Systems Solutions of Kentucky LLC, v. DHL Express (USA), Inc., No. 21-2505 (7th Cir. 2022)

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Justia Opinion Summary

Rankins, a DHL employee, was seriously injured at work when a cable within a winch system snapped. Rankins received workers’ compensation benefits. The winch system was designed and installed by SSK. Rankins brought products-liability claims in state court against SSK. DHL lost the physical pieces of the winch system after the suit was removed to federal court. SSK brought a third-party suit against DHL seeking damages for the spoliation of evidence and seeking contribution under the Illinois Joint Tortfeasor Contribution Act. DHL settled with Rankins by waiving its workers’ compensation lien ($455,229.17) and paying an additional $87,500. DHL then argued that its good-faith contribution settlement with Rankins entitled it under state law to a full dismissal of all third-party claims stemming from Rankins’s injury. The district court rejected SSK’s argument that the settlement did not compensate SSK for its own spoliation-related difficulties and dismissed SSK’s third-party complaint.

The court found that, under FRCP 54(b), there was no just cause for delaying SSK’s appeal of the dismissal of the spoliation claim. The Seventh Circuit dismissed the appeal for lack of jurisdiction. The spoliation and product liability claims are not factually and legally separable to the extent required by Rule 54(b), so there is no final judgment.

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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 21-2505 ANTHONY RANKINS, Plaintiff, v. SYSTEM SOLUTIONS OF KENTUCKY, LLC, Defendant/Third-Party Plaintiff-Appellant, and LUMMUS CORP., Defendant, DHL EXPRESS (USA), INC., v. Third-Party Defendant-Appellee. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 19 C 3775 — Sharon Johnson Coleman, Judge. ____________________ ARGUED JANUARY 12, 2022 — DECIDED JULY 11, 2022 ____________________ Before FLAUM, EASTERBROOK, and WOOD, Circuit Judges. 2 No. 21-2505 WOOD, Circuit Judge. Anthony Rankins, a DHL employee, was seriously injured at DHL’s Chicago facility when a cable within a winch system snapped. The winch system was designed and installed by Systems Solutions of Kentucky, LLC (SSK), and so Rankins brought products-liability claims in state court against SSK and its sole member, Lummus Corporation. But DHL lost the physical pieces of the winch system after the suit was removed to the federal district court. After learning that, SSK brought a third-party suit against DHL seeking damages for the spoliation of evidence. The district court dismissed SSK’s third-party claim after DHL settled with Rankins, nding that DHL’s contribution payments were enough to discharge all liabilities related to Rankins’s injury. Recognizing that SSK sought to press its spoliation claim against DHL, the court certi ed its resolution of the SSK third-party claim for appeal by issuing an order styled as a Federal Rule of Civil Procedure 54(b) partial nal judgment. Because the spoliation claim is intimately related to the products-liability claims still pending in the district court, we hold that Rule 54(b) was not available for an immediate appeal. We therefore dismiss SSK’s appeal for lack of jurisdiction. If SSK seeks to appeal the district court’s rejection of its spoliation issue and DHL’s dismissal from the case, it must wait until a nal judgment has been entered. I On August 6, 2018, Rankins and three other DHL employees were using a winch system, which had been designed and installed by SSK, to unload cargo from a freight trailer at DHL’s O’Hare Gateway Facility. Because another DHL employee allegedly had not disengaged the locks securing the No. 21-2505 3 cargo to the bed of the trailer, the cable that had been holding the cargo in place snapped and struck Rankins in the leg. Rankins received workers’ compensation bene ts for his injury. He then brought state products-liability claims in the Illinois circuit court against SSK, Lummus Corporation (SSK’s sole member), and Allied Power Products, Inc. (the manufacturer of the winch device at the center of the winch system), on the theory that the failure of the winch system caused his injuries. Allied Power removed the case to federal district court and, in turn, brought a third-party complaint with a claim of contribution against DHL. (The district court has since dismissed Allied Power from this case, and so that thirdparty complaint disappeared.) Throughout the early stages of litigation, the physical pieces of the winch system—including the winch cable, bridle, and slide lock—were in DHL’s possession. But on March 19, 2021, counsel for DHL informed the parties that DHL had somehow lost the winch components. Alleging that the loss of the evidence hindered its defense strategy in the suit with Rankins, SSK led a third-party complaint against DHL on June 7, 2021. That complaint asserted that SSK was entitled to contribution from DHL under the Illinois Joint Tortfeasor Contribution Act, 740 ILCS § 100/2, and it raised a state-law claim of negligent spoliation. Meanwhile, DHL settled with Rankins by waiving its workers’ compensation lien in the amount of $455,229.17 and paying an additional $87,500. DHL then led a Motion to Dismiss Pursuant to Settlement on June 28, arguing that its good-faith contribution settlement with Rankins entitled it under state law to a full dismissal of all third-party claims stemming from Rankins’s injury. At a hearing on the matter, SSK argued that the settlement contributed to Rankins’s injury costs and perhaps 4 No. 21-2505 even compensated Rankins for any trouble stemming from the loss of the physical evidence, but it did not compensate SSK for its own spoliation-related di culties. Unpersuaded by SSK’s arguments, the district court dismissed SSK’s thirdparty complaint against DHL in full. Then on July 30, the district court entered a minute order nding that, pursuant to Federal Rule of Civil Procedure 54(b), there was no just cause for delaying SSK’s appeal of the dismissal of the spoliation claim against DHL. We need not further elaborate on the details of this dispute, as this case is not properly before us at this time. As we explored at oral argument, the spoliation and productsliability claims are not factually and legally separable to the extent required by Rule 54(b), and so there is no nal judgment over which we can now take appellate jurisdiction. II Rule 54(b) permits a federal court to “direct entry of a nal judgment as to one or more, but fewer than all, claims” when the court “expressly determines that there is no just reason for delay.” Fed. R. Civ. P. 54(b). But the rule does not provide an open invitation for the district court to certify a ruling for interlocutory appeal. Factory Mut. Ins. Co. v. Bobst Group USA, Inc., 392 F.3d 922, 924 (7th Cir. 2004). Instead, two requirements must be met. First, we must be sure that the district court’s order “was truly a nal judgment.” Peerless Network, Inc. v. MCI Comms. Servs., Inc., 917 F.3d 538, 543 (7th Cir. 2019). We test this by examining de novo the degree of overlap between the certi ed claim and all other parts of the case that are still pending in the district court. This enables us to limit Rule 54(b) to situations where concentrating all claims in a single appeal so as to preserve judicial resources is No. 21-2505 5 unnecessary because the certi ed claim is akin to a standalone lawsuit. Second, we must consider whether the district court abused its discretion in nding no just reason to delay the appeal of the adjudicated claim. Id. Taken together, these requirements help us to avoid “piece-meal appeals,” CurtissWright Corp. v. Gen. Elec. Co., 446 U.S. 1, 10 (1980), that tend to undermine judicial e ciency. And because 28 U.S.C. § 1291 a ords us appellate jurisdiction only over “ nal decisions,” we must dismiss for want of jurisdiction if either of Rule 54(b)’s requirements are not met and no other basis for interlocutory review exists. We need not look further than Rule 54(b)’s rst requirement to dismiss this appeal. As we just noted, to determine whether an order truly is “ nal,” we ask whether there is signi cant factual and legal overlap between the claim proposed for appeal and the part of the case pending in the district court. See Factory Mut. Ins. Co., 392 F.3d at 924 (“[W]e have insisted that Rule 54(b) be employed only when the subjects of the partial judgment do not overlap with those ongoing in the district court.”). Claims are intertwined, and thereby outside the bounds of Rule 54(b) treatment, if the resolution of the claims pending in the district court could “undercut” or otherwise alter the “ nal” claim. VDF FutureCeuticals, Inc. v. Stiefel Laboratories, Inc., 792 F.3d 842, 845 (7th Cir. 2015); cf. Factory Mut. Ins. Co., 392 F.3d at 924 (“It makes little sense for an appellate court to address contribution when that subject may be made academic by the outcome of trial. Everything we do on this appeal could be wasted.”). SSK’s appeal is ill-suited for Rule 54(b) treatment because the spoliation claim depends on whether SSK’s defense against Rankins’s products-liability claims will be hamstrung 6 No. 21-2505 by the loss of the physical evidence. Perhaps SSK will be disadvantaged by its absence, but we cannot say from this vantage point how prejudicial this will be. It may turn out that SSK can defeat Rankins’s claims notwithstanding its inability to use that evidence. Perhaps the absence of the physical evidence will work in SSK’s favor. The answer will emerge only once the products-liability claims are resolved by the district court. Given this entanglement and the needless duplication that would result if we were to pass judgment on the spoliation issue at this juncture, the district court’s dismissal of SSK’s spoliation claim was not su ciently distinct from the remainder of the case to qualify as a “ nal” decision eligible for Rule 54(b) certi cation. And that means we lack appellate jurisdiction under 28 U.S.C. § 1291. Since we have no jurisdiction over the appeal, we obviously have nothing to say about the merits of the spoliation issue or the district court’s dismissal of DHL from the suit. We have not considered whether a claim for spoliation exists under Illinois state law separate and apart from contribution claims, or whether DHL’s settlement with Rankins discharges DHL of potential liability to SSK with respect to the spoliation issue. If SSK seeks to appeal these determinations in the future, it must wait for the district court to issue a nal judgment over which we can take jurisdiction. III Because the district court erred in granting partial nal judgment on SSK’s spoliation claim, we VACATE the Rule 54(b) judgment and DISMISS this appeal for want of jurisdiction.
Primary Holding
Seventh Circuit dismisses an appeal for lack of jurisdiction; product liability and spoliation claims were not factually and legally separable to the extent required by Rule 54(b).

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