A “Bleak House” for the 21st Century- Chavez v. Dole Food Co.

Chavez v. Dole Food Co., 836 F.3d 205 (3d Cir. 2016).  In the classic Charles Dickens book “Bleak House,” the legal case of Jarndyce v. Jarndyce ran for so many years that “[i]nnumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it.”  The saga of Chavez v. Dole Food Co., the latest installment of which was an en banc opinion of the Third Circuit late last week, gives the Jarndyce case a real-life run for its money.

As Judge Fuentes stated in his opinion for the unanimous en banc court, “[t]he plaintiffs in these cases are foreign agricultural workers who labored on banana plantations in Central and South America from the 1960s through the 1980s.  They allege that their employers and certain chemical companies knowingly exposed them to toxic pesticides over many years, and that this exposure caused adverse health consequences ranging from sterility, to birth defects, to a heightened risk of cancer.  Litigation against the defendants first began in Texas state court in 1993, yet to date no court has reached the merits of the plaintiffs’ claims.”

The Third Circuit’s opinion focused on a Delaware District Court ruling that dismissed plaintiffs’ claims based on the “first filed rule,” a principle of comity.  Under that principle, when the same or a similar case is filed in multiple jurisdictions, courts handling later-filed cases will stay their hands and allow the case that was filed first to proceed.  Here, the District Court had invoked that rule and had dismissed the case with prejudice.

After discussing exhaustively the history of the first-filed rule and decisions under that doctrine elsewhere, Judge Fuentes concluded that it was an abuse of discretion, the applicable standard of review, to have dismissed the Delaware action with prejudice.  “[A] court exercising its discretion under the first-filed rule should be careful not to cause unanticipated prejudice to the litigants before it.”  In most cases, Judge Fuentes said, a stay or transfer of a later-filed case is the appropriate response under the first-filed rule.  Even a dismissal without prejudice “may create unanticipated problems.”  And a dismissal with prejudice “will almost always be an abuse of discretion,” though not always, as Judge Fuentes went on to explain.  This, however, was not the rare case where a dismissal with prejudice was permissible.

The second issue addressed in this opinion was one of personal jurisdiction over one of the defendants, Chiquita Brands, a New Jersey citizen.  The District Court found that it lacked personal jurisdiction over Chiquita.  That court then dismissed Chiquita from the case.  Applying de novo review to the decision regarding personal jurisdiction, Judge Fuentes agreed that personal jurisdiction was lacking.  But the District Court “had a statutory obligation to transfer the claims against  that defendant to another district court where personal jurisdiction would be present.”  Either or both of 28 U.S.C. §1406(a) or 28 U.S.C. §1631 (the latter of which deals expressly with “want of jurisdiction”) call for transfer “if it is in the interest of justice.”  Since the District Court’s action here “flowed solely from its mistaken application of the first-filed rule,” the dismissal of Chiquita was error.

Finally, the court ruled that a decision in a Louisiana federal District Court to dismiss a parallel case on timeliness grounds was not res judicata as to the Delaware action.  The District Court here had not reached that issue, since it acted based on the first-filed rule.  Normally, an appellate court will not reach an issue that was not addressed below, but Judge Fuentes rightly noted that the age of this case created a “need for judicial acceleration,” so the en banc court here decided the question.  After a detailed discussion of United States Supreme Court res judicata precedents as far back as 1831, as well as Louisiana authorities on that subject, Judge Fuentes ruled that res judicata did not apply.

This was a masterful, 69-page opinion that ranged far and wide in the legal issues with which it dealt, including many sub-issues not summarized here.  It is a treatise on the first-filed rule, and a valuable resource on many other topics as well, including abstruse areas such as cross-jurisdictional class action tolling of the statute of limitations. It should be read in full.

Judge Fuentes expressly declined to “suggest that the defendants have acted improperly or unethically by seeking to defeat the plaintiffs’ claims solely on procedural grounds.”  But the conclusion of his opinion contains two sentences that represent some of the best of what the court system should offer.  “For over two decades, the plaintiffs have been knocking on courthouse doors all over the country and, indeed, the world, only for those doors to remain closed….  We revive this litigation now, more than two decades after it began, while expressing our sincerest hope that it proceeds with more alacrity than it has to the present date.”