Northwest Airlines v. ASTRAEA AVIATION SERVICES

• Decision Date: 18 June 1996
• Docket Number: Civil No. 3-95-704.
• Citation: 930 F. Supp. 1317
• Parties: NORTHWEST AIRLINES, INC., a Minnesota Corporation, Plaintiff, v. ASTRAEA AVIATION SERVICES, INC., d/b/a Dalfort Aviation, a Texas Corporation, Defendant.
• Court: U.S. District Court — District of Minnesota

930 F. Supp. 1317

NORTHWEST AIRLINES, INC., a Minnesota Corporation, Plaintiff, v. ASTRAEA AVIATION SERVICES, INC., d/b/a Dalfort Aviation, a Texas Corporation, Defendant.

Civil No. 3-95-704.

United States District Court, D. Minnesota, Third Division.

June 18, 1996.

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Thomas Tinkham, Perry M. Wilson III, Peter W. Carter, and Nicholas A.J. Vlietstra, Dorsey & Whitney LLP, Minneapolis, Minnesota, for Plaintiff.

Francis B. Majorie and Keith P. Ray, Levine and Majorie, Ltd., Dallas, Texas, and Scott A. Wold and Kenneth Corey-Edstrom, Henningson & Snoxell, Ltd., Minneapolis, Minnesota, for Defendant.

MEMORANDUM OPINION AND ORDER

KYLE, District Judge.

Background

The procedural posture of this case is, briefly, as follows. On July 12, 1995, Defendant Astraea Aviation Services, Inc., d/b/a Dalfort Aviation ("Dalfort") filed an action in Texas state court against Plaintiff Northwest Airlines, Inc. ("Northwest") and a Texas resident asserting breach of contract and various common-law claims, and effected service upon Northwest on July 18. On July 14, Northwest commenced the present action in Dakota County District Court and effected personal service on Dalfort on that date. On July 31, 1995, Dalfort removed the Dakota County action to this Court.

Soon after removal, Dalfort filed a Motion to Dismiss or Transfer in this Court. After briefing and oral argument, the Court denied the Motion in a Memorandum Opinion and Order dated December 22, 1995, finding that it possessed personal jurisdiction over Dalfort and that venue was properly laid in the District of Minnesota.

Northwest then brought a Motion for Partial Summary Judgment with respect to six counterclaims asserted by Dalfort. These counterclaims are the same as a number of the claims asserted by Dalfort as plaintiff in the Texas state court action. After briefing and oral argument, this Court, in a Memorandum Opinion and Order dated May 13, 1996, dismissed Dalfort's punitive damages claims¹ as well as the following counterclaims: Count One (defamation based on Northwest's statements to the press, Dalfort's customers, and others); Count Two (defamation based on Northwest's statements to the Federal Aviation Administration ("FAA") and others concerning Dalfort's alleged incompetence; Count Five (fraudulent and negligent misrepresentation); Count Six (unjust enrichment); and Count Seven (violation of the Texas Deceptive Trade Practices Act ("TDTPA"). The Court also granted the Motion as to Dalfort's claims for additional compensation for work performed on the first five DC9-51 aircraft under Contract B. The Court denied the Motion as to Count Four of Dalfort's counterclaims, which contained claims for breach of contract.

Meanwhile, Northwest had filed a plea in abatement before the Texas court on August 14, 1995. A hearing was had on that motion on February 28, 1996, and the Texas court took the matter under advisement.

On May 22, 1996, nine days after this Court's Memorandum Opinion and Order was entered, Dalfort moved the Texas court for an order setting the matter for trial on June 24, 1996, or granting priority to the case on the jury trial docket. The Texas case had been previously placed on the June 24, 1996 jury trial docket along with a number of other cases by virtue of a Pre-Trial Scheduling Order dated January 9, 1996. Def.'s Ex. 3.²

In this action, the parties were notified, in a pretrial scheduling order from Magistrate Judge Ann Montgomery dated September 7, 1995, to be ready for trial on July 1, 1996. Def.'s Ex. 7. A later Notice of Assignment of Cases for Trial, dated February 9, 1996, scheduled this case, with others, for trial as of July 1, 1996 (Doc. No. 54). The July setting was confirmed by the Court during oral argument on Northwest's Motion for Summary Judgment. Finally, a Notice of Jury Trial filed on May 28, 1996, informed the parties that the trial was set for a day certain — July 10, 1996, at 9:30 a.m. (Doc. No. 97).

After holding a hearing on Dalfort's motion, starting May 30, 1996, and continuing on June 4, 1996, the Texas court granted Dalfort's motion and set the matter down for trial on June 24, 1996.³ The Texas court also denied Northwest's plea in abatement at the same time.

Northwest has now moved this Court, pursuant to Federal Rule of Civil Procedure 54(b),⁴ for an order directing the entry of a final judgment as to those Counts in Dalfort's Counterclaims which were dismissed or otherwise resolved in its May 13, 1996 Memorandum Opinion and Order. By doing so, Northwest seeks to preclude relitigation in Texas state court of Dalfort's claims which this Court has previously dismissed. Northwest also asks the Court to enjoin the parties and the Texas state court from proceeding further on all claims pursuant to an exception to the Anti-Injunction Act. The Act states:

A court of the United States may not grant an injunction to stay proceedings in a state court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.

28 U.S.C. § 2283. The final exception, known as the "relitigation exception," is invoked by Northwest, which claims that an injunction must issue to "protect or effectuate" the May 13, 1996 Memorandum Opinion and Order. Northwest requests, in the alternative, that this Court advance this case for a trial date before June 24, 1996, so that it will proceed ahead of the Texas action.⁵

Analysis

I. Rule 54(b)

Northwest requests the Court to enter a final judgment, pursuant to Rule 54(b), as to those Counts in Dalfort's Counterclaims which were determined in the May 13, 1996 Memorandum Opinion and Order under Rule 54(b). After entering judgment, the argument goes, the previous Memorandum Opinion and Order could qualify as a "judgment" in the language of the Anti-Injunction Act, and this Court could effectively stay reconsideration of the issues already decided by this Court in the Texas state court by enjoining the future prosecution of that case.

The May 13, 1996 Memorandum Opinion and Order as it stands is neither a final dismissal nor a final judgment. Under Rule 54(b), a court may vacate or modify a partial summary judgment order at any time unless that court has directed the entry of a final judgment and made an express determination that there is no just reason for delay.

A. Consideration of Res Judicata Effects Is Proper

Northwest contends that entry of final judgment under Rule 54(b) is "appropriate for the purpose of creating res judicata effects elsewhere." Pl.'s Brief 7. This argument implies that a final judgment may be entered under Rule 54(b) solely to give an order preclusive effect in another proceeding. At least three Circuits have noted that a Court may consider res judicata effects of a Rule 54(b) certification, but such consideration must occur in conjunction with other factors. Shamley v. ITT Corp., 869 F.2d 167, 170 (2d Cir.1989); Continental Airlines, Inc. v. Goodyear Tire & Rubber Co., 819 F.2d 1519, 1525 (9th Cir.1987); Bank of Lincolnwood v. Federal Leasing, Inc., 622 F.2d 944, 949-50 n. 7 (7th Cir.1980). Yet two of these Circuits held that an otherwise permissible order under Rule 54(b) would be proper even if it was designed to produce res judicata effects. Shamley, 869 F.2d at 170-71; Continental Airlines, 819 F.2d at 1525. The other notes that res judicata effects must be weighed with the other factors to determine if Rule 54(b) may be applied. Bank of Lincolnwood, 622 F.2d at 949-50 n. 7.⁶ Following these precedents, this Court will determine the res judicata effect of the order requested by Northwest in conjunction with the traditional principles applied by courts to Rule 54(b) motions.

B. Traditional Principles of Rule 54(b)

In Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980), the Supreme Court outlined the steps for a district court to follow in making determinations under Rule 54(b). First, the Court must determine that it is dealing with a "final judgment" — one which is a decision upon a cognizable claim for relief and represents an ultimate disposition of an individual claim in a multiple-claim action. 446 U.S. at 7, 100 S.Ct. at 1464 (quoting Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 436, 76 S.Ct. 895, 900, 100 L.Ed. 1297 (1956)). Next, the Court must determine whether there is any just reason for delaying the entry of judgment — which will permit an appeal of the finally decided issues. "A district court must take into account judicial administrative interests as well as the equities involved." 446 U.S. at 8, 100 S.Ct. at 1465. The first step of the test requires finality, with no room for the district court to exercise its discretion; the second step, in contrast, contemplates that the district court will weigh competing factors, and that its determination will be given substantial deference. 446 U.S. at 10, 100 S.Ct. at 1466.

1. Finality

A district court cannot, in the exercise of discretion, take its disposition of claims which is not "final" and make it "final" merely by virtue of certification under Rule 54(b). Mackey, 351 U.S. at 437, 76 S.Ct. at 900. In Mackey, the plaintiff advanced four claims: violation of the Sherman Antitrust Act, willful destruction of business, breach of contract, and a combination of unfair competition and patent infringement. The Court noted, in discussing whether the requisite "final judgment" existed, that the first two claims were not "inherently inseparable" from the last two claims, and that the antitrust claim had an independent basis of liability. 351 U.S. at 436-37 & n. 9, 76 S.Ct. at 900 & n. 9. "Finality" has been found to exist by courts when the district court has disposed of all the rights and liabilities of at least one party to at least one claim. See, e.g., Credit Francais Int'l. S.A. v. Bio-Vita, Ltd., ...