Aztar Indiana Gaming v. Kern, Matthew B.

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 00-3753 and 00-3879
Janet Greenwell,
Plaintiff, Cross-Appellant,
v.
Aztar Indiana Gaming Corporation,
doing business as Aztar Casino,
Defendant, Third-Party Plaintiff/Appellant,
Cross-Appellant,
v.
Matthew B. Kern and Gregory J. Loomis,
Third-Party Defendants/Appellees.
Appeals from the United States District Court
for the Southern District of Indiana, Evansville Division.
No. 98 C 211--Richard L. Young, Judge.
Argued June 6, 2001--Decided October 4, 2001
Before Fairchild, Bauer, and Posner,
Circuit Judges.
Posner, Circuit Judge. We have a three-
cornered dispute that raises a tangle of
jurisdictional and procedural issues. The
plaintiff, Greenwell, suffered back pain
while walking in a casino boat on which
she was employed by the owner, Aztar. (On
the origins and popularity of modern
riverboat gambling, see Lori Chapman,
"Riverboat Gambling in the Great Lakes
Region: A Pot of Gold at the End of the
Rainbow or Merely ’Fool’s Gold?,’" 26 U.
Toledo L. Rev. 387, 390-91 (1995); Ronald
J. Rychlak, "The Introduction of Casino
Gambling: Public Policy and the Law," 64
Miss. L.J. 291, 309 (1995).) The boat was
afloat on a navigable waterway of the
United States in Indiana. Aztar referred
Greenwell to two doctors, Kern and
Loomis, who operated on her back--
negligently, she claims. Yet her suit,
which charges both a work-related injury
to her back and medical malpractice and
related torts in the treatment of the
injury, is not against the doctors but
against Aztar. Aztar, however has
impleaded the doctors, contending that
they are the primary wrongdoers.
Greenwell bases federal jurisdiction
primarily on the Jones Act, which applies
the principles of the FELA to maritime
workers, 46 U.S.C. App. sec. 688(a);
Miles v. Apex Marine Corp., 498 U.S. 19,
32 (1990); Weibrecht v. Southern Illinois
Transfer, Inc., 241 F.3d 875, 877 (7th
Cir. 2001); Igneri v. Cie. de Transports
Oceaniques, 323 F.2d 257, 266 (2d Cir.
1963), and on the admiralty doctrine of
maintenance and cure, which requires a
seaman’s employer to provide food,
lodging, and--what is relevant here--
medical services to a seaman injured
while employed on the ship. Lewis v.
Lewis & Clark Marine, Inc., 121 S. Ct.
993, 997 (2001); Galveston County
Navigation District No. 1 v. Hopson
Towing Co., 92 F.3d 353, 357 n. 8 (5th
Cir. 1996); Fitzgerald v. A.L. Burbank &
Co., 451 F.2d 670, 679 (2d Cir. 1971).
The seaman is unlikely to have an
alternative source of maintenance and
cure when at sea; the doctrine thus
formalizes and makes mandatory what, in
its absence, would probably be a
contractual undertaking by the employer.
Cf. Aguilar v. Standard Oil Co., 318 U.S.
724, 730 (1943); Silmon v. Can Do II,
Inc., 89 F.3d 240, 242 (5th Cir. 1996).
The duty is nonwaivable, perhaps out of
fear of duress against seamen who are
injured, or fall sick, far from land, and
so are at the mercy of their employer.
Had Greenwell’s back pain been caused by
an injury sustained at work, as she
originally charged, and had the
malpractice in treating her been
committed by a doctor employed by Aztar,
her employer, Aztar would have been
liable in accordance with standard
principles of respondeat superior. It
would have been liable under both the
Jones Act and the doctrine of maintenance
and cure, because the malpractice would
have been committed by a fellow employee
acting within the scope of his
employment. De Zon v. American President
Lines, Ltd., 318 U.S. 660, 665-69 (1943);
Fitzgerald v. A.L. Burbank & Co., supra,
451 F.2d at 679-80. Even if the doctor
had been an independent contractor hired
by Aztar to discharge the "cure" part of
Aztar’s duty of maintenance and cure,
rather than an employee, Aztar would have
been liable, as explained in id. at 680.
But after admitting in her deposition
that she had been seeing a chiropractor
about her back before experiencing back
pain on board the ship, she amended her
complaint to drop the charge that she had
been injured at work and charged instead
that Aztar had either directed her to use
the incompetent doctors who operated on
her or had fraudulently induced or
otherwise improperly compelled her to use
them. Under standard tort principles
(see, e.g., Reed v. Bascon, 530 N.E.2d
417, 420-21 (Ill. 1988)) that are equally
applicable to maritime cases, Aztar would
be liable, not vicariously but as a
negligent actor, if it steered Greenwell
to doctors who it knew or should have
known were incompetent. Fitzgerald v.
A.L. Burbank & Co., supra, 451 F.2d at
679; cf. Barbetta v. S/S Bermuda Star,
848 F.2d 1364, 1369 (5th Cir. 1988).
That’s a big "if." Steering a patient to
a doctor who commits malpractice is not
itself malpractice or otherwise tortious
unless the steerer believes or should
realize that the doctor is substandard,
and that is not claimed. Yet the district
judge, instead of dismissing the
malpractice claim on the merits and
therefore with prejudice, dismissed it
without prejudice. He thought it merely
premature, because Greenwell hadn’t
completed the precomplaint review
procedure to which Indiana subjects
claims of medical malpractice. Ind. Code
sec. 34-18-8-4; Hill v. Porter Memorial
Hospital, 90 F.3d 220, 222 (7th Cir.
1996); Sherrow v. GYN, Ltd., 745 N.E.2d
880, 884 (Ind. App. 2001). The judge also
dismissed Aztar’s third-party claim
against the doctors.
Both dismissals are interlocutory,
because the remainder of Greenwell’s
complaint, consisting of fraud claims
against Aztar that invoke the district
court’s supplemental jurisdiction, 28
U.S.C. sec. 1367, remains pending in the
district court. The general rule in the
federal system is that only final
judgments are appealable. 28 U.S.C. sec.
1291. The judge purported to make the
dismissals appealable by entering partial
final judgments under Fed. R. Civ. P.
54(b). This was improper with respect to
the dismissal of Greenwell’s claims. Rule
54(b) can be used only to enter judgment
"as to one or more but fewer than all of
the claims or parties," with "claim"
defined to include all legal grounds that
are based on closely related facts.
Indiana Harbor Belt R.R. v. American
Cyanamid Co., 860 F.2d 1441, 1444 (7th
Cir. 1988). The retained fraud claims
overlap the dismissed claims too closely
to satisfy this criterion. In contrast,
the dismissal of the third-party claim
let the doctors out of the case, thus
satisfying the "fewer than all of the . .
. parties" provision of Rule 54(b) and
making that dismissal a final,
immediately appealable judgment. So their
appeal is secure.
Now it is true that interlocutory
appeals are authorized in admiralty cases
by 28 U.S.C. sec. 1292(a)(3), but this
route isn’t open to Greenwell either, and
for two reasons. First, as we’ll see,
Greenwell failed to invoke admiralty
procedures, Continental Casualty Co. v.
Anderson Excavating & Wrecking Co., 189
F.3d 512, 517 (7th Cir. 1999), and
second, the only interlocutory appeals
that fall within section 1292(a)(3) are
those that "determin[e] the rights and
liabilities of the parties." This
language has been interpreted to exclude
procedural orders, Wingerter v. Chester
Quarry Co., 185 F.3d 657, 668-70 (7th
Cir. 1999) (per curiam); Sea Lane Bahamas
Ltd. v. Europa Cruises Corp., 188 F.3d
1317, 1321-22 (11th Cir. 1999), such as
the order in this case dismissing
Greenwell’s claim for failure to exhaust
administrative remedies. It’s a sensible
interpretation. A rule allowing all
interlocutory orders to be immediately
appealable would flood us with appeals.
Anyway the purpose of the special
admiralty appeal statute is merely to
allow the determination of liability to
be appealed without awaiting the
determination of damages, Beluga Holding,
Ltd. v. Commerce Capital Corp., 212 F.3d
1199, 1203 (11th Cir. 2000), consistent
with the historic admiralty practice (now
of course widely imitated in ordinary
civil cases as well) of trying liability
and damages separately. Wingerter v.
Chester Quarry Co., supra, 185 F.3d at
670.
That leaves only one route for
Greenwell’s appeal: the doctrine of
pendent appellate jurisdiction. The
dismissal of Aztar’s third-party
complaint against the doctors is
appealable by virtue of Fed. R. Civ. P.
54(b), as we have said, and Greenwell’s
appeal is closely related to it. But
after the Supreme Court questioned the
existence of the doctrine in Swint v.
Chambers County Commission, 514 U.S. 35,
43-51 (1995), we turned skittish,
describing it as a "controversial and
embattled doctrine" in United States v.
Board of School Commissioners, 128 F.3d
507, 510 (7th Cir. 1997), and invoking it
not a single time in the six years after
Swint was decided. Yet the doctrine
clearly still lives, for it has been
invoked by the Supreme Court since Swint,
in Clinton v. Jones, 520 U.S. 681, 707 n.
41 (1997), where the Court said that "the
Court of Appeals correctly found that
pendent appellate jurisdiction over this
issue was proper." Cf. Vermont Agency of
Natural Resources v. United States ex
rel. Stevens, 529 U.S. 765, 770 n. 2
(2000). It has also been invoked by our
sister circuits. See Comstock Oil & Gas
Inc. v. Alabama & Coushatta Indian
Tribes, No. 00-40088, 2001 WL 902139, at
*3 (5th Cir. Aug. 27, 2001); Streit v.
County of Los Angeles, 236 F.3d 552, 559
(9th Cir. 2001); In re Stoltz, 197 F.3d
625, 629 (2d Cir. 1999); Twelve John Does
v. District of Columbia, 117 F.3d 571,
574-75 (D.C. Cir. 1997). This is an apt
case for the use of the doctrine.
Greenwell’s malpractice claim against
Aztar is entwined with Aztar’s indemnity
claim against the doctors (Greenwell is
trying to hold Aztar liable for the
doctors’ acts, and indemnity depends on
whether she succeeds), and since we must
decide the latter, we might as well
decide the former at the same time and
head off a second appeal--so this is one
of those cases in which allowing an
interlocutory appeal prevents rather than
produces piecemeal appeals, while if the
liability and indemnity issues did not
overlap there would be only a limited
economy from deciding them in one rather
than two appeals. And though the special
admiralty appeal statute is not
applicable, it reflects a relaxed view of
finality hospitable to a doctrine that
enables certain interlocutory orders to
be brought up to the court of appeals
earlier than they could be in an ordinary
civil case. Pendent appellate
jurisdiction is that doctrine.
So we can proceed to the merits, where
we first observe that the district judge
erred in dismissing Greenwell’s claim on
the basis of the Indiana medical-review
statute. The statute governs claims under
Indiana law (thus including diversity
suits, Jones v. Griffith, 870 F.2d 1363,
1367-68 (7th Cir. 1989); Hines v. Elkhart
General Hospital, 603 F.2d 646-47 (7th
Cir. 1979)), not claims under federal
law, as correctly noted in Smith v.
Indiana, 904 F. Supp. 877, 879-80 (N.D.
Ind. 1995). The judge should have
dismissed the claim, all right, but on
the merits.
There is an anterior question, however,
of whether Greenwell successfully invoked
federal admiralty jurisdiction. Her
contention that Aztar violated its duty
of maintenance and cure by steering her
to the doctors who operated on her
establishes a maritime connection: she’s
a maritime employee and Aztar a maritime
employer. At one time no more would have
been necessary to place the case within
the admiralty jurisdiction. Jerome B.
Grubart, Inc. v. Great Lakes Dredge &
Dock Co., 513 U.S. 527, 531-34 (1995);
The Plymouth, 70 U.S. (3 Wall.) 20, 36
(1866). But now a substantial
relationship between the alleged tort and
some traditional maritime activity must
also be shown. Sisson v. Ruby, 497 U.S.
358, 364-67 (1990); East River S.S. Corp.
v. Transamerica Delaval Inc., 476 U.S.
858, 864 (1986); Foremost Ins. Co. v.
Richardson, 457 U.S. 668, 673-75 (1982);
Mink v. Genmar Industries, Inc., 29 F.3d
1543, 1545 (11th Cir. 1994). That element
is missing here, just as it would be if
Greenwell were complaining that an
employee of Aztar had broken into her
house and poisoned her goldfish. Remember
that it’s not argued that Aztar knew or
had reason to believe that the doctors
were incompetent. The referral was
innocent, and the alleged negligence of
the doctors unforeseeable. Jutzi-Johnson
v. United States, No. 00-2411, 2001 WL
1002736 at *2-4 (7th Cir. Sept. 4, 2001);
Beul v. ASSE International, Inc., 233
F.3d 441, 447 (7th Cir. 2000). In any
event, neither in the goldfish case nor
in our case is there enough of a maritime
flavor to warrant trundling out a body of
law designed to regulate maritime
accidents, which is the distinction
(between an adventitious and an organic
relation to maritime activity) that
explains why the Supreme Court added the
"substantial relationship" test for
determining whether there is admiralty
jurisdiction. Palmer v. Fayard Moving &
Transportation Corp., 930 F.2d 437, 440
(5th Cir. 1991); In re Complaint of
Paradise Holdings, Inc., 795 F.2d 756,
759-60 (9th Cir. 1986). The ordinary law
of medical malpractice is adequate to
deal with the consequences of the
operation by medical landlubbers on
Greenwell’s back for a condition that
preexisted her maritime employment.
But jurisdiction depends on the facts as
they appear when the complaint is filed.
Keene Corp. v. United States, 508 U.S.
200, 207 (1993); Mullen v. Torrance, 22
U.S. (9 Wheat.) 537, 539 (1824); Chicago
Typographical Union No. 16 v. Chicago
Sun-Times, Inc., 935 F.2d 1501, 1508 (7th
Cir. 1991). Remember that Greenwell
initially charged that she had been
injured at work. That would have brought
the case within range, at least, of the
doctrine of maintenance and cure. When
she dropped that charge, her claim of
maintenance and cure evaporated, because
the duty of cure is limited to injuries
and illnesses that occur on the job. But
it evaporated because of a failure of
proof, not because of a failure of
jurisdiction.
As for Greenwell’s claim under the Jones
Act, a claim within the federal-question
jurisdiction of the district court, it
too evaporated because of facts that
emerged after the complaint was filed:
that the doctors who operated on her were
neither employees of the defendant nor
acting on behalf of Aztar, thus
eliminating any basis for vicarious
liability, and that Aztar was not
negligent in selecting them, thus
eliminating any basis for holding it
directly liable for the consequences of
the operation on Greenwell’s back. More
fundamentally, the Jones Act, like the
doctrine of maintenance and cure, Braen
v. Pfeifer Oil Transportation Co., 361
U.S. 129, 132-33 (1959), is limited to
injuries that occur "in the course of
[the seaman’s] employment," 46 U.S.C.
App. sec. 688(a), and Greenwell’s did
not.
The district judge mistakenly thought
that Greenwell had a viable federal
admiralty or Jones Act claim, just one
that was premature. Let us now consider
whether he was also mistaken in believing
that Aztar could not implead the doctors
under the admiralty impleader rule, Fed.
R. Civ. P. 14(c), a rule "designed to
expedite and consolidate admiralty
actions by permitting a third-party
plaintiff to demand judgment against a
third-party defendant in favor of the
plaintiff." Texaco Exploration &
Production Co. v. AmClyde Engineered
Products Co., 243 F.3d 906, 910 (5th Cir.
2001). "In an admiralty suit, once a
defendant impleads a third party in an
effort to shift the burden of liability
in whole or part from its own shoulders,
and demands judgment in favor of the
original plaintiff against that third
party, the suit proceeds as if the
original plaintiff had sued the third
party." Rodi Yachts, Inc. v. National
Marine, Inc., 984 F.2d 880, 882 (7th Cir.
1993). The peculiar urgency of many
admiralty cases explains the rule.
Admiralty proceedings typically are in
rem, meaning that, through the fiction
that the ship itself is the defendant,
the ship is made security for the payment
of any damages assessed against its
owner; it might be too difficult to
obtain jurisdiction over the owner, who
might be thousands of miles away. Oliver
Wendell Holmes, Jr., The Common Law 28
(1881). But with the right to seize the
ship to secure the payment of damages
comes a correlative obligation on the
part of the court to expedite the case so
that the ship isn’t held in port
indefinitely with its cargo rotting or
otherwise going to waste, or is allowed
to sail away beyond the court’s reach.
The district judge’s ground for refusing
to permit Aztar to use Rule 14(c) was
that Greenwell had failed to designate
her claim as an admiralty claim under
Fed. R. Civ. P. 9(h). Rule 14(c) permits
its special impleader procedure (as well
as the special statute permitting certain
interlocutory appeals in admiralty cases)
only "when a plaintiff asserts an
admiralty or maritime claim within the
meaning of Rule 9(h)." The distinction is
between a case being within the admiralty
jurisdiction and the special admiralty
procedures being applicable to the case.
So we go to Rule 9(h) and discover there
that a pleading which sets forth a claim
for relief that is within both the
admiralty jurisdiction and some other
grant of federal jurisdiction, as is the
case here (where there is both a
maintenance and cure claim and a Jones
Act claim), "may contain a statement
identifying the claim as an admiralty or
maritime claim for the purposes of Rule
14(c) [and other special admiralty
rules]." The purpose is to enable the
plaintiff to notify his opponent and the
court that he’s invoking those rules,
Carey v. Bahama Cruise Lines, 864 F.2d
201, 206 (1st Cir. 1988); Romero v.
Bethlehem Steel Corp., 515 F.2d 1249,
1252-54 (5th Cir. 1975), when, having
another basis for federal jurisdiction,
he could just rely on the ordinary civil
rules. If he doesn’t so indicate, by
means of the statement or otherwise,
Wingerter v. Chester Quarry Co., supra,
185 F.3d at 665-68; Foulk v. Donjon
Marine Co., 144 F.3d 252, 256 (3d Cir.
1998); Teal v. Eagle Fleet, Inc., 933
F.2d 341, 345 (5th Cir. 1991) (per
curiam), the case proceeds under the
ordinary civil rules. Since the plaintiff
by thus forgoing the use of the admiralty
rules surrenders whatever advantages he
might derive from them, there is no
reason to permit the defendant to invoke
them either. See Foulk v. Donjon Marine
Co., supra, 144 F.3d at 257 n. 4;
Harrison v. Flota Mercante
Grancolombiana, S.A., 577 F.2d 968, 987
(5th Cir. 1978).
But all this is supremely unimportant in
this case. For the significance of Rule
14(c) is that it permits the plaintiff to
obtain relief directly from the third-
party defendant, cutting out the
middleman, the third-party plaintiff. If
the third-party plaintiff, Aztar here, is
not seeking to bow out, but is content to
remain the middleman, paying the
plaintiff if she obtains a judgment and
then turning around and seeking
reimbursement from the third-party
defendants, rather than, as Rule 14(c)
permits, substituting the third-party
defendants (the doctors, in this case)
for itself, it can use Rule 14(a), the
ordinary impleader rule. Rule 14(c) drops
out of the picture, see In re Oil Spill
by Amoco Cadiz, 699 F.2d 909, 913 (7th
Cir. 1983), and with it any concern
related to Rule 9(h), to which Rule 14(a)
naturally does not refer. And Rule 14(a)
can be used in admiralty suits as well as
in ordinary federal civil suits. Seal
Offshore, Inc. v. American Standard,
Inc., 777 F.2d 1042, 1045 (5th Cir.
1985); McCune v. F. Alioto Fish Co., 597
F.2d 1244, 1246 (9th Cir. 1979).
This point is academic too, however,
because Greenwell’s malpractice claim
(maintenance and cure and Jones Act) has
to be dismissed and with it goes any
claim by the malpractice defendant
(Aztar) against third parties. The
remaining significance of the cross-
appeal is that without it Aztar could not
ask us to modify the judgment in its
favor against Greenwell to make it a
judgment on the merits dismissing her
malpractice claim with prejudice rather
than a procedural order dismissing it
without prejudice. El Paso Natural Gas
Co. v. Neztsosie, 526 U.S. 473, 479-82
(1999); Conover v. Lein, 87 F.3d 905, 908
(7th Cir. 1996); Bell, Boyd & Lloyd v.
Tapy, 896 F.2d 1101, 1104 (7th Cir.
1990); Engleson v. Burlington Northern
R.R., 972 F.2d 1038, 1042 (9th Cir.
1992).
The district court’s judgment is
modified to place dismissal of the
malpractice claim on the merits, and as
so modified is affirmed. Because the
claims over which the district court had
original jurisdiction have thus dropped
out before trial, the court will almost
certainly want to dismiss the plaintiff’s
supplemental claims as well. See 28
U.S.C. sec. 1367(c)(3). But that is a
judgment for that court to make in the
first instance.