Filed: Sep. 21, 2007
Latest Update: Feb. 21, 2020
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit F I L E D No. 07-60128 September 21, 2007 Charles R. Fulbruge III Clerk COOPER TIRE & RUBBER CO. Plaintiff-Appellant v. JOHN BOOTH FARESE; FARESE, FARESE & FARESE, P.A.; JOHN DOES A-A; BRUCE R KASTER; BRUCE R KASTER, P.A. Defendants-Appellees Appeal from the United States District Court for the Northern District of Mississippi USDC No. 3:02-CV-210 Before JOLLY, STEWART, and CLEMENT, Circuit J
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit F I L E D No. 07-60128 September 21, 2007 Charles R. Fulbruge III Clerk COOPER TIRE & RUBBER CO. Plaintiff-Appellant v. JOHN BOOTH FARESE; FARESE, FARESE & FARESE, P.A.; JOHN DOES A-A; BRUCE R KASTER; BRUCE R KASTER, P.A. Defendants-Appellees Appeal from the United States District Court for the Northern District of Mississippi USDC No. 3:02-CV-210 Before JOLLY, STEWART, and CLEMENT, Circuit Ju..
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
F I L E D
No. 07-60128 September 21, 2007
Charles R. Fulbruge III
Clerk
COOPER TIRE & RUBBER CO.
Plaintiff-Appellant
v.
JOHN BOOTH FARESE; FARESE, FARESE & FARESE, P.A.; JOHN DOES
A-A; BRUCE R KASTER; BRUCE R KASTER, P.A.
Defendants-Appellees
Appeal from the United States District Court
for the Northern District of Mississippi
USDC No. 3:02-CV-210
Before JOLLY, STEWART, and CLEMENT, Circuit Judges.
PER CURIAM:*
Cooper Tire & Rubber Co. (“Cooper Tire”) brings suit against attorneys
Bruce Kaster and John Booth Farese and their law firms alleging tortious
interference with business relations, tortious interference with contract, and
civil conspiracy. A prior panel of this court reversed the district court’s grant of
summary judgment in favor of Kaster and Farese and remanded for trial on the
merits. Cooper Tire & Rubber Co. v. Farese, 423 F.3d 446, 459 (5th Cir. 2005)
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 07-60128
(“Cooper Tire I”). On remand the district court again granted summary judgment
against Cooper Tire, and we again reverse.
I. FACTS AND PROCEEDINGS
The history of this case is set out in detail in this court’s prior opinion. Id.
at 450–54. Cooper Tire sued Kaster and Farese for their role in procuring
testimony from former Cooper Tire employee Kathy Barnett, allegedly in
violation of a separation agreement between Barnett and Cooper Tire. Cooper
Tire alleges that:
Cathy Barnett, upon ending her employment at Cooper Tire, signed
a separation agreement that contained a non-disparagement clause;
nevertheless, she executed an affidavit, prepared with Farese,
containing false and disparaging statements about Cooper Tire;
despite knowledge of the separation agreement, Farese provided
Barnett's affidavit to another attorney, who provided it to Kaster,
for use in pending litigation in Arkansas against Cooper Tire;
despite knowledge of the separation agreement, Kaster leaked the
affidavit to the media; as a result, Cooper Tire sustained extremely
substantial losses to its stock value; and Kaster paid Farese $50,000
after the Arkansas litigation was settled.
Id. at 450.
In the first summary judgment proceeding, the district court found that
the separation agreement was contrary to Mississippi public policy because it
protected an illegal enterprise by preventing Barnett from testifying about
wrongdoing by Cooper Tire.
Id. at 456. This court reversed and remanded for
trial, holding that the agreement was not illegal under Mississippi law.
Id. at
457. On remand, Kaster and Farese again moved for summary judgment and
argued that the separation agreement was illegal because it violated an obscure
anti-bribery statute, section 97-9-9 of the Mississippi Code. The district court
again granted summary judgment in favor of Kaster and Farese. Cooper Tire &
Rubber Co. v. Farese,
2007 U.S. Dist. LEXIS 1779, at *21 (D. Miss. 2007)
(“Cooper Tire II”). Cooper Tire now appeals.
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No. 07-60128
II. STANDARD OF REVIEW
This court reviews motions for summary judgment de novo, construing all
facts and inferences in the light most favorable to the nonmoving party. Cooper
Tire I, 423 F.3d at 454. “We review de novo a district court’s interpretation of our
remand order, including whether the law-of-the-case doctrine or mandate rule
forecloses any of the district court’s actions on remand.” United States v. Pineiro,
470 F.3d 200, 204 (5th Cir. 2006). We review the district court’s rulings related
to sealed documents for abuse of discretion. SEC v. Van Waeyenberghe,
990 F.2d
845, 848 (5th Cir. 1993).
III. DISCUSSION
The district court erred by not correctly applying the law of the case
following remand. “The law of the case doctrine provides that a decision of a
factual or legal issue by an appellate court establishes the law of the case and
must be followed in all subsequent proceedings in the same case in the trial
court . . . .” Lyons v. Fisher, 888 F.2d 1071, 1074 (5th Cir. 1989) (internal
quotation omitted); see also Knotts v. United States,
893 F.2d 758, 761 (5th Cir.
1990). Courts have the discretion to ignore the law of the case under certain
narrow exceptions: “if substantially different evidence has been presented, there
has been an intervening change in the law, or the prior decision was clearly
erroneous and it would work a manifest injustice.” Browning v. Navarro,
887
F.2d 553, 556 (5th Cir. 1989). Absent such exceptions, the law of the case
doctrine applies not only to things decided explicitly but also to matters settled
“by necessary implication:” “those matters that were fully briefed to the
appellate court and were necessary predicates to the ability to address the issue
or issues specifically discussed are deemed to have been decided tacitly or
implicitly, and their disposition is law of the case.” Office of Thrift Supervision
v. Felt,
255 F.3d 220, 225 (5th Cir. 2001).
3
No. 07-60128
The separation agreement’s legality was fully briefed and argued before
the prior panel. Cooper Tire I held that the non-disparagement clause was legal
under Mississippi law and remanded the case for trial. 423 F.3d at 456–57.
Following remand, the district court again found that the separation agreement
was illegal, this time under section 97-9-9 of the Mississippi Code. Cooper Tire
II,
2007 U.S. Dist. LEXIS 1779, at *6–7. The district court relied on the fact that
section 97-9-9 was not before the Cooper Tire I panel.
Id. This finding
misunderstands the scope of the law of the case doctrine and the substance of
Mississippi law on this topic.
Subject to a few narrow exceptions, the law of the case controls legal
claims which were fully litigated and decided in the first appeal, even if parties
seek to introduce new legal or factual evidence on remand. See Felt, 255 F.3d at
225. In Lyons, this court held on summary judgment that a land transaction was
a nullity under Louisiana law because it lacked proper
consideration. 888 F.2d
at 1073. On remand to the district court, the nonmoving party sought to
introduce evidence not before the prior panel to show that the land transaction
was supported by adequate consideration.
Id. at 1075. He also sought to
introduce new evidence about Louisiana law to show that the prior panel erred
as a matter of law.
Id. The district court found that these arguments were
precluded by the prior panel’s holding and did not fall under the “clear error” or
“manifest injustice” exceptions to the law of the case doctrine.
Id. This court
affirmed, saying:
We might be persuaded that manifest injustice had occurred as a
result of the alleged error if Fisher had presented such evidence in
the prior proceeding and the previous panel had disregarded the
evidence because of a misunderstanding of the law, or if
consideration had become an issue only after it reached the
appellate level and Fisher had had no opportunity in the prior
proceeding to adduce such evidence. The truth is, however, that
Fisher flatly failed in the prior proceeding, for reasons best known
4
No. 07-60128
to him, to adduce evidence of any consideration, despite his having
both the reason and opportunity to do so. . . . Thus, given his
opportunity and his puzzling failure to adduce such evidence earlier,
we hold that Fisher has not suffered "manifest injustice" simply
because the law-of-the-case doctrine may now preclude his tardy
introduction of that evidence.
Id. Like the nonmovant in Lyons, Kaster and Farese introduced new evidence
about Mississippi law on remand to support their argument that the separation
agreement was illegal—an issue that was fully briefed and argued on the first
appeal.1 Their claim fails both because it violates the law of the case under
Lyons, and because they are wrong about Mississippi law.
The prior panel held that the separation agreement was neither illegal nor
unconscionable. Cooper Tire I, 423 F.3d at 456 (“The district court held that, as
a matter of law, and regardless of whether Barnett’s affidavit was covered by the
separation agreement, that agreement was both illegal and unconscionable.
Each ruling is erroneous.”). As the prior panel noted, Mississippi courts must
look to the state constitution, statutes and caselaw to determine whether an
agreement is void under public policy.
Id. at 457 (citing Heritage Cablevision v.
New Albany Elec. Power Sys.,
646 So. 2d 1305, 1313 (Miss. 1994)). Thus, in
deciding whether the non-disparagement agreement violated public policy, the
prior panel was required to consider (and the parties had the opportunity and
incentive to brief) the question of whether the agreement violated any
Mississippi statutes. To decide whether the agreement was unconscionable the
panel was required to consider, and the parties to brief, the circumstances
surrounding the signing of the agreement, as well as its specific terms. In short,
the panel considered the Barnett non-disparagement agreement in full and held
1
Unlike the nonmovant in Lyons, Kaster and Farese never argue that one of the
exceptions to the law of the case doctrine applies here. Instead they state that their claim does
not fall within the law of the case doctrine because MISS. CODE ANN. § 97-9-9 was not before
the prior panel.
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No. 07-60128
that it was neither illegal nor unconscionable. Id. This holding became the law
of the case, and Kaster and Farese are precluded from relitigating these issues
on remand. See
Felt, 255 F.3d at 225 (“[T]hose matters that were fully briefed to
the appellate court and were necessary predicates to the ability to address the
issue . . . specifically discussed are deemed to have been decided . . . implicitly,
and their disposition is law of the case.”).
In addition to violating the law of the case, Kaster and Farese’s claim also
fails as a matter of law. Although section 97-9-9 of the Mississippi Code is over
seventy years old, Kaster and Farese cannot point to any Mississippi cases
where it has been used to invalidate a non-disparagement agreement or other
release. When the Mississippi courts have evaluated releases signed under
threat of prosecution, they have relied on ordinary principles of contract
interpretation regarding duress or fraud and not anti-bribery law. See Royer
Homes of Miss., Inc. v. Chandeleur Homes, Inc., 857 So. 2d 748, 757 (Miss. 2003)
(discussing Mississippi contract law with regard to fraud and duress). In Service
Fire Insurance Co. of New York v. Reed, the Supreme Court of Mississippi
invalidated a release signed by an insured under threat of criminal prosecution
by his insurer.
72 So. 2d 197, 198 (Miss. 1954). The court did not discuss state
or federal anti-bribery law when evaluating the release.
Id. The court instead
looked at the particular circumstances of the insured’s situation, including the
fact that he was not represented by counsel when he signed the release, that he
was an uneducated farm hand, and that the insurance company had the superior
bargaining position. Id.; see also Royer
Homes, 857 So. 2d at 757 (discussing
Reed); cf. Martinez v. Martinez,
860 So. 2d 1247, 1249, 1250–51 (Miss. Ct. App.
2003) (upholding a post-divorce release signed after the wife had filed and
dropped criminal charges, and was seeking additional civil damages); Estate of
Reaves v. Owen,
744 So. 2d 799, 800–01 (Miss. Ct. App. 1999) (upholding a
release from criminal and civil prosecution which was signed following a
6
No. 07-60128
stabbing in a domestic violence case). Thus, granting summary judgment on this
ground was improper under Mississippi law.
Next, we consider the district court’s discussion of contractual ambiguity.
Cooper Tire I held that the effective date of the separation agreement was
ambiguous, and that under Mississippi law “‘where a contract is ambiguous and
uncertain, questions of fact are presented which are to be resolved by the trier
of facts, [therefore,] the granting of summary judgment is inappropriate.’” 423
F.3d at 456 (quoting Shelton v. Am. Ins. Co.,
507 So. 2d 894, 896 (Miss. 1987)).
On remand, the district court “respectfully request[ed] guidance on this issue”
because it was “the understanding of [the district court] that the bulk of
Mississippi law suggests otherwise.”2 Cooper Tire II,
2007 U.S. Dist. LEXIS
1779, at *15. The district court erred in its interpretation of Mississippi law.
In Royer Homes, the Supreme Court of Mississippi stated “[i]f the terms
of a contract are subject to more than one reasonable interpretation, it is a
question properly submitted to the jury.” 857 So. 2d at 752. The court went on
to outline its approach to contract interpretation:
Legal purpose or intent should first be sought in an objective
reading of the words employed in the contract to the exclusion of
parol or extrinsic evidence. . . .
2
The district court also suggested that the case to which Shelton v. American Insurance
Co. cited had been overruled. Cooper Tire II, 2007 U.S. Dist. LEXIS 1779, at *15–16 (criticizing
Dennis v. Searle,
457 So. 2d 941, 945 (Miss. 1984)). This was clear error. The case cited by the
district court as overruling Dennis only mentions it once, in the footnote of a single-judge
concurrence inveighing generally against the overuse of the term “ambiguous” in the law of
contracts. Thornhill v. Sys. Fuels, Inc.,
523 So. 2d 983, 1007 n.22 (Miss. 1988). Dennis has
been cited with approval numerous times post-Thornhill for the proposition that an ambiguous
contract should be submitted to a jury. See, e.g., Yowell v. James Harkins Builder, Inc.,
645 So.
2d 1340, 1345 (Miss. 1994) (citing Dennis,
457 So. 2d 941 at 945) (stating that “‘[t]he
interpretation of an unclear contract generally involves questions of fact sufficient so that our
summary judgment procedure will be an inappropriate vehicle for final decision’”);
Cunningham v. Lanier,
555 So. 2d 685, 687 (Miss. 1989) (same).
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No. 07-60128
Secondly, if the court is unable to translate a clear
understanding of the parties’ intent, the court should apply the
discretionary “canons” of contract construction. Where the language
of an otherwise enforceable contract is subject to more than one fair
reading, the reading applied will be the one most favorable to the
non-drafting party. Finally, if the contract continues to evade clarity
as to the parties’ intent, the court should consider extrinsic or parol
evidence.
Id. at 753 (internal citations omitted). So under Mississippi law, the principle
of interpreting a contract in favor of the non-drafter is considered a discretionary
“canon of construction,” and Mississippi courts recognize that a contract may be
ambiguous even after such canons are applied.
Id.
The Cooper Tire I panel held that the effective date of the separation
agreement was ambiguous as a matter of
law. 423 F.3d at 456. In reaching this
determination, the prior panel necessarily had to consider whether the contract’s
apparent ambiguities could or should be resolved by applying the discretionary
canons of construction. See
Felt, 255 F.3d at 225 (stating that the law of the case
includes matters decided by “necessary implication” of the court’s holding). As
the district court recognized below, this determination is the law of the case, and
the question of whether the effective date of the separation agreement can be
determined on summary judgment is now closed.
Cooper Tire I also held that Cooper Tire’s claims for tortious interference
with contract, tortious interference with business relations, and civil conspiracy
involved genuine issues of material fact which should be presented to a jury. 423
F.3d at 459 (“Cooper Tire’s claims turn in large part on proving Farese and
Kaster’s motives and intent. These types of determinations . . . are particularly
ill-suited for summary judgment. In short, genuine issues of material fact
8
No. 07-60128
preclude summary judgment.”) (internal citation omitted).3 This holding is the
law of the case and these three claims should be tried on the merits.
A few issues remain outstanding. Cooper Tire moved for sanctions against
Kaster and Farese. It also moved to place certain sensitive documents under
seal. The district court denied both motions, and we affirm because we do not
find that the court abused its discretion. Cooper Tire also requests that this case
be reassigned on remand. We find that reassignment is proper under the three-
prong test of In re DaimlerChrysler Corp., 294 F.3d 697, 700–01 (5th Cir. 2002)
(reassigning a case where the district court failed to carry out the mandate of the
court of appeals on remand). First, given the history of this case on remand, we
find that it is reasonable to expect the original judge to have substantial
difficulty in putting out of his mind his previously-expressed views with regard
to Mississippi law of contract interpretation and the scope of the law of the case.
Second, we find that reassignment is advisable in order to preserve the
appearance of fairness to nonmovant Cooper Tire after it was denied an
opportunity for trial on the merits as mandated by the prior panel. Finally, we
find that concerns about waste and duplication do not outweigh the fairness
considerations since the underlying facts in the case are not exceptionally
complex, and it appears from the docket that the district court has yet to hold
any hearings.
3
On remand, the district court found that all three of Cooper Tire’s claims depended
entirely on the validity of the separation agreement. Cooper Tire II, 2007 U.S. Dist. LEXIS
1779 at *1. Because we hold that the separation agreement was not illegal and remand all
three of Cooper Tire’s claims for trial, we do not reach the question of whether the district
court’s holding that all of Cooper Tire’s claims depended on the agreement was correct.
However, we note that neither civil conspiracy nor intentional interference with business
relations requires the existence of a valid contract in order to state a claim. See Cooper Tire
I,
423 F.3d at 458–59 (outlining the elements for civil conspiracy and intentional interference
with business relations).
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No. 07-60128
V. CONCLUSION
We REVERSE the judgment of the district court granting summary
judgment in favor of Kaster and Farese and AFFIRM its order denying Cooper
Tire’s motions for sanctions and to place documents under seal. We REMAND
for trial on the merits in accordance with the prior panel’s holding, and for
reassignment by the Chief Judge of the Northern District of Mississippi to
another judge.
10
