Trial Practice and Procedure - Philip W. Savrin

• Publication year: 1995

Trial Practice & Procedureby Philip W. Savrin^*

I. Introduction

This Article surveys the 1994 decisions of the Eleventh Circuit Court of Appeals that have a significant impact on issues related to trial practice and procedure.

II. Parties

A. Standing

In Church v. City of Huntsville,¹ homeless persons brought a class action under 42 U.S.C. Sec. 1983 against the City of Huntsville, alleging that the city had a policy of arresting them, in violation of their constitutional rights, as a part of a concerted effort to drive them out of the city.² Plaintiffs sought an injunction restraining the allegedly unlawful arrests.³ The district court granted preliminary injunctive relief, and the city appealed.⁴

Before reaching the merits of the injunction, the Eleventh Circuit addressed the issue of whether the plaintiffs had standing to assert their claims.⁵ The City of Huntsville had not challenged the plaintiffs' standing in the district court. Standing, however, is not simply a pleading requirement, but "an indispensable part of the plaintiff's case" that goes to the subject matter jurisdiction of the court.⁶ Therefore, each element of standing must be supported "with the manner and degree of evidence required at the successive stages of the litigation."⁷ On a motion for summary judgment, the court explained, standing (if challenged) must be proven by plaintiffs through affidavits or other evidence.⁸ The same rule applies on a preliminary injunction motion.⁹ In Huntsville however, the court of appeals reasoned that the plaintiffs did not present evidence to support standing possibly because standing had not been challenged by Huntsville.¹⁰ Under these circumstances, the court concluded that standing in the preliminary injunction context would be adjudged by the pleadings, with any evidence viewed favorable to the plaintiffs.¹¹ In so ruling, the court expressly reserved deciding "the degree of evidence necessary to support standing at the preliminary injunction stage when the plaintiff is on notice that standing is contested."¹²

B. Real Party in Interest

In ECI Management Corp. v. Scottsdale Insurance Co.,¹³ an apartment complex operator (ECI) sued Scottsdale Insurance Company for failing to defend and indemnify ECI against a lawsuit brought by a tenant.¹⁴ ECI, who was named as an insured on another policy with Allstate Insurance Company, settled the tenant's suit using Allstate's funds pursuant to a loan receipt.¹⁵ ECI then filed a diversity action against Scottsdale in federal court alleging breach of contract and bad faith refusal to honor its insurance contract.¹⁶

Scottsdale successfully moved the district court to substitute Allstate as the real party in interest under Rule 17.¹⁷ Following a jury trial, judgment was entered in favor of Scottsdale, and ECI and Allstate appealed.¹⁸

One of the errors alleged on appeal was that Allstate should not have been added as a party because it was not a "real party in interest."¹⁹ The Eleventh Circuit noted that although the real party analysis is a matter of federal procedure, state law identifies the true owner of the legal interest.²⁰ The court found that, under Georgia law, ECI was the real party in interest.²¹ Nevertheless, the court affirmed the judgment of the district court because it found the addition of Allstate harmless.²²

III. Pleadings

A. Retroactivity of Amendments

In Hunt v. Department of Air Force Division of USA,²³ Hunt sued the Department of the Air Force claiming she received personal injuries while shopping at a commissary.²⁴ Plaintiff filed the complaint on the last day allowed following exhaustion of administrative remedies, but incorrectly named the Air Force instead of the United States.²⁵ Although plaintiff served the complaint within 14 days on the Attorney General, the United States was not served properly until 184 days after the complaint was filed, when Hunt served, in addition, the United States Attorney.²⁶

The district court dismissed the complaint without prejudice for plaintiffs failure to perfect service of process within 120 days of filing the complaint (as required by Federal Rule of Civil Procedure 4(j)) and did not allow the United States to be added as a party retroactively.²⁷ On appeal, the Eleventh Circuit affirmed the dismissal on untimely service grounds, even though it found error in the district court's retroactivity analysis.²⁸ Specifically, under Federal Rule of Civil Procedure 15(c), Hunt should have been allowed to amend her complaint to name the United States because the Attorney General had notice of the action before the expiration of the 120 day period provided under

Rule 4(j).²⁹ The error was deemed harmless, however, because the complaint was not served within 120 days of the complaint.³⁰

In deciding Hunt, the Eleventh Circuit construed Rule 4(j), which mandated dismissal of a complaint served outside the 120 day period unless "good cause" excused the delay.³¹ Federal Rule of Civil Procedure 4(m), which superseded Rule 4(j), which now requires a district court to extend the 120 day period if good cause is shown and allows a district court discretion to extend the period even in the absence of good cause.³² Practitioners are therefore cautioned that the holding in Hunt might be different under a Rule 4(m) analysis.

B. Undue Delay

In Jones v. Childers,³³ the Eleventh Circuit discussed the discretion of courts to bar amendments to pleadings due to undue delay. Jones, on the advice of Talent Service, Inc.(TSI), purchased interests as a limited partner in a research project.³⁴ TSI told Jones the investment would be a tax shelter and that an IRS audit was a mere formality.³⁵ TSI's advice proved wrong, however, as the IRS audit resulted in deficiency notices that Jones eventually settled for $90,000.³⁶

In 1987, Jones sued TSI to recover damages arising from its advice.³⁷ In 1992, less than one week before a pretrial conference, TSI moved to amend their answer to add estoppel, waiver, ratification, and failure to mitigate damages, among others, as affirmative defenses.³⁸ The district court denied the amendments as untimely.³⁹

At trial, Jones was awarded over half a million dollars in damages.⁴⁰ On appeal, TSI argued that the district court abused its discretion in denying TSI's motion to amend.⁴¹ The Eleventh Circuit disagreed. Although it acknowledged that leave to amend should be freely granted, it noted as well that "undue delay" is a factor to be considered in the district court's exercise of discretion.⁴² In Jones the motion to amend was made four years after the original answer, after discovery had been completed, and after a trial date had been set.⁴³ Because the amendment would have further complicated an already complex case and likely delayed the trial, the Eleventh Circuit affirmed the district court's denial.⁴⁴

C. Statute of Limitations

The decision in Tucker v. Southern Wood Piedmont Co.,⁴⁵ addresses the interplay between state statute of limitations and a federal law establishing accrual date for actions involving exposure to hazardous substances.⁴⁶ The plaintiff sued for damages to property resulting from defendant's wood preservative.⁴⁷ Defendant moved to dismiss, arguing that plaintiff's damages should be restricted by the state statute of limitations to those damages occurring during the four years immediately preceding the lawsuit.⁴⁸ The district court denied the motion because federal law provides a discovery rule for environmental torts brought under state law.⁴⁹

The Eleventh Circuit affirmed the district court, finding that the scope of the federal discovery rule is not restricted to a statement of whether an action may be brought, but also defines the period when damages can be recovered.⁵⁰ The court reasoned that in the context of a continuing tort, the time limit for recovery of damages and time when an action can be brought are indistinguishable:

To conclude that the statute of limitations is tolled until the injury is discovered, but that Plaintiffs may only recover for damage done to their property within the immediately preceding period of the statute of limitations [,] is illogical .... Such a result would result in depriving plaintiffs of their day in court for the full extent of their injury.⁵¹

IV. Discovery

A. Attorney-Client Privilege

In Cox v. Administrator United States Steel & Carnegie,⁵² the Eleventh Circuit discussed many aspects of the attorney-client privilege and its exceptions. In Cox union members sued their union and their employer, USX Corporation, claiming USX improperly obtained, and union negotiators improperly gave, concessions in negotiating a collective bargaining agreement.⁵³ During discovery in this complicated case, the district court made certain rulings on the scope of the attorney-client privilege.⁵⁴ Those rulings were then raised on appeal from a summary judgment order.⁵⁵

The Eleventh Circuit first noted that the purpose of the attorney-client privilege is "to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice."⁵⁶ Despite this lofty goal, the privilege has a number of exceptions, including the "Garner doctrine," the "crime-fraud exception," and waiver.⁵⁷

The Garner doctrine⁵⁸ states that stockholders in a corporation can discover communications between the corporation and its attorneys upon a showing of "good cause," which is determined by the application of nine factors.⁵⁹ The Eleventh Circuit did not reach an analysis of all those factors in Cox, however, because two of those factors precluded disclosure of the communications: only a small percentage of the union's members were part of the plaintiff class, and the interests of the plaintiff class were adverse to those not in the class.⁶⁰ The Eleventh Circuit also added that the Garner doctrine does not apply to attorney work product.⁶¹

Next, the Eleventh Circuit addressed the...