On Appeal from the United States District Court for the Western District of pennsylvania, D.C. Civ. No. 84-506.
GREENBERG, Circuit Judge.
This matter is before the court on appeal from an order of the district court entered on January 22, 1988 denying a motion by defendant McDonald's Corporation for a judgment notwithstanding the verdict in this personal injury action arising from the injury of plaintiff Elizabeth F. Shuder at a McDonald's restaurant on October 17, 1982 in Virginia Beach, Virginia. We will reverse and remand the matter for entry of an order granting the motion.
While the circumstances of Mrs. Shuder's accident may not have been unusual, surely the court proceedings which followed were. Mrs. Shuder and Robert J. Shuder, her husband, Pennsylvania citizens, were patrons at the McDonald's on October 17, 1982. After the Shuders left the restaurant she fell on the restaurant parking lot and was injured. Consequently, they filed this diversity of citizenship action on February 28, 1984 in the United States District Court for the Western District of Pennsylvania against McDonald's. Mr. Shuder joining as a plaintiff to assert a loss of consortium. In their complaint, the Shuders recited that Mrs. Shuder stumbled and fell over an abruptly raised portion of the parking lot. They alleged that McDonald's had a duty to maintain the area in a safe condition for travel, but that the place where Mrs. Shuder fell was inadequately lighted and was not marked or painted to distinguish it from other portions of the parking lot. It was further alleged that McDonald's should have had or did have knowledge of this dangerous condition. McDonald's filed an answer denying that it owned, controlled, managed or operated the business.
On October 10, 1984 Mrs. Shuder filed a diversity action in the United States District Court for the Eastern District of Virginia against McDonald's Restaurants of Virginia, Inc. (McDonald's Virginia) to recover damages for the same injuries again alleging that she stumbled and fell over an abruptly raised portion of the parking lot. McDonald's Virginia is a franchisee of McDonald's and apparently is owned by McDonald's. She repeated her assertions that the property was inadequately lighted and was not marked or painted to distinguish it from other sections of the parking lot. She alleged, however, that the premises were owned and operated by McDonald's Virginia and were under its care, direction, supervision, control and maintenance. She asserted that McDonald's Virginia should have had or did have knowledge of this dangerous condition. The only material differences between the Pennsylvania and Virginia complaints were that Mr. Shuder was a plaintiff in Pennsylvania and not in Virginia and the defendants were different, though related. McDonald's Virginia filed an answer denying liability. McDonald's subsequently moved to transfer the Pennsylvania action to the United States District Court for the Eastern District of Virginia under 28 U.S.C. § 1404(a) but this motion was opposed by the Shuders and was denied by an order filed January 22, 1985.
Though filed after the Pennsylvania case, the Virginia case was the first to reach a jury. In his charge the district judge in Virginia told the jury that Mrs. Shuder was obliged to prove that McDonald's Virginia was negligent and that its negligence was a proximate cause of her injuries. He instructed the jury that McDonald's Virginia had the duty to Mrs. Shuder to use ordinary care to have the premises in a reasonably safe condition for her use and to use ordinary care to warn her of any unsafe condition which it had created or knew about or by the use of ordinary care should have known about. He further explained that a breach of these duties would constitute negligence. He also told the jury that McDonald's Virginia had raised contributory negligence as a defense and that McDonald's Virginia bore the burden of establishing that there had been contributory negligence and that it proximately caused the injury. In this regard, the district judge charged that Mrs. Shuder had a duty to use ordinary care for her own safety as to a dangerous condition or obstruction of the property if she knew of it, or if it was so open and obvious that she was able to see it or should have been able to see it. The judge told the jury that contributory negligence was a complete defense and that it could not apportion or balance the negligence of the parties to determine which one was more at fault. The jury returned a general verdict for McDonald's Virginia.
Mrs. Shuder appealed to the United States Court of Appeals for the Fourth Circuit which, in an unpublished per curiam opinion on June 9, 1986, affirmed. In its opinion the Court of Appeals pointed out that there was a sharp controversy as to whether the parking lot was lighted at the time of the accident but that after being carefully instructed by the district judge, the jury apparently accepted the evidence presented by McDonald's Virginia.
Thereafter, McDonald's moved for summary judgment in the Pennsylvania action. It recited that McDonald's Virginia operated the Virginia Beach restaurant under a franchise/license agreement and, if anything, owed a greater duty to Mrs. Shuder than McDonald's and yet had prevailed in the Virginia action. Thus, in McDonald's view, the liability issues had been determined adversely to the Shuders, thereby entitling it to a summary judgment.
The district judge denied the motion. He held that McDonald's and McDonald's Virginia were not sufficiently in privity for res judicata to apply, as the logical defense for McDonald's Virginia was that the accident was caused by a negligent design of the parking lot by McDonald's. He also held that collateral estoppel could not be applied. He pointed out that he did not have a copy of the jury instructions in the Virginia action and could not ascertain the precise issues resolved in Virginia. He understood that a general verdict had been returned in Virginia and that there was no specific finding that "no negligent condition existed on the property." He indicated that on the record he could not say whether the jury verdict was returned because: (1) the property was not in a negligent condition; (2) McDonald's Virginia was not liable for the condition; or (3) Mrs. Shuder was contributorily negligent. Thus, the district judge could not rule that a finding in Virginia adverse to Mrs. Shuder was preclusive on an identical issue in Pennsylvania and thereby barred the action. The district judge did observe, however, that collateral estoppel might have applied had the jury in Virginia negatively answered an interrogatory asking "was the McDonald's Restaurant property in Virginia Beach in a negligent condition and not reasonably safe for the ordinary use by business invitees." The district judge finally pointed out that McDonald's urged that Virginia law should be applied in the case, but he did not then rule on that point.
McDonald's moved for reconsideration of the order and with its motion supplied the jury charge given in the Virginia action. On August 3, 1987 the district judge denied the motion for reconsideration, reciting In his order that "the jury verdict in the Virginia litigation followed a charge by the judge that the issue to be decided is the negligence of the McDonald's Corporation of Virginia, Inc., the franchisee-owner of the premises, not the defendant in the instant case."
A pretrial conference was then held on November 16, 1987 at which the district judge ruled, citing Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964), that Pennsylvania law would be applied at the trial. The district judge reached that conclusion as Virginia still recognizes contributory negligence as a defense in tort case whereas Pennsylvania has adopted comparative negligence. The district judge explained, "Pennsylvania is concerned, I think, that its citizens receive full compensation when they are traveling interstate and would not permit a minority common law rule to bar recovery for a citizen of its state litigating an issue in this state. Accordingly, we will apply Pennsylvania law, because of the interest at stake and the public policies of this forum."
The matter was then bifurcated on liability and damages and was tried first on liability. In his charge the district judge explained that the Shuders contended that the elevated portion of the parking lot was a hazard and that McDonald's should have either corrected the problem or warned the public of it. He further explained that the Shuders asserted that the "negligent construction or design defect, combined with the fact that the area was inadequately illuminated on the night in question" caused the accident. He told the jury that McDonald's as the contractor had a duty to exercise reasonable care in the construction of the parking lot and if it failed to do so it would be liable for the injuries to persons lawfully on the premises. He explained that if the contractor designed the lot and made it dangerous for its intended use the contractor would be subject to liability to others for failure to exercise reasonable care in the adoption of a safe plan or safe design. He also charged that the contractor would be subject to liability by reason of the dangerous character of the structure after the work has been completed and accepted by the owner or possessor of the land. He further indicated that a contractor is required to warn persons lawfully on the property of dangerous conditions if a contractor has reason to know that the conditions will not be discovered by customers using reasonable care. The district judge also gave definitions of negligence and proximate cause.
The district judge explained that McDonald's contended that the accident was caused solely by Mrs. Shuder's negligence or alternatively, that regardless of McDonald's negligence, the Shuders were barred by Mrs. Shuder's contributory negligence. He set forth that McDonald's contended that the areas were well-illuminated and Mrs. Shuder failed to look where she was walking for, if she had, she would had observed the condition which she alleged caused the accident. He indicated that Mrs. Shuder was negligent if she, as an ordinary prudent person under the circumstances then present, failed to exercise reasonable care for her own protection and her lack of care was a substantial factor or proximate cause in bringing about her injury. The district judge explained that McDonald's had the burden of proof on the contributory negligence issue. The district judge instructed the jury that if it found both Mrs. Shuder and McDonald's were negligent, it should determine Mrs. Shuder's percentage of the negligence. The jury returned a verdict finding that the parking lot was negligently designed or constructed, thereby proximately causing the ...