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

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No. 98-1579 MAY 14 1999

IN THE

Supreme Court of the United States

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

REPLY BRIEF FOR PETITIONER

JOHN R. HARGROVE

Counsel of Record

W. KENT BROWN

HEINRICH GORDON HARGROVE

WEIHE & JAMES, P.A.

Attorneys for Petitioner

Broward Financial Centre

Suite 1000

500 East Broward Boulevard

Fort Lauderdale, FL 33394-3092

(954) 527-2800

152991 @) Counsel! Press LLC

FORMERLY LUTZ APPELLATE SERVICES

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TABLE OF CONTENTS

Page

i te bie eee Ee Pere ear eat

Conclusion ...... Pes WE Aan Sw ee, - 6

TABLE OF CITED AUTHORITIES

Cases:

Leavitt v. Jane L., 518 U.S. 137 (1996) ......... 5

Lehman Bros. vy. Schein, 416 U.S. 386 teand Be 1,4

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

Pee tree: 2 ee Pee) ork ee rae. rUAR 4

Mobil Oil Corp. v. Shevin, 354 So.2d 372 (Fla 1978)

hi Rinle kh o:h-d i OO Wane Be oad: le wate wicks ee 3,4

Resolution Trust Corp. y. Chapman, 29 F.3d 1120

Yaod * ap” + Tepes aah ee ie ores ois re

State Oil Co. v. Khan, 522 U.S. 3, 118 S. Ct. 275

4 £8 FREREDS Gea EO a AE eM een Pee an ae - 4

Sun Insurance Office, Ltd. v. Clay, 133 So.2d 735

ERED ee i ea ry Ol say coe ate is Pig.

Wisconsin Knife Works v. Nat'l Metal Crafters. 78]

sg RM Ee A ead 5

Other Authority:

Uniform Commercial Code. URES Urge 4 Seine eae ea 5

REPLY ARGUMENT

The focus of BMC’s contention is the Eleventh Circuit’s

refusal to certify an unsettled question of Florida law, and

that court’s failure to do so has created intercircuit conflict

on a significant UCC issue. Federal courts of appeals are

somewhat circumscribed by the decisions of one another

and therefore recognize that creating conflict among the

circuits is undesirable. Specifically addressing this point

in Resolution Trust Corp. v. ¢ ‘hapman, 29 F.3d 1120 (7%

Cir. 1994), Judge Easterbrook observed:

Even if we doubted the correctness of these

holdings, which we do not, we would not think

it prudent to create a conflict among the circuits.

id. at 1222. To be sure, the Florida Supreme Court could

eventually decide the UCC issue in favor of Barth. But that

is not the point. Simply put, the Eleventh Circuit should

not have been the court to create the conflict. Rather than

yielding to the preferred course of certification, the Eleventh

Circuit chose to preempt a cooperative federal and state

judicial process adopted by Florida under its constitution.

its statutes and its appellate rules. (Petition at 3-6) To say

the least, certification is an important component of Florida

and federal oe as this Court expressly recognized

in Lehman Bros. v. Schein, 416 U.S. 386 (1977) and as

recognized by the Florida Supreme Court in Sun Insurance

Office, Ltd. v. Clay, 133 So.2d 735, 742 (Fla. 1961).

In Sun Insurance, the court explained that Florida

constitutional and general law provide for the adoption of

practice and procedural rules for the certification to the

ho

Florida Supreme Court by federal appellate courts of

“questions of state law determinative of a cause pending in

federal court.” /d. at 741. Referring specifically to the

certification procedural rule, the court said:

Its adoption was a valid exercise of our organic

power and provided a procedure for assisting, in

a spirit of comity, the Federal Appellate system

in questions of state jurisprudence, no other

forum for so doing having been established by

the laws of Florida.

It is now well established procedure for a federal

court to abstain from deciding the merits of a

case so as to afford the state courts a reasonable

opportunity to construe a State statute involved

in the case. As stated in Harrison v. N.A.A.C.P.,

360 U.S. 167, 79 S. Ct. 1025, 1030, 3 L. Ed. 2d

1152.

This now well-established procedure is

aimed at the avoidance of unnecessary

interference by the federal courts with

proper and validly administered state

concerns, a course so essential to the

balanced working of our federal

system. To minimize the possibility of

such interference a “scrupulous regard

for the rightful independence of state

governments ... should at all times

actuate the federal courts,” Matthews

v. Rodgers, 284 U.S. 521, 525, 52 S.

Gs: protean tama iat B esiee ere cata Cid % sa ——— ne

3

Ct. 217, 219, 76 L. Ed. 447, as their

“contribution ... in furthering the

harmonious relation between state and

federal authority .. .” Railroad Comm.

Of Texas v. Pullman Co., 312 U.S. 496,

501, 61S. Ct. 643, 645, 85 L. Ed. 971.

And statutes such as § 25.031 — enacted by the

Florida Legislature “with rare foresight,” [363

U.S. 207, 80 8. Ct. 1222, 1226] to borrow Mr.

Justice Frankfurter’s words describing its action

in this respect — cannot help but contribute

substantially to the salutary policy quoted above,

since such statutes would provide a vastly more

expeditious method of securing an authoritative

decision by the court of last resort of a state of a

doubtful question of state law than does the

declaratory judgment procedure, the route

frequently followed in such cases. See Harrison

v. N.A.A.C.P., supra; Allegheny County vy.

Mashuda Co., 360 U.S. 185, 79 S. Ct. 1060, 3 L.

Ed. 2d 1163; cf. Meredith v. City of Winter

Haven, 320 U.S. 228, 64 S. Ct. 7, 88 L. Ed. 9.

Sun Insurance, 133 So.2d at 741-42 (emphasis added).

Commenting on less desirable practices followed prior

to the availability of certification — where federal courts

either would determine first impression questions on their

own or abstain altogether — the Florida Supreme Court in

Mobil Oil Corp. v. Shevin, 354 So.2d 372 (Fla. 1978),

characterized the certification process as one initiated

expressly to permit doubtful questions of stete law to be

“referred directly to the highest state court for resolution.”

4

Id. at 376 (emphasis added). Relying specifically on Lehman

Bros., the court added that “[a]s a tool of federal-state

comity, the certification process has been well-received, and

is now used generously in the federal system where

permitted by state law.” /d.

Whether described as “cooperative judicial federalism”

or “federal-state comity”, the concept of certification

reflects a policy judgment similar to Justice O’Connor’s

statement of policy regarding stare decisis in State Oil Co

v. Khan, 522 U.S. 3, 118 S. Ct. 275 (1997). “[I]n most

matters it is more important that the applicable rule of law

be settled than that it be right.” /d., 118 S. Ct. at 284. Thus,

while this case presents a conflict between the Eleventh

Circuit (per Judge Gerald Tjoflat) and the Seventh Circuit

(per Chief Judge Richard Posner), BMC is not now asking

for resolution of that conflict. Rather, it is urging this Court

to order compliance with the policy underpinning of Lehman

Bros. This Court deemed certification important enough to

grant certiorari and render an opinion in Lehman Bros.

calling for a connection between federal and state judiciaries

even though they are sufficiently independent.

Unfortunately, the Eleventh Circuit chose to go down its

own path.

To justify the result below, Barth focuses on the

Eleventh Circuit’s reliance upon an intermediate Florida

appellate court decision, Linear Corp. v. Standard

Hardware Co., 423 So.2d 966 (Fla. 1* DCA 1982), and

contends that the Eleventh Circuit did not need to certify

the question at issue because Linear “implicitly” decided

the UCC question in favor of Barth. This statement is simply

not true. An examination of the facts and holding of Linear

discloses that the decision does not even address —- much

less determine — the dispositive point. If anything, Linear

can readily be interpreted to support BMC, consistent with

Wisconsin Knife Works v. Nat'l Metal Crafters, 781 F.2d

1280 (7" Cir. 1986). The plain truth, however, is that either

interpretation is a stretch because the case does not utter a

word about reliance, as analyzed by Judge Posner.

Procedures were in place to avoid the very problem which

has now been created by the court’s ruling. A jury verdict

was overturned in the process and ten years worth of

litigation will now start over from scratch.

In Leavitt v. Jane L., 518 U.S. 137 (1996), this Court

stated in no uncertain terms that it will not turn a “blind

eye” to state law determinations which are far reaching in

their impact, controversial, or perhaps even “plainly wrong.”

Id. at 144-45. In this case an interstate commercial

transaction was structured between major corporations

located in different states (Minnesota and Ohio) and

different circuits (the Sixth and the Eighth). They contracted

to do business in yet another state (Florida) situated in

another federal circuit (the Eleventh), which is now at odds

with two other circuits (the Fourth and Seventh) on a major

issue of uniform law. Forty-nine states have adopted the

UCC to simplify, clarify, and modernize the law governing

commercial transactions, and to make uniform the law

among the various jurisdictions whose citizens do business

with one another. Uniform Commercial Code,

§ 1-102(2). Certification procedures exist to foster that

purpose. That is precisely why the UCC issue should have

been certified in this case.

;

;

6

CONCLUSION

Given Florida’s proliferation as a center of global

commerce, it should have been virtually pro forma for the

Eleventh Circuit to permit Florida the opportunity to

determine the UCC issue for itself. A more compelling case

for certification in a civil context is hard to imagine.

Fortunately it 1s not too late to correct the problem. It 1s

still possible to send the issue to Florida. This Court is urged

to order certification~

Respectfully submitted,

JOHN R. HARGROVE

Counsel of Record

W. KENT BROWN

HEINRICH GORDON

HARGROVE WEIHE

& JAMES, P.A.

Attorneys for Petitioner

Broward Financial Centre

Suite 1000

500 East Broward Boulevard

Fort Lauderdale, FL 33394-3092

(954) 527-2800