Roger Edwards, LLC v. Fiddes & Son Ltd.

United States Court of Appeals
For the First Circuit

No. 05-1306

ROGER EDWARDS, LLC,

Plaintiff, Appellant,

v.

FIDDES & SON LTD.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE

[Hon. David M. Cohen, U.S. Magistrate Judge]

Before

Boudin, Chief Judge,
Selya, Circuit Judge,
Siler,* Senior Circuit Judge.

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.

October 31, 2005

*
Of the Sixth Circuit, sitting by designation.
 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

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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.

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 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

1
The magistrate judge also imposed sanctions on Roger Edwards'
counsel for making the motion, which are the subject of a separate
appeal not now before this court. A separate motion, which we will
decide later, seeks sanctions for the filing of the present appeal.
2
In its reply brief, Roger Edwards interprets one statement in
a First Circuit case as suggesting that our review under Rule

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 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

60(b)(6) is entirely plenary, see Simon v. Navon, 116 F.3d 1, 2
(1st Cir. 1997), but such a suggestion is at odds with ample
precedent (examples are cited in text), and in any event the Simon
court was engaging in review of purely legal issues.

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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 (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. 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

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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).

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 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 reopen the judgment for newly discovered

evidence, Fed. R. Civ. P. 60(b)(2), but only if the evidence could

not have been discovered through the exercise of due diligence,

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id.; Lepore v. Vidockler, 792 F.2d 272, 274 (1st Cir. 1986), and

the new evidence "would probably have changed the outcome," Hoult

v. Hoult, 57 F.3d 1, 6 (1st Cir. 1995). Roger Edwards did not

invoke this exception.

By contrast, fraud perpetrated in the course of

litigation interferes with the process of adjudication, and it is

this kind of litigation-related fraud that principally concerns

Rule 60(b)(3)'s fraud provision. Once such fraud is proved, the

judgment may be set aside merely upon the movant's showing that the

fraud "'substantially interfered with [the movant's] ability fully

and fairly to prepare for, and proceed at, trial.'" Tiller v.

Baghdady, 294 F.3d 277, 280 (1st Cir. 2002) (quoting Anderson, 862

F.2d at 926). This is a far less demanding burden than showing

that a different result would probably have ensued.

The case law under Rule 60(b)(3) does not often

articulate this distinction between "out of court" conduct and

trial-related conduct. But the vast bulk of reported fraud cases

under Rule 60(b), whether under subsection (3) or (6), involve

fraud or misstatements perpetrated in the course of litigation or

other misconduct aimed directly at the trial process; those few

litigants who seek to utilize Rule 60(b) fraud motions to redress

non-litigation conduct are typically rebuffed at the threshold.

A good example of the latter is Optimal Health Care

Servs., Inc. v. Travelers Ins. Co., 801 F. Supp. 1558, 1561 (E.D.

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Tex. 1992), where a Texas district court declared that to allow a

Rule 60(b)(3) fraud claim on the basis of "the fraud underlying

[the plaintiffs'] claim" would "impermissibly give those plaintiffs

a second bite at the apple." And where treatises describe the kind

of conduct that permits a Rule 60(b) fraud motion to reopen a

judgment, they ordinarily identify conduct such as perjury, forged

evidentiary documents, or bribery of judge or jury as paradigmatic

grounds for such motions, with no mention of non-litigation-related

conduct. E.g., James & Hazard, Civil Procedure § 12.14, at 678 (3d

ed. 1985).3

Roger Edwards' allegations of mislabeling or inadequate

certifications, trumpeted in its expert affidavit, relate to the

commercial conduct of Fiddes. As Roger Edwards points out, there

are complex regulations bearing both on importing and distributing

products like the waxing materials sold by Fiddes; it would not be

surprising if there were small deviations from the regulations, and

perhaps large ones. Proving them might have assisted Roger Edwards

in pursuing its claims and defenses, but it was Roger Edwards'

obligation to use discovery to seek out such before or during the

litigation.

3
Some conduct may straddle the line. Cf. Jordan v. Paccar,
Inc., 97 F.3d 1452 (table), 1996 WL 528950, at **10 (6th Cir. Sept.
17, 1996) (per curiam) (unpublished opinion) (hypothesizing that "a
one-week document retention policy for information relating to
products liability litigation would obviously constitute 'other
misconduct' within the meaning of Rule 60(b)(3)").

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 Roger Edwards devotes much of its brief on appeal to

arguing that it could not have unearthed the alleged deficiencies

in labeling or certification prior to trial. We see no reason why

not; obviously it had the labels, and the same expert could easily

have been retained prior to trial. In any event, we do not regard

newly discovered instances of commercial wrongdoing as encompassed

by Rule 60(b)(3); if useful at trial, such episodes must be

unearthed by discovery or presented after trial under the stringent

conditions of Rule 60(b)(2), which Roger Edwards does not claim to

have satisfied.

We turn now to the three specific alleged false

statements that were made in the course of litigation (or in one

case at least arguably so) and thus are possible candidates under

Rule 60(b)(3). To set aside a verdict for fraud under Rule

60(b)(3), a litigant must "present the district court with 'clear

and convincing evidence' that the claimed fraud . . . occurred,"

Tiller, 294 F.3d at 280 (citing Anderson, 862 F.2d at 926)--that

is, that the statement was made and was fraudulent--and prove that

any alleged fraud "'substantially interfered with [the litigant's]

ability fully and fairly to prepare for, and proceed at, trial,'"

id. (quoting Anderson, 862 F.2d at 926). We begin with the first

two allegedly false statements, which are closely related.

Under Maine law a buyer can in certain limited

circumstances revoke its acceptance of goods already sold and

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delivered to it. Me. Rev. Stat. Ann. tit. 11, § 2-608 (West 2005).

To defeat Fiddes' counterclaim for payment with respect to goods

delivered, Roger Edwards' counsel wrote Fiddes on December 13,

2002, saying that Roger Edwards had "recently found considerable

evidence of nonconformity to US law" with respect to "all Fiddes

products" purchased by Roger Edwards and that Roger Edwards revoked

its acceptance of those products on grounds of product defects and

Fiddes' misrepresentations.

Fiddes replied on December 16, rejecting the "attempted

revocation" as "unreasonably late and without any basis"; it also

denied generally that it or its products were in violation of any

laws. This general denial is now claimed by Roger Edwards to be a

fraudulent "misrepresentation . . . of an adverse party" warranting

relief under Rule 60(b)(3). In other words, Roger Edwards asserts

that this formal denial (that Fiddes or its products were in

violation of law) was both fraudulent and that it substantially

interfered with the presentation of Roger Edwards' case.

The second allegedly fraudulent statement echoes the

first. Roger Edwards, in opposing Fiddes' first motion for summary

judgment, submitted a statement of material facts in December 2002,

see D. Me. R. 56(c), maintaining that it had withdrawn its

acceptance of the delivered goods and asserting that "[t]he

product" lacked certification for U.S. trade, a point elaborated

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upon in a Roger Edwards affidavit. Fiddes replied in its own

filing in January 2003 by stating among other things:

The Defendant qualifies the Plaintiff's
[Statement of Material Facts] ¶ 34 by stating
that Fiddes expressed its refusal to recognize
the Plaintiff's attempt at revocation and
confirmed that Fiddes' goods complied with
U.S. laws.

Roger Edwards argues that but for the allegedly false

statements of compliance by Fiddes in its December 2002 letter and

January 2003 court papers, Roger Edwards would not have withdrawn

its revocation of acceptance defense (supposedly in March 2003).

But in denying the Rule 60(b) motion, the magistrate judge

reiterated his original ruling that the December 2002 revocation

was itself too late as a matter of law. On that premise, the

subsequent withdrawal of the revocation was irrelevant.4

Roger Edwards also implies that the December 2002 and the

January 2003 statements deterred it from asserting other possible

claims or defenses by, for example, forestalling discovery into

other possible claims. But the discovery period, having ended in

October 2002, was long over by the time these alleged misstatements

were made. To warrant a serious inference that the case would have

4
Roger Edwards could have contested the magistrate judge's
premise that December 2002 was too late to revoke acceptance, but
it did not do so on the original appeal after the ruling was first
made, and to the extent it has raised the issue in the form of an
equitable estoppel argument in this appeal, this argument is
forfeit, having been omitted from the original Rule 60(b) motion.
See Daigle v. Me. Med. Ctr., 14 F.3d 684, 687-88 (1st Cir. 1994).

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proceeded differently but for the statements at issue, something

far more specific and telling is required than general speculation.

Roger Edwards lastly invokes a case-law presumption that

a purposefully fraudulent statement interferes with litigation,

Anderson, 862 F.2d at 926. But putting aside the lack of "clear

and convincing evidence" of fraud, any such presumption can be

overcome by "a clear and convincing demonstration" that the

statement in fact had no impact upon the litigation. Id. This is

just what the magistrate judge found in this case as to the first

two statements. We have been given no sound reason to disagree.

Although we need not resolve the issue, it would be

difficult to attach the label "fraud" to either of these two

statements. Whether "true" or not, they are the kind of bland

denials that the law was violated that would not be relied upon by

any serious adversary. Roger Edwards did not accept the statements

as true, but forged ahead with its revocation defense, only

withdrawing revocation, if its briefs are to be credited, after it

lost the summary judgment motion on Fiddes' counterclaim in

February 2003. In any event, Roger Edwards has made no plausible

argument that either statement, even if "fraudulent,"

"'substantially interfered with [its] ability fully and fairly to

prepare for, and proceed at, trial.'" Tiller, 294 F.3d at 280

(quoting Anderson, 862 F.2d at 926).

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 Fiddes made the third allegedly fraudulent set of

statements in June 2003, when shortly before trial it filed a

second motion for summary judgment, occasioned by a then-recent

computation of damages proffered by Roger Edwards in the pretrial

process. This computation, addressed to Roger Edwards' claims then

scheduled for trial, sought million-dollar damages for lost

profits, services rendered, set-up and start-up costs, goodwill,

and product storage and disposal costs caused "by improper

labeling, documentation and unsellable product."

In support of its second motion, Fiddes argued inter alia

that Roger Edwards (1) could not recover storage and disposal costs

because it had accepted the goods; (2) had not made a timely

revocation "assuming for the sake of argument that [the product]

was defective"; and (3) as "the importer" had been responsible

under U.S. law for ensuring that the goods met the requirements for

admissibility. Roger Edwards claimed in its Rule 60(b) motion that

these arguments amounted to a third fraudulent statement.

The first statement is merely a conclusion, and the

second assumes arguendo a product defect rather than denies it. On

appeal, Roger Edwards focuses upon the third assertion, namely,

that Roger Edwards, as the "importer" of the product, had to make

sure that the product was compliant. Whatever the accuracy of this

pronouncement, it is in essence the assertion of a legal position,

and Roger Edwards' counsel was free to consult the law books and

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(subject, of course, to the strictures of Fed. R. Civ. P. 11)

assert the contrary. Statements of this kind are not what Rule

60(b)(3) means by "fraud . . . or misstatement."

Finally, Roger Edwards cites United States v. Baus, 834

F.2d 1114 (1st Cir. 1987), for the view that its allegations of

fraud and impact on the litigation should be accepted as true by

this court and reviewed only for their legal sufficiency for

purposes of determining whether the lower court erred in denying

its request for discovery and for an evidentiary hearing in

connection with the Rule 60(b) motion. Baus dealt with

"uncontested" allegations, id. at 1122; there is no requirement

under Rule 60(b) that contested allegations automatically get an

evidentiary hearing regardless of plausibility or import. Even

apart from the latitude allowed to the trial judge in such matters,

see Pearson v. First N.H. Mortgage Corp., 200 F.3d 30, 35 (1st Cir.

1999), Roger Edwards points to nothing in this case that could be

unearthed by discovery or proved in an evidentiary hearing that

would alter our analysis.

Affirmed.

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