Opinion ID: 782407
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 4 The action before us arose from a 1994 outbreak of Legionnaires' Disease on board Celebrity's cruise ship Horizon. The United States Centers for Disease Control and Prevention traced the outbreak to the presence of legionella bacteria in filters designed, manufactured, and distributed by Essef that were operated in connection with the ship's whirlpool spa. Water from the spa passed through silica sand and gravel within the filters, cleansing it of hair, dirt, and oils. Beneath the gravel, each filter contained a hub from which laterals radiated like the spokes of a wheel. Filtered water returned to the spa via holes in the laterals. 5 The filters were designed to be cleaned by running them in reverse. Water was forced through the laterals and up through the gravel and sand, dislodging built-up waste material. Waste water from this backwashing process was then thrown overboard. 6 According to the evidence adduced at trial, the filters did not backwash properly. Instead of lifting the entire sand bed and cleansing each grain, water flowed primarily through the center of each filter and failed to clean the outer edges. As waste material built up in the filters, biofilms of organic material formed. These biofilms trapped the legionella inside the filters, protecting the bacteria from disinfectants while providing a growth medium. The bacteria proliferated. As water containing the bacteria was released back into the whirlpool, it was aerosolized and inhaled by passengers in and near the spa. 7 Many victims of the outbreak, their families, and their estates, including these plaintiffs, subsequently brought suit against Celebrity and Essef for their injuries and those of their relatives. Celebrity, in turn, filed cross-claims against Essef for indemnification and other damages. 8 By the end of 1995, at least twenty-two separate such actions had been filed. All of the related cases were assigned to United States District Judge Lawrence M. McKenna in the United States District Court for the Southern District of New York. Judge McKenna ordered the cases consolidated for discovery before Magistrate Judge Francis who, with the consent of the parties pursuant to 28 U.S.C. § 636(c), was later designated to conduct all proceedings in the matter, including the entry of final judgments. Over the next several years, discovery proceeded. During that period, some of the plaintiffs settled with Celebrity and Essef. 9 In May 2000, the remaining plaintiffs, Celebrity, and Essef agreed to resolve the entire matter before Magistrate Judge Francis using a bellwether procedure. One case — the bellwether — brought by John and Joyce Silivanch, would be tried to a jury on all issues. The jury would determine if Celebrity, Essef, or both were liable for the Silivanches' injuries. If the jury found such liability, it would determine each defendant's proportional liability and Celebrity's right of indemnification against Essef, if any, with regard thereto, in addition to the amount of the Silivanches' compensatory damages. It would also determine each defendant's liability for any punitive damages to all the plaintiffs as a group. The Silivanch jury's findings on all issues, other than proximate cause with respect to the Silivanches' injury and compensatory damages to be awarded to them, would be binding in all of the remaining cases, each of which would be tried separately on the reserved two issues. Any punitive damages awarded in the bellwether trial would be allocated by the court among the various plaintiffs. 10 In June 2000, the jury returned a verdict finding the defendants liable to the Silivanches. It also found that Essef had an obligation to indemnify Celebrity in full. The jury awarded $4,200,000 in punitive damages to the plaintiffs, and another $2,800,000 to Celebrity, all to be paid by Essef. 11 The remaining plaintiffs then settled or tried their cases on the issues of causation and compensatory damages. Afterward, the district court apportioned the punitive damages award among those plaintiffs who had established the requisite proximate causation at trial, or against whom such causation had not been contested because of definitive medical evidence. 12 In November 2001, the district court severed Celebrity's remaining claims against Essef, and, pursuant to Fed. R.Civ.P. 54(b), 1 directed the clerk of the court to enter final judgment in, and close, some or all of the plaintiffs' cases. Supplemental judgments as to punitive damages were signed by the magistrate judge, issued, and docketed for each plaintiff who was awarded punitive damages. 13 Shortly thereafter, on December 7, 2001, however, the district court ordered the clerk to reopen the cases that had been closed because the supplemental judgments in many of the related cases ... ha[d] not been forwarded to counsel, and certain parties ha[d] raised the issue of post-judgment interest. Order dated Dec. 7, 2001. 14 On January 25, 2002, after ruling on post-judgment interest, the magistrate judge signed a new Rule 54(b) order severing Celebrity's claims against Essef, and directing the entry of final judgment in favor of the plaintiff or plaintiffs in each case. The orders, highly similar although individualized for each set of parties, were mailed to counsel and entered on each docket except, inexplicably, the docket for Silivanch. 15 Also on January 25, 2002, the magistrate judge signed separate Second Supplemental Judgments ordering post-judgment interest for each plaintiff or group of plaintiffs that had been allocated punitive damages. Additionally, the Second Supplemental Judgments alluded to Rule 54(b) and recited the prior compensatory awards, prejudgment interest, and punitive damages awards for each plaintiff. They were docketed in each case shortly thereafter. The Silivanch docket contains a January 28 entry that refers to the judgment signed on January 25: 16 SECOND SUPPLEMENTAL JUDGMENT # 00,1990: that there being no just reason for delay, purs. to FRCP 54(b), pltffs be awarded postjudgment interest on the principal amount of $5,892,719.80 from 9/6/00, until final payment is made, at the rate of 6.241 percent, compounded annually. (signed by Magistrate Judge James C. Francis IV); Mailed copies and notice of right to appeal. Entered on Docket: 1/28/02. (kg) [Entry date 01/28/02]. 17 (brackets in original.) As noted on the docket, the judgments were mailed to counsel along with right to appeal notices. 18 On February 5, 2002, Robert A. Jacobs, the Silivanches' lawyer, wrote to Essef's lawyer, Robin G. Weaver, raising the issue of Essef's appeal bond. Jacobs' letter mentioned that final judgment had been entered on January 28. Weaver responded on February 8, acknowledging receipt of Jacobs' letter. The two lawyers had conversations in which, according to Jacobs, Weaver acknowledged that judgment had been entered on January 28. 19 On February 19, some three weeks after the Second Supplemental Judgments had been entered, counsel for Celebrity (James M. Hazen), Essef (Weaver), and the Lorenzo, Hague, and DeFrancesco plaintiffs (Brendan Burke), conducted a pre-argument telephone conference with Second Circuit staff counsel regarding a separate appeal filed by the Lorenzos. During the conference, staff counsel sought to set a briefing schedule that would take into account the timing of Essef's expected appeals in the other cases, and asked the lawyers when they would know whether they were pursuing such other appeals. According to Hazen, he posited March 4, 2002, as the control date for the Silivanch appeals, but had not actually calculated the deadline himself because Celebrity intended to appeal only if Essef did. Hazen Decl. dated Apr. 15, 2002, at ¶ 6. Based on Hazen's statement, Essef lawyer Weaver noted March 4 in his calendar as the last day for filing a notice of appeal. 20 Fed. R.App. P. 4(a)(1)(A) requires parties to file notices of appeal within 30 days after the judgment or order appealed from is entered. Under it, Essef's time to appeal expired on February 27, 2002, thirty days after the January 28 entries of the Second Supplemental Judgments. On March 1, thirty-two days after those judgments had been entered, Essef filed a notice of appeal under the Silivanch caption and master-file docket number listing a January 28, 2002, order as the latest judgment appealed from. 21 On March 29, 2002, Essef's counsel having realized that more than thirty days had passed between the entry of the Second Supplemental Judgment in Silivanch and the filing of the notice of appeal, Essef filed a motion in the district court requesting, inter alia, an extension of time to file a notice of appeal pursuant to Fed. R.App. P. 4(a)(5). 2 In its motion, Essef asserted that it had filed its notice of appeal late because its counsel had been misled by Hazen's statement that the deadline was March 4, and that counsel's mistake persisted because Essef received no written notice from the Court or any party that judgment was in fact entered on January 28, 2002. Essef Mot. to Reopen the Time in Which to File a Notice of Appeal dated Apr. 3, 2002, at 2. Shortly thereafter, Essef raised its contention that the time for filing a notice of appeal had not yet begun to run because the second Rule 54(b) order had never been entered in the Silivanch docket despite the fact that Silivanch was the bellwether case. 22 On May 8, 2002, the district court heard oral argument on Essef's motions. At the hearing, Essef abandoned its argument that it had never received notice of the Second Supplemental Judgments. It argued instead that no appealable judgment had been entered, and pressed its claim of excusable neglect based on ... the state of the docket, the confusion, and Hazen's statement that the deadline was March 4. Tr. of May 8, 2002, Hearing, at 29. 23 The district court granted Essef's motion, concluding that Essef's late filing in reliance on Hazen's statement constituted excusable neglect under Fed. R.App. P. 4(a)(5)(A)(ii). In re: Horizon Cruises Litigation, Nos. 94 Civ. 5270; 94 Civ. 6147; 95 Civ. 0374, slip op. (S.D.N.Y. May 15, 2002) ( Horizon Cruises Litigation ). The court rejected Essef's argument that an appealable judgment had not yet been entered, however, describing this argument as an after-the-fact rationalization that is inconsistent with the record and with the contemporaneous understanding of all the parties. Id. at 6 n. 3. 24 Essef filed a new notice of appeal on May 22, 2002, under the Silivanch caption and docket number listing the other plaintiffs' cases as related and also being appealed, and filed initial notices of appeal in those other cases too. Celebrity filed cross-appeals shortly thereafter. The plaintiffs then filed these motions to dismiss the appeals and cross-appeals as untimely. 25 On September 25, 2002, one day after these motions were argued before us, the clerk of the district court entered the January 25 Rule 54(b) order in the Silivanch docket. Essef then filed a third notice of appeal virtually identical to its second. 26 Before us, then, are the plaintiffs' motions to dismiss the appeals and cross-appeals on the ground that the district court abused its discretion by granting the Rule 4(a)(5) motion for an extension of time. We conclude that it did, and therefore dismiss the appeals and cross-appeals.