General Foods Corp. v. Massachusetts Dept. of Public Health

• Decision Date: 13 May 1981
• Docket Number: No. 80-1502,80-1502
• Citation: 648 F.2d 784
• Parties: GENERAL FOODS CORPORATION and Rich-SeaPak Corporation, Plaintiffs-Appellants, v. The MASSACHUSETTS DEPARTMENT OF PUBLIC HEALTH et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 784

648 F.2d 784

GENERAL FOODS CORPORATION and Rich-SeaPak Corporation Plaintiffs-Appellants, v. The MASSACHUSETTS DEPARTMENT OF PUBLIC HEALTH et al Defendants-Appellees.

No. 80-1502.

United States Court of Appeals First Circuit.

Argued Feb. 13, 1981.

Decided May 13, 1981.

William H. Kitchens, Atlanta, Ga., with whom Ellis Arnall, Cleburne E. Gregory, Jr., Allen I. Hirsch, Kevin B. Getzendanner, Arnall, Golden & Gregory, Atlanta, Ga., Michael J. Quillinan, Murray D. Sayer, James M. Serafino, White Plains, N. Y., Edward J. McCormack, Jr., Joel Z. Eigerman, and McCormack & Zimble, Boston, Mass., were on brief, for plaintiffs-appellants.

Stephen S. Ostrach, Asst. Atty. Gen., Boston, Mass., with whom Francis X. Bellotti, Atty. Gen., Boston, Mass., was on brief, for defendants-appellees.

Before COFFIN, Chief Judge, ALDRICH, Senior Circuit Judge, WYZANSKI, Senior District Judge. ^*

WYZANSKI, Senior District Judge.

The appellants General Foods Corporation and Rich-SeaPak Corporation, as plaintiffs, began in the district court this action for declaratory judgment and injunctive relief, alleging the unconstitutionality of the Massachusetts open date food labeling regulation, 105 C.M.R. § 520.119. The appellees, the Massachusetts Department of Health and the Commissioner of that department, as defendants, moved to dismiss the complaint because the matter was res judicata. They contended that the judgment in Grocery Manufacturers of America v. Department of Public Health, Mass.Adv.Sh. 2291, -- Mass. --, 393 N.E.2d 881 (1979) (the GMA litigation) precluded the claims made in the complaint.

The appellants filed an "Opposition to Defendants' Motion to Dismiss." The appellee filed an affidavit, and the appellants filed two affidavits. The district court considered all the affidavits and thus converted the appellee's motion into a motion for summary judgment. ¹ Fed.R.Civ.P. 12(b) (6). The court then granted the motion and entered judgment for appellees.

On their appeal to this court each of the appellants contends that the judgment in the GMA litigation does not preclude it from maintaining the present action, but, as will appear, they advance somewhat different grounds for such a contention.

We first state the uncontested facts with respect to the GMA litigation which resulted in the judgment which the district court held to be preclusive. In that litigation, begun by a complaint in the Massachusetts Supreme Judicial Court before a single justice sitting in Suffolk County, the plaintiffs were two trade associations, Grocery Manufacturers of America (GMA) and American Frozen Food Institute (AFFI) and ten individual food manufacturers, each of which was a member of GMA or AFFI or both. Neither appellant General Foods, nor appellant Rich-SeaPak, nor its affiliate Rich Products was a nominal party to the GMA litigation. The defendants in that litigation were the Massachusetts Department of Health which is a defendant-appellee in the case at bar and the official predecessor of the Commissioner who is a defendant-appellee in the case at bar.

The amended complaint in that GMA litigation challenged a set of food labeling regulations, 105 C.M.R. § 520.119, on statutory and constitutional grounds, including contentions that the regulations represented an unlawful delegation of authority and were therefore violative of separation of powers and due process, that they were unconstitutionally vague, that they imposed an excessive burden on interstate commerce, that they were preempted by federal law, and that the regulations violated due process. The complaint contained no allegations of denial of equal protection.

In order to secure an expeditious determination of the GMA case by a panel of justices of the Supreme Judicial Court the parties submitted the case on the basis of a lengthy Statement of Agreed Facts and 126 Exhibits. On August 28, 1979 the Supreme Judicial Court rendered an opinion directing a single justice to enter a judgment for the defendants on the merits. A single justice did so on November 6, 1979.

It is undisputed (1) that General Foods has been at all relevant times a member of GMA and AFFI, the two trade associations which were among the parties plaintiff in the GMA litigation, (2) that General Foods declined an invitation to participate as a named plaintiff in the GMA litigation, but, at the request of GMA, contributed $2,500 toward the expenses of that litigation, and (3) that General Foods did not otherwise participate in or control the GMA case.

It is undisputed (1) that Rich Products, which is not a party to the case at bar, has been at all relevant times a member of AFFI, (2) that Rich Products declined an invitation to participate as a named plaintiff in the GMA litigation but contributed $1,000 toward the expenses of that litigation and (3) that Rich Products did not otherwise participate in or control the GMA case.

It is undisputed (1) that the appellant Rich-SeaPak Corporation has never been a member of either GMA or AFFI, (2) that so far as appears in the present record Rich-SeaPak was not aware of the GMA litigation, (3) that Rich Products and Rich-SeaPak have separate plants and places of business, maintain separate books and records, and manufacture and process different types of frozen foods, (4) that both corporations are similarly affected by the food labeling regulations, 105 C.M.R. § 520.119, and (5) that at all relevant times Rich Products owned 260,000 shares of class B stock of Rich-SeaPak Corporation. It seems to be undisputed that at all relevant times there was no other class B shareholders; that the 260,000 shares constituted over 39% of all the outstanding shares of Rich-SeaPak; that Rich Products as the sole owner of class B shares is entitled to elect two out of six directors of Rich-SeaPak; and that as holder of 39% of all the shares Rich Products is entitled to participate in the election of the fifth director and the sixth director (the latter having no voting power except in certain limited situations). There is no agreement as to who were officers or directors of Rich-SeaPak in 1979 when the GMA litigation began and was adjudicated. However, the district court had before it an undisputed affidavit of counsel of the present appellees to which was attached a page of Standard & Poor's Register of Corporations, Directors & Executors which identifies as of the year 1980 Robert E. Rich as Chairman of the Board of Directors of both corporations, Robert E. Rich, Jr. as President and director of Rich Products and as Vice-President and Assistant Secretary and director of Rich-SeaPak, H. J. Coffer, Jr. as a director of Rich Products and as President and Chief Executive Officer of Rich-SeaPak, David A. Rich as Secretary and a director of Rich Products, Janet W. Rich as a director of Rich Products, three other persons as directors of Rich Products, and one other person as a director of Rich-SeaPak.

CHOICE OF LAW.

"What persons are bound by a valid judgment is determined, subject to constitutional law, by the local law of the State where the judgment was rendered." Restatement, Conflict of Laws, Second, § 94; Riley v. New York Trust Co., 315 U.S. 343, 350, 62 S.Ct. 608, 612, 613, 86 L.Ed. 885 (1942); First Nat. Bk. of Minneapolis v. City Nat. Bk., 182 Mass. 130, 135-136, 65 N.E.2d 24 (1902). Pursuant to that principle we conclude that the appellants are bound by the Massachusetts judgment in the GMA litigation if, but only if, Massachusetts would bind them.

Our conclusion is in accordance with two lines of Supreme Court cases which, although they did not determine which persons were affected by a judgment, laid down rules applicable generally to questions as to the preclusive effect of state court judgments in cases in which the federal court exercises, as here, a purely federal, non-diversity jurisdiction. Allen v. McCurry, -- U.S. --, --, 101 S.Ct. 411, 416, 66 L.Ed.2d 308 (1980), relying on 28 U.S.C. § 1738, held that where the state court rendering the judgment would give it a preclusive effect, federal courts must give it such preclusive effect. Union & Planters' Bank v. Memphis, 189 U.S. 71, 75, 23 S.Ct. 604, 606, 47 L.Ed. 712 (1903); City of Covington v. First Nat. Bank, 198 U.S. 100, 109, 25 S.Ct. 562, 564, 49 L.Ed. 963 (1905) and Wright v. Georgia R.R. & Banking Co., 216 U.S. 420, 429, 30 S.Ct. 242, 245, 54 L.Ed. 544 (1910), commented on in 1A Pt. 2 Moore's Federal Practice § 0.311(2) (2d ed. 1980), held that where the state court rendering the judgment would not give it a preclusive effect, the federal courts would not give it such preclusive effect.

CONSTITUTIONAL CONSIDERATIONS.

The due process clauses of the Fifth and Fourteenth Amendments protect a non-party from being bound by an in personam judgment unless in the underlying litigation he had directly or vicariously a full and fair opportunity to present evidence and argument. Hansberry v. Lee, 311 U.S. 32, 61 S.Ct. 115, 85 L.Ed. 22 (1940); Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 329, 91 S.Ct. 1434, 1443, 28 L.Ed.2d 788 (1971); Southwest Airlines Co. v. Texas International Airlines, Inc., 546 F.2d 84, 95 (5th Cir.), cert. denied, 434 U.S. 832, 98 S.Ct. 117, 54 L.Ed.2d 93 (1977); Humphreys v. Tann, 487 F.2d 666, 671 (6th Cir. 1973). See Note, Collateral Estoppel of Non-parties, 87 Harv.L.Rev. 1485, 1498-1500 (1974).

THE EFFECT UPON GENERAL FOODS OF THE JUDGMENT IN THE GMA LITIGATION

The Massachusetts court, ² the federal courts, ³ and Restatement, Judgments, Second, T.D. No. 2 § 85 ⁴ recognize that a person who is not a party to an action but who expressly or impliedly gives a party authority to represent him may be bound by the rule of res judicata as though he were a party. Such a rule is not repugnant to the due process clauses of the Fifth and Fourteenth Amendments because the person so represented has had a vicarious opportunity to be heard in the...