Robinson v. Audi Aktiengesellschaft

• Decision Date: 30 May 1995
• Docket Number: No. 92-5238,92-5238
• Citation: 56 F.3d 1259
• Parties: Harry ROBINSON and Kay Robinson; Eva May McCarthy; and George Samuel Robinson, Plaintiffs-Appellants, v. AUDI AKTIENGESELLSCHAFT, f/k/a Audi NSU Auto Union Aktiengesellschaft, a foreign corporation; Volkswagen of America, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1259

56 F.3d 1259

Harry ROBINSON and Kay Robinson; Eva May McCarthy; and George Samuel Robinson, Plaintiffs-Appellants, v. AUDI AKTIENGESELLSCHAFT, f/k/a Audi NSU Auto Union Aktiengesellschaft, a foreign corporation Volkswagen of America, Inc., Defendants-Appellees.

No. 92-5238.

United States Court of Appeals Tenth Circuit.

May 30, 1995.

Winton D. Woods, Tucson, AZ (Ronald D. Mercaldo and Lucile D. Sherman of the Law Offices of Ronald D. Mercaldo, Ltd., Tucson, AZ., Thomas Elke, Palo Alto, CA, and Maynard I. Ungerman, Ungerman & Iola, Tulsa, OK, with him on the briefs), for plaintiffs-appellants.

Richard M. Eldridge, Rhodes, Hieronymus, Jones, Tucker & Gable, Tulsa, OK (John H. Tucker, Rhodes, Hieronymus, Jones, Tucker & Gable, Tulsa, OK, and Herbert Rubin and Daniel V. Gsovski, Herzfeld & Rubin, P.C., New York City, with him on the brief), for defendants-appellees.

Before EBEL and KELLY, Circuit Judges, and BROWN, District Judge. ^*

WESLEY E. BROWN, Senior District Judge.

This is an appeal from an order denying plaintiff's request to set aside a judgment. The judgment in question resulted from a jury verdict in defendants' favor on plaintiffs' product liability claims. After that judgment was affirmed on appeal, plaintiffs filed a complaint in the district court alleging that the defendants had obtained the judgment by means of a fraud upon the court. Pursuant to Fed.R.Civ.P. 60(b), the district court held a bench trial on the allegations and, after hearing the evidence, concluded that plaintiffs had failed to prove such fraud. Plaintiffs now contend that the district court's ruling was flawed. We exercise jurisdiction under 28 U.S.C. Sec. 1291 and, for the reasons set forth herein, we affirm. ¹

I. History of the Litigation.

An understanding of the plaintiffs' allegation of fraud on the court requires a review of the eighteen-year history of this litigation. The plaintiffs were injured in an automobile accident on an Oklahoma highway in 1977. The car in which they were traveling, a 1976 Audi 100 LS, was struck from behind by a Ford Torino being operated by a drunk driver. The Ford was going approximately 90 miles per hour at the time of the crash, while the plaintiffs' car was going an estimated 55 miles per hour. The impact of the collision crushed the rear end of the Audi up to twenty-four inches, and the doors of the car were jammed shut. The impact also punctured the Audi's fuel tank, called a "drop-in" type, which was located in the back of the car and which served as the floor of the trunk. The Audi burst into flames from the collision, and the plaintiffs were severely burned.

Plaintiffs brought an action in the District Court for Creek County, Oklahoma, claiming that their injuries resulted from defective design and placement of the Audi's gas tank and fuel system. The initial named defendants included the vehicle's importer, Volkswagen of America, Inc., as well as the regional distributor and the retailer of the car. An amended petition named Volkswagenwerk Aktiengesellschaft (hereinafter "Volkswagen AG"), a German company, as the manufacturer of the vehicle. Plaintiffs subsequently substituted Audi NSU Auto Union Aktiengesellschaft (hereinafter "Audi" or "Audi NSU"), a subsidiary of Volkswagen AG, for Volkswagen AG, stating that through interrogatories they had learned that Audi was the manufacturer of the vehicle. Aple.Supp.App. at 804. It is undisputed that this substitution was made after a lawyer for one of the defendants informed plaintiffs' counsel that Audi NSU rather than Volkswagen AG was the manufacturer. A jurisdictional dispute was eventually decided by the United States Supreme Court, which held that personal jurisdiction was lacking over the regional distributor and the retailer, see World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), and those defendants were dismissed from the case. The remaining defendants, Audi NSU and Volkswagen of America, removed the action to the U.S. District Court for the Northern District of Oklahoma, where the claims were tried to a jury.

In the course of the jury trial, plaintiffs attempted to admit into evidence certain documents that Volkswagen of America had submitted to the National Highway Traffic Safety Administration (NHTSA) on behalf of Volkswagen AG between 1967 and 1974. The documents indicated that Volkswagen of America and Volkswagen AG were aware at the time the submissions were made that a car with a fuel system of the type later used in the 1976 Audi LS 100 carried a risk of combustion when impacted from behind. The defendants challenged the admissibility of this evidence, and the district court heard extensive arguments on the issue. Counsel for Audi argued, among other things, that the submissions were made on behalf of Volkswagen AG and were therefore irrelevant to the claims against Audi. In a memorandum in support of Audi's motion in limine, counsel argued that the fact that both of the defendants were subsidiaries of Volkswagen AG was irrelevant, stating that Volkswagen AG "had nothing whatever to do with the design, manufacture or sale of the subject Audi 100 LS." See Aplt.App. at 696. Counsel also argued that, although there was an agency relationship between Audi and Volkswagen of America, the submissions in question did not arise from that relationship and the documents were therefore not admissible against either Audi or Volkswagen of America.

The district court excluded the evidence, finding that Volkswagen of America's knowledge had not been acquired by virtue of its agency relationship with Audi and, thus, the documents could not be attributed to Audi. Aple.Supp.App. at 435. The court also held that such knowledge was not admissible against Volkswagen of America because the distributor's knowledge of the state of the art could not be attributed to the manufacturer in a case involving an alleged design defect. Id. at 435-36. The jury later returned a verdict for the defendants.

Plaintiffs appealed the judgment. See Robinson v. Audi NSU Auto Union, 739 F.2d 1481 (10th Cir.1984). This court upheld the judgment in favor of Audi NSU but reversed the judgment in favor of Volkswagen of America. As to Audi, we noted that the NHTSA submissions that the trial court excluded were made on behalf of Volkswagen AG rather than Audi and that there was no agency relationship between Audi and Volkswagen of America concerning such submissions at the time the submissions were made (although such a relationship was later made). Id. at 1487. Thus, we concluded that the knowledge contained in the documents could not be attributed to Audi. As to Volkswagen of America, however, we concluded that the documents were admissions against interest which showed that Volkswagen of America had prior knowledge of the alleged defect. We further concluded that such knowledge was relevant to whether the product was unreasonably dangerous and found that under Oklahoma law it was inconsequential that Volkswagen of America did not design or manufacture the allegedly defective vehicle. Id. at 1487-88. We therefore ordered a new trial on the claims against Volkswagen of America and sent the case back to the district court. Before a new trial could be held, however, the Oklahoma Supreme Court ruled that a verdict in favor of an automobile manufacturer in a strict liability action absolves a retail dealer of liability where the alleged defect is attributable solely to the manufacturing process rather than to any conduct by the distributor. See Braden v. Hendricks, 695 P.2d 1343 (Okla.1985). Relying on Braden, the district court then granted summary judgment in favor of Volkswagen of America. Plaintiffs again appealed, and this time we upheld the judgment. See Robinson v. Volkswagen of America, Inc., 803 F.2d 572 (10th Cir.1986). In doing so we rejected plaintiffs' argument that evidence of prior knowledge by Volkswagen of America took the case outside of the Braden rule. We noted that the jury's determination in favor of Audi established that the placement of the gas tank did not render the Audi 100 LS a defective product, "and this issue cannot be relitigated." Id. at 575. Moreover, because there was no allegation that conduct in the distribution process led to any defect, we found that judgment in favor of Volkswagen of America was proper under Braden. Id.

II. Plaintiffs' Action for Relief From the Judgment.

In 1989, the plaintiffs filed the complaint that forms the basis of this action. Jurisdiction was alleged under the court's "inherent and continuing jurisdiction over its judgments." Aplt.App. at 3. The complaint alleged that during the trial the defendants had intentionally or recklessly misrepresented and failed to disclose a close corporate relationship between Volkswagen AG and Audi NSU (including Audi NSU's predecessor Auto Union GmbH). ² The allegations focused on statements made to the court by Myron Shapiro, Audi NSU's attorney, concerning the admissibility of the Volkswagen AG NHTSA submissions. Plaintiffs pointed out that Mr. Shapiro argued that the Volkswagen AG submissions were irrelevant to the claims against Audi NSU and that he made certain statements in support of that argument, including an assertion that Volkswagen AG had nothing to do with the design, manufacture or sale of the subject Audi 100 LS. Aplt.App. at 20 (Complaint p 46-51). Plaintiffs alleged that these statements were either false or misleading in light of the actual relationship between these companies, which plaintiffs maintained was one of "near alter ego." Id. at 9. According to plaintiffs, the misrepresentations were part of a scheme to deceive the court and were designed to conceal the relationship between Volkswagen AG and Auto Union or Audi NSU and thereby prevent any admissions of Volkswagen AG from being introduced into evidence against Audi at the previous trial. Aplt.App. at 152. The complaint alleged that...