Opposition Brief — Fluor Daniel (NPOSR), Inc. v. Seward

(%

No. 98-545

In The

Supreme Court of the United

OCTOBER TERM, 1997

FLUOR DANIEL (NPOSR), INC.,

a Delaware corporation,

Petitioner,

v.

DAVID G. SEWARD,

Respondent.

On Petition for Writ of Certiorari

To The Supreme Court of Wyoming

REPLY OF PETITIONER TO

BRIEF IN OPPOSITION

DONN J. McCALL

Counsel of Record

Attorney for Petitioner

Brown, Drew, Massey & Sullivan

Casper Business Center

Suite 800

123 West First Street

Casper, Wyoming 82601

Telephone No. (307) 234-1000

LANTAGNE LEGAL PRINTING

801 East Main Street Suite 100 Richmond, Virginia 23219 (800) 847-0477

Pome ree er cul

QUESTION PRESENTED

Whether the issue of Due Process was timely raised

and preserved in the district court and the Supreme Court of

Wyoming.

TABLE OF CONTENTS

Question Presented «665

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TABLE OF CITATIONS

Cases Cited:

Barber v. Turberville, 218 F.2d 34 (D.C. Cir. 1954).......

Bieganek v. Taylor, 801 F.2d 879 (7th Cir. 1986)..........

Braniff Airways v. Nebraska State Board of

Equalization and Assessment, 347 U.S. 590,

74 S. Ct. 757, 96 L.Ed. 967 (1964)...........cccsecccsccs.sss.

Bridoux v. Eastern Air Lines, Inc., 214 F.2d 207

(D.C. Cir. 1954), cert. den., 348 U.S. 821,

75 S. Ct. 33, OO L.Ed. 647 (1964) oo... ccccccccccccccscssess

County of Sacramento v. Lewis, ___ U.S.___,

118 S. Ct. 1708, 140 L.Ed.2d 1043 (1998)...

Eastman Kodak Company v. Guasti, 386 N.E.2d 291

Aon: WO icc ee

Eddings v. Oklahoma, 455 U.S. 104,

102 S. Ct. 869, 71 L.Ed.2d 1 (1982)... cee.

Eisler v. Stritzler, 45 F.R.D. 27 (D.P.R. 1968) ......0........

Ellington v. Milne, 14 F.R.D. 241 (E.D.N.C. 1953).........

Evitts v. Lucey, 469 U.S. 387, 105 S. Ct. 830,

SD A Bt TU pce. tesccesicsbaccecscirerarvisincse

*ee eee

se eeee

ved

Fluor Daniel (NPOSR), Inc. v. Seward.

eT ae 118s CO: NOUN) os 2

Gamble v. Pope & Talbot, Inc., 191 F.Supp. 763

RU 5

Greene v. Lindsey, 456 U.S. 444, 102 S. Ct. 1874,

Pe ee WU ION i 45

Helicopteros Nacionales de Colombia v. Hall,

466 U.S. 408, 104 S. Ct. 1968,

ok” REE SESE lle pg 5

Henry v. Mississippi, 379 U.S. 443 (1965) .......................... 7

Hoppe, inc. v. St. Louis Public Service Co.,

oan caved O97 One, 1051).:...........:;...:.... 6

Horn v. Intelectron Corp., 294 F.Supp. 1153

I OE ia 4

Hovey v. Elliott, 167 U.S. 409, 17 S. Ct. 841,

ge 3

Madden v. Wilde, State Examiner, 48 Wyo, 372,

eT ee CN Baek RR CO 2

Meeker v. Rizley, 324 F.2d 269 (10th Cir. mee 4

Menier v. United States, 405 F.2d 245 (Sth Cir. 1968) ........ 4

Mieszkowski v. Norville, 209 N.E.2d 358 i) | MURA. 4

In re Murchison, 349 U.S. 133, 75 S. Ct. 623,

cb nes ctos teas, POE AS 8 a EE 3

North Laramie Land Co. v. Hoffman, 268 U.S. 276,

45 S. Ct.491, 69 L.Ed. 953 | ER ia Men gc SR 4

Oceanic Trading Corp. v. Vessel Diana,

hal Bh NR ARERR Sate nan a Nem 3,4

oS rst—<‘<C;S”:”*=<‘i‘i‘CS;«<COCS™;S

People of State of New York ex rel. Bryant

v. Zimmerman, 278 U.S. 63, 49 S. Ct. 61,

73 L.Ed. 184 (1928) ...........cccscssccscstccvenseeccsesetcensstcatevssnees 5

Phillips v. Weiner, 103 F.R.D. 177 (D.C. Me. 1984)

Provident Security Life Insurance Co. v.

Gorsuch, 323 F.2d 839 (9th Cir. 1963),

cert. den., 376 U.S. 950, 84 S. Ct. 966,

11 L.Ed.2d 970 (1964) ........c.cccccsesesrsseesteeessereesseneseanenes

Rooks v. American Brass Company, 263 F.2d

166 (6th Cir. 1950) ............ccsssessserccessessesesscecssessseceessoees

Steffey v. City of Casper, 358 P.2d 951 (1961)..............00

Swink v. City of Pagedale, 810 F.2d 791

(Ott Cir. 1987) ni ccccssisvcccencsssdecscsarcaursoscrsecsenrscevessecseoeneness

Taylor v. Kentucky, 436 U.S. 478,

98 S. Ct. 1930, 56 L.Ed.2d 468 (1978)............ cece:

Tolson v. Hodge, 411 F.2d 123 (4th Cir. 1969) ..............00

Tozer v. Charles A. Krause Milling Co., 189 F.2d

BES CBG: Gir, TOBY) aio snc eicii keds. cease ice Weticiercrevesceccccnsesnecses

Traders Bank of Kansas City v. Cherokee

investment Co., inc., 642 S.W.2d 122

(MO. Aad. TIGR) ann csncsinssccscesesnconscsesseasiansesrsevesteredgnsesevoneses

Traguth v. Zuck, 710 F.2d 90 (2d Cir. 1983) ............ccesee

United States v. Williams, 504 U.S. 36,

112 S. Ct. 1735, 118 L.Ed. 352 (1992).............:cesceeseneees

Wendt v. Pratt, 154 F.R.D. 229 (D.Minn. 1994)..................

Williams v. Blitz, 226 F.2d 463 (4th Cir. 1955)

Wilver v. Fisher, 387 F.2d 66 (10th Cir. 1967)

United States Constitution Cited:

Fourteenth Amendment ................cccccccccceee eee

Petitioner, Fluor Daniei (NPOSR), Inc., a Delaware

corporation, respectfully submits this Reply to Brief in Oppo-

sition in support of its petition for a writ of certiorari to the

Supreme Court of Wyoming.

ARGUMENT

BECAUSE THE ISSUE OF DUE PROCESS WAS

TIMELY RAISED BEFORE BOTH THE DISTRICT COURT

AND THE SUPREME COURT OF WYOMING BY AP-

PEALING TO FUNDAMENTAL PROCEDURAL FAIRNESS,

THE ISSUE WAS PROPERLY PRESERVED, AND THE

UNITED STATES SUPREME COURT HAS JURISDICTION.

Respondent, David Seward (Seward), contends that

this Court should not issue a writ of certiorari because the

due process issue was not properly preserved below. This

contention is incorrect. Fluor Daniel (NPOSR), Inc. (Fluor

Daniel) has consistently argued the issue of procedural fair-

ness throughout the course of this litigation. The only issue

in this case has always been simple fairness. Is it fair to ex-

ercise governmental power to award a default judgment of

more than half a million dollars where the defendant has no

meaningful opportunity to be heard or to present its de-

fenses?

Under the traditional rule of this Court, if the parties

and courts were aware of the issue and litigated it, then it is

preserved even if the lower court did not base its decision on

the issue. United States v. Williams, 504 U.S. 36, 40-45,

112 S. Ct. 1735, 118 L.Ed.2d 352 (1992). In the case at bar,

the Due Process issue was preserved in the district court,

where Fluor Danie! argued: "Relief from a default judgment

is essentially a matter of fairness." Memorandum in Support

of Defendant's Motion to Set Aside Entry of Default Judg-

ment Pursuant to Wyoming Rules of Civil Procedure 55(c)

and 60(b), App. 4.7 (Nov. 5, 1996).

The fairness issue also was preserved in the Su-

preme Court of Wyoming where Fiuor Daniel again argued:

“Relief from a default judgment is a matter of fairness. Fair-

-1-

ness demands relief from a default judgment of $562,489.00,

where the amount of the judgment was based upon blatant

misrepresentations of fact." Appellant's Brief, App. 5.8 (Feb.

28, 1997). Fluor Daniel also argued that "Seward's judgment

was unfairly obtained." Appellant's Reply Brief, App. 6.4

(Mar. 20, 1997). When Fluor Daniel argued to the Supreme

Court of Wyoming in its original briefs that fairness demands

the default judgment be set aside, it preserved the Due Pro-

cess issue.

The fairness issue was again raised by Fluor Danie!

in its petition for rehearing: “Due Process and Public Policy

Considerations Require that Rehearing be Granted and the

Default Judgment Entered in this Case be Set Aside.” Brief

of Appellant in Support of Petition for Rehearing, Appendix J,

37a (Apr. 27, 1998). Later in the brief, the issue was

phrased: "The More Liberal Federal Standard Establishing

‘Excusable Neglect’ Should be Applied by this Court Based

upon Public Policy and Due Process Considerations under

the United States Constitution.” /d. at 42a."

The Supreme Court of Wyoming chose not to ad-

dress the fairness issue, but did acknowledge "a temptation

to review the damage award because of the amount

awarded." Fiuor Daniel (NPOSR), Inc. v. Seward, 956 P.2d

1131, 1136 (Wyo. 1998); Appendix B, 13a. And the Su-

preme Court of Wyoming ruled that the trial court's decision

was not “arbitrary or capricious.” /d. In denying rehearing,

the Supreme Court of Wyoming again failed to address the

fairness issue. Order Denying Petition for Rehearing, Ap-

pendix A (May 5, 1998).

The touchstone of procedural due process is protec-

tion of the individual against arbitrary action of government

and comprehends fundamental procedural fairness County

1

Contrary to the contention made by Seward at page 14 of his

Brief in Opposition, the Supreme Court of Wyoming will grant a petition for

rehearing on a constitutional issue not raised below or in the original ap-

peal if “the public interest is involved". Madden v. Wilde, State Examiner.

48 Wyo. 372, 377-78, 49 P.2d 637 (1935): see also Steffey v. City of

Casper, 358 P.2d 951 (Wyo. 1961). -

of Sacramento v. Lewis, ___ U.S. __, 118 S. Ct. 1708,

1716, 140 L.Ed.2d 1043 (1998). Where life, liberty or prop-

erty is at stake, one has a right to a fair procedure. This

Court has stated that "a fair trial in a fair tribunal is a basic

requirement of due process.” /n re Murchison, 349 U.S. 133,

136, 75 S. Ct. 623, 99 L.Ed. 942 (1955). Due Process em-

phasizes fairness between the State and the individual

dealing with the State. Evitts v. Lucey, 469 U.S. 387, 405,

105 S. Ct. 830, 83 L.Ed.2d 821 (1985). And a state appel-

late process must comport with the Due Process Clause.

Evitts, 469 U.S. at 401.

The principles of fairness fundamental to our concep-

tion of due process go to the very core of our system of gov-

ernment. Without this element of fairness, our judicial sys-

tem would find itself bereft of the legitimacy and public ac-

ceptance it needs to perform its function:

The fundamental conception of a court of

justice is condemnation only after hearing.

To say that courts have inherent power to

deny all right to defend an action, and to

render decrees without any hearing what-

ever, is, in the very nature of things, to

convert the court exercising such authority

into an instrument of wrong and oppres-

sion, and hence to strip it of that attribute

of justice upon which the exercise of judi-

cial power necessarily depends.

Hovey v. Elliott, 167 U.S. 409, 413-14, 17 S. Ct. 841, 42

L.Ed. 215 (1897).

Even though this Court has never directed the courts

of this nation to look at Due Process principles when consid-

ering default judgments, many judges intuitively realize that

defaults should be set aside where fairness so commands.

And where trial courts deny motions to set aside default

judgments, they will often be reversed. See, e.g., Bieganek

v. Taylor, 801 F.2d 879 (7th Cir. 1986); Traguth v. Zuck, 710

F.2d 90 (2d Cir. 1983); Oceanic Trading Corp. v. Vessel Di-

ms

ana, 423 F.2d 1 (2d Cir. 1970); Tolson v. Hodge, 411 F.2d

123 (4th Cir. 1969); Menier v. United States, 405 F.2d 245

(Sth Cir. 1968); Wilver v. Fisher, 387 F.2d 66 (10th Cir.

1967); Meeker v. Rizley, 324 F.2d 269 (10th Cir. 1963):

Provident Security Life Insurance Co. v. Gorsuch, 323 F.2d

839 (9th Cir. 1963), cert. den., 376 U.S. 950, 84 S. Ct. 966,

11 L.Ed.2d 970 (1964); Rooks v. American Brass Company,

263 F.2d 166 (6th Cir. 1959); Williams v. Blitz, 226 F.2¢ 463

(4th Cir. 1955); Barber v. Turberville, 218 F.2d 34 (D.C. Cir.

1954); Bridoux v. Eastern Air Lines, Inc., 214 F.2d 207 (D.C.

Cir. 1954), cert. den., 348 U.S. 821, 75 S. Ct. 33, 99 L.Ed.

647 (1954); Tozer v. Charles A. Krause Milling Co., 189 F.2d

242 (3d Cir. 1951). "The setting aside of (a default) judg-

ment should be tested by the principle of fundamental fair-

ness." Eastman Kodak Company v. Guasti, 386 N.E.2d 291,

295 (Ill.App. 1979), quoting Mieszkowski v. Norville, 209

N.E.2d 358, 362 (1965).

This Court views the sufficiency of notice in the con-

Stitutional sense as grounded in the realities of the case be-

fore it:

In determining the constitutionality of a

procedure established by the State to pro-

vide notice in a particular class of cases,

“its effect must be judged in the light of its

practical application to the affairs of men

as they are ordinarily conducted.”

Greene v. Lindsey, 456 U.S. 444, 451, 102 S. Ct. 1874. 72

L.Ed.2d 249 (1982), quoting North Laramie Land Co. v.

Hoffman, 268 U.S. 276, 283, 45 S. Ct. 491, 69 L.Ed. 953

(1925). This sensitivity to practical considerations is re-

flected in widespread judicial reluctance to permit default

judgments where large sums of money are claimed. See,

€.g., Swink v. City of Pagedale, 810 F.2d 791, 792 n2 (8th

Cir. 1987); Rooks v. American Brass Company, 263 F.2d at

169; Tozer v. Charles A. Krause Milling Co., 189 F.2d at 245;

Wendt v. Pratt, 154 F.R.D. 229, 230 (D. Minn. 1994); Phillips

v. Weiner, 103 F.R.D. 177, 179 (D. Me. 1984); Horn v. In-

telectron Corp., 294 F.Supp. 1153, 1155 (S.D.N.Y. 1968);

-4-

RR Sr Rien i> Kamaensomonm. .* Z

Eisler v. Stritzler, 45 F.R.D. 27, 28 (D.P.R. 1968); Gamble v.

Pope & Talbot, inc., 191 F.Supp. 763, 764 (E.D.Pa. 1961).

In determining compliance with due process fairness,

this Court has looked at whether the means of serving proc-

ess fails to afford actual notice. Greene, 456 U.S. at 451, n.

4. Although the entity, Fluor Daniel, did receive nominal no-

tice of this lawsuit, the record reveals that no individual in the

control group, no individual with the authority to respond,

ever received actual notice. To enter a default a judgment

without any opportunity to be heard under these circum-

stances (where there is no actual notice) is fundamentally

unfair and violates the Due Process protection of the Four-

teenth Amendment to the United States Constitution.

In Ellington v. Milne, 14 F.R.D. 241 (E.D.N.C. 1953),

a federal judge vacated a default judgment entered against a

corporation when neither the legal department nor any officer

of the corporation had actual knowledge that the summons

had issued until it was found in storage files located in the

corporation's basement nearly a year after the default. Ap-

parently, some unknown employee had negligently placed

the summons in the basement. Even though service of pro-

cess was technically correct, the court found that to award a

default judgment under such circumstances involving a large

sum of money would amount to denial of due process of law.

ld. at 242. Corporations too are entitled to due process.

Heliconteros Nacionales de Colombia v. Hall, 466 U.S. 408,

414, 104 S. Ct. 1868, 80 L.Ed.2d 404 (1984).

In framing the federal due process question for pres-

entation to the Wyoming courts, Fluor Daniel was not re-

quired to follow any particular form of words or phrases. The

procedural fairness issue was brought before the Wyoming

courts with fair precision. Since the record as a whole shows

by "clear intendment" that the issue was fairly presented, the

issue is to be regarded as having been adequately pre-

sented. People of State of New York ex rel. Bryant v. Zim-

merman, 278 U.S. 63, 67, 49 S. Ct. 61, 73 L.Ed. 184 (1928).

This Court has stated that: "Our jurisdiction does not de-

pend on citation to book and verse." Eddings v. Oklahoma,

5.

455 U.S. 104, 113-14 n. 9, 102 S. Ct 869, 71 L.Ed.2d 1

(1982). Thus, Fluor Daniel's appeal to fundamental fairness

sufficiently alerted the trial court to Fluor Daniel's reliance on

due process principles. See Taylor v. Kentucky, 436 U.S.

478, 482 n. 10, 98 S. Ct. 1930, 56 L.Ed.2d 468 (1978).

Though at the district court level Fluor Daniel's reliance on

due process principles may have been inexplicit, this reli-

ance was within the clear intendment of the fairness issue

and was therefore sufficiently presented. See Braniff Air-

ways v. Nebraska State Board of Equalization and Assess-

ment, 347 U.S. 590, 598-99. 74 S. Ct 757, 98 L.Ed. 967

(1954).

The requirement of reasonable notice goes deeper

than the mere rules of civil procedure; it goes deeply into the

underlying principles of due process:

In our system of jurisprudence reasonable

notice to a litigant (where there exists

even the possibility of action adverse to

his interests) is deemed to be of the es-

sence of fairness and justice. Reasonable

notice to parties whose interests are at

Stake in a contemplated order is a prereq-

uisite to the lawful exercise of the court's

power. Opportunity for a litigant to pres-

ent his views as to the matters instantly

before the court which may affect his

rights is the very foundation stone of our

procedure.

Traders Bank of Kansas City v. Cherokee Investment Co.,

Inc., 642 S.W.2d 122, 127 (Mo. App. 1982), citing Hoppe,

Inc. v. St. Louis Public Service Co., 235 S.W.2d 347 (Mo.

1951). Entry of a default judgment without actual notice

"violates the instinct for fair play." Traders Bank, 642 S.W.2d

at 127. This instinct, the instinctual Craving for fairness that

even children recognize, is the roct of due process. This

Court has held that the "question of when and how defaults

in compliance with state procedural rules can preclude our

consideration of a federal question is itself a federal ques-

-6-

tion." Henry v. Mississippi, 379 U.S. 443, 447, 85 S. Ct. 564,

567, 13 L.Ed.2d 408 (1965). Thus, there can be no doubt

that the federal question was preserved here.

In the case at bar, the Supreme Court of Wyoming

was Clearly troubled by the equities of this case, but thought

it was powerless to intervene. The Wyoming courts should

have abided by their instincts for fairness and given Fiuor

Daniel the opportunity to be heard that due process requires.

CONCLUSION

Petitioner, Fluor Daniel (NPOSR), Inc., respectfully

prays that this Court grant a writ of certiorari to review the

judgment and opinion of the Supreme Court of Wyoming so

that this Court can address the due process issues in the

default judgment procedure.

Respectfully submitted,

By: had Yona

DONN J. McCALL

Counsel of Record

Attorney for Petitioner

Brown, Drew, Massey & Sullivan

Suite 800

123 West First Street

Casper, Wyoming 82601

(307) 234-1000