Robert M. McKinney Cross-Appellee v. Gannett Co., Inc., and the New Mexican, Inc., Cross-Appellants

THE COURT: All right, if there was a breach there, insofar as legal damages are concerned, we would be in the nominal damage category there, would we not?

MR. MARSHALL: . . . We do not know at this time of any way of putting a price tag on these, short of speculation.

For one thing, Mr. McKinney isn't interested in money. He's got lots of money. He's interested in the rights he bargained for.

THE COURT: I'm trying to sift the problems that we have here so that we can get this litigation into manageable shape.

MR. MARSHALL: We do not think that breach is properly compensable in damages.

THE COURT: So, if there is an injury, you would be relegated to nominal damages, apart from the possibility of rescission.

THE COURT: Do we have a statement by counsel for the plaintiff in regard to waiver of damages in respect to the claimed breaches which are being submitted to the jury? And in order to assume that we do have it, on the record, would you please state that at this time, Mr. Marshall?

MR. MARSHALL: Yes, Your Honor. The plaintiff waives any right to what has been termed on occasion legal damages arising from the breaches submitted to the jury. That is, putting a price tag on the rights of which he has been deprived. We are not, of course waiving our rights to ancillary damages and punitive damages and any other relief by way of rescission, or any other relief.

My observation of the Gannett men who appeared and testified in court, consideration of their testimony and the exhibits admitted into evidence, and reflection on the testimony of others regarding the conduct which molded the breaches of the Employment Agreement tell me that these are hard-charging, wilful men who, almost without exception, were fully cognizant of the dimensions of Gannett's obligations and McKinney's rights under the Employment Agreement. But this awareness notwithstanding, some of them, acting together, struck for themselves and the corporation they represented a deliberate course of conduct which wilfully and wrongfully dishonored Gannett's obligations and, bit by bit and day by day, shamelessly destroyed the rights bargained to McKinney.

I believe that Gannett went into this deal with its eyes wide open. It knew the Employment Agreement would interfere with how it wanted to run The New Mexican. It also knew that McKinney was old and physically infirm. It knew that he would be residing in Virginia. It wanted The New Mexican very badly. Gannett took a gamble. It gambled on McKinney's health continuing to worsen. It gambled on McKinney not meaningPage 1244what, during negotiations, he had informed Gannett he must retain, i.e. real authority. McKinney's health improved dramatically at lower altitudes. McKinney, instead of fading away, insisted on exercise of his prerogatives under the contract. Gannett had lost its gamble and it must now act to set McKinney adrift, albeit in violation of the terms of their bargain.

McKinney filed this lawsuit. Gannett responded by duly calling a meeting of The New Mexican's board. McKinney declined to attend, a previous informal attempt at reconciliation having failed . . . At that meeting, the final and ultimate breach of McKinney's Employment Agreement occurred: McKinney's responsibilities (authority) under his contract were suspended pending this litigation. He was left with empty titles and his perquisites. Gannett argued that it was necessary to remove McKinney's authority after he had filed this lawsuit because it would have been destructive to the newspaper to allow McKinney to continue his authority while in an adversarial position with it. This argument assumes it was wrongful for McKinney to sue to enforce his rights under the contract. I do not agree. This lawsuit was a perfectly legitimate way for McKinney to vindicate his rights. Gannett could have responded by fully honoring McKinney's contract. Instead, it escalated its pattern of breaches to the highest level of dishonor.

An accounting in this case will be difficult. But because The New Mexican has kept separate books despite control of its financial structure by Gannett, The New Mexican has not been completely assimilated into the parent.Cf. Rudman v. CowlesCommunications, Inc.,30 N.Y.2d 1,330 N.Y.S.2d 33,280 N.E.2d 867(1972) (Rescission not appropriate where assimilation complete). Thus, an accounting will, I trust, be workable.

OPTION TO RESCIND

Instead of ordering rescission outright prior to an accounting, I will order that McKinney may elect to have rescission after the accounting. Rescission cannot be had without a price. The magnitude of the price cannot be firmly established without decisions on each item to be considered in the accounting.

Also, McKinney has expressed concern as to what Gannett might do toThe New Mexicanbetween the time an order of rescission is entered and the actual rescission effected. This period of time could be substantial . . . . Giving McKinney the option to rescind after the accounting should act as an effective mechanism for assuring that Gannett will act towardThe New Mexicanin a responsible way.

The date by which McKinney must exercise his option to rescind will be set at sixty (60) days after judgment becomes final.

THE COURT: Well, excuse me, let me interrupt. That raises the question as to whether it's 60 days from a judgment which is entered in this court or 60 days from the time that a judgment becomes final by either by the judgment not being appealed in this court or after appeal.

THE COURT: And my thought was that he [McKinney] should have 60 days after all the smoke clears off whether by appeal or otherwise.

THE COURT: My intention is to give him [McKinney] that option 60 days after the smoke clears completely whether it's appealed by appeal or non-appeal, by the passage of time, so with that in mind how do we go about accomplishing that?

MR. McCRORY: I would respectfully submit, Your Honor, that Your Honor does not have the power to determine that because if you make that determination there never can be an appeal.

THE COURT: I'm going to do everything that I can to draft a judgment which will attempt to effectuate that.

MR. McCRORY: I think that would lie within the equitable power of a court of appeals to give him the 60 days after an appellate judgment, but if you say that the final action is not going to come about until 60 days after something then there is no final judgment from which an appeal may be taken.

(B) McKinney may exercise the rescission election only during either of the following periods:

(1) The 60-day period commencing the day following expiration of the time to appeal, as determined by the Federal Rules of Civil Procedure, provided that none of the parties to the action has filed a timely notice of appeal; or

(2) The 60-day period commencing on the date of issuance of a mandate of the United States Court of Appeals for the Tenth Circuit affirming McKinney's right to the rescission election.

V. In the event that McKinney does not exercise the rescission election or is unable to comply with all the provisions of this Judgment in regard to rescission, all the agreements of the parties shall remain in full force and effect.

Notwithstanding the fact that neither party has raised the issue of this court's jurisdiction to hear this consolidated appeal, jurisdictional questions are of primary consideration and can be raised at any time by courts on their own motion.McGrath v.Kristensen,340 U.S. 162,71 S.Ct. 224,95 L.Ed. 173(1950);First State Bank, etc. v. Sand Springs StateBank,528 F.2d 350(10th Cir. 1976);Bledsoe v.Wirtz,384 F.2d 767(10th Cir. 1967). Lack of jurisdiction cannot be waived and jurisdiction cannot be conferred upon a federal court by consent, inaction or stipulation.California v. LaRue,409 U.S. 109,93 S.Ct. 390,34 L.Ed.2d 342(1972);Nattav. Hogan,392 F.2d 686(10th Cir. 1968). "If the parties do not raise the question of lack of jurisdiction, it is the duty of thePage 1246federal court to determine the mattersua sponte."Basso v. Utah Power and Light Company,495 F.2d 906,909(10th Cir. 1974). A court lacking jurisdiction cannot render judgment but must dismiss the causeat any stageof the proceedings in which it becomes apparent that jurisdiction is lacking.Mitchell v. Maurer,293 U.S. 237,55 S.Ct. 162,79 L.Ed. 338(1934);Citizens Concerned,etc. v. City and County of Denver,628 F.2d 1289(10th Cir. 1980).

Title28 U.S.C. § 1291provides for appeal only "from all final decisions of the district courts," except where direct appeal to the Supreme Court is provided. This requirement promotes judicial efficiency and "embodies a strong congressional policy against piecemeal reviews, and against obstructing or impeding an ongoing judicial proceeding by interlocutory appeals."United States v. Nixon,supra,418 U.S. 683at 690,94 S.Ct. 3090at 3098-3099,41 L.Ed.2d 1039;United States v.MacDonald,435 U.S. 850,98 S.Ct. 1547,56 L.Ed.2d 18(1978). . . .

A "final decision" generally is one which ends the litigation on the merits andleaves nothing for thecourt to do but execute the judgment. St. Louis, I.M.S.R. Co. v. Southern Express Co.,108 U.S. 24,28,2 S.Ct. 6,27 L.Ed. 638(Emphasis supplied)

. . . [A] "judgment" in the sense that it is a decision upon a cognizable claim for relief, and it must be "final" in the sense that it is "an ultimate disposition of an individual claim. . . ."

The rule requiring finality of a judgment or order as a prerequisite to appeal is dependent upon statute.28 U.S.C. § 1291. Any exceptions must be made by Congress, not by the courts, although to the courts falls the responsibility of deciding whether a judgment or order is final and therefore appealable. It is our duty to resolve that question.UnitedStates v. Grand Jury,425 F.2d 327(5th Cir. 1970);Levin v. Baum,513 F.2d 92(7th Cir. 1975).

The order, viewed apart from its discussion of Rule 54(b), constitutes a grant of partial summary judgment limited to the issue of petitioner's liability. Such judgments are by their terms interlocutory, see Fed. Rule Civ.Proc.56(c), and where assessment of damages or awarding of other relief remains to be resolved have never been considered to be "final" within the meaning of28 U.S.C. § 1291. 424 U.S. at p. 744,96 S.Ct. at 1206.

Moreover, allowing appeals of right from nonfinal orders that turn on the facts of a particular case thrusts appellate courts indiscriminately into the trial process and thus defeats one vital purpose of the final-judgment rule — "that of maintaining the appropriate relationship between the respective courts . . . . This goal, in the absence of most compelling reasons to the contrary, is very much worth preserving." 437 U.S. at p. 476,98 S.Ct. at 2462.

The general rule is that an appeal suspends the time allowed by the judgment for the performance of a condition affecting the substantive rights of the parties, so the party who is to perform the condition has the specified time starting from the time that the appellate court judgment becomes effective to perform the condition. 4 Am.Jur.2d, Appeal Error, § 363 . . . . Thus the appeal suspended the time for performance by the nurses of tendering payment for the shares of stock available to them through the imposition of the constructive trust on the Taylor stock. They must tender payment only after the judgment from this court becomes effective.

It is fundamental that federal courts do not render advisory opinions and that they are limited to deciding issues in actual cases and controversies. U.S. Const. art.3, §1et seq.;Barr v. Matteo,355 U.S. 171,78 S.Ct. 204,2 L.Ed.2d 179(1957);Oklahoma City, Oklahoma v. Dulick,318 F.2d 830(10th Cir. 1963). A justiciable controversy is distinguished from a difference or dispute of a hypothetical character or from one that is academic. The controversy must be one admitting to specific relief through a decree of a conclusive character, subject to judicial review.Golden v. Zwickler,394 U.S. 103,89 S.Ct. 956,22 L.Ed.2d 113(1969);Flastv. Cohen,392 U.S. 83,88 S.Ct. 1942,20 L.Ed.2d 947(1968). Judicial restraint should be exercised to avoid rendition of an advisory opinion.DetroitEdison Company v. East China Township School DistrictNo. 3,378 F.2d 225(6th Cir. 1967), cert. denied,389 U.S. 932,88 S.Ct. 296,19 L.Ed.2d 284(1967).