Opposition Brief — Taylor Forge Stainless, Inc. v. Viacom International, Inc.

(z.) Ptoms Gow, 8

DEO

No. 00-528 wies

HOV G 200

IN THE OFFOE OF THE CLERM

Supreme Court of the United Stater

TAYLOR FORGE STAINLESS, INC.

and MICHAEL W. KEARNEY,

Petitioners,

v.

VIACOM INTERNATIONAL INC.,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CouRT OF APPEALS FOR THE SECOND C)RCUIT

BRIEF IN OPPOSITION

WILLIAM R. MAGUIRE

Counsel of Record

JONATHAN D. PRESSMENT

HucGuHes Hupsarp & REED LLP

One Battery Park Plaza

New York, New York 10004

(212) 837-6000

Attorneys for Respondent

Viacom International Inc.

163249 @) Counsel Press LLC

(800) 274-3321 + (800) 359-6859

i

PARTIES TO THE PROCEEDING AND

STATEMENT PURSUANT TO RULE 29.6

The Petition correctly identifies the parties to the

proceeding as Michael W. Kearney, Taylor Forge Stainless,

Inc. and Viacom International Inc. Although third-party

defendants Camp Dresser & McKee and Conolog

Corporation did not submit briefs to either the District Court

or the Second Circuit Court of Appeals, both have been

served with this brief in opposition.

Viacom International Inc. is a wholly-owned subsidiary

of Viacom Inc., a publicly held company.

il

TABLE OF CONTENTS

Parties to the Proceeding and Statement Pursuant to

PME eC re re er ek

Reasons for Denying the Writ .................

DOUIOGNG. oon svcdsaesesaeeeneel oe

PEQUUOEE oo 6 6A aes eee

I. The Petition Fails To Meet Any Criteria For

The Granting Of A Writ Of Certiorari .....

II. The Second Circuit’s Decision Was Required

Veter 26 US. 8 S39 ies

COMNEIIOOD novos kc civ atone Lee ee

Page

10

iit

TABLE OF CITED AUTHORITIES

Cases:

Beaulieu v. United States, 497 U.S. 1038 (1990) ..

Chicago v. Int’l Col. of Surgeons, 522 U.S. 156

EE EA Cebiwe cde eseevrdiceveeuecenevens

D.L. Thomas v. American Home Products, Inc.,

SR OUD ccc acedvarevveasseewe se

Dev. Fin. Corp. v. Alpha Hous. & Health Care, Inc.,

SQ F346 156 (36 Cir. 1995) .. 0 cc cccccccvess

E.R. Squibb & Sons v. Accident & Cas. Ins. Co.,

OO Foe Ses Ce Cir. ISPS)... 5 ce seccecesess

In re: Abbott Laboratories, Inc., 51 F.3d 524

(Ste Civ. BOGS)... nc cect cieeeccccesess

Indianapolis v. Chase Nat'l Bank, 314 U.S. 63

Ee RG ade eh CGN Kaas Nevde cee vw averse

Janney Montgomery Scott, Inc. v. Shepard Niles,

Inc., 11 F.3d 399 (3d Cir. 1993) .............

Leonhardt v. Western Sugar Co., 160 F.3d 631 (10th

a och twos vebvecneceeswescss

Page

6

iv

Cited Authorities

Page

Maryland Cas. Co. v. W.R. Grace & Co., 23 F.3d

617 (2d Cir.), cert. denied, 513 U.S. 1052, 115

Se Sere oer ere rere peer 5

Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d

a EE if sb ak ckucdesdedednd Anan eo 6

Owen Equip. & Erection Co. v. Kroger, 437 U.S.

PPERUED Shi xs vencinscekdvenyees eves 5

Shanaghan v. Cahill, 58 F.3d 106 (4th Cir. 1995)

MiSs Si nae b oa kaw See eeeee tea oe ee 5

Shields v. Barrow, 58 U.S. 130 (1854) .......... 5

Strawbridge v. Curtiss, 7 U.S. 267 (1806) ....... 5

Stromberg Metal Works, Inc. v. Press Mechanical,

Boe. 77 F.0 Fae C7 Ce, COPED. va ove secures 5

Viacom International Inc. v. Kearney, 212 F.3d 721

SG SE. hence s pe peedaens bua 4, 7,10

Wisconsin Dep't of Corrections v. Schacht, 524 U.S.

re EE 6453 enka isd sea eee

Vv

Cited Authorities

Page

Statutes:

yr Ris Som 5) Serer rer r rire rire... 5, 7,8

POUL. O10 3. cisas cee ceaeieess 1, 5, 6, 7, 8,9

26-US. BADR «5 cnc ccncnsveces Kuniecteses 6, 7

y Eis Foe EE: >) | Peeererrr rr rrr rrer er. 8,9, 10

Rule:

U.S. Sap. Ct. Rude 10 2... sees cre rveceecsess 1, 4, 6

Other Authorities:

H.R. Rep. No. 101-734 (1990), reprinted in 1990

if ae ak ©) Sr re rr ee ee 10

4 James Wm. Moore et al., Moore's Federal Practice

§ 19.04[1][b] (3d ed. 1999) ..........- ee eee 9

16 James Wm. Moore et al., Moore’s Federal

Practice § 106.02 (3d ed. 1997) ...........-. 7,8

David D. Siegel, Practice Commentary, The 1990

Adoption of § 1367, Codifying “Supplemental”

Jurisdiction, printed in 28 U.S.C.A. § 1367 (West

SPS re eRe tr Ey ee Eee 8,9

7C Charles A. Wright, Arthur R. Miller & Mary K.

Kane, Federal Practice and Procedure § 1917

(2d Ed. 1986 & 1999 Supp.) ...............-- 9

|

Respondent Viacom International Inc. (“Viacom”),

respectfully submits this brief in opposition to the Petition

of Michael W. Kearney and Taylor Forge Stainless, Inc.

(collectively, “Petitioners”) for a writ of certiorari.

REASONS FOR DENYING THE WRIT

Petitioners Michael W. Kearney and Taylor Forge

Stainless, Inc. challenge the Second Circuit’s decision

concluding that fourth-party defendant Taylor Forge was not

an absent party and therefore could be considered neither a

necessary, nor an indispensable party whose joinder was

required. The Second Circuit held that the District Court

could properly exercise jurisdiction over claims by Taylor

Forge against non-diverse plaintiff Viacom under the

Supplemental Jurisdiction Statute, 28 U.S.C. § 1367, which

grants a District Court supplemental jurisdiction over non-

diverse claims asserted by any party other than plaintiff.

The Petition is devoid of any basis warranting a grant of

certiorari. The Petition fails to satisfy any of the standards

for granting a Writ of Certiorari under this Court’s Rule 10.

The Petition raises four questions, of which only question

three was even arguably implicated below.' The Second

Circuit’s decision is not in conflict with any other circuit.

Nor does the decision involve a state court’s interpretation

of federal law. Similarly, the ruling fails to raise a question

which conflicts with any decision of this Court or which

1. On its own initiative, the Second Circuit requested

supplemental briefing on the issue implicated by petitioners’ question

3 — whether the District Court could exercise supplemental

jurisdiction over Taylor Forge’s claims against Viacom without

destroying diversity jurisdiction.

2

should be settled by this Court. The Second Circuit's ruling

is a well-reasoned application of clear statutory text with no

far-reaching implications. Accordingly, the Petition for Writ

of Certiorari should be denied.

BACKGROUND

This dispute arises from a contract for the sale of Taylor

Forge Stainless, Inc., a Delaware corporation (“Taylor

Forge”) engaged in the manufacture and sale of stainless

steel, alloy fittings and flanges, and based in Somerville,

New Jersey. In 1984, Viacom’s predecessor, Gulf & Western

Manufacturing (“Gulf & Western’’), incorporated Taylor

Forge.

On October 26, 1984, Gulf & Western entered into a

contract with the manager of its Taylor Forge plant, petitioner

Michael Kearney, to sell Taylor Forge to Kearney.

To facilitate the sale, Viacom’s predecessor and Kearney

entered into a consent order with the New Jersey Department

of Environmental Protection and undertook to implement a

cleanup plan on the Taylor Forge premises.

In an indemnity provision of the parties’ sale contract,

Viacom’s predecessor and Kearney agreed to split the future

costs of implementing the cleanup plan. Viacom’s

predecessor agreed to pay the first $1.75 million in third party

costs incurred in implementing a cleanup plan, and Kearney

agreed to pay all such costs in excess of $1.75 million.

Although Viacom (and its predecessors) has, over the past

ten years, spent over $5 million in third party costs in

implcmenting the cleanup plan, and is continuing to incur

such costs, Kearney has yet to pay his indemnity to Viacom.

3

Anticipating litigation on his indemnity, Kearney

fired the first shot. In August 1993, Kearney and Taylor

Forge sued Gulf & Western’s successor, Paramount

Communication Realty Corporation (“Paramount”), in

Superior Court of New Jersey (the “New Jersey Action”).

The complaint sought declaratory and other relief,

challenging the validity or coverage of Kearney’s contractual

indemnity. The complaint alleged that Guif & Western

procured the contractual indemnity by fraud or

misrepresentation. In May 1994, the parties consented to a

dismissal without prejudice of the New Jersey Action.

In September 1998, Viacom filed this breach of contract

suit in federal court in the Southern District of New York to

enforce Kearney’s contractual indemnity. The Complaint

asserts no claim against Taylor Forge — a non-party to the

contract. Kearney responded to the complaint by moving to

dismiss on various grounds including lack of personal

jurisdiction, improper venue and abstention and, in the

alternative, sought transfer to the District of New Jersey.

All of those arguments were rejected by the District Court.?

Kearney then proceeded to re-instate the complaint he and

his company, Taylor Forge, had previously filed and

dismissed against Viacom in New Jersey state court.

2. Kearney eventually responded with an Answer, Separate

Defenses, Counterclaim, Third Party Complaint, and Jury Demand,

in which he asserted twenty-two counterclaims against Viacom.

Kearney also interposed third party complaints against Conolog

Corporation, a neighbor of the Taylor Forge premises whom Taylor

Forge alleged contributed to the contamination, and Viacom’s

environmental consultant, Camp, Dresser & McKee. Conolog

subsequently served a Fourth Party Complaint seeking contribution

and indemnification against Taylor Forge.

4

After his initial attempts to dismiss the federal action

were rejected, Kearney again moved to dismiss, this time

arguing that Taylor Forge was an indispensable party whose

presence would destroy the District Court’s diversity

jurisdiction. Before both the District Court and the Second

Circuit, Viacom argued that Taylor Forge was not, in fact,

an absent party because it had already been impleaded by

third-party defendant Conolog.

While the District Court granted Kearney’s motion to

dismiss, the Second Circuit reversed that decision,

concluding that, as Viacom had previously asserted, “Taylor

Forge was already present in the litigation and could have

joined with Kearney in asserting its 22 claims against Viacom

without destroying the court’s subject matter jurisdiction.”

Viacom International Inc. v. Kearney, 212 F.3d 721, 726

(2d Cir. 2000).

ARGUMENT

I.

THE PETITION FAILS TO MEET ANY CRITERIA

FOR THE GRANTING OF A WRIT OF CERTIORARI

This Court’s Rule 10 dictates thai a “[rJeview on a writ

ef certiorari is not a matter of right, but of judicial discretion.”

U.S. Sup. Ct. Rule 10, 28 U.S.C.A. (West 1984 & Supp.

2000). It follows that “[a] petition for a writ of certiorari

wi'l be granted only for compelling reasons.” /d. While Rule

10 is “neither controlling nor fully measuring [of] the Court’s

discretion,” it provides three instances in which the Court

may consider granting a writ of certiorari. Jd. Only two of

5

those instances involve decisions by a federal court of

appeals.’ Neither of those circumstances is implicated here.

The Second Circuit’s decision does not conflict with

prior decisions of this Court, the Second Circuit or other

courts of appeal. Petitioners’ arguments to the contrary are

based upon cases decided before the enactment of the

Supplemental Jurisdiction Statute in 1990 (Petition at 6-7,

citing Strawbridge v. Curtiss, 7 U.S. 267 (1806); Shields v.

Barrow, 58 U.S. 130 (1854); Indianapolis v. Chase Nat'l

Bank, 314 U.S. 63 (1941); and Owen Equip. & Erection Co.

v. Kroger, 437 U.S. 365 (1978)). None of these cases applies

here.

The remaining cases cited by Petitioners indicate neither

a split amongst authorities on “the same important matter”

nor an “important question of federal law that has not

been ... settled by this Court.” Rather, Petitioners cite

to cases which either fail to address § 1367, or concern

the minimum $75,000 amount in controversy requirement

of 28 U.S.C. § 1332, which is neither implicated nor disputed

here.* (Petition at 6-7, citing E.R. Squibb & Sons v. Accident

& Cas. Ins. Co., 160 F.3d 925 (2d Cir. 1998); Lewis v. Odell,

503 F.2d 445, 447 (2d Cir. 1974); Maryland Cas. Co. v. W.R.

Grace & Co., 23 F.3d 617, 621 (2d Cir.), cert. denied, 513

U.S. 1052, 115 S. Ct. 655 (1994); Stromberg Metal Works,

Inc. v. Press Mechanical, Inc., 77 F.3d 928 (7th Cir. 1996);

Shanaghan v. Cahill, 58 F.3d 106 (4th Cir. 1995); Leonhardt

v. Western Sugar Co., 160 F.3d 631 (10th Cir. 1998);

3. The other circumstance involves a decision by a state court

on a matter of federal law.

4. Petitioners acknowledge that Viacom is seeking costs in

excess of $4 million. (Petition at 2).

6

Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214

(3d Cir. 1999); In re: Abbott Laboratories, Inc., 5\ F.3d 524

(Sth Cir. 1995)).

The Petition is a meritless attack upon a decision which

Petitioners deem “incorrect.” (Petition at 16). “A petition

for writ of certiorari is rarely granted when the asserted error

consists of erroneous factual findings or the misapplication

of a properly stated rule of law.” U.S. Sup. Ct. Rule 10

(emphasis added). Even where a conflict exists amongst

circuits, a petition for writ of certiorari is to be denied if

such conflict is “tolerable” or “narrow.” Beaulieu v. United

States, 497 U.S. 1038, 1039 (1990) (J. White, dissenting).

See also D.L. Thomas v. American Home Products, Inc., 519

U.S. 913, 917 (1996) (J. Rehnquist, dissenting) (petitions

for writ of certiorari should be granted in “exceptional”

circumstances). The Petition fails to identify any conflict

between the Second Circuit’s decision and prior decisions

of this Court or of other circuits. To the contrary, the decision

represents a routine application of the supplemental

jurisdiction statute and lacks any “exceptional”

circumstances warranting this Court’s review.

THE SECOND CIRCUIT’S DECISION WAS

REQUIRED UNDER 28 U.S.C. § 1367

Section 1367(a) provides that “in any civil action of

which the district courts have original jurisdiction, the district

courts shall have supplemental jurisdiction over all other

claims that are so related to claims in the action within such

original jurisdiction that they form part of the same case or

controversy. .. .” 28 U.S.C. § 1367(a). The statute expressiy

J

provides that this broad grant of jurisdiction includes “claims

involving the joinder or intervention of additional parties.”

Id.

Because the District Court had diversity jurisdiction over

this action between the original parties, Viacom (a Delaware

corporation) and Kearney (a Florida resident), § 1367(a)

provides the court supplemental jurisdiction over “all other

claims” that form part of the same case.* Here, “the substance

of Taylor Forge’s claims are identical to Kearney’s 22

compulsory counterclaims. . . . [and] are, by definition, ‘part

of the same case or controversy.’ ” Viacom International Inc.

v. Kearney, 212 F.3d. 721, 727-28 (2d Cir. 2000) (citation

omitted).

The Petition asserts that this exercise of supplemental

jurisdiction by the District Court would eviscerate the

complete diversity requirements of 28 U.S.C. § 1332.

(Petition at 12). Not so. The very purpose of § 1367 was to

“allow[] federal courts to entertain claims over which they

have no independent basis of subject matter jurisdiction.”

16 James Wm. Moore et al., Moore's Federal Practice

5. Petitioners now argue that this Court's decision in Chicago"

v. Int'l Col. of Surgeons, 522 U.S. 156 (1997) making “clear that

‘original’ jurisdiction is still a condition precedent to the exercise

of supplemental jurisdiction” is somehow in conflict with the Second

Circuit's decision in this case. (Petitiorat 11). Such is not the case.

It is clear that the District Court had jurisdiction over the original

parties to the case, Viacom and Michael Kearney. Viacom

International v. Kearney, 212 F.3d. 721, 726 (2d Cir. 2000) (citing

Wisconsin Dep't of Corrections v. Schacht, 524 U.S. 381, 388

(1998)). Chicago did not equate “original jurisdiction” with

supplemental jurisdiction exercised after additional parties had been

impleaded.

8

§ 106.02 (3d ed. 1997). The Supplemental Jurisdiction

Statute does not affect § 1332’s requirement of complete

diversity between plaintiff and defendant. Section 1367

merely grants supplemental jurisdiction, where such diversity

exists as between the original parties, over additional parties

and claims joined to the litigation. Jd. The Second Circuit

recognized that § 1367(b) provides an explicit exception to

the complete diversity requirements in instances where a

defendant, such as Kearney, impleads a party who chooses

to assert claims against a non-diverse plaintiff, as Taylor

Forge has done in this case.

The Petition’s reliance on § 1367(b) to suggest that the

District Court lacked supplemental jurisdiction over Taylor

Forge’s claims is equally misplaced. (Petition at 6-15).

- “By no means does [§ 1367(b)] exclude [supplemental

jurisdiction] from diversity cases.” See David D. Siegel,

Practice Commentary, The 1990 Adoption of § 1367,

Codifying “Supplemental” Jurisdiction, printed in

28 U.S.C.A. § 1367 at 832 (West 1993). Subsection (b) does

not apply to claims by Taylor Forge nor, for that matter, to

claims by anyone other than plaintiff Viacom:

In any civil action of which the district courts

have original jurisdiction founded solely on

section 1332 of this title, the district courts shall

not have supplemental jurisdiction under

subsection (a) over claims by plaintiffs against

persons made parties under Rule 14, 19, 20 or 24

of the Federal Rules of Civil Procedure.

28 U.S.C. § 1367(b) (emphasis added).

Section 1367(b) was designed to prevent plaintiffs from

smuggling in claims against non-diverse parties. See David

9

D. Siegel, Practice Commentary, The 1990 Adoption of

§ 1367, Codifying “Supplemental” Jurisdiction, printed in

28 U.S.C.A. § 1367 (West 1993) (“Subdivision (b) of § 1367

is concerned only with efforts of a plaintiff to smuggle in

claims that the plaintiff would not otherwise be able to

interpose. . . . The repetition of the word ‘plaintiffs’ at several

rule-citing junctures in subdivision (b) makes this clear.”)

(emphasis added). See also Dev. Fin. Corp. v. Alpha Hous.

& Health Care, Inc., 54 F.3d 156, 161 (3d Cir. 1995)

(“[Subdivision (b) of § 1367] does not deprive the district

court of supplemental jurisdiction over a counterclaim or

cross-claim raised by an intervening defendant, even where

the intervenor shares citizenship with an original party.”);

Janney Montgomery Scott, Inc. v. Shepard Niles, Inc.,

11 F.3d 399, 412 n.15 (3d Cir. 1993) (noting that plaintiff

was precluded from amending its complaint to include non-

diverse party as defendant under § 1367(b)).°

The Second Circuit recognized that Ҥ 1367(b) reflects

Congress’ intent to prevent original plaintiffs — but not

defendants or third parties —- from circumventing the

6. See also 7C Charles A. Wright, Arthur R. Miller & Mary K.

Kane, Federal Practice and Procedure § 1917 (2d Ed. 1986 & 1999

Supp.) (“[Section 1367(b)] specifically prohibits the exercise of . . .

[supplemental] jurisdiction in diversity cases for persons seeking to

intervene as plaintiffs ...”); 4 James Wm. Moore et al., Moore's

Federal Practice § 19.04[1][b] (3d ed. 1999) (“[Section 1367(b)]

precludes supplemental! jurisdiction over claims (1) by plaintiffs

joined under Rule 19 (necessary parties); (2) by absentees seeking

to interv..e as plaintiffs under Rule 24 (intervention); and (3) by

plaintiffs against parties josned under Rule 14 (third-party practice

or impleader), Rule 19 (necessary parties), Rule 20 (proper parties),

or Rule 24 (intervention).”) (emphasis added). Petitioners’ argument

that Taylor Forge should be aligned as a cefendant (Petition at 18)

renders § 1367(b) inapplicable as a bar to its claims against Viacom.

10

requirements of diversity.” Viacom International Inc. v.

Kearney, 212 F.3d. 721, 726-27 (2d Cir. 2000) (citing H.R.

Rep. No. 101-734, at 29 (1990), reprinted in 1990

U.S.C.C.A.N. 6860, 6875). There is no conflict among the

circuits about this point.

Nothing in § 1367(b) restricts the District Court’s ability

to exercise supplemental jurisdiction over claims by anyone

other than plaintiff Viacom. Viacom has no claim against

Taylor Forge and has asserted none in either this federal

action or the parallel state court action. Accordingly, as the

Second Circuit concluded, the District Court can properly

exercise jurisdiction over Taylor Forge’s claims against

Viacom without destroying diversity jurisdiction.

CONCLUSION

For all of the foregoing reasons, Respondent respectfully

requests that this Honorable Court deny the Petition in its

entirety.

Respectfully submitted,

WILLIAM R. MAGUIRE >

Counsel of Record

JONATHAN D. PRESSMENT

HuGHes HuBBARD & REED LLP

One Battery Park Plaza

New York, New York 10004

(212) 837-6000

Attorneys for Respondent

Viacom International Inc.