Korczak, Kevin M. v. Sedeman, Faizel ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-2698
KEVIN KORCZAK, et al.,
Plaintiffs-Appellees,
v.
FAIZEL SEDEMAN, et al.,
Defendants-Appellees.
APPEAL OF TARKWIN ENRICK.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 01 C 9739—William J. Hibbler, Judge.
____________
SUBMITTED AUGUST 3, 2005—DECIDED OCTOBER 5, 2005
____________
Before BAUER, POSNER and WOOD, Circuit Judges.
POSNER, Circuit Judge. The underlying suit, which we’ll
call suit number 1, is a diversity suit, governed by Illinois
law, for damages arising from an automobile accident. A
jury determined that both drivers had been negligent, and
the judge entered judgment against them in accordance with
the verdict. Enrick, a passenger in one of the cars, brought
a separate suit, suit number 2, against the driver of the other
car, one of the defendants in suit number 1. The parties to
number 1 decided to settle, and pursuant to the terms of the
2 No. 05-2698
settlement they asked the judge to vacate the judgment in
their suit. Enrick asked the judge to let him intervene to
oppose the settlement, because he wanted the judgment to
stand so that he could use it to establish the liability of the
driver of the other car in suit number 2, his suit against that
driver—use it, that is, as “offensive collateral estoppel,” to
preclude the driver from relitigating the issue of his negli-
gence. Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979);
Chicago Truck Drivers, Helpers & Warehouse Union Pension
Fund v. Century Motor Freight, Inc., 125 F.3d 526, 530-31 n. 3
(7th Cir. 1997). The judge permitted Enrick to intervene for
the limited purpose of challenging the provision of the
settlement that required the judgment in suit number 1 to be
vacated, but after listening to his pitch decided to approve
the settlement, vacate the judgment, and dismiss the suit.
The judge, who had misgivings about the instructions that
he had given the jury, said that if the case had not been
settled he would almost certainly have granted the defen-
dants a new trial.
Enrick has appealed from the judge’s order vacating the
judgment. Doubting whether we have jurisdiction of the
appeal, we asked the parties to brief the question.
To intervene in a suit is to become a party to it, String-
fellow v. Concerned Neighbors in Action, 480 U.S. 370, 375
(1987); Diamond v. Charles, 476 U.S. 54, 68 (1986); Associated
Builders & Contractors v. Perry, 16 F.3d 688, 690 (6th Cir.
1994), and a party has a right to appeal from a judgment
that inflicts a sufficiently tangible injury on him to give
him standing under Article III of the Constitution to sue.
Article III has been interpreted to impose the requirement of
standing on all stages of a federal litigation, including
appeals. E.g., Arizonans for Official English v. Arizona,
No. 05-2698 3
520 U.S. 43, 68 n. 22 (1997); United States Parole Commission
v. Geraghty, 445 U.S. 388, 397 (1980).
The opportunity to use a judgment in a suit to which one
is not a party to gain an advantage in a suit to which one is
a party is valuable, but the denial of the opportunity is not
a sufficient injury to confer standing. The principle is well
established in cases in which the opportunity is merely to
use the judgment (or rather, in the usual case, the opinion
accompanying the judgment) as a precedent that might
persuade a court in a subsequent case. Boston Tow Boat Co.
v. United States, 321 U.S. 632 (1944); Purcell v. BankAtlantic
Financial Corp., 85 F.3d 1508, 1513 (11th Cir. 1996). Of course
precedent has a social value; that was one basis on which
the Supreme Court held in U.S. Bancorp Mortgage Co. v.
Bonner Mall Partnership, 513 U.S. 18, 26-27 (1994), that a
judgment should not be vacated just because a settle-
ment afterwards mooted the case and thus precluded
further judicial review. But U.S. Bancorp did not overrule
Boston Tow Boat; there are many socially valuable goods that
no one has a sufficient interest in to enable a suit to secure
the good.
One case holds, however, that a person who would like to
use a judgment for purposes of offensive collateral estoppel
has standing to challenge the vacation of that judgment.
American Games, Inc. v. Trade Products, Inc., 142 F.3d 1164,
1167 (9th Cir. 1998). The court’s entire reasoning is con-
tained in a single, short sentence: “American Games stands
to benefit directly from the preclusive effect of the district
court’s decision on those issues if that court’s vacatur
decision is reversed.” We have our doubts about the
soundness of the decision. Considering that the use of a
judgment as offensive collateral estoppel in a subsequent
suit is discretionary with the court in that suit, e.g., Parklane
4 No. 05-2698
Hosiery Co. v. Shore, supra, 439 U.S. at 331, it is hard to see
why, if the precedential effect of a decision shouldn’t be a
sufficiently tangible interest to confer standing, the possibil-
ity of using the decision to foreclose relitigation of a particu-
lar issue should be. And we are concerned that recognizing
standing in such a case would make it even more difficult
than it is to settle cases, by making the intervenor in effect
another party to the settlement negotiations. There is no
doubt a price at which the parties to the present case could
induce Enrick to go away and leave them alone, but a three-
party negotiation is more cumbersome than a two-party
one.
Even if (as we need not decide to resolve this ap-
peal) the American Games decision is wrong, the predomi-
nant view is that intervention does not require that the
intervenor have an interest sufficient under Article III
to entitle him to sue, since the court’s jurisdiction is ade-
quately supported by the fact that the original parties must
have standing, as otherwise the suit could not continue.
Purcell v. BankAtlantic Financial Corp., supra, 85 F.3d at 1512;
Associated Builders & Contractors v. Perry, supra, 16 F.3d at
690; Yniguez v. Arizona, 939 F.2d 727, 731 (9th Cir. 1991).
There is dissent from this position, however, Mausolf v.
Babbitt, 85 F.3d 1295, 1300 (8th Cir. 1996); Southern Christian
Leadership Conference v. Kelley, 747 F.2d 777, 779 (D.C. Cir.
1984); cf. United States Postal Service v. Brennan, 579 F.2d 188,
190 (2d Cir. 1978), and we treated the issue as an open one
in Sokaogon Chippewa Community v. Babbitt, 214 F.3d 941, 946
(7th Cir. 2000).
If intervention always meant that the intervenor became a
party with all the rights the original parties had, so that if
the party on whose side he intervened dropped out of the
case he could take his place and continue the litigation to
No. 05-2698 5
judgment, he would have to show that his interest in the
suit was sufficient to confer standing under Article III. Such
a conclusion would be implicit in the rule mentioned earlier
that jurisdiction must continue throughout a litigation. It is
not enough that there was jurisdiction originally but it
lapsed before judgment was entered; when it lapses, the suit
must be dismissed.
But “intervention” can be and is used more broadly
(or loosely) to denote a situation in which the resolution of
a dispute can be expedited or made more accurate or
otherwise improved by allowing someone to enter the
litigation, conduct discovery, examine and cross-examine
witnesses, and otherwise disport himself as a party would,
or else to participate in a more limited capacity, as in the
present case. Whether such participations are called
“intervention” or something else, and the participants are
called “parties” (invariably they are, if permitted to inter-
vene, however limited a participation the judge authorizes)
or something else, such participation is within the power of
a district judge to allow if he has a reasonable basis in
judicial expedience to do so. See, e.g., Jessup v. Luther, 227
F.3d 993, 997-98 (7th Cir. 2000); Grove Fresh Distributors, Inc.
v. Everfresh Juice Co., 24 F.3d 893, 896 (7th Cir. 1994); Walsh
v. Walsh, 221 F.3d 204, 213 (1st Cir. 2000); United Nuclear
Corp. v. Cranford Ins. Co., 905 F.2d 1424, 1427 (10th Cir. 1990).
But if the intervenor does not have the kind of interest that
confers standing, then, even if he is called a “party,” and
even if he is a party for other purposes, he cannot force the
litigation to judgment or take an appeal. Diamond v. Charles,
supra, 476 U.S. at 68-69; Transamerica Ins. Co. v. South, 125
F.3d 392, 396 (7th Cir. 1997); Harris v. Amoco Production Co.,
768 F.2d 669, 675-76 (5th Cir. 1985) (permissive intervenor);
McKay v. Heyison, 614 F.2d 899, 907 (3d Cir. 1980) (same).
The other side of this coin is that a member of a class in a
6 No. 05-2698
class action suit, even if not a named party, can challenge a
settlement that will bind him. Devlin v. Scardelletti, 536 U.S. 1(2002). He has a tangible interest. In short, the label “party”
does not determine standing.
This analysis may seem to make the question whether
the possibility of using a judgment as offensive collateral
estoppel in the intervenor’s suit is sufficient to confer
standing on the intervenor inescapable in the present case.
But the case is peculiar because the judge, while vacating
the judgment because the parties to suit number 1 wanted
him to, made clear that he thought the judgment unsound
and therefore that he would have set it aside quite apart
from the settlement. A vacated judgment is not a permis-
sible basis for collateral estoppel. E.g., Warner/Elektra/
Atlantic Corp. v. County of DuPage, 991 F.2d 1280, 1282 (7th
Cir. 1993) (Illinois law); Pontarelli Limousine, Inc. v. City
of Chicago, 929 F.2d 339, 340 (7th Cir. 1991) (same).
Even if the judge would not have set aside the judg-
ment—for it is merely highly likely, and not certain, that
he would have done so—his criticisms of the judgment
would undoubtedly have dissuaded the court in suit
number 2 from giving the judgment collateral estoppel
effect; for a judgment must not be given such effect if “any
special circumstances exist which would render preclu-
sion inappropriate or unfair.” Crowder v. Lash, 687 F.2d
996, 1010 (7th Cir. 1982). The fact that a loss or other harm
on which a suit is based (here, the loss of Enrick’s opportu-
nity to use the judgment in suit number 1 against the
defendant in number 2) is probabilistic rather than certain
does not defeat standing. E.g., North Shore Gas Co. v. EPA,
930 F.2d 1239, 1242 (7th Cir. 1991). But the probability must
not be too close to zero. So remote is the prospect that Enrick
could have derived a benefit in suit number 2 from vacating
No. 05-2698 7
the settlement in suit number 1 that we conclude that he has
not established standing to pursue this appeal. The appeal
is therefore
DISMISSED.
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—10-5-05