In Re: Arthur Baldwin v. , 700 F.3d 122 ( 2012 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 11-4447
_____________
IN RE:
ARTHUR BALDWIN; LINDA COBB; JEROME
BULLOCK; ANGELA FORD; JOANNE ANDIORIO; J.W.
WALLACE; TWYLA JOHNSON; NICOLE GAINES;
WILLIAM THOMPKINS; ROY PENNER; MELODY
CAUSEY; JAMES SHEALEY; LEONARD R. DUNCAN;
RENEE FRAZIER; CLAUDIA ALLEN; EUGENE
DOWING; GEORGE CALLOWAY; B.J. LEBER;
REVERAND RONALD PETERS,
Petitioners
_____________
On a Petition for a Writ of Mandamus from the United States
District Court
for the Western District of Pennsylvania
(Related to D.C. Civil No. 2-10-cv-00800)
_____________
Argued May 31, 2012
Before: AMBRO, JORDAN, and VANASKIE, Circuit
Judges
(Filed: November 26, 2012)
1
Mark R. Hamilton, Esq. (ARGUED)
Phillip J. Sbrolla, Esq.
Rebecca Sember Izsak, Esq.
Cipriani & Werner, P.C.
650 Washington Road, Suite 700
Pittsburgh, PA 15228
Counsel for Petitioners Arthur Baldwin, Linda Cobb,
Jerome Bullock, Angela Ford, Joanne Marie Andiorio,
J.W. Wallace, Twyla Johnson, Nicole Gaines, William
Thompkins, Roy Penner, Leonard R. Duncan, Renee
Frazier, Claudia Allen, Eugene Downing, George
Calloway, B.J. Leber, and Reverend Ronald Peters
Frank H. Scialdone, Esq.
Mazanec, Raskin & Ryder Co., L.P.A.
100 Franklin’s Row
34305 Solon Road
Cleveland, OH 44139
Counsel for Petitioners James Shealey and Mel Lee
Causey 1
Nicholas D. Krawec, Esq.
Arthur W. Zamosky, Esq. (ARGUED)
Bernstein Law Firm P.C.
707 Grant Street, Suite 2200
Gulf Tower
Pittsburgh, PA 15219
1
Mel Lee Causey is incorrectly identified in the
caption as “Melody Causey.”
2
Counsel for Respondent Official Committee of
Unsecured Creditors, on Behalf of the Lemington
Home for the Aged
_____________
OPINION
_____________
VANASKIE, Circuit Judge.
Concerned about the consequences of a District Court
order setting a 7.5 hour per side limit on the parties’
presentation of evidence at trial, the sixteen named defendants
in this litigation (the “Lemington Defendants”) seek a writ of
mandamus to vacate the time- limit order. 2 Because we
believe that a direct appeal presents an adequate means for
the Lemington Defendants to challenge the District Court’s
order, we will deny the petition for a writ of mandamus.
I.
The Lemington Home for the Aged (the “Home”) is a
non-profit nursing care facility in Pittsburgh, Pennsylvania.
Beginning in the 1980’s, the Home faced a series of
escalating financial difficulties, eventually culminating in the
Home ceasing to admit new patients and filing a Chapter 11
bankruptcy petition in the United States Bankruptcy Court for
the Western District of Pennsylvania in 2005. The
Bankruptcy Court appointed a Committee of Unsecured
2
Although this petition’s caption includes nineteen
named defendants, the parties state that there are presently
only sixteen named defendants.
3
Creditors (the “Committee”), approved closure of the Home,
and authorized the Committee to commence adversary
proceedings against the Home’s officers and directors in the
District Court.
On August 27, 2007, the Committee filed its second
amended complaint on behalf of the debtor, asserting causes
of action against the Lemington Defendants—former officers
and directors of the Home—for breach of their fiduciary
duties of care and loyalty and for deepening insolvency. The
District Court granted summary judgment to the Lemington
Defendants, holding that the business judgment rule and the
doctrine of in pari delicto precluded the Committee’s breach
of fiduciary duty claims, and that the Committee failed to
show fraud sufficient to support a deepening insolvency
claim. We vacated the District Court’s grant of summary
judgment and remanded for trial. See Official Comm. of
Unsecured Creditors ex rel. Estate of Lemington Home for
the Aged v. Baldwin (In re Lemington Home for the Aged),
659 F.3d 282, 285 (3d Cir. 2011).
Following remand, the District Court issued an order
on October 31, 2011, scheduling jury selection and trial for
December 5, 2011. The District Court also scheduled a
preliminary pre-trial conference for November 22, 2011 and a
final pretrial conference for December 1, 2011.
Before the November 22, 2011 preliminary pretrial
conference, the parties stipulated to fourteen facts and
identified approximately 400 proposed exhibits. The parties
also submitted proposed witness lists. The Committee stated
that it intended to call up to fifty-one witnesses, and the
Lemington Defendants stated that they intended to call up to
4
thirty-four witnesses. The Lemington Defendants’ witness
list included twenty definite witnesses and fourteen standby
witnesses. Of the definite witnesses, five were expert
witnesses and fifteen were fact witnesses. The Lemington
Defendants’ descriptions of many of their witnesses’ intended
testimony were similar. For example, the Lemington
Defendants indicated that six of their definite director
witnesses intended to testify as to their responsibilities to the
Home and the reasons for the decision to cease admitting new
residents to the Home and to file for bankruptcy in 2005.
On November 22, 2011, the District Court held a
preliminary pretrial conference, during which it expressed
frustration with what it viewed as the parties’ failure to
“streamline [the] case.” (Lemington Defendants’ Pet. at 31.)
In particular, the District Court noted that “[t]he duplication
of witnesses [was] overwhelming,” and that the parties
appeared “unwilling[] to stipulate to the most basic facts.”
(Id.) Explaining that it would not allow the parties to force
the “jury [to] sit through endless repetitive testimony,” the
District Court limited each side’s witness testimony to 7.5
hours and limited the parties’ opening and closing statements
to half an hour per side per statement. (Id.) In total, the
District Court allowed each side 8.5 hours to present their
cases.
The Lemington Defendants objected to the District
Court’s time-limit order, explaining that they did not believe
that 8.5 hours was adequate time to present their case. The
District Court responded that it viewed the expert testimony
and exhibits as excessive and the fact witnesses as redundant.
It did, however, offer the Lemington Defendants the option of
extending their opening and closing time to forty minutes, if
5
they divided their opening and closing time between the
officers and the directors. It thus extended the Lemington
Defendants’ total possible presentation time to eight hours
and fifty minutes.
Following the November 22, 2011 conference, the
parties stipulated to ten additional facts. The Lemington
Defendants also added an additional definite witness to their
witness list, and provided a supplemental list of thirty-seven
possible creditor witnesses to testify regarding damages. The
thirty-seven creditor witnesses were almost entirely
custodian-of-records witnesses.
The Lemington Defendants also moved for
reconsideration of the District Court’s trial time-limit order,
contending that they did not have warning that the District
Court would impose such a short time limit, and that the time
allotted to them was insufficient to present their case. The
Lemington Defendants instead estimated that the trial would
likely require a total of approximately sixteen days, or eight
days per side.
The District Court held the final pretrial conference on
December 2, 2011. Addressing the Lemington Defendants’
motion for reconsideration, the District Court observed that,
in view of its well-settled practice of trying cases “on the
clock,” the parties had fair warning that a time limit would be
imposed. The District Court also expressed disappointment
that the parties had not cooperated with each other since the
November 22, 2011 conference, and reiterated that “[i]t’s
unfair to our jurors to bring them in here and just put witness
after witness on the stand with repetitive testimony.”
(Lemington Defendants’ Pet. at 89.) The District Court
6
concluded that it “would have been willing to give [the
parties] a little more time or at least talk to [them] about [the
time-limit order] if [they] had followed [its] suggestions,” but
because they did not “work with [the District Court] . . . [the
District Court will] not . . . give [the parties] 16 days to try the
case.” (Id. at 97.) The District Court offered, however, to
stay the trial and to certify the time-limit issue for appeal.
Based on the District Court’s order certifying the time-
limit issue for appeal, the Lemington Defendants petitioned
for permission to appeal under 28 U.S.C. § 1292(b) and, in
the alternative, for a writ of mandamus. We dismissed the
petition to appeal under § 1292(b) because the District Court
did not certify that the time-limit order “involve[d] a
controlling question of law as to which there is substantial
ground for difference of opinion” pursuant to § 1292(b). We
now address the Lemington Defendants’ petition for a writ of
mandamus.
II.
We have authority to issue a writ of mandamus under
28 U.S.C. § 1651(a), which permits “[t]he Supreme Court and
all courts established by Act of Congress [to] issue all writs
necessary or appropriate in aid of their respective
jurisdictions and agreeable to the usages and principles of
law.” 3 The writ of mandamus is available exclusively in
3
Because 28 U.S.C. § 1651(a) allows us to issue writs
of mandamus “in aid of” our jurisdiction, “the case must be
one that lies within ‘some present or potential exercise of
appellate jurisdiction.’” Westinghouse Elec. Corp. v.
Republic of Phil., 951 F.2d 1414, 1422 (3d Cir. 1991)
7
“exceptional circumstances.” Will v. United States, 389 U.S.
90, 95 (1967) (citing De Beers Consol. Mines, Ltd. v. United
States, 325 U.S. 212, 217 (1945)). We ordinarily may issue
“the writ only to confine inferior courts to their lawful
jurisdiction or to compel them to exercise authority when they
have a duty to do so.” De Masi v. Weiss, 669 F.2d 114, 117
(3d Cir. 1982) (citing Will, 389 U.S. at 95). To obtain
mandamus relief, “the petitioner must establish both that there
is (1) ‘no other adequate means’ to attain the relief sought,
and (2) a right to the writ that is ‘clear and indisputable.’” In
re Briscoe, 448 F.3d 201, 212 (3d Cir. 2006) (quoting Cheney
v. U.S. Dist. Court, 542 U.S. 367, 380-81 (2004)). Even if the
petitioner satisfies both prerequisites, our decision to issue the
writ remains discretionary. Id.The Lemington Defendants argue that their right to the
writ is clear and indisputable because the time-limit order is a
clear abuse of discretion, and that they have no other adequate
means to obtain relief because “without the granting of the
Writ, [the Lemington Defendants’] pleas for adequate time to
present their case at trial will go unheard, and there will be no
way to rectify the harm imposed by the district court’s time
limitations prior to the time set for trial.” (Lemington
Defendants’ Pet. at 17.) In particular, the Lemington
Defendants emphasize that immediate review is necessary
because, if the Lemington Defendants can appeal only after
(quoting Bogosian v. Gulf Oil Corp., 738 F.2d 587, 591 (3d
Cir. 1984)). This case is within the exercise of our potential
appellate jurisdiction because the District Court had
jurisdiction under 28 U.S.C. §§ 1331 and 1334(b), and we
may obtain jurisdiction after the District Court enters final
judgment under 28 U.S.C. § 1291.
8
the District Court enters final judgment, “the appellate court
[will] be asked to speculate on the defenses that [the
Lemington Defendants] intended to present and to re-
construct the case that [the Lemington Defendants] intended
to set forth.” (Lemington Defendants’ Reply Br. at 14.) They
also contend that the District Court’s time-limit order
“violates due process and has in effect denied . . . their right
to a jury trial, thus, justifying mandamus relief under the
law.” (Id. at 13.)
A.
The “no other adequate means” requirement to
mandamus relief “emanates from the final judgment rule,”
which ordinarily requires the parties to await the district
court’s entry of final judgment before seeking appellate
review. In re Diet Drugs Prods. Liab. Litig., 418 F.3d 372,
379 (3d Cir. 2005) (quoting Westinghouse Elec. Corp. v.
Republic of Phil., 951 F.2d 1414, 1422 (3d Cir. 1991)); see
also In re Briscoe, 448 F.3d at 212 (“An appellate court’s
overuse of the writ to review interlocutory district court
decisions would undermine the Congressional policy against
piecemeal appeals.”). In accordance with our respect for the
final judgment rule, “a writ of mandamus should not be
issued where relief may be obtained through an ordinary
appeal.” In re Chambers Dev. Co., 148 F.3d 214, 223 (3d
Cir. 1998) (quoting Hahnemann Univ. Hosp. v. Edgar, 74
F.3d 456, 461 (3d Cir. 1996)).
Assuming that the Lemington Defendants lose at trial,
they will be able to appeal the District Court’s time-limit
order following the entry of final judgment. See, e.g.,
Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d
9
604, 611 (3d Cir. 1995) (reviewing a district court’s trial
time-limit order). Although we appreciate that postponing
review until after the District Court enters final judgment may
increase litigation costs by forcing the parties to try this case
under conditions that possibly constitute reversible error,
“adverse interlocutory rulings . . . [that] increase the cost of
litigation, cause inconvenience, or result in unanticipated
delay . . . typically do not . . . warrant the extraordinary step
of mandamus intervention.” In re Briscoe, 448 F.3d at 214(citations omitted); see also Allied Chem. Corp. v. Daiflon,
Inc., 449 U.S. 33, 36 (1980) (a litigant has other adequate
means to challenge a district court’s order for a new trial in
part because “[a] litigant is free to seek review of the
propriety of such an order on direct appeal”). Moreover, the
Lemington Defendants may win at trial, thereby avoiding our
need to address their challenge to the time-limit order
altogether.
We are not persuaded by the Lemington Defendants’
argument that they may have difficulty demonstrating on
appeal how the time-limit order caused them prejudice at
trial. Although the Lemington Defendants are correct that the
time-limit order will not be reversible error if the record
indicates that it caused no prejudice at trial, the Lemington
Defendants’ possible need to show prejudice is no different
than the burden on most litigants appealing purported trial
errors. See, e.g., Duquesne Light Co., 66 F.3d at 611
(“[D]espite our concern about the district court’s [time-limit
decision], we will not reverse because we are unable to
conclude that its ruling had any impact on the outcome of the
case.”). Indeed, the fact that the Lemington Defendants may
be unable to show prejudice at trial suggests that their right to
relief is not clear and indisputable, a sine qua non of
10
mandamus relief. In re Briscoe, 448 F.3d at 212.
Accordingly, the Lemington Defendants’ potential difficulty
in demonstrating prejudice at trial militates against granting
the writ, rather than in favor of granting it.
B.
We also reject the Lemington Defendants’ argument
that we may grant mandamus relief on the grounds that the
District Court’s time limit “has in effect denied [them] their
right to a jury trial.” (Lemington Defendants’ Reply Br. at
13.) The Lemington Defendants correctly assert that writs of
mandamus have issued to protect the right to a jury trial. See,
e.g., Beacon Theatres v. Westover, 359 U.S. 500, 511 (1959)
(“[W]e think the right to grant mandamus to require [a] jury
trial where it has been improperly denied is settled.”);
Eldredge v. Gourley, 505 F.2d 769, 770 (3d Cir. 1974)
(granting a writ of mandamus to protect the right to a jury
trial while the district court action remained pending); see
also Maloney v. Plunkett, 854 F.2d 152, 154 (7th Cir. 1988)
(noting that the Supreme Court has suggested that “a less
stringent test [for mandamus] might be proper where the
challenged ruling ha[s] infringed [on] the right to [a] jury
trial”); Golden v. Kelsey-Hayes Co. (In re Golden), 73 F.3d
648, 658 (6th Cir. 1996) (“Where the constitutional right to a
jury trial is involved, . . . some courts . . . have held that
neither of the[] two preconditions [to mandamus relief] needs
to be met.”) (citations omitted).
The unsound premise of the Lemington Defendants’
argument is that the time-limit order deprives them of their
right to a jury trial. In fact, the order does not preclude
adjudication of this controversy by a jury.
11
To avoid the indisputable fact that their right to a jury
trial remains intact, the Lemington Defendants suggest that if
mandamus relief is permissible prior to final judgment to
protect the right vel non to a jury trial, then it is also
permissible prior to final judgment to ensure “a fair jury
trial.” (Lemington Defendants’ Pet. at 18.) Because the
District Court’s time-limit order does not, in the Lemington
Defendants’ view, provide adequate time for them to present
their defenses, they assert that the time-limit order violates
their right to a fair trial before a jury, and that they therefore
may obtain mandamus relief before trial, regardless of the
availability of relief after final judgment.
The Lemington Defendants’ attempt to shoehorn a fair
trial claim into a jury trial claim for which mandamus review
may lie is unavailing. There is simply no basis for us to
conclude that the time-limit order has the effect of depriving
the parties of a jury trial. Nor can we decide ex ante that the
effect of the time-limit order is so draconian and such a
mockery of the trial process as to amount to no trial at all. It
may be that, in this case, the time-limit order is found to be
reversible error. But that determination must await the
presentation of a record that identifies with precision the
evidence that the Lemington Defendants were unable to
present because the trial judge’s clock ran out. To hold
otherwise would invite parties to seek mandamus relief
whenever they are “placed on the clock,” requiring appellate
courts to hazard guesses as to whether an impact of a time-
limit order is so severe as to deprive a party of the right to a
“fair” jury trial. We decline to endorse such use of the
extraordinary remedy of the writ of mandamus.
12
Notably, we have recognized that a district court may
impose limits on the parties’ presentation time at trial, so long
as the court both “mak[es] an informed analysis based on a
review of the parties’ proposed witness lists and proffered
testimony” and “allocates trial time evenhandedly.”
Duquesne Light Co., 66 F.3d at 610. Other circuits have
likewise concluded that a district court may, in its discretion,
set reasonable trial time limits. See, e.g., United States v.
DeCologero, 364 F.3d 12, 25 (1st Cir. 2004) (“[L]imits on
witnesses and the time allowed to each side are permissible
measures.”) (citations omitted); Deus v. Allstate Ins. Co., 15
F.3d 506, 520 (5th Cir. 1994) (“In the management of its
docket, the court has an inherent right to place reasonable
limitations on the time allotted to any given trial.”) (citing
United States v. Reaves, 636 F. Supp. 1575, 1577 (E.D. Ky.
1986)); Sutkiewicz v. Monroe Cnty. Sheriff, 110 F.3d 352, 361
(6th Cir. 1997) (“[A] district court has broad discretion to
place limits on the presentation of evidence to prevent delay,
waste of time, and needless presentation of cumulative
evidence.”) (citing Duquesne Light Co., 66 F.3d at 609); MCI
Commc’ns Corp., 708 F.2d at 1172-73 (holding that
reasonable trial time limits do not violate the right to a fair
trial); Johnson v. Ashby, 808 F.2d 676, 678 (8th Cir. 1987)
(“Trial courts have discretion to place reasonable limits on the
presentation of evidence . . . .”) (citations omitted); Gen.
Signal Corp. v. MCI Telecomms. Corp., 66 F.3d 1500, 1508
(9th Cir. 1995) (“Generally, a district court may impose
reasonable time limits on a trial.”) (citations omitted).
Whether a District Court has abused its discretion in
setting and administering a time-limit order is best addressed
after trial, with a reviewing court able to assess a record that
shows what was presented to the jury and what a party was
13
unable to present. Only then may an informed decision be
made as to whether a party was denied a fair trial. 4
In denying mandamus relief, we emphasize that we are
not ruling on the propriety of the time-limit order. We
appreciate that this is a complex case, that the Committee has
sued sixteen individual defendants, and that many of the
defendants may need to testify to present their own defenses,
even if some of their testimony is duplicative. Because 7.5
hours may ultimately be too little time for the Lemington
Defendants to adequately present their case, we do not
conclude that the time-limit order is permissible or valid. We
hold only that a post-judgment appeal is adequate to assure
meaningful review of the propriety of the time-limit order. 5
4
The Lemington Defendants have not cited any case
where an appellate court has held before trial that a time-limit
order deprived a party of a fair trial.
5
It is difficult to conceive how either side in this
complex case could possibly present the necessary evidence
to a jury in 7.5 hours of trial time. Although the Committee
has not sought immediate review of the time-limit order, it
did make clear at oral argument that it was not willing to
concede that the order was a proper exercise of discretion.
Instead, the Committee asserted that it was not waiving its
right to challenge the time-limit order if it does not prevail at
trial. It is also difficult to understand the District Court’s
rationale in allocating to the entire defense side of the case
7.5 hours of evidence presentation time given the fact that
there may be different liability rules and defenses applicable
to defendants who were members of the board of directors
versus defendants who were officers of the non-profit entity.
Compare 15 Pa. Cons. Stat. Ann. § 5712(a)-(b) (standard of
14
III.
For the foregoing reasons, we will deny the petition for
a writ of mandamus.
care for directors of a nonprofit corporation) with 15 Pa.
Cons. Stat. Ann. § 5712(c) (standard of care for officers of a
nonprofit corporation). We therefore urge the District Court
to re-examine the time-limit order to avoid the necessity of a
re-trial. We trust that if, at any time, the District Court is
persuaded that any time limits it has set are not sufficient to
allow for a fair presentation of the case, the Court will take
appropriate steps to see that due process is satisfied.
15