Repola v. Morbark Industries, Inc.

• Decision Date: 03 December 1992
• Docket Number: 92-5293,Nos. 92-5172,s. 92-5172
• Citation: 980 F.2d 938
• Parties: Daniel M. REPOLA; D.R. Firewood, a sole proprietorship; Irene Stevens Repola, his wife v. MORBARK INDUSTRIES, INC., a corporation of the State of Michigan; Morbark Pennsylvania, Inc., a corporation of the State of Pennsylvania, Morbark Industries, Inc., Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 938

980 F.2d 938

Daniel M. REPOLA; D.R. Firewood, a sole proprietorship Irene Stevens Repola, his wife v. MORBARK INDUSTRIES, INC., a corporation of the State of Michigan; Morbark Pennsylvania, Inc., a corporation of the State of Pennsylvania Morbark Industries, Inc., Appellant.

Nos. 92-5172, 92-5293.

United States Court of Appeals Third Circuit.

Argued Nov. 2, 1992.

Decided Dec. 3, 1992.

Thomas R. O'Brien (argued), Wolff & Samson, Roseland, N.J., for appellant.

Paul E. Graham (argued), Pitney, Hardin, Kipp & Szuch, Morristown, N.J., for appellees.

Before SLOVITER, Chief Judge, STAPLETON and LAY ^*, Circuit Judges.

OPINION OF THE COURT

SLOVITER, Chief Judge.

Defendant Morbark Industries, Inc. has filed an interlocutory appeal certified pursuant to 28 U.S.C. § 1292(b). It challenges the district court's order requiring that it participate in a retrial of plaintiff's products liability claims despite the fact that it was found not liable by the jury at the first trial and was not a party to the appeal taken by its co-defendant.

I. Facts and Procedural History

This products liability action by plaintiff Daniel Repola against defendants Morbark Industries, Inc. ("Morbark Industries") and Morbark Pennsylvania, Inc. ("Morbark Pennsylvania"), respectively the manufacturer and distributor of a wood chipping machine, was originally filed in a New Jersey state court, removed by defendants based upon diversity jurisdiction, and tried in federal court in New Jersey.

At trial, two theories of liability were submitted to the jury: (1) whether Morbark Industries and Morbark Pennsylvania were strictly liable under the New Jersey Products Liability Act (NJPLA), N.J.Stat.Ann. § 2A:58C-1 to 58C-7 (West 1987), for manufacturing and distributing a defective product; and (2) whether Morbark Pennsylvania was liable for common law negligence for its failure to provide adequate start-up instructions. In response to special interrogatories the jury found that although the machine did not contain a design defect, it was defective because of defendants' failure to provide adequate warnings, but that the defendants' failure to provide adequate warnings was not a proximate cause of the accident. These findings resulted in a verdict in favor of both defendants on the NJPLA claim. The jury also found that because Morbark Pennsylvania failed to fulfill its dealership obligation to Morbark Industries to provide adequate start-up instructions to Repola, Morbark Pennsylvania was negligent at common law and its negligence in that regard was a proximate cause of the accident. The jury awarded Repola $747,279.10 on the common law negligence claim, less 30% for Repola's own negligence, resulting in a verdict of $523,095.37.

Judgment was entered on the jury's verdict on December 4, 1989. Morbark Pennsylvania moved for judgment notwithstanding the verdict or, in the alternative, for a partial new trial. The district court denied the motion on February 20, 1990. Morbark Pennsylvania filed a notice of appeal, but Repola did not file a cross-appeal challenging the verdict in favor of Morbark Industries. On Morbark Pennsylvania's appeal, this court found that the common law negligence claim was improperly submitted to the jury because that claim was subsumed by the NJPLA. Repola v. Morbark Indus., Inc., 934 F.2d 483 (3d Cir.1991) (Repola I ). We held that the district court's error in submitting the negligence claim to the jury resulted in "inconsistent and utterly irreconcilable" verdicts, id. at 485, and therefore we reversed and remanded the case for a new trial on the NJPLA claim. Id. at 495.

Our opinion did not address the question whether Morbark Industries, which was not a party to the appeal, was included in the retrial order. On remand, the district court, after asking counsel to brief what issues and which parties should be part of the retrial, determined that "a retrial of all issues in light of the instructions of the Third Circuit is required." App. at 75-77. Ultimately, the district court certified its order to that effect as an interlocutory order pursuant to 28 U.S.C. § 1292(b) and this court granted Morbark Industries' petition for leave to appeal.

II. Discussion

Morbark Industries contends that it cannot be compelled to participate in the retrial of Repola's claim against Morbark Pennsylvania because principles of res judicata or waiver preclude the retrial of the jury's finding of no liability for Morbark Industries, and because the district court misconstrued the mandate of this court's earlier opinion ordering a new trial. ¹

Morbark Industries argues that Repola has no right to relief from the earlier judgment in Morbark Industries' favor because, as a general rule, without a cross-appeal an appellee may not "attack the decree with a view either to enlarging his own rights thereunder or lessening the rights of his adversary." Morley Constr. Co. v. Maryland Casualty Co., 300 U.S. 185, 191, 57 S.Ct. 325, 328, 81 L.Ed. 593 (1937) (quoting United States v. American Ry. Express Co., 265 U.S. 425, 435, 44 S.Ct. 560, 564, 68 L.Ed. 1087 (1924)); see New Castle Cty. v. Hartford Accident & Indem. Co., 933 F.2d 1162, 1205 (3d Cir.1991); Airco Indus. Gases, Inc. v. Teamsters Health & Welfare Pension Fund, 850 F.2d 1028, 1034 (3d Cir.1988); 9 Moore's Federal Practice p 204.11, at 4-45 (2d ed. 1992). That is, an appellee may not attempt to reverse a judgment unless review is sought "of the whole judgment or of that portion which is adverse to him." LeTulle v. Scofield, 308 U.S. 415, 421-22, 60 S.Ct. 313, 316, 84 L.Ed. 355 (1940). The Supreme Court has described this rule as "inveterate and certain." Morley, 300 U.S. at 191, 57 S.Ct. at 328.

The courts of appeals have differed as to whether the preclusion embodied by this rule is jurisdictional or merely a rule of practice. Compare Young Radiator Co. v. Celotex Corp., 881 F.2d 1408, 1415-16 (7th Cir.1989) (jurisdictional); Akron Center for Reproductive Health v. Slaby, 854 F.2d 852, 869 (6th Cir.1988) (same), rev'd on other grounds, 497 U.S. 502, 110 S.Ct. 2972, 111 L.Ed.2d 405 (1990); Brotherhood of Maintenance of Way Employees v. St. Johnsbury & Lamoille Cty. R.R., 806 F.2d 14, 15 (2d Cir.1986) (same); Savage v. Cache Valley Dairy Ass'n, 737 F.2d 887, 888-89 (10th Cir.1984) (same) with La Faut v. Smith, 834 F.2d 389, 394 n. 9 (4th Cir.1987) (rule of practice); Freeman v. B & B Assocs., 790 F.2d 145, 151 (D.C.Cir.1986) (same); Bryant v. Technical Research Co., 654 F.2d 1337, 1341-43 (9th Cir.1981) (same); Hysell v. Iowa Public Serv. Co., 559 F.2d 468, 476-77 (8th Cir.1977) (same).

In those courts which treat the failure to file a cross-appeal as going to the jurisdiction of the court, patently the court is precluded from reversing a favorable judgment entered for the non-appealing party. Thus, in Brotherhood of Maintenance of Way Employees v. St. Johnsbury & Lamoille Cty. R.R., the Court of Appeals itself on rehearing vacated that portion of its earlier decision which directed the district court to enter judgment against a party which was not before the court either by appeal or cross-appeal. 806 F.2d at 16. The court explained that the applicable rule

does not exist primarily to punish a non-appealing party for its failure to exhaust avenues of appeal, but to allow beneficiaries of a final judgment to be secure in their rights under that judgment unless the judgment is timely challenged on appeal and the beneficiary of the judgment is given the opportunity to defend the judgment against attack. Any other result would violate the principles of finality and due process.

Id. This court, however, has not approached the issue in terms of jurisdiction.

Instead, in a recent decision, upon which Repola relies, this court held that the rule "is one of practice generally followed and not a restriction on the power of the courts to see that justice is done." United States v. Tabor Court Realty Corp., 943 F.2d 335, 342 (3d Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1167, 117 L.Ed.2d 413 (1992). Thus, the "lack of a formal cross-appeal" will not always preclude an appeals court from considering certain issues or parties not formally participating in the appeal, especially where rendering a just judgment is impossible "without affecting the rights of parties who did not file notices of appeal." Id. at 344; see also Sochanski v. Sears, Roebuck & Co., 689 F.2d 45, 49 (3d Cir.1982).

Neither Tabor Court Realty nor Sochanski are determinative of the issue before us here. In Tabor Court Realty, Linde (the prospective purchaser of property held by a receiver) initially appealed from the district court's order invalidating its Agreement of Sale on the ground that Linde's assignment to Carrier had stifled the competitive bidding process. We reversed, generally sustaining Linde's position as to both the validity of the Agreement of Sale and the assignment. In the interim, however, Linde had entered into a conflicting assignment of the property. The district court refused to grant Carrier's motion to direct the assignment of the Agreement of Sale to it after the remand. On appeal, Linde argued that Carrier was precluded from enforcing the assignment because it had failed to file a formal notice of appeal from the initial order. We rejected Linde's position, holding that the rights of the prospective purchaser and its assignee in the first appeal were "inextricably intertwined ... so as to make it impossible to grant relief to one party without granting relief to the other." 943 F.2d at 344. We also noted that in the first appeal, Carrier had filed a brief in this court, that Linde, the formal appellant, had ceded argument time to Carrier, and that all parties, including the court, had assumed that Carrier's rights were being adjudicated in that appeal. Id. at 339.

Thus, in Tabor Court Realty, we held that we could not justly grant relief to the prospective purchaser without also...