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Central Soya Co. v. Voktas Inc.

October 1, 1981

CENTRAL SOYA COMPANY, INC., AN INDIANA CORPORATION AND CENTRAL SOYA INTERNATIONAL, INC., A PANAMANIAN CORPORATION, PETITIONERS,
v.
VOKTAS, INC., A GREEK CORPORATION, RESPONDENT



Petition for Permission to Appeal Under 28 U.S.C. § 1292(b) from an Interlocutory Order, United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 79-C-217 -- Gene B. Lee, Magistrate .

Before Fairchild, Senior Circuit Judge, and Pell and Cudahy, Circuit Judges.

Author: Per Curiam

Central Soya Company, Inc., and Central Soya International, Inc. ("defendants" or "Central Soya") seek leave to appeal an interlocutory order entered by United States Magistrate Lee and certified by him for appeal pursuant to 28 U.S.C. § 1292(b). Voktas, Inc. ("plaintiff" or "Voktas") has filed an answer in opposition to Central Soya's petition for permission to appeal. During its consideration of this petition, the court ordered, sua sponte, that the parties file additional memoranda as to whether a magistrate is empowered to certify a question for interlocutory appeal under 28 U.S.C. § 1292(b). We conclude that a United States Magistrate under these circumstances is authorized to make a Section 1292(b) certification and we grant leave to appeal.

I

The underlying dispute between Central Soya and Voktas arose out of Central Soya's manufacture and sale of allegedly defective chicken feed to Voktas. Voktas originally brought suit on August 13, 1979, in Indiana state courts seeking damages computed on several theories for breach of implied warranty of merchantability, implied warranty of fitness, express warranties, strict liability, negligence per se, etc. In state court, the parties have been engaged in a variety of pretrial discovery maneuvers. The state litigation remained pending at the time the instant petition was filed in this court.

On November 20, 1979, Voktas, plaintiff in the state court proceedings, filed an identical complaint in federal district court, apparently based on diversity jurisdiction, 28 U.S.C. § 1332(a)(2). Defendants assert that while the same parties, issues and factual contexts are before both courts,*fn1 plaintiff has made no effort to stay, dismiss or otherwise abate its state court action. After the consent of the parties, United States Magistrate Lee was designated to conduct the proceedings in the federal action. 28 U.S.C. § 636(c)(1).*fn2

On January 24, 1980, Central Soya moved in federal court for a stay of all proceedings in the federal action pending disposition of the prior state court action. Magistrate Lee denied the motion on July 21, 1980,*fn3 relying on Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976), Calvert Fire Insurance Co. v. American Mutual Reinsurance Co., 600 F.2d 1228 (7th Cir. 1979), and refusing to follow Burrows v. Sebastian, 448 F. Supp. 51 (N.D.Ill.1978). The magistrate, pursuant to 28 U.S.C. § 1292(b),*fn4 concluded his order in the following fashion:

The order denying defendants' motion for stay of proceedings being otherwise unappealable, this court now determines that such order involves a controlling question of law as to which there is substantial ground for a difference of opinion and that an immediate appeal from the order may materially advance the ultimate determination of the litigation; provided, however, that application for appeal hereunder shall not stay proceedings in this court.

This petition for leave to appeal followed.

During its deliberations on whether to permit this appeal, the court ordered additional memoranda of law on a magistrate's power to certify a question for interlocutory appeal under Section 1292(b), noting that while the Federal Magistrates Act, 28 U.S.C. § 631 et seq.,*fn5 speaks of the magistrate's power as equivalent to the district court's, Section 1292(b) calls for a statement in writing from the district judge.*fn6

II

The Federal Magistrates Act of 1979*fn7 enlarged the powers and responsibilities of federal magistrates by conferring on them the power under certain circumstances to conduct all proceedings in a jury or non-jury civil matter and order the entry of judgment in the case.*fn8 Once judgment is entered, an aggrieved party may appeal directly to the Court of Appeals from the magistrate's judgment "in the same manner as an appeal from any other judgment of a district court."*fn9 Before the 1979 amendments, magistrates, even when acting on consent of the parties, could not enter a final judgment directly appealable to the court of appeals. Rather, a magistrate's report and recommendation were reviewed first by the district court judge from whose final decision an appeal could be taken. Taylor v. Oxford, 575 F.2d 152 (7th Cir. 1978).*fn10

The issue we decide is whether these 1979 amendments, increasing the scope of a magistrate's jurisdiction to include entry of orders appealable as "any other judgment of the district court," extend to Section 1292(b) certifications, where a district judge's statement in writing is required. Our decision is hampered by Congress' failure to address the issue directly when enacting the amendment. However the sweep of the jurisdictional extensions permitting conduct of "any or all proceedings in a ... civil matter," § 636(c)(1), was sufficiently broad to include Section 1292(b) certification.

The legislative history of the 1979 amendments bears out this conclusion. The right of appeal to the court of appeals, or "case dispositive jurisdiction," was included in the general broadening of magistrates' powers and responsibilities. S.Rpt. 74, 96th Cong., 1st Sess., reprinted in (1979) U.S.Code Cong. & Admin.News 1469. Congress had before it the restrictive judicial interpretations of earlier versions of the act, id. at 4-5, (1979) U.S.Code Cong. & ...


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