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. e du/thir dc ir c uit_1997/255Filed October 30, 1997

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 96

- 3705

USX CORPORATION; BESSEMER AND LAKE ERIE

RAILROAD COMPANY

v.

THE PENN CENTRAL CORPORATION, now known as

American Premier Underwriters, Inc. as Successo r in

interest to the Penn Central Transportation Company,

Appellant

Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civ. No. 94

- cv

- 00877)

Argued

July 21, 1997

Before: BECKER, MANSMANN and R OSENN,

Circuit Judges.

(Filed October 30, 1997)

Thomas S. Kilbane, Esquire (Argued)

Stacy D. Ballin, Esquire

Squire, Sanders & Dempsey L.L.P.

127 Public Square

4900 Society Center

Cleveland, Ohi o 44114

- 1304

Timothy W. Bergin, Esquire

Squire, Sanders & Dempsey L.L.P.

1201 Pennsylvania Avenue, N.W.

P.O. Box 407

Washington, DC 20044

- 0407

David A. Lynch, Esquire

Senior General Attorney

USX Corporation

600 Grant Street

Pittsburgh, PA 15219

- 4776

COUNSEL FOR APPELLEESJames J. Capra, Jr., Esquire

Donovan, Leisure, Newton & Irvine

30 Rockefeller Plaza

New York, NY 10112

Peter M. Fishbein, Esquire (Argued)

Karen E. Katzman, Esquire

Kaye, Scholer, Fierman, Hays

& Handler, LLP

424 Park Avenue

New York, NY 10022

Michael L. Cioffi, Esquire

American Premier Underwrite rs, Inc.

One East Fourth Street

Cincinnati, OH 45202

Ralph A. Finizio, Esquire

Houston Harbaugh, P.C.

Two Chatham Center

Twelfth Floor

Pittsburgh, PA 15219

- 3463

COUNSEL FOR APPELLANT

2

OPINION OF THE COURT

MANSMANN, Circuit Judge.

The separate litigations ensuing from certain railroads'

participation in an antitrust conspiracy and thefinancial

demise of the Penn Central Transportation Compa ny now

span three decades. See In the Matter of Penn Central

Transportation Company, 458 F. Supp. 1364 (E.D. Pa.

1978); In Re Lower Lake Erie Iron Ore Antitrust Litigation,

759 F. Supp. 219 (E.D. Pa. 1991). Our decision today

unfortunately perpetuates this longevity as we resolve only

the issue of which jurisdiction adjudicates the issue of "who

ultimately pays."

USX Corporation (USX) and Bessemer and Lake Erie

Railroad (B&LE) filed state and federal actions against

American Premier Underwriters , Inc. (American Premier),

the reorganized successor of Penn Central, seeking

indemnity and contribution of the approximately $600

million USX paid in satisfaction of judgments against B&LE

in ten antitrust actions. American Premier urged that the

act ions be dismissed based upon provisions of the Final

Consent Decree entered in the Penn Central bankruptcymatter. The parties agreed to stay the indemnity and

contribution proceedings pending a decision by the judge

presiding over the bankruptcy matte rs as to the present

action's viability in light of the Consent Decree.

Eventually, USX filed a notice of dismissal of the federal

contribution and indemnity suit pursuant to Fed R. Civ. P.

41(a)(1). The district court, by adoption of a magistrate

j udge's report and recommendation, approved the

dismissal. American Premier strongly disputes the propriety

of the voluntary dismissal at the particular point of

litigation in which it was granted. In its view, a summary

judgment motion submitted by it prior to the filing of the

notice of dismissal precluded a voluntary dismissal of the

federal suit.

We will affirm the order of the district court. The specific

chronology of the proceedings, the language of the relevant

3

orders, and the conduct of the parties necessitate a

conclusion that at the time the voluntary notice of

dismissal under Rule 41(a)(1) was filed, the status of the

case was such that the notice was appropriate and the

dismissal correctly granted.

I.

A. Background

Prior to 1989, B&LE was a wholly

- owned subsidiary of

USX. Pursuant to an indemnity agreement, USX paid

nearly $600 million in satisfaction of antitrust judgments

entered against B&LE in In Re Lower Lake Erie Iron Ore

Antitrust Litigation, 998 F.2d 1144 (3d Cir. 1993).

The basis for the claims in the antitrust litigation was

that conspiring railroads, including B&LE, acted to restrain

trade in the movement of iron ore by ship across the Great

Lakes to docks on th e south shore of Lake Erie. Iron ore

was traditionally transported in mud

- like form in vessels

which had to be unloaded using special cranes available

only at railroad

- owned docks. Some producers then began

shipping iron ore in pellet form which permit ted the ore to

travel in self

- unloading vessels. The ore could then be

unloaded at private docks. This method of shipment did not

require either the railroads' equipment or the railroads

themselves

-- trucks could now be used to carry the iron

ore inl and.

The railroads conspired to preserve their monopolyposition in transporting iron ore by preventing the

development of this alternative transportation system for

the iron ore. The conspiracy succeeded in delaying

establishment of the self

- unload ing method and negatively

impacted steel companies, private dock companies,

trucking companies and a shipbuilder.

In the 1980's, twelve cases were filed under the Sherman

Act and the Ohio Valentine Act by the injured industries

against Penn Central, B&LE and several other railroads.

The damages claimed varied: the steel companies lost the

cost savings of the self

- unloading transportation system;

4

the private dock companies were excluded from the iron ore

unloading business; the trucking companies were

foreclosed from carrying iron ore which could have been

unloaded at the private docks; and the shipbuilder was

denied the use of its vessels.

Three separate actions were also brought by a private

dock owner, a self

- unloading shipbuilder and a trucking

company in the Northern District of Ohio (the Northern

District litigations). In the Northern District cases, the

claims of two of the plaintiffs against Penn Central were

dismissed in January 1986 on the ground that they were

discharged in the Penn Central reorganization proceeding.

The Ohio district court then dismissed B&LE's cross

- and

third

- party claims against Penn Central for indemnification

under both federal and Ohio law and for contribution under

federal law to the extent these claims were asserted against

Penn Central as to alleged post

- consummation conduct.

Pinney Dock and Transportation Co. v. Penn Central Corp.,

1982 W.L. 1914 (N.D. Ohio Nov. 9, 1982).

The remaining Northern Distr ict litigation and the actions

brought by private dock owners, trucking companies and

steel mills brought in the Eastern District of Pennsylvania

were then consolidated. All the claims brought by the

antitrust plaintiffs against Penn Central were dismi ssed.

After trial, B&LE was held liable to the various plaintiffs

under both the Sherman Act and the Ohio Valentine Act for

amounts totaling over $600 million. B&LE settled with four

of the plaintiffs during the appeal process and paid two

other jud gments after appeal. B&LE also settled the claims

brought against it by the two remaining plaintiffs in the

Northern District litigations.

B. Present ActionB&LE then sought indemnity from American Premier

with respect to the amounts paid to the a ntitrust plaintiffs.

On May 26, B&LE filed a complaint in the Court of

Common Pleas of Cuyahoga County, Ohio, claiming

contribution from American Premier under Ohio law for its

proportionate share of the antitrust damages. B&LE

alternatively claimed e ntitlement to common law indemnity

5

for that portion of the damages assessed which B&LE

asserted were attributable to Penn Central. In order to

preserve claims exclusively within federal jurisdiction,

B&LE also filed on the same day an action against

American Premier in the United States District Court in the

Western District of Pennsylvania.

On June 24, 1994, American Premier filed a petition

before Judge Fullam of the United States District Court for

th e Eastern District of Pennsylvania, who had presided over

the Penn Central reorganization and bankruptcy, seeking

preliminary injunctive relief as well as an order directing

B&LE to dismiss its claims against Penn Central as barred

under the Consummati on Order and Final Decree in the

reorganization proceedings.

At a July 21, 1994, hearing on the petition, the parties

orally entered into a stipulation spread on the record and

recited by Judge Fullam: "[I]t is stipulated by counsel that

... all pro ceedings will be stayed as to B&LE until I dispose

of this petition. This will not preclude the plaintiffs in either

of these actions from amending their pleading if they want

to do so."

The District Court for the Western District of

Pennsylvania wa s advised of the stipulation by a written

notice of stipulation filed August 4, 1994. That notice of

stipulation, drafted and filed by American Premier, was not

executed by B&LE nor signed by the district court.

On October 13, 1994, Judge Fullam deci ded the request

for injunctive relief in Penn Central's favor and issued the

following order:

[B&LE] and [USX] are restrained and enjoined from

asserting or prosecuting, or attempting to assert or

prosecute their claims in USX C orporation v. The Penn

Central Corporation No. 94

- 877 (W.D.Pa.), and USX

Corporation v. The Penn Central Corporation No. 94

- 271/91 (C.P. Cuyahoga County, Ohio).

On the basis of Judge Fullam's decision, the DistrictCourt for th e Western District of Pennsylvania issued an

order on November 2, 1994, directing the Clerk to withdraw

the present action from the list of active cases and mark

the action "closed."

6

B&LE moved for clarificati on and reconsideration of the

November 2 order to insure that the district court had not

dismissed the claims in its amended complaint so that it

could pursue them if Judge Fullam's decision was reversed

on appeal. B&LE also filed a precautionary notic e of appeal

with us from the November 2 order.

By order of December 28, 1994, the district court

clarified its November 2 order:

[I]t is hereby ordered that this court's order dated

November 2, 1994 shall not be considered a dismissa l

or disposition of the above captioned action, and that,

should further proceedings in the action become

necessary or desirable, either party may initiate the

same in the same manner as if this order had not been

en tered; provided however, that plaintiffs, USX

Corporation and Bessemer and Lake Erie Railroad

Company, shall not prosecute or attempt to assert or

prosecute any claim in the above captioned action

during the pendency of the order dated October 13,

1994 entered by the United States District Court for

the Eastern District of Pennsylvania referred to in this

court's November 2, 1994 order.

(Emphasis added.) Based on this clarifying language, B&LE

with drew its appeal to our court with respect to the

November 2, 1994 order.

On December 12, 1995, we reversed Judge Fullam's

October 13, 1994 order, holding that the claims brought by

B&LE in this case arose post

- consummation and hence

were not dischar ged in the Penn Central bankruptcy. See In

Re Penn Central Transportation Company, 71 F.3d 1113 (3d

Cir. 1995). A petition for rehearing was denied on February

16, 1996.

On March 22, 1996, a motion to stay the mandate was

entered. The parties were a dvised, pursuant to practice in

our court, that if a petition for certiorari was filed within

the time that the stay was entered, the mandate would not

issue until the Supreme Court proceedings were concluded.

On May 28, 1996, the United States Supre me Court

denied American Premier's petition for writ of certiorari.7

Penn Central Underwriters, Inc. v. USX Corporation , 116

S.Ct. 1851 (1996). Our Clerk's office received notice of the

denial on May 30, 1996, and our court's mandate was

issued on June 3, 1996. On June 25, 1996, Judge Fullam

entered an order denying American Premier's petition for

dismissal in accordance with our mandate.

Prior to Judge Fullam's action on the mandate but after

the denial of certiorari, on May 30, 1996, American Premier

filed a motion for summary judgment for dismissal of all

the claims in the amended complaint in the Western

District action. Eight days later, on June 7, 1996, B&LE

filed a notice of dismissal pursuant to Fed. R. Civ. P.

41(a)(1) or, alternatively, a motion to dismiss pursuant to

Rule 41(a)(2). After being advised by court personnel that

the case remained closed and that all recently filed motions

should be withdrawn, on June 12, 1996, B&LE filed a

motion to reopen the case for purposes of filing a notice of

dismissal pursuant to Rule 41(a)(1). American Premier

opposed the motion to reopen. Then, after Judge Fullam

acted on our mandate on June 25, 1996, B&LE againfiled

a notice of dismissal under Rule 41(a)(1).

A hearing on the summary judgment and dismissal

motions was held before a magistrate judge. After briefing,

the magistrate judge recommended that American Premier's

motion for summary judgment be stricken and that B&LE's

notice of di smissal without prejudice pursuant to Rule

41(a)(1) be upheld. The court reasoned that when American

Premier's motion for summary judgment was filed, the

Western District matter had been stayed by agreement of

the parties. Because the stay was in effec t when the motion

for summary judgment was filed, that motion was a nullity.

The magistrate judge further concluded that the Rule

41(a)(1) notice was the only motion properly before it and

that a responsive pleading had not been filed. The

magistrate judge therefore recommended that "the motion

for summary judgment (Docket No. 14) be stricken, and

that the motion to voluntarily dismiss the action without

prejudice (Docket No. 25) be granted."1

______________________________________________________ ___________

1. Docket No. 25 refers to B&LE's Rule 41(a)(1) notice of dismissal rather

than its alternative Rule 41(a)(2) motion for dismissal, which is recorded

at Docket No. 17.

8On October 31, 1996, "after de novo review of the

pleadings and documents in this case" the district court

issued its order:

It is hereby ordered that defendant's motion for

summary judgment (Docket No. 14) is stricken, and

that plaintiffs' motion for vol untary dismissal of this

action pursuant to 41(a)(1) (Docket No. 25) is granted.

The Report and Recommendation of the Magistrate Judge

was adopted as the opinion of the court. This appeal

followed and we have jurisdiction pursuant to 28 U.S.C.

S 1291.

II.

We must decide the point at which the stay of the

Western District proceedings was dissolved. This

determination enables us to identify which of the pleadings,

if any, were appropriate for the court's consideration and,

specifically , whether the Rule 41(a)(1) voluntary dismissal

was filed timely.2

_________________________________________________________________

In its order, the district court repeated the contradictory language of

the magistrate judge's order, that a motion f or voluntary dismissal

pursuant to Rule 41(a)(1) was granted.

2. We do not address American Premier's second issue, whether

dismissal by the court under Fed. R. Civ. P. 41(a)(2) was appropriate.

While we realize that the language of the final order o n appeal might

indicate that the Rule 41(a)(2) motion was considered by the district

court, examination of the docket and the proceedings convinces us that

the Rule 41(a)(2) issue did not form the basis of the district court's

decision.

In its order , the district court granted what it referred to as the

"motion" to dismiss the action rather than the notice of dismissal under

Rule 41(a)(1). However, the district court parenthetically referred to the

"motion" as Docket No. 25 which is actually the J une 25 "notice" of

dismissal. Since the Docket No. 25 notice of dismissal was the only

viable document before the court, it is apparent that the district court

was granting the plaintiff's notice of dismissal under Rule 41(a)(1) and

not its alternative motion under 41(a)(2).

9

We thus direct our attention to the terms of the

stipulation which stayed these proceedings.

A consensual stipulation of the parties is "to beinterpreted according to the general pri nciples of contract

construction." Pittsburgh Terminal Corp. v. Baltimore & Ohio

Railroad Co., 824 F.2d 249, 254 (3d Cir. 1987).

With these principles in mind, we must preliminarily

determine whether the stipulation is ambiguous as a

matter of law. Duquesne Light Co. v. Westinghouse Elec.

Corp., 66 F.3d 604, 613 (3d Cir. 1995). A contract is

ambiguous if, after hearing evidence presented by the

parties, the court determines that objective indicia exists to

support the view that "the terms of the contract are

susceptible of different meanings." Teamsters Indus.

Employees Welfare Fund v. Rolls

- Royce Motor Cars, Inc.,

989 F.2d 132, 135 (3d Cir. 1993). If the terms are then

considered to be ambiguous, the factfinder must interpret

the terms. Mell on Bank, N.A. v. Aetna Business Credit, Inc.,

619 F.2d 1001, 1011 (3d Cir. 1980); Matter of Nelson Co.,

959 F.2d 1260, 1263 (3d Cir. 1992). Here, the language

utilized by Judge Fullam, in placing on the record the

stipulation to stay, is subject to int erpretation. Thus, we

review the district court's findings concerning the meaning

of the stipulation under the clearly erroneous standard.

III.

Federal Rule of Civil Procedure 41(a)(1) provides in

pertinent part:

[A]n action may be dismi ssed by the plaintiff without

order of court (i) by filing a notice of dismissal at any

time before service by the adverse party of an answer

or of a motion for summary judgment, whichever first

occurs

. . . .

T he essential issue, thus, is whether at the time Penn

Central filed its motion for summary judgment the stay

issued by Judge Fullam was still in effect. If the stay was

in effect, the summary judgment motion was a nullity

10

which allowed B&LE to file a notice of dismissal under Rule

41(a)(1).

In deciding if the Rule 41(a)(1) voluntary dismissal should

be granted, the district court concluded that the stay

agreed to by the parties was not lifted until June 25, 1996,

when Judge Fullam acted on our mandate and denied

American Premier's petition seeking an order of dismissal of

the action brought by B&LE. Persuading the district courtwas the conduct of American Premier itself:

Had American Premie r believed that the stay was in

effect only until Judge Fullam entered an order, the

motion for summary judgment would have been filed at

some point shortly after Judge Fullam entered his

order in October 1994. Instead, Penn Central waited

until the Third Circuit reversed Judge Fullam's order

and the petition for certiorari was denied.

Our review of the chronology of the case3 and of the

_________________________________________________________________

3. In summary fashion the relevant timeline is as follows:

5/26/94

- Complaint filed in Western District;

- Amended 8/5/94

6/24/94

- Petition before Judge Fullam filed in Eastern District

seeking to enjoin Western Distri ct action.

7/21/94

- Judge Fullam spreads stipulation on record: "all

proceedings stayed as to B&LE until I dispose of

petition."

10/13/94

- Judge Fullam decides: "B&LE restrained from

prosecuting western dist rict action."

11/2/94

- Western District Clerk marks action"closed."

12/28/94

- Western District issues clarifying order: closure of case

not a dismissal, but B&LE cannot prosecute action

"during pendency of order dated 1 0/13/94."

12/12/95

- We reverse Judge Fullam; Matter of Penn Central

Transp. Co., 71 F.3d 1113 (3d Cir. 1995).

3/22/96

- Motion to stay mandate during Supreme Court

proceedings.

5/28/96

- Supreme Court denies certio rari.

5/30/96

- American Premier motion for summary judgment in

Western District action.

6/3/96

- We issue mandate.

6/7/96

- B&LE files notice of dismissal 41(a)(1) and, alternatively,

motion for dismissal 41(a)( 2).

11interpretation of the language of the court's orders

convinces us that the district court was correct. Certainly,

until October 13, 1994, when Judge Fullam granted

American Premier's petition to enjoin th e Western District

action, the stay remained in effect. In finding in favor of

Penn Central, Judge Fullam ordered: "B&LE and USX are

restrained and enjoined from asserting or prosecuting their

claims in the Western District action."

We conclude that this order, by its terms, extended the

stay. Although American Premier argues that the order only

restrained B&LE, and not it, from continuing in the

Western District action, we are not persuaded. If read as

permitting American Premier to continue lit igating the

action, B&LE would have been precluded from responding.

This could not have been the intent of Judge Fullam nor is

it consistent with the general conduct of litigation.

The activity in the Western District also militates against

a findin g that the stay was dissolved. On November 2,

1994, based on Judge Fullam's order, the district court

ordered the Clerk to withdraw the action from the list of

active cases and mark the action "closed." At this point,

further pleadings could not be fil ed. The court later

clarified, on December 28, 1994, that marking the case

closed was not tantamount to a dismissal of the case; its

intent was to implement Judge Fullam's order that B&LE

shall not prosecute any claim in the action during the

pendency of the order dated October 13, 1994.

We must now determine at which point the Eastern

District matter became final, allowing once again for the

filing of pleadings in the Western District action. As noted,

on May 28, the Supreme Court denied certior ari. Two days

later, American Premier filed its motion for summary

judgment. On June 7, B&LE filed its 41(a)(1) notice of

dismissal and an alternative motion for dismissal under

_________________________________________________________________

6/12/ 96

- After parties advised by Western District that case

remained closed, B&LE files motion to reopen tofile

41(a)(1) notice of dismissal. American Premier opposes.

6/25/96

- Judge Fullam acts on mandate. B&LEfiles another

41(a)(1) notice (Docket #25).

12

Rule 41(a)(2). At this point, the parties were informed by

the Clerk of the Western District that the case had

remained closed and the recent filings had not been

accepted . B&LE, on June 12, responded by requesting amotion to reopen and for 41(a)(1) dismissal. The motion was

opposed by Penn Central.

On June 25, 1996, Judge Fullam acted on the mandate

from our court based upon the remand from the Supreme

Court. The s tay to which the parties had stipulated

continued through the entire appellate process and

terminated only when Judge Fullam acted on the mandate

of our court and denied American Premier's request to

enjoin B&LE from proceeding in the Western District. Later

that day, B&LE filed its notice of dismissal under Rule

41(a)(1) in the Western District. This last notice of dismissal

(Docket No. 25) was the only pleading filed after the

Eastern District case was finally resolved, and therefore, it

was the only motion viable in the Western District. Because

this notice was filed "before service by the adverse party of

an answer or of a motion for summary judgment" as

required by Rule 41(a)(1), the district court did not err in its

conclusion that the not ice of dismissal under Rule 41(a)(1)

was appropriate. Since no other pleadings were before it, it

cannot be said that the district court abused its discretion

in allowing the matter to be dismissed voluntarily.

IV.

We will, therefore, affirm the o rder of the district court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

13