter pronouncement to require me to apply Florida or Colorado issue preclusion law. "It is merely a factual observation — most federal courts have said that in diversity cases they are bound to apply the law of judgments of the state in which they sit." Degnan, Federalized Res Judicata, 85 Yale L.J. 741, 751 (1976). (Hereafter referred to as Degnan.) See also, Wright, Miller and Cooper, Federal Practice and Procedure § 4472, n. 25 (1981).

There is little disagreement that state law controls the effects of that state court's judgments in a later diversity action. Eaton v. Weaver Mfg. Co., 582 F.2d 1250, 1256, n. 8 (10th Cir.1978); McCarty v. Amoco Pipeline Co., 595 F.2d 389, 395-96 (7th Cir.1979); Howard v. Green, 555 F.2d 178, 181-82 (8th Cir.1977). This is true even where the first state's preclusion rules conflict with those of the diversity court's.¹ There is considerable disagreement whether this rule is required by Erie considerations,² or by the full faith and credit clause and its implementing statute.³ It is equally clear that as between two federal courts exercising federal question jurisdiction, the scope of the judgment is also governed by federal law.⁴

The greatest confusion and source of disagreement is in cases like the one before me, where a federal diversity suit follows a federal diversity judgment. Some cases have relied upon Erie or the full faith and credit act to find that state law, whether of the forum court or the first court, controls. Others have specifically chosen not to decide the issue, or have chosen to apply state law without extended discussion. Still others have applied federal rules of preclusion. See Wright, Miller and Cooper, Federal Practice and Procedure, § 4472, nn. 26-28 (1981).

Worth noting is the District of Columbia Circuit's explanation in Semler v. Psychiatric Institute of Washington, D.C., 575 F.2d 922 (D.C.Cir.1978).

We believe that the principles of Erie R. Co. v. Tompkins and the mandate of the Full Faith and Credit Clause as supplemented by 28 U.S.C. § 1738 require a federal court exercising diversity jurisdiction in Forum II to give to the judgment of a federal court exercising diversity jurisdiction in Forum I the same full faith and credit that a state court in Forum II would be obliged to give the judgment of a state court in Forum I, at least in the absence of an overriding federal interest. (Footnotes omitted, emphasis in original.)

575 F.2d at 927-28.

The court there found support for its position in an early Supreme Court case which gave preclusive effect to a Texas judgment in a later Louisiana suit, as determined by Texas law.⁵

In United States v. United Air Lines, Inc., 216 F.Supp. 709, (D.Nev.E.D.Wash. 1962),⁶ the district court was sitting as a court for both the district of Nevada and the eastern district of Washington. It initially tried some of the wrongful death claims in southern California under Nevada substantive law, the location of the air collision. A jury found United liable for the death of those plaintiffs. The remaining plaintiffs then moved for summary judgment as to liability. In addressing the mutuality question the court first looked to Nevada law and determined that Nevada had abandoned mutuality in 1916. The court then "advanced the more comforting authority of Bernhard v. Bank of America, 19 Cal.2d 807, 122 P.2d 892 (1942) which Nevada presumably would have followed in any event." Degnan, supra, at 764. Into this amalgam of California and Nevada law, Judge Hall also threw a collection of federal district and circuit cases abandoning the rule of mutuality in federal courts. 216 F.Supp. at 728.

In Berner v. British Commonwealth Pacific Airlines, Ltd., 346 F.2d 532 (2d Cir. 1965), cert. denied, 382 U.S. 983, 86 S.Ct. 559, 15 L.Ed.2d 472 (1966), the trial court, sitting in diversity in New York, ruled that the defendant was collaterally estopped from relitigating a question of liability for willful misconduct by virtue of an earlier diversity action in California. 346 F.2d at 538-39. On appeal, the district court's ruling was upheld. The Second Circuit first considered the issue "in light of the radiations of Erie R.R. v. Tompkins ...." 346 F.2d at 539. It then suggested that "the collateral estoppel effect to be given to a prior federal court judgment in a subsequent action in either federal or state court might itself be a matter of federal law." Id., at 540. (Emphasis in original.) Avoiding a difficult decision, it found instead that "whether the applicability of collateral estoppel is governed by federal, New York or California law, the result in this case would be the same...." Id., at 541.⁷

Among those diversity cases applying the first forum's federal collateral estoppel law is Kern v. Hettinger, 303 F.2d 333 (2d Cir. 1962). An earlier defamation case filed in the northern district of California was dismissed there under Rule 41(b), F.R.Civ.P. In the second New York diversity action, the court granted the defendant's motion for summary...