Michigan Can't Enjoin Testimony In Missouri
U.S. Supreme Court Reverses Eighth Circuit
By Kenneth C. Jones
A Missouri court could order an employee to testify against his former employer in a products liability suit even though a Michigan court -- in unrelated litigation -- had enjoined him from testifying in such cases, the U.S. Supreme Court has ruled.
The employee had agreed to the injunction as part of a settlement of his wrongful discharge claim.
The employer argued that the Missouri court's refusal to honor the injunction and prohibit the testimony was a violation of the "full faith and credit" clause of the Constitution.
But the Court disagreed. "[J]ust as the mechanisms for enforcing a judgment do not travel with the judgment itself for purposes of Full Faith and Credit...," wrote Justice Ruth Bader Ginsburg, "similarly the Michigan decree cannot determine evidentiary issues in a lawsuit brought by parties who were not subject to the jurisdiction of the Michigan court.
"Michigan has no authority to shield a witness from another jurisdiction's subpoena power in a case involving persons and causes outside Michigan's governance."
The case is Baker, et al. v. General Motors Corporation, MLW No. 21738, handed down Jan. 13.
'Michigan Would Rule The World'
"This case certainly has some significance," said Professor David Achtenberg of the University of Missouri-Kansas City School of Law. "Injunction against testimony is a recurring issue, and there has been an increasing attempt to 'buy' silence.
"A very important issue was resolved here -- an injunction against testimony in one state is not enforceable against a non-party in another state," continued Achtenberg, who teaches civil procedure, evidence and a seminar on current Supreme Court cases.
"But I expected the opinion to be more along the lines of Justice Kennedy's concurrence. And I expected the case to be based more on federal law than on state law." He explained that the majority focused on the fact that a judgment does not carry its enforcement procedures into another state.
"We are elated that the United States Supreme Court ruled unanimously in our favor," said J. Kent Emison of Eminence who, along with Robert L. Langdon, represented the plaintiffs in the Missouri products liability suit. "The Court has sent a message that witnesses will not be allowed to be paid for their silence. GM has fought for many years to keep [this witness] from testifying concerning his knowledge of numerous issues, including vehicle fires."
The plaintiffs hired Laurence Tribe of Harvard Law School to argue the case in the Supreme Court. "The questioning at oral argument was spirited," Emison said. And according to Langdon, Kenneth Starr, who argued for GM in the 8th Circuit, told Tribe as he was walking up the Supreme Court steps that he was not going to handle the argument that morning -- he had been too busy with the Whitewater investigation and was not adequately prepared.
"So a young attorney from Starr's firm who had clerked for Justice Kennedy handled the argument," Langdon said. "He told Ginsburg that she was wrong, and that the Restatement was wrong too. She reminded him of this comment later in the argument.
"And she said to him, 'If we rule for you, Michigan will rule the world, because they get to dictate who can testify where.'"
Emison said the case now goes back for retrial in the district court, where the plaintiffs originally won a $11.3 million jury verdict. He added that the plaintiffs did not ask the Supreme Court to review the 8th Circuit's reversal of discovery sanctions imposed by the district court on GM. The district court had directed a finding that the product was defective because of "stonewall" tactics by GM.
But since the 8th Circuit also found that some kind of sanction was "clearly justified," Emison said he expects the district court to hold a "sanction hearing" before the next trial.
Michigan Case
The employee worked for General Motors from 1959 until 1989. He was a member of GM's "Engineering Analysis Group," which studied the performance of GM vehicles involved in products liability litigation. He helped GM lawyers defending the cases -- especially vehicular fire suits -- and often testified as an expert.
Beginning in 1987, the employment relationship soured. GM and the employee negotiated an agreement under which he would retire after serving as a consultant for two years. When the time came for him to retire, however, additional disagreements developed.
In May 1991, the employee was deposed in a Georgia products liability case in which a pickup truck fuel tank had burst into flames after a collision. He testified that the truck's fuel system was inferior to that in competing products, significantly contradicting testimony he had given when serving as an in-house expert witness for GM.
A month later, he sued GM in a Michigan county court, claiming wrongful discharge and other tort and contract claims. GM counterclaimed, contending that he had breached his fiduciary duty to GM by disclosing privileged and confidential information and misappropriating documents.
In August 1992, parties entered into a settlement under which the employee received an undisclosed sum, and stipulated to the entry of a permanent injunction which prohibited him from:
* disclosing any of GM's trade secrets, confidential information or matters of attorney-client work product relating to the subject matter of any products liability litigation, and
* testifying at deposition or trial, and consulting with attorneys, in any litigation involving GM in a products liability case.
An exception provided that the injunction did not apply to the Georgia case. In addition, the settlement agreement between the parties said that if any court ordered the employee to testify, his testimony would "in no way" support a GM action for violation of the injunction or the settlement agreement.
After the settlement was entered, the employee testified against GM both in Georgia and in several other jurisdictions in which he had been subpoenaed to testify.
Missouri Case
The plaintiffs in the Missouri case were the sons of a woman who was killed when a 1985 Chevy S-10 Blazer caught fire during an accident. They alleged that a faulty fuel pump caused the engine fire. GM removed the case to the U.S. District Court in Kansas City.
The plaintiffs sought to depose the employee and to call him as a witness at trial. GM objected to his appearance as a deponent or trial witness on the ground that the Michigan injunction barred his testimony.
After a review of the Michigan injunction and the settlement agreement, the trial court allowed the plaintiffs to depose the employee and to call him as a witness at trial, ruling that: (1) Michigan's injunction would violate Missouri's "public policy" that shielded from disclosure only privileged or otherwise confidential information, and (2) just as the injunction could be modified in Michigan, so a court in another state could modify the decree.
At trial, the employee testified in support of the plaintiffs' claim, identifying and describing a 1973 internal GM memorandum bearing on the risk of fuel-fed engine fires. The court entered judgment on the jury's $11.3 million verdict.
On appeal, the 8th Circuit reversed. Regarding the admissibility of the employee's testimony, the appellate court said that the trial court erroneously relied on Missouri's public policy favoring disclosure of relevant, nonprivileged information, because Missouri had an "equally strong public policy in favor of full faith and credit." The appellate court also said there was insufficient evidence to show that the Michigan court would modify the injunction barring the testimony, noting that if the Michigan court did not intend to block the employee's testimony in products liability cases, "the injunction would...have been unnecessary."
The Supreme Court granted certiorari "to decide whether the full faith and credit requirement stops the [plaintiffs], who were not parties to the Michigan proceeding, from obtaining [the employee's] testimony in their Missouri wrongful death action."
Full Faith And Credit
Article IV, Sect. 1 of the Constitution provides: "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State." Justice Ginsburg began by laying out several principles underlying full faith and credit jurisprudence. She first noted that the purpose of the clause was to make the states "'integral parts of a single nation....'"
In addition, the clause was more "exacting" in regard to judgments -- as opposed to legislative and common law -- because a "final judgment in one State, if rendered by a court with adjudicatory authority over the subject matter and persons governed by the judgment, qualifies for recognition throughout the land....[T]he judgment of the rendering State gains nationwide force."
And contrary to the District Court's ruling, Ginsburg said, there was no "roving 'public policy exception' to the full faith and credit due judgments," which would cripple the purpose of the clause.
Nor was there any precedent that placed "equity decrees" outside the reach of the clause. "We see no reason why the preclusive effects of an adjudication on parties and those 'in privity' with them, i.e., claim preclusion and issue preclusion (res judicata and collateral estoppel), should differ depending solely upon the type of relief sought in a civil action."
However, "[f]ull faith and credit...does not mean that States must adopt the practices of other States regarding the time, manner, and mechanisms for enforcing judgments. Enforcement measures do not travel with the sister state judgment as preclusive effects do; such measures remain subject to the even-handed control of forum law." For example, one state's decree concerning land ownership in another state is ineffective to transfer title, "although such a decree may indeed preclusively adjudicate the rights and obligations running between the parties to the foreign litigation."
'Michigan Lacks Authority'
Given these principles, the issue was: "What matters did the Michigan injunction legitimately conclude?"
Ginsburg said the injunction was "claim preclusive between [the employee] and GM." But the Michigan judgment "cannot reach beyond the [employee]-GM controversy to control proceedings against GM brought in other States, by other parties, asserting claims the merits of which Michigan has not considered. Michigan has no power over those parties, and no basis for commanding them to become intervenors in the [employee]-GM dispute.
"Most essentially, Michigan lacks authority to control courts elsewhere by precluding them, in actions brought by strangers to the Michigan litigation, from determining for themselves what witnesses are competent to testify and what evidence is relevant and admissible in their search for the truth," Ginsburg continued.
"As the District Court recognized, Michigan's decree could operate against [the employee] to preclude him from volunteering his testimony....But a Michigan court cannot, by entering the injunction to which [the employee] and GM stipulated, dictate to a court in another jurisdiction that evidence relevant in the [plaintiffs'] case -- a controversy to which Michigan is foreign -- shall be inadmissible."
This conclusion did not create a "general exception" to the full faith and credit clause, nor did it permit a state to refuse to honor another state's judgment based on the forum's choice of law or policy preferences.
"Rather, we simply recognize that, just as the mechanisms for enforcing a judgment do not travel with the judgment itself for purposes of Full Faith and Credit,...and just as one State's judgment cannot automatically transfer title to land in another State,...similarly the Michigan decree cannot determine evidentiary issues in a lawsuit brought by parties who were not subject to the jurisdiction of the Michigan court.
'Interferes With Missouri'
"The Michigan judgment is not entitled to full faith and credit...because it impermissibly interferes with Missouri's control of litigation brought by parties who were not before the Michigan court."
Ginsburg noted that the settlement agreement between the employee and GM provided that the employee's testimony pursuant to a court order would not constitute a violation of the agreement or the injunction. While the 8th Circuit regarded this provision "as merely a concession by GM that 'some courts might fail to extend full faith and credit to the [Michigan] injunction,'" Ginsburg said that "we see no altruism in GM's agreement not to institute contempt or breach-of-contract proceedings against [the employee] in Michigan for giving subpoenaed testimony elsewhere.
"Rather, we find it telling that GM ruled out resort to the court that entered the injunction, for injunctions are ordinarily enforced by the enjoining court, not by a surrogate tribunal.
"In sum, Michigan has no authority to shield a witness from another jurisdiction's subpoena power in a case involving persons and causes outside Michigan's governance. Recognition, under full faith and credit, is owed to dispositions Michigan has authority to order. But a Michigan decree cannot command obedience elsewhere on a matter the Michigan court lacks authority to resolve," Ginsburg concluded.
Kennedy Concurrence
Justice Antonin Scalia filed a concurring opinion. Justice Anthony Kennedy, in a concurring opinion joined by Justices Sandra Day O'Connor and Clarence Thomas, wrote that "well-settled" full faith and credit principles rendered that majority's "extended" analysis "unnecessary and, with all due respect, problematic in some degree."
Kennedy said he was concerned that the majority's opinion -- although it recited the general principle that a second state had the "obligation to give effect to another State's judgments even when the law underlying those judgments contravenes the public policy of the second State" -- seemed to announce "two broad exceptions.
"First, the majority would allow courts outside the issuing State to decline to enforce those judgments 'purport[ing] to accomplish an official act within the exclusive province of [a sister] State.' Second, the basic rule of full faith and credit is said not to cover injunctions 'interfer[ing] with litigation over which the ordering State had no authority.'
"[I]t is unclear what it is about the particular injunction here that renders it undeserving of full faith and credit. The Court's reliance upon unidentified principles to justify omitting certain types of injunctions from the doctrine's application leaves its decision in uneasy tension with its own rejection of a broad public policy exception to full faith and credit."
In any event, Kennedy said, not even Michigan law would bind the Missouri plaintiffs, because they were not parties to the litigation between the employee and GM. Therefore, there was no need for the Supreme Court "to decide whether full faith and credit applies to equitable decrees as a general matter or the extent to which the general rules of full faith and credit are subject to exceptions," Kennedy concluded.
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(The full text of the U.S. Supreme Court's opinion in Baker, et al. v. General Motors Corporation, MLW No. 21738, is available from Missouri Lawyers Weekly -- 29 pages. Call (800) 685-2147.)
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