The opinion of the court was delivered by: Keenan, District Judge:
Before the Court is the motion of defendant and
counter-plaintiff Krueger, Inc. ("Krueger") for an Order vacating
an Order dated April 13, 1987 in which the Court granted the
motion to dismiss of third-party defendants Tom John and Alan
Morse for lack of personal jurisdiction. Fed.R.Civ.P. 60. Also
before the Court is a motion for partial summary judgment by
Facit, Inc. ("Facit"), Human Factors Technologies, Inc. ("HFT")
and Ericsson Information Systems, AB ("Ericsson") pursuant to
Federal Rule of Civil Procedure 56.*fn1
The facts of this case are set forth in a thorough decision
reported at 657 F. Supp. 1069 (S.D.N.Y. 1989) (Walker, J.) and
will be summarized for purposes of this discussion.
Plaintiff Facit is a distributor of office furniture referred
to as "computer support furniture." Facit is incorporated under
the laws of Delaware with its principal place of business in New
Hampshire. Defendant Krueger is a Wisconsin corporation with its
principal place of business in Wisconsin, and also manufactures
computer support furniture. Third-party defendants Jahn and
Morse, both former Facit employees, currently serve as officers
of third-party defendant HFT.
Facit initiated this suit in 1986, alleging that Krueger
breached a 1983 settlement agreement with it by failing to make
payments due under the settlement. Krueger counterclaimed,
alleging that Facit, together with the additional defendants on
counterclaims, was responsible for breaching the 1983 agreement.
Pursuant to the agreement, Krueger had exclusive rights to
manufacture the "920 Series," a specific line of computer support
furniture. Krueger alleges that Facit violated Krueger's
exclusive marketing rights under the agreement by selling and
distributing the "Generation III" line of computer support
furniture, which Krueger alleges is a virtual copy of the 920
In January 1984, the parties entered into an agreement settling
litigation commenced by Krueger in the United States District
Court for the Eastern District of Wisconsin. According to the
settlement, Facit agreed to discontinue selling the Generation
In April 1984, HFT was incorporated under the laws of New
Hampshire. In May 1984, HFT purchased the Facit Furniture
Division. Krueger alleges that HFT was founded by Facit for the
purpose of distributing the Generation III line, in violation of
the settlement agreement. Krueger's counterclaims allege tortious
interference with contractual relations against Tom Jahn, Alan
Morse and HFT. Krueger also alleges unfair competition against
Facit and HFT.
Krueger bases its motion to vacate on the ground that the April
13, 1987 Order was premised on the "fiduciary shield" doctrine,
which subsequently was held by the New York Court of Appeals to
be unavailable to defeat personal jurisdiction in New York. See
Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 527 N.Y.S.2d 195,
522 N.E.2d 40 (1988). As stated in Kreutter, the fiduciary shield
doctrine "provides that an individual should not be subject to
jurisdiction if his dealings in the forum State were solely in a
corporate capacity." 527 N.Y.S.2d at 199, 522 N.E.2d at 44.
The following facts are pertinent to this discussion. On April
13, 1987, Judge Walker issued a decision granting Jahn and
Morse's motion to dismiss for lack of personal jurisdiction. On
March 29, 1988, the New York Court of Appeals decided Kreutter.
On July 25, 1988, upon HFT's request, Judge Walker recused
himself from the case. On August 4, 1988, Krueger wrote to Judge
Walker requesting that he decide a pending discovery motion
regardless of his recusal. On December 13, 1988, Krueger wrote to
Judge Walker requesting a pre-motion conference for a motion to
vacate his prior Order. The case was re-assigned to Judge Keenan
on February 7, 1989. A conference was held with Judge Keenan on
March 7, 1989, during which a motion schedule was determined.
Krueger filed its Rule 60(b) Notice of Motion on March 13, 1989.
Krueger brings its motion under Rule 60(b) without identifying
a particular subsection. In its supporting brief Krueger argues
that 60(b)(5) and (6) apply, and in its reply brief it argues
that 60(b)(1) applies. Rule 60(b) provides:
On motion and upon such terms as are just, the court
may relieve a party or a party's legal representative
from a final judgment, order, or proceeding for the
following reasons: (1) mistake, inadvertence,
surprise, or excusable neglect; . . . (5) the
judgment has been satisfied, released, or discharged,
or a prior judgment upon which it is based has been
reversed or otherwise vacated, or it is no longer
equitable that the judgment should have prospective
application; or (6) any other reason justifying
relief from the operation of the judgment. The motion
shall be made within a reasonable time, and for
reasons (1), (2), and (3) not more than one year
after the judgment, order, or proceeding was entered
A motion under Rule 60(b) is addressed to the discretion of the
court, and the Rule attempts to strike a proper balance between
the conflicting principles of the finality of litigation and that
justice should be done. C. Wright & A. Miller, Federal Practice
and Procedure § 2851 at 140 (1973 & Supp. 1989). Courts may
consider equitable principles when determining a Rule 60 motion.
Rule 60 is not, however, to be used as a substitute for appeal.
The Court must first determine under which subsection of Rule
60(b) Krueger's motion falls. It has been held that Rule 60's
catch-all provision found in 60(b)(6) may be used "only if other,
more specific grounds for relief encompassed by the rule are
inapplicable." Maduakolam v. Columbia University, 866 F.2d 53, 55
(2d Cir. 1989). Because the Court finds that Krueger's motion
falls under Rule 60(b)(1), the other two subsections referred to
need not be addressed.
Rule 60(b)(1) allows for relief from a final judgment, order or
proceeding for "mistake, inadvertence, surprise or excusable
neglect." Krueger argues that 60(b)(1) applies because Judge
Walker made a mistake in finding that New York recognizes the
fiduciary shield doctrine to defeat the assertion of personal
jurisdiction under New York's long-arm provision. Krueger
indicates that the Kreutter court did not change New York law
with its decision, but held that there is not and never has been
a fiduciary shield doctrine in New York. See Kreutter, 527
N YS.2d at 200-02, 522 N.E.2d at 45-7 ("none of our prior
decisions have adopted the fiduciary shield doctrine"). Jahn and
Morse argue that the prior decision of the Court was not a
"mistake" in that the decision was made in reliance on cases of
this Circuit which have applied the fiduciary shield doctrine,
and that therefore this motion cannot fall under Rule 60(b)(1).
Alternatively, Jahn and Morse argue that under Rule 60(b)(1),
the motion is untimely. A time limitation is placed on motions
made under subsection (1): "The motion shall be made . . . not
more than one year after the judgment, order, or proceeding was
entered or taken." The one year period has been described by the
Second Circuit as an "absolute one-year bar." Amoco Overseas Oil
Co. v. Compagnie Nationale Algerienne de Navigation,
605 F.2d 648, 656 (2d Cir. 1979). Krueger points out, however,
and the Court finds, that because the April 13, 1987 Order
dismissed only some of the additional defendants on
counterclaims, it was not a final and appealable order. 28 U.S.C. § 1291.
See C. Wright, Federal Courts § 98 at 660 (4th ed. 1983).
The one year limitation period for claims under Rule 60(b)(1)
therefore cannot begin to run until a final judgment is entered.
See Max M. v. Thompson, 585 F. Supp. 317, 321 (N.D.Ill. 1984). The
Court further notes that, although the motion to vacate was filed
almost one year after the Kreutter decision was issued, the
intervening recusal of Judge Walker as well as the delay in the
re-assignment of this case present extenuating circumstances
under which delay is excusable. The Court thus finds Krueger's
motion to have been timely filed.
While it has been held that "a change in decisional law is not
grounds for relief under 60(b)(6)," Travelers Indem. Co. v.
Sarkisian, 794 F.2d 754, 757 (2d Cir.), cert. denied,
479 U.S. 885, 107 S.Ct. 277, 93 L.Ed.2d 253 (1986), a different result has
occurred in Rule 60(b)(1) cases. See G & T Terminal Packaging Co.
v. Consolidated Rail Corp., 646 F. Supp. 511 (D.N.J. 1986), aff'd,
830 F.2d 1230 (3d Cir. 1987), cert. denied, 485 U.S. 988, 108
S.Ct. 1291, 99 L.Ed.2d 501 (1988); Max M. v. Thompson,
585 F. Supp. 317 (N.D.Ill. 1984). The decision of the New York Court
of Appeals finding that the fiduciary shield doctrine does not
and has never existed in New York is certainly persuasive on this
motion to vacate the April Order which relied on that doctrine.
The Court also finds that certain equitable factors weigh in
favor of vacating the April Order. Although substantial discovery
in this case has been conducted, a motion for summary judgment is
pending, see discussion infra, and thus no trial date had
previously been set nor have pre-trial materials been filed.
Morse and Jahn are employed by HFT and have been represented by
HFT's counsel throughout this litigation. The prejudice to Morse
and Jahn in reinstating them as defendants on counterclaims is
minimal. In fact, Morse and Jahn suggest an option for Krueger:
commence a suit against them in New Hampshire. The result would
then be two suits in two separate jurisdictions based on the same
facts and the same evidence. Trying Morse and Jahn in the same
forum with HFT is much preferable in terms of judicial economy.
In addition, should this motion be denied, the finality in
litigation theory would be frustrated. Krueger would have to wait
for a final judgment to be entered in this case to file an appeal
based upon the same grounds as this Rule 60(b) motion.
The Court finds, therefore, that the equities and the
subsequent decision of the New York Court of Appeals weigh in
favor of granting Krueger's motion to vacate the April 1987 Order
of this Court, and Krueger's motion is granted. The request for
Rule 11 sanctions against Krueger accordingly is denied.
II. Personal Jurisdiction
Having granted Krueger's motion to vacate the April 13, 1987
Order, the Court must now determine whether in light of Kreutter
personal jurisdiction may be asserted over Jahn and Morse. In
considering this issue, which originally arose on a motion to
dismiss, the Court must accept as true the allegations of the
non-movant, drawing all factual inferences in the light most
favorable to it.
It is undisputed that in June 1983, Facit entered into an
agreement with Krueger whereby Krueger was given the exclusive
right to market the 920 Series in the United States. Shortly
thereafter, Facit began marketing the Generation III line. On
January 16, 1984, Facit and Krueger entered into a settlement
agreement under which Facit agreed to discontinue distributing
the Generation III. At the time of these events, Jahn was Facit's
president and Morse was General Manager of Facit's Furniture
Division. An inference can easily be made, then, that Jahn and
Morse were aware of the above transactions.
The issue of personal jurisdiction concerns Jahn and Morse,
both New Hampshire residents, who are alleged to have used
information obtained from Krueger to compete unfairly with
Krueger, and to have tortiously interfered with contractual
relations between Krueger and Facit. Personal service was made
upon Morse and Jahn ...