Roger Edwards, LLC v. Fiddes & Son Ltd., 05-1306.

• Decision Date: 31 October 2005
• Docket Number: No. 05-1306.,05-1306.
• Citation: 427 F.3d 129
• Parties: ROGER EDWARDS, LLC, Plaintiff, Appellant, v. FIDDES & SON LTD., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

427 F.3d 129

ROGER EDWARDS, LLC, Plaintiff, Appellant, v. FIDDES & SON LTD., Defendant, Appellee.

No. 05-1306.

United States Court of Appeals, First Circuit.

Heard August 3, 2005.

Decided October 31, 2005.

COPYRIGHT MATERIAL OMITTED

Thomas F. Hallett with whom Thomas F. Hallett Law Offices, P.A. was on brief for appellant.

Ronald W. Schneider, Jr. with whom David A. Soley and Bernstein, Shur, Sawyer & Nelson were on brief for appellee.

Before BOUDIN, Chief Judge, SELYA, Circuit Judge, SILER,^* Senior Circuit Judge.

BOUDIN, Chief Judge.

In the district court, plaintiff-appellant Roger Edwards, LLC ("Roger Edwards"), a Maine limited liability company, sought to undo a previous defeat, see Roger Edwards, LLC v. Fiddes & Sons, Ltd., 387 F.3d 90 (1st Cir.2004), by alleging fraudulent conduct on the part of defendant-appellee Fiddes & Son, Ltd. ("Fiddes"), a British corporation. The district court denied Roger Edwards' motion under Fed.R.Civ.P. 60(b) for relief from the original judgment. Roger Edwards then filed this new appeal. The background events follow.

Roger Edwards is a distributor of wax products (primarily furniture wax). Fiddes manufactures such products, some of which are imported into this country. On March 14, 2002, Roger Edwards filed a complaint in a Maine state court claiming that Fiddes breached the terms of an alleged distribution agreement between the parties by selling its wax products directly into Roger Edwards' "protected territory" or allowing others to do so. Fiddes removed to federal court, invoking diversity jurisdiction.

Fiddes then defended against Roger Edwards' claim by arguing that there was no contract between the two parties or, in the alternative, that if there were a contract Fiddes did not breach it and it had been terminated. Fiddes also counterclaimed for amounts owed to it on unpaid invoices; Roger Edwards defended against Fiddes' counterclaim by arguing that it had revoked acceptance of the invoiced goods in December 2002 because of "violation by Fiddes of multiple U.S. laws and regulations."

After extensive discovery, the magistrate judge (presiding over the case with the consent of the parties, see 28 U.S.C. § 636(c) (2000)) granted partial summary judgment to Fiddes on February 14, 2003. The judge ruled that if there were a dealership agreement (a question left for the jury), Roger Edwards had terminated it on November 19, 2001, and Fiddes had acquiesced in the termination. The magistrate judge also granted summary judgment to Fiddes on its counterclaim for unpaid invoices for past deliveries: he found that Roger Edwards' "attempted revocation of acceptance more than a year after the plaintiff discovered the asserted basis for the revocation, and seven months after this action was filed, is untimely and thus ineffective."

This disposition left open Roger Edwards' breach of contract claim for the period prior to the November 19, 2001, termination. A second grant of partial summary judgment in favor of Fiddes shortly before trial in July 2003 sharply limited Roger Edwards' possible theories of recovery as to this claim. Ultimately, the jury found after trial that an agreement had existed between the parties but that Fiddes had not breached it. Judgment was entered in favor of Fiddes on its counterclaim for $17,286 plus interest and costs.

Roger Edwards appealed certain aspects of the judgment (but not the partial summary judgment against it on Fiddes' counterclaim). This court affirmed, saying—with misplaced optimism—that it was "put[ting] this litigation to a well-deserved rest." Roger Edwards, 387 F.3d at 97. While the original appeal was pending, Roger Edwards filed a Rule 60(b) motion seeking relief from the judgment on grounds of fraud. After our affirmance, the magistrate judge denied the motion, prompting the new appeal by Roger Edwards that is now before us.¹

Nominally, the standard of review for decisions granting or denying Rule 60(b) motions is abuse of discretion. United States v. $23,000 in U.S. Currency, 356 F.3d 157, 165 (1st Cir.2004); Teamsters, Chauffeurs, Warehousemen & Helpers Union, Local No. 59 v. Superline Transp. Co., 953 F.2d 17, 19 (1st Cir.1992); Anderson v. Cryovac, Inc., 862 F.2d 910, 923 (1st Cir.1988). But in practice this means de novo review on issues of abstract law and clear error as to fact findings, deferential review associated with the phrase "abuse of discretion" otherwise being reserved for what might be termed judgment calls (e.g., law application, procedural rulings).²

Rule 60(b) permits a district court to reopen a final judgment for any of six stated reasons, two of which were invoked by Roger Edwards: (3) "fraud ..., misrepresentation, or other misconduct of an adverse party" and (6) "any other reason justifying relief," a catchall sometimes taken to include what is called "fraud on the court." Whatever the precise quality or quantity of misconduct needed to constitute "fraud on the court," it is not remotely present in this case so we need not consider whether, if it were, it would be properly presented under subsection (3) or subsection (6) or both. Compare Simon v. Navon, 116 F.3d 1, 2 (1st Cir.1997), with United States v. Parcel of Land and Residence at 18 Oakwood Street, Dorchester, Mass., 958 F.2d 1, 5 (1st Cir.1992).

The usual reason why litigants urge that their claim is one for "fraud on the court," and arises under Rule 60(b)(6), is that if both conditions are satisfied, the claim is not subject to the one-year limit applicable to ordinary fraud claims under Rule 60(b)(3). Here, however, Roger Edwards brought its motion within one year of the challenged judgment, so it need not have invoked fraud on the court for purposes of avoiding the one-year time limit. Instead, Roger Edwards argues that the showings of prejudice and diligence that the courts have required of Rule 60(b)(3) fraud claims either do not apply in the case of fraud on the court or are at least ameliorated.

The leading discussion of the "fraud on the court" concept appears in Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250 (1944), in which the Court upheld an independent action to set aside a prior judgment; the prior judgment assumed the validity of a patent that had been secured by a complex fraudulent scheme involving manipulation of the patent office by a lawyer. Id. at 240-42, 249-50, 64 S.Ct. 997. Using the concept as a ground for relief under Rule 60(b) itself, primarily to avoid the one-year limitations period, has been a creature of circuit case law, e.g., Parcel of Land and Residence at 18 Oakwood Street, 958 F.2d at 5, and may have created more trouble than it was worth.

The cases have struggled, usually without great success, to provide a useful definition of "fraud on the court." One common version, drawn in part from language in Hazel-Atlas, refers to "an `unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter' involving an officer of the court." Geo. P. Reintjes Co. v. Riley Stoker Corp., 71 F.3d 44, 48 n. 5 (1st Cir.1995) (quoting Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir.1989)). More usefully, in Reintjes we said that "perjury alone ... has never been sufficient." Id. at 49; see also Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2870, at 419-20 (1995).

In any event, "[t]he cases in which it has been found that there was, or might have been, a `fraud upon the court,' for the most part, have been cases in which there was `the most egregious conduct involving a corruption of the judicial process itself.'" Wright, Miller & Kane § 2870, at 418. Wright, Miller and Kane give as examples the "bribery of a judge" or the use of counsel to exert improper personal influence on the court. Id. at 418-19. The quoted language and these examples capture the severity of the conduct needed to escape the limitations deliberately imposed on ordinary motions to obtain relief under Rule 60(b)(3).

None of the statements or omissions alleged by Roger Edwards in the present case remotely involves "an unconscionable scheme" or "the most egregious conduct" designed to corrupt the judicial process. As we will see, some of the statements or omissions have nothing to do with the judicial process at all, and the balance would be at most the routine stuff of claims under Rule 60(b)(3) and are weak examples even of that. Nothing more need be said about "fraud on the court" or Rule 60(b)(6). We turn now to the statements and conduct assailed by Roger Edwards, to consider how they may fare under Rule 60(b)(3).

The basis for Roger Edwards' several Rule 60(b) fraud claims was Fiddes' allegedly fraudulent product labeling and certification practices. Roger Edwards attached to its Rule 60(b) motion an expert affidavit attesting that Fiddes had consistently mislabeled and "fraudulently certified" products sold to Roger Edwards; Fiddes' failure to disclose the defects was, according to Roger Edwards, a species of fraud warranting relief under Rule 60(b)(3). The balance of Roger Edwards' Rule 60(b) motion focused on three specific alleged misrepresentations made by Fiddes during the course of the litigation—misrepresentations made, according to Roger Edwards, to further conceal Fiddes' fraudulent labeling and certification practices.

In parsing Rule 60(b)(3), an initial, and important, distinction to grasp is between fraud or misstatements that are committed during the course of a commercial transaction (such as a false statement about the quality of goods being sold), and fraud or misstatements perpetrated in the course of litigation (such as perjury of a witness or the introduction of a false document into evidence). The former is the subject-matter of litigation, meant to be investigated through the discovery process and resolved by the evidence at trial. True, within one year of final judgment a litigant may move to...