Follette v. Wal-Mart Stores, Inc.Follette v. Wal-Mart Stores, Inc.
The plaintiffs, Kent and Jane Follette, brought this breach of warranty suit on behalf of their minor son, Andrew. They now appeal the grant of a motion for summary judgment filed by the defendant, Wal-Mart. The District Court held that the Follettes’ cause of action was barred by res judicata. Alternatively, that Court held that the suit was barred by the Arkansas statute of limitations. For the reаsons set forth below, we reverse and remand the case for further proceedings.
I.
The Follettes allege that on August 21, 1989, a jug of hairspray purchased from Wal-Mart exploded, causing injuries to their minor son Andrew. Unfortunately for their case, they allowed the one-year Louisiana limitations period to run before pursuing their claims against Wal-Mart. Thus began the odd and complicated series of procedural events which culminate in the case before us.
The Follettes filed their original suit in the United States District Court for the Eastern District of Texas in order to avoid Louisiana‘s one-year limitations period. Wal-Mart moved to dismiss the suit based on a lack of jurisdiction over the person of the defendant. The Texas court denied this motion, holding that Wal-Mart had consented to the general jurisdiction of the Texas courts by virtue of its being liсensed to do business in Texas. (It later became clear that this holding was erroneous according to Fifth Circuit law.) The Texas court then transferred the case, pursuant to
This transfer, combined with the erroneous ruling on personal jurisdiction, proved fatal to the Follettes’ suit. Soon after the transfer, the United States Court of Appeals for the Fifth Circuit held that a foreign corporation does not consent to the general jurisdiction of a statе merely by registering to do business in that state and appointing an agent for the service of process in that state. Siemer v. Learjet Acquisition Corp., 966 F.2d 179 (5th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1047, 122 L.Ed.2d 356 (1993). Subsequently, the Louisiana court granted Wal-Mart‘s motion for summary judgment, reasoning that, since the Texas court never had jurisdiction ovеr the person of Wal-Mart, the Louisiana court was free to apply the Louisiana limitations period and dismiss the case. 829 F.Supp. 840 (W.D.La.), aff‘d without opinion, 998 F.2d 1014 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1187, 127 L.Ed.2d 537 (1994). (Normally the law of the transferor forum follows a case transferred under Section 1404(a), but that is not true when the transferor court lacked jurisdiction.)
The Follettes then filed this suit on August 18, 1993, in the United States District Court for the Eastern District of Arkansas. For the first time, they allege a breach of the implied warranty of merchantability found in Article 2 of the Uniform Commercial Code (U.C.C.). They did not advance this theory in the previous case because Louisianа has not adopted Article 2. In order to recover damages for personal injury from a non-manufacturing seller in Louisiana, a plaintiff must prove negligence. Jones v. Menard, 559 F.2d 1282, 1284 (5th Cir.1977).
Citing the general rule against claim splitting, the Arkansas court held that the Follettes’ warranty claim arose from the sаme transaction as the previously litigated tort claims, which were dismissed with prejudice in the Louisiana suit. Thus, the warranty claims should have been asserted along with the tort claims in the original suit. As a result, the Arkansas court held that res judicata prevents their assertion now.
Alternatively, the Arkаnsas court held that the Arkansas statute of limitations had expired before the Follettes filed their warranty suit. According to the court, breach-of-warranty actions which seek damages for personal injury are products-liability actions under Arkansas law. As such, they are subject tо the three-year limitations period found in the Product Liability Act of 1979.
II.
We first consider whether the Follettes’ warranty claims were filed within the Arkansas limitations period. We give plenary review to a district court‘s determination of state law. Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991). The Follettes argue that the general four-year limitations period found in the UCC governs this case.
The Product Liability Act defines products-liability actions as “all actions brought for or on account of personаl injury ... caused by, or resulting from, the manufacture, construction, design, formula, preparation, assembly, testing, service, warning, instruction, marketing, packaging, or labeling of any product....”
If the Follettes were suing on their own behalf, this holding would end the matter. This suit, however, was brought on behalf of the Follettes’ minor son. They argue, therefore, that Arkansas‘s general savings statute prevents the running of the three-year limitations period. We agree.
The Arkansas savings statute provides that any minor entitled to bring an action may do so within three years after coming of age. See
The Arkansas Supreme Court case of Graham v. Sisco, supra, is instructive. There, the parents of a minor allegedly injured by the malpractice of a doctor brought suit on behalf of the minor after the ordinary statute of limitations for malprаctice actions had run. The Court found that the suit was timely because of the savings statute. This was so even though there was a specific limitations period for malpractice actions. See Ark.Stat.Ann. Sec. 34-2616 (superseded by
Likewise, the Follettes are suing on behalf of their minor son. The theory they advance, breach of the implied warranty of merchantability, has its roots in the common law, though it has been changed by a statutory scheme, the U.C.C. Thus, the savings statute applies to prevent the limitations period from running.
III.
We are left, then, to consider whether the prior Louisiana decision precludеs the claim that the Follettes now assert. When a federal court is sitting in diversity, the preclusive effect of a prior judgment is determined by the preclusion rules of the forum which provided the substantive law underlying that prior judgment. Hicks v. O‘Meara, 31 F.3d 744, 746 (8th Cir.1994). This rule applies when the original judgment is that of another federаl court sitting in diversity. Austin v. Super Valu Stores, 31 F.3d 615, 617-18 (1994).1 Thus, the question in this case is whether the Louisiana state courts would give preclusive effect to the original judgment. We conclude that they would not.
Louisiana‘s general rule of claim preclusion is virtually identical to that of the Restatement 2d of Judgments. All actions arising from the same “transaction or occurrence that is the subject matter” of a prior judgment are barred.
An examination of the Louisiana cases defining exceptional circumstances mandates the deсision we reach today. For example, in Jenkins v. State, 615 So.2d 405 (La.App.1993), the plaintiff was allowed to pursue his second suit in spite of a prior dismissal with prejudice for failure to prosecute. In reaching its decision, the Louisiana Court of Appeals noted that the plaintiff alleged “a horrendous injustiсe” (fraudulent conviction of murder and 30 years in prison) and that “his predicament is the result of his attorney‘s conduct and not his own.” Id. at 406-07. In Billiot v. Lebeouf Brothers Towing Co., 640 So.2d 826 (La.App.1994), the exceptional-circumstances clause was applied where the prior federal cоurt action for violation of the Longshore and Harbor Workers’ Compensation Act was dismissed with prejudice because one defendant was not the employer of the deceased worker and the other was immune from liability under that Act. In the opinion of the Louisiana Cоurt of Appeals, the prior judgment should have been without prejudice because it was a mere procedural recognition of no right of action. The merits of the plaintiffs’ claims had not been reached. Thus, the plaintiffs were allowed to pursue their Jones Act clаims in a second suit. Otherwise, res judicata would forever bar the plaintiffs “from asserting their claims arising from the alleged wrongful death of their husband and father.” Id. at 829. Such a result would be a “procedural windfall” to the defendant. Id.
Likewise, in the case before us, the Follettes find themselves in a bizarrе predicament. The predicament in this case was caused by the error of a court. The correct course of action for the Texas federal court would have been either to dismiss the suit for want of personal jurisdiction, or to transfer the suit to another jurisdictiоn where personal jurisdiction and venue did exist, the Eastern District of Arkansas, for example.
IV.
For the reasons stated above, we find that the Follettes’ case is not barred by the Arkansas statute of limitations. Furthermore, exceptional circumstances exist precluding the application of res judicata in this case. Therefore, we reverse the judgment of the District Court and remand this case for further proceedings.