Brief in Opposition to Petition for Writ of Certiorari — Transit Casualty Co. v. Security Trust Co.

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INDEX

Page

OPINIONS BELOW 1-2

JURISDICTION 2

QUESTION PRESENTED 2

FEDERAL RULE OF CIVIL PROCEDURE

INVOLVED 3

STATEMENT OF THE CASE 4-10

Events Leading Up to Order of September 14,

1966 4-6

District Court Proceeding After Denial of In-

terlocutory Appellate Review... 7

The Dismissal With Prejudice for Failure to

Obey the Court’s Order 7-9

Court of Appeal’s Ruling That Dismissal

Should Be Without Prejudice 9-10

REASONS FOR DENYING WRIT 10-11

CONCLUSION ........ x ee

AUTHORITIES CITED

Case . Page

CARROLL v. PRESIDENT AND

COMMISSIONERS OF PRINCESS ANNE,

= oo 10

LINK v. WABASH R. CO.,

8370 U.S. 626 10

WALKER v. CITY OF BIRMINGHAM,

388 U.S. 307 10

OTHER AUTHORITIES CITED

Federal Rule of Civil Procedure 41(b) 3

5 Moore’s Federal Practice, Section 41.12 semana 10

Supreme Court Rule 19 10

Supreme Court Rule 23 11

28 US.C., Section 1254(1) 2

IN THE

SUPREME COURT OF THE

UNITED STATES

OCTOBER TERM, 1968

No. 742

TRANSIT CASUALTY COMPANY, et al.,

Petitioners,

v8.

SECURITY TRUST COMPANY, et al.,

Respondents.

BRIEF OF RESPONDENT SECURITY TRUST COM-

PANY IN OPPOSITION TO PETITION FOR A

WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE

FIFTH CIRCUIT

Petitioners pray that a writ of certiorari issue to

review the judgment below of the United States Court

of Appeals for the Fifth Circuit.

OPINIONS BELOW

The Order of Dismissal of the United States District

Court for the Southern District of Florida is unreported,

but appears at R.* 229-231. Petitioners appealed to the

United States Court of Appeals for the Fifth Circuit. The

Court of Appeals’ initial opinion is reported at 396 F.2d

*“R” refers to the printed record in the Court of Appeals.

é

2

803; its uncorrected opinion on Petition for Rehearing

En Banc is reported at 399 F.2d 665; and its corrected

Order on Petition for Rehearing is not yet reported, but

appears at A2-A3 of the Appendix to the Petition.

JURISDICTION

Jurisdiction of this Court is invoked under 28 U.S.C.,

Section 1254(1). The original opinion of the Court of

Appeals is dated June 28, 1968. Petitioners’ timely peti-

tion for rehearing was denied on August 29, 1968.

QUESTION PRESENTED

Was it error to dismiss petitioners’ complaints with-

out prejudice for failure to obey a court order under the

following circumstances:

The named petitioners filed two diversity damage ac-

tions in the district court below alleging that the suits

were brought in their own behalf and on behalf of al-

leged classes consisting of certain insurance companies

and other insurers; the members of the alleged classes

who were of the same citizenship as respondent were not

named as parties plaintiff; during the trial pruceedings,

the district court ordered plaintiffs to amend their com-

plaints “so as to include as parties plaintiff all members

of the alleged class who have retained counsel for the

plaintiff to represent them in these two cases;” when this

order was not complied with, the district court dismissed

both cases with prejudice for failure to obey a court

order; plaintiffs then appealed to the Court of Appeals,

which vacated the “with prejudice” part of the dismissal

and remanded the cases for entry of a dismissal without

prejudice?

3

FEDERAL RULE OF CIVIL PROCEDURE

INVOLVED

Federal Rule of Civil Procedure 41(b) provides:

“(b) Involuntary Dismissal: Effect thereof.

For failure of the plaintiff to prosecute or to

comply with these rules or any order of court,

a defendant may move for dismissal of an ac-

tion or of any claim against him. After the

plaintiff, in an action tried by the court with-

out a jury, has completed the presentation of

his evidence, the defendant, without waiving

his right to offer evidence in the event the mo-

tion is not granted, may move for a dismissal

on the ground that upon the facts and the law

the plaintiff has shown no right to relief. The

court as trier of the facts may then determine

them and render judgment against the plaintiff

or may decline to render any judgment until the

close of all the evidence. If the court renders

judgment on the merits against the plaintiff, the

court shall make findings as provided in Rule

52(a). Unless the court in its order for dis-

missal otherwise specifies, a dismissal under

this subdivision and any dismissal not provided

for in this rule, other than a dismissal for lack

of jurisdiction, for improper venue, or for fail-

ure to join a party under Rule 19, eperates as an

adjudication upon the merits.”

4

STATEMENT OF THE CASE

Petitioners, as plaintiffs below, filed two suits in

the United States District Court for the Southern Dis-

trict of Florida (R. 12-75, 261-284). The complaints sought

to recover damages from the respondent, Security Trust

Company, because of the latter’s alleged mismanagement

of McKinley & Company. McKinley & Company was al-

leged to have gone insolvent after entering into: separate

management agreements to act as manager for various

insurers in the writing of certain types of insurance.

The named plaintiffs in each case were foreign in-

surance companies authorized to do business in Florida.

In each case, plaintiffs sued “to their own use and to the

use of” certain other insurers similarly situated (R. 12-13,

261-262). After some preliminary procedural sparring

had occurred, the district court entered an order on Sep-

tember 14, 1966, which provided in pertinent part:

“1. Plaintiffs shall within ten (10) days here-

after amend their complaints so as to include

as parties Plaintiff all members of the alleged

class who have retained counsel for the Plain-

tiffs to represent them in these two cases.”

(R. 179).

kvents Leading Up To Order Of September 14, 1966

The events leading up to the order of September 14,

1966, are shown at R.76-175. These «vents are fairly

summarized in TRANSIT CASUALTY COMPANY v.

ATKINS, (5th Cir. 1967), 372 F.2d 441, 441-442, where the

Court of Appeals declined interlocutory review of the

order, stating:

5

“The facts underlying both of these proceedings

are: The complaints were brought by two named

parties plaintiff and seek damages against Se-

curity Trust Company, not only for themselves,

but presumably for the benefit of 24 other in-

surance companies allegedly similarly situated.

The complaints did not state in what way the

class members were so numerous that joinder of

all was impracticable; nor was it alleged what

questions of law or fact were common as be-

tween the defendant, Security Trust Conipany,

and all the quasi plaintiffs; nor was it shown

how a class action was superior to other avail-

able methods for the fair and efficient adjudica-

tion of the controversy. Security Trust, in its

answers, specifically denied all allegation as to

the alleged class claimed to be represented; de-

nied that it was impracticable to bring all of the

alleged members of the class before the court;

and denied that the two party plaintiffs fairly

represented the interests of the entire class.

In the course of discovery, after answers were

filed, the attorneys for Security communicated

by letter with some of the 24 absent members

of the alleged class seeking information as to

their knowledge of having beeu named as mem-

bers. The communications also concerned the

taking of discovery depositions. Thereupon, the

attorneys for the plaintiffs notified Security’s

counsel to cease and desist communicating di-

rectly or indirectly with the clients represented

by them. They filed before the district judge a

motion to enjoin and prohibit any such com-

munication, and in that motion charged counsel

for defendant with unethical conduct in attempt-

6

ing to communicate directly with the absent

members of the class. Presented with a claim

by the attorneys for the p’aintiffs that the at-

torney-client relationship existed between them

and the non-party class members, and a charge

of unethical conduct leveled at counsel for de-

fendant, the Court had the problem of determin-

ing the jural relationship of the members of the

class, not only to the plaintiffs but to each

other, and to the subject matter of the litiga-

tion, as well as to the counsel for plaintiffs. In

an apparent effort to assemble information to

assist him in determining these relationships, the

District Judge entered the order of September

14th. Plaintiffs argue that the writs should issue

because the order requires the joinder of addi-

tional plaintiffs who are residents of the same

state as the defendants, and that this will de-

stroy diversity and will divest the federal court

of jurisdiction.

Irrespective of the correctness of the order be-

low, it is apparent that this case is not in an

appropriate stage for appellate review. The

District Court is in the middle of a housekeep-

ing operation. It has not reached a determina-

tion of the merits in any respect, and the order

here sought to be reviewed does not define the

rights of any party. It is not clear what the

precise effect of the order will be on the out-

come of the litigation, nor what subsequent steps

the court will take. Only the subsequent decree,

either dismissing the case or permitting them to

proceed as a class action, will define their

rights....”

———Eee

Ney

7

District Court Proceeding After Denial of Interlocutory

Appellate Review

After the Court of Appeals held it had no jurisdic-

tion to review the interlocvcory order, the district court

granted petitioners additional time to comply with the

order (R. 185-186). Finaliy, on May 9, 1967, petitioners

amended their complaints in supposed compliance with

the September 14th order, but merely added certain for-

eign corporations as named plaintiffs and named none of

the Florida corporations they admittedly represented

(R. 221-223). To add insult to injury, plaintiffs’ counsel

filed an affidavit to the effect that the unnamed Florida

members of the class had “elected to remain in that ca-

pacity” (R. 228).

The Dismissal With Prejudice for Failure to Obey The

Court’s Order

The district court’s Order of Dismissal provides in

pertinent part as follows:

“ ...2. Notwithstanding the granting of two

continuances to the plaintiffs to comply with

the order of September 14, 1966, plaintiffs, in the

opinion of this Court, have failed to comply

therewith. The Amendment to the Complaint

filed on May 9, 1967 in an effort to comply with

the order of September 14, 1966, conspicuously

fails to include three Florida corporations which

the plaintiffs have represented to this Court,

as well as the Appellate Court—the Fifth Cir-

cuit Court of Appeals—to comprise members of

the alleged class which must be named pur-

7

CP saR Ph ts «wat at i 08 Gitta a 1: CEA Nett Nida

8

suant to the Order of September 14, 1966, since

they were legally represented by counsel for the

plaintiffs. As argued by counsel for the de-

fenaant, a failure to name these corporations

constitutes a failure to comply with the order

of September 14, 1966.

3. This Court expressly notes that at the time

of the hearing on this motion no determination

had been made as to whether this action is prop-

erly maintainable as a class action. In this re-

gard, the posture of this cause at the time of

the hearing was the same as when the order of

September 14, 1966 was entered. This Court,

then, as now, as noted by the Fifth Circuit Court

of Appeals, war engaged in a ‘housekeeping’

operation with a view to determining whether

this action is properly maintainabie as a class

action. A full and good faith compliance with

the order of September 14, 1986 was also neces-

cary in order for this Court to determine the

jural relationships of ali interested parties

among themselves as well as their relationship

to the subject matter of tie litigation and dis-

covery processes incident thereto.

4. The Amendmert together with counsel’s

affidavit of compliance does net respond to the

Court’s order of September 14, 1966 and instead

of facilitating a disposition of the matters set

forth in the complaint it serves to frustrate and

hamper this Court’s effort to resolve the perti-

nent issues.

9

5. The Court expressly finds that the plaintiffs

have failed to comply with the order of Sep-

tember 14, 1966 as they were ordered to do.

It Is Therefore, Ordered And Adjudged, that

this cause be and the same is hereby dismissed

with prejudice pursuant to Rule 41(b) and that

the Defendant, Security Trust Co. go hence

without day with its costs as may hereafter be

taxed upon motion. ...” (R. 229-231).

Court of Appeal’s Ruling That Dismissal Should Be

Without Prejudice

In its initial opinion at 396 F.2d 803, the Court of

Appeals states:

“... We agree with the order of dismissal by

the district court, but vacate that part of the

order making the dismissal with prejudice and

remand with instructions to enter the order

without prejudice.”

In its Order on Petition for Rehearing at 399 F.2d

665, the Court of Appeals states:

“... For rehearing, appellants urge two prin-

ciple points, both of which dea! again with the

merits or demerits of the District Court’s order

in attempting to define the parties to be in-

cluded within the appellants’ class action. Again

appellants overlook that really the only issue

on appeal is the compliance vel non with the Dis-

trict Court’s order of September 14, 1966, and,

having found a failure of compliance on the part

10

of appellants, the District Court’s judgment of

dismissal was affirmed with directions that the

order be entered without prejudice as set out in

our Per Curiam of June 28, 1968. This Court will

not modify its previous ruling despite any Flor-

ida law claimed by appellants which may or may

not bar a subsequent cause of action in any fu-

ture suit....”

Having had their cases dismissed without prejudice

for failure to obey a court order, petitioners now seek

review in this Court by petition for a writ of certiorari.

REASONS FOR DENYING THE WRIT

1. The decision below is not in conflict with any

decision of another Court of Appeals. Dismissals without

prejudice for failure to obey a court order are expressly

authorized by both Rule 41(b) and numerous federal de-

cisions. Cf.,5 MOORE’S FEDERAL PRACTICE, Section

41.12, and cases there collected.

2. The decision below is correct and in probable

accord with this Court’s prior decisions. Compare: LINK

v. WABASH R. CO., 370 U.S. 626. The orderly adminis-

tration of justice would be replaced by complete anarchy

if litigants could, with complete impunity, simply disre-

gard all Court orders deemed erroneous. Cf., WALKER

v. CITY OF BIRMINGHAM, 388 U.S. 307; CARROLL v.

PRESIDENT AND COMMISSIONERS OF PRINCESS

ANNE, — US. —.

8. None of the questions petitioners purportedly

raise are properly before the Court on the present record.

All four questions “presented” in the petition relate to

joinder under Rule 19 and class action procedure under

11

Rule 23. None of these matters were considered by the

courts below because petitioners never complied with the

September 14th order of the district: court. Since peti-

tioners now assert a denial of due process, it should be

noted in passing that these constitutional issues were

never raised in the lower courts.

4. Supreme Court Rule 23(4) provides:

“The failure of a petitioner to present with ac-

curacy, brevity, and clearness whatever is es-

sential to a ready and adequate understanding

of the points requiring consideration will be a

sufficient reason for denying his petition.”

Petitioners have not stated the “Questions Presented”

with the required “accuracy, brevity, and clearness”. Nor

have they accurately or fairly stated the facts. While

they now claim their lawyers were never “retained by the

Florida companies” and that such companies did not have

to be named under the September 14th order (Petition,

p. 7), they admitted the exact opposite in both the district

court (R. 253, 229-230), and in the court of appeals below.

At page 2 of their Brief for petitioner in the mandamus

and prohibition proceeding before the court of appeals,

the present petitioners stated:

“On September 14, 1966, the trial Court sua

sponte entered an order requiring that the

complaint be amended so as to add as addi-

tional parties plaintiff all members of the class

who have retained counsel for the plaintiffs

to represent them in the case (Exhibit C). It is

undisputed that four (4) of the companies

whose joinder would be required under this rul-

ing are Florida corporations.” (R. 225-226).

~

12

>» CONCLUSION

_- It is respectfully submitted that the petition for a

writ of certiorari to the United States Court of Appeals

for the Fifth Circuit should be denied.

Respectfully submitted,

JAMES A. DIXON

900 Dade Federal Building

Miami, Florida 33131

and

SAM DANIELS

1414 duPont Building

Miami, Florida 33131

Attorneys for Respondent

Security Trust Company

13

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that in accordance with Su-

preme Court Rule 33, true copies of the foregoing were

mailed to the attorneys for petitioners, SAMUEL a

POWERS, JR., ESQUIRE, First Federal Building, Miami,

Florida 33132; and GEORGE P. BOWIE, ESQUIRE, 901

Washington Avenue, St. Louis, Missouri 63178, this

day of November, 1968.