800 F2d 660 Giotis v Apollo of the Ozarks Inc Gillespie OpenJurist — Volkswagen Apollo

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800 F2d 660 Giotis v. Apollo of the Ozarks Inc

800 F.2d 660


5 Fed.R.Serv.3d 1310

GIOTIS, Plaintiff-Appellant,

APOLLO OF THE INC. Red Rocket Fireworks, a

and Cyril James Warrilow,

Underwriter, Defendants-Appellees,

and

Malcolm Defendant and Third-Party Plaintiff-Appellant,

R. Kerkman, Cook Franke, Wis. for plaintiff-appellant.

Wayne M. Simarski Stack, Ltd. G. Ryan, Minaham Peterson, Wis. for defendants-appellees.

Before Chief Judge, CUDAHY, Judge, and BARKER, District

This appeal comes to us the district court’s grant of by defendants Apollo of the Ozarks, (Apollo) and Red Rocket Fireworks Rocket) to dismiss for lack of jurisdiction. This case again requires this to explore the limitations of personal over non-consenting, nonresident that are mandated by the constitutional of due process. For the reasons set forth we reverse the judgments of the district granting these defendants’ to dismiss.

* This case out of injuries suffered by plaintiff Giotis (Giotis) at a Fourth of party in Wisconsin. Third-party Malcolm Gillespie, Jr. (Gillespie), a resident, had purchased fireworks Capitol Fireworks Company by completing a mail order that appeared in Capitol’s in the magazine American Rifleman. shipped the fireworks to White Lake, Minnesota, where resided at the time. Gillespie the fireworks with him to a party in Wisconsin, on July 4, 1982. and others discharged the fireworks, and one of the allegedly struck and injured who subsequently sued Gillespie, Red Rocket and others.

Capitol is a of fireworks, and allegedly sold the to Gillespie that caused the to Giotis. Capitol is an Illinois doing business in Springfield, Capitol solicited business and through various magazines, advertising nationwide through the Rifleman magazine. It was through the in American Rifleman that learned about Capitol and its Capitol’s advertisement stated the fireworks would not be sold prohibited by law, but Capitol the fireworks to Gillespie’s residence in and both Minnesota and Wisconsin fireworks.

Apollo is a manufacturer of fireworks may have manufactured and distributed to the fireworks that caused the to Giotis. Apollo is a Missouri which had a business office and outlet in Stanton, Missouri, and retail outlet in Marshall, Both retail outlets located on the interstate highway. advertised on billboards placed the interstate highway in Missouri, in newspapers, and on local radio. In and 1981, Apollo’s president, S. Scaman, said that may have distributed fireworks in states, including Alabama, Indiana, Kansas, Louisiana, Mississippi, Missouri, Ohio, South Carolina, Tennessee, and but not in Wisconsin. Scaman at one point Apollo’s business as selling to big wholesalers who, in turn, to others. Capitol is one of the Illinois to whom Apollo distributed

Red Rocket is a distributor of fireworks may have distributed to Capitol the that caused the injuries to Red Rocket is a Missouri corporation offices in Missouri and Louisiana. Red sells primarily (85-90% of its to distributors, and during 1982 fireworks to distributors in at least ten but not in Wisconsin. Red Rocket also fireworks directly to consumers gift shops located at its and has two signs along the interstate near Strafford, Missouri, its retail outlet there.

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to sustaining injuries from the on July 4, 1982, Giotis suit against Gillespie, Red Rocket, and various other fireworks producers, and insurance Gillespie filed a third-party against Apollo, Red Rocket, and others, for contribution and/or On December 21, 1984, the district granted Apollo’s motion to for lack of personal jurisdiction. The court subsequently granted Red motion to dismiss for lack of jurisdiction. This appeal

Before reaching the merits of dispute over personal we must first deal some procedural preliminaries. specifically, Red Rocket admits it failed to raise the defense of jurisdiction in its initial answer to complaint, as required by Fed.R.Civ.P. However, Gillespie, the third-party compounded the problem by never in the court below to Red Rocket’s untimely motion raising the of personal jurisdiction. We are thus with the problem of what to do a party raises for the first on appeal the opposing party’s to timely raise the affirmative of personal jurisdiction. In short, we decide whether a party can a waiver of the defense of personal

There is no dispute that a failure to timely raise the of personal jurisdiction waives the Fed.R.Civ.P. 12(h)(1) is unequivocal on point, and Red Rocket has admitted in its to this Court that it to timely raise this It is equally clear that as a rule an argument that is not below cannot be raised for the time by an appellant in this Singleton v. Wulff, 428 U.S. 121, 96 S.Ct. 2868, 49 L.Ed.2d 826; Gehl v. Commissioner, 795 F.2d 1324. (7th Cir.1986); National v. McNeil, 784 F.2d 817, 825 Cir.1986); Mattingly v. Heckler, 784 258. 261 n. 2 (7th Cir.1986); v. Markhon Industries, Inc. 781 613. 618 (7th Cir.1986). We further recognized that can be a waiver of a waiver, i.e. a of waiver can itself be waived by not raised. Lynk v. LaPorte Court No. 2, 789 F.2d 554. 565 Cir.1986); see also Jordan v. 728 F.2d 1. 4 (1st Cir.1984). we have also noted this waiver rule has its and we retain discretion to reach an initially raised on appeal in situations. Gehl, 795 F.2d at There are several reasons for the rule requiring issues on to have been raised the desire to receive the district views on the issue, the need for a record to answer the issue, and the to avoid having to decide an that might not have had to be if the district court had had the opportunity to the issue. These considerations our decision to exercise discretion to the issue; for example, we are more to reach an issue if it does not a new factual record. National 784 F.2d at 826; Sgro v. States, 609 F.2d 1259. n. 8 (7th Cir.1979).

In this case, however, the issue not raised below was Red failure to plead the defense of jurisdiction in a timely fashion, and the court proceeded to reach the of the personal jurisdiction issue objections from the parties, 15(b) might be relevant. 15(b) states that an issue not raised by the pleadings is tried by the express or implied of the parties, the issue is treated as if it had raised in the pleadings. If Rule were to apply to the instant it would mean that has impliedly consented to litigate the of personal jurisdiction, thereby Red Rocket’s failure to raise the in a timely fashion.

The issue of Rule 15(b) applies to the case is a difficult question. 15(b) applies to affirmative not properly included in the answer. v. Riggsby, 622 F.2d 290. 294 Cir.1980); Wagner v. United 573 F.2d 447. 452 (7th Federal Savings and Loan Corp. v. Hogan, 476 F.2d 1186 (7th Cir.1973); see W RIGHT M ILLER, 20 FEDERALPRACTICE AND Sec. 1492 (1971) referred to as Wright Miller). Court and others have Rule 15(b) to reach a affirmative defense that was not included in defendant’s answer in the court but was not objected to by the plaintiff the defense was eventually raised and was and decided by the district court on the See, e.g. Wagner, 573 at 452; Bradford Audio v. Pious, 392 F.2d 67. 73-74 (2d see generally Wright Miller 1494. However, these cases involve general defenses governed by Civil 8(c) and 8(d), whereas the case involves one of the seven affirmative defenses governed by 12(h). The failure to plead any of affirmative defense can result in a but Rule 12(h) explicitly the waiver of the seven special defenses, whereas the question of the of other affirmative defenses an explicit textual basis in 12(h) and typically involves of a balancing test (fair, and inexpensive determination of every versus prejudice of a delayed giving the district court flexibility. Wright Miller 1278, 1394. One could that Rule 15(b) has applied to Rule 8(c) affirmative defenses because of greater flexibility on the issue of the of general affirmative defenses, and should not be applied to the special defense of personal jurisdiction by the explicit commands of Rule It should be noted, however, Rule 15(b) itself to make any such distinction types of affirmative defenses.

We need not resolve this issue, however, because Red failed to timely raise the of Rule 15(b) in this Red Rocket never mentioned 15(b) in their briefs to Court.1 Instead, Red Rocket raised the issue at oral An issue not timely raised in the to this Court is waived, and the Rule 15(b) argument is for purposes of this appeal.

Rule 15(b) is waived, our of whether Gillespie has waived Red waiver of the defense of personal must rest on general considerations outlined above. See pp. 663-664. Red Rocket has admitted it failed to raise in a timely the defense of personal jurisdiction, and so we easily reach and decide issue without the benefit of a record. Other courts reached the merits of this and issues where plaintiff to raise it below, even such conduct by plaintiff normally constitute a waiver of the See, e.g. Myer v. Dental Association, 695 F.2d 716 (3d certiorari denied, 462 U.S. 103 S.Ct. 2453, 77 L.Ed.2d (defendant waived defense of jursidiction by not timely raising defense, even though never raised this in district court); Pila v. Leasing, 551 F.2d 941 (1st (defendant waived defense of service of process by not timely this defense, even plaintiff never raised defect in district court). regardless of our decision on this issue, we still have to the issue of personal jurisdiction respect to Apollo, and that legal analysis applies equal force to whether is personal jurisdiction with to Red Rocket. Given our analysis of the personal jurisdiction issue, if we decided that Gillespie has Red Rocket’s pleading defect, the of the personal jurisdiction issue is no We therefore reach the merits of the jurisdiction issue with to both defendants.

A federal district court in a case has personal jurisdiction a non-consenting, nonresident defendant if and if a court of the state in which the court is sitting would such jurisdiction (in our case Afram Export Corp. v. Halyps. S.A. 772 F.2d 1362 (7th Cir.1985); Ice Cream C. v. R.C.H. Tool 726 F.2d 1209. 1212 Cir.1984). The determination of whether a court would have over a non-consenting, nonresident is a two-step process. The first is whether defendant is subject to under an applicable Wisconsin long-arm statute. If not, there is no jurisdiction, and the inquiry is at an If the answer to the first question is however, then the Wisconsin must determine whether the of jurisdiction under the long-arm does not run afoul of the due process of the Fourteenth Amendment. Matter of Ins. Corp. 110 Wis.2d 72, 76, 327 648, 650 (1983). A district sitting in diversity must not ask these same two questions, but ask them in the same order, it is obviously preferable to decide a on statutory rather than grounds.

In examining the statutory question, the issue is whether Wisconsin to restrict personal jurisdiction nonresident defendants above and the restrictions imposed by due process. The due requirements are merely the minimum possessed by nonresident defendants, and a is of course free to provide defendants with greater See, e.g. Cook Inc. v. Lexington United 87 Ill.2d 190, 197-198, 57 730, 733, 429 N.E.2d 850 (1981) (the boundaries or under [the Illinois] are not to be equated with the ‘minimum test under the due process George v. Strick Corp. 496 10. 12-13 (10th Cir.1974) long-arm statute does not courts’ jurisdiction to the maximum permitted by the due process clause). states have long-arm that are intended to be co-extensive the due process clause. See, Hedrick v. Daiko Shoji Co. Osaka, 715 F.2d 1355. (9th Cir.1983) (Oregon statute confers jurisdiction the outer limits’ of due process); Dredging Corp. v. Dredge Corp. 744 F.2d 1081. (5th Cir.1983) (limits of long-arm statute synonymous those of due process). With latter type of long-arm the first step becomes and a court need address the due process requirements. Bean Corp. 744 F.2d at 1083; 715 F.2d at 1357-1358.

In the instant the relevant long-arm statute is Sec. 801.05(4) (1977), provides in pertinent part

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