Opposition Brief — Travelers Indemnity Co. v. Avondale Industries, Inc.

Supreme Court

No. 89-1576 , ; "

FILE

IN THE » JOSEPH F. SPAN!

by CLERK

Supreme Court of the United Stater--~

OCTOBER TERM, 1989

>

THE TRAVELERS INDEMNITY COMPANY,

( ;

Petitioner,

—_vV.—

AVONDALE INDUSTRIES, INC. and

OGDEN CORPORATION,

Plaintiffs-Respondents,

—and—

COMMERCIAL UNION INSURANCE COMPANY, HIGHLANDS IN

SURANCE COMPANY, AMERICAN MOTORISTS INSURANCE

COMPANY, and NATIONAL UNION FIRE INSURANCE COM

PANY, Third-Party-Defendants-Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

rO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

PLAINTIFFS-RESPONDENTS’

BRIEF IN OPPOSITION

HUGH N. FRYER

Counsel of Record for Plaintffs

Respondents

FRYER, ROSS & GOWEN

SS] Fitth Avenue

New York, New York 10176

(212) 286-0099

John P. Gastor

fkdward M. Jovce

Of Counsel

peer AUALL ARIE CODY

re

QUESTIONS PRESENTED

1. Did the courts below err in determining that a decision

awarding plaintiff relief under a separate claim can be made

final under Rule 54(b) while defendant’s claims for contribu-

tion and indemnity, asserted in a third-party pleading,

remained unresolved (due to defendant’s failure to take any

action to secure their resolution)?

2. Did the Court of Appeals err in determining that the

District Court did not abuse its discretion in entering a Rule

54(b) judgment when a decision of an intermediate state

court, which the district court correctly held was distinguish-

able, was still subject to review by the highest state court?

i

RULE 29.1 STATEMENT

Ogden Corporation owns an interest in the following sub-

Sidiaries (excluding wholly owned subsidiaries):

Company name % Ownership

Rototest Laboratories, Inc. 91%

ERC Environmental and Energy

Services Co., Inc. 68.6%

IEA of Japan Company Ltd. 50%

IEAL Energie Consult GmbH 50%

Laser Corporation of America 49.96%

Lawrence Associates, Inc. 80%

Ogden Catering of Texas, Inc. 48%

Ogden Buik Systems Company, Inc. 90%

International Terminal Operating

Co. Inc. 50%

Ogden Projects, Inc. 85.6%

Neither Ogden nor Avondale Industries, Inc. has any par-

ent companies, and Avondale has no non-wholly owned sub-

sidiaries.

lil

TABLE OF CONTENTS

PAGE

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eg cco c eee devrswecverveetes iil

TABLE OF AUTHORITIES

Nee ec euaee wees eauwer Vv

eevee enneee ee ees ix

Nee eek ex OR Ra knees 1X

ee ee CO CO Lec eeuwessveews ens ]

Se rpeeemey OCOF ARGUMENT ..cccccccccccecevcess 5

ARGUMENT

I. THERE 1S NO CONFLICT AMONG THE

ee es daa eaaeen 6

A. There Is No Express Conflict Among The

ree a at ra oe eee erg & 6

B. There Is No Implicit Conflict Among The

ESE Re gre a 7

C. There Is Harmony Among The Circuits .. 8

Il. THE COURTS BELOW DID NOT DEPART

FROM THE ACCEPTED AND USUAL

COURSE OF JUDICIAL PROCEEDINGS... 9

A. The Lower Courts Followed The Guidance

OEP ee Cee rer rr rere 9

iV

PAGE

B. Additional Explication Of Rule 54(b) By

This Court Is Unnecessary .............. 10

C. Judge Posner’s Views In Minority Police

Officers Do Not Require The Overruling

Of Sears And Cold Metal............... 11

D. The Courts Of Appea! Are Not Overbur-

dened With Rule 54(b) Appeals.......... 11

III. TRAVELERS ‘‘REASONS FOR GRANTING

THE WRIT’’ ARE UNPERSUASIVE ....... 12

A. The Lower Courts Do Not Need ‘‘Practica]

SE va vcudunek odcukc uo dase en 12

B. The Lower Courts Did Not Preempt State

UN CI ok oc vo bd do ccececcdaculn. 13

C. This Court Is Reluctant To Review State

naw Tmswenmee isemes ........... ec sce... 14

SPUN co 0k coca cd wihcdmesucs. SSEu ete cots 16

TABLE OF AUTHORITIES

Cases:

Akerman v. Oryx Communications, Inc., 810 F.2d 336

Ce a SOR eo daadvcak oxredoawereeeseaeneneree™

Allegheny County Sanitary Authority v. U.S.E.P.A.,

Tae Wee SOG? GOS Ge. WOOD cc ccc cence execeacsees

Al Tech Specialty Steel Corp. v. U.S. E.P.A., 846 F.2d

SO Gee Ge, ON Pes or cece neds ucavenss Faekus ee

American Motorists Ins. Co. v. Levolor Lorentzen,

ie, Ge Dake 116s GS Cat. FAs kk sce wscccnves:

Ansam Associates, Inc. v. Cola Petroleum, Ltd., 760

ie FF ok ae. re er yr er ere eo

Arkin v. Trans. Intern. Airlines, Inc., 815 F.2d 12 (2d

Co, Gee i caccvses sav vee clase eannasee tener

Automatic Liquid Packaging, Inc. v. Dominik, 852

Fae SES Ce Ga. FORE vctercccnneuassadesecss

Baez v. Hennessy, 853 F.2d 73 (2d Cir. 1988) .......

BASF Wyandotte Corp. v. Local 227, Intern. Chemical

Workers Union, AFL-CIO, 791 F.2d 1046 (2d Cir.

bob caccev cased enesdscianeas sesh

Bloor v. Carro, Spanbock, Londin, Rodman & Fass,

re Boe Poe 2 ae. | errr rer or err

Brown Transport Corp. v. Atcon, Inc., 439 U.S. 1014

CES7E) CONC, F5 GOI 5 vo coe ccacevevenvevas

Burr by Burr v. Ambach, 863 F.2d 1071 (2d Cir. 1988)

Cinerama, Inc. v. Sweet Music, S.A., 482 F.2d 66 (2d

COE De oi code esp ccse beuss andes

PAGE

12

12

12

vi

PAGE

Coffee v. Cutter Biological, 809 F.2d 191 (2d Cir.

i) CEE Se ee Tee Tre er ree ere e cle mind 12

Cold Metal Process Co. v. United Eng’g & Foundry

Go, Bee Ue. Re. CER 6.6cccenenseasecstcieees 9

Continental Airlines Inc. v. Goodyear Tire & Rubber

Co., B19 F.20 1909 Gale Cor. FOF) co cns vecceeutes 8

Continental Ins. Cos. v. Northeastern Pharmaceutical

& Chemical Co., 842 F.2d 977 (8th Cir.) cert.

Gates, Wor G. Ge. Ge CIR oes kn ccevesscdeleuans 15

Cullen v. Margiotta, 811 F.2d 698 (2d Cir. 1987)..8, 10, 12

Curtiss-Wright Corp. v. General Eiec. Co., 446 U.S. 1

CRUE. nck 0b 300050040080 0000 bite 7, 9, 10, 13

Eagle-Picher Indus., Inc. v. Liberty Mut. Ins. Co., 682

F.2d 12 (1st Cir. 1982), cert. denied, 460 U.S. 1028

FOOD i ac'eneeteneveceeenki besa eee 15

Elfenbein v. Gulf & Western Indus., Inc., 590 F.2d 445

Coe Ge, BOR cnc ands en ¥0s be eyheeee Cee 8

Eli Lilly & Co. v. Home Ins. Co., 794 F.2d 710 (D.C.

Cir. 1986), cert. denied, 107 S. Ct. 940 (1987)..... 15

Ellis Nat. Bank of Jacksonville v. Irving Trust Co.,

van Fae GS Ge Ga Bick occ neeuveeaceeweene. 12

Fromer v. Scully, 817 F.2d 227 (2d Cir. 1987)....... 12

Gas-A-Car, Inc. v. American Petrofina, Inc., 484 F.2d

Bee Coe Go, Fras dev cs bas caesi ae 8

Gilbert v. Burlington Industries, Inc., 765 F.2d 320 (2d

Gat. TEDOE os vedcdkossaeaseeans senna 12

H & W Industries v. Formosa Plastics Corp., U.S.A..,

Sep Fie STE Cee Cat... POS cc ice ws ecccceeeneeee 8

Vil

Herbert v. Lando, 781 F.2d 298 (2d Cir. 1986)......

Hollander v. Brezenoff, 787 F.2d 834 (2d Cir. 1986) .

Huddleston v. Dwyer, 322 U.S. 232 (1944) ..........

In re Agent Orange Product Liability Litigation MDL

No. 381, 818 F.2d 179 (2d Cir. 1987).............

Insurance Co. of N. Am. v. Forty-Eight Insulations,

633 F.2d 1212 (6th Cir. 1980), cert. denied, 454 U.S.

SOG CHOUED 0 svn chduva cus een velelcacendesacucee:

Johnston v. Cartwright, 344 F.2d 773 (8th Cir. 1965)

Keene Corp. v. Insurance Co. of N. Am., 667 F.2d

1034 (D. C. Cir. 1981), cert. denied, 455 U.S. 1007

CFD ch kw nec aus oc etecaa cere ceenesbsnsaneeeus

Korwek v. Hunt, 827 F.2d 874 (2d Cir. 1987) .......

Layne & Bowler Corp. v, Western Well Works, Inc.,

ye A oe : rrr re rr fee ere

Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737 (1976)

Local P-171, Amalgamated Meat Cutters v. Thompson

Farms Co., 642 F.2d 1065 (7th Cir. 1981).........

Lowen v. Tower Asset Management, Inc., 829 F.2d

ee: ge eo, Sry er eee Tre

Matter of Bassak, 705 F.2d 234 (7th Cir. 1983)......

Minority Pol. Off. Ass’n v. City of South Bend, Ind.,

vie B 2: Yo | rer errr rr

Monmouth Medical Center v. Harris, 646 F.2d 74 (3d

Coe NS oekcle ewes au eeaee eae are oe eas

Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737

fe ae eG ooh usectowboenc ae deere enere eae

15

12

Vill

PAGE

Morrison-Knudsen Co., Inc. v. Archer, 655 F.2d 962

I aie aaa ule eras ha oe al :

National Bank of Washington v. Dolgov, 853 F.2d 57

i ns Ue kebegs sy Uda len Cie ¥e Ga Oe Nab aie li

Oliveri v. Delta S.S. Lines, Inc., 849 F.2d 742 (2d Cir.

SR UEMULE OS an Pag ale ad alee aA ak ad ee ew eee few et 1]

Page v. Preisser, 585 F.2d 336 (8th Cir. 1978)....... 8

Pembaur v. City of Cincinnati, 475 U.S. 469 (1986).. 14

Perez vy. Ortiz, 849 F.2d 733 (2d Cir. 1988) ......... 1]

Pierson ¥. Ray, SOO U.S. S47 CISST) oc ccccccvccccces 14

Porter v. American Optical Corp., 641 F.2d 1128 (Sth

Cir.), cert. denied, 454 U.S. 1009 (1981) .......... 15

Propper v. Clark, 337 U.S. 472 (1949) .............. 14

Regents of University of Michigan v. Ewing, 474 U.S.

RR A ee aig mae se as en 14

Retail Software Services, Inc. v. Lashlee, 854 F.2d 18

a peed eu u'd CN obs enced é-0 seekers os 1]

Rieser v. Baltimore & Ohio R.R., 224 F.2d 198 (2d

Le nig aN a is es lh a a 8

Sears, Roebuck & Co. v. Mackey, 351 U.S. 427

ee Oy aa en cad w ease #0 8, 9, 10, 13

Seatrain Shipbuilding Corp. v. Shell Oil Co., 444 U.S.

il es ee ee eae ete a eeu we 9

Smiga v. Dean Witter Reynolds, Inc., 766 ¥.2d 698 (2d

EM toh a ctu acdadneie ae erdwa ke ee eae wae kes 12

Spiegel v. Trustees of Tufts College, 843 F.2d 38 (lst

fat a eens ou egaada sue + ca ee ea Oe bea eed 7

PAGE

Technicon Elecs. Corp. v. American Home Assurance

Co., 533 N.Y.S.2d 91 (2d Dep’t 1988), aff’d, 544

Pi a Ee CNS bee ve dus adn head cenkvadaeess 3, 4

United States v. McDonald, 435 U.S. 850 (1977)..... 10

United States v. O’Neil, 709 F.2d 361 (Sth Cir. 1983) 8

U.S. Golf Ass’n v. St. Andrews Systems, Data-

Max,Inc., 749 F.2d 1028 (3d Cir. 1984) ........... &

Virginia v. American Booksellers Assn., 484 U.S. 383

SE CN ho eae eee ee Ray CARIES Se eae ess 14

Weber v. Dell, 804 F.2d 796 (2d Cir. 1986) ......... 12

Statutes and Rules:

es ae do Sik nek PRET He eee ewer 13

ee a a a oo hb we wines aed ot eS ee

So, 38, 33, 82, i3

a Ee TE aber esc Ke ne ence sun asdbannedeyws 6, 10, 12

Other Authorities:

Federal Bar Council, Second Circuit Redbook-1989-

Pk. a ee eer ee ere 15

Stern, Gressman & Shapiro, Supreme Court Practice

OE Seco s sacle useda naa eae ee saa eae ens 6

Wright, Miller & Cooper, Federal Practice and Proce-

SS FA COD boo ov ccced cn eiapeseduunes 14

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

No. 89-1576

=>

THE TRAVELERS INDEMNITY COMPANY,

Petitioner,

a oe

AVONDALE INDUSTRIES, INC. and

OGDEN CORPORATION,

Plaintiffs-Respondents,

—and—

COMMERCIAL UNION INSURANCE COMPANY, HIGHLANDS

INSURANCE COMPANY, AMERICAN MOTORISTS INSUR-

ANCE COMPANY, and NATIONAL UNION FIRE _ INSUR-

ANCE COMPANY,

Third-Party-Defendants-Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

>_>

PLAINTIFFS-RESPONDENTS’

BRIEF IN OPPOSITION

STATEMENT OF THE CASE

Petitioner, The Travelers Indemnity Company, insured

Respondents Ogden Corporation and Avondale Industries,

Inc., under comprehensive general liability insurance policies

covering the period 1975-1984. In the policies, Travelers

undertook to ‘‘defend any suit against the insured.’’

The Louisiana Proceedings

From 1975 through 1979, Avondale sold to a recycler ‘‘sal-

vage oil’’ consisting of petroleum products and other cargo

removed from commercial and U.S. Navy vessels which were

cleaned at Avondale’s ‘‘gas-freeing’’ plant. The recycler pro-

cessed the ‘‘salvage oil’’ and resold it to third-parties. The

recycler also received ‘‘salvage oil’’ and other material from

scores of other sources. It eventually went out of business

several years after Avondale had ceased dealing with it.

In early 1986, the Louisiana Department of Justice on

behalf of the Louisiana Department of Environmental Qual-

ity commenced an administrative proceeding against Avon-

dale and many other parties alleging environmental

contamination in connection with the recycler’s site. Fourteen

judicial proceedings were also commenced against Avondale

and scores of other defendants in Louisiana State Court

alleging personal injury and property damage. The com-

plaints in those actions sound in strict liability and allege that

Avondale and the other defendants were negligent in generat-

ing or transporting hazardous waste to the site. Neither the

complaints in the private actions nor the administrative pro-

ceeding contain allegations as to how any hazardous material

was released into the environment.

This Insurance Litigation

Avondale promptly notified Travelers and asked it to

defend it in the proceedings in Louisiana. When Travelers

had failed to respond to a repeated request, Avondale com-

menced this declaratory judgment action. Travelers con-

ducted extensive discovery, eventually taking over 40

depositions and receiving responses to multiple waves of

interrogatories and document requests. Travelers also filed a

third-party complaint against Avondale’s insurers for the

periods before and after Avondale had sold the ‘‘salvage oil’’

to the recycler.

Avondale moved for summary judgment requiring Trav-

elers to defend it in the Louisiana proceedings. In opposition

to this motion, Travelers argued, among other things, that

the ‘‘other insurance’’ clause in its policy relieved it of the

duty to defend Avondale. Travelers took no action to resolve

its third-party claims against the other four insurers.

In October 1988 the district court ruled that Travelers was

obligated to provide Avondale with a defense in the Louisi-

ana proceedings. In its decision the court specifically deter-

mined that Travelers ‘‘other insurance’’ argument was

without merit. Petition at A-45.’

The Rule 54(b) Motion

When Travelers continued to refuse to provide a defense,

Avondale moved for entry of a final judgment pursuant to

Rule 54(b). Travelers opposed this motion, and argued that

its provision of a defense to Avondale should await the reso-

lution of its third-party complaint against the other insurers.

It also repeated its arguments that the district court decision

was inconsistent with an intermediate level state court deci-

sion (now reported as Technicon Elecs. Corp. v. American

Home Assurance Co., 141 A.D.2d 124, 533 N.Y.S.2d 91 (2d

Dep’t 1988), aff’d, 74 N.Y.2d 66, 542 N.E.2d 1048, 544

N.Y.S.2d 531 (1989)). In Technicon, the losing party had

filed a motion for leave to appeal to the highest state court,

which motion had not yet been decided. Travelers also

argued that any Rule 54(b) certification was premature until

the highest state court decided the Technicon appeal on the

merits.

In December 1988 the district court in a six-page decision

carefully reviewed all arguments made by Travelers, deter-

mined that the Travelers’ duty to defend was ‘‘separate and

| For the convenience of the Court, our citation to the lower court

opinions in this case will be to the Appendices to Travelers’ Petition.

4

distinct’’ from its duty to indemnify, and also determined

that there was no just reason fo: delay, and ordered the entry

of a Rule 54(b) judgment. As to the third-party issue, the

court correctly forecast’ that ‘‘there is no immediate prospect

of an Order being entered as to Travelers rights (if any)

against the third-parties.’’ (Petition at A-28). As to Techni-

con, the district court noted that it had previously distin-

guished that case (correctly, in the view of the Second

Circuit).

The Appeal

Travelers appealed to the Second Circuit. After briefing

and argument, the Second Circuit unanimously affirmed the

district court on all points. It carefully reviewed the issue of

the Rule 54(b) certification, an issue which had been raised

again by Travelers on the appeal. By the time the Second Cir-

cuit rendered its decision, the New York Court of Appeals

had accepted and decided the Jechnicon case in a manner

entirely consistent with the district court’s analysis. The Sec-

ond Circuit found that ‘‘the New York Court of Appeals

affirmance of Technicon did nothing to cast doubt on the

district court’s conclusion.’’ (Petition at A-18).

Travelers moved for rehearing, and filed a suggestion of

rehearing en banc. The motion for rehearing was denied, and

no active judge requested a vote on the suggestion of a

rehearing en banc. Three of those active judges were formerly

New York State court judges and five other active judges

practiced law in New York state. In its per curiam opinion

denying the petition for rehearing, the Second Circuit modi-

fied one sentence in its prior opinion to reflect a ruling of the

New York Court of Appeals in another decision (not Techni-

con) handed down subsequent to the Second Circuit's first

opinion. That state court decision and the modification of

the sentence in the Second Circuit’s opinion had no effect on

the holding in this case.

2 Even as of the present time, Travelers has made no effort to secure

relief on its third-party claims.

SUMMARY OF ARGUMENT

This is no conflict among the circuits, either explicit or

implicit. In fact, there is harmony in analysis and result, and

the circuits frequently cite one another in their discussion of

the legal principles governing Rule 54(b).

This case does not call for the exercise of this Court’s

power of supervision to correct any departure from the

accepted and usual course of judicial proceedings. This Court

has amply explicated the standards to be applied, and the

lower courts here have carefully applied those standards.

Moreover, this Court has expressly ruled that there is no need

for hard and fast rules to govern the lower courts.

Travelers’ reasons for certiorari are umpersuasive. The

lower courts do not need any additional ‘‘practical guide-

lines.’” Avondale’s claim to a defense is separate from Trav-

elers unprosecuted third-party claims for contribution and

indemnity. The lower courts did not ‘‘preempt the decisions

of state courts.’’ The district court was not required to deny

Avondale its defense pending the appeal of a case which the

district court had already determined (correctly, according to

the Second Circuit) was distinguishable. Underlying Travelers

strained arguments that the courts below did not follow cor-

rect Rule 54(b) procedures is its contention that those courts

decided state law issues incorrectly to reach a result with

which Travelers does not agree. This Court is properly reluc-

tant to grant certiorari to review state law insurance deci-

sions.

6

ARGUMENT

I. THERE IS NO CONFLICT AMONG THE CIRCUITS

Rule 10 of this Court’s rules provide that one of the con-

siderations governing the granting of a petition for a writ of

certiorari is, ‘‘{[w]hen a United States court of appeals has

rendered a decision in conflict with another United States

court of appeals . . .”’ The presence of even a square con-

flict on a seemingly important issue is not necessarily suffi-

cient to bring about a grant of certiorari. Brown Transport

Corp. v. Atcon, Inc., 439 U.S. 1014 (1978) (White, J., dis-

senting). There must be a ‘“‘real or ‘intolerable’ conflict on

the same matter of law or fact, not merely an inconsistency

in dicta or im the general principles utilized.’’ Stern, Gress-

man & Shapiro, Supreme Court Practice, § 4.3 (6th ed. 1986)

In Layne & Bowler Corp. v. Western Well Works, Inc.,

261 U.S. 387, 393 (1923) this Court declared that,

it is very important that we be consistent in not granting

the writ of certiorari except in cases involving principles

the settlement of which is of importance to the public as

distinguished from that of the parties, and in cases

where there is a real and embarrassing conflict of opin-

ion and authority between the Circuit Courts of Appeal.

(Our emphasis.)

A. There Is No Express Conflict Among The Circuits

The Second Circuit in this case did not find itself in con-

flict with any other circuit. The Petition nowhere cites any

circuit court opinion which states that it is in conflict with

another circuit on Rule 54(b) issues. We have also been

unable to find such a case. No circuit has stated that it is in

conflict with any other circuit.

The Petition nowhere cites any other authority, including

lower court decisions, treatises, or law review articles which

has identified any conflict among the circuits on the Rule

7

54(b) issues. Similarly, we have been unable to find any such

authority. There is no express conflict among the circuits.

B. There Is No Implicit Conflict Among The Circuits

There is no evidence of any implicit conflict among the cir-

cuits. Petitioner cites no case in which one circuit distin-

guishes or questions a case in another circuit.

Petitioner suggests that the Second Circuit’s ‘‘failure to

address the interlocuiory character of the order’’ conflicts

with American Motorists Ins. Co. v. Levolor Lorentzen, Inc.,

879 F.2d 1165 (3d Cir. 1989). (Petition at 22). The lower

courts here did consider that issue and concluded that the

order was not interlocutory. (Petition at A-24-25). The Third

Circuit found the order in Levo/or not final because in the

same decision in which the district court granted Rule 54(b)

certification, it allowed the defendant to take discovery on

the certified issue. In this case, the district court made no

suggestion whatsoever that its judgment was subject to revi-

sion. Massive discovery had already taken place, and was

closed by court order.

The Third Circuit in Levo/or gave no indication that it was

in conflict with any Second Circuit rule. The Second Circuit,

aware of, and citing, the Third Circuit decision dismissing the

appeal (Petition A-21), did not consider itself in any way to

be in conflict with the Third Circuit.

The other authorities which Travelers cites to support its

contention that there is a conflict (Petition at 13-14) are all

cases which can be explained on the basis of the different

fact patterns involved, as this Court recognized would often

be the case. Curtiss-Wright Corp. v. General Elec. Co., 446

U.S. 1, 8-11 (1980). For example, in Morrison-Knudsen Co.,

Inc. v. Archer, 655 F.2d 962, 966 (9th Cir. 1981) the court

found that ‘‘[t]he claims disposed of by the Rule 54(b) judg-

ment were inseverable, both legally and factually, from the

claims that remained unadjudicated in the district court.’’ In

another case cited by Travelers, Spiegel v. Trustees of Tufts

College, 843 F.2d 38, 43 at n.3 (Ist Cir. 1988) the First Cir-

8

cuit observed that, ‘‘the integers which comprise this calculus

[Rule 54(b) ana’ysis] will vary from case to case... .”’

Travelers’ insistence on rigid rules is contrary to this Court’s

philosophy of flexibility in applying Rule 54(b). Sears, Roe-

buck & Co. v. Mackey, 351 U.S. 427 (1956).

C. There Is Harmony Among The Circuits

Not only is there no conflict among the circuits, there is a

surprising amount of uniformity in result for an area of the

law in which considerations of judicial discretion play such a

large role. For example, the circuits routinely cite cases from

other circuits in their examination of Rule 54(b) certifica-

tions: Automatic Liquid Packaging, Inc. v. Dominik, 852

F.2d 1036, 1037 (7th Cir. 1988) citing Cinerama, Inc. v.

Sweet Music, S.A., 482 F.2d 66 (2d Cir. 1973) and Rieser v.

Baltimore & Ohio R.R., 224 F.2d 198 (2d Cir. 1955); Minor-

ity Pol. Off. Ass’n v. City of South Bend, Ind., 721 F.2d

197, 200 (7th Cir. 1983) citing Cinerama, Inc. v. Sweet

Music, S.A., 482 F.2d 66 (2d Cir. 1973); U.S. Golf Ass’n v.

St. Andrews Systems, Data-Max, Inc., 749 F.2d 1028, 1031

(3d Cir. 1984) citing Morrison-Knudsen Co., Inc. v. Archer,

655 F.2d 962 (9th Cir. 1981); Allegheny County Sanitary

Authority v. U.S. E.P.A., 732 F.2d 1167, 1172 (3d Cir. 1984)

citing Page v. Preisser, 585 F.2d 336 (8th Cir. 1978) and Mart-

ter of Bassak, 705 F.2d 234 (7th Cir. 1983); Monmouth Mea-

ical Center v. Harris, 646 F.2d 74, 78 (3d Cir. 1981) citing

Elfenbein v. Gulf & Western Indus., Inc., 590 F.2d 445 (2d

Cir. 1978); Continental Airlines Inc. v. Goodyear Tire &

Rubber Co., 819 F.2d 1519, 1525 (9th Cir. 1987) citing Local

P-17], Amalgamated Meat Cutters v. Thompson Farms Co..,

642 F.2d 1065 (7th Cir. 1981); H & W Industries v. Formosa

Plastics Corp., U.S.A., 860 F.2d 172, 176 (Sth Cir. 1988) cit-

ing Cullen v. Margiotta, 811 F.2d 698 (2d Cir. 1987) and

Gas-A-Car, Inc. v. American Petrofina, Inc., 484 F.2d 1102

(10th Cir. 1973); United States v. O’Neil, 709 F.2d 361, 369

(Sth Cir. 1983) citing Johnston v. Cartwright, 344 F.2d 773

(8th Cir. 1965).

9

Il. THE COURTS BELOW DID NOT DEPART FROM

THE ACCEPTED AND USUAL COURSE OF JUDI-

CIAL PROCEEDINGS

Rule 10 of the rules of this Court provides that one consid-

eration militating in favor of granting certiorari is ‘‘[w]hen a

United States court of appeals. . . has so far departed from

the accepted and usual course of judicial proceedings or sanc-

tioned such a departure by a lower court, as to call for an

exercise of this Court’s power of supervision.’’ Travelers

makes no showing that any such dereliction occurred in this

case.

A. The Lower Courts Followed The Guidance Of This

Court

The procedures to be followed by the lower courts in enter-

ing Rule 54(b) judgments have been set out in a series of five

decisions of this Court starting in 1956.° The district court

must first determine that there is a final judgment. ‘‘It must

be a ‘judgment’ in the sense that it is a decision upon a cog-

nizable claim for relief, and it must be ‘final’ in the sense

that it is ‘an ultimate disposition of an individual claim

entered in the course of a multiple claims action.’ ’’ Curtiss-

Wright, 446 U.S. at 7 (quoting Sears, Roebuck & Co. v.

Mackey, 351 U.S. 427, 436 (1956)). ‘‘Once having found

finality, the district court must go on to determine whether

there is any just reason for delay . . . The function of the

district court under the Rule is to act as a ‘dispatcher’ [cita-

tion omitted] . . . It is left to the sound judicial discretion of

the district court to determine the ‘appropnate time’ when

each final decision in a multiple claims action is ready for

appeal.’’ Curtiss-Wright, 446 U.S. at 8.

3 Sears, Roebuck & Co. v. Mackey, 351 U.S. 427 (1956); Cold Metal

Process Co. v. United Eng’g & Foundry Co., 351 U.S. 445 (1956); Lib-

erty Mutual Ins. Co. v. Wetzel, 424 U.S. 737 (1976); Seatrain Ship-

building Corp. v. Shell Oil Co., 444 U.S. §72 (1980); Curtiss-Wright

Corp. v. General Elec. Co., 446 U.S. 1 (1980).

10

In this case, both lower courts carefully followed those

guidelines. The district court considered the full range of fac-

tors necessary to enter a Rule 54(b) judgment. It was ‘‘cogni-

zant of the goals of judicial economy and the policy against

‘piecemeal appeals,’ ’’ and that ‘‘a court should not enter

final judgment dismissing a given claim unless that claim is

‘separable from the claims that survive.’ ’’ District Court

Opinion, (petition at A-24), citing United States v.

McDonald, 435 U.S. 850, 852 (1977); Sears, 351 U.S. at 438;

Cullen v. Margiotta, 811 F.2d 698, 71! (2d Cir. 1987).

The court of appeals gave plenary review to the separabil-

ity of claims issue and analyzed the determination of the dis-

trict court as to just cause for delay on an abuse of discretion

standard. Petition A-13.

B. Additional Explication Of Rule 54(b) By This Court

Is Unnecessary

With the overall procedures to be followed under Rule

54(b) carefully set out by this Court in five decisions, it

becomes a matter of applying those rules to specific circum-

stances on a case-by-case basis. Because of the latitude recog-

nized to be necessary by this Court in the making of the

separate claim determination, (Curtiss-Wright, 446 U.S. at 8)

and the broad discretion allowed on the ‘‘no just reason for

delay’’ prong of the analysis (Jd. at 10), it would be difficult,

if not impossible, to frame additional refinements of the pro-

cedures already explicated by this Court.

This Court has determined that there is no need for hard

and fast rules in this area of the law. The Court is ‘‘reluctant

either to fix or sanction narrow guidelines for the district

court to follow.’’ Curtiss-Wright, 446 U.S. at 11. This Court

has recognized a ‘‘demonstrated need for flexibility,’’ in Rule

54(b) determinations. Sears, 351 U.S. at 435.

1]

C. Judge Posner’s Views In Minority Police Officers Do

Not Require The Overruling Of Sears And Cold

Metal

Petitioner has cited one appellate decision which suggests

that this Court ‘‘may’’ need to review its Rule 54(b) holdings.

Minority Pol. Off. Ass’n v. City of South Bend, Ind., 721

F.2d 197, 201 (1983).* Although Judge Posner suggests that

the Rule 54(b) decisions of this Court ‘‘may be ripe for reex-

amination,’’ he concluded that there is no evidence that this

Court would overrule those decisions. Jd. at 201. We submit

that Judge Posner was correct in that conclusion. In fact,

Judge Posner demonstrated the wisdom of this Court’s flexi-

ble approach to Rule 54(b) by finding that ‘‘it is open to us”’

to achieve the results he desired (without overruling Sears and

Cold Metal). Id.

D. The Courts Of Appeal Are Not Overburdened With

Rule 54(b) Appeals

We do not believe that there is any evidence that the cir-

Cults are overburdened with Rule 54{b) appeals. For the Sec-

ond Circuit, which Petitioner asserts is ‘‘at one extreme’ of

permissiveness under Rule 54(b), we were able to locate’, for

the vear 1988, only seven reported 54(b) appeals.® Reported

4 The Minority Pol. court's belief that Rule 54(b) ‘‘may”’ be ripe for

examination was not based on a perceived conflict between circuits—

the court even cited the Second Circuit case Cinerama, Inc. v. Sweet

Music, S.A., 482 F.2d 66 (2d Cir. 1973) as authority for its own $4(b)

views.

5 Our survey was necessarily limited to reported decisions. We recopg-

nize there may be 54(b) appeals disposed of without a reported opin-

ion.

6 Burr by Burr vy. Ambach, 863 F.2d 1071 (2d Cir. 1988) ($4(b) certifi-

cation held improvidently granted as to one issue); Retail Software Ser-

vices, Inc. v. Lashlee, 854 F.2d 18 (2d Cir. 1988); Baez v. Hennessy,

853 F.2d 73 (2d Cir. 1988); National Bank of Washington v. Dolgov,

853 F.2d 57, $8 (2d Cir. 1988) (appeal dismissed because no 5$4(b)

explanation and ‘‘closely related issues remained to be litigated’’);

Perez v. Ortiz, 849 F.2d 793 (2d Cir. 1988); Oliveri v. Delta S.S. Lines,

12

54(b) appeals in other years, are, similarly, few in number:

1987-eight reported cases’; 1986-five reported cases*; 1985-

five reported cases’.

Il. TRAVELERS “‘REASONS FOR GRANTING THE

WRIT’’ ARE UNPERSUASIVE

Travelers advances two arguments for granting certiorari

(Petition at 12), neither of which appears to be derived from

Rule 10 of this Court.

A. The Lower Courts Do Not Need ‘‘Practical Guide-

lines’’

Travelers’ first reason is ‘‘to provide the lower courts with

practical guidelines for determining when a partial final judg-

ment may be entered on one claim in an action involving

multiple claims and parties... .’’ (Petition at 12). As we

have shown above, this Court has eschewed that approach,

Inc., 849 F.2d 742 (2d Cir. 1988); Al Tech Specialty Steel Corp. v.

U.S. E.P.A., 846 F.2d 158 (2d Cir. 1988).

7 Lowen v. Tower Asset Management, Inc., 829 F.2d 1209 (2d Cir.

1987); Korwek v. Hunt, 827 F.2d 874 (2d Cir. 1987); Fromer v. Scully,

817 F.2d 227 (2d Cir. 1987); In re Agent Orange Product Liability Liti-

gation MDL No. 381], 818 F.2d 179 (2d Cir. 1987); Arkin v. Trans.

Intern. Airlines, Inc., 81§ F.2d 12 (2d Cir. 1987); Cullen v. Margiotia,

811 F.2d 698 (2d Cir. 1987); Akerman v. Oryx Communications, Inc.,

810 F.2d 336 (2d Cir. 1987) (Rule 54(b) appeal dismissed for lack of

finality); Coffee v. Cutter Biological, 809 F.2d 191 (2d Cir. 1987).

8 Weber v. Dell, 804 F.2d 796 (2d Cir. 1986); BASF Wyandotte Corp.

v. Local 227, Intern. Chemical Workers Union, AFL-CIO, 791 F.2d

1046 (2d Cir. 1986); Hollander v. Brezenoff, 787 F.2d 834 (2d Cir.

1986); Ellis Nat. Bank of Jacksonville v. Irving Trust Co., 786 F.2d

466 (2d Cir. 1986); Herbert v. Lando, 781 F.2d 298 (2d Cir. 1986).

9 Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737 (2d Cir. 1985);

Smiga v. Dean Witter Reynolds, Inc., 766 F.2d 698 (2d Cir. 1985); Gil-

bert v. Burlington Industries, Inc., 765 F.2d 320 (2d Cir. 1985); Ansam

Associates, Inc. v. Cola Petroleum, Lid., 760 F.2d 442 (2d Cir. 1985);

Bloor v. Carro, Spanbock, Londin, Rodman & Fass, 754 F.2d 57 (2d

Cir. 1985).

13

saying ‘‘we are reluctant either to fix or sanction narrow

guidelines for the district courts to follow.’’ Curtiss-Wright,

446 U.S. at 10-11.

Avondale’s claim to a defense is separate from Travelers

unprosecuted third-party claims for contribution and indem-

nity and is final. In fact, the third-party complaint assumes,

as a third-party complaint must (Fed. R. Civ. P. 14(a)), the

liability of Travelers. The existence of third-party complaints

can not as a matter of law preclude the entry of a Rule 54(b)

judgment on the main claim. The two types of claims are

specifically listed in the Rule itself as types of claims as to

which a rule 54(b) judgment can be entered.

That the third-party complaints raise significant issues of

fact and law unrelated to Travelers’ duty to defend is shown

by the fact that Travelers has taken no action to resolve those

claims, as it would surely have done if the issues were similar

to those raised by Avondale’s motion for partial summary

judgment. Ironically, if Travelers position in this regard is

adopted then if would usurp the role of ‘‘dispatcher’’ which

this Court has held properly belongs to the district court.

Sears, 351 U.S. at 435. This is because finality as to Avon-

dale’s claim for a defense, in Travelers view, depends on

when, if ever, Travelers sees fit to pursue its third-party

claims.

B. The Lower Courts Did Not Preempt State Court

Decisions

Travelers second reason for certiorari is ‘‘to enforce the

institutional limits on the discretion of a federal court sitting

in diversity to use Rule 54(b) to preempt the decisions of

state courts construing state law.’’ Nothing in the decisions

below in any way preempts state courts from construing state

law. The gist of this argument is that Travelers does not

agree with the way the courts below decided state law.

A reading of the lower court decisions will demonstrate not

only that the lower courts were correct (not one of the four-

teen judges in the courts below who considered Travelers

14

arguments found any merit in them), but also that the lower

courts carefully considered all the state law precedents, even

to the extent, in the case of the Second Circuit, of modifying

its opinion to reflect a state court decision handed down a

month after its first opinion.

C. This Court Is Reluctant To Review State Law Insur-

ance Issues

Even if Travelers had demonstrated that the lower courts

decided issues of state law incorrectly, that would not be a

sufficient basis for the grant of certiorari.

As noted in Wright, Miller & Cooper, Federal Practice and

Procedure: Jurisdiction § 4036 at 41 (1988),

[T]he Court practices severe restraint in reviewing ques-

tions of state law. Thus until 1980, the Court’s Rules

stated that one reason for granting certiorari would be

that a court of appeals had decided an important state

or territorial question in a way in conflict with applica-

ble state or territorial law. Even then, review was seldom

granted to consider such questions. The new Rules omit

the former provision, and the Court has since stated that

ordinarily it will not grant certiorari simply to review

questions of state or District of Columbia law. [foot-

notes omitted]

This Court ‘‘rarely reviews a construction of state law

agreed upon by the two lower federal courts.’’ Virginia vy.

American Booksellers Assn., 484 U.S. 383, 395 (1988); Pem-

baur vy. City of Cincinnati, 475 U.S. 469, 484 n.13 (1986)

(‘‘We generally accord great deference to the interpretation

and application of state law by the courts of appeals’’);

Regents of University of Michigan v. Ewing, 474 U.S. 214,

224 n.10 (1985) (‘‘In dealing with issues of state law. . . we

are hesitant to overrule decisions by federal courts skilled in

the law of particular states unless their conclusions are shown

to be unreasonable’’ quoting Propper v. Clark, 337 U.S. 472,

486-87 (1949)); Pierson v. Ray, 386 U.S. 547, 558 n.12 (1967)

ala aia

15

(Court does not ‘‘ordinarily review the holding of a court of

appeals on a matter of state law’’); Huddleston v. Dwyer,

322 U.S. 232, 237 (1944).

The application of that rule is particularly apt in this case

because the author of the circuit court opinion, interpreting

New York state law, Judge Cardamone, served for 18 years

as a New York state court judge. Federal Bar Council, Sec-

ond Circuit Redbook-1989-1990, 53 (1989).

This Court has consistently denied certiorari in insurance

coverage disputes governed by state law. E.g. Eli Lilly & Co.

v. Home Ins. Co., 794 F.2d 710 (D.C. Cir. 1986), cert.

denied, 107 S. Ct. 940 (1987); Eagle-Picher Indus., Inc. v.

Liberty Mut. Ins. Co., 682 F.2d 12 (1st Cir. 1982), cert.

denied, 460 U.S. 1028 (1983); Keene Corp. v. Insurance Co.

of N. Am., 667 F.2d 1034 (D. C. Cir. 1981), cert. denied,

455 U.S. 1007 (1982); Porter v. American Optical Corp., 641

F.2d 1128 (Sth Cir.), cert. denied, 454 U.S. 1009 (1981);

Insurance Co. of N. Am. v. Forty-Eight Insulations, 633

F.2d 1212 (6th Cir. 1980), cert. denied, 454 U.S. 1109 (1981).

Certiorari has even been denied where the attorney general

of a state has asserted that the lower federal courts have

incorrectly determined the law of his state. Petition for Cer-

tiorari on behalf of State of Missouri (p.29) in Continental

Ins. Cos. v. Northeastern Pharmaceutical & Chemical Co.,

842 F.2d 977 (8th Cir.) cert. denied, 109 S. Ct. 66 (1988).

16

CONCLUSION

For all the foregoing reasons, Avondale respectfully

requests that this Court deny Travelers petition for a writ of

certiorari to review the decision of the United States Court of

Appeals for the Second Circuit.

Dated: New York, New York

May 10, 1990

Respectfully submitted,

HUGH N. FRYER

Counsel of Record for Plaintiffs-

Respondents

FRYER, ROSS & GOWEN

551 Fifth Avenue

New York, New York 10176

(212) 286-0099

JOHN P. GASIOR

EDWARD M. JOYCE {

Of Counsel