Opposition Brief — BMC Industries, Inc. v. Barth Industries, Inc.

IN THE

Supreme Court of the United States

OcTOBER TERM, 1998

BMC INDUSTRIES, INC.,

Petitioner,

v.

BARTH INDUSTRIES, INC., Nesco, Inc., f/k/a

Nesco Management, Inc., Barth Industries Co.

Limited Partnership, BIC Corporation,

Nesco Holdings, Inc., f/k/a Nesco, Inc.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Eleventh Circuit

BRIEF IN OPPOSITION FOR RESPONDENT

BARTH INDUSTRIES, INC.

ARTHUR J. ENGLAND, JR.

Counsel of Record

CHARLES S. KyRIAZOS,

GREENBERG TRAURIG, P.A.

Attorneys for Respondent

Barth Industries, Inc.

1221 Brickell Avenue

Miami, Florida 33131

(305) 579-0500

152599 J Counsel Press LLC

FORMERLY LUTZ APPELLATE SERVICES

(800) 274-3321 « (800) 359-6859

i

LIST OF PARENT COMPANIES AND NONWHOLLY

OWNED SUBSIDIARIES OF EACH OF THE

CORPORATE FILERS PURSUANT TO SUPREME

COURT RULE 29.6

Barth Industries, Inc. (“Barth”), is the only corporate

respondent in this proceeding.' Barth was reorganized,

subsequent to the inception of this litigation in 1989, and is

now known as Barth Industries Co., L.P., a Delaware limited

partnership. It is owned by its general partner, BIC

Corporation (1%), and its limited partner, NES Group, Inc.

(99%), which was formerly known as Nesco Holdings, Inc.

and as Nesco, Inc. Barth has no nonwholly owned

subsidiaries.

Petitioner BMC Industries, Inc., has separately identified

relevant information pursuant to Supreme Court Rule 29.6

(Petition at ii), and that information is not repeated here.

1. The Eleventh Circuit decision brought for review has directed

that judgment be entered in favor of Nesco Holdings, Inc. (“Nesco”)

on grounds unrelated to and independent of the issue on which BMC

Industries, Inc. (“BMC”) has sought review (Petition App. A at 39a).

That decision of the Eleventh Circuit is now final. Inasmuch as

Nesco is no longer exposed to liability in BMC’s lawsuit or a party

to the lawsuit, it takes no part in this certiorari proceeding. The other

respondents named in the caption of the case are similarly not before

the Court, as they were voluntarily dismissed by BMC prior to the

district court’s judgment and were not parties to the Eleventh Circuit

proceeding. BMC Industries, Inc. v. Barth Industries, Inc., 160 F.3d

1322, 1324-25 n.2 (11th Cir. 1998).

il

TABLE OF CONTENTS

Page

List of Parent Companies and Nonwholly Owned

Subsidiaries of Each of the Corporate Filers Pursuant

to Supreme Court Rule 29.636 sci is cwdexevaes i

SOIC OF COURS os cc be eee ee eee eee ll

DOD Of Cit AMROTINOS ois se eis ees ee ili

Table Of ADOORGIOOE si0 6 kc ins ce ee ee es Vi

Reasons for Denying the Whit 2. ceca iceees 2

A. There is no intercircuit conflict. .......... 2

B. There is no unresolved question of state law for

which certification would be appropriate. ... 3

C. The decisions of the Court provide no basis to

support a grant of certiorari simply to force the

Eleventh Circuit to reconsider certification to

the Florida Supreme Court. .............. 6

D. There is no important legal issue at stake. .. 7

E. Certification would hinder rather than advance

the resolution of this lawsuit. ............. 8

F. Certification is not appropriate whenever federal

courts interpret issues of state law. ........ 10

Conciasiee oo is cccdes be xkenaeke sc Orakei 12

1

H

i

lil

TABLE OF CITED AUTHORITIES

Page

Cases:

Cantwell y. University of Massachusetts, 551 F.2d 879

Pee PER RAs ee ES Sate 1]

Escareno v. Noltina Crucible and Refractory

Corporation, 139 F.3d 1456 (11th Cir. 1998) ... 8

Flowers Ginning Co., Inc. y. Arma, Inc., 106 F.3d 390

(a Ea eae ca tetme 2

Gooding v. Wilson, 405 U.S. 1) 34S ie 7 Rig renaae anes 5

Haring y. Prosise, 462 U.S. 306 1 8) Sees 10

Huron Holding Corporation v. Lincoln Mine Operating

Co., 312 U.S. 183 cst 1 ec Bate are Deb patel 4

King v. Order of United Commercial Travelers of

American, 333 U.S. 153 ln) SPE ane 5

Leavitt v. Jane L., 518 U.S. fae SAY oo PES ek 6

Lehman Bros. y. Schein, 416 U.S. 386 Lop. : aeeamaiig 6,7,9

Linear Corp. v. Standard Hardware Co., 423 So. 2d

966 (Fla. Ist DCA ont SEE OUP ADRS sie By 35.0, 10

Mobil Oil Corp. y. Shevin, 354 So. 2d 372 (Fla.

gg OTE SOTO eee ana 11,12

Cited Authorities

Page

Nash v. Florida Industrial Comm'n, 389 U.S. 235

CR OGTY os on.6 ee Se CE Ka CaS 5

Pardo vy. State, 596 So. 2d 665 (Fla. 1992) ........ 5

Propper v. Clark, 337 U.S. 472 (1949) ........... 10

Seaboard Surety Company v. Garrison, Webb &

Stanaland, P.A., 823 F.2d 434 (11th Cir. 1987) .. 12

Standard Accident Insurance Co. v. Gavin, 184 So. 2d

229 (Fla. Ist DCA 1966), cert. dismissed, 196 So.

ye ag WE os SO a Ry, ese yege ae 6

State v. Dwyer, 332 So. 2d 333 (Fla. 1976) ....... 6

State of Florida ex. rel. Shevin vy. Exxon Corp., 526

F.2d 266 (5th Cir.), cert. denied, 425 U.S. 930, cert.

denied, 429 VS. S29. CI9TG). os ock ss Bececnses 9

Tidler v. Eli Lilly and Company, 851 F.2d 418 (D.C.

COM: PRE eck. ce ve te ea Cd a ea 4

West v. American Telephone & Telegraph Co., 311 U.S.

AERA ee oe Oe OM A Eh es 4

Wisconsin Knife Works v. National Metal Crafters, 781

FA Sa CP OC. 19OND ig ca kis cedansn hy 2:5, 6, 8, 19

Statutes:

y

Cited Authorities

roe. meet. § 29,033 (1998) eee

Fla. Stat. § 672.209

Rules:

Pe ae ee POT, Me, © Pee ee Oe ete ee

United States Supreme Court Rule Le SSI ete eae

Other Authorities:

Fla. Const., Art. V,

4th Cir. L.R. 36(c)

SPS) ood bu Bo

Sit eh onl ena iin de Natt fiat, et ve Ye ee

Page

10

10

bo

vi

TABLE OF APPENDICES

Appendix A — Suggestion Of Rehearing

En Banc And Petition For Rehearing Dated

SPOON Fi EIU i ia 65:40 ak OWA we baa eeyen

Appendix B — Opinion Of The United States Court

Of Appeals For The Eleventh Circuit Denying

Petition For Rehearing Dated And Filed December

hs Ua WM praia dix ob eee Rae ck RN

Page

la

l

Respondent Barth Industries, Inc. (““Barth’’) files this brief

in Opposition to the petition for writ of certiorari filed by

BMC Industries, Inc. (“BMC”).

BMC has asked the Court to review the decision of the

Eleventh Circuit Court of Appeals in BMC Industries, Inc. v.

Barth Industries, Inc., 160 F.3d 1322 (11th Cir. 1998), so

that the Court can then order the case remanded to the

Eleventh Circuit to provide that court with the opportunity

to “reconsider” its decision not to certify a state law question

in the case to the Supreme Court of Florida. (Petition at 16).

Barth respectfully suggests that BMC’s petition provides no

“compelling” reason for the Court to exercise its certiorari

jurisdiction authority, as required by the Court’s Rule 10.

The Court should decline to grant certiorari merely to direct

the Eleventh Circuit to re-exercise its discretion to consider

invoking a Florida certification procedure, when the court

has already considered certification at BMC’s request and

declined to do so.’

BMC has argued to the Court that the decision of the

Eleventh Circuit with regard to the requirement of “reliance”

for waiver of a contract deadline under a Florida statute differs

from the result reached in Wisconsin Knife Works v. National

Metal Crafters, 781 F.2d 1280 (7th Cir. 1986) — a decision

addressing the requirement of reliance under Wisconsin law

which was rendered by a panel majority of the Seventh Circuit

Court of Appeals.’ BMC asserts that the Eleventh Circuit’s

2. Attached as Appendices A and B to this brief in opposition

are copies of BMC’s petition for rehearing in the Eleventh Circuit,

in which certification to the Supreme Court of Florida was sought

(App. A at 15a), and the court’s denial of the petition (App. B at

34a-35a).

3. Petitioner also argues conflict with an unpublished table

decision of a majority panel of the Fourth Circuit Court of Appeals

(Cont’d)

2

decision on the issue of waiver has created “intercircuit

conflict” (Petition at 6, 12), and argues that if only the

Eleventh Circuit would use Florida’s certification procedure

then the Florida Supreme Court would have an opportunity

to agree with the Seventh Circuit’s majority. There are several

reasons that the Court should decline BMC’s invitation to

grant certiorari.

REASONS FOR DENYING THE WRIT

A. There is no intercircuit conflict.

There is no inter-circuit decisional conflict such as would

warrant the Court’s attention. Rule 10(a) suggests the types

of “conflict” among the United States courts of appeals which

might merit consideration by the Court, and it is significant

that BMC makes no effort to bring itself within the ambit of

the Rule.* BMC has only asked that the Court intercede so

that the trial courts and the intermediate appellate courts of

Florida can hear from the Florida Supreme Court, rather than

have to consider what the Eleventh Circuit has opined, and

so that the federal courts in the Eleventh Circuit will not be

bound regarding the state law issue of whether Florida’s

(Cont'd)

interpreting Georgia law, Flowers Ginning Co., Inc. v. Arma, Inc.,

106 F.3d 390 (4th Cir. 1997). Citations to such unpublished

dispositions are disfavored even within that circuit. See 4th Cir. L.R.

36(c). The decision has no effect on the arguments contained herein,

even if it is considered by the Court.

4. BMC has not suggested that the Court should resolve the

conflict between the circuits, nor can it: the BMC Industries case

and Wisconsin Knife Works are premised on the statutes of different

states. No federal question is posed by these cases.

3

commercial contract statute requires reliance for the waiver

of a contract provision. (Petition at 9). BMC’s purported

concern for Florida’s lower courts provides no compelling

reason for the Court’s exercise of its discretionary certiorari

jurisdiction.

B. There is no unresolved question of state law for which

certification would be appropriate.

The issue of “reliance” as a requisite for waiver of a

contract term was not an unresolved question of Florida law

on which the Eleventh Circuit opined as a matter of first

impression. The court identified and followed existing Florida

precedent on precisely that point, stating:

At least one Florida court implicitly agrees with

this conclusion; in Linear Corp. v. Standard

Hardware Co., 423 So. 2d 966 (Fla. Ist DCA

1982), the court held that a contract term had been

waived despite the absence of any facts showing

detrimental reliance.

(Petition App. A at 24a). The court went on to analyze the

Linear decision, concluding that the Florida appellate court

“implicitly held that a contract term could be waived without

the existence of detrimental reliance by the non-waiving

party.” (Petition App. A at 25a). By identifying and following

a construction of a Florida statute by one of Florida’s district

courts of appeal, the Eleventh Circuit eliminated any reason

to invoke the certification process. Indeed,

[W]here the applicable state law is clear,

certification is inappropriate; it is not a procedure

by which federal courts may abdicate their

4

responsibility to decide a legal issue when the

relevant sources of state law available to it provide

a discernible path for the court to follow.

Tidler v. Eli Lilly and Company, 851 F.2d 418, 426 (D.C.

Cir. 1988).

It is not, of course, inappropriate for the Eleventh Circuit

to have relied on a decision of a Florida intermediate appeal

court. Federal courts often look to the decisions of state courts

other than those of the state’s highest court. West v. American

Telephone & Telegraph Co., 311 U.S. 223, 236-37 (1940);

accord Huron Holding Corporation v. Lincoln Mine

Operating Co., 312 U.S. 183, 188 n.7 (1941). As the Court

observed in West:

A state is not without law save as its highest court

has declared it... . State law is to be applied in

the federal as well as the state courts and it is the

duty of the former in every case to ascertain from

all the available data what the state law is and

apply it. . . however much the state rule may have

departed from prior decisions of the federal courts.

Where an intermediate appellate state court rests

its considered judgment upon the rule of law which

it announces, that is a datum for ascertaining state

law which is not to be disregarded by a federal

court unless it is convinced by other persuasive

data that the highest court of the state would decide

otherwise.

West, 311 U.S. at 236-37.

LA tee ee ae

5

Moreover, the decision on which the Eleventh Circuit

relied was not just persuasive authority to consider; it was

binding precedent throughout Florida. The decisions of the

Florida district courts of appeal represent the law of Florida

unless and until they are overruled by the Florida Supreme

Court and, in the absence of interdistrict conflict, are binding

on the all Florida trial courts. Pardo v. State, 596 So. 2d 665,

666 (Fla. 1992). The Court has recognized this precedential

phenomenon in the state judicial hierarchies. E.g., Gooding

v. Wilson, 405 U.S. 518, 525, n.3 (1972) (federal courts will

follow the holdings of the Court of Appeals of Georgia as to

matters of Georgia law because they are binding on all trial

courts in Georgia in the absence of a conflicting decision of

the Supreme Court of Georgia).

The Linear decision was the first and only appellate

decision in Florida involving detrimental reliance as an

element of waiver under Section 672.209, Florida Statutes.

Thus, the Eleventh Circuit was not establishing controlling

precedent for Florida’s courts, as BMC charges (Petition at

9); it was following controlling precedent which the Florida

trial courts were already obliged to honor. See Nash v. Florida

Industrial Comm'n, 389 U.S. 235, 237-38 n.1 (1967) (holding

that Florida’s district courts of appeal are courts of last resort

in the state for purposes of seeking certiorari review in this

Court).

The Eleventh Circuit’s reliance on Linear is no different

than the reliance that would have been required of any trial

court in the state. Federal courts act in the capacity of state

courts when they opine on issues of state law. King v. Order

of United Commercial Travelers of American, 333 U.S. 153,

161 (1948). Under Florida law, the Seventh Circuit’s decision

in Wisconsin Knife Works would not have been binding on a

6

Florida court. See, e.g., State v. Dwyer, 332 So. 2d 333, 335

(Fla. 1976) (“lower federal court rulings . . . are not binding

on state courts”); Standard Accident Insurance Co. v. Gavin,

184 So. 2d 229, 231 (Fla. lst DCA 1966), cert. dismissed,

196 So. 2d 440 (Fla. 1967) (declining to follow decisions of

a foreign jurisdiction where Florida precedent is to the

contrary). Consequently, Wisconsin Knife Works should not

have been binding on the Eleventh Circuit even if it had been

inclined to follow it, in light of the contrary decision in Linear.

C. The decisions of the Court provide no basis to support

a grant of certiorari simply to force the Eleventh

Circuit to reconsider certification to the Florida

Supreme Court.

BMC has argued that decisions of the Court indicate a

preference for federal appellate courts to use state certification

processes to resolve issues of state law. BMC’s reference to

select comments in certification decisions from the Court is

unconvincing.

BMC references Leavitt v. Jane L., 518 U.S. 137 (1996),

for the proposition that the Court will not turn a blind eye to

a federal court’s state law determination which is plainly

wrong. (Petition at 13-14). That is not precisely what the

Court held. It started with the proposition that certiorari

petitions are not normally granted to review what purports to

be an application of state law, and it then held that the Court

will review decisions “where the alternative is allowing

blatant federal-court nullification of state law.” 518 U.S. at

144-45. The Eleventh Circuit, however, did not nullify Florida

law in this case; as noted, it followed Florida precedent.

BMC also references Lehman Bros. v. Schein, 416 U.S.

386, 391 (1974), as reflecting the Court’s strong endorsement

—

7

of certification as a process to have “‘a state court first address

an important, yet unclear question.” (Petition at 13). Lehman

actually held, in a situation involving no Florida case on the

issue, that certification is not an obligatory process, that its

use in any given case “rests in the sound discretion of the

federal court,” but that certification is particularly appropriate

where federal judges in New York are attempting to predict

uncertain Florida law because they are “ ‘outsiders,’ lacking

the common exposure to local law which comes from sitting

in the jurisdiction.” 416 U.S. at 391. The distinctions between

Lehman and this case are obvious: the judges of the Eleventh

Circuit are not outsiders; the Eleventh Circuit has already

been asked to exercise its discretion and declined to do so;

and the issue of reliance for a waiver of contract terms was

not unsettled in Florida.

Perspective on the certification process is provided by

Chief Justice Rehnquist’s concurring opinion in Lehman:

If a district court or court of appeals believes that

it can resolve an issue of state law with available

research materials already at hand, and makes the

effort to do so, its determination should not be

disturbed simply because the certification

procedure existed but was not used.

Lehman, 416 U.S. at 395 (Rehnquist, J., concurring).

D. There is no important legal issue at stake.

The Eleventh Circuit’s decision that detrimental reliance

is not a requirement for waiver of a contract provision under

Florida law does not, as BMC states, involve “a point of law

adversely impacting business transactions in Florida.”

8

(Petition at 9). The court’s decision is completely neutral,

like every other provision in the Uniform Commercial Code.

The presence or absence of required reliance for waiver

merely sets the rule for waivers by which commercial

enterprises can govern their conduct.

BMC over-dramatizes the alleged effect of the Eleventh

Circuit’s decision on “interstate and international commercial

transactions in a major trade center” by asserting that the

court adopted a minority position on the issue of detrimental

reliance for contract waiver, allegedly contrary to what the

drafters of the UCC had intended. (Petition at 12). BMC is

mistaken. The fact is there is neither a majority nor a minority

view on the point for, as noted by Judge Posner in the

Wisconsin Knife Works decision, cases throughout the country

are simply “diverse in outlook.” 781 F.2d at 1288. That

diversity in views offers no reason for the Court to exercise

its jurisdiction in order to push the Eleventh Circuit to request

that the Florida Supreme Court be given the opportunity to

align itself with a view which will benefit BMC in this

litigation.

E. Certification would hinder rather than advance the

resolution of this lawsuit.

The Eleventh Circuit has recognized that it will

sometimes decide questions of state law even when there is

doubt as to how a state court would resolve the issue, without

recourse to certification. Escareno v. Noltina Crucible and

Refractory Corporation, 139 F.3d 1456, 1461 (11th Cir.

1998). State courts, like their federal counterparts, are busy

institutions, with their own caseloads to manage. Jd. The Chief

Justice has recognized, in considering certification of an issue

to the Florida Supreme Court, that delay and expense are

factors to be taken into account.

i a al

9

While certification may engender less delay and

create fewer additional expenses for litigants than

would abstention, it entails more delay and

expense than would an ordinary decision of the

state question on the merits by the federal court.

The Supreme Court of Florida has promulgated

an appellate rule [now Rule 9.150] which provides

that upon certification by a federal court to that

court, the parties shall file briefs there according

to a specified briefing schedule, that oral argument

may be granted upon application, and that the

parties shall pay the costs of the certification. Thus

while the certification procedure is more likely to

produce the correct determination of state law,

additional time and money are required to achieve

such a determination.

Lehman, 416 U.S. at 394-95 (Rehnquist, J., concurring).

Delay and further expense are significant factors here.

BMC’s lawsuit against Barth began in 1989. It did not

reach the Eleventh Circuit until 1995, and under the best of

circumstances a decision by the Florida Supreme Court

(duplicating the judicial labor already expended by the

Eleventh Circuit) could not be expected until well into the

year 2000. See, e.g., State of Florida ex. rel. Shevin v. Exxon

Corp., 526 F.2d 266, 275 (Sth Cir.) (“[t]he experience in our

Circuit has been that the process requires a period approaching

one year at the least — sometimes much more”), cert. denied,

425 U.S. 930, cert. denied, 429 U.S. 829 (1976). The prospect

of a decision coming two and one half years after the filing

of the complaint was considered by the Fifth Circuit as

“narticularly significant” in evaluating certification to the

Florida Supreme Court. Exxon, 526 F.2d at 275-76. The legal

10

issue that troubles BMC is not so uncertain, so unsettled, or

so significant to national and international commerce that

this contract dispute should be maintained in judicial limbo

well beyond the passage of a decade.

Running through BMC’s brief is the notion that the

Eleventh Circuit wrongly decided the issue of detrimental

reliance as an interpretation of the Uniform Commercial

Code. The Court has traditionally shown great deference to

the decisions of federal courts of appeal on state law

questions, unless their conclusions are shown io be

unreasonable. Haring v. Prosise, 462 U.S. 306, 314 n.8

(1983); Propper v. Clark, 337 U.S. 472, 486-87 (1949). The

Eleventh Circuit’s decision to follow the only Florida

precedent on the issue, the Linear decision of Florida’s First

District Court of Appeal, was eminently reasonable.°

F. Certification is not appropriate whenever federal

courts interpret issues of state law.

The establishment of a certification procedure by the

State of Florida does not mean that the Florida Supreme Court

wants to be consulted whenever an unresolved matter of

Florida law comes before the Eleventh Circuit, as BMC

suggests (Petition at 7). BMC overstates the role of

certification in Florida. Indeed, the Florida Supreme Court

“may,” but need not, accept any question certified from a

federal appellate court; it has discretion to decline

consideration. See Art. V, § 3(b)(6), Fla. Const.; Section

25.031, Fla. Stat. (1998); Fla. R. App. P. 9.150(a). (Petition

at 3-5). |

5. Judge Easterbrook dissented in Wisconsin Knife for the

reasons expressed in the decision of the Eleventh Circuit.

ee

ee en

Area She AGP alt lh cp ome 2 ae

eR Ene A aT lll WA SH

Ab ai ea xa Sebace

FP. PREP SAE BAER LI LN TELE REDD LOI ATS ot, 9 SiO RM

1]

The Florida Supreme Court has noted that a litigant faced

with an unsettled question of state law has choices. It can

have the issue resolved in the federal proceeding it initiated,

request certification where available (which the federal court

may or may not choose to provide), or seek a stay in the

federal district court proceeding and pursue a declaratory

action in the state courts. Mobil Oil Corp. v. Shevin, 354 So.

2d 372, 376 (Fla. 1977).

BMC chose to bring this diversity action in federal court.

It was only after it received an unfavorable ruling from the

Eleventh Circuit that a state court determination of legal issue

is being sought. While there is nothing to bar BMC from

suggesting the desirability of certification, as it already has

done unsuccessfully, a state high court is justified in carefully

considering a request from a party who chose to invoke federal

jurisdiction in the first place. See, e.g., Cantwell v. University

of Massachusetts, 551 F.2d 879, 880 (1st Cir. 1977):

[T]he bar should take notice that one who chooses

the federal courts in diversity actions is in a

peculiarly poor position to seek certification. We

do not look favorably, either on trying to take two

bites at the cherry by applying to the state court

after failing to persuade the federal court, or on

duplicating judicial effort.

The First Circuit observed in Cantwell that “two bite”

skepticism is particularly appropriate when it appears that

certification is not sought to resolve unsettled state law, but

only to afford the state court an opportunity to change existing

state law. /d. That, of course, is precisely the situation here.

BMC elected to be in federal court. In declining

certification, the Eleventh Circuit may well have considered

12

that BMC should be bound by its own tactical decision since

it knowingly sought a federal resolution of state law contract

issues. Seaboard Surety Company v. Garrison, Webb &

Stanaland, P.A., 823 F.2d 434, 438 (11th Cir. 1987); Mobil

Oil, 354 So. 2d at 377.

CONCLUSION

BMC’s petition for a writ of certiorari should be denied.

Respectfully submitted,

ARTHUR J. ENGLAND, JR.

Counsel of Record

CHARLES S. KyYRIAZOS,

GREENBERG TRAURIG, P.A.

Attorneys for Respondent

Barth Industries, Inc.

1221 Brickell Avenue

Miami, Florida 33131

(305) 579-0500