author: LIVELY, Circuit Judge.

text:
    Joseph V. ORLEANS, by his father and next friend, Joseph A. Orleans, et al., Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.
    No. 74-1496.
    United States Court of Appeals, Sixth Circuit.
    Jan. 13, 1975.

      William E. Pfau, Jr., Pfau, Comstock & Spinger, Youngstown, Ohio, James P. Murphy, Squire, Sanders & Dempsey, Charles F. Clarke, Cleveland, Ohio, for plaintiffs-appellants.
    Frederick M. Coleman, U. S. Atty., D. D. Weisberger, James Diggs, Cleveland, Ohio, for defendant-appellee.
    Before PECK and LIVELY, Circuit Judges, and McALLISTER, Senior Circuit Judge.
   LIVELY, Circuit Judge.

This action was filed under the Federal Tort Claims Act to recover for personal injuries suffered by the plaintiff in an automobile accident. Plaintiff was one of a group of children who had been taken to a recreational area some distance from their homes on an outing which was part of the program of the Westlawn Neighborhood Opportunity Center (Westlawn). Westlawn was an “activity” of the Warren-Trumbull Council for Economic Opportunity, Inc. (WTCEO). A van was furnished by WTCEO to Westlawn for the outing, but it was not large enough to carry all the children who turned out for the affair. Employees of WTCEO arranged for two young men from the Westlawn area to drive some of the children to the outing in privately owned automobiles. Plaintiff was a passenger in an automobile driven by Robert Walker and owned by Robert’s father on the return trip when the accident occurred.

The complaint alleged that the outing was sponsored by the Office of Economic Opportunity and “that the agents of the United States of America in charge of said outing were negligent in the organization and supervision of said outing . ” resulting in plaintiff’s injuries. The government answered that WTCEO is not an agent or instrumentality of the United States, nor is Westlawn such an instrumentality. In addition, the defendant denied that any agents of the United States were “present during, before, or after the described outing.”

The defendant then moved for summary judgment and filed with its motion the affidavit of the regional director of the Office of Economic Opportunity (OEO) having jurisdiction of WTCEO, copies of community action program grants from OEO to WTCEO and a copy of an unpublished district court opinion. The gist of the regional director’s affidavit is that the supervisors of WTCEO and Westlawn were not employees of OEO on the date of the accident and that these organizations “make their own decisions as to whom to hire, discipline and discharge.” It states that OEO involvement in personnel decisions of WTCEO and Westlawn “is limited to the issuance of standards.” The affidavit concludes with the statment that OEO does not supervise “either on a day-to-day basis or otherwise” the activities of employees of the two organizations ' and that the employees are not “subject to OEO supervision or control as to the quantity or quality of the work product they produce.”

In opposition to summary judgment the plaintiff filed affidavits of the chairman of the governing board of WTCEO and an attorney who had participated in the organization and management of WTCEO. In his affidavit the board chairman stated that he was appointed directly by the- Regional Office of OEO and “that presently the entire funding of the Warren-Trumbull Council for Economic Opportunity is by funds of the United States except for some so-called ‘in kind’ contributions, and that to his knowledge this is and has been the case throughout the history” of WTCEO. The affidavit of the attorney-board member contained inter alia, these statements:

That the corporation was formed for the purpose of obtaining funds made available through the Economic Opportunity Act of 1964 and to act primarily as an instrumentality of ” the United States by carrying out the purposes of the Economic Opportunity Act. The corporation was carefully organized and the by-laws and regulations tailored to come within the restrictions of the Economic Opportunity Act.
After the organization of the Warren Council for Economic Opportunity, Inc., it was funded almost totally by Federal funds made available through the Economic Opportunity Act, the only exception being some credit that may have been given for “in kind” services rendered by local citizens. Its management and operation were under the direct supervision of the Regional Director of the Office of Economic Opportunity in Chicago.
The projects undertaken were those suggested by the Economic Opportuni- . ty Act or the directives of the Economic Opportunity Administration.
One of the projects undertaken by the Warren Council for Economic Opportunity, Inc. was the' Westlawn Neighborhood Opportunity Center, which project was set up in accordance with the provisions of the Economic Opportunity Act of 1964 and more specifically, that portion at 42 U.S.Code Annotated, Section 2811,
* * * Sf! * *
The Affiant says that from the time of the organization of the Warren Council for Economic Opportunity, Inc. and the Westlawn Neighborhood Opportunity Center, the Warren Council for Economic Opportunity, Inc. and Westlawn Neighborhood Opportunity Center acted as agencies to serve and assist the poor in methods and manners outlined and prescribed by the Economic Opportunity Act and numerous instructions, restrictions and requirements of the Director of the Office of Economic Opportunity. These instructions and requirements directed the manner in which the Warren Council for Economic Opportunity, Inc. and the Westlawn Neighborhood Opportunity Center be organized, the classes of persons who were to be employed as directors or serve as trustees, the nature and purpose of the projects to be undertaken and the methods for carrying out such projects. Before funding was granted, the United States of America, through the Office of the Director of Economic Opportunity and his regional directors, was required to approve projects and the outlined approach for conducting them. After a project was approved, its operation was supervised by the Office of the Regional Directors in Chicago.
Without the Economic Opportunity Act and the funds made available thereunder, the Warren Council for Economic Opportunity, Inc. would not have been created and could not have operated or existed.

The plaintiff also filed depositions of a former employee of Westlawn, the former director of WTCEO and of the regional director of OEO whose affidavit had been filed by defendant. These depositions explored the relations between OEO and the local organizations, particularly with respect to personnel matters, funding and selection of projects.

In granting summary judgment for the defendant the district court found that no issue as to any material fact existed and accepted as true the following “four basic facts” urged by the plaintiff:

First, the Warren-Trumbull Council for Economic Opportunity, Inc. was created for the purpose of carrying out the community action programs, contained in the Economic Opportunity Act of 1964. Second, the Warren-Trumbull Council and its activity, the Westlawn Neighborhood Opportunity Center, received funds from no source other than the Office of Economic Opportunity. Third, the Council conducted no programs other than those formulated and funded by the federal government. Fourth, the Office of Economic Opportunity and its regional office in Chicago exercised close supervision over the Council and its activities.

The court rejected the plaintiff’s conclusion that these facts require a holding that the United States may be sued under provisions of the Federal Tort Claims Act on account of the negligence of an employee of WTCEO or Westlawn. Rather, he found that the defendant was entitled to judgment as a matter of law. Rule 56(c), Fed.R.Civ.P.

Under the Federal Tort Claims Act recovery is allowed against the federal government generally in those cases where recovery would be permitted against a private individual or corporate defendant. 28 U.S.C. § 2674. Exclusive jurisdiction of actions for damages under this Act is vested in the district courts. 28 U.S.C. § 1346(b). Since the government acts only through its agents and employees, general principles of respondeat superior apply, subject to 28 U.S.C. § 2671 which contains these definitions:

As used in this chapter and sections 1346(b) and 2401(b) of this title, the term “Federal agency” includes the executive departments, the military departments, independent establishments of the United States, and corporations primarily acting as instrumentalities or agencies of the United States, but does not include any contractor with the United States.
“Employee of the government” includes officers or employees of any federal agency, members of the military or naval forces of the United States, and persons acting on behalf of a federal agency in an official capacity, temporarily or permanently in the service of the United States, whether with or without compensation.
“Acting within the scope of his office or employment”, in the case of a member of the military or naval forces of the United States, means acting in line of duty.

The district court concluded that WTCEO is a contractor with OEO and “thus the government is specifically excluded from liability for torts of the employees of the council under 28 U.S.C. § 2671.” The court found that the approach to eliminating poverty which Congress adopted in the Economic Opportunity Act of 1964, 42 U.S.C. § 2701 et seq., was basically to rely on local community effort. The purpose of a community action council such as WTCEO is not merely to act as a federal agency to administer federal programs. Rather, the court held, its responsibility is to use local capabilities to coordinate all programs in the community, including state and local programs, as well as federal ones. The fact that WTCEO received no funds other than grants from OEO and conducted no programs other than those initiated by OEO was held to be immaterial. Relying on the charter of WTCEO which permitted it to receive funds from other sources, and various provisions of the Economic Opportunity Act which define the purposes of community action councils and their relations with OEO, the district court held that WTCEO and Westlawn were not corporations primarily acting as agencies or instrumentalities of the United States. If the two local organizations do not come within the statutory definition of “Federal agency,” it follows that the acts and omissions of their employees which were charged in the complaint were not those of “Employee[s] of the government.” 28 U.S.C. § 2671.

On appeal, plaintiff contends that WTCEO was not a contractor, but at all times functioned as a “Federal agency” within the definition of Section 2671. In deciding whether a given relationship is that of principal and agent or principal and independent contractor, the courts are concerned primarily with the type and extent of control retained by the principal. Generally, if the principal looks to the other party for results only, leaving to that party discretion as to means and control over the methods and details of performance, the relationship is that of principal and independent contractor. The greater the control, the greater is the likelihood of a finding of agency. In Schetter v. Housing Authority of the City of Erie, 132 F.Supp. 149 (W.D.Pa.1955), the government defended a Federal Tort Claims Act case on the theory that a public housing authority which leased a housing project from the Federal Public Housing Administration was an independent contractor. The court noted numerous provisions of the lease which led it to “conclude that Erie is not an independent contractor since Erie was controlled by the United States with respect to the performance of the undertaking provided by the agreement between the United States and Erie.” Id. at 152. See also Toth v. United States, 107 F.Supp. 37 (N.D.Ohio 1952). While a member of the Court of Appeals for the Eighth Circuit, Mr. Justice Blackmun wrote the opinion in Buchanan v. United States, 305 F.2d 738 (1962), which listed some of the factors to be considered in deciding whether a person is an independent contractor as follows: “(1) Control of the work; (2) control of the premises; (3) control over the means of performance; (4). nature of the work done; (5) supervision of work; (6) control of personnel; (7) furnishing of personnel and material; (8) method of payment; (9) freedom of the contractor in employment policy; and (10) procurement of insurance covering personnel, social security payments, and like items.” Id. at 742.

There are a number of cases in which independent contractor status was assumed, but the contention was made that particular circumstances had caused the principal to lose his insulation from liability for negligence of employees of the contractor. In Lipka v. United States, 369 F.2d 288 (2d Cir. 1966), it was held that the independent contractor status of one engaged by the Corps of Engineers was not destroyed by reservation of the power to control the contractor’s compliance with specifications or the institution of an accident prevention program. A similar result was reached in United States v. Page, 350 F.2d 28 (10th Cir. 1965), where it was held that reservation of the right to make safety inspections and to require greater safety precautions than those normally practiced by the contractor in question did not make the principal liable for negligent acts of the contractor. See also Gowdy v. United States, 412 F.2d 525 (6th Cir. 1969). On the other hand, the government has been held liable for negligent acts of employees of a contractor whose performance was subject to detailed supervision by a public housing authority. Maryland v. Manor Real Estate & Trust Company, 176 F.2d 414 (4th Cir. 1949). In Logue v. United States, 412 U.S. 521, 93 S.Ct. 2215, 37 L.Ed.2d 121 (1973), the Supreme Court stated that the purpose of the exclusion of “contractors with the United States” found in Section 2671 is to afford the government the same immunity from tort liability arising out of negligent acts of an employee of a contractor as is enjoyed by private individuals who deal with such contractors. As the Court said, it is based on the “traditional distinction between employees of the principal and employees of an independent contractor.” Id. at 527, 93 S.Ct. at 2219. If the principal lacks authority to control the detailed performance of the contractor, it cannot be treated in law as the employer of that contractor’s employees. Only if the principal has the right to supervise the “physical performance” of the work of such employees do they become employees of the principal. Id. at 531, 93 S.Ct. 2215.

The question in this case is whether a community action council formed for the purposes of the Economic Opportunity Act, which receives funds solely from the federal government and operates within the statutory and regulatory “guidelines” of OEO which are applicable to such councils, is to be deemed a federal agency or an independent contractor with the government when sued by a “client” of the agency claiming injury as the result of negligence on the part of agency employees. In seeking analogies in decisions involving other federally funded programs it is necessary to keep in mind the concept of the importance of using all the resources of the local community to fight poverty which underlies the Economic Opportunity Act of 1964. From the President’s message on poverty of March 16, 1964 (S. Doc. No. 86, 88th Cong., 2d Sess. 2-4 (1964)) (hereafter Sen. Doc.) through the Congressional presentation of Sargent Shriver of March 17, 1964 (Sen. Doc. 35 — 74) and the legislative history of the Act itself there is a clear and repeated emphasis on the importance of local community participation. Furthermore, an examination of the affidavits and depositions filed by the plaintiff leaves no room for doubt that the purpose of WTCEO is to implement in the community which it serves the policy and goal of eliminating poverty in the Nation as expressed by Congress in the Economic Opportunity Act of 1964. In pursuing this policy Congress established the Office of Economic Opportunity in the Executive Office of the President. Central to the scheme of the Act are the provisions for community action programs. 42 U.S.C. §§ 2781— 2837. The determination to be made is whether, in choosing to fight this sector of the “war on poverty” by utilizing community action agencies rather than acting directly through OEO at the local level, Congress intended for these community organizations to be “Federal agencies” within the definition contained in the Tort Claims Act.

Several sections of the Economic Opportunity Act must be examined. With respect to community action governing boards, 42 U.S.C. § 2791(e) provides:

(e) The powers of every community action agency governing board shall include the power to appoint persons to senior staff positions, to determine major personnel, fiscal, and program policies, to approve overall program plans and priorities, and to assure compliance with conditions of and approve proposals for financial assistance under this subchapter.

Section 2795 deals with the powers of the agencies themselves, in part as follows:

(a) In order to carry out its overall responsibility for planning, coordinating, evaluating, and administering a community action program, a community action agency must have authority under its charter or applicable law to receive and administer funds under this subehapter, funds and contributions from private or local public sources which may be used in support of a community action program, and funds under any Federal or State assistance program pursuant to which a public or private nonprofit agency (as the case may be) organized in accordance with this, part could act as grantee, contractor, or sponsor of projects appropriate for inclusion in a community action program. A community action agency must also be empowered to transfer funds so received, and to delegate powers to other agencies, subject to the powers of its governing board and its overall program responsibilities. This power to transfer funds and delegate powers must include the power to make transfers and delegations covering component projects in all cases where this will contribute to efficiency and effectiveness or otherwise further program objectives.

The Act also sets administrative standards for operation of community action agencies and requires them to adopt “rules designed to establish specific standards” relating to employee pay and benefits and promotion procedures, the avoidance of conflicts of interest and appropriate advocacy on behalf of the poor without participation in picketing, protest or violation of law. 42 U.S.C. § 2796(a). The provisions for financial assistance from OEO to community action agencies are found in Section 2808, which provides in sub-section (e) that—

(e) In order to promote local responsibility and initiative, the Director shall not establish binding national priorities on funds authorized by this section, but he shall review each application for financial assistance on its merits. Before extending financial assistance to a new community action agency under this section, and in determining the amount of and conditions on which such assistance shall be extended, the Director shall consider the extent and nature of poverty in the community and the probable capacity of the agency to carry out an effective program. In reviewing or supplementing financial assistance to a previously existing community action agency, he shall consider the progress made in carrying on programs by such agency.

The relationship between OEO and WTCEO meets a number of the criteria for establishing that WTCEO is an independent contractor. There was no showing that OEO controlled or supervised the physical performance of the work of employees of WTCEO and Westlawn. Moreover, the requirements imposed on these local agencies by statute and regulations are not concerned with the details of the day-to-day operations of the agencies or the programs which they carry on in the Warren-Trumbull County area. They are more in the nature of general instructions to be followed in order to assure that certain policies which Congress had adopted in establishing OEO are respected and adhered to. On the other hand, by withholding approval of its operations, OEO had for all intents and purposes put WTCEO out of business for a period of time and had in October 1972 selected a new chairman of its board who completely reorganized the agency. These are not powers usually possessed by a principal in dealing with an independent contractor.

The plaintiff argues that the court should not decide the issue on potentialities, but on actuality. He maintains it is irrelevant that WTCEO might have obtained funds from other sources and might have carried on programs other than those planned by OEO. The fact is, he contends, that WTCEO never had any funds except those from the federal treasury which were granted to it by OEO and never initiated a single program other than the “canned” ones offered to it by OEO. The facts of the actual history of the operation of WTCEO, including the incident which demonstrated that OEO possessed the power to dictate to its governing board, lead to the conclusion, he maintains, that WTCEO was a corporation primarily acting as an instrumentality or agency of the United States, and therefore a “Federal agency” as defined in 28 U.S.C. § 2671.

In two cases involving the rights of employees of community action agencies similar to WTCEO, the Fifth Circuit has held that such employees were employees of a private corporation and not of the government. Robles v. El Paso Community Action Agency, Project Bravo, Inc., 456 F.2d 189 (5th Cir. 1972); Hines v. Cenla Community Action Committee, Inc., 474 F.2d 1052 (5th Cir. 1973). Though neither of these cases arose under the Federal Torts Claims Act and the agency-contractor dichotomy was not present, decision in both was based on a finding that the plaintiffs were not public employees. In his dissent in the Cenia case, Judge Wisdom pointed to some of the controls which OEO retained in its dealings with the local agency in the following language:

As appears from the complaint, Cenia was organized for the purpose of qualifying as a grantee community action agency of the OEO under 42 U.S.C. § 2781. Congress adopted the Equal Opportunity Act to combat poverty, to create jobs, to disburse money for the reduction or elimination of poverty, all on a national scale. To insure federal supervision and uniformity, OEO divided the country into regions and adopted guidelines. Cenia, for example, is directly responsible to Region VI of OEO in Dallas, Texas. It must comply with the guidelines and policies formulated by Region VI in Dallas. In the event of any conflict between the policies and practices of Cenia with those of Region VI or federal legislation (as interpreted by OEO), Cenia must yield. Id. at 1059.

We do not believe that the community action agencies created in response to passage of the Economic Opportunity Act of 1964 fit the traditional definition of independent contractors insofar as their relations with agency clients are concerned. They have ties to the OEO which do not normally exist between a principal and an independent contractor. While many of the traditional criteria of independence .are present, the power in the principal to remove the governing board of the other contracting party and replace it with one of its own choosing is totally inconsistent with the status of independent contractor. Furthermore, even a cursory reading of the voluminous regulations of OEO leaves one with the distinct impression that an organization required to operate in compliance with these “guidelines” must indeed be a federal instrumentality. The controls which are retained apply particularly to relations between the local agencies and their clients who are the beneficiaries of the 1964 Act.

Congress could have chosen to administer the Economic Opportunity Act directly by establishing local offices of OEO. The declared reason for using local agencies is to assure the maximum participation of the citizens most affected by the program in each community, to the end that the particular needs of each participating community will be discovered and dealt with. Thus, a national priority in programs is forbidden. Nevertheless, OEO approval is required for each local program and all the operations of community action agencies must fit within the detailed framework ordained by OEO.

Both the Federal Tort Claims Act and the Economic Opportunity Act of 1964 were designed to remedy conditions which caused hardship and human suffering. Before the passage of the Tort Claims Act, a person injured as the result of negligence of an employee of the government was denied a remedy which was available to another whose injuries were caused under similar circumstances by the negligence of a private individual or the employee of a private firm. Elimination of this disparity which was based on the outmoded legal fiction that “the king can do no wrong” achieved a laudable humanitarian result. Congress embarked on another humanitarian effort of monumental proportions when it undertook, with the passage of the 1964 Act, a program for the eventual elimination of poverty in this Nation.

When the two Acts here involved are read together and consideration is given to the purpose of each, it does not appear that Congress intended to shield the government from liability in a situation such as this case presents. The scheme of the 1964 Act is to improve the lot of the poor by involving them in a multitude of activities which their poverty had previously prevented them from experiencing. To the extent that participation in these activities exposes the beneficiaries of the Act to injury while engaged in approved programs under the supervision of personnel of a community action agency, the United States cannot avoid liability under the Federal Tort Claims Act on the ground that agencies chosen to achieve the purposes of the 1964 Act are not federal agencies or instrumentalities. To equate the status of such an agency with that of independent contractor under these circumstances would be to elevate form above substance.

It should be noted that this ease does not present the issue of whether a member of the general public may base a Tort Claims Act proceeding on alleged negligence of an employee of a community action agency. Decision in such a case might well be reached by resort to the traditional tests of the' principal-contractor/employee relationship unaffected by the special considerations which flow from the peculiar federal responsibility for the safety and well-being of persons drawn into the programs of OEO. Nor do we intimate any opinion on the merits of the present case.

The judgment of the district court is reversed, and the case is remanded for further proceedings consistent with this opinion.


source: Caselaw Access Project

author: JAMESON, District Judge:

license: Public Domain

text:
    Martha C. KAMM, a widow, et al., Plaintiffs-Appellants, v. CALIFORNIA CITY DEVELOPMENT COMPANY, a corporation, et al., Defendants-Appellees.
    No. 73-3241.
    United States Court of Appeals, Ninth Circuit.
    Jan. 9, 1975.

      Thomas Elke (argued), San Francisco, Cal., for plaintiffs-appellants.
    Ronald L. Olson (argued), of Munger, Tolies, Hills, & Richershauser, Los Angeles, Cal., for defendants-appellees.
    Before CHAMBERS and KILKENNY, Circuit Judges, and JAMESON, District Judge.

       Honorable W. J. Jameson, United States Senior District Judge for the District of Montana, sitting by designation.

   OPINION

JAMESON, District Judge:

This is an interlocutory appeal, pursuant to 28 U.S.C. § 1292(b), from an order dismissing plaintiffs-appellants’ class action and striking class allegations from their first amended complaint.

Parties and Nature of Controversy

The 14 named plaintiffs and the estimated 59,000 members of the class whom they seek to represent are investors in a desert land promotion scheme known as California City. The defendants-appellees are the current promoters of California City, Great Western Cities; three of its affiliated real estate companies, California City Development Co., GWU Properties, Inc. and California City Realty Co.; N. K. Mendelsohn, officer, director and principal shareholder of California City Development Co.; Great Western United, the corporate parent of Great Western Cities and two other defendants, Shakey’s Inc. and Great Western Sugar; and the incorporated City of California City.

California City is a body of barren land comprised of approximately 100,000 acres in the Mojave Desert. The defendant promotors bought the land, divided it into some 90,000 lots, and commenced selling the lots as part of a planned city. To date, the promoters have sold and resold an estimated 59,000 residential, commercial and industrial lots for an estimated $200 million. The lots were primarily purchased for investment reasons. About 2,000 people live in California City.

Allegations of Complaint

Alleging a class action pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure, plaintiffs charged that the defendants had defrauded the investors by failing to disclose fully to them the nature of the property and the risks inherent in the investment plan. Specifically, the first amended complaint alleged that (1) the California City lots constitute securities or investment contracts which were marketed by means of deceptive practices in violation of Section 10b of the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)), and Rule 10b-5 thereunder; (2) the same deceptive practices violated the Interstate Land Sales Act; (3) the sale of California City lots violated the registration provisions of the Interstate Land Sales Act in that the defendants made material misrepresentations in the “Statement of Record” filed with the Department of Housing and Urban Development pursuant to 15 U.S.C. § 1703(a)(2)(B); (4) the land scheme was falsely registered under the California Subdivided Lands Act; and (5) the defendants’ actions were fraudulent and constituted a breach of trust.

Motion to Dismiss

Pursuant to Rule 23(c) and (d), the defendants moved to dismiss the class action and to strike all class allegations “on the ground that the alleged class action is not the superior method for resolving the alleged controversy”. They contended that even if it were assumed that the alleged class satisfied all of the prerequisites of Rule 23(a) and the “common issue requirement” of Rule 23(b)(3), the class action did not constitute a “superior method for the fair and efficient adjudication of the controversy”. Defendants’ motion was based primarily on the fact that state action had already been commenced by the California Attorney General and Real Estate Commissioner with respect to the same controversy and relief had been obtained.

State Litigation and Agreement

The Attorney General and the Real Estate Commissioner of California on March 8, 1973, acting pursuant to comprehensive statutory powers set forth in the California Subdivided Lands Act, Cal.Bus. & Prof.Code § 11000 et seq. (West Supp.1974) and regulations thereunder, and the California deceptive and misleading advertising statute, Cal.Bus. & Prof.Code § 17500 et seq. (West Supp. 1974), commenced an action in state court against four of the defendants for false and misleading advertising and deceptive sales practices. Concurrently, a stipulation of the parties and a proposed permanent injunction and final judgment were filed. Attached to the judgment as an exhibit was a copy of a settlement agreement, also dated March 8, 1973. In the stipulation the defendants accepted service of the complaint and consented to the entry of the final judgment and permanent injunction, without admitting the allegations of the complaint other than those alleging jurisdiction. The judgment, entered the same date, expressly approved the terms and conditions of the settlement agreement and ordered the parties “to carry out the executory provisions contained therein”. The court retained “continuing jurisdiction to the full extent provided by law . . .”.

The settlement agreement between the Attorney General and Real Estate Commissioner and the defendant Great Western Cities, Inc., provided for offers of restitution of prinicpal payments to certain purchasers. The agreement defines a “purchaser” as one who executed a purchase agreement for land in California City, between January 1, 1966 and December 31, 1970 or one who saw a certain sales film and executed a purchase agreement between January 1, 1971 and May 17, 1972, inclusive. Purchasers are divided into two groups — offerees and claimants. An offeree is a purchaser who prior to September 16, 1972 indicated either by means of a negative response to a questionnaire or by a direct communication to the Attorney General or Real Estate Commissioner his belief that there was a material misrepresentation of fact in connection with his purchase of land. All purchasers who after September 16, 1972 appropriately responded to the questionnaire or complained about misrepresentation are claimants. Offerees were entitled to refunds aggregating about $2,300,000 in restitution. Claimants were entitled to an aggregate of $1,000,000.

With respect to other persons who purchased land, the agreement provided that Great Western Cities would “use its best efforts to establish and implement a program to settle future disputes”. The company is required to “render quarterly reports to the office of the Attorney General setting forth the names of complainants and summarizing the general nature of such complaints and the disposition thereof”.

Defendants were also permanently enjoined from engaging in deceptive sales practices and from making or disseminating, or permitting to be made or disseminated, any false or misleading representations relating to the sale of real property in California City.

There is nothing in the settlement agreement which would preclude any purchaser who did not accept an offer and execute a release from instituting action against the defendants or otherwise seeking recovery for any alleged damage. Appellants concede that these alternate remedies are available.

Ruling of District Court

In opposing the motion to dismiss, plaintiffs-appellants contended that (1) the motion was premature because time was needed for discovery with respect to the class action issues; and (2) the class action was superior because the state action involved a different controversy and provided relief for only a small part of the class.

At the time of oral argument, the court denied plaintiffs’ request for further discovery. An order was subsequently entered dismissing the class action aspects of the suit, the court finding that

“ . . .a class action is not superior to other available methods for the fair and efficient adjudication of the controversy herein, especially in light of the proceedings already brought by the California Attorney General and Real Estate Commissioner and of the relationship of these proceedings to the facts and posture of this particular case”.

Two issues are raised on appeal: (1) Whether the court erred in refusing to grant plaintiffs an opportunity for further discovery; and (2) whether the class action constituted a “superior method” of adjudicating the controversy.

Discovery

In support of their motion to dismiss, the defendants filed an affidavit of Bruce Ducker, Vice President of Legal Affairs for Great Western United Corporation and Great Western Cities. The affidavit (comprising 26 pages) and appended exhibits (comprising 100 pages) detail the negotiations and settlement between the defendants and the Attorney General and Real Estate Commissioner and procedures followed pursuant to the settlement agreement.

No opposing affidavits were filed by plaintiffs. Rather they contended that discovery should be permitted with respect to all matters set forth in the Ducker affidavit which were not a part of the public record. At the hearing plaintiffs argued that in the absence of discovery the court could properly consider only those matters which were part of the public record, i.e. the statutes authorizing the Attorney General and Real Estate Commissioner to seek relief for people injured by deceptive sales practices and misrepresentation, the complaint filed against the defendants in state court, the permanent injunction and judgment, and the settlement agreement.

Appellants contend on appeal that the statutes and the record of the proceedings in the state court action did not sufficiently apprise the district court of the nature of the state action or settlement agreement. Relevant information, they argue, was contained in letters, records of meetings, and documents which were not before the state court, and the district court’s reliance on this extraneous matter, without affording plaintiffs an opportunity for discovery, constituted error.

Whether or not discovery will be permitted in a case of this nature lies within the sound discretion of the trial court. See Berland v. Mack, 48 F.R.D. 121, 126 (S.D.N.Y.1969). Rule 23(c)(1) provides that “As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained”. In determining whether to grant discovery the court must consider its need, the time required, and the probability of discovery resolving any factual issue necessary for the determination. The propriety of a class action cannot be determined in some cases without discovery, as for example, where discovery is necessary to determine the existence of a class or set of subclasses. To deny discovery in a case of that nature would be an abuse of discretion. Where the necessary factual issues may be resolved without discovery, it is not required.

In determining whether the district court abused its discretion, two related questions are presented: (1) whether the district court did in fact rely on matters outside the public record; and (2) whether the information contained in the public record or otherwise admitted by plaintiffs was sufficient to justify a dismissal of the class action without further discovery.

From a review of the record of the proceedings in the state court action, the written memoranda filed in the district court in this action, and the proceedings at oral argument, we find that the district court did not abuse its discretion in denying the request for further discovery. While it is true that the defendants through the Ducker affidavit introduced numerous facts relating to the settlement negotiations which were not a part of the public record, we conclude that the record itself provided a sufficient evidentiary base on which the “superiority” question might be determined. Moreover, it does not appear that the district court relied on matters outside of the public record in reaching its conclusion. Throughout the hearing, counsel for plaintiffs strenuously urged their contention that, in the absence of discovery, the court was limited to a consideration of the public record. This was recognized by the court, as indicated by the following colloquy between the court and plaintiffs’ counsel:

“MR. WELLS: No, I am telling you, Your Honor, we have been denied any discovery in this case. We have had no opportunity to investigate through normal discovery channels any of the matters that are attached to the . [Ducker affidavit],
“THE COURT: What do you want to discover? We have the record of the State lawsuit. We know under— “MR. WELLS: There is nothing in that record.
“THE COURT: We know under what legal authority it was brought. We know that it was brought and we know it was settled and we know the provisions of the decree. What do you want to discover?”

Superiority of Class Action

To permit the action to proceed as a class action under Rule 23(b)(3), it was necessary for the district court to find that “a class action is superior to other available methods for the fair and efficient adjudication of the controversy”. The trial judge has broad discretion in making this determination. “If he applies the correct criteria to the facts of the case, the decision should be considered to be within his discretion”. Gold Strike Stamp Co. v. Christensen, 436 F.2d 791, 793 (10 Cir. 1970).

In contending that the district court abused its discretion, appellants first argue that the court erred in weighing a judicial remedy against an administrative remedy, i.e. the state action. They rely on dictum in Amalgamated Workers Union of the Virgin Islands v. Hess Oil Virgin Islands Corp., 478 F.2d 540 (3 Cir. 1973) where the court said:

“As we view it, it would appear that the rule was not intended to weigh the superiority of a class action against possible administrative relief. The ‘superiority requirement’ was intended to refer to the preferability of adjudicating claims of multiple-parties in one judicial proceeding and in one forum, rather than forcing each plaintiff to proceed by separate suit, and possibly requiring a defendant to answer suits growing out of one incident in geographically separated courts “ . . . We find no suggestion in the language of Rule 23, or in the committee notes, that the value of a class suit as a superior form of action was to be weighed against the advantages of an administrative remedy. We leave this question, however, for disposition in an appropriate case.” (emphasis added). Id. 478 F.2d at 543.

We agree with Wright and Miller, Federal Practice and Procedure: Civil § 1779 (1973 Supp. at 17) that this statement in Amalgamated Workers is “an overly restrictive” reading of Rule 23(b)(3). “Since the purpose of the superiority requirement is to assure that the class action is the most efficient and effective means of settling the controversy, it seems consistent with that purpose to determine whether any administrative methods of settling the dispute exist.” Id.

Moreover, the action in state court is more than an administrative remedy. Following investigation and negotiations, the California officials instituted representative litigation in the Superior Court of Los Angeles County. That court still retains jurisdiction. In addition, unlike Amalgamated Workers, the court here is not simply considering “possible administrative relief”, but rather a remedy which has already been instituted.

Appellants’ primary contention is that the class action is in fact superior because the California state action (1) does not sufficiently represent and protect the interests of the entire class and (2) does not adjudicate the same controversy-

It is true that not all members of the class appellants seek to represent will be protected by the California settlement; nor will the class recover an amount that is even close to that sought in the class action. Except for those post-1970 purchasers who viewed a certain sales film, only those offerees and claimants who purchased lots or parcels between 1966-1970 are entitled to share in the estimated $3,300,000 in restitution offered by defendants. All other investors, including those purchasing before 1966 and after 1970, are limited to either seeking relief through the “future dispute” program structured by Western Cities or instituting their own private actions. Appellants argue that because of the narrow scope of the state relief the proposed class action must be found to be superior to the settlement in the California state action.

The superiority requirement is unique to those class actions maintained under Rule 23(b)(3). With reference to Rule 23(b)(3), the Advisory Committee explained in its Note to Amended Rule 23, 39 F.R.D. 98, 102-103:

“In the situations to which this subdivision [(b)(3)] relates, class-action treatment is not as clearly called for as in those described above, [i.e. (b)(1) and (b)(2)], but it may nevertheless be convenient and desirable depending upon the particular facts. Subdivision (b)(3) encompasses those cases in which a class action would achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results”.

As the Advisory Committee noted, the court must “assess the advantages of alternative procedures for handling the total controversy”. Many factors must be considered in determining whether a class action is superior to other available methods. As an aid for determining the superiority question, Rule 23(b)(3) lists four factors (see Note 3). This is not, however, an exhaustive list. In the recent case of Katz v. Carte Blanche Corp., 496 F.2d 747, 760 (3 Cir. 1974) the court noted that Rule 23(b)(3) superiority determinations must “take into account several different interests”. The court said:

“Superiority must be looked at from the point of view (1) of the judicial system, (2) of the potential class members, (3) of the present plaintiff, (4) of the attorneys for the litigants, (5) of the public at large and (6) of the defendant. The listing is not necessarily in order of importance of the respective interests. Superiority must also be looked at from the point of view of the issues.”

In its order dismissing the class action and striking the class allegations, the district court did not make detailed findings of fact, but found generally that “a class action is not superior to other available methods for the fair and efficient adjudication of the controversy”, especially in light of the proceedings already brought by the California officials in state court and “the relationship of these proceedings to the facts and posture of this particular case”.

Although not expressly articulated by the district court, many factors support the court’s determination: (1) A class action would require a substantial expenditure of judicial time which would largely duplicate and possibly to some extent negate the work on the state level. (2) The class action would involve 59,000 buyers in separate transactions over a 14 year period, with part of the buyers desiring to retain their land. (3) Significant relief had been realized in the state action through (a) restitution to many members of the class; (b) Western Cities’ agreement to establish a program to settle future disputes; (c) a permanent injunction; and (d) a letter of credit in the amount of approximately $5,000,000 to guarantee funds for off-site improvements. (4) The state court retained continuing jurisdiction. (5) No member of the class is barred from initiating a suit on his own behalf. (6) Although the class action aspects of the case have been dismissed, appellants’ action is still viable. (7) Defending a class action would prove costly to the defendants and duplicate in part the work expended over a considerable period of time in the state action. These factors as a whole support the conclusion of the district court that the class action was not a superior method of resolving the controversy.

Finally, appellants contend that the district court erred in considering the California action as an alternative to the class action, arguing that the state action did not involve the same controversy, did not include five of the defendants named in this action, and did not provide the class-wide restitution sought in this case.

We cannot agree that these, differences render the state action so different a controversy that it should not have been considered by the district court in determining whether the class action was superior to alternative methods. The state action was based on a charge of misleading advertising and deceptive sales practices. While appellants have charged false registration under the Interstate Land Sales Act, a violation of the Securities Exchange Act of 1934, and false registration under the California Subdivided Land Act, both actions involve the same fraudulent conduct of the defendants and both seek to provide relief for those injured thereby.

Considering only those facts properly before the court, we conclude that the court did not abuse its discretion in dismissing the class action.

Affirmed.

      . The interlocutory appeal was authorized by order of this court entered November 18, 1973.

      . The order was made pursuant to Rule 23(c)(1) and (d)(4) of the Federal Rules of Civil Procedure.

      . Rule 23(b) provides that an action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
      “(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.”

      . The four defendants in the state action were Great Western Cities, Inc., GWU Properties, Inc., California City Realty Corporation and California City Development Company.

      . The agreement provided that 90% of the payments to California residents would be in 7% secured notes of Great Western Cities and 10% in cash. Non-California residents were to receive a single cash payment.

      . The agreement recites that the term “questionnaire” refers to questionnaires “used by the Company, with the consent of the Attorney General, to solicit certain information” from purchasers of land during certain periods. The term “negative response” refers to a response containing “an allegation of a material misrepresentation of fact by the Company”. It is recited further that the Company and Attorney General “have reviewed the Questionnaires and have determined which Questionnaires contain Negative Responses”.

      . Under the terms of the agreement, the state released the defendants from any further state claims of fraud and illegality. The agreement states:
      “Q. Release: The Attorney General and the Commissioner hereby release the Company, GWU Properties, Inc., California City Realty Company, their officers, directors, employees, representatives, independent sales representatives, predecessors, and successors from all known claims, liabilities, obligations, actions and causes of action, of any nature, by reason of any other matter, cause or thing occurred, done, omitted or suffered to be done prior to the date of this Agreement”.

      . It may be noted, however, that appellants in their briefs both in the district court and on appeal relied in part on the Ducker affidavit and appended documents, particularly in attacking the adequacy of the questionnaire and extent of its mailing.

      . Appended to the settlement agreement were a press release issued jointly by the parties to the agreement, an instrument reciting the terms of the secured notes, and the form of release to be executed by offerees and claimants.

      . Specifically, they argue that information regarding the method of determining what investors would be offered restitution, how many would actually receive restitution, the aggregate amount of restitution to be offered, and the nature of the program structured by Great Western Cities to deal with future disputes was not a part of the public record.

      . As stated by the First Circuit in Yaffee v. Powers, 454 F.2d 1362, 1366 (1972):
      “To pronounce finally, prior to allowing any discovery, the nonexistence of a class or set of subclasses, when their existence may depend on information wholly within defendants’ ken, seems precipitate and contrary to the pragmatic spirit of Rule 23. Evidence which might be forthcoming might well shed light on a final decision on this issue."

      . The colloquy continued:
      “MR. WELLS: We have been talking, for example, about adequacy of notice.
      “THE COURT: We have been talking about it, but is it really vital?
      “MR. WELLS: It would be vital to a determination under Rule 23.
      “THE COURT: Anybody that wants can still bring a lawsuit. There is no res adjudicata. The only question is, should we have a class action.”

      . While specific findings would have been helpful to the parties and this court, they are not required in dismissing a class action pursuant to Rule 23(c)(1). Wright and Miller, Federal Practice and Procedure: Civil § 1785 at 134.

      . Both parties argue the effect of an arbitration program instituted by Western Cities and the . Attorney General, but this program was instituted subsequent to the settlement agreement and does not appear in the public record.

      . The press release appended to the settlement agreement recites that the settlement was the “last of several steps” and that “Earlier GWC had arranged for a letter of credit, up to $5 million, to assure availability of funds for the installation of off-site improvements. Also, engineering studies indicate that the City now has access to water sources sufficient to service anticipated future growth.”

      . Moreover, some of the named plaintiffs appear to be in the class to whom offers of restitution will be made.

      . Appellants in their briefs appear to assume that the district court held that the state action was superior. Rather, the court held that the class action was not superior to “other alternative methods", especially in the light of the state action. The alternative methods would consist of individual suits as well as participation in the state settlement plan.


author: TONE, Circuit Judge.

text:
    Chitta R. NANDA, Plaintiff-Appellee, Cross-Appellant, v. FORD MOTOR COMPANY, Defendant-Appellant, Cross-Appellee.
    No. 73-1726.
    United States Court of Appeals, Seventh Circuit.
    Argued Sept. 10, 1974.
    Decided Dec. 27, 1974.
    Rehearing Denied March 25, 1975.

      Francis D. Morrissey, Chicago, Ill., for appellant.
    Richard J. Phelan, Chicago, Ill., Donald M. Reno, Sr., Champaign, Ill., for appellee.
    Before FAIRCHILD, PELL and TONE, Circuit Judges.
   TONE, Circuit Judge.

The principal issue before us in this diversity case is whether under Illinois law an automobile manufacturer has a duty so to design and to manufacture its product that its occupants will not be subjected to an unreasonable risk of injury if a collision occurs which is not itself caused by any defects in the condition of the automobile. We hold that such a duty exists in the circumstances of this case and affirm the District Court’s judgment on a jury verdict in favor of the plaintiff.

The evidence, “when viewed in the aspect most favorable to” the plaintiff (Pedrick v. Peoria E. R.R., 37 Ill.2d 494, 510, 229 N.E.2d 504, 513-514 (1967)), supports the following version of the facts:

At about 8:30 P.M. on October 29, 1967 plaintiff Chitta R. Nanda, driving alone in his 1967 Ford Cortina, stopped in the inner northbound lane of Route 45 in Urbana, Illinois, to wait for an opening in southbound traffic so he could turn left into an access road. While stopped, the Cortina was struck in the rear by a 1962 Oldsmobile traveling at a speed the jury could have found was as low as 10 miles per hour. This collision injured no one and caused only relatively minor damage to the front of the Oldsmobile. The Cortina, however, was spun around and pushed into the southbound lanes, where it was struck in the rear by a southbound Rambler. The Rambler was traveling at about 40 miles per hour when the driver saw the Cortina and applied the brakes, which grabbed before the collision with the Cortina.

The jury could have found that the collision with the Oldsmobile caused a small fire on the rear of the Cortina, which was the size and shape of a grapefruit with a stream coming up from it and which, when the Rambler struck the Cortina, grew into a huge ball, enveloping the Cortina and the front of the Rambler. Almost instantaneously after the second collision the inside of the Cortina was engulfed in flames. Plaintiff suffered permanently disfiguring and disabling burns.

Plaintiff contends that design defects in the Cortina caused his injury. The fuel tank in the 1967 Cortina, like that in at least some other models manufactured by defendant, was “dropped into” a hole in the floor of the trunk, the top of the fuel tank serving as a portion of the floor of the trunk. The only shield separating the fuel tank from the passenger compartment was a piece of cardboard. Other automobile manufacturers in the United States provided a trunk floor consisting of some kind of continuous metal panel which shielded the fuel' tank from the passenger compartment, and after 1971 defendant itself abandoned the “drop-in” fuel tank installation. In addition, the fuel-filler pipe in the 1967 Cortina ran through the trunk compartment and was connected to the outer shell of the car by a rubber grommet and, the jury could have found, was so designed that it lacked flexibility, flexion at one end tending to pull the pipe loose. In at least some of the other types of cars defendant manufactured, it attached the flange of the fuel-filler pipe to the outer shell of the car by metal screws or bolts.

I.

The Duty of the Manufacturer Under Illinois Law

Courts have differed on the issue of the liability of an automobile manufacturer for injuries to occupants of the automobile resulting from a collision not itself caused by any defects in the condition of the automobile, sometimes called the “second collision” issue. The two leading cases are one in this court applying Indiana law, Evans v. General Motors Corp., 359 F.2d 822 (7th Cir. 1966), cert. denied, 385 U.S. 836, 87 S.Ct. 83, 17 L.Ed.2d 70 (1966), and one in the Eighth Circuit applying Minnesota law, Larsen v. General Motors Corp., 391 F.2d 495 (8th Cir. 1968). Evans, in which the court reasons that the intended use of an automobile does not include participation in collisions despite their foreseeability, holds that the manufacturer is not liable. Larsen, on the other hand, holds that since injury-producing impacts are foreseeable, the manufacturer has a duty so to design its vehicle that the user will not be subjected to an unreasonable risk of injury in the event of collision. We are, of course, not bound by Evans, because in this case the law of Illinois rather than Indiana is controlling.

The Illinois Supreme Court recently considered the Evans and Larsen cases and the divergent lines of cases following them in Mieher v. Brown, 54 Ill.2d 539, 301 N.E.2d 307 (1973). In the Mieher case the court held that the manufacturer of a truck was not liable for the death of the driver of an automobile that had run under the rear of the trunk bed, the truck having no rear bumper or shield to prevent such an occurrence. The controlling issue, in the words of the court, was “whether the defendant and the decedent stood in such a relationship to one another that the law imposed upon the defendant an obligation of reasonable conduct for the benefit of the decedent”. (54 Ill.2d at 541, 301 N.E.2d at 308.) After analyzing the Evans and Larsen lines of cases, the court did not expressly adopt either view. Rather it distinguished those cases:

“The question in Larsen and Evans concerned the duty of the manufacturer to design a vehicle in which it was safe to ride. The question in our case involves the duty of the manufacturer to design a vehicle with which it is safe to collide.” (54 Ill.2d at 543, 301 N.E.2d at 309.)

In deciding that question, the court said, the controlling considerations are whether “it appears to the court highly extraordinary that it [the defendant’s conduct] should have brought about the harm,” and whether the defendant has created “an unreasonable risk of injury” or “an unreasonable danger.” The court applied these tests to the accident before it and concluded that the alleged defective design did not create “an unreasonable danger or an unreasonable risk of injury,” and that the manufacturer did not have a duty “to design his vehicle so as to prevent injuries from the extraordinary occurrences of this case.” (54 Ill.2d at 545, 301 N.E.2d at 310.) Justice Goldenhersh, in dissent, disagreed with the court’s result but said of the majority opinion:

“Upon a close reading of the opinion it appears to me that the majority recognize that the duty owed by the manufacturer is to design his vehicle so as to avoid the unreasonable risk of injury in the event of collision irrespective of whether the injured is within or without the particular vehicle, and insofar as the opinion so holds, I concur.”

The Illinois Supreme Court followed and applied Mieher v. Brown in Cunis v. Brennan, 56 Ill.2d 372, 308 N.E.2d 617 (1974), in which the plaintiff, when the automobile in which he was riding and another automobile collided, had been thrown approximately 30 feet to a parkway, where one of his legs was impaled on an object protruding from the ground. In holding that the municipality was not liable for permitting a dangerous condition to remain on the parkway, the court applied the “unreasonable danger” test of Mieher and concluded that the municipality’s duty did not extend to maintaining the parkway to guard against “the remote possibility” of the “tragically bizarre” and perhaps “unique” occurrence for which the plaintiff sued. Again Justice Goldenhersh dissented.

Application of the principles stated in the Mieher and Cunis opinions requires affirmance here. Viewing the evidence in the light most favorable to the plaintiff, it does not appear to us to be “highly extraordinary” that the absence of a firewall or shield between the fuel tank and the passenger compartment and the condition of the filler-pipe assembly would bring about the harm for which plaintiff sues. The jury could have found that those conditions, in the words of the Mieher opinion, constituted an “unreasonable danger” and subjected the user of the product to “an unreasonable risk of injury.” A rear-end collision is the most common of highway mishaps, and it is not “extraordinary,” “bizarre,” “unique,” or “freakish and fantastic” for such a collision to impel, the victim vehicle into a collision with a third vehicle. We believe the law of Illinois to be that when an automobile is so constructed that its occupants are subjected to an unreasonable risk of being severely injured if it becomes involved in an accident that is not of a highly extraordinary kind, the manufacturer is liable for resulting injuries to occupants of the automobile.

In what amounts to an argument that the circumstances of plaintiff’s injury were extraordinary and therefore comparable to those in Mieher and Cunis, defendant assumes impact speeds of 20 or 25 miles per hour for the first impact and 40 or 45 for the second, applies the formula for determining kinetic energy to calculate the forces of the two impacts, and arrives at a total force which it says was approximately equivalent to the force that would have been received if the Cortina had been backed off the roof of the Marshall Field Building. The jury could have found, however, from testimony that the impact speeds were lower than defendant assumes and the evidence that the only major injuries suffered by anyone involved in the collisions were plaintiff’s burns, that lesser forces were involved. Indeed, it would be difficult for us to believe, if we were the trier of the facts, that a passenger in a car backed off the roof of the Marshall Field Building would suffer no major injury other than burns. Contrary to defendant’s assertion, a holding of liability is not a holding that a manufacturer has a duty “to design and build a crash-proof vehicle.”

II.

Availability of Strict-Liability Theory

Plaintiff in this case proceeded upon the theory of strict liability adopted in Suvada v. White Motor Co., 32 Ill.2d 612, 210 N.E.2d 182 (1965). In order to recover against the manufacturer under that theory, plaintiff must prove that his injury “resulted from a condition of the product, that the condition was an unreasonably dangerous one and that the condition existed at the time it left the manufacturer’s control.” 32 Ill.2d at 623, 210 N.E.2d at 188; Taylor v. Carborundum Co., 107 Ill.App.2d 12, 18, 246 N.E.2d 898, 901 (1st Dist. 1969); Nolan v. Shaf Mfg. Co., 128 Ill.App.2d 19, 29, 261 N.E.2d 209, 213 (3rd Dist. 1970).

In Mieher the Illinois Supreme Court held that the complaint did not state a cause of action on a strict-liability theory because it failed to allege that the product was in the same condition at the time of the accident as it was when it left defendant’s possession. The court, therefore, viewed the claim as sounding in common-law negligence. There is no reason to doubt, however, that the Illinois Supreme Court would hold the reach of the manufacturer’s duty to the “second collision” victim to be the same under either theory.

Existence of the Condition at the Time the Automobile Left Defendant’s Control

It was stipulated in the case at bar that up to the time of the accident plaintiff’s Cortina was in essentially the same condition as when sold. Defendant did not argue in its briefs in this court that the stipulation was insufficient to establish that fact or dispute that fact in any way. Rather, its argument was that the collision with the Oldsmobile changed the Cortina’s condition before the injury to plaintiff, and therefore the same-condition requirement was not satisfied. We were advised for the first time on oral argument that the stipulation was not read to the jury. Since the parties tried the case on the theory that the vehicle was in the same condition immediately before the collision with the Oldsmobile as it was when it left defendant’s control, they are bound by that theory here, United States v. Home Indemnity Co., 489 F.2d 1004, 1007-1008 (7th Cir. 1973); Ellsworth Freight Lines, Inc. v. Coney, 376 F.2d 475, 478 (7th Cir. 1967); Wagner v. Retail Credit Co., 338 F.2d 598, 601-602 (7th Cir. 1964); cf. Hormel v. Helvering, 312 U.S. 552, 556— 559, 61 S.Ct. 719, 85 L.Ed. 1037 (1941), even though plaintiff neglected to read the stipulation to the jury. The presence of the other elements of a Suvada claim, injury proximately caused by an unreasonably dangerous condition, is discussed in Part III below.

Strict Liability for a Design Defect

At the threshold defendant contends that plaintiff has not pleaded or proved a cause of action in strict liability because Illinois law does not permit the application of “a theory of strict liability in tort to a case sounding in design negligence.” In making this contention defendant seizes upon a sentence in the opinion of the Appellate Court in Mieher v. Brown, 3 Ill.App.3d 802, 805, 278 N.E.2d 869, 872 (5th Dist. 1972), reversed on other grounds, 54 Ill.2d 539, 301 N.E.2d 307 (1973), and ignores several Illinois cases squarely contrary to its contention. Sutkowski v. Universal Marion Corp., 5 Ill.App.3d 313, 281 N.E.2d 749 (3rd Dist. 1972); Rivera v. Rockford Mach. & Tool Co., 1 Ill.App.3d 641, 274 N.E.2d 828 (1st Dist. 1971); Dunham v. Vaughn & Bushnell Mfg. Co., 86 Ill. App.2d 315, 229 N.E.2d 684 (4th Dist. 1967); Wright v. Massey-Harris, Inc., 68 Ill.App.2d 70, 215 N.E.2d 465 (5th Dist. 1966). As the court said in the Wright case (68 Ill.App.2d at 79, 215 N.E.2d at 470):

“. . . we interpret Suvada to mean that the strict liability ■ imposed upon a manufacturer includes injuries which arise from defects in design as well as defects in manufacture.”

The sentence in the Appellate Court’s opinion in Mieher v. Brown relied upon by defendant appears in the context of an explanation that negligence and strict liability in tort are “separate and distinct causes of action” which the plaintiff’s pleading had erroneously combined in an “admixture of language and theory.” (3 Ill.App.3d at 805, 278 N.E.2d at 872.) It would be a strange rule that would immunize the manufacturer of a product from strict liability in tort if the unreasonably dangerous condition of his product was the result of a design defect rather than negligence in manufacturing or inspection. We are satisfied that Illinois has not adopted such a rule.

III.

Sufficiency of the Evidence

Given the duty of defendant as we have defined it, the applicability of the strict-liability theory, and the absence of an issue as to whether the car was in the same condition as it was when it left defendant’s control, there remain the unreasonably-dangerous-condition and probable-cause issues. If there was evidence from which the jury could find that an unreasonably dangerous condition existed in the Cortina by reason of its design, and that the fire that caused plaintiff’s burns, or the instantaneous spread of that fire into the passenger compartment, resulted from that condition, plaintiff’s prima facie case was complete, and the jury’s verdict is supported by the evidence.

Plaintiff called two experts, whose combined testimony, viewed in the light most favorable to him, showed in substance that the fuel-filler neck of the 1967 Cortina tended to pull loose and be displaced into the trunk; that the fuel tank was “susceptible to distortion” because of its location in the frame; that the fuel tank, filler neck and cap were located in an extremely vulnerable position; and that these conditions created an unreasonable danger of fire in the event of collision. Their testimony also showed that there was no firewall between the fuel tank and the passenger compartment; and that this condition created an unreasonable danger that a fire in the area of the fuel tank resulting from a collision would spread into the passenger compartment before the occupants of the car could escape or be extricated. The causal relationship between one or both of these unreasonably dangerous conditions and plaintiff’s injuries was shown prima facie by expert opinion testimony that the small fire after the first impact was caused by the design and location of the filler pipe; that this fire was spread by a gross leakage of fuel after the second impact; and, in the words of one of plaintiff’s expert witnesses, that “the lack of isolation of the fuel-tank area from the passenger compartment allowed a very rapid spread of this fire in the interior of the car, thus preventing rescue personnel from evacuating the driver before he suffered serious burns.”

The evidence of plaintiff’s experts was confirmed by the deposition testimony of one of defendant’s own engineers who had been assigned by defendant to investigate accidents involving 1967 Cortinas in England, one of which involved a fuel fire. In his report on this accident he referred to a similar occurrence in the United States and concluded that the bursting of the fuel tank and immediate conflagration in the latter accident “indicate that the floor mounted tank is hazardous and should be carefully reviewed and tested in each new model.”

Not surprisingly, there are sharp contradictions in the evidence. Resolving these conflicts was the jury’s responsibility. Our role in reviewing the denial of defendant’s motion for directed verdict ends when we determine, as we have, that the evidence favorable to plaintiff, although contradicted, is sufficient to support the jury’s verdict under the applicable Illinois law. We turn now to the claims of trial error.

IV.

Alleged Trial Errors

A. Expert Testimony

1.

We are told that the district judge refused to allow defendant to cross-examine plaintiff’s experts, William Stieglitz and Paul O’Shea, “with respect to their qualifications as ‘expert’ witnesses,” but we are not referred to the pages of the joint appendix or the record where this is supposed to have occurred. We have examined the transcript of the testimony of these witnesses and conclude that defendant was not prejudiced in its cross-examination.

2.

Plaintiff’s experts did not inspect the vehicle after the accident. Defendant argues that “an actual examination of the vehicle or at a bare minimum some physical evidence is absolutely essential” as a basis for expert testimony. There is of course no such rule. The evidence showing the circumstances of the accident and the design of the car was sufficient to permit an expert to express an opinion as to the cause of the fire. That the expert did not have the advantage of an inspection of the vehicle goes to the weight of his testimony, not its admissibility.

Similarly, defendant’s contention that Stieglitz was not shown to be sufficiently knowledgeable about the Cortina or automotive design problems goes to the weight of his testimony.

8.

The argument that Stieglitz based his testimony on “pure speculation” rests on his inability to say exactly how the small amount of leakage that in his opinion caused the small fire after the first collision occurred. He explained the various possibilities and concluded,

“There is no way of telling what happened. There was something that permitted a small degree of leakage.”

The competency of Stieglitz’s opinion on causation did not depend on his ability to state the precise place at which the leak of gasoline from the filler pipe occurred. Experts frequently must determine the causes of accidents by drawing inferences after the event from such evidence as is available. Frequently circumstances make it impossible to state all the details of the occurrence with absolute certainty. It is enough that the expert opinion be supported by a rational explanation which reasonable men could accept as more probably correct than not correct.

4.

Next it is contended that the hypothetical question put to Stieglitz included statements not supported by the evidence, viz., that the Oldsmobile struck the right corner of the Cortina, and that a fire the size of a grapefruit began “in the area around the right rear section where the gasoline cap is located.” Defendant points out that the driver of the Oldsmobile and a passenger in that car testified that the impact occurred at the Cortina’s left rear. The stipulation of fact, however, which as we noted above was inexplicably not read to the jury, stated that the Oldsmobile struck “the right rear of the Cortina.” • Defendant also points out that the driver of the Rambler, who alone testified she saw the grapefruit-sized fire, testified she saw it on the right lower rear, whereas the gasoline cap, says defendant, “was in fact located at the mid to upper rear section of the Cortina — not the lower rear.”

The objections now made to the hypothetical question were not asserted at the time the question was asked, or indeed at any other time during the trial. The objections that counsel for defendant did make at the trial were obviated by an amendment to the question. If the objections now asserted had also been made then, they too might have been obviated. By not making them then, defendant waived them. His contention that the District Court erred in allowing Stieglitz to answer the hypothetical question containing these alleged inaccuracies is therefore without merit.

There remains the issue of the probative value of Stieglitz’s answer, if the hypothetical question contained errors of fact. Defendant having stipulated that the Oldsmobile struck the right rear of the Cortina, plaintiff tried the case on the assumption that this was the fact. Defendant’s failure to seek to withdraw the stipulation, coupled with its failure to object to the inclusion of the stipulated fact in the hypothetical question, estops it from now questioning the sufficiency of the evidence of that fact. Cf. Hoosier Home Improvement Co. v. United States, 350 F.2d 640, 644 (7th Cir. 1965). Moreover, even if the initial impact of the Oldsmobile was with the left rear of the Cortina, the testimony concerning the small fire was that it appeared on the right side, the side on which the gasoline cap was located. This was consistent with the plaintiff’s theory that the initial collision caused a small gasoline leakage which in turn caused the initial, small fire. In any event, even if the fire initially started with the second impact and, because of the absence of a firewall, burst into the passenger compartment before plaintiff could escape or be rescued, the jury could have found liability.

With respect to the statement in the hypothetical question that the fire was “in the area around the right rear section where the gasoline cap is located,” defendant’s attempt to distinguish between “the lower rear,” where the driver of the rambler testified she saw the fire, and the “mid to upper rear section,” where defendant says the cap was placed, is no more than a quibble. The cap is below the bottom of the trunk lid, and its location could properly be described as the “lower” rear of the car.

5.

Defendant complains that Stieglitz’s testimony that a firewall would have prevented the spread of fire to the interior of the vehicle long enough to have permitted the rescue personnel to get the driver out before suffering major burns was based on hearsay, consisting of a report of the National Advisory Committee for Aeronautics (predecessor to the National Aeronautics and Space Administration) entitled “Appraisal of the Hazards to Human Survival in Airplane Crash Fires.” When the witness said he had based his opinion in part on this report and started to testify about what the report said, counsel for defendant objected and the court sustained the objection. We pass over counsel’s failure to specify a ground for his objection, since the court appears to have inferred the ground now asserted. But counsel did not move to strike the opinion itself, which had been stated several questions and answers earlier and which he now says should have been stricken. He therefore cannot complain here of the court’s failure to strike it. The court gave counsel all the relief he asked for.

Even if a motion had been made, however, the court could properly have denied it. Facts or data found in the literature of the profession, even though not themselves admissible in evidence, properly form a part of the basis for an expert’s opinion. 2 J. Wigmore, Evidence § 665b (3d ed. 1940); Proposed Federal Rules of Evidence, Rule 703, H.R. 5463, 93d Cong., 2d Sess., Rule 703; see also Rivera v. Rockford Mach. & Tool Co., supra, 1 Ill.App.3d at 649-650, 274 N.E.2d at 834.

6.

Defendant contends that a mistrial should have been granted because Stieglitz, using a Cortina gas tank and filler-neck assembly in making a demonstration to the jury, did not use the steel clamps with which the filler tank was affixed to the gas tank when the assembly was installed in a Cortina automobile. Stieglitz struck the filler neck with his hand, causing it to disengage from the tank, which would not have occurred, says defendant, if the clamps had been in place. The record shows that the district judge carefully considered the motion for mistrial and in denying it observed that the jury had been advised that the clamps had been removed, and concluded that they were not misled. His ruling was correct.

7.

Defendant complains that the District Court allowed plaintiff to reopen his case in chief, after the close of defendant’s case, to call expert witness O’Shea. This was a matter within the trial court’s discretion, reviewable only for abuse, which we do not find. Defendant had an adequate opportunity to prepare to cross-examine O’Shea, since it had taken his deposition and he was listed in the final pretrial order as a prospective witness. We need not review here the dispute between the parties concerning his availability during plaintiff’s case in chief. The trial judge was justified in accepting the representation of plaintiff’s counsel on that subject, which defendant’s counsel did not question at the time, and the record before us does not provide any basis for finding that representation to have been inaccurate.

Defendant also complains that the trial court allowed it to call only one witness to rebut O’Shea’s testimony. This exercise of discretion by the judge was not an abuse absent a showing of prejudice. Since no offer of proof was made, there is no basis for a finding of prejudice. A party cannot raise as error the exclusion of evidence unless its substance was made known to the judge by offer or was apparent from the context. Proposed Federal Rules of Evidence, Rule 103(a)(2) states this well-settled rule.

8.

O’Shea was allowed to testify about a test he conducted on “the back-half” of a 1967 Ford Cortina, mounted on a sled, in which he caused a ram mounted on another vehicle to strike the test vehicle. Defendant objected that the test did not duplicate the essential conditions of the accident. The test, however, did not purport to be a reconstruction of the accident but was for the limited purpose of demonstrating that an impact of a given force could dislodge the fuel-filler pipe from the rear panel. It was not required, therefore, that the conditions of the accident be duplicated, Johnson v. Chicago & N. W. Ry., 9 Ill. App.2d 340, 355-356, 132 N.E.2d 678, 686 (2d Dist. 1956); Skalon v. Manning, Maxwell & Moore, Inc., 127 Ill.App.2d 145, 162-163, 262 N.E.2d 146, 155 (1st Dist. 1970); McCormick, Evidence 486— 487 (Cleary ed. 1972).

9.

Plaintiff, at the time he asked leave to reopen to call O’Shea, also sought to introduce with O’Shea’s testimony a motion picture of the test and the test vehicle. Defendant objected to allowing O’Shea to testify and to all evidence concerning the test. After hearing counsel and viewing the motion picture, the court ruled that he would admit O’Shea’s testimony but would exclude the motion picture and the test vehicle, since defendant had not offered movies or test vehicles in connection with tests its experts had described to the jury. Defendant then sought to use the motion picture and test vehicle itself in cross-examining O’Shea. The court denied that request. .

Defendant argues that the motion picture would have shown that the bar on the filler cap was not horizontal but nearly vertical, which meant that the cap was not screwed into the fixed position and therefore any jar would have knocked it off. O’Shea, however, eon-ceded on cross-examination that the bar was not horizontal in his experiment. The real dispute on this point at the trial was whether all Cortina filler caps were made in such a way that the filler-cap bar was horizontal when the cap was screwed on tight. The motion picture did not, of course, throw any light on this issue. Similarly, other points defendant says would have been demonstrated by the motion picture or the test model were adequately brought out without them. When O’Shea was asked on cross-examination whether the amount of fuel discharged was less than a cup, he acknowledged that was so. Turning to matters not called to the trial court’s attention but brought up for the first time here, O’Shea also conceded that there was no damage to the rim of the hole where the filler neck passes through the rear panel of a kind that would occur if the neck was pulled through with the cap affixed and that there was no damage or distortion to the tube itself. The trial court’s refusal to allow the use of the motion picture and the test model in the cross-examination of O’Shea did not affect the substantial rights of the parties. See Rule 61, F.R. Civ.P.

B. Use of Deposition

Defendant’s final complaint of error in rulings on evidence is that the District Court allowed plaintiff to read the deposition of a non-party witness who was present in the courtroom. It appears that when plaintiff’s counsel first announced his intention to read the deposition on Monday, June 19, the witness was at his home outside the 100-mile limit. See Rule 32(a)(3), F.R.Civ.P. By the time counsel got around to reading the deposition, on Wednesday, June 21, defendant had brought the witness to Chicago. The witness then being available, Rule 32(a)(3) did not authorize the reading of his deposition. The error, however, was harmless. Defendant does not argue that it was prejudiced, merely that the rule was violated.

C. Instructions

Finally defendant objects to the giving of several instructions to the jury and the failure to give others tendered by defendant.

Defendant argues that the instructions failed to tell the jury that if the conduct of a third person was the sole proximate cause of plaintiff’s injury, he cannot recover from the defendant. This proposition was adequately communicated to the jury in the instructions that were given, although not in the words defendant asked the court to use. No particular form of words was required, so long as the idea was conveyed.

Defendant argues that certain instructions were “peremptory and contained conclusions.” At the trial, however, the grounds of objection to these instructions were entirely different. The burden-of-proof instruction is also attacked on grounds different from those stated at the trial. New grounds may not be asserted for the first time here. Rule 51, F.R.Civ.P.

Defendant also complains of the court’s refusal to give one of the two alternative burden-of-proof instructions it tendered. In at least two respects either of these proposed instructions might have been confusing to the jury. Each of them told the jury plaintiff had to prove that the dangerous condition existed when the car left defendant’s control. That issue, however, had been stipulated out of the case, and defendant did not, as we observed earlier, ask to be relieved from that stipulation or suggest to the trial judge that it was inaccurate. In addition, each of the proposed instructions, by modifying the words “unreasonably dangerous condition” with the phrase “when put to its intended use,” might have been construed by the jury to exclude a condition that is unreasonably dangerous only if a collision occurs, since a collision was not “an intended use.” Thus the “intended use” qualification, appropriate in some contexts, would in this case have introduced semantic confusion and would have been likely to mislead the jury as to the law. The instructions that were given the jury on the issues and burden of proof adequately informed them of the law applicable to the case.

In its reply brief, defendant adds what appears to be still another objection, viz., that the instructions as a whole fail to instruct the jury “on the law attendant to a ‘second collision’ case.” This objection comes too late.

The judgment of the District Court is affirmed.

Affirmed.

      . In the jargon of automobile tort law, the “first collision” is the accident in which the vehicle strikes another vehicle or object, and the “second collision” occurs when the occupants of the vehicle are exposed to an unreasonably dangerous condition because of the design of the vehicle. The “first collision” is not caused by the allegedly defective design, but the “second collision” is. A second collision with still another vehicle, which occurred in the case at bar, is not necessarily a part of a “second collision” case and is not the “second collision” to which that term refers.

      . Restatement of Torts (Second) § 435(2) (1965) is quoted and relied upon by the court, as is Prosser, Palsgraf Revisited, 52 Mich.L. Rev. 1, 27 (1953).

      . The phrase “an unreasonable risk of injury” appears in Larsen v. General Motors, supra, 391 F.2d at 502.

      . The last phrase is from a passage in Prosser, Palsgraf Revisited, 52 Mich.L.Rev. 1, 27 (1953), quoted in Mieher v. Brown, 54 Ill.2d . at 545, 301 N.E.2d at 310.

      . One eyewitness estimated 10 m. p. h. for the first impact. The driver of the Rambler testified that, although she was traveling at 40 m. p. h. when she first saw the Cortina, she braked before impact and felt her brakes grab.

      . This argument suggests the unrealistic view that in inferring the Cortina was unreasonably dangerous in its original condition, the effects of the Oldsmobile and Rambler collisions cannot be considered cumulatively. We have already observed that the sequence of the two collisions was not extraordinary or bizarre.

      . “To put the matter bluntly, there is no cause of action in this state for strict liability in tort for negligent design.” 3 Ill.App.3d at 805, 278 N.E.2d at 872.

      . Defendant was not entitled to a directed verdict unless “the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors movant that no contrary verdict based on that evidence could ever stand.” Pedrick v. Peoria E. R.R., supra, 37 Ill.2d at 510, 229 N.E.2d at 513-514. The Pedrick rule is applicable in a diversity case. See, e. g., Risse v. Woodard, 491 F.2d 1170, 1171 (7th Cir. 1974).

      . Considered as a basis for new trial, defendant’s contention that the verdict was against the manifest weight of the evidence is equally without merit. A motion for new trial on this ground is addressed to the sound discretion of the district judge, and his ruling is non-reviewable except for an abuse of discretion (6A J. Moore, Federal Practice 59.08 [5]), which we do not find here.

      . That phrase does not appear in what purports to be a quotation from defendant’s instruction 5 in defendant’s brief. The brief contains no supporting record or appendix reference. The defendant’s tendered and refused instructions do not appear to be in-eluded in the record on appeal, but defendant’s post trial motion purports to quote defendant’s instructions 5 and 5A in full, and the phrase “when put to its intended use” appears in both those instructions.


author: HEANEY, Circuit Judge.

text:
    Earl CUTHBERTSON, Appellant, v. Dr. C. G. UHLEY, Individually, the Northwestern Clinic, a partnership, and the Bethesda Hospital Association, a corporation, now known as the Riverview Hospital Association, Appellees.
    No. 74-1603.
    United States Court of Appeals, Eighth Circuit.
    Submitted Jan. 7, 1975.
    Decided Feb. 3, 1975.

      Raymond A. Lamb, Moorhead, Minn., for appellant.
    Edmund M. Odland, Erickson, Erie & Odland, Crookston, Minn., for appellee, Bethesda Hospital.
    Gerald S. Rufer, Rufer, Hefte, Pemberton, Schulze & Sorlie, Fergus Falls, Minn., for appellees, Uhley and Northwestern Clinic.
    Before GIBSON, Chief Judge, and HEANEY and ROSS, Circuit Judges.
   HEANEY, Circuit Judge.

The sole issue on appeal is whether the Minnesota statute of limitations or the North Dakota statute of limitations applies to this medical malpractice suit brought in the United States District Court for the District of Minnesota. The District Court, in an unpublished decision, applied the Minnesota statute and dismissed the action. It held that the Minnesota Supreme Court would, under its better-law methodology adopted in Milkovich v. Saari, 295 Minn. 155, 203 N.W.2d 408 (1973), find the Minnesota statute to be the better law and bar the action. We affirm on different grounds.

Earl Cuthbertson, a North Dakota resident, brought this action against Dr. E. G. Uhley, a Minnesota resident, Northwestern Clinic, a Minnesota partnership, and Bethesda Hospital, a Minnesota corporation, now known as Riverview Hospital Association, alleging negligent treatment of a laceration to his right arm. Jurisdiction was based on diversity-

The statute of limitations for medical malpractice is two years in both Minnesota and North Dakota. The Minnesota statute, however, begins to run from the termination of the treatment, Johnson v. Winthrop Laboratories Division of Sterling Drug, Inc., 291 Minn. 145, 190 N.W.2d 77 (1971), while the North Dakota statute begins to run from the discovery of the cause of action, Iverson v. Lancaster, 158 N.W.2d 507 (N.D.1968). The action here is not barred under the North Dakota statute. The appellant argues that the Minnesota Supreme Court would apply the North Dakota statute here because it is the better law.

We must follow the choice-of-law rules of the forum state in resolving the issue presented. Klaxon v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). The appellant’s reliance on the better-law analysis announced in Milkovich v. Saari, supra, is misplaced. That case adopted a choice-of-law methodology to be applied to conflicts between substantive law; it did not address the issue here. When the conflict is between the procedural law, Minnesota follows the general rule that procedural law of the forum applies and that statutes of limitations are procedural. See American Mutual Liability Ins. Co. v. Reed Cleaners, 265 Minn. 503, 122 N.W.2d 178, 180, n. 1 (1963); Allen v. Nessler, 247 Minn. 230, 76 N.W.2d 793, 798-799 (1956); Knipfer v. Buhler, 227 Minn. 334, 35 N.W.2d 425, 426 (1948); In Re Daniel’s Estate, 208 Minn. 420, 294 N.W. 465, 469 (1940); Weston v. Jones, 160 Minn. 32, 199 N.W. 431, 432-433 (1924); Restatement, Second, Conflict of Laws § 142; Leflar, American Conflicts Law 303-305 (1968). That rule governs the disposition of the issue presented here.

The decision of the District Court is

Affirmed.

      . The Minnesota statute, M.S.A. § 541.07, provides in pertinent part:
      Except where the uniform commercial code otherwise prescribes, the following actions shall be commenced within two years:
      (1) * * * all actions against physicians, surgeons, dentists, hospitals [and] sanitoriums, for malpractice, error, mistake or failure to cure, whether based on contract or tort; * * *
      The North Dakota statute, N.D.C.C. § 28-01-18, provides in pertinent part:
      * * * The following actions must be commenced within two years after the cause of action has accrued:
      ******
      3. An action for 'the recovery of damages resulting from malpractice.