Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
10-30-1997
USX Corp v. The Penn Cent Corp
Precedential or Non-Precedential:
Docket
96-3705
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Recommended Citation
"USX Corp v. The Penn Cent Corp" (1997). 1997 Decisions. Paper 255.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/255
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Filed October 30, 1997
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 96-3705
USX CORPORATION; BESSEMER AND LAKE ERIE
RAILROAD COMPANY
v.
THE PENN CENTRAL CORPORATION, now known as
American Premier Underwriters, Inc. as Successor in
interest to the Penn Central Transportation Company,
Appellant
Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civ. No. 94-cv-00877)
Argued
July 21, 1997
Before: BECKER, MANSMANN and ROSENN,
Circuit Judges.
(Filed October 30, 1997)
Thomas S. Kilbane, Esquire (Argued)
Stacy D. Ballin, Esquire
Squire, Sanders & Dempsey L.L.P.
127 Public Square
4900 Society Center
Cleveland, Ohio 44114-1304
Timothy W. Bergin, Esquire
Squire, Sanders & Dempsey L.L.P.
1201 Pennsylvania Avenue, N.W.
P.O. Box 407
Washington, DC 20044-0407
David A. Lynch, Esquire
Senior General Attorney
USX Corporation
600 Grant Street
Pittsburgh, PA 15219-4776
COUNSEL FOR APPELLEES
James J. Capra, Jr., Esquire
Donovan, Leisure, Newton & Irvine
30 Rockefeller Plaza
New York, NY 10112
Peter M. Fishbein, Esquire (Argued)
Karen E. Katzman, Esquire
Kaye, Scholer, Fierman, Hays
& Handler, LLP
424 Park Avenue
New York, NY 10022
Michael L. Cioffi, Esquire
American Premier Underwriters, Inc.
One East Fourth Street
Cincinnati, OH 45202
Ralph A. Finizio, Esquire
Houston Harbaugh, P.C.
Two Chatham Center
Twelfth Floor
Pittsburgh, PA 15219-3463
COUNSEL FOR APPELLANT
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OPINION OF THE COURT
MANSMANN, Circuit Judge.
The separate litigations ensuing from certain railroads'
participation in an antitrust conspiracy and thefinancial
demise of the Penn Central Transportation Company now
span three decades. See In the Matter of Penn Central
Transportation Company, 458 F. Supp. 1364 (E.D. Pa.
1978); In Re Lower Lake Erie Iron Ore Antitrust Litigation,
759 F. Supp. 219 (E.D. Pa. 1991). Our decision today
unfortunately perpetuates this longevity as we resolve only
the issue of which jurisdiction adjudicates the issue of "who
ultimately pays."
USX Corporation (USX) and Bessemer and Lake Erie
Railroad (B&LE) filed state and federal actions against
American Premier Underwriters, Inc. (American Premier),
the reorganized successor of Penn Central, seeking
indemnity and contribution of the approximately $600
million USX paid in satisfaction of judgments against B&LE
in ten antitrust actions. American Premier urged that the
actions be dismissed based upon provisions of the Final
Consent Decree entered in the Penn Central bankruptcy
matter. The parties agreed to stay the indemnity and
contribution proceedings pending a decision by the judge
presiding over the bankruptcy matters as to the present
action's viability in light of the Consent Decree.
Eventually, USX filed a notice of dismissal of the federal
contribution and indemnity suit pursuant to Fed R. Civ. P.
41(a)(1). The district court, by adoption of a magistrate
judge's report and recommendation, approved the
dismissal. American Premier strongly disputes the propriety
of the voluntary dismissal at the particular point of
litigation in which it was granted. In its view, a summary
judgment motion submitted by it prior to the filing of the
notice of dismissal precluded a voluntary dismissal of the
federal suit.
We will affirm the order of the district court. The specific
chronology of the proceedings, the language of the relevant
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orders, and the conduct of the parties necessitate a
conclusion that at the time the voluntary notice of
dismissal under Rule 41(a)(1) was filed, the status of the
case was such that the notice was appropriate and the
dismissal correctly granted.
I.
A. Background
Prior to 1989, B&LE was a wholly-owned subsidiary of
USX. Pursuant to an indemnity agreement, USX paid
nearly $600 million in satisfaction of antitrust judgments
entered against B&LE in In Re Lower Lake Erie Iron Ore
Antitrust Litigation, 998 F.2d 1144 (3d Cir. 1993).
The basis for the claims in the antitrust litigation was
that conspiring railroads, including B&LE, acted to restrain
trade in the movement of iron ore by ship across the Great
Lakes to docks on the south shore of Lake Erie. Iron ore
was traditionally transported in mud-like form in vessels
which had to be unloaded using special cranes available
only at railroad-owned docks. Some producers then began
shipping iron ore in pellet form which permitted the ore to
travel in self-unloading vessels. The ore could then be
unloaded at private docks. This method of shipment did not
require either the railroads' equipment or the railroads
themselves -- trucks could now be used to carry the iron
ore inland.
The railroads conspired to preserve their monopoly
position in transporting iron ore by preventing the
development of this alternative transportation system for
the iron ore. The conspiracy succeeded in delaying
establishment of the self-unloading method and negatively
impacted steel companies, private dock companies,
trucking companies and a shipbuilder.
In the 1980's, twelve cases were filed under the Sherman
Act and the Ohio Valentine Act by the injured industries
against Penn Central, B&LE and several other railroads.
The damages claimed varied: the steel companies lost the
cost savings of the self-unloading transportation system;
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the private dock companies were excluded from the iron ore
unloading business; the trucking companies were
foreclosed from carrying iron ore which could have been
unloaded at the private docks; and the shipbuilder was
denied the use of its vessels.
Three separate actions were also brought by a private
dock owner, a self-unloading shipbuilder and a trucking
company in the Northern District of Ohio (the Northern
District litigations). In the Northern District cases, the
claims of two of the plaintiffs against Penn Central were
dismissed in January 1986 on the ground that they were
discharged in the Penn Central reorganization proceeding.
The Ohio district court then dismissed B&LE's cross-and
third-party claims against Penn Central for indemnification
under both federal and Ohio law and for contribution under
federal law to the extent these claims were asserted against
Penn Central as to alleged post-consummation conduct.
Pinney Dock and Transportation Co. v. Penn Central Corp.,
1982 W.L. 1914 (N.D. Ohio Nov. 9, 1982).
The remaining Northern District litigation and the actions
brought by private dock owners, trucking companies and
steel mills brought in the Eastern District of Pennsylvania
were then consolidated. All the claims brought by the
antitrust plaintiffs against Penn Central were dismissed.
After trial, B&LE was held liable to the various plaintiffs
under both the Sherman Act and the Ohio Valentine Act for
amounts totaling over $600 million. B&LE settled with four
of the plaintiffs during the appeal process and paid two
other judgments after appeal. B&LE also settled the claims
brought against it by the two remaining plaintiffs in the
Northern District litigations.
B. Present Action
B&LE then sought indemnity from American Premier
with respect to the amounts paid to the antitrust plaintiffs.
On May 26, B&LE filed a complaint in the Court of
Common Pleas of Cuyahoga County, Ohio, claiming
contribution from American Premier under Ohio law for its
proportionate share of the antitrust damages. B&LE
alternatively claimed entitlement to common law indemnity
5
for that portion of the damages assessed which B&LE
asserted were attributable to Penn Central. In order to
preserve claims exclusively within federal jurisdiction,
B&LE also filed on the same day an action against
American Premier in the United States District Court in the
Western District of Pennsylvania.
On June 24, 1994, American Premier filed a petition
before Judge Fullam of the United States District Court for
the Eastern District of Pennsylvania, who had presided over
the Penn Central reorganization and bankruptcy, seeking
preliminary injunctive relief as well as an order directing
B&LE to dismiss its claims against Penn Central as barred
under the Consummation Order and Final Decree in the
reorganization proceedings.
At a July 21, 1994, hearing on the petition, the parties
orally entered into a stipulation spread on the record and
recited by Judge Fullam: "[I]t is stipulated by counsel that
... all proceedings will be stayed as to B&LE until I dispose
of this petition. This will not preclude the plaintiffs in either
of these actions from amending their pleading if they want
to do so."
The District Court for the Western District of
Pennsylvania was advised of the stipulation by a written
notice of stipulation filed August 4, 1994. That notice of
stipulation, drafted and filed by American Premier, was not
executed by B&LE nor signed by the district court.
On October 13, 1994, Judge Fullam decided the request
for injunctive relief in Penn Central's favor and issued the
following order:
[B&LE] and [USX] are restrained and enjoined from
asserting or prosecuting, or attempting to assert or
prosecute their claims in USX Corporation v. The Penn
Central Corporation No. 94-877 (W.D.Pa.), and USX
Corporation v. The Penn Central Corporation No. 94-
271/91 (C.P. Cuyahoga County, Ohio).
On the basis of Judge Fullam's decision, the District
Court for the Western District of Pennsylvania issued an
order on November 2, 1994, directing the Clerk to withdraw
the present action from the list of active cases and mark
the action "closed."
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B&LE moved for clarification and reconsideration of the
November 2 order to insure that the district court had not
dismissed the claims in its amended complaint so that it
could pursue them if Judge Fullam's decision was reversed
on appeal. B&LE also filed a precautionary notice of appeal
with us from the November 2 order.
By order of December 28, 1994, the district court
clarified its November 2 order:
[I]t is hereby ordered that this court's order dated
November 2, 1994 shall not be considered a dismissal
or disposition of the above captioned action, and that,
should further proceedings in the action become
necessary or desirable, either party may initiate the
same in the same manner as if this order had not been
entered; provided however, that plaintiffs, USX
Corporation and Bessemer and Lake Erie Railroad
Company, shall not prosecute or attempt to assert or
prosecute any claim in the above captioned action
during the pendency of the order dated October 13,
1994 entered by the United States District Court for
the Eastern District of Pennsylvania referred to in this
court's November 2, 1994 order.
(Emphasis added.) Based on this clarifying language, B&LE
withdrew its appeal to our court with respect to the
November 2, 1994 order.
On December 12, 1995, we reversed Judge Fullam's
October 13, 1994 order, holding that the claims brought by
B&LE in this case arose post-consummation and hence
were not discharged in the Penn Central bankruptcy. See In
Re Penn Central Transportation Company, 71 F.3d 1113 (3d
Cir. 1995). A petition for rehearing was denied on February
16, 1996.
On March 22, 1996, a motion to stay the mandate was
entered. The parties were advised, pursuant to practice in
our court, that if a petition for certiorari was filed within
the time that the stay was entered, the mandate would not
issue until the Supreme Court proceedings were concluded.
On May 28, 1996, the United States Supreme Court
denied American Premier's petition for writ of certiorari.
7
Penn Central Underwriters, Inc. v. USX Corporation , 116
S.Ct. 1851 (1996). Our Clerk's office received notice of the
denial on May 30, 1996, and our court's mandate was
issued on June 3, 1996. On June 25, 1996, Judge Fullam
entered an order denying American Premier's petition for
dismissal in accordance with our mandate.
Prior to Judge Fullam's action on the mandate but after
the denial of certiorari, on May 30, 1996, American Premier
filed a motion for summary judgment for dismissal of all
the claims in the amended complaint in the Western
District action. Eight days later, on June 7, 1996, B&LE
filed a notice of dismissal pursuant to Fed. R. Civ. P.
41(a)(1) or, alternatively, a motion to dismiss pursuant to
Rule 41(a)(2). After being advised by court personnel that
the case remained closed and that all recently filed motions
should be withdrawn, on June 12, 1996, B&LE filed a
motion to reopen the case for purposes of filing a notice of
dismissal pursuant to Rule 41(a)(1). American Premier
opposed the motion to reopen. Then, after Judge Fullam
acted on our mandate on June 25, 1996, B&LE againfiled
a notice of dismissal under Rule 41(a)(1).
A hearing on the summary judgment and dismissal
motions was held before a magistrate judge. After briefing,
the magistrate judge recommended that American Premier's
motion for summary judgment be stricken and that B&LE's
notice of dismissal without prejudice pursuant to Rule
41(a)(1) be upheld. The court reasoned that when American
Premier's motion for summary judgment was filed, the
Western District matter had been stayed by agreement of
the parties. Because the stay was in effect when the motion
for summary judgment was filed, that motion was a nullity.
The magistrate judge further concluded that the Rule
41(a)(1) notice was the only motion properly before it and
that a responsive pleading had not been filed. The
magistrate judge therefore recommended that "the motion
for summary judgment (Docket No. 14) be stricken, and
that the motion to voluntarily dismiss the action without
prejudice (Docket No. 25) be granted."1
_________________________________________________________________
1. Docket No. 25 refers to B&LE's Rule 41(a)(1) notice of dismissal rather
than its alternative Rule 41(a)(2) motion for dismissal, which is recorded
at Docket No. 17.
8
On October 31, 1996, "after de novo review of the
pleadings and documents in this case" the district court
issued its order:
It is hereby ordered that defendant's motion for
summary judgment (Docket No. 14) is stricken, and
that plaintiffs' motion for voluntary dismissal of this
action pursuant to 41(a)(1) (Docket No. 25) is granted.
The Report and Recommendation of the Magistrate Judge
was adopted as the opinion of the court. This appeal
followed and we have jurisdiction pursuant to 28 U.S.C.
S 1291.
II.
We must decide the point at which the stay of the
Western District proceedings was dissolved. This
determination enables us to identify which of the pleadings,
if any, were appropriate for the court's consideration and,
specifically, whether the Rule 41(a)(1) voluntary dismissal
was filed timely.2
_________________________________________________________________
In its order, the district court repeated the contradictory language of
the magistrate judge's order, that a motion for voluntary dismissal
pursuant to Rule 41(a)(1) was granted.
2. We do not address American Premier's second issue, whether
dismissal by the court under Fed. R. Civ. P. 41(a)(2) was appropriate.
While we realize that the language of the final order on appeal might
indicate that the Rule 41(a)(2) motion was considered by the district
court, examination of the docket and the proceedings convinces us that
the Rule 41(a)(2) issue did not form the basis of the district court's
decision.
In its order, the district court granted what it referred to as the
"motion" to dismiss the action rather than the notice of dismissal under
Rule 41(a)(1). However, the district court parenthetically referred to the
"motion" as Docket No. 25 which is actually the June 25 "notice" of
dismissal. Since the Docket No. 25 notice of dismissal was the only
viable document before the court, it is apparent that the district court
was granting the plaintiff's notice of dismissal under Rule 41(a)(1) and
not its alternative motion under 41(a)(2).
9
We thus direct our attention to the terms of the
stipulation which stayed these proceedings.
A consensual stipulation of the parties is "to be
interpreted according to the general principles of contract
construction." Pittsburgh Terminal Corp. v. Baltimore & Ohio
Railroad Co., 824 F.2d 249, 254 (3d Cir. 1987).
With these principles in mind, we must preliminarily
determine whether the stipulation is ambiguous as a
matter of law. Duquesne Light Co. v. Westinghouse Elec.
Corp., 66 F.3d 604, 613 (3d Cir. 1995). A contract is
ambiguous if, after hearing evidence presented by the
parties, the court determines that objective indicia exists to
support the view that "the terms of the contract are
susceptible of different meanings." Teamsters Indus.
Employees Welfare Fund v. Rolls-Royce Motor Cars, Inc.,
989 F.2d 132, 135 (3d Cir. 1993). If the terms are then
considered to be ambiguous, the factfinder must interpret
the terms. Mellon Bank, N.A. v. Aetna Business Credit, Inc.,
619 F.2d 1001, 1011 (3d Cir. 1980); Matter of Nelson Co.,
959 F.2d 1260, 1263 (3d Cir. 1992). Here, the language
utilized by Judge Fullam, in placing on the record the
stipulation to stay, is subject to interpretation. Thus, we
review the district court's findings concerning the meaning
of the stipulation under the clearly erroneous standard.
III.
Federal Rule of Civil Procedure 41(a)(1) provides in
pertinent part:
[A]n action may be dismissed by the plaintiff without
order of court (i) by filing a notice of dismissal at any
time before service by the adverse party of an answer
or of a motion for summary judgment, whichever first
occurs
. . . .
The essential issue, thus, is whether at the time Penn
Central filed its motion for summary judgment the stay
issued by Judge Fullam was still in effect. If the stay was
in effect, the summary judgment motion was a nullity
10
which allowed B&LE to file a notice of dismissal under Rule
41(a)(1).
In deciding if the Rule 41(a)(1) voluntary dismissal should
be granted, the district court concluded that the stay
agreed to by the parties was not lifted until June 25, 1996,
when Judge Fullam acted on our mandate and denied
American Premier's petition seeking an order of dismissal of
the action brought by B&LE. Persuading the district court
was the conduct of American Premier itself:
Had American Premier believed that the stay was in
effect only until Judge Fullam entered an order, the
motion for summary judgment would have been filed at
some point shortly after Judge Fullam entered his
order in October 1994. Instead, Penn Central waited
until the Third Circuit reversed Judge Fullam's order
and the petition for certiorari was denied.
Our review of the chronology of the case3 and of the
_________________________________________________________________
3. In summary fashion the relevant timeline is as follows:
5/26/94 - Complaint filed in Western District;
- Amended 8/5/94
6/24/94 - Petition before Judge Fullam filed in Eastern District
seeking to enjoin Western District action.
7/21/94 - Judge Fullam spreads stipulation on record: "all
proceedings stayed as to B&LE until I dispose of
petition."
10/13/94 - Judge Fullam decides: "B&LE restrained from
prosecuting western district action."
11/2/94 - Western District Clerk marks action"closed."
12/28/94 - Western District issues clarifying order: closure of case
not a dismissal, but B&LE cannot prosecute action
"during pendency of order dated 10/13/94."
12/12/95 - We reverse Judge Fullam; Matter of Penn Central
Transp. Co., 71 F.3d 1113 (3d Cir. 1995).
3/22/96 - Motion to stay mandate during Supreme Court
proceedings.
5/28/96 - Supreme Court denies certiorari.
5/30/96 - American Premier motion for summary judgment in
Western District action.
6/3/96 - We issue mandate.
6/7/96 - B&LE files notice of dismissal 41(a)(1) and, alternatively,
motion for dismissal 41(a)(2).
11
interpretation of the language of the court's orders
convinces us that the district court was correct. Certainly,
until October 13, 1994, when Judge Fullam granted
American Premier's petition to enjoin the Western District
action, the stay remained in effect. In finding in favor of
Penn Central, Judge Fullam ordered: "B&LE and USX are
restrained and enjoined from asserting or prosecuting their
claims in the Western District action."
We conclude that this order, by its terms, extended the
stay. Although American Premier argues that the order only
restrained B&LE, and not it, from continuing in the
Western District action, we are not persuaded. If read as
permitting American Premier to continue litigating the
action, B&LE would have been precluded from responding.
This could not have been the intent of Judge Fullam nor is
it consistent with the general conduct of litigation.
The activity in the Western District also militates against
a finding that the stay was dissolved. On November 2,
1994, based on Judge Fullam's order, the district court
ordered the Clerk to withdraw the action from the list of
active cases and mark the action "closed." At this point,
further pleadings could not be filed. The court later
clarified, on December 28, 1994, that marking the case
closed was not tantamount to a dismissal of the case; its
intent was to implement Judge Fullam's order that B&LE
shall not prosecute any claim in the action during the
pendency of the order dated October 13, 1994.
We must now determine at which point the Eastern
District matter became final, allowing once again for the
filing of pleadings in the Western District action. As noted,
on May 28, the Supreme Court denied certiorari. Two days
later, American Premier filed its motion for summary
judgment. On June 7, B&LE filed its 41(a)(1) notice of
dismissal and an alternative motion for dismissal under
_________________________________________________________________
6/12/96 - After parties advised by Western District that case
remained closed, B&LE files motion to reopen tofile
41(a)(1) notice of dismissal. American Premier opposes.
6/25/96 - Judge Fullam acts on mandate. B&LEfiles another
41(a)(1) notice (Docket #25).
12
Rule 41(a)(2). At this point, the parties were informed by
the Clerk of the Western District that the case had
remained closed and the recent filings had not been
accepted. B&LE, on June 12, responded by requesting a
motion to reopen and for 41(a)(1) dismissal. The motion was
opposed by Penn Central.
On June 25, 1996, Judge Fullam acted on the mandate
from our court based upon the remand from the Supreme
Court. The stay to which the parties had stipulated
continued through the entire appellate process and
terminated only when Judge Fullam acted on the mandate
of our court and denied American Premier's request to
enjoin B&LE from proceeding in the Western District. Later
that day, B&LE filed its notice of dismissal under Rule
41(a)(1) in the Western District. This last notice of dismissal
(Docket No. 25) was the only pleading filed after the
Eastern District case was finally resolved, and therefore, it
was the only motion viable in the Western District. Because
this notice was filed "before service by the adverse party of
an answer or of a motion for summary judgment" as
required by Rule 41(a)(1), the district court did not err in its
conclusion that the notice of dismissal under Rule 41(a)(1)
was appropriate. Since no other pleadings were before it, it
cannot be said that the district court abused its discretion
in allowing the matter to be dismissed voluntarily.
IV.
We will, therefore, affirm the order of the district court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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