Schreiber v. Allis-Chalmers Corp.

• Decision Date: 24 March 1978
• Docket Number: No. 77-4192.,77-4192.
• Citation: 448 F. Supp. 1079
• Parties: Lawrence SCHREIBER, Plaintiff, v. ALLIS-CHALMERS CORPORATION, Defendant.
• Court: U.S. District Court — District of Kansas

448 F. Supp. 1079

Lawrence SCHREIBER, Plaintiff, v. ALLIS-CHALMERS CORPORATION, Defendant.

No. 77-4192.

United States District Court, D. Kansas.

March 24, 1978.

COPYRIGHT MATERIAL OMITTED

William Larry Latham, Jackson, Miss., R. Daniel Lykins, Topeka, Kan., for plaintiff.

Heber Ladner, Jr., Angelos J. Dorizas, Jackson, Miss., Frank Saunders, Jr., Overland Park, Kan., for defendant.

MEMORANDUM AND ORDER

ROGERS, District Judge.

This is a products liability action which comes before the Court on the motion of defendant for summary judgment on the ground plaintiff's claim is barred by the applicable statute of limitations. Oral argument has been heard on the motion, and the Court is prepared to rule.

This case raises difficult questions of jurisdictional theory and conflict of laws. Thus we will recount the procedural history of the case at some length. The complaint initiating this case was filed June 16, 1977, in the Southern District of Mississippi. It alleges that plaintiff is a resident of Soldier, Kansas, who was injured near Soldier, Kansas by a product manufactured by defendant. Defendant is a Delaware corporation which has its principal business headquarters in Wisconsin. The alleged injury took place June 22, 1971. At this juncture it is important to note that plaintiff's claim would have been barred by the applicable statutes of limitation had the action been brought in any venue of "residence" or in the district where the claim arose, the District of Kansas.

Mississippi, however, has six-year statutes of limitation governing tort and warranty actions. The action was filed in Mississippi six days before the six-year period had run. Service was had on defendant's registered agent in Mississippi pursuant to Sections 79-1-27 and 79-1-29, Miss.Code 1972, which provide for such service upon any corporation "found doing business" in Mississippi, "whether the cause of action accrued in this state or not."

On July 5, 1977, defendant Allis-Chalmers moved for a change of venue pursuant to 28 U.S.C. § 1404. Defendant alleged generally the lack of any connection between the State of Mississippi and the cause of action or any party thereto, and requested transfer to the district of Kansas. On the same date defendant answered, challenging the jurisdiction of the Mississippi court and pleading various affirmative defenses.

On July 26, 1977, the motion for change of venue was overruled and denied by the district court. On August 4, defendant requested permission to take an interlocutory appeal from the denial of transfer, pursuant to 28 U.S.C. § 1292(b). This too was denied August 23 and discovery began. Defendant then filed a petition with the Fifth Circuit Court of Appeals for a writ of mandamus to force the requested transfer. This was granted by minute order September 13; the Mississippi district court was thus ordered to transfer the case to the District of Kansas. Copies of the Fifth Circuit mandate were filed in the Southern District of Mississippi September 15. On September 29 defendant filed a motion to have the district court comply with the appellate mandate and cause the case file to be sent to the District of Kansas. The motion was granted the same day, and all relevant materials were received by the clerk of this court October 3, 1977.

Upon transfer defendant made clear its intent to rely upon the Kansas statutes of limitation as a bar to the action and secured an order staying discovery pending resolution of the issue. Defendant filed an amended answer setting up the Kansas limitations statutes, and filed the present motion for summary judgment. Defendant's argument is bifurcated: first, it challenges the existence of jurisdiction to adjudicate the case in Mississippi. Of course, if Mississippi could not have assumed jurisdiction, it could not have applied its statutes of limitation to plaintiff's claim. Defendant's second contention is that, even if jurisdiction were properly assumed by Mississippi, that state would nevertheless have applied the shorter Kansas statutes of limitation, K.S.A. §§ 60-513 and 84-2-725, and would have dismissed the action. Plaintiff argues that Mississippi would have assumed personal jurisdiction over defendant, and would have applied its six-year statutes, Sections 75-2-725 and 15-1-49, Miss.Code 1972.

We must preface our analysis of the issues raised by the present motion with a frank admission of our antipathy for plaintiff's position. The necessary result of plaintiff's argument, as it will be discussed below, is that a federal district court sitting in Kansas must entertain a suit which would have been dismissed out of hand had it been brought here, or brought in a Kansas state court and removed by the defendant. We are aware that this case appears on our docket only through the unilateral act of defendant in securing transfer; yet while this may in legal terms merely bestow upon us the functions of a Mississippi federal court sitting elsewhere, the practical effect of the ruling plaintiff urges is the defeat of the legislative policy of Kansas, as expressed in K.S.A. §§ 60-513 and 84-2-725, through utilization of the laws of a sister state apparently unconcerned with effecting such interference. Were this an isolated instance, a "fluke of the law," our concern would be limited to the interests of the defendant in its attempt to avoid all liability. Yet we are cognizant that plaintiff's counsel has employed similar arguments, and has succeeded in resurrecting a claim "stale" in Kansas, in at least one other case—Steele v. G. D. Searle, the various reported orders in which will be discussed below. This fact, and the ready availability of transfer as was effected in this case, raises the grim possibility that many such cases may appear on the dockets of Kansas federal courts, and that the effect of the Kansas limitations statutes may, by appropriate procedural maneuvering, be avoided time and again. It may fairly be called an aberration when the principles developed to accommodate the rule of Erie R.R. Co. v. Thompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), intended to avoid the evils of forum-shopping, provide a link in plaintiff's argument that he has an unqualified right to forum-shop for an outcome favorable to him. On the other hand, some of the principles underpinning plaintiff's argument undoubtedly have salutory effects in the vast majority of cases, and perhaps should not be rejected for that reason. With this consideration of conflicting policies in mind, we proceed to examine the legal arguments of the parties before us.

I. THE LAW TO BE APPLIED: KLAXON AND THE EFFECT OF CHANGE OF VENUE

Plaintiff's argument for the application of the Mississippi statutes of limitation in this court builds upon two hotly contested assumptions: that a hypothetical state court in Mississippi would have had jurisdiction to entertain this action originally, and that such a court would automatically apply its own limitations statutes to any case brought in Mississippi. Both of these points will be dealt with in detail below; for purposes of this section, however, we will assume both are true statements of the law. The argument proceeds that the process and personal jurisdiction of the federal district court in Mississippi is coextensive with that of the hypothetical state court, under general principles of federal diversity jurisdiction. With this there can be no quarrel, for we note that the citizenship of the parties and the amount claimed in apparent good faith by the plaintiff satisfies the statutory prerequisites for federal jurisdiction under 28 U.S.C. § 1332; the statutory requirements for venue are met under 28 U.S.C. § 1391(a) and the special "corporate venue" provisions of 28 U.S.C. § 1391(c).

The argument proceeds that Mississippi state law would have bound the Mississippi federal court under the Erie doctrine, as interpreted in Klaxon v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Klaxon commands that a federal court apply the choice-of-law rules of the state in which it sits; thus the Mississippi federal court would have been bound by Mississippi choice-of-law rules with regard to statutes of limitation. Defendant does not dispute this. Although plaintiff contends Mississippi treats limitations statutes as "procedural" for choice-of-laws purposes, it is painfully evident that such statutes can be a factor in forum selection, and thus are not mere "housekeeping" rules exempt from Erie under Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). While Klaxon may lead to the application of the law of a state which has no interest in an action, and hence to forum-shopping between states (the present case is a perfect example), attempts to depart from the strict Klaxon rule have not met with approval from the Supreme Court. Cf. Day & Zimmerman, Inc., v. Challoner, 423 U.S. 3, 96 S.Ct. 167, 46 L.Ed.2d 3 (1975). Thus if a Mississippi state court would apply the Mississippi statutes of limitation to this action, a Mississippi federal court must follow this practice.

Plaintiff proceeds to argue that Mississippi's presumed application of its own statutes of limitation to this action must be observed by this court following a transfer at the request of a defendant under 28 U.S.C. § 1404(a). For this proposition plaintiff relies upon Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) and the rule announced therein that "the transferee court must be obligated to apply the state law that would have been applied had there been no change of venue." Id., 376 U.S. at 639, 84 S.Ct. at 821. This means a § 1404 transfer will effect "a change in courtrooms, but not a change of law." Wright, Law of Federal Courts § 44 at 187 (3d ed. 1976) hereinafter Wright.

Defendant, however, points to the following qualifying language found in the Van Dusen opinion:

In so ruling, however, we do not and

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