Schiavone v. Fortune

477 U.S. 21, 106 S. Ct. 2379, 91 L. Ed. 2d 18, 1986 U.S. LEXIS 106, 4 Fed. R. Serv. 3d 1009, 54 U.S.L.W. 4692

• Court: Supreme Court of the United States
• Decided: June 18, 1986
• Docket: 84-1839
• Status: Published

Opinions

Justice Blackmun

delivered the opinion of the Court.

This case primarily concerns Rule 15(c) of the Federal Rules of Civil Procedure and its application to a less-than-precise denomination of a defendant in complaints filed in federal court near the expiration of the period of limitations. Because of an apparent conflict among the Courts of Appeals,¹ we granted certiorari. 474 U. S. 814 (1985).

I

The three petitioners instituted this diversity litigation on May 9, 1983, by filing their respective complaints in the United States District Court for the District of New Jersey. Each complaint alleged that the plaintiff was libeled in a cover story entitled “The Charges Against Reagan’s Labor Secretary,” which appeared in the May 31, 1982, issue of Fortune magazine. The caption of each complaint named “Fortune,” without embellishment, as the defendant. See App. 8a. In its paragraph 2, each complaint described Fortune as “a foreign corporation having its principal offices at Time and Life Building, Sixth Avenue and 50th Street, New York, New York 10020.” Id., at 9a. “Fortune,” however, is only a trademark and the name of an internal division of Time, Incorporated (Time), a New York corporation.²

On May 20, petitioners’ counsel mailed the complaints to Time’s registered agent in New Jersey. They were received on May 23. The agent refused service because Time was not named as a defendant.

On July 18, 1983, each petitioner amended his complaint to name as the captioned defendant “Fortune, also known as Time, Incorporated,” and, in the body of the complaint, to refer to “Fortune, also known as Time, Incorporated,” as a New York corporation with a specified registered New Jersey agent. See id., at 25a, 26a. The amended complaints were served on Time by certified mail on July 21.

Time moved to dismiss the amended complaints. The District Court granted those motions. Id., at 96a, 98a, 100a. It ruled that the complaints, as amended, adequately named Time as a defendant, and therefore were not to be dismissed “for failure of capacity of defendant to be sued.” Supp. App. to Pet. for Cert. 18a. Under New Jersey law, however, see N. J. Stat. Ann. 2A:14-3 (West 1952), a libel action must be commenced within one year of the publication of the alleged libel.³ Supp. App. to Pet. for Cert. 18a. State law also provides that the “ ‘date upon which a substantial distribution occurs triggers the statute of limitations for any and all actions arising out of that publication,’” id., at 19a, quoting MacDonald v. Time, Inc., Civil No. 81-479 (DNJ Aug. 25, 1981). Supp. App. to Pet. for Cert. 19a.⁴ The court found it unnecessary, for purposes of the motion, to determine the precise date the statute of limitations had begun to run.

Although Time acknowledged that the original filings were within the limitations period, it took the position that it could not be named as a party after the period had expired. Time contended that a party must be substituted within the limitations period in order for the amendment to relate back to the original fifing date pursuant to Rule 15(c).⁵

The District Court concluded that the amendments to the complaints did not relate back to the fifing of the original complaints because it had not been shown that Time received notice of the institution of the suits within the period provided by law for commencing an action against it. Supp. App. to Pet. for Cert. 23a. It therefore “with great reluctance” granted the motion to dismiss, noting that any dismissal of a claim based upon the statute of limitations “by its very nature is arbitrary.” Id., at 24a. The court also ruled that the “equities of this situation” did not demand that relief be afforded to petitioners. Ibid. The identity of the publisher of Fortune was readily ascertainable from the magazine itself. It rejected petitioners’ contention that Time deliberately misled them to believe that Fortune was a separate corporation. It observed that petitioners created the risk by filing their suits close to the end of the limitations period. Id., at 25a.

Petitioners moved for reconsideration. By letter opinion filed January 12, 1984, the court adhered to its prior ruling. App. to Brief in Opposition la.

On appeal to the United States Court of Appeals for the Third Circuit, the three actions were consolidated. That court affirmed the orders of the District Court. 750 F. 2d 15 (1984). It ruled that the New Jersey statute of limitations ran “on May 19, 1983, at the latest,” for a “substantial distribution” of the issue of May 31, 1982, had “occurred on May 19, 1982, at the latest.” Id., at 16. It regarded the language of Rule 15(c) as “clear and unequivocal.” 750 F. 2d, at 18. It also said: “While we are sympathetic to plaintiffs’ arguments, we agree with the defendant that it is not this court’s role to amend procedural rules in accordance with our own policy preferences.” Ibid. It further held that the period within which the defendant to be brought in must receive notice under Rule 15(c) does not include the time available for service of process.

HH 1 — 1

It is clear, from what has been noted above, that the three complaints as originally drawn were filed within the limitations period; that service was attempted only after that period had expired; and that the amendment of the complaints, and the service of the complaints as so amended, also necessarily took place after the expiration of the limitations period. The District Court and the Court of Appeals so found, and we have no reason to disagree. The parties themselves do not dispute these facts. Instead, their dispute centers on whether Time was sufficiently named as the defendant in the original complaints so that the service that was attempted after the 1-year period but within the time allowed for service was effective, and on whether, in any event, the amendment of the complaints related back to the original filing and accomplished the same result.

Petitioners argue that Rule 15(c)’s present form came into being by amendment in 1966 for the express purpose of allowing relation back of a change in the name or identity of a defendant when, although the limitations period for filing had run, the period allowed by Rule 4 for timely service had not yet expired. Brief for Petitioners 5. The Rule was effected, it is said, to ameliorate literal and rigid application of limitations periods to both claim and party amendments. It is urged that the Rules of Civil Procedure should be applied and construed to yield just determinations, that is, determinations on the merits, and that a procedural “double standard” that bars relation back for late notice to a new defendant when a like notice to the original defendant would be timely is unacceptable. Petitioners further argue that the original party named here and the party sought to be substituted had such commonality of interest that notice to one was in fact notice to the other. Therefore, it is said, where the intended defendant was misdesignated in form only, and knew or reasonably should have known that it was the true target and received the same notice it would have received had the form been flawless, “relation back should be a foregone conclusion.” Brief for Petitioners 6.

Respondent, of course, takes issue with this approach. It claims that the language of Rule 15(c) is clear and that proper notice of the institution of these actions was not received by it within the period of limitations. It asserts that the equities do not support petitioners’ position, and that the interpretation of Rule 15(c) urged by petitioners in effect would be an impermissible rewriting of the Rule by this Court.

f — H I — I I — I

As amended, Rule 1 of the Federal Rules of Civil Procedure states: “These rules . . . shall be construed to secure the just, speedy, and inexpensive determination of every action.” Rule 8(f) says: “All pleadings shall be so construed as to do substantial justice.” And Justice Black reminded us, more than 30 years ago, in connection with an order adopting revised Rules of this Court, that the “principal function of procedural rules should be to serve as useful guides to help, not hinder, persons who have a legal right to bring their problems before the courts.” 346 U. S. 946, 946 (1954).

This Court, too, in the early days of the federal civil procedure rules, when Rule 15(e), see n. 5, supra, consisted only of what is now its first sentence, announced that the spirit and inclination of the rules favored decisions on the merits, and rejected an approach that pleading is a game of skill in which one misstep may be decisive. Conley v. Gibson, 355 U. S. 41, 48 (1957). It also said that decisions on the merits are not to be avoided on the basis of “mere technicalities.” Foman v. Davis, 371 U. S. 178, 181 (1962).

Despite these worthy goals and loftily stated purposes, we conclude that the judgments of the Court of Appeals in the present cases were correct.

A

The defendant named in the caption of each of the original complaints was “Fortune,” and Fortune was described in the body of the complaint as “a foreign corporation” having principal offices in the Time and Life Building in New York City. It also was alleged that Fortune was engaged in the publication of a magazine of that name. Attached to the complaint were a copy of the magazine’s cover for its issue of May 31, 1982, an artist’s depiction of an alleged payoff, and the text of parts of the article about which petitioners complained. The focus, as pleaded, was on Fortune.

We cannot understand why, in litigation of this asserted magnitude, Time was not named specifically as the defendant in the caption and in the body of each complaint. This was not a situation where the ascertainment of the defendant’s identity was difficult for the plaintiffs. An examination of the magazine’s masthead clearly would have revealed the corporate entity responsible for the publication.⁶

Petitioners nonetheless rely on Fortune’s status as a division of Time to argue that institution of an action purportedly against the former constituted notice of the action to the latter, as a related entity. Some Courts of Appeals have recognized an “identity-of-interest” exception under which an amendment that substitutes a party in a complaint after the limitations period has expired will relate back to the date of the filing of the original complaint.⁷ The Court of Appeals in this case rejected that approach. The object of the exception is to avoid the application of the statute of limitations when no prejudice would result to the party sought to be added.

Even if we were to adopt the identity-of-interest exception, and even if Fortune properly could be named as a defendant, we would be compelled to reject petitioners’ contention that the facts of this case fall within the exception. Timely filing of a complaint, and notice within the limitations period to the party named in the complaint, permit imputation of notice to a subsequently named and sufficiently related party. In this case, however, neither Fortune nor Time received notice of the filing until after the period of limitations had run. Thus, there was no proper notice to Fortune that could be imputed to Time. See Hernandez Jimenez v. Calero Toledo, 604 F. 2d 99, 102-103 (CA1 1979); Norton v. International Harvester Co., 627 F. 2d 18, 20-21 (CA7 1980).

B

The complaints as they were amended, of course, meet the identification standard. While the statement, “Fortune,. also known as Time, Incorporated, was and is a corporation of the state of New York,” is not a model of accuracy, it does focus on Time and sufficiently describes Time as the targeted defendant. The next question, then, is whether the amendment, made in July 1983, related back to the fifing on May 9, a date concededly within the period of the applicable New Jersey statute of limitations.

Central to the resolution of this issue is the language of Rule 15(c). See n. 5, supra. Relation back is dependent upon four factors, all of which must be satisfied: (1) the basic claim must have arisen out of the conduct set forth in the original pleading; (2) the party to be brought in must have received such notice that it will not be prejudiced in maintaining its defense; (3) that party must or should have known that, but for a mistake concerning identity, the action would have been brought against it; and (4) the second and third requirements must have been fulfilled within the prescribed limitations period. We are not concerned here with the first factor, but we are concerned with the satisfaction of the remaining three.

The first intimation that Time had of the institution and maintenance of the three suits took place after May 19, 1983, the date the Court of Appeals said the statute ran “at the latest.” 750 F. 2d, at 16. Only on May 20 did petitioners’ counsel mail the complaints to Time’s registered agent in New Jersey. Only on May 23 were those complaints received by the registered agent, and then refused. Only on July 19 did each petitioner amend his complaint. And only on July 21 were the amended complaints served on Time.

It seems to us inevitably to follow that notice to Time and the necessary knowledge did not come into being “within the period provided by law for commencing the action against” Time, as is so clearly required by Rule 15(c). That occurred only after the expiration of the applicable 1-year period. This is fatal, then, to petitioners’ litigation.

We do not have before us a choice between a “liberal” approach toward Rule 15(c), on the one hand, and a “technical” interpretation of the Rule, on the other hand. The choice, instead, is between recognizing or ignoring what the Rule provides in plain language. We accept the Rule as meaning what it says.

We are not inclined, either, to temper the plain meaning of the language by engrafting upon it an extension of the limitations period equal to the asserted reasonable time, inferred from Rule 4, for the service of a timely filed complaint. Rule 4 deals only with process. Rule 3 concerns the “commencement” of a civil action. Under Rule 15(c), the emphasis is upon “the period provided by law for commencing the action against” the defendant. An action is commenced by the filing of a complaint and, so far as Time is concerned, no complaint against it was filed on or prior to May 19, 1983.

Any possible doubt about this should have been dispelled 20 years ago by the Advisory Committee’s 1966 Note about Rule 15(c). The Note specifically states that the Rule’s phrase “within the period provided by law for commencing the action” means “within the applicable limitations period”:

“An amendment changing the party against whom a claim is asserted relates back if the amendment satisfies the usual condition of Rule 15(c) of ‘arising out of the conduct ... set forth ... in the original pleading,’ and if, within the applicable limitations period, the party brought in by amendment, first, received such notice of the institution of the action — the notice need not be formal — that he would not be prejudiced in defending the action, and, second, knew or should have known that the action would have been brought against him initially had there not been a mistake concerning the identity of the proper party” (emphasis supplied). Advisory Committee’s Notes on Fed. Rule Civ. Proc. 15, 28 U. S. C. App., p. 551; 39 F. R. D. 83.

Although the Advisory Committee’s comments do not foreclose judicial consideration of the Rule’s validity and meaning, the construction given by the Committee is “of weight.” Mississippi Publishing Corp. v. Murphree, 326 U. S. 438, 444 (1946).

The commentators have accepted the literal meaning of the significant phrase in Rule 15(c) and have agreed with the Advisory Committee’s Note. See 3 J. Moore, Federal Practice § 15.15[4.-2], p. 15-225 (2d ed. 1985) (“the Rule demands a showing that, within the period of limitations, the new party . . .”); 6 C. Wright & A. Miller, Federal Practice and Procedure § 1498, p. 250 (Supp. 1986) (“in order for an amendment adding a party to relate back under Rule 15(c) the party to be added must have received notice of the action before the statute of limitations has run”).

The linchpin is notice, and notice within the limitations period. Of course, there is an element of arbitrariness here, but that is a characteristic of any limitations period. And it is an arbitrariness imposed by the legislature and not by the judicial process. See Note: Federal Rule of Civil Procedure 15(c): Relation Back of Amendments, 57 Minn. L. Rev. 83, 85, n. 8 (1972).⁸

The judgments of the Court of Appeals are affirmed.

It is so ordered.

1 Compare, e. g., Cooper v. U. S. Postal Service, 740 F. 2d 714, 716 (CA9 1984), cert. denied, 471 U. S. 1022 (1985); Watson v. Unipress, Inc., 733 F. 2d 1386, 1390 (CA10 1984); Hughes v. United States, 701 F. 2d 56, 58 (CA7 1982); and Trace X Chemical, Inc. v. Gulf Oil Chemical Co., 724 F. 2d 68, 70-71 (CA8 1983), with Kirk v. Cronvich, 629 F. 2d 404, 408 (CA5 1980); Ingram v. Kumar, 585 F. 2d 566, 571-572 (CA2 1978), cert. denied, 440 U. S. 940 (1979); and Ringrose v. Engelberg Huller Co., 692 F. 2d 403, 410 (CA6 1982) (concurring opinion).

2 No claim is made that Fortune is a separate legal entity with the capacity to be sued. •

3 The cited New Jersey statute reads:

“Every action at law for libel or slander shall be commenced within 1 year next after the publication of the alleged libel or slander.”

4 The court noted that, despite the magazine’s cover date of May 31, 1982, the record “indicate[d]” that, for purposes of determining the limitations period, publication “occurred substantially before” May 31; that subscription copies were mailed May 12 and received by subscribers May 13-19; that newsstand copies went on sale May 17; that a press release was issued May 11; and that copies of the magazine were mailed to representatives of the press on that date. Supp. App. to Pet. for Cert. 19a.

5 Rule 15(c) provides in pertinent part:

“Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.”

6 The magazine’s very issue in question, that of May 31, 1982, p. 2, recites:

“FORTUNE (ISSN 0015-8259), May 31, 1982, Vol. 105, No. 11. Issued biweekly by Time Inc., 3435 Wilshire Blvd., Los Angeles, Cal. 90010. . . . Principal offices: Time & Life Building, Rockefeller Center, New York, N. Y. 10020. . . . FORTUNE is a registered mark of Time Incorporated.”

The parallel information set forth in current issues of Fortune magazine reads:

“FORTUNE (ISSN 0015-8259). Published biweekly, with three issues in October, by Time Inc., 10880 Wilshire Blvd., Los Angeles, CA 90024-4193. Time Inc. principal office: Time & Life Building, Rockefeller Center, New York, NY 10020-1393. . . . FORTUNE is a registered mark of Time Inc.”

See issue of June 9, 1986, p. 2; issue of May 26, 1986, p. 4; issue of May 12, 1986, p. 4.

7 See, e. g., Travelers Indemnity Co. v. United States ex rel. Construction Specialties Co., 382 F. 2d 103 (CA10 1967); Montalvo v. Tower Life Building, 426 F. 2d 1135 (CA5 1970); Korn v. Royal Caribbean Cruise Line, Inc., 724 F. 2d 1397 (CA9 1984).

8 Petitioners would garner support from Professor Clark Byse’s article, Suing the “Wrong” Defendant in Judicial Review of Federal Administrative Action: Proposals for Reform, 77 Harv. L. Rev. 40 (1963), cited in the Advisory Committee’s Note to the 1966 amendment of Rule 15, 28 U. S. C. App., p. 550; 39 F. R. D. 83. That study was critically directed at four Federal District Court decisions concerning “relation back” in suits against Government officers. In each of the cases, however, the Government within the period of limitations was on notice of the claim.

Similarly, petitioners’ reliance upon Justice White’s footnote comment in dissent from the denial of certiorari in Cooper v. United States Postal Service, 471 U. S. 1022, 1025, n. 3 (1985), seems to us to be misplaced. Justice White, in fact, noted the inherent weakness of any such reliance (“Petitioner’s position is somewhat weak in this regard because, while the complaint was filed within the requisite 30 days, no party was served with process within that period”).