Petition for Writ of Certiorari — Koontz v. International Harvester Co.

; Supreme Sourt, US.

87-1529 FiLleED

ZAR Z

Or MAR 14 1988

JOS=PHF. SPANIOL, JR,

TLERK

In The

Supreme Court of the United States

October Term, 1987

Oo

RICHARD KOONTZ AND

BARBARA ANN KOONTZ, ADMINISTRATORS

OF THE ESTATE OF

STEVEN KOONTZ, DECEASED,

Petitioners,

INTERNATIONAL HARVESTER COMPANY,

Respondent. —

Oo

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

—_————-0

Tuomas P. Preston

(Counsel of Record)

Wayne A. Mack, Jr.

Duane, Morris & HeckscHer

1500 One Franklin Plaza

Philadelphia, PA 19102

(215) 854-6237

Attorneys for Petitioners

Mareh 11, 1988

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or cail collect (402) 342-2831

QUESTIONS PRESENTED

1. Does the due process clause of the United States

Constitution preclude a forum court from applying its

own procedural law to a lawsuit properly instituted

against a defendant conducting business in the state,

where the cause of action arose outside the forum state,

as to which the court of appeals are in conflict?

2. Whether a federal district court, following trans-

fer of venue under 28 U.S.C. § 1404(a) for the convenience

of parties and witnesses, is free to reject the choice of

law rules of the transferor state and dismiss a timely

instituted action based upon the procedural law of the

transferee state, as to which the court of appeals are in

conflict?

LIST OF PARTIES

This petition is being filed on behalf of Richard

Koontz and Barbara Ann Koontz, Administrators of the

Estate of Steven Koontz, deceased.

The respondent before this Court is Internationa!

Harvester Company, now known as Navistar Internation-

al Transportation Corporation.

ill

TABLE OF CONTENTS

Page

Sif ee B00) ED ig 4 i bY | i

LIST OF PARTIES ........... ii

TABLE OF AUTHORITIES Vv

| Eee ee 2

JURISDICTION EET ee a 2

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED 3

STATEMENT OF THE CASE ..... 2 4

REASONS FOR GRANTING THE WRIT i)

I.

If.

THE THIRD CIRCUIT’S RULING CON-

CERNING THE CONSTITUTIONALITY OF

A FORUM COURT’S APPLICATION OF ITS

OWN PROCEDURAL LAW UNNECESSAR-

ILY CONFLICTS WITH THE DECISIONS

OF OTHER CIRCUIT COURTS Soca

THE THIRD CIRCUIT’S RULING CON-

CERNING THE CONSTITUTIONALITY OF

A FORUM COURT’S APPLICATION OF ITS

OWN PROCEDURAL LAW IMPROPERLY

CONFLICTS WITH THE DECISIONS OF

0 SS )

A. The Third Circuit’s Ruling Conflicts With

This Court’s Decisions Upholding The Rule

ec

B. The Third Cireuit’s Ruling Conflicts With

This Court’s Decisions Under The Full Faith

And Clause And The Due Process Clause ~

C. The Third Cireuit’s Ruling Conflicts With

This Court’s Decisions Regarding The Pur-

pose And Effect Of A Transfer Under 28

U.S.C. § 1404(a)

9

17

20

TABLE OF CONTENTS—Continued

Page

D. The Third Cireuit’s Ruling Conflicts With

This Court’s Decisions Requiring Uniformity

Between Federal Courts And State Courts

Sitting In The Same State . Piers acai RS

CONCLUSION | 25

APPENDIX Sicha a

TABLE OF AUTHORITIES

Page

CAsEs:

Allstate Insurance Co. v. Haque, 449 U.S. 302

DIE Dt - sscchchcnnetcunscdioanacagceaaoecmdameaeenes Rae Ar Prt 16, 18, 20

Chase Securities Corp. v. Donaldson, 325 U.S. 304

CRUD © lncins cstacnaieihaneatlabic a coniaseemabneeesaadereena eae 15

Clay v. Sun Insurance Office Ltd., 363 U.S. 207

FOIE: <ss-cosailaisconeinsiescstnpecrinetabendaceaean nae ualieeaee 19

Cowan v. Ford Motor Co., 694 F.2d 104 (Sth Cir.

NED covnnccintunnsiaeekacy puncte eae es ut nortawn 10, 13

Cowan v. Ford Motor Co., 715 F.2d 100 (Sth Cir.

ss SNS AR tie asieler ec RAD ROO oe Pee ne SITES Nase tac 10, 11

Cowan v. Ford Metor Co., 719 F.2d 785 (5th Cir.

|, ROI rN EN TEE eae RMIT Aly fo 6 metas nm ee ae

Ellis v. Great Southwestern Corp., 646 F.2d 1099

4 + A... 2 I ReremenanetnneO mn UnaE MERE NRE ey Pe uncurlh 8

Eric R. Co. v. Tompkins, 304 U.S. 64 (1938) ................24, 25

Ferens v. Deere & Co., 819 F.2d 428 (38d Cir. May

28, 1987), pet. for cert. filed, 56 U.S.L.W. 3249

(U.S. Sept. 21, 1987) (No. 87-477) _.... 2, 7, 8, 9, 10, 16, 20

Goad v. Celotexr Corp., 831 F.2d 508 (4th Cir. 1987) ..12, 13

Gonzalez v. Volvo of America Corp. 734 F.2d

1221 (7th Cir. 1984), amended on other qrounds,

(a6 Fae we (he ee eee &

Great Western Telephone Co. v. Purdy, 162 U.S.

Guaranty Trust Co. v. York, 326 U.S. 99 (1945) 0000. ~=24

Headrick v. Atchison T. & S.FLR. Co., 182 F.2d

ae CO Oet.. TO nee 11, 22, 23

Home Insurance Co. v. Dick, 281 U.S. 397 (1930) ....15, 16

vil

TABLE OF AUTHORITIES—Continued

Page

Klaron Co, v. Stentor Electric Manufacturima

Co., 3138 U.S. 487 (1941) 8, 24

Louisiana & Mississippi R. Transfer Co. r, Long,

159 Miss. 654 (19380) 5, 10, 24

M’Elmoyle v. Cohen, 38 US. (15 Pet.) 312 (1839) 14

Martin v. Stokes, 625 F.2d 469 (6th Cir. 1980) Ss

Mayo Clinic v. Kaiser, 383 F.2d 653 (8th Cir. 1961) 8

McVicar v. Standard Insulations, Ine., 824 F.2d

920 (11th Cir. 1987) 12

Nelson v. International Paint Co., 716 F.2d 640

(9th Cir. 1983) . . &

Order of United Commercial Travelers of

America v. Wolfe, 331 U.S. 586 (1947) 15

Perkins v. Benquet Consolidated Mining Co., 342

U.S. 437 (1952) oo | | 10, 18

Poole v. Mississippi Publishers Corp., 208 Miss.

364, 44 So.2d 467 (1950) : 19

Roofing & Sheet Metal Services, Ine. v. LaQuinta

Motor Inns, luc., 689 F.2d 982 (11th Cir. 1982) 8

Schreiber v. Allis-Chalmers Corp., 611 F.2d 790

(10th Cir. 1979) a

Van Dusen v. Barrack, 376 US. 612 (1964) passim

Wells v. Simonds Abrasive Co., 364 U.S. 514 (1953) 15,17

White v. Malone Properties, lue., et al., No. 55, 195,

slip op. (Miss. Mareh 12, 1986), withdrawn, 494

So.2d 5766 (Miss. September 24, 1986) 5.6.7

World-Wide Volkswagen Corp, v. Woodson, 444

U.S. 286 (1980) 1s

vu

TABLE OF AUTHORITIES—Continued

Page

CONSTITUTIONAL Provisions:

U.S. Const. art. IV, §1 0 3

U.S. Const. amend. XIV, §1 3

STATUTES:

28 U.S.C. § 1254(1) | amet 2

28 U.S.C. § 1291 .......... onal 4

28 U.S.C. § 1332 mead | 4

28 U.S.C. § 1404(a) .... ; in passim

42 Pa. Cons. Stat. Ann. § 5524(2) 2.5

Miss. Code Ann. § 15-1-49 3,5

Miss. Code Ann, § 29-1-27 : 4,19

Annee een eee ene eeeeeneee

In The

Supreme Court of the United States

October Term, 1987

RICHARD KOONTZ AND

BARBARA ANN KOONTZ, ADMINISTRATORS

OF THE ESTATE OF

STEVEN KOONTZ, DECEASED,

Petitioners,

v.

INTERNATIONAL HARVESTER COMPANY,

Respondent.

0-—

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

“y

Vv

Petitioners, Richard Koontz and Barbara Ann Koontz

Administrators of the Estate of Steven Koontz, deceased

respectfully pray that a writ of certiorari issue to review

the judement-order of the United States Court of Appeals

for the Third Cireuit, entered in the above-entitled pro-

ceeding on December 15, 1987.

bo

OPINIONS BELOW

The judement-order of the Court of Appeals for the

Third Cirenit is unreported. A copy of the court of ap-

peal’s judgement-order appears in the Appendix to this

petition at la. The order of the District Court for the

Kastern District of Pennsylvania is also unreported. A

copy of the distriet court’s order appears in the Appendix

to this petition at 3a.

The express basis for both the court of appeal’s jude-

ment-order and the district court’s order, Perens v. Decre

d Co., is reported at 819 F.2d 428 (8d Cir. 1987). A peti-

tion for a writ of certiorari was filed in Ferens on Sep-

tember 21, 1987 and is reported at 56 U.S.L.W. 3249 (U.S.

September 21, 1987) (No. 87-477).

°

JURISDICTION

The judgemeut-order of the United States Court of

Appeals for the Third Cireuit was entered on December

15, 1987. This Court has jurisdiction to review the judg-

ment of the court of appeals by writ of certiorari pursuant

to 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

U.S. Const. amend. XIV, § 1

Ali persons born or naturalized in the United States,

and subject to the jurisdiction thereof are citizens of

the United States and of the State wherein they re-

side. No State shall make or enforee any law which

shall abridge the privileges or immunities of the citi-

zens of the United States; nor shall any State deprive

any person of life, liberty, or property, without due

process of law; nor deny to any person within its jur-

isdiction the equal protection of the laws.

U.S. Const. art. IV, §1

Full Faith and Credit shall be given in each State to

the publie Acts, Records, and judicial Proceedings of

every other State.

28 U.S.C. § 1404(a)

For the convenience of parties and witnesses, in the

interest of justice, a district court may transfer any

civil action to any other district or division where it

might have been brought.

Miss. Code Ann, § 15-1-49 (1972)

All actions for which no period of limitation is pre-

seribed shall be commenced within six years next after

the cause of such action accrued, and not after.

42 Pa. Cons. Stat. Ann. § 5524 (Purdon 1981)

The following actions and proceedings must be com-

menced with two years:

. * *

(2) an action to recover damages for injuries to the

person or for the death of an individual caused by the

4

wrongful act or neelect or unlawful violenee of an-

other.

Miss. Code Ann. § 29-1-27 (1972)

Any corporation claiming existenee under the laws of

any other state or of any other country foreign to the

United States, found doing business in this state, shall

be subject to suit here to the same extent that corpora-

tions of this state are, whether the cause of action ae-

cerued in this state or not.

STATEMENT OF THE CASE

This is a products liability action which was instituted

in the Distriet Court for the Northern District of Mis-

sissippi on May 15, 1985.'" After respondent answered the

Complaint and discovery motions were filed, the court

transferred the action to the District Court for the Kastern

District of Pennsylvania.”

{nu their Complaint, petitioners allege that respondent

International Harvester Co. (‘‘ International Harvester’’)

is strictly liable for certain design defeets and defective

conditions in a 1977 International Harvester Scout vehicle

which caused the vehicle to overturn and burst into flames

on June 9, 1979. This accident occurred in Pennsylvania.

' The jurisdiction of the district court was invoked under 28

U.S.C. § 1332 because of diversity of citizenship; the plain-

tiffs being citizens of Pennsylvania and the defendant a

citizen of Illinois. On appeal, jurisdiction was vested in

the court of appeals pursuant to 28 U.S.C. § 1291.

The Mississippi court transferred the action following pe-

titioners’ motion pursuant to 28 U.S.C. § 1404(a).

3D

Petitioners’ son, Steven Koontz, was fatally injured in the

accident, as was the driver of the vehicle.

International Harvester is a nationwide corporation

that regularly conduets business, and is registered to do

business in the State of Mississippi. International Har-

vester has a registered agent for service of process in

Mississippi, who accepted service of the Complaint.

Under prevailing Mississippi law, petitioners’ action

was timely instituted since it was brought against Inter-

national Harvester within six years of the time the cause

of action arose. See Miss. Code Ann. § 15-1-49 (1972).

For over 150 years, Mississippi courts and federal courts

applying Mississippi law have repeatedly held that the

Mississippi six-year statute of limitations is procedural

and, thus, applies to lawsuits brought by non-resident

plaintiffs against defendants, such as International Har-

vester, who qualify to do business in the state, even

though the cause of action arose in another state. See,

e.g., Louisiana & Mississippi R. Transfer Co. v. Long,

159 Miss. 654 (1930); Cowan v. Ford Motor Co., 719 F.2d

785 (5th Cir. 1983)?

On March 12, 1986, the Mississippi Supreme Court

rendered a decision which appeared to jeopardize the con-

tinued applicability of this Mississippi rule. In White v.

Malone Properties, Inc., et al., No. 55, 195, slip op. (Miss.

March 12, 1986), withdrawn, 494 So. 2d 5766 (Miss. Sep-

tember 24, 1986), the Mississippi Supreme Court held that

a worker’s compensation claim brought in a Mississippi

. Under Pennsylvania law, petitioners’ action was time barred

since it was instituted outside the two year period imposed

by 42 Pa. Cons. Stat. Ann. § 5524(2).

6

court based upon a cause of action arising wholly within

Louisiana, was controlled by the Louisiana Worker’s Com-

pensation Act. The Louisiana Act contained an exelusive-

ness of liability clause and a two-year statute of limita-

tions.

Immediately following the Mareh 12, 1986 White opin-

ion, a Petition for Rehearing of the decision was filed in

the Mississippi Supreme Court. While the resolution of

that petition was pending, the District Court for the

Eastern District of Pennsylvania sua sponte dismissed

petitioners’ action without prejudice on April 29, 1986.

This dismissal was expressly based on the March 12, 1986

White opinion that was under reconsideration by the Mis-

sissippi Supreme Court ex banc. The district court con-

cluded that White held that ‘‘where a claim arose factually

in another state, the statute of limitations of the other state

applies even though the six-year statute of limitations for

tort actions in Mississippi would allow the action if it

arose in Mississippi.’”

On September 24, 1986, the Mississippi Supreme Court

withdrew its March 12, 1986 opinion in White and entered

an entirely new opinion. In the new White opinion the

court stated that it did not ‘‘ax any manner disturb’ its

prior holdings mandating the application of the Missis-

sippi six-year statute of limitations to lawsuits brought

in Mississippi courts based upon causes of action arising

out of state. White v. Malone Properties, Inc., et al., 494

4 A copy of the district court’s April 12, 1986 order appears

in the appendix at 4a.

So. 2d 576, 579 (Miss. September 24, 1986) (emphasis

added).>

Based upon these extraordinary circumstances, peti-

tioners filed a motion under Fed. R. Civ. P. 60 with the

district court to have their original, timely Complaint

against International Harvester revived so that it eould

be decided on its merits. Followine the hearine on the

motion, and while this case was awaiting decision by the

district court, the Third Cireuit entered its opinion in

Ferens v. Deere & Co., 819 F.2d 423 (3d Cir. May 28, 1987

pet. for cert. filed, 56 U.S.L.W. 3249 (U.S. Sept. 21, 1987)

(No. 87-477).

Ferens is a ease strikingly similar to this case. As

here, Perens originated in Mississippi and was transferred

to Pennsylvania. Although the action was timely insti-

tuted under Mississippi law, the Pennsylvania district

court dismissed the action on the ground that it was un-

timely under Pennsyivania law.

On appeal, the Third Circuit in Ferens acknowledged

that this Court’s prior holdings established that a trans-

fer under 28 U.S.C. § 1404(a) does not result in a change

of law. Ferens, 819 F.2d at 425 (citing Van Dusen v. Bar-

>

' In the new opinion, the court indicated that the action in

White was barred because the Louisiana Worker’s Com-

pensation Act contained an exclusiveness of liability clause,

and not because the Louisiana statute of limitations was

applicable.

rack, 376 U.S. 612 (1964)).6 The court also admitted that

following transfer from one federal court to another, the

transferee court must sit as a court of the transferor state

and apply its choice of law rule. Jd.’

Notwithstanding the clear language of Van Dusen,

however, the Third Cireuit in Ferens held that the law of

the transferee state, Pennsylvania, controlled. The basis

of this holding was the court’s conclusion that a Missis-

sippi court could not constitutionally apply the Mississippi

six year statute of limitations in a lawsuit involving a

cause of action arising out of state. 819 F.2d at 427.

The Honorable Collin J. Seitz vigorously dissented in

Ferens. Judge Seitz argued that the majority ignored the

traditional distinction between the constitutional limita-

tions on a forum’s choice of substantive law and a forum’s

application of its procedural law. /d. at 428. Therefore,

The Third Circuit rejected the contention, also advanced

by International Harvester in this case, that the application

of the law of the transferor or transferee state should de-

pend on whether the defendant or plaintiff moved for

transfer. 819 F.2d at 426 n.4. Accord Mayo Clinic v. Kaiser,

383 F.2d 653, 656 (8th Cir. 1961); Martin v. Stokes, 623 F.2d

469, 492 (6th Cir. 1980); Roofing & Sheet Metal Services,

Inc. v. LaQuinta Motor Inns, Inc., 689 F.2d 982, 991 n.14

(11th Cir. 1982); Gonzalez v. Volvo of America Corp., 734

F.2d 1221, 1223-24 (7th Cir. 1984), amended on other

grounds, 752 F.2d 295 (7th Cir. 1985). Cf. Ellis v. Great

Southwestern Corp., 646 F.2d 1099, 1108-11 (5th Cir.

1981); Nelson v. International Paint Co., 716 F.2d 640, 643

(9th Cir. 1983). This was a question arguably left open by

the Supreme Court in Van Dusen. See id. at 639-40.

Under Klaxon Co. v. Stentor Electric Manufacturing Co.,

318 U.S. 487 (1941), a federal district court sitting in di-

versity must apply the choice of law rule of the state in

which it sits.

the Third Cireuit had usurped the legislative process and

judicially imposed ‘‘a federal choice of law rule.”’? Jd.

at 429.

On June 4, 1987, the district court denied petitioners’

motion for relief solely on the basis of Ferens. On appeal,

und after denying petitioners’ motion to hear the appeal

in bane, the Third Cireuit summarily affirmed the district

court’s order denying petitioners’ motion for relief. Again,

the court’s order cited only the Ferens opinion.

o

REASONS FOR GRANTING THE WRIT

I.

THE THIRD CIRCUIT’S RULING CONCERNING

THE CONSTITUTIONALITY OF A FORUM

COURT’S APPLICATION OF ITS OWN

PROCEDURAL LAW UNNECESSARILY CONFLICTS

WITH THE DECISIONS OF

OTHER CIRCUIT COURTS.

This petition directly calls into question the validity

of a holding by the Third Circuit on a constitutional issue

of exceptional significance. ‘That issue substantively im-

pacts the rights of countless litigants, including the peti-

tioners in this case. ‘The question, previously addressed

by this Court, is whether the United States Constitution

precludes a forum court from applying its own procedural

law to a lawsuit brought against a defendant conducting

business in the state where the cause of action arose out-

side the state. The Third Cireuit stands alone in its con-

10

clusion that such an application of procedural law is pro-

hibited.

In addition to creating a rule of law conflicting with

the decisions of this Court, the Third Cireuit has created

a rule which is in conflict with the decisions of four other ‘

federal appellate courts. This conflict raises significant

problems within the federal court system.

The issue which the Third Cireuit ruled on in Ferens,

and of necessity in this case, was whether a Mississippi

court could constitutionally apply the Mississippi six year

statute of limitations. Remarkably, despite the fact the

Third Cirenit was analyzing what it believed a Mississippi

court could do, it conducted its analysis without even men-

tioning the binding Fifth Cireuit precedent on the issue.

In Cowan v. Ford Motor Co., 694 F.2d 104 (Sth Cir.

1982) (‘Cowan 1’’), and Cowan v. Ford Motor Co., 713

F.2d 100 (5th Cir. 1983) (‘Cowan IT’’), the Fifth Circuit

addressed the constitutionality of a Mississippi court’s

application of the Mississippi statute, in a case brought

by a non-resident plaintiff, based on a cause of action aris-

ing out of state. The defendant in Cowan, like respondent,

conducted business in Mississippi and appointed an agent

for service of process in Mississippi. The Fifth Circuit

concluded that the application of the Mississippi statute

of limitations to the action was constitutional on the fol-

lowing grounds:

First, the court relied on Perkins v. Benquet Consoli-

dated Mining Co., 342 U.S. 437 (1952), where the

Court held that due process was not violated by appli-

cation of the forum’s law to a cause of action arising

out of state. Cowan I, 694 F.2d at 106-7.

11 :

Second, the court stated that the sovereign state of

Mississippi had a ‘‘recognizable interest’? in’ such

eases. 694 F.2d at 107.

Third, the court noted the well-established distinction

between the constitutional limitations on the choice of

substantive law, as opposed to procedural rules, such

as statutes of limitations. /d.

Finally, the Fifth Cireuit concluded that this Court’s

‘‘onthusiastie endorsement’’ and explicit approval of

a case involving the identical issue, Headrick v. Atchi-

son, T. € S.F.R. Co., 182 F.2d 305 (10th Cir. 1950), in

Van Dusen, supra, indicated that the Supreme Court

‘‘saw no constitutional due process problem’? in such

eases. Cowan 11,713 F.2d at 104.

Likewise, the Tenth Cireuit has also ruled on this

issue. In Schreiber v. Allis-Chalmers Corp., 611 F.2d 790

(10th Cir. 1979), a Kansas plaintiff sued in the federal

district court in Mississippi on a products lability cause

of action which arose in Kansas. The suit was brought

after the Kansas statute of limitations had expired, but be-

fore the expiration of the Mississippi statute. The Mis-

sissippi court transferred the action under 28 U.S. C.

§ 1404(a) to a Kansas federal court. The Kansas court

refused to apply the Mississippi statute of limitations and

dismissed.

On appeal, the Tenth Cireuit reversed holding that a

Mississippi court would follow its long-adhered to rule

that in a proceeding in a Mississippi court, Mississippi

procedural law, including the six year statute of limita-

tions, governs. 611 F.2d at 794. The court admitted that

perhaps, there was a ‘‘degree of incongruity’’ to the result,

but cautioned as follows:

12

[Ijt is axiomatie that hard cases make bad law. We

think it preferable to adhere to accepted legal prin-

ciples rather than to strive to achieve, at the expense

of those principles, a result which might appear to

some as being more fair and just than the alternative.

ld.

A similar result was reached by the United States

Court of Appeals for the Eleventh Cireuit in WeViear v.

Standard Insulations, Inc., 824 F.2d 920 (11th Cir. 1987).

There the court held, contrary to the Third Cireuit, that

the longer Mississippi statute would apply following trans-

fer under 28 U.S.C. § 1404(a) to a federal court in Florida.

The Fourth Cireuit also recently adopted this posi-

tion in a carefully reasoned opinion, Goud v. Celotex Corp.,

831 F.2d 508 (4th Cir. 1987). In Goad, the Fourth Circuit

rejected a constitutional due process challenge to the lex

fori rule. As in this case, the only contact the litigation

in Goad had with the initial forum was that the defendant

conducted business in the state. The court held that this

‘‘contact’’ satisfied due provess, noting the well-estab-

lished distinction between the constitutionality of the ap-

plication of substantive and procedural law. Jd. at 510-11.

In addition, the Fourth Cireuit held that ‘‘the heart of

due process’’ was not violated since there was no unfair

surprise to the defendant which conducted business in the

state and had every reason to expect the longer statute of

limitations could be applied to it. Jd. at 513.

Thus, the Third Cireuit’s ruling stands in conflict

with the decisions of the Fourth, Fifth, Tenth and Elev-

enth Circuits. A conflict of this magnitude creates dra-

matic problems within the federal court system. These

problems are not confined to cases initially filed in Mis-

13

sippi, but involve cases filed in any state where plaintiffs

enjoy the benefit of an extended statute of limitations.

lor example, if a case identical to the instant case is

filed in a Mississippi federal court or other federal court

of a state with a longer statute of limitations and remains

there, the longer statute of limitations will be applied and

the action will proceed. Sce, e.g., Cowan 1, 694 F.2d at

107. Similarly, if a motion to transfer pursuant to 28

U.S.C. § 1404(a) is granted, and the action is transferred

to the Fourth, Fifth, Tenth or Eleventh Circuits, the

longer statute will apply and the action will proceed. See,

e.g., Goad, 831 F.2d. at 513. However, if the case is trans-

ferred to the Third Circuit, the longer statute will not

apply and the case will be dismissed.

Accordingly, the conflict among the circuits creates

the possibility of completely different results in the iden-

tical cases instituted in the identical court. For this reason

alone, certiorari should be granted.

II.

THE THIRD CIRCUIT’S RULING CONCERNING

THE CONSTITUTIONALITY OF A FORUM

COURT’S APPLICATION OF ITS OWN

PROCEDURAL LAW IMPROPERLY CONFLICTS

WITH THE DECISIONS OF THIS COURT.

A.

The Third Circuit’s Ruling Conflicts

With This Court’s Decisions

Upholding The Rule Of Lex Fori.

It is not surprising that four of the five circuit courts

to rule on this issue have reached the result they did.

For hundreds of years, dating back to medieval times,

seeieeiiise aa

14

courts have traditionally relied upon forum law to deal

with the procedural aspeets of the litigation. This appli-

‘ation of forum procedural law by a forum state court

has been held to be constitutional regardless of where the

cause of action arose.

As early as 1839, this Court stated that it was ‘‘ well

settled’? that statutes of limitation were a matter of rem-

edy ‘‘and consequently that the lex fori must prevail.”’

M’Elmoyle v. Cohen, 38 U.S. (13 Pet.) 312, 327 (1839).

The Court reasoned that a statute of limitations:

is a thing of policy, growing out of the experience of

its necessity; and the time after which suits or actions

shall be barred, has been, from a remote antiquity,

fixed by every nation, in virtue of that sovereignty by

which it exercises its legislation for all persons and

property within its jurisdiction.

Id.

Although the due process clause of the fourteenth

amendment, unlike article [V’s full faith and credit clause,

Was not a part of the Constitution at the time of M’El-

moyle, the rule has been consistently followed since the

adoption of the amendment. For example, in Great West-

ern Telephone Co. v. Purdy, 162 U.S. 329 (1896), the Court,

citing W’Elmoyle, stated:

The limitation of actions is governed by the lex fori,

and is controlled by the legislation of the state in

which the action is brought, as construed by the high-

est court of that state, even if the legislative act or

the judicial construction differs from that prevailing

in other jurisdictions.

Id. at 339.

15

In Home Insurance Co. v. Dick, 281 U.S. 397 (1930),

this Court again noted that ‘‘in the absence of a contrac-

tual provision, the local statute of limitations may be ap-

plied to a right created in the other jurisdiction even

where the remedy in the latter is barred.’? Jd. at 409.

Likewise, in Order of United Commercial Travelers of

America v. Wolfe, 331 U.S. 586 (1947), the Court recoe-

nized that the rule was ‘‘well established and constitu-

tional.’’ 7d. at 607-09. The Court reiterated this point

in Wells v. Simonds Abrasive Co., 364 U.S. 514 (1953),

where it noted its approval of the ‘‘well-established rule

that the forum state is permitted to apply its own period

of limitations.’’ Jd. at 516-17.

The basis for the Court’s reeognition of the eonstitu-

tionality of the fraditional lex fori rule was expressed in

Chase Securtties Corp. v. Donaldson, 325 U.S. 304 (1945).

There the Court held that statutes of limitation are tradi-

tionally matters of forum state policy established by the

legislature after weighing the state’s interest in eliminat-

ing stale claims:

Statutes of Limitation find their justification in

necessity and convenience rather than logic. They

represent expedients, rather than principles. They

are practical and pragmatic devices to spare the courts

from litigation of stale claims, and the citizen from

being put to his defense after memories have faded,

witnesses have died or disappeared, and evidence has

been lost. They are by definition arbitrary, and their

operation does not discriminate between the just and

the unjust claim, or the voidable and unavoidable de-

lay. They have come into the law not throneh the

judicial process but through legislation. They repre-

sent a public policy about a privilege to litigate. Their

16

shelter has never been regarded as what now is ealled

a ‘‘fundamental’’ right or what used to be ealled a

‘natural’? right of the individual.

Id. at 314 (citation and footnote omitted).

The Third Cirenit’s position on this issue, expressed

in Ferens and this case, stands counter to this lone line

of decisions. Indeed, the Third Cirenit in its haste to sub-

jeet a court’s application of a forum’s statute of limita-

tions to constitutional analysis, failed to even discuss the

well established distinetion between procedural and sub-

stantive law. Instead, the court erroneously relied on two

eases, Allstate Insurance Co. v. Haque, 449 U.S. 302

(1981), and Tome Insurance Co. v. Dick, 281 U.S. 397

(1930), for the proposition that a particular state’s stat-

ute of limitations may not be applied constitutionally to a

defendant conducting business in the state where the cause

of action arose outside the state.

In taking this aberrational position, however, the

Third Cireuit failed to note that Mague and Dick do not

overrule or set aside this Court’s prior holdings regarding

the traditional lex fori rule. In fact, the eases explicitly

address only the constitutionality of the application of

substantive law, as distinguished from procedural law.’

. For example in Hague, the Court stated:

(Flor a state’s substantive law to be selected in a con-

stitutionally permissible manner, that state must have

a significant contact or a significant aggregation of

contacts, creating state interest, such that choice of its

laws in neither arbitrary nor fundamentally unfair.

449 U.S. at 313 (emphasis added). Moreover, in Dick, the

Court distinguished the case before it which involved an

(Continued on following page)

17

Therefore, the Third Circuit’s rejection of the traditional

rule is directly contrary to the position of this Court.

The Third Circuit’s Ruling Conflicts With This

Court’s Decisions Under The Full Faith And Clause

And The Due Process Clause.

The Third Cireuit’s ruling not only runs contrary to

this Court’s prior decisions on the rule of lex fori, but also

to the Court’s numerous decisions regarding the limita-

tions imposed by the full faith and credit clause and the

due process clause of the fourteenth amendment.

There is simply no authority to support the theory

that the full faith and eredit clause limits the ability of a

forum state to apply its own statute of limitations to a

‘ause of action arising in another state. To the contrary,

this Court has explicitly decided that ‘‘the Full Faith

and Credit Clause does not compel the forum state to use

the period of limitations of a foreign state.’’ Wells, supra,

345 U.S. at 517.

Similarly, the due process clause and its minimum

contacts analysis do not limit a forum’s application of

its own procedural law. The Court has explained that

the minimum contacts analysis embodies a concern for

(Continued from previous page)

attempt to apply Texas substantive law to a contractual

limitation on the period in which the parties could sue,

from a case in which the forum simply applied its pro-

cedural statute of limitations. 281 U.S. at 409-10. The court

stated that ‘‘in the absence of a contractual provision, the

local statute of limitations may be applied to a right created

in the other jurisdiction even where the remedy in the lat-

ter is barred.” Id. at 409.

1s

reasonableness and fairness to defendants. World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 292-93 (1980).

A corporation purposefully availing itself of the privilege

to conduct business within a state has clear notice that it

is subject to suit in that state and to the application of

that state’s laws. Jd. at 298.

Indeed, this precise issue was addressed by the Court

in Perkins v. Benquet Consolidated Mining Co., 342 U.S.

437 (1952). In that case, a non-resident plaintiff sued a

foreign corporation in Ohio on a cause of action arising

from activities entirely distinct from the corporation’s

activities in Ohio. Having found that the authorized rep-

resentative of the corporation was physically present in

the state and permitted to accept service or receive notice

on the corporation’s behalf, the Court stated that ‘‘there

is no unfairness in subjecting that corporation to the

jurisdiction of the courts of that state ...’? ZTd. at 444.

The Court reasoned that if the corporation carries on,

in that state, ‘‘continuous and systematic corporate ac-

tivities ... those activities are enough to make it fair and

reasonable to subject that corporation to proceedings in

personam in that state ...’? 7d. at 445. With regard to

causes of action not arising out of a corporation’s activ-

ities in the forum state, the Court found ‘‘no requirement

of federal due process’? that prohibited the Ohio court

from exercising jurisdiction and applying its law. Jd. at

446.

Likewise in Haque, supra, this Court attached sig-

nificance to the fact that the corporation was ‘‘at all times

present and doing business’’ in the forum state. 449 U.S.

at 317. In that ease as well, the cause of action arose out-

19

side the forum state. Notwithstanding this fact, the Court

found that the application of the forum’s substantive law

was constitutional, infer alia, on the ground that the cor-

poration could ‘hardly claim unfamiliarity with the laws

of the host jurisdiction and surprise that the state’s courts

might apply forum law to litigation in which the company

is involved.’’ Jd. at 317-18. The Court reasoned that ap-

plication of the forum law was not arbitrary or unfair,

‘*particularly since the company was licensed to do busi-

ness in [the forum!, it must have known it might be sued

there, and that [the forum] courts would feel bound by

[forum] law.’’ Id. at 317-18 (quoting Clay v. Sun Insur-

ance Office Ltd., 363 U.S. 207, 221 (1960) (Black, J., dis-

senting) ).

Limitation statutes are designed to close the doors

of a state’s courts to untimely claims. This purpose is

not subverted by a forum state’s application of its own

limitation period to an action originated in its courts.

Mississippi has chosen to extend this period to six years

and make it applicable to all who conduct business in the

state? Whether the Third Cireuit approves or disapproves

vt the Mississippi poliey is irrelevant. The wisdom of

9 Mississippi's exercise of jurisdiction and its application of

its law is consistent with, and necessary to, its avowed

policy of treating authorized foreign corporations and do-

mestic corporations equivalently. See Miss. Code Ann.

§ 29-1-27. As stated in Poole v. Mississippi Publishers

Corp., 208 Miss. 364, 44 So. 2d 467 (1950): ‘All foreign

corporations doing business in Mississippi shall be subject

to suit here to the extent that corporations of the state

are, whether the cause of action accrued here or not, and

this statute indicates a general policy of equality and sim-

ilarity of treatment as between foreign and domestic cor-

porations’”’. 44 So. 2d at 473.

20

that policy is properly and necessarily reserved for the

Mississippi legislature. The point here is that, as repeat-

edly recognized by this Court, the Mississippi policy does

not violate the United States Constitution and therefore

is not subject to amendment or rejection by the Third

Circuit.

C.

The Third Circuit’s Ruling Conflicts

With This Court’s Decisions Regarding

The Purpose And Effect Of A Transfer

Under 28 U.S.C. § 1404(a).

While the Third Cireuit’s ruling purports to depend

upon a constitutional analysis outside the scope of Van

Dusen v. Barrack, supra, the import of the decision is

squarely contrary to the policy expressed in Van Dusen."

In Van Dusen, this Court laid out the principles gov-

erning the effect of a transfer under 28 U.S.C. § 1404(a)

on the choice of law. There the Court held that following

a transfer, the transferee court is ‘‘obligated to apply the

state law that would have been applied if there had been

no change of venue.’’ 376 U.S. at 639. In other words, the

transferee federal court is to sit as a federal court of the

transferor state and apply its law, imcluding its choice of

law rule. Jd. at 633, 642. The Court explained that ‘‘both

the history and purposes of § 1404(a) indicate that it

10 = =The Third Circut admitted that the application of Van

Dusen was “Straight-forward’” but erroneously concluded

that Hague controlled. ferens, 819 F.2d at 425. As dis-

cussed above, the court failed to recognize that Hague ad-

dressed the choice of substantive law only. Moreover, the

court failed to acknowledge the due process contacts pre-

sent in the case.

21

should be regarded as a federal judicial housekeeping

measure ... [designed] simply to authorize a change of

eourtrooms.’’? Id. at 636-637.

The Court’s ruling in Van Dusen concerning the ef-

fect of a transfer on the choice of law was based upon

an analysis of the purposes of § 1404(a) and the imper-

missible consequences which would result from a contrary

rule. 376 U.S. at 633-36. The Court recognized that

§ 1404(a) was enacted to promote convenience and justice.

376 U.S. at 616. If a change of law were to result from

-a transfer, these ends would be sacrificed and a motion to

transfer could be utilized as a motion to dismiss. More-

over, the judge exercising his diseretion upon a motion

to transfer might well decline to grant the transfer, de-

spite considerations of convenience, if the transfer would

prejudice the plaintiffs’ claim. Zd. at 636. Such a result

would impermissibly turn a remedial, judicial housekeep-

ing statute into a method ‘‘to defeat the advantages ac-

cruing to plaintiffs who have chosen a forum which al-

though it was inconvenient, was a proper venue.’’ 7d. at

634,

The Third Cireuit’s ruling at issue directly contra-

venes this analysis of the purpose and function of § 1404

(a). Under the Third Circuit’s decision, substantive law,

not convenience will be the determining factor in another

court’s decision whether to transfer a case to a federal

court within the Third Cireuit. Defendants will attempt

to utilize the rule to gain an advantageous change in law

and thereby defeat the benefits the plaintiffs were en-

titled to by their selection of the initial forum. Conveni-

ence and judicial eeonomy—the purposes of § 1404(a) ac-

22

eording to Van Dusen—will give way to consideration of

legal tactics.

In avoiding this ‘‘straight-forward’’ analysis laid out

in Van Dusen, the Third Circuit failed to recognize that

the primary case relied on by the Supreme Court as the

basis for the holding in Van Dusen was Headrick v. Atchi-

son T. & SFR. Co., 182 F.2d 305 (10th Cir. 1950). Van

Dusen, 876 U.S. at 631-33. The Supreme Court stated that

Headrick had ‘‘adopted and applied a general interpretive

principle which we belive faithfully reflects the purposes

underlying § 1404(a).’’ 376 U.S. at 631.

Headrick is factually almost identical to this case.

There the plaintiff, a Missouri citizen, filed suit in New

Mexico against a Kansas corporation doing business in

New Mexico for injuries received in California. The plain-

tiff frankly stated that he had chosen New Mexico because

only there would he ‘‘not be confronted with the defense of

the statute of limitations.’’ Headrick, 182 F.2d at 311. The

defendant moved to have the case dismissed, or in the al-

ternative, transferred to the federal district court in Cali-

fornia pursuant to 28 U.S.C. § 1404(a). The judge dis-

missed, reasoning that transfer would be futile because

the suit would be barred by the California statute of lim-

itations.

On appeal, the Tenth Ciremt in Headrick reversed.

It held that the district court erred in assuming the Cali-

fornia statute of limitations was applicable on transfer,

since the case would properly remain ‘‘a New Mexico case

still controlled by the law and policy of that state.’? Head-

rick, 182 F.2d at 310. The court further observed, in a

passage quoted with approval in Van Dusen, that the

23

plaintiff ‘‘had a legal right to select any forum where the

defendant was amenable to process ... [H]lad the case

been tried in the New Mexico state court, the procedural

laws of New Mexico including the statute of limitations

would be applicable ... [I]n removal cases, the federal

court must apply the state law and the state poliecy.”’

Van Dusen, 576 U.S. at 632 (quoting Headrick, 182 F.2d

at 309). :

The Court explicitly approved Headrick’s holding eon-

cerning the applicability of the transferor state’s statute

of limitations in the transferee court and saw no consti-

tutional due process problem in the state’s choice of law.

Yet the Third Cireuit’s ruling to the contrary does not

even cite Headrick, much less distinguish it or otherwise

suggest why the Court’s endorsement of it should not be

controlling.

Such a gap in the analysis is strong evidence of the

errors in the Third Cireuit’s ruling. That decision must

be overturned in light of its failure to follow the decisions

of this Court and its inability to withstand scrutiny in

light of the purposes of 28 U.S.C. § 1404(a).

D.

The Third Circuit’s Ruling Conflicts

With This Court’s Decisions Requiring

Uniformity Between Federal Courts And State

Courts Sitting In The Same State.

Because the Third Cireuit’s holding transforms 28

U.S.C. 6 1404(a) into a vehicle for affecting a change in

state law, rather than a change in courtrooms, the decision

eonflicts with the policies expressed in Erie R. Co. v.

Tompkins, 304 U.S. 64 (1938).

The Supreme Court has often summarized the Frie

policy as ‘‘the principle of uniformity within a state.’’

Klaxon Co. v. Stentor Electric Manufacturing Co., 313

U.S. 487, 496 (1941). The uniformity which Frie requires

is between federal courts and state courts sitting in the

same state. As explained in Guaranty Trust Co. v. York,

526 U.S. 99, 100 (1945), the ‘‘nub of the poliey that under-

lies Erie... is that for the same transaction the accident

of a suit by a non-resident litigant in a federal court

instead of in a state court a block away should not lead to

substantially different results.”’ Jd.

The Third Cireuit’s ruling jeopardizes this uniform-

ity. For example, if a case identical to the instant case

is filed in a Mississippi state court and remains there, the

Mississippi state court will apply the Mississippi statute

of limitations and allow the action to proceed. See Louisi-

ana and Mississipp! R. Transfer Co., supra, 159 Miss. at

667. If, however, as actually happened in this case, a non-

resident plaintiff brought the action in a Mississippi fed-

eral court and venue was transferred to a federal court

within the Third Cireuit, Mississippi law no longer applies

and the action will be dismissed.

This incongruous result is manifestly violative of the

Erie principle of uniformity between-a Mississippi state

court and a Mississippi federal court. The *‘accident of

diversity’? leads to a different result than that which would

have been attained if the action were brought in a state

court.

a, ee

29

Indeed, the Court recognized the implications of Erie

in reaching its decision in Van Dusen. There the court

concluded that ‘‘the accident of federal diversity juris-

diction [should] not enable a party to utilize a transfer to

achieve a result in federal court which could not have been

achieved in the courts of the State where the action was

filed.”? 376 U.S. at 688. Accordingly, the Court held that

a transfer under 28 U.S.C. § 1404(a) should be simply a

change in courtrooms and no more. The Third Cireuit’s

ruling ignores and contravenes this principle without ex-

planation or analysis. This Court should grant certiorari

-to prevent the Third Cireuit’s ruling from jeopardizing

the continued viability of 28 U.S.C. § 1404(a).

co)

CONCLUSION

For the foregoing reasons, petitioners respectfully

pray that the Court issue a writ of certiorari to review the

judgment of the Court of Appeals for the Third Cireuit.

Respectfully submitted,

Tuomas P. Preston

(Counsel of Reeord)

Wayne A. Mack, Jr.

Duane, Morris & HeckscHER

1500 One Franklin Plaza

Philadelphia, PA 19102

(215) 854-6237

Attorneys for Petitioners

March 11, 1988

la

APPENDIX

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 87-1571

RICHARD KOONTZ and BARBARA ANN KOONTZ,

ADMINISTRATOR OF THE ESTATE OF

STEVEN KOONTZ, Deceased

Appellants

INTERNATIONAL HARVESTER COMPANY

Appellee

Appeal from the United States District Court

tor the Fastern District of Pennsylvania

(D.C. Civil Action No. 86-1542)

(Hon. Edward N, Cahn)

Submitted Under Third Cireuit Rule 12(6)

December 8, 1987

Before: GREENBERG, SCIRICA and HUNTER,

Circuit Judges

JUDGMENT ORDER

After consideration of all contentions raised by appel-

lants, it is

ADJUDGED AND ORDERED that the judgment of

the district court be and is hereby AFFIRMED. See

Ferens v. Deere & Co., 819 F.2d 423 (3d Cir, 1987).

2a

Costs taxed against appellants.

BY THE COURT,

Anthony J. Scirica

Cireuit Judge

Attest:

/s/ Sally Mrvos

Sally Mrvos, Clerk

Dee. 15, 1987

3a

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANTA

RICHARD KOONTZ, et al.

CIVIL ACTION

NO. 86-1542

Vv.

NAVISTAR INTERNATIONAL

TRANSPORTATION

CORPORATION

SS Se OO ee

ORDER

(Filed June 4, 1987)

AND NOW, this 3rd day of June, 1987, upon consid-

eration of the opinion of our Court of Appeals in Ferens

ww OF

28, 1987), IT IS ORDERED that plaintiffs’ motion for

relief from order of dismissal is DENIED.

BY THE COURT:

/s/ Edward N. Cahn,

Edward N. Cahn, J.

Entered: 6-4-87.

4u

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

RICHARD KOONTZ, et al.

CIVIL ACTION

)

)

v. )

) NO, 86-1342

)

)

INTERNATIONAL

HARVESTER COMPANY

ORDER

(Filed Apr. 50, 1986)

AND NOW, this 29th day of April, 1986, following a

telephone conference with the attorneys, IT IS ORDERED

that the within case is DISMISSED without prejudice.'

BY THE COURT:

/s/ Edward N. Cahn

Edward N. Cahn, J.

‘In a telephone conference held April 29, 1986, involving

the court and both counsel, the case of White v. Malone Prop-

erties, Inc., et al. No. 55,195 (Supreme Court of Mississippi)

was discussed. In that case the Supreme Court of Mississippi

decided that where a “claim arose factually wholly in another

state,” the statute of limitations of the other state would apply

even though the six year statute of limitations for tort actions in

Mississippi would allow the action if it arose in Mississippi.

Counsel agree that the White case controls the outcome of this

case which has been removed from the Northern District of

Mississippi to the Eastern District of Pennsylvania. Consequent-

ly, a dismissal without prejudice is in order.