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Gonzalez v. Volvo of America Corp.

decided: May 16, 1984.


Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 79-888-C -- S. Hugh Dillin, Judge.

Pell and Cudahy, Circuit Judges, and Wilkins, Senior District Judge.*fn* Cudahy, Circuit Judge, dissenting.

Author: Wilkins

WILKINS, Senior District Judge.

This product liability action arises out of an automobile accident which occurred on September 2, 1977, in the State of Arkansas. Plaintiff-appellee Judith Gonzalez, then a minor, was driving a 1974 Volvo automobile. Judith's parents and a younger brother were passengers. The vehicle was towing a trailer and hitch rented from defendant U-Haul Company of Central Indiana, Inc. [hereinafter U-Haul], when it left the road and rolled over. Both Judith and her mother Jennie were thrown from the car and injured; Jennie died from her injuries.

On March 3, 1978, plaintiff-appellee Roger Gonzalez, Sr., filed a personal injury wrongful death suit on behalf of daughter Judith and wife Jennie respectively in the United States District Court for the Western District of Arkansas. Jurisdiction was based on diversity of citizenship. 28 U.S.C. § 1332. The original complaint named only U-Haul as defendant, and the complaint was amended on September 5, 1978 to name appellant Volvo of America Corporation [hereinafter Volvo] as an additional defendant. On September 4, 1979, the complaint was dismissed as to U-Haul for lack of personal jurisdiction, and Roger thereupon on November 5, 1979 filed an action against U-Haul in the United States District Court for the Southern District of Indiana. Jurisdiction over the Indiana action was also based on diversity of citizenship.

On October 2, 1980, Roger successfully moved to transfer the Arkansas action to the Southern District of Indiana pursuant to 28 U.S.C. § 1404(a). In November, 1980, the two actions were consolidated for trial, and Roger was appointed for the first time as the personal representative of his deceased wife Jennie. On December 17, 1981, a fifth amended complaint was permitted to be filed naming both U-Haul and Volvo as defendants. In the amended complaint, Judith, having reached majority, sued on her own behalf for her personal injuries, and Roger sued as administrator of Jennie's estate on the wrongful death claim.

A jury trial was held in August, 1982. The jury returned a verdict in favor of the plaintiffs and against each defendant for $250,000 on the wrongful death claim brought by Roger as administrator of Jennie's estate, and for $216,000 on the personal injury claim of Judith. The district court entered judgment accordingly, and defendant Volvo appealed.

When jurisdiction is based on diversity of citizenship, a federal court must apply the substantive law of the forum state under the Erie doctrine, including the state's choice of law rules. Klaxon Company v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941); Goldberg v. Medtronic, Inc., 686 F.2d 1219, 1225 (7th Cir. 1982). However, when a defendant successfully moves to transfer a diversity action from one district court to another on the grounds of convenience and justice pursuant to 28 U.S.C. § 1404(a), the transferee court must apply the state law of the original forum. Van Dusen v. Barrack, 376 U.S. 612, 11 L. Ed. 2d 945, 84 S. Ct. 805 (1964). The rule announced in Van Dusen is designed to "ensure that the 'accident' of federal diversity jurisdiction does not enable a party to utilize a transfer to achieve a result in federal court which could not have been achieved in the courts of the State where the action was filed." Id. at 638. See also Piper Aircraft Co. v. Reyno, 454 U.S. 235, 70 L. Ed. 2d 419, 102 S. Ct. 252 (1981). Although the Supreme Court did not specifically decide whether the same rule applies to transfers initiated by a plaintiff, see Van Dusen, supra, 376 U.S. at 639-40, a few lower federal courts have reached this issue.

In the Sixth and Eleventh Circuits, the Van Dusen rule is applied to transfers initiated by the plaintiff unless the transferor court would not have been able to exercise personal jurisdiction over the defendant, Martin v. Stokes, 623 F.2d 469, 471 (6th Cir. 1980); Roofing & Sheet Metal Services, Inc. v. La Quinta Motor Inns, 689 F.2d 982, 991-93 (11th Cir. 1982), and the same rule has been approved by at least one district court in this circuit. Subacz v. Town Tower Motel Corp., 567 F. Supp. 1308 (N.D. Ind. 1983). If personal jurisdiction over the defendant was lacking in the original forum, the transferee court must apply the law of the state in which it sits, regardless of which party requested the transfer. Ellis v. Great Southwestern Corp., 646 F.2d 1099, 1110 (5th Cir. 1981); Martin v. Stokes, supra, 623 F.2d at 472; Roofing & Sheet Metal Services, Inc. v. La Quinta Motor Inns, supra, 689 F.2d at 992; Subacz v. Town Tower Motel Corp., supra, 567 F. Supp. at 1316. Thus plaintiffs are not permitted to capture favorable law of forums which lack personal jurisdiction over the defendant by filing suit there and then transferring the action to a state that is able to assert personal jurisdiction. However, when a plaintiff has exercised his choice of forum in the first instance by selecting a permissible forum, the state law of that forum should govern the action regardless of which party initiates a transfer. Martin v. Stokes, supra, 623 F.2d at 473. Because we agree that such an approach to plaintiff-initiated transfers under 28 U.S.C. § 1404(a) complements the policy underlying the Van Dusen rule, we adopt that approach here.

In the present case, appellant Volvo was first made a party in the Arkansas district court action on September 5, 1978. On September 4, 1979, the Arkansas federal court held that it had personal jurisdiction over Volvo, and on October 2, 1980 that court transferred the action to the Southern District of Indiana pursuant to plaintiffs' motion under 28 U.S.C. § 1404(a). Under these facts, the district court in Indiana should have applied the state law of the original forum, i.e., Arkansas. Because the interstate nature of this action implicates the laws of several jurisdictions, Arkansas choice of law rules also should have been applied. Kalmich v. Bruno, 553 F.2d 549, 552 (7th Cir. 1977), cert. denied, 434 U.S. 940, 54 L. Ed. 2d 300, 98 S. Ct. 432 (1977).

In tort actions involving parties from different states, Arkansas choice of law rules dictate that the substantive law of the state having the "most significant relationship" to the lawsuit be applied. Williams v. Carr, 263 Ark. 326, 565 S.W.2d 400, 404 (1978) (In Banc). In making this determination, the Arkansas rule requires consideration of several factors, including advancement of the forum state's governmental interests and application of the better rule of law. Id.; See also Williams v. American Broadcasting Companies, Inc., 96 F.R.D. 658, 662 (W.D. Ark. 1983). Application of the Arkansas choice of law rule may even result in the laws of different states being applied to separate issues in the same lawsuit. See, e.g., Wallis v. Mrs. Smith's Pie Co., 261 Ark. 622, 550 S.W.2d 453 (1977); Williams v. Carr, supra, 565 S.W.2d at 404.

Although the choice of law issue was raised directly or indirectly on at least two separate occasions before the Indiana district court, on neither occasion was the choice clearly made. In diversity cases where state substantive law supplies the rules of decision, the importance of making that choice cannot be underestimated. In the present action, for example, one of appellant's assignments of error pertains to the wrongful death claim regarding Jennie Gonzalez. If Indiana substantive law is applicable, decisions by the courts of that state indicate that a wrongful death cause of action for decedent Jennie Gonzalez no longer existed at the time plaintiff Roger Gonzalez was appointed as the personal representative of his wife's estate. Warrick Hospital, Inc. v. Wallace, 435 N.E.2d 263 (Ind.Ct.App. 1982); General Motors Corp. v. Arnett, 418 N.E.2d 546 (Ind.Ct.App. 1981). The same conclusion appears likely under the Arkansas wrongful death statute, but the language of the decisions by courts in that state is less clear. See, e.g., Sandusky v. First Electric Cooperative, 266 Ark. 588, 587 S.W.2d 37 (1979). As if to amplify the necessity for the district court to have made a clear choice of law, plaintiffs-appellees now argue, apparently for the first time on appeal, that the California wrongful death statute should govern.

A number of other issues were raised on appeal by appellant Volvo, particularly with regard to product liability on the part of Volvo. Until a proper choice of law is made, however, these and other issues of substantive law cannot be resolved. We express no opinion on their proper resolution at this time. Because we have determined that a new trial in this action is necessitated in any event, we will remand the matter to the district court for application of the Arkansas choice of law rules in the first instance.

Volvo has also argued on appeal that a new trial is required because of the misconduct of plaintiffs' counsel during closing argument. Volvo acknowledges, however, that it made no contemporaneous objections to plaintiffs' argument before the trial court. It is well-settled that objections not raised at trial ordinarily may not be raised upon appeal. Pietrucha v. Grant Hospital, 447 F.2d 1029, 1039 (7th Cir. 1971) (Pell, J., dissenting); Rothschild v. Drake Hotel, Inc., 397 F.2d 419, 425 (7th Cir. 1968). The purpose of this rule is to inform the trial judge of possible errors so that he may have an opportunity to correct them. Ries v. Lynskey, 452 F.2d 172, 179 (7th Cir. 1971). In the absence of a contemporaneous objection, reviewing courts will reverse only in extraordinary situations, in order to correct plain prejudicial error or to prevent a plain miscarriage of justice. Sadowski v. Bombardier Ltd., 539 F.2d 615, 618 (7th Cir. 1976); Lange v. Schultz, 627 F.2d 122, 127 (8th Cir. 1980).

The trial judge does not sit as a passive observer who functions solely when called upon by the parties, but is required instead to assure that each litigant is accorded a fair trial. Pingatore v. Montgomery Ward & Co., 419 F.2d 1138, 1143 (6th Cir. 1969), cert. denied, 398 U.S. 928, 26 L. Ed. 2d 90, 90 S. Ct. 1818 (1970), quoting Brown v. Walter, 62 F.2d 798, 799-800 (2d Cir. 1933). When examining allegations of misconduct during closing arguments, appellate courts have recognized that frequent objections by counsel serve to emphasize the prejudicial statements made by opposing counsel and risk antagonizing the jury. Werner v. Upjohn Co., Inc., 628 F.2d 848, 854 (4th Cir. 1980). Thus when a party's right to a fair trial has been substantially prejudiced by the actions of opposing counsel so as to result in plain or fundamental error if uncorrected, the appellate court may order a new trial in spite of the absence ...

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