Morel v. DAIMLERCHRYSLER AG

United States Court of Appeals
For the First Circuit

No. 08-1195

CARMEN MOREL ET AL.,

Plaintiffs, Appellants,

v.

DAIMLERCHRYSLER AG,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Francisco A. Besosa, U.S. District Judge]

Before

Lynch, Chief Judge,
Torruella and Selya, Circuit Judges.

David C. Indiano, with whom Seth A. Erbe and Indiano &
Williams, P.S.C. were on brief, for appellants.
David M. Rice, with whom Troy M. Yoshino, Carroll, Burdick &
McDonough LLP, Diego A. Ramos, Roberto Camara Fuertes, José L.
Ramírez Coll, and Fiddler, González & Rodriguez, PSC were on brief,
for appellee.

May 6, 2009
 SELYA, Circuit Judge. This appeal turns on a nuanced

question that lurks at the intersection of federal and state law:

Does an amended complaint that changes the identity of a named

defendant after the expiration of the applicable limitations period

relate back to the date of the commencement of the action? The

district court, after first concluding that the Puerto Rico

relation-back rule controlled the analysis, answered this question

in the negative and jettisoned the action.1 We hold that the

federal relation-back rule applies; that because the conditions to

the operation of the federal rule are satisfied, the amendment

relates back to the date of the commencement of the action; and

that, therefore, the judgment below must be reversed.

I. BACKGROUND

The pertinent facts are largely undisputed. On November

29, 2004, a 1987 Mercedes-Benz 300SDL parked on an inclined street

in Puerto Rico began rolling downhill and crushed a six-month-old

child, Johnathan Román Morel. The infant died that evening.

Alleging that the death resulted from the vehicle's flawed design,

the decedent's family members repaired to court.

1
To be precise, the district court granted partial summary
judgment in favor of this defendant. The order was for partial
summary judgment because one of the plaintiffs, Jean Carlos Román,
is a minor, as to whom the one-year limitations period has not run.
See Cintrón v. Commonwealth, 127 P.R. Dec. 582, 589 (1990). The
district court did, however, certify the partial judgment for
immediate appeal under Federal Rule of Civil Procedure 54(b).

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 Invoking diversity jurisdiction, 28 U.S.C. § 1332(a), the

family members (whose names and exact relationships are immaterial

here) commenced their action in the United States District Court

for the District of Puerto Rico on November 4, 2005. Their

complaint alleged a gallimaufry of product liability theories and

named as a defendant "Daimler-Chrysler," which the complaint

described as "an automobile company incorporated, operated, and

with its principal place of business in Michigan . . . ." The

plaintiffs served Daimler-Chrysler Corporation (DCC) on December

12, 2005, in Auburn Hills, Michigan.

On February 9, 2006, DCC responded to the complaint by

moving for summary judgment on the ground that it had never

manufactured or sold Mercedes-Benz vehicles; and that, therefore,

the plaintiffs had sued the wrong party. DCC noted that a

different entity, Daimler-Benz AG, had manufactured the vehicle

described in the complaint and that DaimlerChrysler AG (DCAG), a

German company, was the successor in interest to Daimler-Benz AG.2

On February 16, 2006, the plaintiffs amended their

complaint as of right, see Fed. R. Civ. P. 15(a), substituting DCAG

2
The motion papers explained that, in 1998, a pact between
Chrysler Corporation and Daimler-Benz AG had created two legally
distinct corporate entities: DCC and DCAG. Under the terms of the
agreement, Chrysler Corporation became known as DCC and continued
to manufacture Chrysler, Dodge, and Jeep motor vehicles. DCAG
(which, in mid-2007, changed its name to Daimler AG) assumed the
business formerly conducted by Daimler-Benz AG, including
proprietorship of its Mercedes-Benz line.

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as the party defendant. DCAG received a copy of the amended

complaint on March 6, 2006. The company was formally served under

the Hague Convention later that month.

The newly-designated defendant moved for partial summary

judgment, see supra note 1, asserting that the adult plaintiffs'

claims were time-barred. The plaintiffs countered that, under Rule

15(c) of the Federal Rules of Civil Procedure, the amended

complaint related back to the date of the commencement of the

action and, thus, their suit was timely.

The district court concluded that a Puerto Rican statute

of limitations conferred substantive rights and that Rule 15(c)

could not be allowed to trump those rights. Morel v.

DaimlerChrysler AG, No. 05-2162, slip op. at 12 (D.P.R. Jan. 10,

2008) (unpublished). Instead, the court applied Puerto Rico's

relation-back rule and determined that the amendment did not relate

back. Id. at 15 (citing P.R. Laws Ann. tit. 32, App. III, R.

13.3). Accordingly, the court granted DCAG's motion and entered a

final (though partial) judgment under Rule 54(b). This appeal

ensued.

II. ANALYSIS

We afford de novo review to a district court's entry of

summary judgment. See Dávila v. Corporación de P.R. Para La

Diofusión Pública, 498 F.3d 9, 12 (1st Cir. 2007). Because this is

a diversity case featuring an array of tort claims rooted in local

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law, we look to the law of the forum (here, Puerto Rico) for the

applicable statute of limitations. See Guaranty Trust Co. v. York,

326 U.S. 99, 110 (1945). Under Puerto Rico law, the limitations

period for tort claims is one year. P.R. Laws Ann. tit. 31,

§ 5298. Since the fatal accident took place on November 29, 2004,

the limitations period expired on November 29, 2005.

The plaintiffs sued on November 4, 2005, well within the

one-year period. But that complaint did not mention DCAG. They

filed their amended complaint — the first pleading targeting DCAG

as a defendant — on February 16, 2006. That was after the

expiration of the one-year period. Thus, the question reduces to

whether the amended complaint relates back to the time of filing

the initial complaint.

In the first instance, the answer to this question hinges

on whether federal or state law furnishes the controlling relation-

back rule. Consequently, we start there.

DCAG maintains that Puerto Rico's statute of limitations

is substantive. See, e.g., Rodriguez Narváez v. Nazario, 895 F.2d

38, 43 (1st Cir. 1990). Building on that foundation, it reasons

that because an application of a federal relation-back rule would

allow the plaintiffs to skirt that temporal bar, Puerto Rico's

relation-back rule must control. Its argument boils down to the

following construct: if relation back under a federal standard

would require a party to defend a claim that would otherwise be

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barred by operation of a substantive state rule, then the state

rule must take precedence. We do not decide, but accept arguendo,

that the claim would otherwise be barred by the Puerto Rico rule

(regardless of whether that rule is characterized as substantive or

procedural).

This mode of "outcome determination" analysis has some

footing in the Supreme Court's diversity jurisprudence. See, e.g.,

York, 326 U.S. at 109. But "'[o]utcome determination' analysis was

never intended to serve as a talisman." Hanna v. Plumer, 380 U.S.

460, 466-67 (1965) (citing Byrd v. Blue Ridge Rural Elec. Coop.,

356 U.S. 525, 537 (1958)).

In fact, the Supreme Court has held that a federal rule

controls notwithstanding that an inconsistent state rule would, if

applied, have resulted in a different outcome. Id. at 463-64.

Although Chief Justice Warren acknowledged that a federal court

"need not wholly blind itself to the degree to which the Rule makes

the character and result of the federal litigation stray from the

course it would follow in state courts," id. at 473, he made clear

that such a Civil Rule ordinarily should take precedence. His

opinion stated:

To hold that a Federal Rule of Civil Procedure
must cease to function whenever it alters the
mode of enforcing state-created rights would
be to disembowel either the Constitution's
grant of power over federal procedure or
Congress' attempt to exercise that power in
the [Rules] Enabling Act.

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Id. at 473-74 (footnote omitted).

Hanna held that the "substance/procedure" dichotomy,

derived from the decision in Erie R.R. Co. v. Tompkins, 304 U.S. 64

(1938), and York's "outcome determination" test do not apply to

matters covered by the Federal Rules of Civil Procedure. Hanna,

380 U.S. at 466-73. Rather, as long as a Rule is consonant with

both the Constitution and the Rules Enabling Act, 28 U.S.C. § 2072,

that Rule must be given effect "regardless of contrary state law."

Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 n.7

(1996); see also Hoyos v. Telecorp Comm., Inc., 488 F.3d 1, 5 (1st

Cir. 2007).

In the case at hand, Rule 15(c) is squarely on point.

For aught that appears, the Rule was properly promulgated and there

is no credible basis for impugning its constitutionality.

Nevertheless, DCAG asseverates that applying Rule 15(c) in the

circumstances of this case would contravene the Rules Enabling Act,

which declares in part that a Federal Rule of Civil Procedure

"shall not abridge, enlarge, or modify any substantive right." 28

U.S.C. § 2072. We reject that asseveration.

This language does not preclude the use of Rule 15(c) in

the instant case. The test of whether a challenged Rule violates

the statutory prohibition turns on the characterization of that

Rule; if the Rule relates directly to the practice and procedure of

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the district court, it does not violate that section of the

statute. See Hanna, 380 U.S. at 464.

Rule 15(c) is of that genre. It "is a truly procedural

rule because it governs the in-court dispute resolution processes

rather than the dispute that brought the parties into court;

consequently, it does not transgress the Rules Enabling Act."

Johansen v. E.I. Du Pont De Nemours & Co., 810 F.2d 1377, 1380 (5th

Cir. 1987); accord Brown v. E.W. Bliss Co., 818 F.2d 1405, 1409

(8th Cir. 1987); Santana v. Holiday Inns, Inc., 686 F.2d 736, 740

(9th Cir. 1982). Indeed, "no federal court has suggested that

[Rule 15(c)] . . . is beyond the scope of the Rules Enabling Act."

6A Wright, Miller & Kane, Federal Practice & Procedure § 1503, at

171 (2d ed. 1990). The commentators' statement, published in 1990,

remains true today. We decline DCAG's invitation to break ranks

and disregard Rule 15(c)'s quintessentially procedural nature.

Sound policy considerations support this point of view.

The federal policy behind the Rules Enabling Act aspires to the

creation of a system of procedure in the federal courts that is

uniform, comprehensive, and rational. The desirability of such a

system substantially outweighs any countervailing state interest

that might be served by ceding absolute priority to a conflicting

state rule. While application of a federal relation-back rule may

interfere with the operation of state rules at the margins,

"[a]pplication of state rules as to relation back would disrupt

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important federal policies favoring simplification and uniformity

of pleading, and liberality of amendment." Welch v. La. Power &

Light Co., 466 F.2d 1344, 1346 (5th Cir. 1972).

Moreover, even though Rule 15(c) is "intimately connected

with the policy of the statute of limitations," Fed. R. Civ. P.

15(c) advisory committee notes (1966 Amendment), the Rule does not

actually alter state limitations periods. Under Rule 15(c), the

original complaint still must be filed within that state-supplied

limitations period. So viewed, "[t]he state's underlying interest

. . . in protecting persons against stale claims is adequately

protected by the practical notice requirements built into Rule

15(c)." Davis v. Piper Aircraft Corp., 615 F.2d 606, 612 (4th Cir.

1980); see 19 Wright et al., supra § 4509, at 273-75.

The conclusion that Rule 15(c) applies in a diversity

case notwithstanding the incidence of a more restrictive state rule

is implicit in our own precedent. See Leonard v. Parry, 219 F.3d

25, 28 (1st Cir. 2000); Freund v. Fleetwood Enters., Inc., 956 F.2d

354, 362 (1st Cir. 1992) (Breyer, C.J.). What is implied in these

decisions is explicit in the holdings of many other courts of

appeals. See, e.g., Simmons v. S. Cent. Skyworker's, Inc., 936

F.2d 268, 270 (6th Cir. 1991); Johansen, 810 F.2d at 1380; Santana,

686 F.2d at 740; Davis, 615 F.2d at 611-12; Ingram v. Kumar, 585

F.2d 566, 570 n.5 (2d Cir. 1978); Loudenslager v. Teeple, 466 F.2d

249, 250 (3d Cir. 1972); Crowder v. Gordons Transps., Inc., 387

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F.2d 413, 416-17 (8th Cir. 1967). We join the ranks of those

courts.

One other matter requires our attention. In support of

its position that state law controls, DCAG cites Marshall v.

Mulrenin, 508 F.2d 39 (1st Cir. 1974). There, we stated that Rule

15(c) "is not to be applied to the extent, if any, that it would

defeat rights arising from state substantive law as distinguished

from state procedure." Id. at 44. But context is important; in

Marshall, the situation was the obverse of the situation here (that

is, the state rule was more generous than the federal rule). Id.

at 41. In that circumstance, we applied the less restrictive state

rule. Id. at 44-45. Thus, Marshall can be squared with Hanna

because "state and federal law do not directly conflict when state

law is less restrictive and adhering to state law may be consistent

with the general purposes of Rule 15." 6A Wright et al., supra

§ 1503, at 175.

At any rate, any questions either about this distinction

or about the correctness of the Marshall decision have been

rendered moot by a 1991 amendment to Rule 15, which explicitly

dictates relation back if "the law that provides the applicable

statute of limitations allows relation back." Fed. R. Civ. P.

15(c)(1)(A). This subsection was designed to "make it clear that

the rule does not apply to preclude any relation back that may be

permitted under the applicable limitations law." Fed. R. Civ. P.

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15 advisory committee notes (1991 Amendment). The provision

cements in place a one-way ratchet; less restrictive state

relation-back rules will displace federal relation-back rules, but

more restrictive state relation-back rules will not.

To say more on this point would be supererogatory. For

these reasons, we hold that federal relation-back rules apply here.

Still, that determination does not end our inquiry. The question

remains whether these rules allow relation back of the plaintiffs'

amended complaint.

Rule 15(c)(1)(C) limns three conditions,3 each of which

must be satisfied in order to permit relation back of an amended

complaint seeking to substitute a newly-designated defendant. See

Leonard, 219 F.3d at 28. First, the claim asserted against the

newly-designated defendant must satisfy the terms of Rule

15(c)(1)(B), which provides that the claim must arise "out of the

conduct, transaction, or occurrence set out — or attempted to be

set out — in the original pleading." Second, "within the period

provided by [Federal Rule of Civil Procedure] 4(m) for serving the

summons and complaint, the party to be brought in by amendment"

must have "received such notice of the action that it will not be

3
Although Rule 15(c) was amended in 2007, the changes were
"intended to be stylistic only." Fed. R. Civ. P. 15 advisory
committee notes (2007 Amendment). The various sub-parts of the
Rule were rearranged and renumbered but for present purposes the
Rule's substance and operation are unchanged. For ease in
exposition, we therefore refer to the present, revised version.

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prejudiced in defending on the merits." Fed. R. Civ. P.

15(c)(1)(C)(i). Third, it must appear that within the same time

frame the newly-designated defendant either "knew or should have

known that the action would have been brought against it, but for

a mistake concerning the proper party's identity." Fed. R. Civ. P.

15(c)(1)(C)(ii).

The first of these conditions is clearly satisfied here.

The claim asserted against DCAG unarguably arises out of the

occurrence described in the original complaint.

The second condition involves notice. That notice need

not be manifested by formal service of process within the

prescribed period. Rather, notice must simply be such that the

defendant "will not be prejudiced in defending on the merits."

Fed. R. Civ. P. 15(c)(1)(C)(i). At a minimum, though, notice

requires knowledge of the filing of suit, not simply knowledge of

the incident giving rise to the cause of action. Singletary v. Pa.

Dep't of Corr., 266 F.3d 186, 195 (3d Cir. 2001).

The notice that was communicated here plainly satisfied

these criteria. DCAG received a letter, attaching a copy of the

amended complaint, on March 6, 2006. That transmittal informed it

not only of the nature of the claims but also of the pendency of

the suit. The only nagging question is whether the notice was

timely under the terms of Rule 15(c)(1)(C), which requires that the

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defendant receive notice within the time allotted for service of

process under Rule 4(m).

The plaintiffs argue that the 120-day time limit

prescribed in Rule 4(m) does not apply in this case because Rule

4(m) does not pertain to service of process in a foreign country;

instead, Rule 4(f) — which specifies no particular time limit —

applies. Regardless of what uncertainty surrounds the amount of

time afforded for service of a foreign corporation in such

circumstances, it is logical that Rule 15(c)(1)(C) would afford no

less time for the giving of notice in cases involving foreign

corporations than it would in the ordinary case to which Rule 4(m)

applies. And here, DCAG received notice within the 120-day period.

To recapitulate briefly, the chronology is as follows.

The plaintiffs commenced the action on November 4, 2005. Because

the day of filing is excluded from the ensuing computation of time,

see Fed. R. Civ. P. 6(a)(1), the 120-day period began to run on

November 5, 2005. Measured from that date, the one-hundred-

twentieth day was Saturday, March 4, 2006. Both that day and the

next (Sunday, March 5) were excluded from the computation. See

Fed. R. Civ. P. 6(a)(3). Thus, the last day of the 120-day period

was Monday, March 6 — the day on which the aforementioned

transmittal arrived. This time line shows beyond hope of

contradiction that DCAG received notice of the action within the

allotted period.

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 This brings us to the third condition: knowledge of a

mistake in identity. To satisfy this condition, the plaintiffs

must show both that they made a mistake about the actual identity

of the proper defendant and that, within the prescribed time, that

party knew or should have known that, but for the mistake, it would

have been sued. See Leonard, 219 F.3d at 28.

It is obvious from the face of the original complaint

that the plaintiffs intended to sue the manufacturer of the

allegedly defective automobile. For aught that appears, they made

a mistake concerning the manufacturer's identity. See generally

Webster's Third New Int'l Dict. 1446 (1993) (defining "mistake" as

"a wrong action or statement proceeding from faulty judgment,

inadequate knowledge, or inattention"). But for this bevue, they

would have sued DCAG, not DCC. Thus, when DCAG (which knew full

well of its legal responsibility for the manufacture of the

vehicle) received notice of the action, it must have known (or, at

least, should have known) that the action would have been brought

against it in the first place but for the plaintiffs' mistake.

Consequently, the final condition precedent to the operation of

Rule 15(c) was satisfied.

DCAG attempts to parry this thrust by suggesting that the

plaintiffs might intentionally have "sued 'Daimler-Chrysler' by an

ambiguous name and served the complaint in Michigan in the hopes

that [DCAG] would respond and thereby obviate the need for the

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costly and often time-consuming requirements of Hague Convention

service." Appellee's Br. at 32. We find this suggestion fanciful.

The summary judgment record contains nothing that would

support this suggestion (indeed, there is no indication that DCAG

made this argument below). What we do find — for example, the

assertion by plaintiffs' counsel that "Daimler-Chrysler" was named

because the corporate website did not distinguish between DCC and

DCAG — points in the opposite direction.

Litigation should not be reduced to a game of cat and

mouse. In the last analysis, it seems highly improbable that, with

the limitations period about to expire, the plaintiffs, represented

by seasoned counsel, would have made such a risky strategic choice.

On this record, the only reasonable inference is that a mistake was

made.4

III. CONCLUSION

We need go no further. In this instance, Rule 15(c)

controls. Because the plaintiffs have satisfied all the conditions

for the application of that Rule, their amended complaint

designating DCAG as a party defendant relates back to the date of

the commencement of the action.5 It follows inexorably, as night

4
This inference is reinforced by the fact that, once the
plaintiffs learned of their error, they had no difficulty in
serving DCAG under the Hague Convention.
5
The plaintiffs have argued in the alternative that the
belated identification of DCAG can be justified as the correction
of a misnomer. See, e.g., United States v. Davis, 261 F.3d 1, 33

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follows day, that the action against DCAG was timely and that the

district court erred in granting partial summary judgment.

Reversed.

n.25 (1st Cir. 2001). We do not reach that argument.

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