Bethel v. McAllister Bros Inc ( 1996 )

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
4-17-1996
Bethel v. McAllister Bros Inc
Precedential or Non-Precedential:
Docket 95-1436
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 95-1436
JOHN BETHEL
v.
MCALLISTER BROTHERS, INC.;
FRANK J. HUESSER
Thomas Bethel, as
Administrator of the
Estate of John
Bethel,
Appellant
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 91-02032)
Argued January 30, 1996
BEFORE: GREENBERG, NYGAARD, and LAY,* Circuit Judges
(Filed: April 17, l996)
Patrick J. O'Connor (argued)
Thomas G. Wilkinson, Jr.
James E. Brown
Cozen and O'Connor
The Atrium
1900 Market Street
Philadelphia, PA 19103
Attorneys for Appellant
1
*Honorable Donald P. Lay, Senior Judge of the United States Court
of Appeals for the Eighth Circuit, sitting by designation.
James F. Young (argued)
Donna L. Adelsberger
Krusen Evans and Byrne
601 Walnut Street
The Curtis Center, Suite 1100
Philadelphia, PA 19106
Attorneys for Appellee
McAllister Brothers, Inc.
Stephen J. Cabot
Maria L. Petrillo (argued)
Brian P. Kirby
John A. Gallagher
Harvey, Pennington, Herting
& Renneisen, Ltd.
Eleven Penn Center
1835 Market Street, 29th Floor
Philadelphia, PA 19103
Attorneys for Appellee
Frank J. Huesser
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. THE HISTORY OF THE CASE
This matter is before this court on appeal following
proceedings having an unusual procedural history. Appellee,
McAllister Brothers, Inc., is a tugboat operator on the Delaware
River in the Philadelphia area. McAllister employed John Bethel
as a river docking pilot between December 1987 and December 1990,
when it discharged him. Thereafter, Bethel brought this action
against McAllister in the district court but he died after the
trial. Consequently, Thomas Bethel, the administrator of his
2
estate, is now the appellant. Our references to "Bethel" in this
opinion, however, are to John Bethel.
Bethel alleged in the complaint that he sustained
personal injuries on December 17, 1990, while working as a
docking pilot for McAllister, which shortly thereafter wrongfully
discharged him. He also contended that McAllister defamed him by
asserting that it fired him because he refused to take a drug
test after his injury, thereby suggesting that he was a drug user
and hindering his efforts to obtain employment in the maritime
and shipping industry. In addition to McAllister, Bethel sued
appellee Frank J. Huesser, a supervisor at McAllister, charging
that he was also liable for these alleged wrongs. Bethel
obtained a judgment for his personal injuries under the Jones
Act, 46 U.S.C. § 688, which McAllister satisfied, and McAllister
obtained a judgment as a matter of law on the wrongful discharge
claim, which is not at issue on this appeal. Inasmuch as we are
not concerned with these claims, and because Huesser's presence
in this litigation in no way affects our disposition of the
issues, as a matter of convenience we will treat this case as
simply a defamation action between Bethel, succeeded by the
appellant, and McAllister. Of course, we nevertheless have
considered the arguments Huesser set forth both in his brief and
at oral argument.
At the trial, Bethel recovered a judgment for $554,000
in compensatory damages and $250,000 in punitive damages on the
defamation claim. McAllister then successfully moved for a
judgment as a matter of law under Fed. R. Civ. P. 50(b). The
3
court concluded that the other towing companies in the
Philadelphia area, which Bethel alleged would not hire him after
McAllister discharged him, did not understand McAllister's
statements as indicating that Bethel was a drug user, and further
concluded that Bethel failed to prove that McAllister's
statements caused him "special harm" as required by Pennsylvania
law which is applicable to the defamation issues in this action.
Agriss v. Roadway Express, Inc., 483 A.2d 456, 461 (Pa. Super.
Ct. 1984); see also Solosko v. Paxton, 119 A.2d 230, 232 (Pa.
1956).
Bethel then appealed, but before we could hear and
decide the appeal, he died on December 4, 1993, so appellant was
substituted for him as a party. On February 4, 1994, over a
dissent, in an unreported opinion we reversed the order granting
the judgment as a matter of law and remanded the case for entry
of a judgment in favor of the appellant. Bethel v. McAllister
Bros., Inc., No. 93-1358 (3d Cir. Feb. 4, 1994). We found that
there was sufficient evidence that McAllister had defamed Bethel
to support the jury's verdict. Furthermore, we concluded that
there was evidence that he had suffered special harm because
Riverbus, Inc., a ferry operator that employed him after
McAllister discharged him, terminated that employment when it
learned from McAllister that it had discharged him for refusing
to take a drug test.0 In reaching this result, we relied on
0
In our earlier opinion we pointed out that we probably could
sustain the verdict on the ground that McAllister's statements
constituted slander per se, thus obviating the need for a showing
of special harm. Appellant, though noting this point in his
4
Bethel's testimony that Riverbus fired him when it acquired that
information in a background check. We also indicated that the
award of compensatory damages was predicated, at least in part,
on Riverbus having fired him. On April 12, 1994, the district
court entered judgment in favor of Bethel against McAllister in
accordance with our mandate.
On March 1, 1994, McAllister moved in the district
court for relief from the judgment to be entered on the remand
pursuant to Fed. R. Civ. P. 60(b)(3), relying on evidence that it
discovered after we reversed the judgment in favor of McAllister
to establish that Bethel committed fraud at the trial.0 The
evidence was Bethel's testimony in an arbitration proceeding
against Riverbus after it discharged him. Bethel testified in
that proceeding that Riverbus discharged him for a myriad of
reasons, of which his refusal to take the drug test as directed
by McAllister was but one.
The district court granted McAllister's motion in an
opinion and accompanying order, both dated July 11, 1994. The
court found that Bethel had given "patently misleading" testimony
and had "knowingly concealed a material fact" at the trial and
thus had committed fraud. Consequently, the court vacated the
judgment of April 12, 1994, and granted McAllister a new trial on
both liability and damages. Thereafter, at appellant's request,
brief, does not rely on it in an effort to overturn the order he
challenges on this appeal.
0
McAllister also asserted bases for the motion under Fed. R. Civ.
P. 60(b)(2) and (6), which the district court rejected and which
are not implicated on this appeal.
5
the district court amended the order of July 11, 1994, by
certifying it under 28 U.S.C. § 1291(b) so that he could seek
leave to appeal. We, however, denied leave to appeal on
September 19, 1994. In the meantime, the appellant sought
reconsideration of the order of July 11, 1994, with respect to
the scope of the retrial, which he argued the court should have
limited to damages. The district court, by order entered
December 13, 1994, adhered to its decision that the new trial
would be on both liability and damages.
The appellant did not wish to retry the case, as he had
concluded that in light of the district court's findings that
Bethel had committed perjury,0 he could not succeed in a retrial.
Thus, in his view, the order granting a new trial effectively
awarded McAllister a final judgment. Therefore, at a conference
on November 3, 1994, the appellant requested that the court enter
a final judgment in McAllister's favor so that he could appeal
the granting of the new trial. The court, though acknowledging
that the appellant was in a difficult position, did not do so.
In this regard we are perplexed by the appellant's articulated
concerns because we can conceive of no way that the jury at a
retrial could have learned of the district court's conclusion
that Bethel had committed perjury, though we can understand how
McAllister might have been able to use Bethel's testimony from
the arbitration hearing at the retrial, particularly if appellant
0
The district court did not use the term "perjury" in describing
Bethel's testimony in its July 11, 1994 opinion, but the parties
have characterized its ruling as finding that Bethel had
committed perjury. Therefore we, too, use that term.
6
used Bethel's testimony from the first trial at a second trial.
We explored the point at oral argument and appellant's attorney
acknowledged that the district court never said that its holding
under Rule 60(b)(3) somehow would be made known to the jury at
the new trial.
In any event, appellant persisted in his efforts to
have a final judgment entered in McAllister's favor. In a motion
filed January 27, 1995, he reiterated that such a judgment should
be entered because he could not proceed and wished to appeal
immediately. The district court instead listed the case for
trial. Appellant then unsuccessfully moved again for entry of
judgment.
Ultimately, the case came on for trial on April 27,
1995. At that time, appellant was free to proceed with the trial
but did not do so. Accordingly, the district court entered a
final judgment against him, but did not do so on the ground that
its opinion and order of July 11, 1994, granting relief under
Fed. R. Civ. P. 60(b)(3), effectively had been a final judgment.
Rather, as the court recited in its order of April 28, 1995, it
dismissed the matter because of appellant's "failure to
prosecute" the case. Appellant then appealed from the orders of
July 11, 1994, December 13, 1994, and April 28, 1995.0
0
The district court exercised federal question and diversity
jurisdiction. While the complaint recites that the court could
exercise supplemental jurisdiction under 28 U.S.C. § 1367 over
the defamation claim because it had federal question jurisdiction
under 28 U.S.C. § 1331, and admiralty and maritime jurisdiction
under 28 U.S.C. § 1333, this assertion is questionable. See Lyon
v. Whisman, 45 F.3d 758 (3d Cir. 1995). However, the diversity
7
II. THE SCOPE OF THE APPEAL
We initially address an objection raised by McAllister
to our entertaining this appeal. In its brief, McAllister urges
that appellant "has Waived his right to Appeal the July 11, 1994
and December 1[3], 1994 Orders [granting a new trial] by Failing
to Prosecute his Case at the Second Trial of this Action."
McAllister seemed to believe, however, that appellant could and
did appeal from the order of dismissal, as it did not suggest
that he could not appeal from it and it supported the dismissal
on the merits.0
We understand why McAllister concluded that appellant
might be seeking a reversal of the order of dismissal. After
all, the notice of appeal recites that appellant is appealing
from that order. Furthermore, his brief sets forth the standard
of review for orders of dismissal citing, inter alia, Titus v.
Mercedes Benz of N. Am., 695 F.2d 746, 749 (3d Cir. 1982), and
indicates that we can reverse the district court if it abused its
discretion in dismissing the case. Brief at 28. Yet it did not
appear clear to us from his overall brief that appellant was
challenging the dismissal of the case or was seeking a new trial,
for at the conclusion of his brief he requested that we reverse
only the orders of July 11, 1994, and December 13, 1994, and
enter judgment in his favor.
jurisdiction was sufficient for the court to hear the case. We
exercise jurisdiction under 28 U.S.C. § 1291.
0
Huesser makes the same contentions.
8
We explored this ambiguity at oral argument and
inquired whether appellant was seeking a new trial. The answer
was absolutely clear: his attorney stated that this was an all-
or-nothing appeal in which appellant was seeking only the
reinstatement of the judgment predicated on the verdict. Thus,
regardless of how we decided the appeal our decision would end
the case, either because the judgment entered on the verdict
would be reinstated or because appellant would not proceed with a
new trial as permitted by the district court in its orders of
July 11, 1994, and December 13, 1994. Consequently, we need not
decide whether we should uphold the order of dismissal, as
appellant does not challenge that order.
McAllister predicates its contention that appellant
waived his right to appeal from the July 11, 1994 and December
13, 1994 orders principally on three cases, Spain v. Gallegos, 26
F.3d 439 (3d Cir. 1994); Sullivan v. Pacific Indemn. Co., 566
F.2d 444 (3d Cir. 1977); and Marshall v. Sielaff, 492 F.2d 917(3d Cir. 1974). In Spain, a female employee of the Equal
Employment Opportunity Commission brought a district court action
against the EEOC, charging sexual and racial discrimination,
sexual harassment and unlawful retaliation. Immediately prior to
the trial, the district court excluded certain evidence which the
employee intended to offer in support of her sexual
discrimination and harassment claims and barred her from
proceeding on those claims on the basis of her remaining
evidence. Nevertheless, the employee was free to proceed with
her claims for racial discrimination and retaliation. But she
9
declined to do so, as she regarded the excluded evidence as
closely connected to those claims. The court then dismissed her
case to the extent it was predicated on these remaining claims.
We held that the district court abused its discretion
in excluding the disputed evidence and we reversed the order
dismissing the sexual discrimination and harassment claims.
Nevertheless, we affirmed the dismissal of the racial
discrimination and retaliation claims, as the employee "was
obliged to proceed with the trial notwithstanding the exclusion
of the evidence." 26 F.3d at 454. In reaching this conclusion,
we explained that "[a] party disappointed with a court's ruling
may not refuse to proceed and then expect to obtain relief on
appeal from an order of dismissal or default." Id.Spain clearly is distinguishable from this case. In
that case the employee, though refusing to proceed with a trial
though free to do so, later sought relief from the order entered
as a consequence of her refusal to go forward. This case is
different because while the appellant, like the employee in
Spain, would not go forward with the trial he, unlike the
employee in that case, does not seek to be relieved of the
consequences of his failure to proceed. Quite to the contrary,
he does not now seek a trial but argues only that a new trial
should not have been granted.
Sullivan, 566 F.2d 444, is somewhat like Spain. There
the plaintiffs sought to bring a class action against an
insurance company predicated on a claim that it overcharged
certain physicians for malpractice insurance. The named
10
plaintiffs moved to certify a class of plaintiffs, but on the day
of trial the district court denied the motion to certify. The
plaintiffs then refused to present any evidence, whereupon the
court dismissed the action for failure to prosecute.
The plaintiffs then appealed, seeking only a review of
the order denying class certification, as they did not contend
that the dismissal was erroneous. Id. at 445. In these
circumstances, we held that the plaintiffs had appealed from an
interlocutory order, and dismissed the appeal for want of
jurisdiction. Sullivan differed from Spain in one respect,
however, because in the latter case the employee urged that the
district court improperly dismissed the balance of the case for
failure to prosecute after it entered the earlier order to which
the employee objected. Thus, in Spain, unlike in Sullivan, we
did not dismiss the appeal and instead affirmed the district
court's order dismissing the case for failure to prosecute.
Sullivan does not support McAllister's contention that
we lack jurisdiction to consider the appeal from the orders of
July 11, 1994, and December 13, 1994. In Sullivan, the order
denying the motion to certify the class was interlocutory because
a reversal of it would not have ended the litigation, as the
certification of the class would have been a futile gesture
unless the plaintiffs could proceed to trial. Thus, in Sullivan,
unlike in this case, a reversal of the order denying
certification and predating the dismissal would have resulted in
further litigation, which would have required reinstatement of
11
the action. Here, a reversal, no less than an affirmance, would
end this litigation.
Marshall, 492 F.2d 917, is also similar to Spain. In
Marshall, a prisoner who brought a civil rights action under 42
U.S.C. § 1983 against prison officials and medical personnel at
the prison, would not proceed with the trial after the district
court refused to grant a writ of habeas corpus ad testificandum
for certain persons the prisoner desired to call as witnesses at
the trial. The district court dismissed the action for failure
to prosecute, whereupon the prisoner appealed from both the
dismissal and the denial of the writ. We affirmed the dismissal
for lack of prosecution but would not reach the issues generated
by the court having denied the application for the writ, pointing
out that "[i]f a litigant could refuse to proceed whenever a
trial judge ruled against him, wait for the court to enter a
dismissal for failure to prosecute, and then obtain review of the
judge's interlocutory decision, the policy against piecemeal
litigation and review would be severely weakened." Id. at 919.
Yet Marshall, too, is distinguishable from this case.
In Marshall, as in Sullivan, the appellant wished to appeal an
order prior to the final order as a prelude to further
litigation. Furthermore, in Marshall, as in both Spain and
Sullivan, the appellant could obtain meaningful relief in the
action only if the order of dismissal was vacated or reversed and
there then was a trial on the merits.
Our decisions in Spain, Sullivan, and Marshall, of
course, fundamentally were premised upon the federal policy
12
against piecemeal appeals, codified in the final judgment rule of
28 U.S.C. § 1291. See Carr v. American Red Cross, 17 F.3d 671,
678 (3d Cir. 1994) ("The finality rule 'reflects federal policy
against piecemeal appeals.'") (quoting Praxis Properties, Inc. v.
Colonial Sav. Bank, 947 F.2d 49, 54 n.5 (3d Cir. 1991)). Section
1291 provides that "[t]he courts of appeals . . . shall have
jurisdiction of appeals from all final decisions of the district
courts of the United States." While we give "a practical rather
than technical construction" to section 1291, we must take care
not to sacrifice the policy of limited appellate jurisdiction.
Id. (citing Fassett v. Delta Kappa Epsilon, 807 F.2d 1150, 1156
(3d Cir. 1986), cert. denied, 481 U.S. 1070, 107 S.Ct. 2463(1987)). With limited exceptions, we will not entertain an
appeal unless the district court's order "ends the litigation on
the merits and leaves nothing more for the court to do but
execute the judgment." Digital Equip. Corp. v. Desktop Direct,
Inc., 114 S.Ct. 1992, 1995 (1994) (citations and internal
quotation marks omitted); Byrant v. Sylvester, 57 F.3d 308, 311
(3d Cir. 1995). That standard permitting appellate review has
been met here. If we set aside the district court's orders of
July 11, 1994, and December 13, 1994, appellant will be entitled
to entry of a judgment in his favor, and if we affirm the orders,
by his own stipulation, he will not be entitled to a trial. In
contrast to the situations raised by the appeals in Spain,
Sullivan, and Marshall, the litigation would be terminated in
either case. Consequently we are persuaded that notwithstanding
13
their original character, the orders of July 11, 1994, and
December 13, 1994, are final and appealable.
In this regard, we observe that it is well established
that otherwise non-appealable orders may become appealable where
circumstances foreclose the possibility of piecemeal litigation.
For example, an order dismissing a complaint without prejudice is
ordinarily not appealable. Where, however, the plaintiff cannot
cure the defect in the complaint or elects to stand on the
complaint without amendment, the order becomes final and
appealable. See Welch v. Folsom, 925 F.2d 666, 668 (3d Cir.
1991); see also Umbenhauer v. Woog, 969 F.2d 25, 30 n.6 (3d Cir.
1992) (holding that order of dismissal without prejudice was
appealable where counsel informed court of appeals at oral
argument that statute of limitations had run). Indeed, the
orders in this case have even greater indicia of finality than an
appealable order dismissing a complaint without prejudice as
their reversal, unlike the reversal of an order dismissing a
complaint without prejudice, will not lead to a trial in the
district court.0
Moreover, an otherwise non-appealable order may become
final for the purposes of appeal where a plaintiff voluntarily
and finally abandons the other claims in the litigation. See
Fassett, 807 F.2d at 1155-57. In Fassett, for example, the
0
We recognize that in some cases a reversal might lead to further
proceedings regarding whether relief should have been granted
under Rule 60(b)(3), see Stridiron v. Stridiron, 698 F.2d 204,
208 (3d Cir. 1983), but even if there were such a reversal here
it would not lead to further proceedings addressing the merits of
the case as appellant has abandoned his right to a new trial.
14
district court granted summary judgment in favor of all the
defendants save one in a diversity action. Choosing not to
proceed to trial against the remaining defendant, the plaintiffs
voluntarily dismissed their complaints against him. Id. at 1154.
On appeal, we held that the summary judgments were appealable for
two independent reasons. First, we found that the statute of
limitations had run on the plaintiffs' claims against the
remaining defendant at the time of the dismissals. Id. at 1155.
Second, the plaintiffs represented at oral argument that they
would not pursue their claims against the remaining defendant in
the federal courts. Id. at 1156-57. In either case, there were
no outstanding issues or parties remaining in the district court
so that we had jurisdiction over the appeal. Id. at 1155, 1157.
We explained that "it would be anomalous to hold that a plaintiff
had no right to appeal the dismissal of all but one of his claims
after that one claim not initially dismissed, had thereafter been
voluntarily and finally abandoned." Id. at 1155. See also
Tiernan v. Devoe, 923 F.2d 1024, 1031 (3d Cir. 1991) (holding
that settlement agreements between plaintiffs and three of four
defendants were appealable where plaintiffs renounced claims
against fourth defendant at oral argument).0
0
Al-Torki v. Kaempen, F.3d , 1996 WL 89101 (9th Cir.
Mar. 5, 1996), which Judge Nygaard cites is factually
distinguishable because there the appellant challenged an order
for a new trial after the original trial as well as the
subsequent order dismissing his complaint when he did not proceed
at the new trial. Thus, while he challenged the district court
order granting a new trial, unlike appellant he sought a new
trial himself in the event that the court of appeals upheld the
district court's order granting a new trial. Furthermore,
Al-Torki involved an appeal from an order for a new trial under
15
We note a persuasive analogy in this case to our review
of orders granting a new trial pursuant to Fed. R. Civ. P. 59.
Like the grant of a Rule 60(b) motion, an order granting a new
trial under Rule 59 ordinarily is interlocutory and non-
appealable. National Passenger R.R. Corp. v. Maylie, 910 F.2d
1181, 1183 (3d Cir. 1990) ("When an order granting a Rule 60(b)
motion merely vacates the judgment and leaves the case pending
for further determination, the order is akin to an order granting
a new trial and in most instances, is interlocutory and
nonappealable."). The grant of a new trial under Rule 59,
however, does not escape review. On appeal following the new
trial, we will review the order and may reinstate the judgment
from the first trial if we find that the new trial should not
have been granted. Blancha v. Raymark Indus., 972 F.2d 507, 511-
12 (3d Cir. 1992). In this case, it is as if the appellant were
Fed. R. Civ. P. 59 rather than an appeal from an order for a new
trial under Fed. R. Civ. P. 60(b)(3) following the vacation of a
judgment on a post-trial motion for relief from a judgment. Judge
Nygaard notes, typescript at 6 n.1, "[a]nalytically, [a] second
trial held after grant of a new trial under Fed. R. Civ. P. 59
can be viewed as a continuation of the first." But his support
for this statement comes from 15B Charles A. Wright, Federal
Practice and Procedure § 3915.5 at 299 (2d ed. 1992) which
indicates that "[n]ew trial orders can be seen as part of the
original and ordinary trial process." However, this
characterization does not apply to a new trial ordered following
the vacation of a judgment under Fed. R. Civ. P. 60(b)(3) which
certainly is not part of the "original and ordinary trial
process." Yet to a degree Al-Torki does support Judge Nygaard's
position on this appeal. Nevertheless we believe that our result
is correct for the reasons we have set forth. In fact, inasmuch
as allowing the appeal on the limited issues which appellant
raises does not offend principles of finality, we could justify
dismissal of the appeal only as a sanction for appellant's
failure to prosecute the case at the retrial. We see no reason
for such a sanction as appellant is not seeking a new trial.
16
challenging the grant of a new trial after an adverse judgment in
the second trial. The appellant is essentially willing to
concede defeat in the second trial and to rest his success or
failure completely on the outcome of our review of the district
court's order granting a new trial under Rule 60(b).
Finally, we point out that the order of dismissal does
not preclude us from reviewing the orders of July 11, 1994, and
December 13, 1994, even though the dismissal terminated the case
in the district court and is not being reviewed. The appeal here
is similar to an appeal from an order entered prior to a remand
of a case by a district court to the state court from which the
case had been removed. In such a case, an order entered prior to
remand may be appealable even though the order of remand itself
may not be appealable. See Aliota v. Graham, 984 F.2d 1350, 1353
(3d Cir.), cert. denied, 114 S.Ct. 68 (1993). The sequence of
events is the same here. The July 11, 1994, and December 13,
1994 orders predated the order of dismissal. Of course, we do
not go so far as to hold that orders entered before dismissal
always are appealable after a dismissal. Sullivan demonstrates
that they are not. Rather, we confine ourselves to the unique
circumstances here in which a reversal of the earlier order would
mean that the proceedings leading to the dismissal never should
have been held. Other factual scenarios may lead to different
results. Overall, we are satisfied that we have jurisdiction to
review the July 11, 1994 and December 13, 1994 orders, and thus
we reach the merits of this appeal.
17
III. THE MERITS
In discussing the merits, we first summarize the
district court's comprehensive opinion of July 11, 1994. In that
opinion, the court set forth the procedural background of the
case and then described the facts. It indicated that Bethel had
been injured on McAllister's vessel on December 17, 1990, when he
fell down a flight of stairs. The following day, McAllister told
Bethel to report to work to submit to a drug test that it claimed
was being administered to all its river docking pilots that day.
Bethel refused to report because he was unable to do so. On
December 21, 1990, McAllister told Bethel that his employment was
terminated, and he received a letter to that effect the following
day.
Thereafter, rumors circulated in the Delaware River
maritime community that McAllister terminated Bethel's employment
because he was a drug user. Bethel never again obtained full-
time employment as a river docking pilot, although Riverbus, a
New Jersey ferry operator, employed him as a captain operating
boats between Camden and Philadelphia from March 25, 1992, until
June 28, 1992. His Riverbus employment ended about three weeks
before the trial in this case, which was from July 21, 1992,
through July 27, 1992. Bethel testified that Riverbus fired him
as the result of a background check, which he understood to mean
that McAllister told Riverbus about Bethel's refusal to take the
drug test.
The district court indicated that McAllister sought
relief from the judgment on remand under Fed. R. Civ. P. 60(b)(3)
18
because of Bethel's fraud. In particular, the alleged fraud was
that Bethel did not testify truthfully about the reasons Riverbus
gave him for his discharge as Bethel, at an arbitration hearing
in a proceeding against Riverbus ten months after the trial in
this case, said Riverbus gave him additional reasons for his
discharge. The district court also pointed out that, as we
recognized in the earlier appeal, Bethel claimed three possible
sources of lost earnings in this case, full-time docking pilot
work, part-time docking pilot work, and the position at Riverbus
which paid $37,000 per year. However, any claim based on loss of
income from the first source was weak.
The district court compared Bethel's testimony at the
jury trial on July 21, 1992, in this case, with his arbitration
testimony ten months after the trial on May 17, 1993. At the
jury trial, Bethel had testified that Riverbus told him that it
was terminating his employment "due to an unsatisfactory
background check" and he then explained that "[w]hat was told to
me, is that they had called my previous employer and they had
become aware that allegedly I refused to take a drug test.
Therefore they did not -- they would not have me in their
employ." Yet, at the arbitration hearing Bethel testified that
on June 23, 1992, Riverbus gave him eight reasons why it was
terminating his employment, which the district court in a fair
characterization of his testimony at the arbitration hearing
described in its July 11, 1994 opinion as follows: "(1) a bad
background check, that included talking to McAllister, who told
[Riverbus] that plaintiff refused to take a drug test; (2) having
19
been fired by former employers for being drunk; (3) failing to
draw up a schedule for crew assignments; (4) reporting to work
drunk; (5) not conducting a fire drill; (6) being late for work;
(7) failure to get along with fellow employees; and (8)
improperly changing the logs."
The court pointed out that the reasons that Riverbus
gave Bethel for discharging him must have been fresh in his mind
when he testified at the jury trial, as Riverbus had given them
to him only three weeks earlier. Despite this fact, the court
then indicated that it now knew in light of Bethel's testimony at
the arbitration hearing that his "testimony given to the jury was
patently misleading as to the reasons for his being discharged
from Riverbus. A review of the versions of the testimony at both
the trial and the arbitration discloses that [Bethel] only told
the jury one of the reasons given for his firing. This turned
out to be the reason the Third Circuit would later cite as the
strongest evidence of his damages, in an otherwise 'weak' case."
The court concluded that if the jury knew about the additional
reasons Riverbus gave Bethel for the discharge, it could have
found that Bethel's failure "to take the drug test for defendant
McAllister had little or nothing to do with the equally or more
substantial ground advanced by Riverbus" for the discharge. The
court concluded that Bethel "knowingly concealed a material fact
-- indeed, seven material facts, being the undisclosed other
grounds -- for being discharged by Riverbus."
The court discussed numerous precedents under Rule
60(b), but naturally in the inherently fact-specific inquiry
20
triggered by a Rule 60(b)(3) motion, all differed on the facts.
The court then said that there "can be no doubt that the withheld
information was well within the scope of the question being
asked, which foreclosed plaintiff's right to pick and choose
those items of truth he preferred the jury to hear." The court
indicated that while it is possible that McAllister's attorney
could have cross-examined Bethel about the reasons for the firing
more extensively than he did, the attorney's methods were
understandable as Riverbus terminated Bethel long after discovery
had been closed and only three weeks before trial. The judge
indicated that Bethel's testimony was the only basis for the
$554,000 award and that the jury had been told that Bethel who
was 37 years old was earning $37,000 annually at Riverbus. In
these circumstances, the court held that McAllister was entitled
to a new trial. Furthermore, the trial was to be on both
liability and damages because Bethel's testimony regarding what
Riverbus told him was relevant on both issues.
We use the abuse of discretion standard in reviewing
the district court's orders under Rule 60(b)(3). Central W.
Rental Co. v. Horizon Leasing, 967 F.2d 832, 836 (3d Cir. 1992).
In this review, we ascertain whether the misconduct prevented
McAllister from fully and fairly presenting its defense. See
Stridiron v. Stridiron, 698 F.2d 204, 206-07 (3d Cir. 1983).
We cannot say that the district court abused its
discretion in granting the new trial. In addition to the patent
inconsistency between Bethel's trial testimony and arbitration
testimony that we already have noted, there were other
21
inconsistencies between his trial and arbitration evidence. At
trial, Bethel testified that Riverbus gave him a letter dated
June 24, 1992, which stated that "due to unsatisfactory
background check, that I was to be put on probation for the rest
of my life." In fact, the letter, which was not produced at
trial, said "that an unsatisfactory background check and
performance rating has been given to Captain John Bethel and that
[he] is placed on probationary status until further notice."0
Furthermore, as the district court noted, Bethel also testified
at the arbitration hearing that Riverbus told him on June 28,
1992, the date it actually discharged him, that it was doing so
because he "refused to take a drug test in McAllister's and . . .
didn't show up for work on the weekend." In the circumstances,
it is perfectly clear that Bethel created a false impression that
Riverbus told him that his difficulties arising from McAllister's
discharge of him cost him his job at Riverbus, whereas he knew
that Riverbus had told him that much more was involved.
This misrepresentation was not merely material to his
case. It was crucial. Indeed, on the first appeal, though we
reversed the district court's order granting McAllister a
judgment in its favor under Rule 50(b), we characterized Bethel's
case as "thin" and described aspects of it as "not . . . strong"
and "weak." Indeed, it was so thin that the district court felt
0
In the appellant's reply brief, he contends that we should not
rely on this letter as it was not in evidence before the district
court and the court did not rely on the letter. We reject this
contention as the district court did rely on the letter, quoting
it in full.
22
that the verdict could not stand and, on the first appeal, one
judge of this court agreed with him. The misrepresentation thus
buttressed a weak case and was almost certainly the basis for the
award of damages, as we cannot understand how the jury could have
settled on its large award of compensatory damages, except on the
basis of Bethel's loss of earnings attributable to Riverbus's
discharge. Clearly, by concealing the actual reasons Riverbus
gave him for his discharge, Bethel prevented McAllister from
fully and fairly presenting its defense, as these events took
place after discovery was closed and immediately before the
trial.
We acknowledge that it is less clear that the
misrepresentation was responsible for the verdict on liability,
though it well may have been, as it is possible that the jury
might have believed that Riverbus had not discharged Bethel
because it believed him to be a drug user if it knew that
Riverbus gave Bethel additional reasons for discharging him. In
any event, in view of the appellant's concession that he does not
want a new trial, any uncertainty of the consequence of the
perjury on the verdict of liability does not matter, as a finding
of liability without an opportunity for a damages trial would be
of no use to him. As we have indicated, appellant made it clear
at oral argument that the only relief he wanted on this appeal
was a reinstatement of the verdict in Bethel's favor and entry of
a judgment on it.0 In these circumstances, we need not explore
0
This concession is understandable since Bethel's arbitration
proceeding against Riverbus resulted in a decision after the
23
the possibility that even if we held that the district court
should have limited its order for a new trial to a trial on
damages, the line of cases culminating in Spain, which we
discussed above, would preclude appellant from proceeding with
the case on the theory that he refused to proceed on a trial
which would have included damages, when he had an opportunity to
do so.0
IV. CONCLUSION
For the foregoing reasons, we will affirm the orders of
July 11, 1994, and December 13, 1994, and will dismiss the appeal
to the extent that appellant recited in his notice of appeal that
it was taken from the order of April 28, 1995.
trial requiring his reinstatement and because Bethel died before
the original appeal. In these circumstances, the damages the
appellant could have demonstrated at a retrial surely would have
been limited. Furthermore, a liability trial would have been
very difficult for the appellant because there is evidence that
Bethel died from an adverse reaction to drug use. Indeed, his
death certificate recites that such a reaction was the cause of
death. Accordingly, while Bethel contended McAllister defamed
him by suggesting that he was a drug user, McAllister at a
retrial would have been in a position to assert a truth defense.
0
In some situations, it might be appropriate for a court to
conduct a hearing to determine the relevant facts on a motion
under Rule 60(b)(3), but in this case that was not necessary
because the records of the trial and the arbitration proceeding
conclusively demonstrated the fraud and nothing that the
appellant produced on the motion in the district court was
adequate to trigger a need for a hearing. See Stridiron, 698
F.2d at 207.
24
NYGAARD, Circuit Judge, concurring.
The district court, after earlier granting defendants'
motion for relief from judgment and ordering a new trial,
dismissed the case for failure to prosecute when appellant, who
first stated unequivocally that he would present his case, later
recanted and expressly refused to proceed to trial. The
appellant does not challenge the propriety of the district
court's dismissal. Indeed, the majority and I also agree that
there was nothing improper about it. Without challenging the
propriety of that dismissal, however, appellant asks that we
review the underlying interlocutory orders granting a new trial.
I would not do so. Unless we can vacate or reverse the dismissal
order, the case is over; because that appropriate dismissal lies
athwart the way to review all other underlying, interlocutory
orders.
Before now we would not review underlying interlocutory
orders if the district court did not abuse its discretion by
25
entering judgment for failure to prosecute. See Sullivan v.
Pacific Indem. Co., 566 F.2d 444, 445, (3d Cir. 1977); Marshall
v. Sielaff, 492 F.2d 917, 919, (3d Cir. 1974). See also Spain v.
Gallegos, 26 F.3d 439 (3d Cir. 1994). These cases establish that
a party who tries to obtain appellate review of otherwise
interlocutory orders by refusing to proceed to trial engages in
an impermissible strategy.
We established this narrow scope of review for three
reasons: first, there is a presumption of propriety for court
orders -- they are enforceable unless stayed or reversed; second,
to avoid piecemeal litigation -- because, as we recognize, the
results of the new trial may well cure complaints about the
interlocutory orders; and third, to vindicate and encourage
proper respect for the district court's authority -- because, we
simply cannot allow counsel to flout proper orders of the
district courts. The majority cannot overturn our precedent.
Instead, it creates an exception to our holdings in Spain,
Sullivan, and Marshall, which is both unnecessary and imprudent.
I would not do so. I would affirm the district court's
dismissal, and hence not reach the propriety of the interlocutory
orders.
I.
Appellant incorrectly theorizes that a decision
granting a new trial is always reviewable after any subsequent
judgment. In Blancha v. Raymark Indus., 972 F.2d 507 (3d Cir.
1992), we held that:
26
[w]hile an order granting a new trial is
purely interlocutory and thus is not an
appealable final order within the meaning of
section 1291, such an order is reviewable
after a final order is entered following
retrial.
Id. at 511-512 (emphasis added).
If, however, there is no retrial because the district
court dismisses the case in response to plaintiff's clear and
unequivocal refusal to proceed with a second trial, and
especially where as here, the appellant does not challenge the
dismissal, then the earlier interlocutory order is simply not
reviewable. This result is both fair and prudent. Where the
dismissal was a sanction, as for failure to prosecute, the case
is distinguishable from those cases where the case was properly
litigated to a conclusion, and the unsuccessful party then seeks
on appeal to challenge the interlocutory order granting a new
trial.
Al-Torki v. Kaempen, -- F.3d ---, ---, 1996 WL 89101, *4 (9th
Cir. March 5, 1996). We would serve a greater purpose by
admonishing counsel to follow proper procedure and to heed the
orders of our colleagues on the trial bench, and by requiring
that litigants give the system the chance to resolve disputes
through trial, rather than allowing them to simply take a dive
and then seek relief in the court of appeals.
In Marshall, the plaintiff refused to proceed with
trial, and the district court dismissed the case for failure to
prosecute. We stated that "the scope of appellate review of an
order of dismissal is extremely narrow, confined solely to
whether the trial court has abused its discretion." 492 F.2d at
918. Appropriately, we found that the district court did not
abuse its discretion:
Indeed, appellant left the district court no
choice. . . . [T]he "proper procedure" was to
proceed. . . . The issues in the case may
well have been resolved. . . . If appellant
had proceeded, he might have been successful.
27
If appellant had proceeded and lost, the
appellate court would have had a complete
record upon which to make its determination.
For these reasons we affirm the
dismissal for lack of prosecution and do not
reach the substantive issue involving the
[underlying ruling] . . . .
Id. at 919.
Marshall emphasized that if we were to review the
interlocutory rulings, we would "undermine the ability of trial
judges to achieve the orderly and expeditious disposition of
cases." Id. What appellant would have us do, and what the
majority does, directly undermines the trial court's authority to
control the proceedings before it.
In Sullivan, plaintiffs sued an insurance company for a
premium refund. Plaintiffs sought class certification, which was
denied by the district court on the day of trial. In the face of
this ruling, plaintiffs refused to present any evidence. The
court then dismissed the case for failure to prosecute. We noted
that, since plaintiffs did not contend that the court abused its
discretion by dismissing for failure to prosecute, the only
matters they presented for review on appeal were the
interlocutory class certification decisions. We dismissed for
lack of an appealable order. Counsel for appellant, here, made
it very clear at oral argument that he does not challenge the
district court's discretion in dismissing his case.
In Spain, we faced the situation where, after the
district court granted partial summary judgment, the plaintiff
refused to proceed on her remaining claims of racial
discrimination and unlawful retaliation. She believed (as
28
appellant here mistakenly believes) that the court's previous
rulings effectively precluded her from succeeding on her
remaining claims. The court appropriately dismissed the
remaining claims for failure to prosecute. On appeal, we held
that the court did not abuse its discretion in so doing. Spain's
refusal to prosecute her remaining claims forever barred any
recovery on them. We reasoned that
[a] party disappointed with a court's ruling
may not refuse to proceed and then expect to
obtain relief on appeal from an order of
dismissal or default.
26 F.3d at 454. Bethel was no less obliged to proceed simply
because he had an earlier underlying judgment in his favor.
The majority tries to distinguish Spain on the basis
that the appellant here does not seek to be relieved of the
dismissal. I believe that he must, however, have the order of
dismissal set aside before the interlocutory rulings can be
reviewed. The majority, instead, saves appellant (and future
appellants like him) from his own sanctionable conduct and grants
him an undeserved opportunity to have the judgment from the first
trial reinstated. The majority reasons that, because review
under our ruling on the merits will end this litigation, the
underlying interlocutory orders were transformed into final
appealable orders.
This reasoning, while temptingly efficient, does not
comport with law or logic. The general rule is that an order
granting a new trial becomes reviewable after the second trial
(or other judgment entered in the normal course of proceedings).
29
If the second trial is aborted by a dismissal when a litigant
refuses to proceed at the moment of trial, the litigant must
suffer the consequences of his refusal. I would conclude that
Bethel's position, that he need not challenge the dismissal for
failure to prosecute, is fatal to his appeal.0
Were we simply to affirm this unquestionably proper
dismissal order, which I say we must, we would do no injustice to
appellant. When the district court informed appellant well
before the date of the second trial that, if he refused to
proceed, it would dismiss the case for failure to prosecute, the
record establishes that the appellant clearly indicated he
0
Analytically, a second trial held after grant of a new trial
under Fed. R. Civ. P. 59 can be viewed as a continuation of the
first. The new trial order thus merges with the second judgment.
New trial orders can be seen as part of the
original and ordinary trial process, to be
protected against immediate appellate
intrusion for reasons little different from
the reasons that preclude direct appeal from
evidentiary rulings during the course of
trial. In many cases a retrial can be
accomplished much more quickly than an
appeal, and the result may avoid the need for
any appeal.
15 B Charles A. Wright et al., Federal Practice and Procedure
§3915.5 (2d ed. 1992 & Supp. 1995).
Although this case involves the grant of a new trial
under Fed. R. Civ. P. 60(b)(3), the grant of a new trial under
either rule is an unappealable interlocutory order which is
afforded review after subsequent judgment. When appeal is taken
from a properly obtained judgment in the continued proceedings,
if the judgment is inconsistent with the result in the first
trial, the appellate court can then determine whether the initial
result prevails because the grant of the new trial was error.
When, however, the entire case is dismissed for failure to
prosecute, unless the court abused its discretion in ordering the
sanction, the correctness of any interlocutory decisions is
irrelevant and the sanction prevails.
30
understood the consequences of a judgment for failure to
prosecute: his appeal of the underlying rulings would be barred.
The district court indicated, as we did in Marshall,
that if appellant prevailed at the second trial his allegations
of error would be cured by results; and if not, he could then
appeal. The court did not demand anything unreasonable from
appellant, but required only that he give the system a chance to
produce a favorable result under well-established procedure. And
if the court's interlocutory ruling had caused him to lose, he
could appeal. That is how the system works. Appellant
nevertheless chose to quit at a most inopportune time. We should
not save him from his knowing and calculated decision.
The court in Al-Torki, confronted this very issue, and
held that an order granting a new trial is unreviewable if the
claims are subsequently dismissed for failure to prosecute. Like
appellant, Al-Torki won at the first trial. After the district
court granted defendant a new trial, Al-Torki failed to appear at
the second trial, and the district court dismissed the case for
failure to prosecute. Unlike appellant, Al-Torki argued that the
district court erred by dismissing for failure to prosecute.
After the appellate court rejected Al-Torki's argument
regarding the dismissal, it determined that, as a result of the
proper dismissal, the order granting the new trial was
unreviewable. The court opined:
This case presents a simple refusal to appear
at the time set for trial. Such a willful
failure to appear for trial forfeits a
litigant's right to appeal interlocutory
orders prior to judgment.
31
1996 WL 89101, *5. Appellant's conduct here was no less willful.
The result and reasoning in Al-Torki is sound, and it is
consistent with our jurisprudence.
II.
I fully recognize that a litigant who has succeeded in
a first trial may not want to fight the battle again, and that
the rule denying immediate review of an order granting a new
trial places burdens on the originally successful litigant.
Nevertheless, new trial orders are not unusual, and the rule is
firmly rooted in the policies embodied by Congress in 28 U.S.C.
§1291, which support appeals only from, and of, final judgments,
save in very limited circumstances.
Moreover, the law recognizes these burdens and provides
a procedure by which a party may move for entry of judgment in
favor of the opposing party. If his motion is granted, he may
then appeal without enduring the second trial. See United
States V. Procter & Gamble Co., 356 U.S. 677 (1958) (entry of a
final judgment in favor of party sought by opposing party allows
the opposing party to appeal the adverse underlying rulings);
Trevino-Barton v. Pittsburgh Nat'l Bank, 919 F.2d 874 (3d Cir.
1990) (same). This procedure affords review of the order, even
though the party appealing solicited the judgment.
A party who is willing to gamble on review of
the new trial order, however, may be able to
win the right to appeal by soliciting entry
of an adverse final judgment. There is a
cogent argument that the solicited judgment
is final if the scope of review is limited to
the order granting a new trial and affirmance
of that order leads to affirmance of the
judgment rather than remand for a new trial.
32
Appeal is bought at the cost of wagering all
on reversal of the new trial order, but this
cost may seem small to a party who is unable
to afford a new trial in any event.
15B Charles A. Wright et al., Federal Practice and Procedure
§3915.5 (2d ed. 1992 & Supp. 1995).
Appellant states that he moved for entry of judgment on
this basis, but the district court denied the motion. He did not
attempt to appeal this order -- which would be rendered
essentially unreviewable following a retrial -- under the
collateral order doctrine of Cohen v. Beneficial Indus. Loan
Corp., 337 U.S. 541 (1949), and instead emphatically indicated to
the court and opposing counsel that, he would indeed "put on a
complete trial." Nonetheless, appellant refused to go forward on
the day of trial, and the district court, not surprisingly,
dismissed the case for failure to prosecute.
III.
Appellant's refusal to try his case combined with
counsel's statement at oral argument on appeal that appellant now
will risk all on our decision, does not substitute for his
obligation to obey proper orders and to follow proper procedure,
and can neither nullify the otherwise proper dismissal, nor
resuscitate his earlier verdict. I would hold that the district
court's underlying orders are not reviewable after a dismissal
for failure to prosecute unless and until appellant can
successfully challenge the dismissal. Because the dismissal here
is unassailed and unassailable, I would affirm the judgment of
33
the district court, and never reach the issue of whether the
district court erred by ordering a new trial.
34