Sussex Drug Products v. Kanasco, Ltd.
| Decision Date | 19 December 1990 |
| Docket Number | No. 90-5269,90-5269 |
| Citation | 920 F.2d 1150 |
| Parties | SUSSEX DRUG PRODUCTS, a corporation of the State of New Jersey, Appellee, v. KANASCO, LTD., a corporation of the State of Maryland, a/t/a/d/b/a John D. Copanos & Sons, Inc.; John D. Copanos & Sons, Inc., a corporation of the State of Florida; and John D. Copanos, an individual. Appeal of KANASCO, LTD. and John D. Copanos & Sons, Inc. |
| Court | U.S. Court of Appeals — Third Circuit |
Clarkson S. Fisher, Jr. (argued), Ober, Kaler, Grimes & Shriver, Edison, N.J., for appellants Kanasco, Ltd., and John D. Copanos & Sons, Inc.
Robert J. Candido (argued), Thomas L. Weisenbeck, Jan C. Walker, Hannoch & Weisman, Roseland, N.J., for appellee Sussex Drug Products Co.
Before SLOVITER, BECKER and WEIS, Circuit Judges.
In this suit growing out of the sale of adulterated pharmaceuticals, the district court entered partial summary judgment awarding compensatory damages for breach of contract and warranties and certified the judgment under Federal Rule of Civil Procedure 54(b). Remaining for disposition is a count for punitive damages based on the same sales. Because the partial summary judgment is not final, we will dismiss the appeal.
For a number of years, plaintiff Sussex Drug Products, purchased drugs for veterinary use manufactured by defendant Kanasco Ltd. and distributed by defendant John D. Copanos & Sons, Inc. In November 1986 the United States began forfeiture proceedings, alleging adulteration of quantities of those drugs in the plaintiff's possession. These proceedings were transferred to the Western District of Missouri and consolidated with similar actions filed in other districts.
In December 1986 plaintiff filed a civil action for damages in the District Court of New Jersey. After the District Court of Missouri granted the United States' motion for partial summary judgment on the issue of adulteration in the forfeiture cases, plaintiff here moved for summary judgment on liability in the New Jersey District Court citing issue preclusion. The District Court granted summary judgment on counts 1-4 seeking damages for breach of contract as well as various implied and expressed warranties. Those counts named both corporate defendants, but not the individual defendant.
Not included in the judgment was count five, alleging fraud on the part of the corporate defendants and the individual defendant John D. Copanos, president of the two companies. In addition to compensatory damages, this latter count asked for punitive damages.
Following a bench trial on damages, the District Court of New Jersey found the following to be due:
Purchase price of adulterated merchandise .... $ 721,311.10
Storage fees for adulterated merchandise ......... 26,130.00
Lost profits .................................... 252,692.42
Prejudgment interest ............................ 168,136.61
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TOTAL .............................. $1,168,270.13
Judgment in the amount of $1,168,270.13 was entered against the defendants Kanasco, Ltd. and John D. Copanos & Sons, Inc.
Plaintiff asked the court to certify the partial judgment as final under Federal Rule of Civil Procedure 54(b), so as to permit enforcement. The district court granted the motion, concluding that the claim for fraud was discrete from those asserting breach of contract and warranty and that plaintiff had a legitimate concern about the collectability of the judgment against the corporate defendants. After appealing to this court, defendants moved for summary reversal contending that the Rule 54(b) certification was improper. That matter was consolidated with the proceedings on the merits.
On appeal, defendants renew their jurisdictional arguments and assert on the merits that the district court erred in using the interlocutory partial summary judgment of the Missouri court as the basis for issue preclusion. Although the use of an interlocutory order for issue preclusion is a matter of grave concern, we need not address that point here because the circumstances preclude the use of Rule 54(b) to confer jurisdiction.
Disfavoring piecemeal appeals is a long-standing policy of the federal courts. Rule 54(b), however, was designed to remedy the harsh effects that sometimes result from a delayed appeal in litigation presenting multiple claims or multiple parties.
The multiple party aspect of Rule 54(b) applies only if the district court's judgment disposes of all of the rights or liabilities of one or more of the parties. In the matter at hand, the remaining count for fraudulent misrepresentation affects all of the defendants. None of the parties has been removed from the case. The issue here is whether the district court's order is a final judgment as to a single claim in a multiclaim action.
Rule 54(b) provides in pertinent part:
"When more than one claim for relief is presented in an action, ... the court may direct the entry of a final judgment as to one or more but fewer than all of the claims ... only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment."
If such an order is properly entered, the certified judgment may be appealed to the Court of Appeals, subject, however, to scrutiny of the Rule 54(b) determination. In deciding whether to grant Rule 54(b) certification, the district court must address two distinct issues. First, whether "it is dealing with a 'final judgment' ... in the sense that it is 'an ultimate disposition of an individual claim entered in the course of multiple claims action.' " Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 7, 100 S.Ct. 1460, 1464, 64 L.Ed.2d 1 (1980). If that hurdle is cleared, the district court must exercise its discretion to determine that the matter is "ready for appeal ... tak[ing] into account judicial administrative interests as well as the equities involved." Id. at 8, 100 S.Ct. at 1465.
Our standard of review depends on which stage of the district court's decision making is challenged. In considering a ruling on finality where, as here, the facts are not in dispute, our review is plenary. "The District Court cannot, in the exercise of its discretion, treat as 'final' that which is not 'final' within the meaning of Sec. 1291." Sears Roebuck & Co. v. Mackey, 351 U.S. 427, 437, 76 S.Ct. 895, 900, 100 L.Ed. 1297 (1956) (emphasis in original). "The district court is not empowered to enter judgment on a decision which is not final." Bogosian v. Gulf Oil Corp., 561 F.2d 434, 440 (3d Cir.1977); see also 10 C. Wright, A. Miller & M. Kane, Federal Practice & Procedure Sec. 2655 (2d ed. 1983) ().
If the judgment is final, we review the district court's decision to certify for an abuse of discretion. We must "scrutinize the district court's evaluation of such factors as the interrelationship of the claims so as to prevent piecemeal appeals in cases which should be reviewed only as single units." Curtiss-Wright, 446 U.S. at 10, 100 S.Ct. at 1466. Once those concerns have been met, "the discretionary judgment of the district court should be given substantial deference." Id.
The first question is whether the judgment entered was "final" for purposes of Rule 54(b). Finality is defined by the requirements of 28 U.S.C. Sec. 1291, which are generally described as ending "the litigation on the merits and leav[ing] nothing for the court to do but execute the judgment." Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 275, 108 S.Ct. 1133, 1136, 99 L.Ed.2d 296 (1988) (quoting Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945)). Rule 54(b) does not alter this definition, but allows a judgment to be entered if it has the requisite degree of finality as to an individual claim in a multiclaim action. The partial adjudication of a single claim is not appealable, despite a rule 54(b) certification. Aetna Casualty & Surety Co. v. Giesow, 412 F.2d 468, 470 (2d Cir.1969). Consequently, it is necessary to consider what constitutes a "claim" within the meaning of Rule 54(b).
After extensive surveys of case law, leading commentators agree that uncertainty is the rule: "The line between deciding one of several claims and deciding only part of a single claim is sometimes very obscure." 10 C. Wright, A. Miller & M. Kane, Federal Practice & Procedure Sec. 2657, at 60-61 (2d ed. 1983); 6 J. Moore, W. Taggart & J. Wickers, Moore's Federal Practice p 54.33, at 54-197 (1990) (). Our Court has acknowledged the lack of consensus. In Allegheny County Sanitary Auth. v. EPA, 732 F.2d 1167, 1172 (3d Cir.1984), we observed that "[t]here is no definitive test to determine whether more than one claim is before the court." Similarly, RePass v. Vreeland, 357 F.2d 801, 805 (3d Cir.1966), noted the "difficulty of providing simple criteria to resolve this onerous problem."
A single definition of claim cannot resolve the variables presented by each case. We shall, therefore, follow the example of the Supreme Court noting that Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 743 n. 4, 96 S.Ct. 1202, 1206 n. 4, 47 L.Ed.2d 435 (1976).
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