Opposition Brief — Wal-Mart Stores, Inc. v. Follette ex rel. Follette

In The

Supreme Court of the United States

October Term, 1994

, 4

WAL-MART STORES, INC.

d/b/a SAM’S WHOLESALE CLUB and/or

SAM’S WHOLESALE CLUB, a Division of

WAL-MART STORES, INC.,

Petitioner,

Vv.

KENT ANDREW FOLLETTE and JANE

ELIZABETH FOLLETTE, Individually and

as Next Friend of ANDREW STEPHENSON

FOLLETTE, a Minor Child,

Respondents.

+

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

*

RESPONDENTS’ BRIEF IN OPPOSITION TO THE

PETITION FOR A WRIT OF CERTIORARI

*

Of Counsel: James A. Rasmussen

A E. “Tom” Counsel of Record

Gary SOUTHARD

fo a e JOHNSON & ASSOCIATES

255 East College Street Wichita Falls, Texas

Batesville, Arkansas

¢ 76307-8185

72503-2595 (817) 761-3344

Rosert Levy FAX (817) 761-3355

P.O. Box 777

Ae? cain, Ruston, Louisiana 71270

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QUESTION PRESENTED

In a lawsuit filed in Arkansas district court, the

Eighth Circuit refused to apply res judicata to bar Respon-

dents’ Uniform Commercial Code (UCC) breach-of-war-

ranty action. Respondents’ breach-of-warranty claims

could not have been brought in the earlier Louisiana

lawsuit since Louisiana has not adopted Article 2 of the

UCC. In so holding, the Eighth Circuit applied a Louisi-

ana statute, La. Rev. Stat. Ann. § 13:4232, which permits a

second action by a plaintiff if “exceptional circumstances”

justify relief from the effects of res judicata. The Eighth

Circuit found that, because “exceptional circumstances”

were created by the very unusual procedural facts of this

case, Respondents were not barred from pursuing their

Arkansas breach-of-warranty suit.

Does the Eighth Circuit’s choice-of-law decision to

apply a Louisiana res judicata statute create an intercircuit

conflict or provide any other reason to grant certiorari?

ii

TABLE OF CONTENTS

Page

QUESIION PRESMIWAIG?. > 06s csoscstnwnngeaenes a i

TABLE OF AUTIROISEAEO cccivosicsccatsveeseedans iii

STATEMENT OF ZPSe CAB cic ccs viccnatdessuucns 1

REASONS FOR DENYING WRIT ..............6.6- 1

CONCLUSION 6 ti cieevistduiese kien 9

iii

TABLE OF AUTHORITIES

Page

Cases

Aerojet-General v. Askew, 511 F.2d 710 (5th Cir.

re ee Se SR, PR oo eas awee cansess 4,6

Austin v. Super Valu Stores, 31 F.3d 615 (1994)........ 1

Bates v. Union Oil Co., 944 F.2d 647 (9th Cir. 1991)..... 5

Forrester v. Southern Ry., 268 F. Supp. 194 (D.C. Ga.

EN ee Nee eee EL eta etn gas anthers oe.e 2

Gatzemeyer v. Vogel, 589 F.2d 360 (8th Cir. 1978) ....2, 6

Glus v. Brookiyn, 359 U.S. 231 (1959) .........2....00. 8

Gramm v. Lincoln, 257 F.2d 250 (9th Cir. 1958)...... .

Guaranty Trust Co. v. New York, 326 U.S. 99 (1945) ..... 6

Hanna v. Plummer, 380 U.S. 460 (1965)................ 6

Hayles v. Randall Motor Co., 455 F.2d 169 (10th Cir.

SE CI NaN purple dn wehbe bev ke dex 0h bk scenes ress 2

Hicks v. O'Meara, 31 F.3d 744 (8th Cir. 1994) ......... 1

Howard v. Green, 555 F.2d 737 (8th Cir. 1977)......... 9

Jones v. Menard, 559 F.2d 1282 (5th Cir. 1977)......... 9

Kern v. Hettinger, 303 F.2d 333 (2d Cir. 1962) ..2, 3, 4, 6

Lane v. Peterson, 899 F.2d 737 (8th Cir.) cert. denied

SE EU oo so ss on wee che wa des ech cous 7, 8

iv

TABLE OF AUTHORITIES —- Continued

Page

Lane v. Sullivan, 900 F.2d 1247 (8th Cir.), cert.

Getta TIO TEs Te Len has oh os Np chad A bes 7

Makarim v. Rinard, 336 F.2d 333 (3rd Cir. 1964)....... 2

Poe v. John Deere Co., 695 F.2d 1103 (8th Cir. 1982)..... 6

Provident Tradesmens Bank & Trust Co. v. Lumber-

mens Mut. Cas. Co., 411 F.2d 88 (3d Cir. 1969)...... 2

Rust v. First National Bank, 466 F. Supp. 135 (D.

WO. Te ai.ei5.0 kg oe bac een aed hd hes BAe Bs sae 2

Semler v. Psychiatric Institutes of Washington D.C.

INC., SIS Tae ek Tac. 4 Fes a hechs Fasc 5 a

Sherrill v. McShan, 356 F.2d 607 (9th Cir. 1966) ....... 6

Skrzat v. Ford Motor Co., 389 F. Supp. 753 (D.R.I.

SOF s én vee ukseccoy en Ca eee hai ks 2

Southwest Airlines Co. v. Texas Intern. Airlines, 546

F.2d 84 (5th Cir. 1977) cert. denied 434 U.S. 832 ...4, 5

Washington Public Power Supply v. Pittsburgh-Des

Moines Corp., 876 F.2d 690 (9th Cir. 1989) .......... 5

Welch v. Crown Zellerbach Corp., 359 So.2d 154 (La.

BRI so cance Koo) eee ee el wes Cee EE aoa 8

Williams v. Ocean Transport Lines, Inc., 425 F.2d

ENE CO SAE TOGO vies 62s ohn colette she eek aeks 2, 6

Wilson v. Retail Credit Co., 474 F.2d 1260 (5th Cir.

RIFE. edcicwaicd 0k we edn eed Eee es ae Kak Ohne 2

Vv

TABLE OF AUTHORITIES - Continued

Page

CONSTITUTION

SON SE Bc pbs bn WEN Rk ev eee 1

STATUTES AND RULES

MP Recs EP 5 2 4 S'S 49K Go PEN eda ehhlbs rk ees 1,3

ne | SEA PREC apis rae ene iS eee Age dn a

oe. Fee Deen An BTS. 6 5 A Ae 7, 8

ie. ev. mene. in, BAO is a hoa ak

OTHER SOURCES

18 Wright, Miller & Cooper, Federal Practice &

Procedure § 4472 (1981 & Supp. 1994)............. 6

Uniform Commercial Code Art. 2...............0005. 9

Restatement of Judgments 2d § 26(1)(c).............. 8

1A Moore’s Federal Practice § 0.311[2]............... 6

STATEMENT OF THE CASE

An accurate statement of the case and proceedings

below is reported in the opinions of the Eighth Circuit

(Petition for Writ of Certiorari App. 1a-8a; 33a-36a) Fol-

lette v. Wal-Mart Stores, Inc., 41 F.3d 1234 reh’g granted 47

F.3d 311.

REASONS FOR DENYING WRIT

The Eighth Circuit explained its choice-of-law deci-

sion regarding the doctrine of res judicata as follows:

When a federal court is sitting in diversity, the

preclusive effect of a prior judgment is deter-

mined by the preclusion rules of the forum

which provided the substantive law underlying

that prior judgment. Hicks v. O'Meara, 31 F.3d

744, 746 (8th Cir. 1994). This rule applies when

the original judgment is that of another federal

court sitting in diversity. Austin v. Super Valu

Stores, 31 F.3d 615, 617-18 (1994).

See Petition for Writ of Certiorari, App. 5a.

This proposition originates by authority of the Full

Faith and Credit Clause of the United States Constitution,

U.S. Const. Art. IV § 1, and its statutory complement, 28

U.S.C. § 1738. These provisions require that federal courts

sitting in diversity lend prior diversity judgments of

other federal courts the same full faith and credit as

would exist between two state courts. In such situations,

state, not federal, law dictates the outcome. Semler v.

Psychiatric Institutes of Washington D.C. Inc., 575 F.2d 922

(D.C. Cir. 1978).

Petitioners suggest that the decisions of the Eighth

Circuit complicate and confuse an already conflicting

jumble of views. They define two emerging lines of cases,

one group forming a majority rule, which obliges federal

courts to apply only federal law on res judicata matters,

Kern v. Hettinger, 303 F.2d 333 (2d Cir. 1962), and a minor-

ity rule mandating that a federal court sitting in diversity

look to the res judicata law of the state where it sits for

guidance, Gramm v. Lincoln, 257 F.2d 250 (9th Cir. 1958).

Petitioners contend the Eighth Circuit decisions are out of

step with both majority and minority rules thereby mak-

ing new law where none existed. See Petition for a Writ of

Certiorari, at 11-13. Actually, the Eighth Circuit’s deci-

sions track a long line of cases employing state law from

the first forum to determine the res judicata effects of an

earlier diversity judgment. Gatzemeyer v. Vogel, 589 F.2d

360, 362 (8th Cir. 1978); Wilson v. Retail Credit Co., 474 F.2d

1260 (5th Cir. 1973); Hayles v. Randall Motor Co., 455 F.2d

169, 173 (10th Cir. 1971); Provident Tradesmens Bank &

Trust Co. v. Lumbermens Mut. Cas. Co., 411 F.2d 88, 94-95

(3d Cir. 1969) (preclusion within the course of a single

diversity action); Makarim v. Rinard, 336 F.2d 333, 334 (3d

Cir. 1964); Rust v. First National Bank, 466 F. Supp. 135, 138

(D. Wyo. 1979); Skrzat v. Ford Motor Co., 389 F. Supp. 753

(D.R.I. 1975); Forrester v. Southern Ry., 268 F. Supp. 194,

195-196 (D.C. Ga. 1967).

Nevertheless, a number of circuits have announced

that federal res judicata principles rather than state law be

applied as a choice of law. However, evaluation of the

circumstances behind these divergent opinions generally

reflects the existence of an overriding federal interest. Semler

provides clarity to these apparently dissimilar decisions:

[W]e believe that the principles of Erie * * * and

the mandate of the Full Faith and Credit Clause

as supplemented by 28 U.S.C. § 1738 require a

federal court exercising diversity jurisdiction in

forum II to give to the judgment of a federal

court exercising diversity jurisdiction in forum I

the same full faith and credit that a state court in

forum II would be obliged to give the judgment

of a state court in forum I, at least in the absence

of an overriding federal interest.

575 F.2d at 927-928 (emphasis added).

Put another way, if there is an overriding federal inter-

est, federal principles will apply notwithstanding the Erie

doctrine, the Full Faith and Credit Clause and 28 U.S.C.

§ 1738. However, when no overriding federal interest

exists, state law should control. Consideration of the var-

ious leading cases supports this conclusion.

The majority viewpoint is based primarily upon the

opinion in Kern v. Hettinger. This prototype case involved

the res judicata effect of a Fed.R.Civ.P. 41(b) want-of-

prosecution dismissal. Thus, the integrity of the Federal

Rules of Civil Procedure was at stake. Not surprisingly,

the Court abandoned any notions of state law and federal

rules of res judicata were applied. The Kern Court stated

its concerns:

It would be destructive of the basic principles of the

Federal Rules of Civil Procedure to say that the

effect of a judgment of a federal court was gov-

erned by the law of the state where the court sits

simply because the source of federal jurisdiction

is diversity. * * * [W]e think it would be strange

doctrine to allow a state to nullify the judgments

of federal courts constitutionally established

and given power also to enforce state created

rights.

303 F.2d at 340 (emphasis added).

In another leading and oft-cited case, Aerojet-General

v. Askew, 511 F.2d 710 (5th Cir. 1975) cert. denied 423 U.S.

908 (1975), evidence of collusive conduct jeopardized the

power of a prior federal court judgment. The Fifth Cir-

cuit, in its opinion, favorably cited the Kern decision and

followed federal principles of res judicata. Aerojet-General,

however, involved an attack upon a prior federal court

order directing specific performance of a land sale con-

tract by state officials, raising a serious federal question.

The court recognized the necessity, in such cases, of pro-

tecting federal diversity judgments and fending off collu-

sive conduct which might circumvent federal judicial

power. A revealing aspect of Aerojet-General was the

rather direct threat posed to the court’s injunctive powers

which, in turn, triggered the action of the court. Therein,

the Court reasoned, “nullification of a federal court judg-

ment would be precisely the result in this case if, as Dade

County urges, the District Court had been obliged to

follow state law to decide the question of res judicata.”

511 F.2d at 716 (emphasis added).

Similarly, other cases have recognized this principle

either explicitly or implicitly. For example, in Southwest

Airlines Co. v. Texas Intern. Airlines, 546 F.2d 84 (5th

Cir.1977) cert. denied 434 U.S. 832, the Fifth Circuit stated:

Federal law of res judicata controls this case.

Even though the holding of Southwest I relied

on state law, the effect of the case on parties and

nonparties presents a question of federal law distinct

from the local issues decided.

546 F.2d at 94 (emphasis added). Likewise, in Williams v.

Ocean Transport Lines, Inc., 425 F.2d 1183 (3d Cir. 1970),

the Court stated:

Where so substantial a federal interest is involved as

the multiplicity of claims arising out of seamen’s

and long-shoremen’s accidents, a federal court

should be able to decide for itself whether or not

a greater preclusionary effect may be given to a

prior judgment than would be given in the state

of the first forum.

425 F.2d at 1189-1190 (emphasis added).

Once again an overriding federal interest influenced

the choice-of-law decision. Federal issues of law arose

which were distinct from the state legal issues. This factor

predictably governed the court’s choice-of-law holding.

Evidence of similar federal interests permeate those deci-

sions supporting the majority rule.

The so-called minority rule of the Ninth Circuit advo-

cates reliance upon state law of the second forum. Gramm

v. Lincoln, 257 F.2d 250, 255 & n. 6 (9th Cir. 1958); Bates v.

Union Oil Co., 944 F.2d 647, 649 (9th Cir. 1991); Washington

Public Power Supply v. Pittsburgh-Des Moines Corp., 876

F.2d 690, 699 (9th Cir. 1989). In each of these cases,

however, both courts, first and second, were located in

the same state, therefore only one forum’s law came into

play. Regardless, the willingness of the Ninth Circuit to

also rely upon state law suggests that, absent a particular

threat to the independence of the federal jucicial system,

state res judicata law, derived from the second forum,

presents an acceptable and convenient choice of law.

Federal treatises discuss the seemingly perplexing

and confusing differences between the circuits. See 18

Wright, Miller & Cooper, Federal Practice & Procedure

§ 4472 (1981 & Supp. 1994); 1A Moore’s Federal Practice

§ 0.311[2]. Indeed, varying views appear as each of the

circuit courts of appeal proclaim choice-of-law decisions

on res judicata matters. However, careful examination of

the facts and circumstances underlying these cases such

as Kern, Aerojet-General and their progeny, reveal the

development of a more practical proposition. If an over-

riding federal interest presents itself — such as a threat to

the Federal Rules of Civil Procedure, or a purely federal

question, or an attack upon the inherent power of the

federal court system — then the second federal forum is

justified, and frequently does apply federal law as a

measure of judicial self-defense. Even the Eighth Circuit

has supplied appropriate federal res judicata law in such

situations. Poe v. John Deere Co., 695 F.2d 1103, 1105 (8th

Cir. 1982). On the other hand, when no federal interest

appears and no threat is posed, a federal court sitting in

diversity assumes its role as an adjunct to the state court

system, Sherrill v. McShan, 356 F.2d 607 (9th Cir. 1966); see

also Guaranty Trust Co. v. New York, 326 U.S. 99 (1945), and

routinely applies state law without controversy. See

Gatzemeyer, supra; cf. Hanna v. Plummer, 380 U.S. 460

(1965). It might even be argued that applying federal law

includes the right of each circuit, if necessary, to draw

upon appropriate state law to resolve res judicata issues.

See Williams, supra. This makes sense, particularly in

diversity suits of a routine nature that have little or no

impact on federal courts or their procedure. Conse-

quently, the conflict as presented here is not really of such

importance as to warrant certiorari review.

In any case, the facts underlying this particular deci-

sion do not portray an overriding federal interest. Both

the Louisiana lawsuit and the second Arkansas action

might just as easily have been brought in state court as

purely state actions. Diversity of citizenship formed the

sole foundation for federal jurisdiction in both cases.

Certainly, no threat to an “independent federal judiciary”

was detected by the Eighth Circuit. In using Louisiana

preclusion law to resolve the issue at hand, the Eighth

Circuit simply recognized the practicality of applying

state law when no federal interest was involved. Lane v.

Sullivan, 900 F.2d 1247, 1250 (8th Cir.), cert. denied 498 U.S.

847 (1990). In so doing, they achieved a just result consis-

tent with both Louisiana law and federal principles. Lane

v. Peterson, 899 F.2d 737 (8th Cir.) cert. denied 498 U.S. 823

(1990).

Moreover, there exist several practical reasons why

this case would be inappropriate for resolving an intercir-

cuit conflict: (1) the peculiar facts of this case do not pose

a recurring judicial problem; (2) the res judicata law of

Louisiana embodied in La. Rev. Stat. Ann. §§ 13:4231,

13:4232 constitute civil res judicata, which is different

from common law res judicata as found in most other

states; and finally, (3) the same result would obtain even

if federal principles of res judicata were used.

First, the peculiar procedural facts of this case are not

reasonably capable of repetition. The Eighth Circuit char-

acterized the Follettes’ situation as an “odd and compli-

cated series of procedural events” resulting in a “bizarre

predicament.” See Follette, supra. Because of the case’s

factual posture, the likelihood of such facts recurring is

virtually nil. A recurring problem would, of course, jus-

tify a grant of certiorari review, Glus v. Brooklyn, 359 U.S.

231 (1959). Follette is not such a case.

Second, La. Rev. Stat. Ann. §§ 13:4231, 13:4232 repre-

sent civil res judicata which is a different concept than the

common law variety of res judicata found in most jurisdic-

tions. Welch v. Crown Zellerbach Corp., 359 So.2d 154, 156

(La. 1978). As such, this Court in granting certiorari

would be evaluating statutory and arguably substantive

law of Louisiana. This fact creates unique analytical prob-

lems in fashioning a broad decision applicable to com-

mon law jurisdictions.

Lastly, the same result would issue even under

accepted principles of res judicata. See Lane v. Petersen,

supra. The Follette court noted that the Eighth Circuit has

previously applied general principles of res judicata,

including the Restatement of Judgments 2d. The Restate-

ment of Judgments 2d § 26(1)(c) provides an exception to

the general rule of preclusion:

The plaintiff was unable to rely on a certain theory

of the case or to seek a certain remedy or form

of relief in the first action because of the limita-

tions on the subject matter jurisdiction of the courts

or restrictions on their authority to entertain

multiple theories or demands for multiple

remedies or forms of relief in a single action,

and the plaintiff desires in the second action to

rely on that theory or to seek that remedy or

form of relief.

Here, the Follettes in their Louisiana lawsuit were

prevented from advancing a UCC claim because Louisi-

ana has not adopted Article 2 of the Uniform Commercial

Code and does not provide an equivalent remedy. Jones v.

Menard, 559 F.2d 1282 (5th Cir. 1977). Under general

principles of res judicata a plaintiff who could not have

brought an action or was prevented from relying upon a

certain theory in his first action may be permitted to split

his claim and maintain a second lawsuit. Howard v. Green,

555 F.2d 737 (8th Cir. 1977). Hence, using accepted res

judicata principles, the Follettes would be allowed to pur-

sue their UCC claim.

In summary and for each of these additional reasons,

this case simply does not provide appropriate circum-

stances for certio ari review.

+

CONCLUSION

Res judicata is a sound doctrine and is in no danger of

being thwarted through the application of state law to

successive diversity suits, particularly as in this case.

Indeed, res judicata will continue to be a useful and strong

doctrine even in the face of an occasional and just excep-

tion to the general rule against claim preclusion. Accord-

ingly, the decision of the Eighth Circuit and the facts of

this case do not create a conflict with decisions of other

circuit courts of appeals as to justify certiorari review

10

by this Court. Respondents request that this Petition for a

Writ of Certiorari be denied.

OF COUNSEL:

ALFRED E. “Tom”

THompson, III

Murpny, Post, THOMPSON,

ARNOLD & SKINNER

255 East College Street

Batesville, Arkansas

72503-2595

Rosert Levy

P. O. Box 777

Ruston, Louisiana 71270

Respectfully submitted,

James A. RASMUSSEN

Counsel of Record

Gary SOUTHARD

JOHNSON & ASSOCIATES

P.O. Box 8185

1101 Scott Ave., Suite 17

Wichita Falls, Texas

76307-8185

(817) 761-3344

FAX (817) 761-3355