author: TOM S. LEE, District Judge.

text:
    FOREST OIL CORPORATION, Plaintiff, v. TENNECO, INC., Defendant.
    Civ. A. No. J84-0084(L).
    United States District Court, S.D. Mississippi, Jackson Division.
    Jan. 7, 1986.

      See also, 622 F.Supp. 152.

      Michael S. McKay and Glenn Gates Taylor, Jackson, Miss., for plaintiff.
    Peyton S. Irby, Jr., John H. Holloman, III and Ernest G. Taylor, Jr., Watkins, Ludlam & Stennis, Jackson, Miss., for defendant.
   MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before this court on motion by Tenneco, Inc. (Tenneco) to dismiss for failure to join indispensable parties pursuant to Rule 19 of the Federal Rules of Civil Procedure. Plaintiff Forest Oil Corporation (Forest) filed timely response to Tenneco’s motion, and the court has considered the series of supplemented memoranda with attachments submitted by both parties.

On June 1,1981, Tenneco contracted with Forest to purchase Forest’s share of natural gas from wells located in what was known as the “Vintage Field” in Jefferson Davis County, Mississippi. By its terms the contract obligated Tenneco to make “pre-initial delivery payments” (pre-I.D. payments) to Forest, the producer, in exchange for Forest’s promise to commit all gas owned by it to the Tenneco contract upon completion of Tenneco’s gas pipeline. Tenneco began making its pre-I.D. payments to Forest in March 1982, based upon invoices submitted by Forest indicating that Tenneco’s pre-I.D. obligations began in November 1981. Tenneco began taking delivery of gas from the Vintage Field following completion of its gas pipeline in August 1982. The total amount in pre-I.D. payments tendered by Tenneco and received by Forest and the entities it represented under the contract exceeded $9,000,000.00.

In late 1982, Tenneco began experiencing increased deliverability capacity of high-cost gas by some of its producers, while at the same time experiencing a reduced demand for the gas it was reselling. In light of this increased supply and diminished demand, Tenneco began exercising its rights under the immediately exercisable market-out clauses in the vast majority of its contracts. There remained, however, a number of gas purchase contracts which, like Forest’s, contained no market-out clauses and which obligated Tenneco to high “take- or-pay payments” provisions over the life of the contracts. Thus, on April 29, 1983, Tenneco announced its Emergency Gas Purchase Policy (EGPP). Utilizing this EGPP, Tenneco either suspended or construed in its favor contractual provisions concerning price, deliveries, take-or-pay, nomination of gas categories and other related matters. The notice of the implementation of the EGPP that was sent to Forest contained a further demand that either Forest accede in writing within one month or Tenneco would terminate the contract. Forest rejected Tenneco’s demand and, accordingly, Tenneco reduced its take-or-pay payments and the amount it paid for gas taken from the Vintage Field pursuant to the EGPP. Forest filed its original complaint in this action alleging breach of contract on February 3, 1984.

Tenneco’s instant motion requests dismissal of this action on the ground that Forest’s complaint seeks recovery not only for itself but also on behalf of two other entities, CDC Producing Company (CDC) and the Forest 1980 U.S. Drilling Partnership (the Drilling Fund). Tenneco argues that during contract negotiations it was aware that the Forest representative was offering to sell the gas interests of the “Forest Group”; however, it was unaware until discovery commenced that Forest had no authorization to commit the interests of CDC and the Drilling Fund to such long-term contracts, or that the interests of CDC and the Drilling Fund in the Vintage Field gas were so substantial. Tenneco urges this court that, because the absence of CDC and the Drilling Fund as named plaintiffs in this action could leave Tenneco subject to a substantial risk of incurring multiple or otherwise inconsistent obligations if CDC and the Drilling Fund should be dissatisfied with the disposition of this action, the court should deem CDC and the Drilling Fund indispensable parties to be joined under Rule 19(a). Tenneco concludes that since joinder of CDC and the Drilling Fund would destroy diversity jurisdiction in this cause, dismissal of the action is proper.

Forest contends that at the time of contracting it was acting as an authorized agent of both CDC and the Drilling Fund in committing their gas to the Forest-Tenneco contract. As a party in whose name a contract has been made for the benefit of another, Forest asserts that it is the real party in interest authorized under Rule 17(a) of both the Federal and Mississippi Rules of Civil Procedure to prosecute the action in its own name. Additionally, Forest alleges that throughout the course of performance of the contract, Tenneco was constantly aware of the interest of both CDC and the Drilling Fund and cannot now be heard to feign surprise that Forest is seeking to vindicate the substantial interests of CDC and the Drilling Fund in this action. Forest lastly asserts that CDC and the Drilling Fund will be bound by any judgment in this case since, as privies of Forest, they will be collaterally estopped from relitigating in a subsequent action any issues adjudicated in this action. The parties are in substantial agreement that this court, in following Mississippi choice-of-law rules, is Eñe -bound to apply Mississippi substantive law. See Spragins v. Louise Plantation, Inc., 391 So.2d 97 (Miss.1980); Mitchell v. Craft, 211 So.2d 509 (Miss. 1968).

Agency

In order to bring this suit in its own name, Forest has the burden of establishing the existence of an agency relationship between it and CDC and the Drilling Fund under Mississippi law. Lubbock Feed Lots, Inc. v. Iowa Beef Processors, Inc., 630 F.2d 250, 256 (5th Cir.1980). Evidence of the existence of an agency relationship between Forest and CDC and the Drilling Fund is overwhelming in this case. While Forest has the burden of proving that an agency relationship existed at the time the contract was executed, Woods v. Nichols, 416 So.2d 659, 664 (Miss.1982), such relationship need not be established by a writing. A de facto agency may be proven by the presence of three elements at the time of contracting:

(1) Manifestation by the alleged principal, either by words or conduct, that the alleged agent is employed as such by the principal;
(2) The agent’s acceptance of the arrangement;
(3) The parties understood that the principal will control the undertaking.

Engle Acoustic & Tile Co. v. Grenfell, 223 So.2d 613, 617 (Miss.1969); Ivey’s Plumbing & Elec. Co. v. Petroleum Maintenance, Inc., 463 F.Supp. 543, 548 (N.D. Miss.1978).

(4) The elements of a de facto agency relationship are clearly present here. CDC and the Drilling Fund manifested their assent to the Tenneco contract from the outset. By letter dated January 7, 1982, some two months following the commencement of the take-or-pay payments, CDC sent a confirmation of agency authorization to Forest, stating in part: “This letter will confirm CDC’s PC’s authorization to Forest to sell our share of gas produced from the Vintage Field, Jefferson Davis County, Mississippi, to TGP (Tenneco) under the terms of the referenced gas contract.” A copy of this letter was sent to Tenneco. The obvious import of the word “confirm” is that Forest had de facto authority at the time of contracting. Such confirmation is an unequivocal manifestation of CI)C’s authorization for' Forest’s agency capacity.

(5) The Drilling Fund acknowledges Forest’s agency capacity in all of its communications regarding the Tenneco contract. Forest’s authority to act as agent in negotiating gas purchase contracts is established in the Drilling Fund prospectus sent to investors, in its Restated Articles of Partnership and in the quarterly status reports sent to its investors. In all of these communications, the Drilling Fund manifested its assent to Forest’s actions on its behalf. It also appears from the record that the Drilling Fund marketed all of its gas interests through Forest; indeed, the Drilling Fund never signed any of its gas purchase contracts in its own name. Such evidence of industry custom and course of performance may be viewed as probative of the agency question and the issue of real party in interest under Rule 17(a). See Lubbock Feed Lots, Inc. v. Iowa Beef Processors, Inc., 630 F.2d 250 (5th Cir.1980); Jackson Mfg. Co. of Mississippi, Inc. v. United States, 434 F.2d 1027 (5th Cir.1970); Mitsui & Co. v. Puerto Rico Water Resources Authority, 528 F.Supp. 768 (D.Puerto Rico 1981). Thus, by written confirmation and by the conduct of the parties, both CDC and the Drilling Fund manifested that Forest was acting as their agent in the execution and performance of the contract. It is undisputed by the parties that Forest accepted the arrangement.

Arguing that it could not have understood that the principals would control the undertaking or that they had manifested their assent to Forest’s action on their behalf, Tenneco states that it had not heard of CDC or the Drilling Fund during the contract negotiations. This contention is refuted by copies of take-or-pay payment invoices submitted to Tenneco by Forest beginning in November 1981. These invoices expressly identify the separate interests of and the percentage of the total payment going to Forest, CDC and the Drilling Fund. Pursuant to these invoices, Tenneco made advance take-or-pay payments to Forest in the amount of $9,089,-301.26, which the invoice allocated to Forest in the amount of $2,830,342.57, the Drilling Fund in the amount of $4,557,-136.28 and CDC in the amount of $1,701,-822.41. It is inconceivable that Tenneco would have disbursed funds in this amount without closely scrutinizing the specific interests dedicated to the contract, or without some knowledge and assurance that these interests were bound to the contract by the representations of Forest. The affidavit of Charles W. Brown, one of Tenneco’s negotiators who was present during the contract negotiations, to the effect that he could not “recall” mention of CDC or the Drilling Fund does not serve to refute the specific mention of those entities in the invoices paid by Tenneco and the inference to be drawn therefrom.

Thus it appears that Forest has met its burden of establishing the existence of, at the very least, a de facto agency relationship between it and CDC and the Drilling Fund at the time of contracting. The parties’ course of performance over the past four years indicates a recognition on Tenneco’s part that Forest was authorized to act as agent of CDC and the Drilling Fund in marketing the Vintage Field gas. This authorization was put in writing by CDC in a February 1982 letter. Forest's written authority to sell the gas owned by the Drilling Fund is contained in a series of writings authored by the Drilling Fund’s managing partners and distributed to its investors. Therefore, this court is of the opinion that Forest was acting as an agent of CDC and the Drilling Fund at the time of contracting and is entitled to prosecute this action in its own name pursuant to Rule 17(a) of both the Federal and Mississippi Rules of Civil Procedure. While the mere fact that Forest fits the definition of a real party in interest under Rule 17(a) is not dispositive of this question, the fact that Forest was acting as an authorized agent for CDC and the Drilling Fund at the time of contracting means that it is entitled to prosecute the action in its own name without joining its principals under Mississippi substantive law. See Lubbock Feed Lots, 630 F.2d at 256-57; see also Restatement (Second) of Ageney § 364 (1957); Miss.R.Civ.Proc. 17(a) (comment).

Tenneco’s last argument on the existence vel non of an agency relationship raises the issue of apparent conflicts as between Forest, CDC and the Drilling Fund. The written contractual document, the Operating Agreement controlling the relationship between Forest and CDC, specifically prohibits Forest from making any long-term commitments of CDC’s gas. The Forest-Tenneco contract was for a term of ten years. Likewise, the Drilling Fund’s limited partnership agreement authorizes only Forest Energy, Inc., not Forest Oil, to sell its gas. A lengthy discussion of the effect of these purportedly controlling documents is unnecessary, for even if Forest’s commitments at the time of contracting were unauthorized, they were clearly ratified by both CDC and the Drilling Fund. Under Mississippi law, a party who has actual knowledge of the facts of a transaction and who accepts some benefit and an obligation to perform thereunder may affirm or ratify a prior act by another party which did not bind him but which was professedly done on his account, and the act thereby constitutes an agency relationship and is given effect as if originally authorized by him. FMC Finance Corp. v. Reed, 592 F.2d 238, 240 (5th Cir.1979) (applying Mississippi law); Gulf Refining Co. v. Travis, 29 So.2d 100, 104 (Miss.1947); Restatement (Second) of Agency § 82 (1958).

Tenneco contends that the ratification doctrine cannot be conscionably applied in this case because any such clear affirmance of the contract did not occur until at least January 1982, a point some six months after execution of the contract when market conditions had changed dramatically. Tenneco urges this court to deny CDC and the Drilling Fund the advantage of a hindsight decision to ratify a six-month-old contract only when it looked like the best available offer. As stated previously, this court is of the opinion, and the affidavits and deposition testimony indicate, that during contract negotiations Tenneco knew that Forest was offering to commit the gas owned by the Forest Group, and that CDC and the Drilling Fund were members of the Forest Group. Had CDC and the Drilling Fund attempted to withdraw their gas from the Forest-Tenneco contract at any point between June 1981 and January 1982, as Tenneco contends they were free to do, Tenneco’s proper remedy would have been a suit for damages against each for breach of a contract executed by an agent clothed with apparent authority to bind their interests. A principal is bound, once an agency relationship exists, not only to those transactions entered into by an agent that are within his actual authority, but those which are within his apparent authority. Weathersby v. Gore, 556 F.2d 1247, 1253 (5th Cir.1977) (applying Mississippi law); Steen v. Andrews, 78 So.2d 881, 883 (Miss.1955).

This court cannot agree with Tenneco that CDC and the Drilling Fund were acting under an assumption that their interests were not bound by the contract executed by Forest, or that they had no intention of recognizing their obligation under the contract until it appeared that the contract offered the highest price for their gas. Throughout the relevant time period, CDC and the Drilling Fund acted consistently with the theory that Forest had actual authority to bind their interests to the June 1,1981 contract. As a party promisee to the contract acting as an agent for disclosed principals for whose benefit, at least in part, the contract was made, Forest is entitled to prosecute this action in its own name. Restatement (Second) of Agency § 364 (1957).

Preclusive Effect of a Judgment

Rule 19(a) of the Federal Rules of Civil Procedure provides certain criteria for determining whether to allow an action to proceed or to dismiss it in the forced absence of an interested party. These criteria require the court to examine inter alia whether continuing the action in the absence of an interested party will work a deprivation of the substantive rights of any persons already parties to the action. See Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968). In this context, Tenneco raises the question of whether proceeding in this action in the absence of CDC and the Drilling Fund will leave Tenneco “subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations” by reason of their interests in the contract under Rule 19(a)(2)(ii). In short, the fear expressed by Tenneco in its motion is that the judgment in this action will not be res judicata as to any claims which CDC or the Drilling Fund may wish to assert in the future.

The Mississippi law of res judicata and collateral estoppel has been “characterized as being as rigid as any now extant.” Stovall v. Price Waterhouse Co., 652 F.2d 537, 540 (5th Cir.1981). See also Note, Collateral Estoppel — The Multiple Tort Claimant Anomaly, 41 Miss.L.J. 497, 498 (1970). Tenneco reasons that if CDC or the Drilling Fund were to bring suit against it subsequent to conclusion of this action in a Mississippi state court — there being no diversity between the parties — the Mississippi court would apply the restrictive Mississippi law of res judicata, and as there would be no strict identity of the parties under Mississippi law, the state court action would not be barred. See Dunaway v. W.H. Hopper & Associates, Inc., 422 So.2d 749 (Miss.1982). Therefore, Tenneco concludes, the failure to join CDC and the Drilling Fund as named parties herein leaves it subject to a substantial risk of incurring multiple and otherwise inconsistent obligations within the meaning of Rule 19(a)(2)(h).

While the court has some reservations concerning the application of Mississippi law of res judicata and collateral estoppel to determine the preclusive effect of this court’s judgments, the parties are in substantial agreement that a Mississippi state court would apply the Mississippi law of res judicata and collateral estoppel in any subsequent action based on this contract. This court cannot disagree.

Forest argues, however, that even if Mississippi law of res judicata would not bar a subsequent state court action on the contract by CDC or the Drilling Fund, the Mississippi law of collateral estoppel is broad enough to preclude such further re-litigation on the contract issue. In general, the Mississippi cases hold that where an issue of fact is actually litigated and resolved in one trial, and where that fact was essential to the judgment in that first trial, that determination is conclusive between the same parties or their privies in a subsequent suit on a different cause of action. Mississippi Employment Security Commission v. Philadelphia Municipal Separate School District, 437 So.2d 388, 396 (Miss.1983); Bush Construction Co. v. Walters, 254 Miss. 266, 179 So.2d 188, 190 (1965). Unlike the broad doctrine of res judicata, collateral estoppel applies only to questions actually litigated in the prior suit, and not to all questions which might have been litigated. Dunaway, 422 So.2d at 751. Forest concludes that since the central issues involved in any subsequent state court suit would be identical to the issues to be litigated in this action — Tenneco’s liability on the contract and the efficacy of its EGPP — CDC and the Drilling Fund would be collaterally estopped from relitigating their claims under Mississippi law.

In State Farm Mutual Automobile Insurance Co. v. Universal Underwriters, 601 F.Supp. 286 (S.D.Miss.1984), this court undertook an examination of the requirement of party identity under the Mississippi law of collateral estoppel. Following an adjudication in Mississippi state court of liability between drivers of two cars involved in an automobile accident, two insurance companies brought a diversity action in this court seeking to determine their respective coverage obligations. The insurance companies were not named parties in the state court action, but they controlled the litigation. Id. at 289. This court, after a review of the Mississippi law of collateral estoppel, noted that “the exact parameters of the requirement for party identity in Mississippi have not been established.” Id. Under the facts presented, this court held that the insurance companies were collaterally estopped from relitigating the liability issue because of the central role played by the companies in the prior litigation, regardless of whether they were named parties.

Thus, this court is of the opinion that the Mississippi law of collateral estoppel would bar relitigation in state court of the contract issue and Tenneco’s chief defenses following a final judgment by this court. Such judgment on the merits by this court would necessarily subsume the issue of Tenneco’s liability on the contract and the merit of its substantive defenses. As Tenneco’s alleged liability to CDC and the Drilling Fund arises solely out of the June 1981 contract and has no independent basis which conceivably would not be litigated in this action, there is no need for this court to demand that its judgment be accorded res judicata effect as to all claims which could have been brought in this action. Operation of the Mississippi law of collateral estoppel should provide Tenneco with sufficient protection from future litigation by these same parties to allow this action to proceed.

Furthermore, through affidavits submitted by Douglas K. Thompson, Executive Vice President of CDC, and J. Brent Garfield, counsel for Forest Energy, Inc., managing general partner of the Drilling Fund, CDC and the Drilling Fund have each stated that it “understands and agrees that any judgment in this lawsuit would be bind-, ing upon the rights of [CDC and the Drilling Fund] with respect to the subject contract.” Tenneco may utilize these sworn statements by both CDC and the Drilling Fund as grounds for various affirmative defenses, including waiver and collateral estoppel, should either party pursue any further remedies in state court. The plain meaning of the statements is that no such action will follow a final judgment by this court.

For the reasons stated above, this court concludes that Tenneco will not suffer a substantial risk of incurring multiple or otherwise inconsistent obligations if this action is allowed to go forward without joining CDC and the Drilling Fund as named plaintiffs. If further problems of this nature arise during the life of this litigation, this court is authorized under Rule 19(b) of the Federal Rules of Civil Procedure to adopt protective provisions in a judgment, shape the relief or take other measures to lessen or avoid any prejudice to Tenneco. Furthermore, and in accordance with this opinion, Tenneco must be allowed full discovery from both CDC and the Drilling Fund to the same extent as if they were named party plaintiffs.

It is, therefore, ordered that Tenneco’s motion to dismiss for failure to join indispensable parties pursuant to Rule 19 of the Federal Rules of Civil Procedure is denied.

      . Pre-I.D. payments are prepayments for gas made to the producer by Tenneco before completion of a gas pipeline, based upon an agreed percentage of ownership which Tenneco agrees to pay a producer in the event the pipeline is not hooked up by a specified time.

      . An immediately exercisable market-out clause was included in many of Tenneco’s contracts with other producers. It gave Tenneco the right to unilaterally reduce the contract price payable to a producer whenever Tenneco considered it necessary in order to keep its resale price competitive and maintain its profit margin. Such immediately exercisable market-out clauses were the product of negotiation between the parties, and no such clause was contained in the Forest-Tenneco contract.

      . A take-or-pay payment is in the nature of a prepayment for gas made available but not actually taken by Tenneco, calculated at a percentage (90% in the Forest-Tenneco contract) of the gas which the producer could have delivered during a contract year, reduced by the amount actually taken by Tenneco, with Tenneco paying the difference to the producer.

      . Deposition testimony of Tenneco’s chief gas contract negotiator, John Cameron, indicates that Cameron was aware during the negotiations of the Forest contract that the "Forest Group” was comprised of Forest Oil Corporation, CDC and the Drilling Fund.

      . Tenneco contends, and Forest does not dispute, that over 66% of the gas committed to the Forest-Tenneco contract was owned by CDC and the Drilling Fund.

      . Rule 19(a) provides:
      Persons to be joined if feasible. A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party. If he should join as a plaintiff but refuses to do so, he may be made a defendant, or, in the proper case, an involuntary plaintiff. If the joined party objects to venue and his joinder would render the venue of the action improper, he shall be dismissed from the action.

      . Jurisdiction in this action is based upon diversity of citizenship. Forest is a New York corporation. Tenneco, CDC and the managing and general partners of the Drilling Fund are all Delaware corporations. Thus, joinder of CDC and the Drilling Fund would destroy this court's diversity jurisdiction.

      . Rule 17(a) provides:
      Real Party In Interest. Every action shall be prosecuted in the name of the real party in interest. An executor, administrator, guardian, bailee, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party authorized by statute may sue in his own name without joining with him the party for whose benefit the action is brought; and when a statute of the United States so provides, an action for the use or benefit of another shall be brought in the name of the United States. No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.

      . See supra note 5 (text of Rule 19(a)).

      . In Aerojet-General Corp. v. Askew, 511 F.2d 710 (5th Cir.), reh. denied 514 F.2d 1072 (5th Cir.), cert. denied 423 U.S. 908, 96 S.Ct. 210, 46 L.Ed.2d 137 (1975), the Fifth Circuit held that federal law of res judicata applies to determine the preclusive effect of a prior judgment by a federal court sitting in diversity in a subsequent diversity action in federal court. See also Willis v. Fournier, 418 F.Supp. 265 (M.D.Ga.), aff’d sub nom 537 F.2d 1142 (5th Cir. 1978) (extending the Aerojet-General holding to include collateral estoppel); Stovall, 632 F.2d at 540. The rationale underlying these holdings is that a court, whatever the source of its jurisdiction, must have the power to determine the scope of its own judgments. A state should not be allowed to nullify the judgments of a federal court, constitutionally established and given power to enforce state-created rights, through the application of such state’s more restrictive rules governing the preclusiveness of judgments. Aerojet-General, 511 F.2d at 516, quoting Kern v. Hettinger, 303 F.2d 333, 340 (2nd Cir. 1962). The parties have not submitted, and the court has not found, any cases wherein a state court applied federal law of res judicata when faced with a subsequent suit filed there after a federal court sitting in diversity had entered judgment in the same action. Application of the federal law of res judicata would bar relitigation of this contract dispute by the named plaintiff, Forest, and those in privity with it, CDC and the Drilling Fund. See Hardy v. Johns-Manville Sales Corp., 681 F.2d 334 (5th Cir. 1982), Hooker v. Klein, 573 F.2d 1360 (9th Cir.), cert. denied 439 U.S. 932, 99 S.Ct. 323, 58 L.Ed.2d 327 (1978). Application of federal law of res judicata would thus alleviate Tenneco’s fears of multiple exposure.


source: Caselaw Access Project

author: PATEL, District Judge.

license: Public Domain

text:
    Colienne (Auxier) BRENNAN, aka Colienne Auxier, Plaintiff, v. LERMER CORPORATION, et al., Defendants.
    No. C-83-5803-MHP.
    United States District Court, N.D. California.
    Jan. 8, 1986.
    Robert E. Cartwright, Jr., Karen E. Scholer, Cartwright, Sucherman & Slobo-. din, San Francisco, Cal., for plaintiff.
    Russell Leibson, Carroll, Burdick & Mc-Donough, Martin T. Ruane, Kathleen Harrington, Barfield, Dryden & Ruane, Michael G. Lowe, Hanna, Brophy, MacLean, MeAleer & Jensen, Patrick Wilson, Morrison & Foerster, San Francisco, Cal., for defendants.
   OPINION

PATEL, District Judge.

Plaintiff Colienne Brennan filed this personal injury action in state court naming Lermer Corporation (“Lermer”) and a number of “Does” as defendants. Lermer answered the complaint and subsequently removed the action to federal court on diversity grounds. After removal, and more than one year after plaintiff’s claim accrued, she discovered the true identity of a number of potential defendants and amended her complaint to substitute these defendants for the “Does” named in her original complaint. One of the newly discovered defendants, Fairchild Industries, Inc. (“Fairchild”), has moved to dismiss the amended complaint on the ground that it is barred by California’s one-year statute of limitations for personal injury actions.

Plaintiff contends that under the California pleading scheme permitting Doe defendants, Cal.Civ.Proc.Code § 474, the statute of limitations was effectively extended for three years from the date she filed the original complaint and, therefore, her amended complaint against Fairchild was timely. Fairchild responds that this case is governed by Fed.R.Civ.P. 15(c) regarding the relation-back of amendments, not by the California Doe pleading provisions. Because plaintiff has failed to meet the requirements of Rule 15(c), Fairchild argues, her amended complaint does not “relate back” to the date of the original complaint and, therefore, is barred by the one-year statute of limitations.

For the reasons given below, the court concludes that the California Doe pleading scheme is state “substantive law” which must be applied in this diversity action. Because under California law plaintiffs amended complaint was timely filed, Fair-child’s motion to dismiss is denied. BACKGROUND

Plaintiff is employed as a flight attendant by Trans World Airlines (“TWA”). In the course of her employment, plaintiff uses an inflight food and beverage service cart to serve passengers on board the aircraft. These carts have a horizontal dead-man brake handle which apparently some flight attendants find difficult to operate. Plaintiff alleges that as a result of using the service carts, she now suffers from bilateral carpal tunnel syndrome, an ailment which plaintiff describes as a “cumulative trauma injury, which affects the nerves of the wrists, resulting in loss of sensation and impaired use of hands.”

Plaintiff alleges that she first noticed symptoms of the ailment in April or early May 1982 and was diagnosed as suffering from carpal tunnel syndrome on July 27, 1982, at which time she first began to suspect that her symptoms resulted from use of the inflight service carts. On March 7, 1983 she was informed by TWA that “Lermer Corporation” manufactured the carts used on board flights.

On March 18, 1983 plaintiff filed a complaint in San Francisco Superior Court naming as defendants the Lermer Corporation, Black Corporation, White Corporation and One Hundred “Does.” The complaint alleged that each of the defendants was involved in the design, manufacture and sale of food and beverage service carts and set forth causes of action for negligence, breach of express and implied warranties, strict products liability and false representation. Defendant Lermer Corporation filed an answer in state court and on December 6, 1983 removed the case to this court, asserting diversity jurisdiction.

Plaintiff alleges she first learned in April 1984 that defendant Fairchild was involved in the manufacture of inflight service carts. At that time plaintiff filed a First Amended Complaint, specifically naming Fairchild and others as defendants and dropping from the complaint the Black and White Corporations and the One Hundred Doe defendants.- Plaintiff served Fairchild with a copy of the First Amended Complaint in May 1984 and Fairchild has participated in the litigation since that time.

In March 1985 it was discovered that plaintiff had filed the First Amended Complaint without stipulation or leave of court in accordance with Fed.R.Civ.P. 15(a). Consequently, on March 14, 1985 the court ordered that plaintiff’s First Amended Complaint be stricken and deemed lodged with the court only. On April 25, 1985 the court granted plaintiff’s motion for leave to file the First Amended Complaint, which plaintiff filed and served upon Fairchild on May 10, 1985.

DISCUSSION

Fairchild moves to dismiss the First Amended Complaint pursuant to Fed.R. Civ.P. 12(b)(6) on the ground that it was filed after the applicable statute of limitations had run. Cal.Civ.Proc.Code § 340(3) provides that any action for personal injury must be commenced within one year. This one-year limitations period applies to all personal injury actions, including those based on negligence, products liability and breach of warranty. See, e.g., Sevilla v. Stearns-Roger, Inc., 101 Cal.App.3d 608, 610, 161 Cal.Rptr. 700 (1980); Howe v. Pioneer Manufacturing Co., 262 Cal.App.2d 330, 339, 68 Cal.Rptr. 617 (1968).

Under § 474, however, a plaintiff who does not know the identity of a particular defendant at the time of injury may file a complaint within one year naming a fictitious defendant and then amend the complaint'when the defendant’s identity is discovered. Once the original complaint is filed, the plaintiff has up to three years to identify and serve any of the Doe defendants. Cal.Civ.Proc.Code § 583.210. The Legislative Committee Comment explains that § 583.210 “applies to a defendant sued by a fictitious name from the time the complaint is filed.” Cal.Civ.Proc.Code § 583.210 legislative committee comment (West Supp.1985). State case law supports this explanation by holding that where a plaintiff files a complaint naming a fictitious defendant and within three years amends the complaint to substitute the defendant’s true name, the defendant “is considered a party to the action from its commencement so that the statute of limitations stops running as of the date of the earlier pleading.” Austin v. Massachusetts Bonding & Insurance Co., 56 Cal.2d 596, 599, 15 Cal.Rptr. 817, 364 P.2d 681 (1961) (emphasis added). Thus, taken together, §§ 340(3), 474 and 583.210 provide the “functional equivalent” of a limitations period of up to four years, depending on when the original complaint is filed. Rum-berg v. Weber Aircraft Corp., 424 F.Supp. 294, 297 (C.D.Cal.1976).

Plaintiff filed her original complaint on March 18, 1983, less than a year after she first noticed symptoms of carpal tunnel syndrome and approximately eight months after she first began to suspect that her symptoms resulted from use of the inflight service carts. Her properly filed First Amended Complaint, substituting Fairchild for one of the Doe defendants, was filed and served upon Fairchild on May 10, 1985, well within the three years provided by § 583.210. Thus, under California law, plaintiff’s First Amended Complaint was timely filed.

Fairchild argues, however, that Fed.R. Civ.Proc. 15(c) — not California law — governs this case and that under Rule 15(c) plaintiff’s First Amended Complaint is untimely. Rule 15(c) provides, in pertinent part:

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

Rule 15(c) requires that the defendant receive notice of the action “within the period provided by law for commencing the action” — in this case, one year. Plaintiff apparently concedes that Fairchild did not receive notice of this action until May 1984 when plaintiff served Fairchild with the improperly filed First Amended Complaint. Therefore even assuming that plaintiffs action did not accrue until July 27, 1982 when she first began to suspect the connection between her injury and the service carts, Fairchild did not receive notice within one year as required under Rule 15(c).

Under California law plaintiffs First Amended Complaint was timely; under Rule 15(c) it was untimely. Thus the court’s ruling on Fairchild’s motion to dismiss will depend on which law applies.

I. California Law

It is, of course, well established that in diversity actions a federal court must apply the substantive law of the state in which it sits. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). State statutes of limitations are considered substantive law for purposes of the Erie doctrine, Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945); Walker v. Arm-co Steel Corp., 446 U.S. 740, 746, 100 S.Ct. 1978, 1983, 64 L.Ed.2d 659 (1980); Nelson v. A.H. Robins Co., 515 F.Supp. 623, 625 (N.D.Cal.1981), as are those state provisions which are “an integral part” of the statute of limitations. Walker, 446 U.S. at 751-52, 100 S.Ct. at 1985-86; Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949).

State laws which affect the tolling of a statute of limitations are generally regarded as “an integral part” of the state limitations statute. See, e.g., Walker, 446 U.S. at 750-51, 100 S.Ct. at 1985-86; Ragan, 337 U.S. at 534, 69 S.Ct. at 1235; Britt v. Arvanitis, 590 F.2d 57, 59 (3d Cir.1978); Marshall v. Mulrenin, 508 F.2d 39 (1st Cir.1974). Indeed, in Alonzo v. ACF Property Management, Inc., 643 F.2d 578, 580 (9th Cir.1981), this circuit applied state filing and computation of time provisions in a diversity action because they were deemed an integral part of the state statute of limitations. As the Supreme Court has observed in a related context:

“Any period of limitation ... is understood fully only in the context of the various circumstances that suspend it from running against a particular cause of action. Although any statute of limitations is necessarily arbitrary, the length of the period allowed for instituting suit inevitably reflects a value judgment concerning the point at which the interests in favor of protecting valid claims are outweighed by the interests in prohibiting the prosecution of stale ones. In virtually all statutes of limitations the chronological length of the limitations period is interrelated with provisions regarding tolling, revival, and questions of application.”

Board of Regents, etc. v. Tomanio, 446 U.S. 478, 485-86, 100 S.Ct. 1790, 1795-96, 64 L.Ed.2d 440 (1980) (quoting Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 463-64, 95 S.Ct. 1716, 1722, 44 L.Ed.2d 295 (1975)).

There can be little doubt that §§ 474 and 583.210, taken together, are “integral” to California’s statute of limitations scheme and embody state substantive policy. The Supreme Court of California has held that § 474 creates a statutory “right of a plaintiff to use a fictitious name where he is ignorant of the defendant’s true name.” Austin, 56 Cal.2d at 602, 15 Cal.Rptr. 817, 364 P.2d 681. The purpose of § 474 “is to enable such a plaintiff to bring suit before it is barred by the statute of limitations.” Id. at 602, 15 Cal.Rptr. 817, 364 P.2d 681; Streicher v. Tommy's Electric Co., 164 Cal.App.3d 876, 882, 211 Cal.Rptr. 22 (1985). Section 474 achieves this purpose

by tolling the statute of limitations as of the date the original complaint is filed, provided the defendant is identified and served within the three years prescribed by § 583.210.

The tolling effect of § 474 takes on particular significance in personal injury actions. The one-year limitations period prescribed by § 340(3) is unusually short compared to the statutes of limitations for personal injury actions provided in other states. See Hogan, California’s Unique Doe Defendant Practice: A Fiction Stranger Than Truth, 30 Stan.L.Rev. 51, 93-94 (1977) (noting that in 26 jurisdictions the limitations period is at least three years while in another 20 states the limitations period is two years). Given the realities of modern tort litigation, in many cases one year may not provide an injured plaintiff sufficient time to identify and locate all potential defendants. This is especially true in products liability cases which often involve a large number of defendants with varying degrees of involvement in and responsibility for the condition of the end product. By effectively extending the statutes of limitations by use of fictitious defendant provisions, §§ 474 and 583.210 help to mitigate the harshness of the one-year limitations period prescribed by § 340(3). See, e.g., Rumberg, 424 F.Supp. at 297 (noting that § 474 “mitigates the harshness of a statute of limitations that is short in comparison to limitations in other jurisdictions”); Hogan, 30 Stan.L.Rev. at 95 (“California’s Doe defendant practice may be largely the product of a judicial realization that the state’s limitation period for personal injury actions provides too short a time for plaintiffs to ascertain all potentially liable parties”).

As the California Supreme Court has noted, by tolling the statute of limitations in Doe pleading cases § 474 also serves the strong state policy in favor of litigating cases on their merits. Austin, 56 Cal.2d at 603, 15 Cal.Rptr. 817, 364 P.2d 681; see also Streicher, 164 Cal.App.3d at 882, 211 Cal.Rptr. 22. Because, of the important policies served by § 474, California courts have been very liberal in permitting the amendment of pleadings to bring in a defendant previously sued by a fictitious name. Barrows v. American Motors Corp., 144 Cal.App.3d 1, 7, 192 Cal.Rptr. 380 (1983).

Viewed in this context, California’s Doe pleading practice “must be considered part and parcel of the statute of limitations.” Walker, 446 U.S. at 752, 100 S.Ct. at 1986. Sections 340(3), 474 and 583.210, taken together, constitute a comprehensive state statutory scheme which strikes a balance between a number of competing interests including defendants’ interest in repose, the state’s interest in the prompt commencement of litigation, and the interest of both the plaintiffs and the state in litigating cases on their merits and providing compensation for those wrongfully injured. Applying § 340(3) but not §§ 474 and 583.-210, as Fairchild urges, would upset this balance and would distort California’s comprehensive statutory scheme. As the court noted in United States ex rel. Sabella v. Newsday, 315 F.Supp. 333, 335 (E.D.N.Y. 1970): “[A] severe, short state statute may be considerably ameliorated by other state provisions; ignoring the softening criteria may lead to unintended and harsh cutting off of meritorious claims.”

The court concludes that, although cast in procedural terms, §§ 474 and 583.210 are an integral part of the California statute of limitations and are “substantive” both in purpose and effect.

Another court in this Circuit has reached the same conclusion. In Rumberg v. Weber Aircraft Corp., 424 F.Supp. 294 (C.D. Cal.1976), the plaintiff filed a wrongful death action in state court alleging that her husband’s death was caused by the malfunction of an aircraft cockpit ejection system. The next day she filed a federal action against the same parties. In her state complaint, plaintiff named a number of Doe defendants pursuant to § 474. She did not name the Doe defendants in her federal complaint, however, because a local rule prohibited the District Court from accepting any complaints that named fictitious parties. When, more than a year later, plaintiff learned the identity of several of the unknown defendants, she amended both her state and federal complaints to include these defendants. The “newly joined” defendants then moved to dismiss the federal action pursuant to Fed.R.Civ.P. 12(b)(6) on the ground that the amended complaint was barred by the one-year statute of limitations prescribed by § 340(3).

The court denied defendants’ motion. Refusing to “myopically focus[ ]” on § 340(3) alone, the court held that §§ 340(3), 474 and 581a, taken together, provide the “functional equivalent” of a limitations period of up to four years. 424 F.Supp. at 297-98. This statutory scheme, the court noted, both promotes California's policy in favor of litigating cases on their merits and helps to mitigate the harshness of the relatively short one-year statute of limitations. Id. at 297. The court concluded that the California statutory scheme embodied “substantive policy” which, although “implemented through the procedural mechanism of ‘Doe’ allegations,” nonetheless constitutes substantive state law which must be applied in federal diversity actions. Id. at 298.

A number of courts in other jurisdictions have held that Doe pleading provisions similar to California’s are substantive rather than procedural. At issue in Santiago v. Becton Dickinson & Co., S.A., 539 F.Supp. 1149 (D.Puerto Rico 1982), was Puerto Rico’s Rule of Civil Procedure 15.5, a Doe pleading statute derived from § 474. 539 F.Supp. at 1153 n. 5. Noting that the Doe pleading provisions “provide a mechanism by which a plaintiff may interrupt the statute of limitations by relating the substitution of an unknown defendant back to the time of the filing of the original complaint,” the court held that “[t]he effect of this procedural mechanism is clearly substantive since the newly identified party will be considered a defendant from the moment the original complaint was filed.” Id. Thus, the court concluded, the Puerto Rico Rules of Civil Procedure and not Rule 15(c) govern the determination of whether the plaintiff’s amended complaint was timely.

Similarly, in Westfall v. Whittaker, Clark & Daniels, Metropolitan Talc Co., Inc., 571 F.Supp. 304 (D.R.I.1983), the court was confronted with the issue whether the state Doe pleading statute (R.I.Gen. Laws § 9-5-20) or Rule 15(c) governed the amendment of a complaint where the plaintiff sought to substitute the name of a newly identified defendant for one of the Doe defendants named in the original complaint. After comparing the statutes at issue in Marshall and Santiago with the Rhode Island Doe pleading statute the court held as follows:

All three statutes ... have been construed as providing a means by which plaintiffs may toll the statute of limitations where a defendant’s name is unknown at the time the original complaint is filed. It is beyond question that all three statutes have the same substantive effect of allowing previously unnotified defendants to be brought into an action after the applicable statute of limitations has run. Finding no significant distinctions between the totality of circumstances in the case at bar, and those in Marshall and Santiago, this Court is compelled to follow the reasoning of the First Circuit and the District of Puerto Rico and hold that in a federal diversity action in the District of Rhode Island, John Doe pleadings must be allowed where the requirements of R.I.Gen.Laws § 9-5-20 are met. ■

571 F.Supp. at 312 (citations omitted). Cf. Britt v. Arvantis, M.D., 590 F.2d at 61 (held New Jersey Doe pleading statute does not extend statute of limitations period, is simply a procedural rule and therefore is not controlling in federal diversity actions); Williams v. Avis Transport of Canada, Ltd., 57 F.R.D. 53 (D.Nev.1972) (holding Doe pleading under Nevada rule “similar” to § 474 is “a procedural matter, not one of substantive law” and reading the “mistake concerning the identity of the proper party” language of Rule 15(c) broadly to include any omission of a party who cannot be identified).

Ordinarily where, as here, it is determined that the relevant state law is “substantive” rather than merely “procedural”, Erie requires the court to apply state law. Fairchild argues, however, that the Erie doctrine is inapplicable in this case in light of the Supreme Court’s decision in Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965).

II. Effect of Hanna v. Plumer

The question before the court in Hanna was “whether, in a civil action where the jurisdiction of the United States district court is based upon diversity of citizenship between the parties, service of process shall be made in the manner prescribed by state law or that set forth in Rule 4(d)(1) of the Federal Rules of Civil Procedure.” 380 U.S. at 461, 85 S.Ct. at 1138. The plaintiffs in Hanna filed an action ip federal court and served process on the defendant by leaving copies of the summons and complaint with the defendant’s wife at the couple’s residence. Although Rule 4(d)(1) allows service to be made in this manner, Massachusetts law requires in-hand service. Thus, if the state service requirement governed, defendant was entitled to have the action dismissed; if Rule 4(d)(1) controlled, the litigation would proceed. Under these circumstances, the defendant argued, the choice between state and federal law was “outcome-determinative” and therefore Erie mandated that the federal court apply state law. The Supreme Court rejected defendant’s argument on two grounds.

First, the Court rejected defendant’s overly formalistic application of the “outcome-determinative” test. “ ‘Outcome-determination’ analysis was never intended to serve as a talisman,” the Court stated. 380 U.S. at 466-67, 85 S.Ct. at 1141. Rather, the “outcome-determinative” test must be read with reference to the “twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws.” Id. at 468, 85 S.Ct. at 1142 (footnote omitted). The Court concluded that the relatively insubstantial variation between the state and federal rules concerning service of process was unlikely either to affect the parties’ choice of forum or to raise the sort of equal protection problems which concerned the court in Erie.

The Court found a second, “more fundamental flaw” in defendant’s argument: “the incorrect assumption that the rule of Erie R. Co. v. Tompkins constitutes the appropriate test of the validity and therefore the applicability of a Federal Rule of Civil Procedure.” Id. at 469, 85 S.Ct. at 1143. “When a situation is covered by one of the Federal Rules, the question facing the court is a far cry from the typical, relatively unguided Erie choice: the court has been instructed to apply the Federal Rule, and can refuse to do so only if the Advisory Committee, this Court, and Congress erred in their prima facie judgment that the Rule in question transgresses neither the terms of the Enabling Act nor constitutional restrictions.” Id., at 471, 85 S.Ct. at 1144. Thus, at least where there is a “direct conflict” between a “housekeeping rule[ ]” prescribed by Congress for the federal courts and a “comparable state rule[],” the Federal Rule will apply in diversity actions unless the Rule is either unconstitutional or outside the scope of the Rules Enabling Act. Id. at 472-73, 85 S.Ct. at 1144-45.

In Walker v. Armco Steel Corp., 446 U.S. 740, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980), the Court clarified its holding in Hanna. Walker involved the same issue raised in Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949): whether a federal court sitting in diversity should apply state law or Rule 3 of the Federal Rules of Civil Procedure in determining when an action is commenced for the purpose of tolling the state statute of limitations. Under the state laws at issue in both Walker and Ragan, an action was not deemed “commenced” for purposes of the statute of limitations until the summons was served on the defendant. In contrast, Rule 3 provides that a “civil action is commenced by filing a complaint with the court.” In Ragan the court held the state statute was an “integral part” of the state statute of limitations and, as such, constituted substantive law which the federal court must apply in diversity actions. The plaintiff in Walker argued that Hanna overruled Ragan and that, after Hanna, the proper test was not whether the state law was an integral part of the statute of limitations but rather whether Rule 3 is within the scope of the Rules Enabling Act and within the constitutional powers of Congress.

The Walker Court rejected plaintiffs argument, holding that Hanna did not affect the holding or the analysis of Ragan. The Court emphasized that the Hanna analysis applies only where there is a “direct collision" between the Federal Rule and state law. 446 U.S. at 749, 100 S.Ct. at 1985. “The first question must therefore be whether the scope of the Federal Rule in fact is sufficiently broad to control the issue before the Court. It is only if that question is answered affirmatively that the Hanna analysis applies.” Id. at 749-750, 100 S.Ct. at 1984-85. The Court concluded that there was no “direct conflict” between Rule 3 and the Oklahoma statute governing the commencement of civil actions. Id. at 752, 100 S.Ct. at 1986. The Court noted that “the Oklahoma statute is a statement of a substantive decision by that State that actual service on, and accordingly actual notice by, the defendant is an integral part of the several policies served by the statute of limitations,” whereas Rule 3 “simply states that ‘[a] civil action is commenced by filing a complaint with the court.’ There is no indication that the Rule was intended to toll a state statute of limitations, much less that it purported to displace state tolling rules for purposes of state statutes of limitations.” Id. at 750-51, 100 S.Ct. at 1985 (footnote omitted). Thus, the Court concluded, Rule 3 and the Oklahoma statute “can exist side by side ... each controlling its own intended sphere of coverage without conflict.” Id. at 752, 100 S.Ct. at 1986. There being no “direct conflict” between the two laws, the Court applied the Erie test, rather than the Hanna analysis, and held as it had in Ragan that the state law applied in diversity actions. Id. at 752-53, 100 S.Ct. at 1986.

Although the area of potential conflict between Rule 15(c) and §§ 474 and 583.210 arguably is greater than that between Rule 3 and the state statutes at issue in Walker and Ragan, it is not such a “direct conflict” as to require application of the Hanna analysis. Under the California Doe pleading scheme, a plaintiff may commence an action against unidentified parties by filing a complaint naming Doe defendants within one year. The very act of filing the complaint extends the limitation period for three years. Thus, if the plaintiff successfully identifies and serves the Doe defendants within three years, the limitation period will not have run and the amended complaint will be timely. If, on the other hand, the plaintiff is unable to identify and serve the defendants, the statute of limitations will run at the end of the three years, thus barring any later amendment. As already discussed, it is the very purpose of the California Doe pleading scheme to extend the statute of limitations in order to provide additional time for plaintiffs to identify those parties who may be responsible for their injuries.

In contrast, although Rule 15(c) is in some respects “intimately connected” with the statute of limitations (Fed.R.Civ.P. 15 advisory committee note), it is not concerned either with determining or altering the length of the limitations period. Rather, Rule 15(c) speaks to the question whether, and under what circumstances, a party may amend his or her complaint after the limitations period has already run. As the court in Rumberg noted:

The California statute of limitations scheme as applied in this case does not deal with the “relation back” doctrine at all but rather extends or tolls the limitations period in the factual circumstances that exist in this case. Rule 15(c) is designed to provide a uniform solution to statute of limitations problems when amendments are sought after the limitations period has expired; it was not designed to determine the length of the limitations period to be applied.

424 F.Supp. at 300-01 (emphasis in original). See also Santiago, 539 F.Supp. at 1153 (“The federal rules do not deal with the particular problem of John Doe defendants”); Williams v. U.S., 353 F.Supp. 1226, 1231 (E.D.La.1973) (holding no conflict between Rule 15(c) and a state law providing that a suit against one person tolls the statute of limitations against all persons solidarily obligated with him, on the ground that the state law “does not deal with the ‘relation back’ doctrine at all but simply interrupts the running of the prescription against any solidary obligor once the suit is filed”). As in Walker, “[tjhere is no indication that [Rule 15(c) ] was intended to toll a state statute of limitations, much less that it purported to displace state tolling rules for purposes of state statutes of limitations.” 446 U.S. at 750-51, 100 S.Ct. at 1985. Thus, there is no “direct conflict” between Rule 15(c) and the California provisions, and the Erie doctrine therefore applies. Walker, 446 U.S. at 752, 100 S.Ct. at 1986.

Application of the California statutory scheme in this case is fully supported by consideration of the “twin aims” of the Erie doctrine: discouragement of forum-shopping and avoidance of inequitable administration of the laws. Hanna, 380 U.S. at 468, 85 S.Ct. at 1142. As already discussed, thé California Doe pleading scheme provides plaintiffs with the functional equivalent of a four-year statute of limitations. There is no Doe pleading practice in federal court nor is there any other state or federal provision 'that would similarly extend the ordinary one-year limitation period. Thus, a plaintiff in a personal injury action will have up to four years to identify and serve all defendants if he files in state court but only one year if he files in federal court. This creates an obvious disparity and compelling incentive for plaintiffs to forum shop. As one commentator has noted, “A device that effectively quadruples the tort statute of limitations can hardly be deemed a procedural triviality unlikely to lead to forum shopping.” Hogan, 30 Stan. L.Rev. at 110.

Furthermore, the disparity between the limitations period available in the two forums creates precisely the kind of inequity with which the Erie court was concerned. It may be argued that where the plaintiff chooses his forum and elects to proceed in federal court rather than in state court he foregoes the longer statute. The flaws in this argument are apparent, however. If the plaintiff had filed in state court he would deprive the defendant of a shorter statute. If there is not complete diversity, the diverse defendant will not be able to remove and will be held to a longer limitations period than where he is in a position to remove to federal court. The greatest hardship is upon California’s own citizens who cannot remove. Claims against them will remain in state court. It would be anomalous to interpret a statute as providing greater repose for out-of-state defendants than for the state’s own citizens. The unevenness of dual application is even more apparent in cases such as this where a plaintiff has chosen the state forum and a defendant is permitted to defeat the statute of limitations by removal.

Because this case involves removal, it is not necessary to reach the question of Doe pleading application to diversity actions filed in federal court. The court holds that in cases removed from state court on diversity grounds the California statutory scheme at issue is state “substantive law” which under the Erie doctrine must be applied. Plaintiff’s First Amended Complaint was timely filed under California law and defendants’ motion to dismiss is denied.

IT IS SO ORDERED.

      . The complaint also sets forth a claim for punitive damages as a separate "cause of action."

      . Although plaintiff did not expressly substitute Fairchild and the others for the Doe defendants, this was the effect of her amendment.

      . All statutory references are to the California Code of Civil Procedure unless otherwise indicated.

      . Section 474 provides, in part: "When the plaintiff is ignorant of the name of a defendant, he must state that fact in the complaint, or the affidavit if the action is commenced by affidavit, and such defendant may be designated in any pleading or proceeding by any name, and when his true name is discovered, the pleading or proceeding must be amended accordingly.”

      . Section 583.210(a) provides: "The summons and complaint shall be served upon a defendant within three years after the action is commenced against the defendant. For the purposes of this subdivision an action is commenced at the time the complaint is filed.”

      . Although plaintiff does not specifically address in her papers whether the requirements of Rule 15(c) have been met in this case, she alleges that Fairchild "had actual notice of this action when they were served with a First Amended Complaint in May 1984." There is nothing in the record to indicate that Fairchild had notice at an earlier date nor does plaintiff make any such allegation.

      . Local Rule 4(j) of the Central District of California provided: "Unless otherwise ordered by the court in a particular case, the Clerk shall refuse to accept for filing, in any civil action or proceeding originally commenced in this court, any complaint wherein any party is designated and sought to be joined under a name which is alleged to be, or for other reasons unquestionably is, wholly fictitious, unless the complaint be accompanied by a dismissal as to every party designated by a fictitious name.” Rumberg, 424 F.Supp. at 296 n. 2. There is no similar local rule in the Northern District of California.

      . Section 581a was the predecessor to § 583.-210. Like § 583.210, it provided for service within three years after commencement of the action.

      . In so holding, the Santiago court relied on the First Circuit’s decision in Marshall v. Mulrenin, 508 F.2d 39 (1st Cir.1974). Although Marshall did not involve a Doe pleading statute, it is cited by many courts and commentators as one of the few cases in which a state law concerning relation-back has been held to govern over Rule 15(c). At issue in Marshall was Mass.Gen.Laws Ann. ch. 231, § 51 which authorized the courts to allow any "amendment in matter of form or substance in any process, pleading or proceeding, which may enable the plaintiff to sustain the action for the cause for which it was intended to be brought, or enable the defendant to make a legal defense.” 508 F.2d at 41. The court acknowledged that the Massachusetts statute was much more liberal than Rule 15(c) and clearly conflicted with the Federal Rule. Nonetheless the court determined that the state provision had a “direct substantive effect" and, based on its own interpretation of the Supreme Court’s decision in Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), that the state provision must be applied in diversity actions "in spite of the contrary provisions of Rule 15.” Id. at 44-45.

      . A number of courts have interpreted Hanna to require the “Hanna analysis” only where there is a direct conflict between a state and federal rule both of which are clearly procedural. Consequently, these courts have held that where the conflict is between a Federal Rule of Civil Procedure and a substantive state law, the Hanna analysis is inapplicable. See, e.g., Marshall, 508 F.2d at 44 (interpreting Hanna "as stating a principle for resolving a direct conflict between two strictly procedural rules”); Britt, 590 F.2d at 60 (citing Hanna for the proposition that where the conflict is between a state substantive rule and a federal rule, it is “axiomatic” that the state rule applies, whereas in a conflict between two procedural rules, the federal rule prevails); Corel r. Safetech, Inc., 90 F.R.D. 427, 430 (D.Mass.1981) (Hanna "should be viewed in the context that the Court was resolving a clash between what it determined to be two clearly ‘procedural’ rules”); Rumberg, 424 F.Supp. at 298 (citing Hanna for the proposition that although a federal court sitting in diversity must apply the substantive law of the forum, the court "is not bound by state procedural law when the matter before the court falls within the scope of a federal procedural rule”). If this interpretation of Hanna is correct, the Hanna analysis would not apply in this case whether or not there is a “direct conflict” between the California and federal provisions, given the court’s determination that the California statutory scheme is a “substantive” one. The Supreme Court’s analysis in Walker, however, suggests this interpretation of Hanna may be too narrow. In Walker the Court found it necessary to determine whether there was a direct conflict between Rule 4(d)(1) and the Oklahoma statute even though the Court determined that the state law was an "integral part” of the state statute of limitations and embodied substantive "policy determinations." 446 U.S. at 752, 100 S.Ct. at 1986. In any event, because the court concludes there is no direct clash between the state and federal law in this case, it need not determine the precise scope of the Court's holding in Hanna.

      . To the extent the California statutory scheme could arguably be characterized simply as a form of relation-back, the court notes that the broad policy underlying Rule 15(c) actually support the application of state law in this case. Rule 15(c), like the California scheme, is intended to promote the strong policy in favor of deciding cases on their merits as well as the federal policies in favor of simplified pleadings, liberal amendments, easy joinder of parties and claims, and broad discovery. See 6 C. Wright & A. Miller, Federal Practice & Procedure § 1503 at 535 (1971); Covel v. Safetech, Inc., 90 F.R.D. at 432; Rumberg, 424 F.Supp. at 301 n. 9. "In addition, the purpose of Rule 15(c) is to provide relief from harsh state rules in cases where the applicable state law would bar the amended complaint.” Williams, 353 F.Supp. at 1231. In light of the policies underlying Rule 15(c), a number of courts and commentators have concluded that where the applicable state relation-back law is more liberal than Rule 15(c), the state law should govern in diversity actions. See, e.g., Marshall, 508 F.2d at 44 ("We do not read Hanna to mean that although the statute of limitations would be tolled if an action were brought on the state side, because of the civil rules it will run if brought in the federal court”); Covel, 90 F.R.D. at 433 (Rule 15(c) "was not meant to override a state law of limitations allowing more liberal relation-back"); Rumberg, 424 F.Supp. at 301 n. 9 ("The Erie analysis as elucidated by Hanna ... might well differ in the situation in which Rule 15(c) would seem to bar an amendment which state law allows”); Williams, 353 F.Supp. at 1231 (“We have discovered no cases which construe Rule 15(c) to bar the amended complaint in the face of a state rule allowing the complaint”); 6 C. Wright, A. Miller & M. Kane Federal Practice & Procedure § 1503 at 252 (West Supp. 1985) (applying more liberal state law “does not represent a departure from Hanna"). These cases suggest that even if the court were to construe the California Doe pleading scheme as a relation-back provision in conflict with Rule 15(c), California law would apply in this case.

      . Even if the court were to find a clash between state law and Rule 15(c), Hanna would not compel a different result. Hanna eschewed an "outcome-determinative” test, pointing out that any procedural differences are likely to result in a different outcome. The federal-state differences in Hanna were procedural. Use of the federal procedure was not likely to thwart the purposes of Erie: discouraging forum shopping and according evenhandedness to litigants before state and federal forums. A litigant would not suffer unfairly or be likely to select a forum based upon the differences in service of process rules. The same cannot be said for rules that toll or extend the period of time within which an action may be brought. See, e.g., Walker, 446 U.S. at 752-53, 100 S.Ct. at 1986; Alonzo, 643 F.2d at 578. Such a result would also seem to be indicated by the Rules Enabling Act, 28 U.S.C. § 2072 providing that federal rules of procedure promulgated by the Supreme Court "shall not abridge, enlarge or modify any substantive right.... ”

      . Santana v. Holiday Inns, Inc., 686 F.2d 736 (9th Cir. 1982), cited by Fairchild, is inapposite. In Santana, the court simply held that even though under state law the statute of limitations had not been tolled and therefore had run, the plaintiff could amend his complaint under Rule 15(c) to add a new claim. This was a straightforward application of Rule 15(c) which, by its terms, applies where a party seeks to amend a pleading after the statute of limitations has run. The court in Santana was not confronted with, and therefore did not address, the issue whether Rule 15(c) precludes application of a state substantive law whose very purpose is to prevent the statute of limitations from running in the first place. Furthermore, Santana did not involve the application of a Doe pleading provision, let alone California’s relatively unique and comprehensive Doe pleading scheme.

        Craig v. United States, 413 F.2d 854 (9th Cir.), cert. denied, 396 U.S. 987, 90 S.Ct. 483, 24 L.Ed.2d 451 (1969), is also inapposite. Craig was not a diversity action. Thus, the court was not faced with deciding whether Rule 15(c) or a state substantive Doe pleading scheme would control amendment of the plaintiff’s complaint. Indeed, it appears from the District Court's opinion in Craig that plaintiffs motion to amend the complaint was specifically brought under Rule 15(c). 284 F.Supp. 697, 698 (S.D. Cal. 1967). Craig makes reference to diversity cases in which Doe pleading has been disapproved. However, the cases to which it refers deal only with Doe allegations made in nonspecific terms and used to defeat diversity. The referenced cases do not address the statute of limitations problem presented here. 413 F.2d at 856 n. 1.
      Although the Ninth Circuit has often expressed disapproval of the use of Doe pleading in federal court, its displeasure stems from the problems Doe pleading creates in establishing and maintaining diversity jurisdiction, not with the tolling aspects of the Doe pleading practice. See, e.g., Fifty Associates v. Prudential Insurance Co. of America, 446 F.2d 1187, 1191 (9th Cir. 1970); Grigg v. Southern Pacific Co., 246 F.2d 613, 620 (9th Cir.1957); Sigurdson v. Del Guercio, 241 F.2d 480, 482 (9th Cir. 1956); Molnar v. National Broadcasting Co., 231 F.2d 684, 687 (9th Cir.1956); 14 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3642 (1971). Application of the California statutory scheme in this case raises no jurisdictional problems, and therefore is not inconsistent with the Ninth Circuit’s holdings.

      . The court notes that there is no evidence plaintiff has been dilatory in prosecuting this action, nor is defendant prejudiced by the court’s ruling. Defendant was put on notice of this action no later than April, 1984 and has participated in the litigation, including conducting discovery, since that date.


author: SCOTT O. WRIGHT, Chief Judge.

text:
    Gerald M. SMITH, By and Through Eugene SMITH, Jr., as his Next Friend, Petitioner, v. William ARMONTROUT, Respondent.
    No. 85-4647-CV-C-5.
    United States District Court, W.D. Missouri, C.D.
    Jan. 9, 1986.

      Richard Sindel, Clayton, Mo., for petitioner.
    Kelly Mescher, Office of Atty. Gen., Jefferson City, Mo., for respondent.
   ORDER

SCOTT O. WRIGHT, Chief Judge.

Because the Missouri Supreme Court has decided to pass the buck to the Federal Courts, this Court has no choice but to step in and stay the execution of Gerald Smith. This ease is before the Court by way of a next-friend habeas corpus petition filed on Gerald Smith’s behalf by his brother, Eugene Smith, Jr. Gerald Smith has announced that he wants to forego all further appeals of his 1981 capital murder conviction and accompanying death sentence. Eugene Smith contends that his brother is not competent to make such a decision. For the reasons set forth below, Gerald Smith’s execution will be stayed pending an up-to-date determination of his competency. If Gerald Smith is adjudged competent, his wish to have his death sentence carried out will be honored, but if he is adjudged incompetent, his brother Eugene will be permitted to process a federal habeas corpus petition on his behalf.

I. Background

■ In 1981, Gerald Smith was convicted and sentenced to death for the 1980 bludgeoning of an ex-girlfriend. On direct appeal, Smith’s conviction and death sentence were affirmed. See State v. Smith, 649 S.W.2d 417 (Mo.1983) (en banc). Smith next commenced a collateral attack on his conviction in the Circuit Court for the City of St. Louis pursuant to Mo.S.Ct. R. 27.26. Smith subsequently moved to dismiss that proceeding. On October 5, 1984, the state circuit court sustained that motion and dismissed the case without conducting a formal hearing on the issue of Smith’s competency to waive his post-conviction remedies. On October 9, 1984, the Missouri Supreme Court held a special session and summoned Smith to appear before it. At that time, Smith advised the judges of that court of his wish to abandon further appeals. The Missouri Supreme Court granted Smith’s wish and set his execution for November 9, 1984.

On November 5, 1984, Eugene Smith filed a next-friend petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2242 in the United States District Court for the Eastern District of Missouri. Judge Filippine of that Court immediately transferred the case to the Central Division of this Court as a more appropriate forum. On November 6, 1984, this Court found that a legitimate issue had been raised concerning Gerald Smith’s competency and, accordingly, entered an order staying Smith’s execution pending resolution of the competency issue. See Smith v. Armontrout, 604 F.Supp. 840 (W.D.Mo.1984) (hereinafter “Smith /”). Before entering that order, the Court conducted a telephone conference with an attorney for Eugene Smith and an attorney from the Missouri Attorney General’s office. At that time, both sides agreed that, in view of the conflicting psychological reports already of record, it was proper to perform a complete psychiatric evaluation of Gerald Smith. See id. at 843. By agreement of the parties, Smith was transferred to the Federal Medical Facility in Springfield, Misouri, for a comprehensive psychiatric examination and evaluation. A hearing on the issue of Smith’s competency was set for March 5, 1985. Before the competency hearing took place, however, Smith changed his mind and announced that he wished to pursue his post-conviction remedies. Accordingly, the competency question became moot and Gerald Smith was substituted for his brother as the sole petitioner.

Nearly five months later, the State finally responded to Smith’s petition for habeas corpus relief and raised the question of whether all of the claims in the petition had been previously presented to the state courts. Under the United States Supreme Court’s ruling in Rose v. Lundy, 455 U.S. 509, 102 S.Ct. 1198, 71 L.Ed.2d 379 (1982), federal courts must dismiss a habeas corpus petition which contains one or more claims that had not been previously presented to the state courts. See id. at 522, 102 S.Ct. at 1205. Thus, when it appeared that state remedies had not been exhausted as to all of Smith’s claim, this Court had no choice but to dismiss Smith’s petition in its entirety and to turn the matter over to the state courts.

In the meantime, Gerald Smith once again announced that he wanted to abandon all further attacks on his conviction and death sentence. The Missouri Supreme Court promptly set January 6, 1986 as Gerald Smith’s execution date. Eugene Smith quickly responded by filing a next-friend petition pursuant to Missouri Supreme Court Rules 27.26 and 52.02 on behalf of his brother in the Circuit Court for the City of St. Louis. At the same time, Eugene Smith filed a motion in the Missouri Supreme Court to stay Gerald Smith’s execution pending a current determination of his competency. That motion was denied in one line and without any explanation. Eugene Smith returned to the Circuit Court for the City of St. Louis and obtained a ruling from Judge Jean C. Hamilton of that court that a next-friend 27.26 petition was a viable procedure under Missouri law. Eugene Smith then went back to the Missouri Supreme Court and renewed his motion for a stay of execution until the question of Gerald Smith’s competency was resolved. The Missouri Supreme Court, on its own motion, postponed the execution date until January 15,1986. On January 8, 1986, however, the Missouri Supreme Court issued an order which, in effect, stated that the next-friend 27.26 proceeding pending in state court in St. Louis was a legal nullity and that no further extensions of Gerald Smith’s execution date would be granted. The Missouri Supreme Court explained that, in its opinion, the October, 1984 state court finding that Gerald Smith was competent foreclosed all further inquiry into that matter. Significantly, the Missouri Supreme Court did not hold a hearing or invite oral argument before making its ruling.

In view of the Missouri Supreme Court’s statement that all available state procedures have been exhausted, the ball is back in this Court. On December 27, 1985, Eugene Smith filed a brand-new next-friend habeas corpus petition in this Court. Once again, the threshhold question before the Court is whether Gerald Smith is competent to waive his post-conviction remedies.

II. The Competency Issue

The procedures to be used in state or federal court when a death row inmate announces his intention to abandon further appeals are well-established. The United States Supreme Court has stated that critical issue is

“whether [the inmate] has capacity to appreciate his position and make a rational choice with respect to continuing or abandoning further litigation or on the other hand whether he is suffering from a mental disease, disorder, or defect which may substantially affect his capacity in the premises.”

Rees v. Peyton, 384 U.S. 312, 314, 86 S.Ct. 1505, 1506, 16 L.Ed.2d 583 (1966) (per curiam). In order to make a reasoned decision on the competency issue, it is incumbent on the Court to conduct a hearing involving “the State and all other interested parties.” Id. at 313, 86 S.Ct. at 1506. If the death row inmate is adjudged competent, the next-friend lacks standing to proceed and the death sentence may be carried out. If the inmate is adjudged incompetent, however, the next-friend is permitted to proceed on behalf of the inmate. In any event, the Court must stay the inmate’s execution pending the competency determination in order to protect its jurisdiction over the case. See Gilmore v. Utah, 429 U.S. 1012, 1016, 97 S.Ct. 436, 439, 50 L.Ed.2d 632 (1976) (Burger, C.J. concurring). Many courts have faithfully followed these procedures in handling cases such as the present one. See, e.g., Hays v. Murphy, 663 F.2d 1004, 1008-09 (10th Cir. 1981); Groseclose ex rel. Harries v. Dutton, 594 F.Supp. 949 (M.D.Tenn.1984); Rumbaugh ex rel. Rumbaugh v. Estelle, 558 F.Supp. 651 (N.D.Tex.1983), remanded with instructions, 730 F.2d 291 (5th Cir. 1984).

In view of these well-settled precedents, this Court has no choice but to schedule a hearing on the issue of Gerald Smith’s competency. That hearing will be conducted on February 18, 1986, at the United States Courthouse in Jefferson City, Missouri. In the meantime, the parties will be given an opportunity to update their psychological evaluations of Gerald Smith. By agreement of the parties, Smith will be returned to the Federal Medical Center in Springfield, Missouri for re-evaluation. The parties should begin preparing for the February 18 hearing immediately.

III. The Missouri Supreme Court’s Approach

The only conceivable reason why this Court should not conduct a competency hearing next month would be if it agreed with the Missouri Supreme Court that the 1984 state court determination of competency is somehow conclusive in the present day. With all due respect to the Missouri Supreme Court, however, this Court believes that the 1984 state court determination cannot be deemed conclusive for three fundamental reasons. First, the October, 1984 state court finding that Smith was competent is not sufficiently recent to be binding at the present time. That finding is now sixteen months old. At the very least, the state courts should have inquired into whether any circumstances since October, 1984 have affected Smith’s current psychological disposition. Second, assuming arguendo that the 1984 state court finding could be binding in the present day, it is evident that such a finding would be deficient because the underlying procedures used in state court were wholly inadequate. In 1984, the circuit court did not afford both sides an opportunity to develop evidence concerning Gerald Smith’s competency, nor did it give the parties an opportunity to cross-examine any of the psychologists who had examined Smith. Such opportunities are not only necessary to comply with rudimentary standards of due process, but such input also is necessary for reasoned judicial decisionmaking. Third, the October, 1984 “finding” that Smith is competent cannot be deemed binding because the Missouri Attorney General’s office subsequently acknowledged before this Court in November, 1984 that the competency question remains an open one. See Smith I, 604 F.Supp. at 843. For these three reasons, then, this Court will decline to follow the approach of the Missouri Supreme Court.

Indeed, after surveying the entire situation, it becomes painfully obvious that the Missouri Supreme Court’s refusal to stay Gerald Smith’s execution pending a competency determination by Judge Hamilton had no basis in fact nor in law, but was merely an expedient way of washing its hands of the matter and passing the buck to the Federal courts. The Missouri Supreme Court surely must have known that the competency determination must be current and that a sixteen-month-old finding of competency cannot be deemed conclusive on that issue. It is the opinion of this Court that Judge Hamilton acted properly last month when she allowed the filing of petitioner’s next-friend 27.26 motion in state court. In sharp contrast, however, the Missouri Supreme Court abdicated its position as a court of law when it refused to stay Smith’s execution and permit Judge Hamilton to proceed. This is not the first time that the Missouri Supreme Court has passed the buck to the Federal courts by refusing to perform its legal obligation to stay an execution. On at least three prior occasions when the law required a stay to permit post-conviction appeals to be heard in an orderly manner, the Missouri Supreme Court declined to act, knowing that the Federal Courts would take the proper action. See McDonald v. Missouri, 464 U.S. 1306, 104 S.Ct. 567, 78 L.Ed.2d 538 (Blackmun, Circuit Justice, 1984); Williams v. Missouri, 463 U.S. 1301, 103 S.Ct. 3521, 77 L.Ed.2d 1282 (Blackmun, Circuit Justice, 1983); Blair v. Armontrout, 604 F.Supp. 723 (W.D.Mo.1985).

In the final analysis, the fact that this Court will have to “take the heat” from the public because of its order staying Gerald Smith’s execution is, as it should be, inconsequential. As Harry S. Truman once said, “If you can’t stand the heat, stay out of the kitchen.” Come to think of it, it was Mr. Truman who also said, “The buck stops here.” This Court will elect to follow the example of Mr. Truman.

Accordingly, it is hereby

ORDERED that the execution of Gerald Smith is stayed pending a determination by the Court of whether he is competent to abandon further litigation. It is further

ORDERED that a hearing on the issue of Gerald Smith’s competency is set to commence at 9:00 A.M. on February 18, 1986, at the United States Courthouse in Jefferson City, Missouri. It is further

ORDERED that the parties shall file a proposed scheduling order no later than January 17, 1986.

      . Such a stay is in no sense a finding in favor of the inmate; the stay is merely necessary to protect the Court’s jurisdiction over the case, for if the inmate was executed while the competency question was pending, the case would become moot even if it later appeared that the inmate clearly was incompetent and that he clearly deserved a new trial.

      . All psychological data and other documents of record compiled during Smith I are hereby incorporated into the record of this proceeding.

      . This Court is aware that many members of the public are frustrated with what seems to be inordinate delay in the processing of appeals by death row inmates. Indeed, many people believe that there should be no appeals whatsoever following the jury’s imposition of the death sentence. The law, on the other hand, provides that certain procedures must be followed before a death sentence may be carried out. Although it may not win a popularity contest in any given case, this scheme was adopted to ensure that every individual would be accorded due process of law.