DeLoach v. Philip Morris USA ( 2004 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
D. LAMAR DELOACH; WILLIAM G. 
HYMAN; HYMAN FARMS,
INCORPORATED; GUY W. HALE; JAMES
R. SMITH; HOUSTON T. EVERETT; D.
KEITH PARRISH,
Plaintiffs-Appellees,
v.
LORILLARD TOBACCO COMPANY;
PHILIP MORRIS USA, INCORPORATED,
Defendants-Appellants,
and
R.J. REYNOLDS TOBACCO COMPANY,  No. 04-1923
Defendant-Appellee,
and
PHILIP MORRIS INTERNATIONAL; R.J.R.
NABISCO HOLDINGS CORPORATION;
B.A.T. INDUSTRIES, PLC; BRITISH
AMERICAN TOBACCO COMPANY
LIMITED; J. P. TAYLOR COMPANY,
INCORPORATED; SOUTHWESTERN
TOBACCO COMPANY, INCORPORATED;
DIMON, INCORPORATED; STANDARD
COMMERCIAL CORPORATION;

2 DELOACH v. LORILLARD TOBACCO CO.
PHILIP MORRIS INTERNATIONAL; LOEWS 
CORPORATION; R.J.R. NABISCO,
INCORPORATED; UNIVERSAL LEAF
CORPORATION,
Defendants.

DAVID DIPERNA,
Claimant,
JIMMY K. LEE; W. DENNY LEE; DALE
R. LUCAS; SAMMY TANT,
Movants.

Appeal from the United States District Court
for the Middle District of North Carolina, at Durham.
William L. Osteen, District Judge.
(CA-00-1235-1)
Argued: October 26, 2004
Decided: December 6, 2004
Before NIEMEYER, MICHAEL, and MOTZ, Circuit Judges.
Affirmed in part and reversed in part by published opinion. Judge
Niemeyer wrote the opinion, in which Judge Michael and Judge Motz
joined.
COUNSEL
ARGUED: David Boies, BOIES, SCHILLER & FLEXNER, L.L.P.,
Armonk, New York; James T. Williams, Jr., BROOKS, PIERCE,
MCLENDON, HUMPHREY & LEONARD, Greensboro, North Car-
DELOACH v. LORILLARD TOBACCO CO. 3
olina, for Appellants. Alan Mitchell Wiseman, HOWREY, SIMON,
ARNOLD & WHITE, L.L.P., Washington, D.C., for Appellees. ON
BRIEF: Larry B. Sitton, Gregory G. Holland, SMITH MOORE,
L.L.P., Greensboro, North Carolina; Carl J. Nichols, BOIES, SCHIL-
LER & FLEXNER, L.L.P., Washington, D.C., for Appellant Philip
Morris USA, Inc. Mack Sperling, Jennifer K. Van Zant, BROOKS,
PIERCE, MCLENDON, HUMPHREY & LEONARD, Greensboro,
North Carolina, for Appellant Lorillard Tobacco Company. Alexan-
der J. Pires, Jr., CONLON, FRANTZ, PHELAN & PIRES, L.L.P.,
Washington, D.C.; Stuart H. Harris, Thomas A. Isaacson, Joseph A.
Ostoyich, HOWREY, SIMON, ARNOLD & WHITE, L.L.P., Wash-
ington, D.C.; Richard M. Hutson, HUTSON, HUGHES & POWELL,
Durham, North Carolina, for Appellees. W. Andrew Copenhaver,
WOMBLE, CARLYLE, SANDRIDGE & RICE, P.L.L.C., Winston-
Salem, North Carolina; Sean E. Andrussier, WOMBLE, CARLYLE,
SANDRIDGE & RICE, P.L.L.C., Raleigh, North Carolina, for Appel-
lee R.J. Reynolds Tobacco Company.
OPINION
NIEMEYER, Circuit Judge:
In this appeal, we determine the impact on a settlement agreement,
partially resolving a class action, of a second settlement agreement
resolving the remainder of the same action.
Tobacco farmers commenced this antitrust class action against sev-
eral tobacco manufacturers and dealers, alleging that the defendants
conspired to violate the federal antitrust laws. The parties, except for
R.J. Reynolds Tobacco Company ("RJR"), settled the case with a set-
tlement agreement dated May 15, 2003 (the "First Settlement Agree-
ment"). The First Settlement Agreement included two provisions for
adjusting benefits to the plaintiff Class, and the triggering of these
adjustments depended on the existence and timing of a later settle-
ment agreement with RJR. The first provision adjusted the monetary
payments that the settling defendants agreed to make to the Class
based on the terms of any settlement that the Class might reach with
RJR "on or before the day before the first day of trial." The second
4 DELOACH v. LORILLARD TOBACCO CO.
provision adjusted the amounts of tobacco that the settling manufac-
turers agreed to purchase from Class members based on the terms of
any settlement that the Class might enter into with RJR "before the
beginning of trial."
The tobacco farmer Class did subsequently enter into a settlement
agreement with RJR dated April 22, 2004 (the "RJR Settlement" or
the "Second Settlement"). The district court found that the RJR Settle-
ment was "reached" when it was signed on April 22, 2004, which was
also the date scheduled for the beginning of trial. On motions filed by
settling defendants Philip Morris USA, Inc. ("Philip Morris") and
Lorillard Tobacco Company ("Lorillard") to trigger the adjustments
available in the First Settlement Agreement based on the RJR Settle-
ment, the district court entered an order dated June 4, 2004, conclud-
ing that the settling defendants were not entitled to either of the
adjustments because the RJR Settlement was not reached or entered
into before the triggering times specified in the First Settlement
Agreement. Philip Morris and Lorillard appealed.
For the reasons given hereafter, we deny the Class’s motion to dis-
miss this appeal based on its assertions (1) that the language of the
First Settlement Agreement made the district court’s resolution of the
issues "non-appealable" and (2) that the district court’s order inter-
preting the First Settlement Agreement was not a final appealable
order. Because we conclude that the district court was not clearly
erroneous in finding as a fact that the RJR Settlement was "reached
after the day before the first day of trial," we affirm the district court’s
denial of the adjustment for any monetary payment required by the
First Settlement Agreement. We reverse, however, the district court’s
legal interpretation of the First Settlement Agreement that the RJR
Settlement was not "entered before the beginning of trial." Thus, we
affirm in part and reverse in part.
I
In February 2000, seven tobacco farmers commenced this antitrust
action against Philip Morris, Lorillard, Brown & Williamson Tobacco
Corporation, RJR, and several leaf tobacco dealers, alleging that the
defendants conspired to fix prices at tobacco auctions and to reduce
tobacco growing quotas, in violation of the Sherman Act. The tobacco
DELOACH v. LORILLARD TOBACCO CO. 5
farmers purported to represent a class of hundreds of thousands of
tobacco farmers that the district court certified as a class on April 3,
2002, describing the class as:
(1) all persons (including corporations and other entities)
holding a quota [under the Federal Tobacco Program] to
grow flue-cured or burley tobacco in the United States at
any time from February 1996 to the present and (2) all
domestic producers of flue-cured or burley tobacco who
sold such tobacco in the United States at any time from Feb-
ruary 1996 to the present.
On May 15, 2003, the tobacco farmers Class and all of the defen-
dants, except RJR, entered into the First Settlement Agreement, and
the district court approved that agreement on October 1, 2003.
The First Settlement Agreement provided two principal benefits to
the tobacco farmers Class: (1) two cash payments consisting of a first
installment of $135 million and a later conditional installment of $65
million, and (2) a commitment by the settling manufacturers to pur-
chase U.S.-grown leaf tobacco in specified amounts over specified
years. Each of these commitments was subject to a reduction adjust-
ment should the Class enter into a settlement with RJR during a speci-
fied period. The second payment of $65 million was subject to a
proportionate reduction if the plaintiff Class "reached" settlement
with RJR "on or before the day before the first day of trial." And the
manufacturers’ agreement to purchase U.S.-grown tobacco was sub-
ject to a "most favored nations clause" under which the settling manu-
facturers’ obligations under the First Settlement Agreement would be
"no less favorable" to them "than those terms agreed to" in any agree-
ment with RJR. The adjustment, however, applied only if a settlement
with RJR was "entered before the beginning of trial."
Following the district court’s approval of the First Settlement
Agreement on October 1, 2003, the litigation continued against RJR,
and trial was ultimately scheduled to commence on April 22, 2004,
at 9:00 a.m.
During a settlement conference between counsel for the Class,
counsel for RJR, and the district judge on Friday, April 16, 2004,
6 DELOACH v. LORILLARD TOBACCO CO.
counsel for RJR explained that it had not settled the case earlier
because "we assumed we were going to try the case because the set-
tlement for us late would have been prohibitive. That clause [the most
favored nations clause] ends, as I understand it, the day before the
trial." The court recognized the problem for a settlement, explaining,
"A final agreement, in my opinion, if you reach an agreement, should
come only after the impaneling of the jury." The court stated further
that it saw "nothing wrong[ ] in an attempt to settle this case today,
with an understanding that this case will not be settled, if it is settled,
until next Thursday when we impanel a jury." Later on April 16, after
the court had left the attorneys to discuss settlement further, the par-
ties indicated to the court that they had neared — if not reached —
a tentative settlement. The district judge recalled, about that report:
I heard that there was some agreement, or each of the parties
at least had indicated, and this was some time later, that an
amount of poundage and an amount of payment was, in fact,
within the realm of what each one of them thought they
could do. I indicated that I thought one of those two figures
was not what it should be, and I asked them to go back and
talk.
And we came back and talked about the matter. And at that
time, I think [Class counsel] indicated that is where they
were at that point, and then [it] was a matter that he could
take up with his clients. . . . And that after that, both sides
indicated that they, I thought, said, I think we can work this
out.
The following Monday, April 19, Class counsel assured counsel for
Philip Morris that no settlement with RJR had been reached. Accord-
ingly, as required by the First Settlement Agreement, on April 21 —
the day before the trial was scheduled to commence — Philip Morris
wired the second installment of $65 million to the Class.
On the morning of April 22 when the jury venire was in the jury
room and the judge in his chambers, the Class and RJR signed the
Second Settlement Agreement at the courthouse and submitted it to
the court. When the district judge entered the courtroom, he stated:
DELOACH v. LORILLARD TOBACCO CO. 7
Good morning, everybody. I believe that I have heard that
we have some signed papers. I have in chambers just
reviewed some papers, which I find to be in order. And we
will talk more about that in a few moments. But we do have
a number of people waiting upstairs who have given of their
time to be here.
So, without objection, I’m going to bring those jurors down
at this point and let them go.
I do believe that the papers are signed now. Is that correct,
Mr. Wiseman?
When counsel for both parties confirmed that the papers had been
signed, the jury panel was called into the courtroom and told, "[J]ust
about five minutes ago, the parties have signed an agreement in this
case, and the agreement is that they have settled their differences.
. . . For that reason, you are not going to have to serve as a juror in
this case." The court then released the venire. On the same day, the
district court preliminarily approved the RJR Settlement, subject to
the class action notice and final approval procedure.
The RJR Settlement contained the same two components as were
included in the First Settlement Agreement. RJR agreed to pay the
class $33 million in cash and agreed to purchase from Class members
35 million pounds of tobacco annually for at least 10 years — for a
total of 350 million pounds. The court observed with approval that the
35 million pounds per year RJR agreed to purchase, coupled with the
405 million pounds per year agreed to by the other manufacturers,
provided a total commitment to purchase 440 million pounds of
tobacco each year.
Because of the RJR Settlement, a week later Philip Morris filed a
motion for the return of its second settlement payment in the amount
of $65 million and for discovery relating to the RJR Settlement, and
both Philip Morris and Lorillard filed notices with the court of the
triggering of the most favored nations clause in the First Settlement
Agreement. They argued that the Class and RJR had reached a settle-
ment on April 16, or at least by April 21, and that even if the RJR Set-
8 DELOACH v. LORILLARD TOBACCO CO.
tlement had not been entered into until April 22, at that time the trial
had not yet "begun."
The district court issued an order on June 4, 2004, denying Philip
Morris’s motion for return of the $65 million payment and concluding
that the most favored nations clause had not been triggered. The dis-
trict court found "that the earliest the settlement was reached was
April 22, 2004, the date on which it was signed," and since this was
"after the day before the first day of trial, [Philip Morris] [was] not
entitled to a reduction of its Second Settlement Payment." With
respect to the most favored nations clause, which would not have
been triggered if the trial had begun, the district court recognized con-
flicting authority for when a trial "begins" and reasoned that because
there is a public policy against the strict enforcement of most favored
nations clauses, "a settlement entered into on the day trial was sched-
uled to start, at the time the case was called for trial, with a jury
venire present, was not entered into before the beginning of trial." It
thus rejected all of Philip Morris and Lorillard’s claims for adjust-
ments under the First Settlement Agreement based on the RJR Settle-
ment.
From the district court’s June 4 order, Philip Morris and Lorillard
filed this appeal. Thereafter, the Class filed a motion to dismiss this
appeal, contending that the First Settlement Agreement bars appel-
lants’ resort to this court for interpretation of the settlement agree-
ment’s terms. They relied on § 4.8 of the First Settlement Agreement,
which provides that any unresolved disputes relating to the tobacco
leaf volume commitments must be brought to the district court for its
"final and non-appealable resolution," and § 12.4(c), which provides
"continuing and exclusive jurisdiction over the Settlement, including
its administration," in the district court. The Class also argues in their
brief that the district court’s order was not an appealable order under
28 U.S.C. § 1291.
II
At the outset, we address the Class’s motion to dismiss the appeal
based on contractual waiver and an absence of finality of the district
court’s order. We address its arguments in order.
DELOACH v. LORILLARD TOBACCO CO. 9
A
Pointing to §§ 4.8 and 12.4(c) of the First Settlement Agreement,
the Class contends that the appellants agreed to waive any right to
appeal. The Class argues that these sections evidence the parties’
intent "to streamline dispute resolution through mediation and non-
appealable district court resolution." Section 4.8 states that "[i]n the
event of a disagreement regarding . . . compliance with the [tobacco
leaf] volume commitments, the parties shall first engage in mediation.
. . . If the parties are still unable to resolve their disputes, the parties
shall bring the matter to the [district court] for its final and non-
appealable resolution." The Class argues that the dispute over the
most favored nations clause is "a disagreement regarding . . . compli-
ance with the [tobacco leaf] volume commitments" that is addressed
in § 4.8. And section 12.4(c) reserves to the district court "continuing
and exclusive jurisdiction over the Settlement, including its adminis-
tration." The Class argues that "the only construction that here gives
meaning to both ’continuing’ and ‘exclusive’ is one that bars appel-
late jurisdiction."
The First Settlement Agreement provides that North Carolina law
governs its interpretation, and the parties agree that we are to apply
North Carolina law. Under that State’s law, as under general princi-
ples of contract law, our task is to "give ordinary words their ordinary
meanings." Internet East, Inc. v. Duro Communications, Inc., 553
S.E.2d 84, 87 (N.C. Ct. App. 2001); see also Harris v. Latta, 259
S.E.2d 239, 241 (N.C. 1979) ("In construing contracts ordinary words
are given their ordinary meaning unless it is apparent that the words
were used in a special sense"); Weyerhaeuser Co. v. Carolina Power
& Light Co., 127 S.E.2d 539, 541 (N.C. 1962) ("When the language
of a contract is clear and unambiguous, effect must be given to its
terms, and the court, under the guise of constructions, cannot reject
what the parties inserted or insert what the parties elected to omit").
"If the plain language of a contract is clear, the intention of the parties
is inferred from the words of the contract." Walton v. City of Raleigh,
467 S.E.2d 410, 411 (N.C. 1996); see also Fidelity Bankers Life Ins.
Co. v. Dortch, 348 S.E.2d 794, 796 (N.C. 1986).
Giving the language of the First Settlement Agreement its ordinary
and natural meaning, we do not read §§ 4.8 and 12.4(c) to support the
10 DELOACH v. LORILLARD TOBACCO CO.
Class’s motion to dismiss. While the most favored nations clause, if
triggered, would affect the volume of appellants’ purchase commit-
ments, this action is not "a disagreement regarding . . . compliance"
with those commitments, as governed by § 4.8. Rather, it is a dispute
over the interpretation of a contractual term in another section of the
agreement.
Similarly, we conclude, given the provision’s plain language, that
the Class’s reading of § 12.4(c) is too broad. The district court’s
maintenance of "continuing and exclusive jurisdiction" over an agree-
ment is not inconsistent with this court’s exercise of appellate juris-
diction to review the district court’s orders. Cf. Marino v. Pioneer
Edsel Sales, Inc., 349 F.3d 746, 753 (4th Cir. 2003) (discussing "con-
tinuing jurisdiction" in terms of a district court’s ability to resolve dis-
putes related to its prior orders); Meade v. Meade, 812 F.2d 1473,
1476 (4th Cir. 1987) (noting that a "presumption of continuing and
exclusive jurisdiction" in one state court discourages resort to the
courts of a second state). Indeed, § 12.4(c) does not include any "non-
appealability" language.
Accordingly, we deny the Class’s motion to dismiss the appeal
based on the contractual language of §§ 4.8 and 12.4(c) of the First
Settlement Agreement.
B
The Class also asserts that the portion of the district court’s order
addressing the most favored nations clause is not a final judgment
because it does not resolve all claims for all parties. The Class points
to the district court’s continuing administration and "oversight of [the
tobacco] leaf commitments (to which the [most favored nations
clause] relates) and resolution of conflicts thereunder." Moreover, it
notes that the RJR portion of the litigation is still not finally resolved.
First, we note that there are no pending issues about whether set-
tling defendants have complied or will comply with tobacco purchase
commitments. When such an issue arises, if it does arise at all, it will
be addressed by the settlement agreements and by the district court’s
continuing jurisdiction — a jurisdiction that is analogous to a court’s
jurisdiction over an injunction. But the issues before us are not of that
DELOACH v. LORILLARD TOBACCO CO. 11
character. They relate to the discrete issue of whether the RJR Settle-
ment triggers the adjustments provided for in the First Settlement
Agreement. If the district court’s order determining that the provi-
sions of the First Settlement Agreement are not triggered by the RJR
Settlement is a final order with respect to the monetary payment
under the First Settlement Agreement, as the parties seem to agree, it
follows that it is also a final order with respect to the district court’s
determination that the most favored nations clause is not triggered by
the RJR Settlement. For, the interpretation and application of the First
Settlement Agreement will not be subjected to any further trial or
legal analysis by the district court.
This conclusion is apparent because post-settlement orders, of the
kind before us, resolve completely the post-settlement issues raised
and do not present the same risks for piecemeal appeal that prejudg-
ment orders do. Thus, we agree with the Third Circuit’s approach to
issues arising in connection with settlement agreements, finding it
appropriate "that the requirement of finality be given a ‘practical
rather than a technical construction.’" Plymouth Mut. Life Ins. Co. v.
Ill. Mid-Continent Life Ins. Co., 378 F.2d 389, 391 (3d Cir. 1967)
(quoting Gillespie v. U.S. Steel Corp., 379 U.S. 148, 152 (1964)). The
court there continued, "this is especially so when supplementary post-
judgment orders are involved, because the policy against and the
probability of avoidable piecemeal review are less likely to be deci-
sive after judgment than before." Id. The court concluded that an
alleged denial of a bargained-for right in a settlement agreement is
immediately appealable as a final order under 28 U.S.C. § 1291. See
id.
Accordingly, we also reject this ground advanced by the Class to
dismiss this appeal.
III
On the merits, Philip Morris first contends that the RJR Settlement
was "reach[ed] . . . on or before the day before the day of trial," and
that thereby it was entitled to a payment reduction as provided in the
First Settlement Agreement. Acknowledging that the RJR Settlement
was actually signed on April 22 and therefore "entered" on the first
day of trial, which was scheduled for April 22, Philip Morris argues
12 DELOACH v. LORILLARD TOBACCO CO.
that agreement underlying the RJR Settlement was "reached" on April
16, 2004, or at the latest, on April 21, the day before the first day of
trial. And because agreement was "reached," as distinct from "en-
tered," at the latest on the day before the first day of trial, its second
payment of $65 million is to be reduced as provided in § 2.1.1 of the
First Settlement Agreement.
Section 2.1.1(B) provides that RJR shall make its second payment
of $65 million "on the day before the first day of trial against any
Non-Settling Defendant," but "in the event that Plaintiffs in the Class
reach settlements with all Non-Settling Defendants, any Second Set-
tlement Payment, as reduced herein, shall be made by Philip Morris
USA 5 days after the last of such settlements receives final approval
by the Court." The reduction of this second payment is provided for
in § 2.1.1(C), which states in full:
In the event that Plaintiffs and the Class reach settlements
with one or more Non-Settling Manufacturer Defendant(s)
[i.e., RJR] on or before the day before the first day of trial
against any Non-Settling Defendant, the Second Settlement
Payment shall be reduced by 50 cents for each dollar actu-
ally received pursuant to such settlement exclusive of legal
fees and costs. Philip Morris USA shall not receive any
refund of its contribution to the First Settlement Payment;
the maximum benefit to Philip Morris USA of this sub-
section will be to reduce the Second Settlement Payment to
zero.
(emphasis added). By reason of this provision, Philip Morris asserts
that the RJR Settlement triggered a reduction to which it is now enti-
tled.
The district court found as a fact that the parties had not "reached"
an agreement until they signed the written document on April 22, and
we review the district court’s factual finding for clear error. See Hens-
ley v. Alcon Labs., Inc., 277 F.3d 535, 541 (4th Cir. 2002).
As a preliminary matter, we conclude that the words "reaches" and
"enters into" are not used synonymously in the First Settlement
Agreement. Since we treat settlement agreements as contracts, we
DELOACH v. LORILLARD TOBACCO CO. 13
must attempt to "give ordinary words their ordinary meanings." Inter-
net East, 553 S.E.2d at 87; see also Harris, 259 S.E.2d at 241;
Weyerhaeuser Co., 127 S.E.2d at 541. The First Settlement Agree-
ment uses the terms in different circumstances. It provides that it "is
entered into this 15th day of May"; that "this Agreement has been
reached as a result of the mediation efforts, subject to the preliminary
approval of the Court and Final Approval"; and, that "it is in the best
interest of the Class to enter into this Agreement." (Emphases added).
These uses of "enters into" and "reaches" indicate that "enters into"
equates with "executes," and "reaches" refers to the process of coming
to an agreement, a conclusion that is reenforced by the tenses used
with the various terms. This use of the terms, moreover, is consistent
with dictionary meanings. Webster, for example, defines "reach" as
"to arrive at[,] get up to or as far as[, or] come to" and defines "enter
into" as "to make oneself a party to or in." Webster’s Third New
International Dictionary 757, 1888 (Merriam-Webster, Inc. ed.,
1993).
Thus, while we agree with Philip Morris that the terms "reached"
and "entered into" have been used differently, see, e.g., NationsBank
of N.C., N.A. v. Am. Doubloon Corp., 481 S.E.2d 387, 389 (N.C. Ct.
App. 1997) (using the terms distinctly), our review of the evidence in
this case nonetheless leads us to conclude that the district court was
not clearly erroneous in finding that the RJR Settlement was neither
reached nor entered into prior to April 22.
To determine whether a settlement agreement has been reached, we
look "to the objectively manifested intentions of the parties." Moore
v. Beaufort County, N.C., 936 F.2d 159, 162 (4th Cir. 1991). As the
district court noted, details remained to be worked out as of April 16,
and "the magnitude of this settlement was such that the sophisticated
parties involved would never have reached a final agreement without
a signed writing." In addition, the district court made much of the lan-
guage of the signed RJR Settlement agreement, including the fact that
it names April 22 as the effective date and includes a merger clause
indicating an intent not to be bound by any previous agreements.
While these might not be conclusive indications that the Class and
RJR had not come to an agreement before April 22, we cannot con-
clude on the record before us that the district court’s finding was
clearly erroneous.
14 DELOACH v. LORILLARD TOBACCO CO.
Because we affirm the district court’s finding that the RJR Settle-
ment was not reached "on or before the day before the first day of
trial," Philip Morris is not on this basis entitled to a return or reduc-
tion of its second settlement payment made to the Class.
IV
Referring to different language in the First Settlement Agreement,
Philip Morris and Lorillard contend that the RJR Settlement was "en-
tered before the beginning of trial" and that thereby they were enti-
tled, under the most favored nations clause, to a reduction of their
tobacco purchase obligations. Noting that when the RJR Settlement
was signed, the jury selection process had not yet begun, they argue
that jury selection is "the earliest that any court has determined a civil
trial to commence." They point in particular to the North Carolina
Supreme Court’s statement in Pratt v. Bishop, 126 S.E.2d 597 (N.C.
1962), defining when a trial commences. That court stated:
When a trial commences is a difficult question, and the
answer may vary according to the statute being construed
and according to the circumstances in a particular case. "In
general, it has been held that the trial begins when the jury
are called into the box for examination as to their qualifica-
tions — when the work of impaneling the jury begins —
and that the calling of a jury is part of the trial." 53 Am-Jur.,
Trial, Section 4. . . . Once the case is reached on the calen-
dar and the jury called into the box, "the hurry of a trial" has
begun . . . .
Id. at 610.
Finding no clear and consistent precedent for when a trial begins,
the district court held that the parties’ intent, revealed by the overall
context of the First Settlement Agreement, generally anticipated a
triggering point at some time in the "period between the First Settle-
ment and the starting date of trial." Believing that this intent was a
more generalized idea of when the trial began than that urged by
Philip Morris and Lorillard, the court held that "a settlement entered
into on the day trial was scheduled to start, at the time the case was
DELOACH v. LORILLARD TOBACCO CO. 15
called for trial, with a jury venire present, was not entered into before
the beginning of trial."
Arguing in support of this interpretation, the Class observes that
trial was scheduled to commence at 9:00 a.m. on April 22, 2004, and
that the RJR Settlement Agreement was not signed until "approxi-
mately 9:30 a.m., well after the scheduled start of trial." Reiterating
the district court’s analysis, the Class contends that because there is
"no uniform definition of when trial begins," the district court was
free to conclude, as a matter of legal interpretation, that the beginning
of trial simply meant the scheduled start of trial. The Class points to
the example where a rule requires that an act be accomplished a spe-
cific number of days "before trial," see, e.g., M.D.N.C. R. 40.1, and
argues that the rule must be referring to the scheduled trial date.
The facts relevant to resolution of this issue are not in dispute. On
the day scheduled for trial — April 22, 2004 — the parties to the RJR
Settlement signed the written agreement in the courthouse. At the
time that the agreement was signed, the jury was in the jury room
waiting for trial to begin, and the district judge was in his chambers.
When the judge entered the courtroom to begin trial, it was clear that
at that time the RJR Agreement had already been signed. As the judge
stated, after saying good morning, "I have heard that we have some
signed papers." To confirm that, the district judge addressed counsel
for both parties, inquiring whether the RJR Agreement had been
"signed now," and both counsel responded affirmatively. The jury,
which was still outside of the courtroom, was called into the court-
room and advised, "Just about five minutes ago," the parties signed a
settlement agreement.
With these facts, the question is whether the RJR Settlement was
signed "before the beginning of trial," as that term is used in the First
Settlement Agreement. This is a question of law that we review de
novo. See Williams v. Prof’l Transp. Inc., 294 F.3d 607, 613 (4th Cir.
2002).
The provision of the First Settlement Agreement in question, § 7.1,
is included under the heading "Most Favored Nations Clause" and
reads:
16 DELOACH v. LORILLARD TOBACCO CO.
In recognition of, among other things, Philip Morris USA’s,
Lorillard’s and B&W’s role as the first defendants to settle
and their lead roles in initiating and pursuing settlement,
Plaintiffs and the Class agree that certain terms of this
Agreement shall be no less favorable to Philip Morris USA,
Lorillard and B&W than those terms agreed to in future set-
tlements with any Non-Settling Manufacturer Defendant.
. . . This Section 7 [most favored nations clause] applies
only to settlements entered before the beginning of trial, but
not to any settlements entered thereafter. Plaintiffs’ Co-Lead
Counsel presently intend to conclude any trial commenced
against a Non-Settling Manufacturer Defendant [RJR].
(Emphasis added). The highlighted phrase is the language at issue
here.
Although the beginning of trial is a specific and identifiable
moment, that moment may depend on the particular trial that is being
conducted and the issue for which the "beginning" must be deter-
mined. The beginning of a federal court trial may be different from
the beginning of a state court trial; the beginning of a civil trial may
be different from the beginning of a criminal trial; the beginning of
a jury trial may be different from the beginning of a court trial; and
the beginning of a court trial may be different from the beginning of
an arbitration. And even within any given type of trial, the "begin-
ning" may be different for each issue for which it must be determined.
For example, in the criminal context, jeopardy does not attach for
double jeopardy purposes "until a defendant is ‘put to trial before the
trier of facts.’" Serfass v. United States, 420 U.S. 377, 388 (1975)
(quoting United States v. Jorn, 400 U.S. 470, 479 (1971)). This
occurs "when a jury is empaneled and sworn" or, in a nonjury trial,
"when the court begins to hear evidence." Id.; see also United States
v. Shafer, 987 F.2d 1054, 1057 (4th Cir. 1993). For purposes of the
Federal Speedy Trial Act, however, we have held that the criminal
trial commences with voir dire. See United States v. A-A-A Elec. Co.,
788 F.2d 242, 246 (4th Cir. 1986); see also United States v. Whitaker,
722 F.2d 1533, 1535 (11th Cir. 1984); United States v. Manfredi, 722
F.2d 519, 524 (9th Cir. 1983); United States v. Howell, 719 F.2d
1258, 1262 (5th Cir. 1983); United States v. New Buffalo Amusement
Corp., 600 F.2d 368, 376 (2d Cir. 1979). With respect to an offer of
DELOACH v. LORILLARD TOBACCO CO. 17
judgment in a civil case under Federal Rule of Civil Procedure 68,
which provides that, "at any time more than 10 days before the trial
begins, a party defending against a claim may serve upon the adverse
party an offer to allow judgment to be taken against the defending
party" (emphasis added), a district court has observed:
[A]lthough a trial may formally "begin" with the selection
of the jury for some purposes, for the purpose of Rule 68,
the trial begins when the trial judge calls the proceedings to
order and actually commences to hear the case. Where . . .
the impanelling of a jury precedes the presentation of evi-
dence and arguments by several weeks or months, this inter-
pretation furthers the policy of Rule 68 by permitting offers
of judgment to be made, and perhaps accepted, in the inter-
vening period.
Greenwood v. Stevenson, 88 F.R.D. 225, 229 (D.R.I. 1980). Thus, the
beginning of trial may be determined not only by the specific type of
trial at issue but also by the issue to which that determination might
relate.
As a general matter, it cannot be disputed that a "trial" is the judi-
cial proceeding during which the law and the facts are examined to
determine the issues between the parties. Accordingly, the beginning
of this proceeding must be the first meaningful act in actually con-
ducting the proceeding. And depending on the issue for determining
what the first meaningful act is, the beginning of trial may be when
the court calls the proceeding to order; or when the court calls the
proceeding to order and all of the actors are present in the courtroom,
including the jury venire; or when the process for the selection of the
jury begins; or when the jury is impaneled; or when the opening state-
ments are made; or when the first witness is called. Regardless of
which act is the relevant meaningful act, no suggestion has been made
that a trial ever begins before the judge first enters the courtroom to
begin the trial proceedings. See, e.g., Greenwood, 88 F.R.D. at 229;
Pratt, 126 S.E.2d at 610.
Because of the undisputed facts relevant here, we need not fix on
any one meaningful act to describe the beginning of trial because the
RJR Settlement was indisputably signed even before the district judge
18 DELOACH v. LORILLARD TOBACCO CO.
entered the courtroom to begin the trial. We therefore conclude that
the RJR Agreement was signed (or "entered") before the beginning of
trial. Under the First Settlement Agreement, this means that the most
favored nations clause was triggered.
The district court had well-considered pragmatic reasons for reach-
ing its conclusion on this issue, but in doing so it meaningfully
rewrote the First Settlement Agreement by interpreting the "beginning
of trial" to mean "the day trial was scheduled to start." This was error,
and accordingly we reverse this ruling.
V
In summary, we deny the Class’s motion to dismiss; we affirm the
district court’s finding that agreement on the RJR Settlement Agree-
ment was reached on April 22, 2004, and its ruling that therefore the
reduction of the second payment under the First Settlement Agree-
ment was not triggered; and we reverse the district court’s ruling that
the RJR Agreement was not entered before the beginning of trial and
that the most favored nations clause therefore was not triggered.
AFFIRMED IN PART AND REVERSED IN PART