Elizabeth F. Shuder and Robert J. Shuder v. McDonald Corporation, a Corporation

Citations: 859 F.2d 266; 1988 U.S. App. LEXIS 13550; 1988 WL 100794Docket: 88-3121

Court: Court of Appeals for the Third Circuit; October 4, 1988; Federal Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The case involves Elizabeth F. Shuder and Robert J. Shuder, plaintiffs who filed a personal injury action against McDonald's Corporation following an incident where Mrs. Shuder fell in the parking lot of a McDonald's restaurant in Virginia Beach, Virginia, on October 17, 1982. The Shuders alleged that McDonald's failed to maintain the parking area safely, citing inadequate lighting and lack of markings that contributed to the accident. They initially filed their complaint on February 28, 1984, in Pennsylvania, with Mr. Shuder joining to claim loss of consortium.

Subsequently, on October 10, 1984, Mrs. Shuder filed a separate action in Virginia against McDonald's Restaurants of Virginia, Inc., a franchisee, again asserting similar claims regarding the dangerous condition of the parking lot. The primary distinctions between the two complaints were the inclusion of Mr. Shuder in the Pennsylvania case and the different defendants. McDonald's denied owning or operating the restaurant in the Pennsylvania case and filed a motion to transfer that case to Virginia, which was denied in January 1985. The appellate court reviewed the district court's denial of McDonald's motion for judgment notwithstanding the verdict and decided to reverse that decision and remand for an order granting the motion.

The Virginia case, though filed after the Pennsylvania case, was the first to go to trial. The district judge instructed the jury that Mrs. Shuder needed to prove McDonald's Virginia was negligent and that this negligence was a proximate cause of her injuries. The judge emphasized McDonald's duty to maintain safe premises and to warn of unsafe conditions. He explained that McDonald's Virginia claimed contributory negligence as a defense, which required them to prove that Mrs. Shuder failed to exercise ordinary care for her own safety regarding any dangerous conditions she knew about or should have known. The jury ultimately found in favor of McDonald's Virginia.

Mrs. Shuder appealed to the Fourth Circuit Court of Appeals, which affirmed the jury's verdict, noting a dispute about the parking lot's lighting but indicating the jury accepted McDonald's evidence. Subsequently, McDonald's sought summary judgment in the Pennsylvania case, arguing that if McDonald's Virginia owed a greater duty to Mrs. Shuder and had won in Virginia, it should prevail in Pennsylvania as well. The district judge denied this motion, ruling that McDonald's and McDonald's Virginia were not in privity for res judicata to apply, as McDonald's Virginia's defense was based on the parking lot's design by McDonald's. He also found that collateral estoppel could not be applied due to a lack of specific jury instructions from the Virginia case, preventing him from determining the precise issues resolved. The judge noted that a finding against Mrs. Shuder in Virginia would only bar the Pennsylvania action had the jury explicitly found the Virginia property was not in a negligent condition. He did not rule on McDonald's request to apply Virginia law at that time.

McDonald's filed a motion for reconsideration regarding a previous order, providing the jury charge used in a Virginia case. On August 3, 1987, the district judge denied this motion, noting that in the Virginia litigation, the jury was directed to assess the negligence of McDonald's Corporation of Virginia, Inc., the franchisee, rather than the defendant in the current case. A pretrial conference on November 16, 1987, determined that Pennsylvania law would govern the trial, as Virginia allows contributory negligence as a defense, while Pennsylvania employs comparative negligence, which promotes full compensation for its citizens involved in interstate matters.

The case was bifurcated into liability and damages phases, with the liability phase first. The district judge instructed the jury that the Shuders claimed the elevated parking lot posed a hazard that McDonald's should have remedied or warned the public about. The Shuders argued that negligent construction and poor illumination contributed to the accident. The judge explained McDonald's duty as the contractor to exercise reasonable care and warned that failure to do so could result in liability for injuries on the premises. He provided definitions of negligence and proximate cause.

McDonald's countered that the accident was solely attributable to Mrs. Shuder’s negligence or, alternatively, that her contributory negligence barred recovery. The judge indicated that McDonald's had to prove Mrs. Shuder's contributory negligence, instructing the jury to determine her percentage of fault if both parties were found negligent. The jury ultimately found the parking lot was negligently designed, directly causing the accident, while attributing 26% of the negligence to Mrs. Shuder. Under Pennsylvania law, this allowed the Shuders to recover a portion of their damages. Following the liability trial, a separate trial on damages resulted in verdicts favoring the Shuders.

McDonald's filed for a judgment notwithstanding the verdict, arguing that the court erred by not granting a directed verdict based on issue preclusion and by failing to apply Virginia law, which recognizes contributory negligence as a complete defense, as opposed to Pennsylvania's comparative negligence doctrine. The judge denied this motion on January 22, 1988, prompting McDonald's to appeal.

The appeal first addresses the choice of law between Pennsylvania and Virginia regarding liability issues, with the court's review standard being plenary. According to established principles, a district court in a diversity action applies the forum state's choice of law rules. Pennsylvania, having moved away from the strict lex loci delicti rule, now utilizes a flexible approach that considers the underlying policies and interests pertinent to the case.

A significant precedent is Griffith v. United Air Lines, where the Pennsylvania Supreme Court ruled that Pennsylvania had a greater interest in applying its law over Colorado's regarding damages in a tort case involving a Pennsylvania resident. In Cipolla v. Shaposka, the court faced a similar choice-of-law dilemma, determining that Delaware's interest in its guest statute outweighed Pennsylvania's interests, as the defendant's relevant contacts were more substantial. Ultimately, the court's analysis hinges on the comparative interests and contacts of the states involved.

Miller v. Gay addressed a choice of law issue stemming from an automobile accident in Delaware involving a Delaware resident plaintiff and a Pennsylvania resident defendant. The court determined that Delaware law should apply to preserve the rights of Delaware residents, emphasizing that they should not have fewer rights due to the involvement of an out-of-state visitor. This conclusion aligned with the Pennsylvania No-Fault Motor Vehicle Act, which states that a victim's right to sue is governed by their state of domicile.

In Blakesley v. Wolford, the Third Circuit applied Pennsylvania's choice of law principles in a dental malpractice case where a Pennsylvania citizen sued a Texas oral surgeon for an operation performed in Texas. The court found a significant conflict between Pennsylvania and Texas regarding informed consent disclosure requirements and statutory limits on malpractice recoveries. Ultimately, the court ruled that Texas law should govern because the injury and consent occurred in Texas, reversing the judgment for a new trial.

Shields v. Consolidated Rail Corp. involved a Federal Employers' Liability Act case where a third-party complaint for contribution was assessed under Pennsylvania choice of law rules. The district judge opted for Pennsylvania law, allowing contribution, due to Conrail's incorporation and principal place of business in Pennsylvania, despite the accident occurring in Indiana. The jury determined Conrail was liable but also mandated Bethlehem Steel to contribute 25%, leading Bethlehem to appeal.

Indiana law was determined to be applicable in a case involving a slip and fall incident that occurred in Indiana, where the relationship between Conrail and Bethlehem was also established. The district judge had initially applied Indiana law to assess Bethlehem's liability as a landowner; however, applying Pennsylvania law for the contribution claim created inconsistencies, as different states' laws governed related aspects of the same incident. The court concluded that Pennsylvania's interest in applying its contribution law was minimal compared to Indiana's substantial interest, leading to a reversal of the district judge’s decision and a remand for judgment in favor of Bethlehem.

In assessing the application of law concerning contributory negligence, the case established that Virginia follows the common law rule barring recovery for plaintiffs whose negligence contributes to their injury, contrasting with Pennsylvania's adoption of comparative negligence. This difference necessitated an evaluation of each state's interests based on their connections to the accident. The analysis revealed that Virginia had significantly greater contacts, as the accident occurred there and the Shuders had voluntarily entered the state. The court emphasized that the incident's circumstances, tied to property conditions and local oversight (evidenced by a building permit for the driveway), reinforced Virginia's legitimate interest in regulating conduct within its borders.

Application of Pennsylvania law in this case is considered anomalous, particularly since the action against McDonald's Virginia was tried under Virginia law without objection from Mrs. Shuder. This situation resulted in different legal standards being applied to the same facts—specifically, whether Mrs. Shuder's conduct amounted to contributory negligence. The distinction arises from the application of substantive law from two states in separate forums, which could have been consolidated if the Pennsylvania case had been transferred to Virginia. It is unlikely that had the entire matter been tried in Virginia, the judge would have applied different laws based on the split actions.

The only contacts with Pennsylvania are that the Shuders reside there and Mrs. Shuder received medical treatment in the state. Despite the Shuders' argument that Pennsylvania law is fairer due to its recognition of comparative negligence and claims for loss of consortium, these factors do not justify its application. The perceived fairness of Pennsylvania law reflects the state's policies rather than its connection to the accident. Pennsylvania courts have previously applied foreign law over their own, even if it results in barring claims by residents.

Virginia law, which bars recovery in cases of contributory negligence if it is a proximate cause of an accident, is deemed applicable, necessitating a reversal of the January 22, 1988, order that denied McDonald's motion for judgment notwithstanding the verdict. The district judge's charge regarding contributory negligence aligned with Virginia law, stating that Mrs. Shuder was contributorily negligent if she failed to exercise reasonable care for her own safety, and this charge did not impose a higher duty than required. Both the judges in Virginia and Pennsylvania similarly instructed that the defendant bears the burden to prove contributory negligence, thus the jury’s verdict precludes the action.

Additionally, McDonald's argues that collateral estoppel, or issue preclusion, applies due to the prior Virginia proceedings. The parties have analyzed the issue under Pennsylvania law, assuming its applicability. For issue preclusion to apply, conditions outlined in Safeguard Mutual Ins. Co. v. Williams must be met: (1) the issues in both cases must be identical; (2) there must be a final judgment on the merits; (3) the party against whom estoppel is invoked must have been a party or in privity with a party in the prior case; and (4) the party must have had a fair opportunity to litigate the issue previously.

While the Shuders acknowledge that Mrs. Shuder was a party in the Virginia action and Mr. Shuder is in privity, they contest the first, second, and fourth conditions. They argue that the Virginia case focused on McDonald's duty to maintain safe premises, whereas the current case involves claims of faulty design and construction, thus presenting different issues. Additionally, the general nature of the Virginia verdict leaves ambiguity regarding the specific determinations made by the jury, meaning Mrs. Shuder's potential contributory negligence findings in Virginia do not automatically bar her claims in Pennsylvania. Moreover, the Shuders assert they did not have a full and fair opportunity to litigate the Pennsylvania issues in Virginia.

Applying Pennsylvania law, the action would not be barred by collateral estoppel or claim preclusion due to the Virginia verdict being general. In Virginia, Mrs. Shuder could have lost her case for various reasons, including failing to prove the property's unsafe condition or her own contributory negligence. If both she and McDonald's were found negligent, this would not affect her case in Pennsylvania, which follows comparative negligence principles, thus preventing successful assertion of collateral estoppel.

For Mrs. Shuder to recover in Pennsylvania, an issue must have been decided against her in Virginia that was identical to one found in her favor under Virginia law. The core issues in Virginia involved the safety of the premises, her contributory negligence, and whether McDonald's negligence was a proximate cause of the accident. Since one of these questions must have been answered negatively for her, it could bar her action against McDonald's.

Despite the Shuders' argument that the issues were not identical due to different allegations about McDonald's duty to maintain the premises, a finding in Virginia that McDonald's did not breach any duty would imply the lot was safe, thus barring claims about design or construction defects. The Pennsylvania district judge acknowledged that collateral estoppel might apply if the Virginia jury found the parking lot reasonably safe.

The distinction made by the Shuders regarding different duties owed by McDonald's and McDonald's Virginia is seen as artificial. Both cases involved the same claim of unsafe property conditions, with overlapping evidence. Both entities owed a duty of reasonable care concerning the property, indicating that despite differing theories, the central issue remained the condition of the property.

The Virginia verdict likely involved a finding of contributory negligence, which bars the Shuders from pursuing their case in Pennsylvania due to collateral estoppel. The first Safeguard criterion is satisfied, as there was a final judgment on the merits in Virginia, and Mrs. Shuder had a full and fair opportunity to litigate the issues without claiming a denial of due process. It is established that one finding in Virginia estops the Shuders, irrespective of the specific basis, as Virginia law applies in this context, contrasting with Pennsylvania law. Thus, the motion for judgment notwithstanding the verdict should have been granted based on issue preclusion.

The case reflects the Shuders' strategy of filing two separate actions in different jurisdictions for the same incident, despite having the option to consolidate them in Virginia. By opposing a motion to transfer, they created unnecessary litigation and costs for the court system. This practice contradicts the policy of resolving related matters in a single proceeding and warrants the application of issue preclusion to discourage such maneuvers. 

Consequently, the January 22, 1988 order will be reversed, and the case remanded for a judgment in favor of McDonald's. Additionally, McDonald's appeal regarding the denial of a new trial due to alleged trial errors is deemed moot. The Shuders' acceptance of Virginia law is indicated by Mr. Shuder's omission of a loss of consortium claim in Virginia, where such claims are not recognized, and a lack of objection to the absence of comparative negligence instructions in that jurisdiction.

Mr. Shuder is bound by the finding of contributory negligence and cannot assert a claim for loss of consortium under Virginia law, as established in Floyd v. Miller. The jury in the Pennsylvania case was informed of the implications of apportionment of negligence, which led them to believe that the Shuders would recover based on their verdict. However, there are no grounds to question the integrity of the Pennsylvania verdict; it is improbable that the jury would find a plaintiff negligent without believing in the validity of that finding, regardless of the potential reduction in recovery. The issue of collateral estoppel is addressed, noting that Virginia law requires mutuality for its application, unlike Pennsylvania law. Thus, under Virginia law, it would be necessary to ascertain whether McDonald's and McDonald's Virginia share a privity relationship, while Pennsylvania law does not impose this requirement. McDonald's claims that McDonald's Virginia is its franchisee and wholly owned subsidiary, which may render the privity distinction irrelevant.