Madoff v. Bold Earth Teen Adventures et al

Filing 96

ORDER DENYING DEFENDANTS' MOTION TO CERTIFY INTERLOCUTORY APPEAL AND STAY CASE re 69 ; 71 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 6/20/13. "This court declines to certify for interlocutory appeal its order refusing to enforce a forum selection clause. Under the factual circumstances presented, there is no controlling question of law the determination of which may materially advance the ultimate termination. This case involves a factual situation that is subject to change." (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
MICHAEL MADOFF, Individually
and as Administrator of the
Estate of TYLER MADOFF,
Deceased,

)
)
)
)
)
Plaintiff,
)
)
vs.
)
)
BOLD EARTH TEEN ADVENTURES,
)
AMERICA’S ADVENTURE, INC.,
)
ABBOTT WALLIS, ANDREW MORK,
)
KELSEY TYLER, HAWAII PACK AND )
PADDLE LLC, BARRY MIMS, NOLAN )
KEOLA A. REED, and LETITIA
)
MIMS,
)
)
Defendants.
)
_____________________________ )

CIVIL NO. 12-00470 SOM/RLP
ORDER DENYING DEFENDANTS’
MOTION TO CERTIFY INTERLOCUTORY
APPEAL AND STAY CASE

ORDER DENYING DEFENDANTS’ MOTION TO CERTIFY
INTERLOCUTORY APPEAL AND STAY CASE
I.

INTRODUCTION.
Michael Madoff, Individually and as Administrator of

the Estate of Tyler Madoff, seeks damages for the death of his
son, Tyler Madoff.

Tyler Madoff died while on a kayaking and

hiking adventure tour operated by Defendant Bold Earth Teen
Adventures, America’s Adventure, Inc.
Bold Earth moved to dismiss, on the ground that a forum
selection clause in a release form stated that “any suit or other
proceeding must be filed or entered into only in Jefferson
County, Colorado.”

On March 28, 2013, the court ruled that the

forum selection clause was unenforceable and that this matter
could proceed in this court.
Bold Earth now seeks certification of an interlocutory
appeal from the court’s order to the Ninth Circuit Court of
Appeals pursuant to 28 U.S.C. § 1292(b).

Specifically, Bold

Earth seeks certification of the following issue on appeal:
whether Plaintiff’s argument that [he] may
potentially have to present an unknown number
of out-of-state witnesses at trial through
video preservation depositions or by live
video deprives him of his day in court as
necessary to defeat a mandatory forumselection provision.
See ECF No. 69-1 at PageID # 941.

The court declines to certify

such an appeal.
II.

FACTUAL BACKGROUND.
The factual background was set forth in the court’s

order of March 28, 2013, and is incorporated herein by reference.
III.

SUMMARY OF PRIOR ORDER.
In relevant part, the court ruled that, drawing all

reasonable inferences in favor of Madoff, enforcement of the
forum selection clause would effectively deprive him of a
meaningful day in court.

Madoff had identified forty-three

Hawaii-based witnesses relevant to proving Defendants’ liability,
including Hawaii first responders, Hawaii search and rescue
personnel, Hawaii government officials responsible for issuing
permits, and other hiking and kayaking tour operators in Hawaii.

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This court was concerned that enforcing the forum
selection clause would leave Madoff without any assurance that he
could present his liability case in an effective manner.
Although some of Madoff’s forty-three Hawaii-based witnesses
might agree to travel to Colorado for trial, the court noted that
Madoff would have no means of compelling their physical
attendance at trial in Colorado if they changed their minds.
Madoff could be relegated to presenting almost his entire
liability case through depositions or by video.

The court noted

that deposition testimony is far less likely to engage a jury
than live testimony, even if the deposition is videotaped.
Moreover, depositions may be subject to a number of other
disadvantages, including the number a party is allowed by court
rules to take.

The court noted that Madoff could be hampered by

court restrictions on his ability to conduct discovery or to
present testimony at trial.

The court further noted that even an

unlimited number of depositions would not cure the effect of
having the only in-person liability witnesses be opposing
parties’ agents.
The court was also concerned that, under Rule
16(f)(3)(D) of the Colorado Rules of Civil Procedure, a party
seeking to present deposition testimony “shall provide the other
parties with its designations of such testimony at least 28 days
before the trial date.”

This time allows for counterdesignations

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by Defendants and court rulings on objections.

But it also means

that, if Madoff’s testimonial evidence on liability ends up
consisting almost entirely of preserved depositions, Madoff will
have disclosed not just his liability theories, but nearly his
entire liability case verbatim a month before trial.
Although the defense would be able to tailor its casein-chief based on Madoff’s pretrial disclosure of his case,
Madoff would not have the same opportunity.

Indeed, Madoff’s

ability to present rebuttal testimony at trial following
testimony by Defendants’ live witnesses would be hindered if he
were relegated to using deposition testimony.
The court stated that, even “live” video conferencing
of the forty-three possible Hawaii-based witnesses would not
overcome the difficulties of presenting nearly an entire
liability case without in-person witnesses.

The court ruled that

the presentation of a case in which the only live witnesses were
opposing parties would not only be difficult and expensive, but
also prejudicial to the party trying to establish liability.
The court noted that this is not a situation in which
only a few witnesses would be presented to the jury via
deposition, video deposition, or live video.

The court ruled

that, drawing all reasonable inferences in favor of the nonmoving
party, including the risk of not having any in-person liability
witness other than Defendants, Madoff would be deprived of a

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meaningful day in court if forced to litigate in Jefferson
County, Colorado.

The court conceded that, if presented with a

different record, the court might reach a different conclusion.
IV.

STANDARD FOR INTERLOCUTORY APPEALS.
The general rule is that an appellate court should not

review a district court ruling until after entry of a final
judgment.
(1978).

See Coopers & Lybrand v. Livesay, 437 U.S. 463, 474
However, via the Interlocutory Appeals Act of 1958, 28

U.S.C. § 1958, Congress has establish a narrow class of nonfinal
orders that may be immediately reviewed because of a need for
prompt review.

Id.

Bold Earth seeks leave to file such an

interlocutory appeal of the order denying its motion to dismiss.
Under 28 U.S.C. § 1292(b):
When a district judge, in making in a civil
action an order not otherwise appealable
under this section, shall be of the opinion
that such order involves a controlling
question of law as to which there is
substantial ground for difference of opinion
and that an immediate appeal from the order
may materially advance the ultimate
termination of the litigation, he shall so
state in writing in such order. The Court of
Appeals which would have jurisdiction of an
appeal of such action may thereupon, in its
discretion, permit an appeal to be taken from
such order, if application is made to it
within ten days after the entry of the order:
Provided, however, That application for an
appeal hereunder shall not stay proceedings
in the district court unless the district
judge or the Court of Appeals or a judge
thereof shall so order.

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As the party seeking an interlocutory appeal, Bold
Earth has the burden of demonstrating “exceptional circumstances”
justifying a departure from the basic policy of postponing
appellate review until a final judgment has issued.
& Lybrand, 437 U.S. at 475.

See Coopers

Because § 1292(b) is a departure

from the normal final judgment rule, the Ninth Circuit has stated
that § 1292(b) should be construed “narrowly.”

See James v.

Price Stern Sloan, Inc., 283 F.3d 1064, 1068 n.6 (9th Cir. 2002).
Before certifying an interlocutory appeal pursuant to
§ 1292(b), the district court must be of the opinion “(1) that
there be a controlling question of law, (2) that there be
substantial grounds for difference of opinion, and (3) that an
immediate appeal may materially advance the ultimate termination
of the litigation.”

In re Cement Antitrust Litigation, 673 F.2d

1020, 1026 (9th Cir. 1982).
“Section 1292(b) was intended primarily as a means of
expediting litigation by permitting appellate consideration
during the early stages of litigation of legal questions which,
if decided in favor of the appellant, would end the lawsuit.”
United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959).
Accordingly, “controlling questions of law” include issues
relating to jurisdiction or a statute of limitations, as issues
determined differently on appeal would terminate a case.

Id.

However, an issue need not be dispositive of the lawsuit to be

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considered controlling.

Id.

Instead, a “question of law” is

controlling if a “resolution of the issue on appeal could
materially affect the outcome of litigation in the district
court.”

In re Cement Antitrust Litigation, 673 F.2d at 1026.

The Ninth Circuit has noted that such issues include questions of
“who are necessary and proper parties, whether a court to which a
cause has been transferred has jurisdiction, or whether state or
federal law shall be applied.”

Woodbury, 263 F.2d at 787.

This court has noted that, to raise a “question of law”
for purposes of § 1292(b), issues should relate to pure questions
of law, rather than mixed questions of law and fact.

See

Thompson v. Crane Co., 2012 WL 2359950 (D. Haw. June 19, 2012)
(Kobayashi, J.).
The Ninth Circuit has stated:
[To] determine if a “substantial ground for
difference of opinion” exists under
§ 1292(b), courts must examine to what extent
the controlling law is unclear. Courts
traditionally will find that a substantial
ground for difference of opinion exists where
“the circuits are in dispute on the question
and the court of appeals of the circuit has
not spoken on the point, if complicated
questions arise under foreign law, or if
novel and difficult questions of first
impression are presented.” 3 Federal
Procedure, Lawyers Edition § 3:212 (2010)
(footnotes omitted). However, “just because
a court is the first to rule on a particular
question or just because counsel contends
that one precedent rather than another is
controlling does not mean there is such a
substantial difference of opinion as will

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support an interlocutory appeal.”
(footnotes omitted).

Id.

Crouch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010).

Put

another way,
A substantial ground for difference of
opinion exists where reasonable jurists might
disagree on an issue’s resolution, not merely
where they have already disagreed. Stated
another way, when novel legal issues are
presented, on which fair-minded jurists might
reach contradictory conclusions, a novel
issue may be certified for interlocutory
appeal without first awaiting development of
contradictory precedent.
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 688 (9th
Cir. 2011).
V.

ANALYSIS.
The court recognizes that reasonable jurists might

apply the facts presented here to the well-established case law
and reach a different conclusion about the enforceability of the
forum selection clause at issue.

But precisely because the

balancing of facts is what is at issue, as opposed to a claim
that this court misapplied the law, the court declines to certify
this matter as an interlocutory appeal.

In other words, this

court does not view the enforceability of the forum selection
clause at issue here as involving a controlling question of law.
Nor is there any claim that enforcement of the forum
selection clause would end the dispute among the parties.

The

court recognizes that, if an appellate court were to rule that

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the forum selection clause were enforceable, the litigation in
this court would end.

However, it is abundantly clear that, if

this court were to enforce the forum selection clause, Madoff
would refile this matter in Colorado state court.

Unlike issues

of jurisdiction or statutes of limitation, the question of
enforceability of the forum selection clause in this case could
not be answered in a way that would end all litigation among the
parties.

Because Bold Earth seeks an interlocutory appeal to

challenge this court’s application of law to facts that might
change and lead to a different motion concerning the enforcement
of the forum selection clause, and because certification of an
interlocutory appeal would not further the end of the underlying
dispute, the court declines to certify the issue for appeal.
In examining whether an interlocutory appeal would or
would not advance the ultimate resolution of this dispute, see In
re Cement Antitrust Litigation, 673 F.2d 1020, 1026 (9th Cir.
1982), the court distinguishes the present case from Red Bull
Associates v. Best Western International, Inc., 686 F. Supp. 447,
453 (S.D.N.Y. 1988).

In Red Bull, the district court certified

an interlocutory appeal concerning its decision not to enforce a
forum selection clause.

However, unlike here, Red Bull did not

involve a contention that the court had incorrectly evaluated
proper factors.

Instead, the defendant in Red Bull wanted to

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argue on appeal that the court had incorrectly interpreted a
Supreme Court case.

See id. at 453.

Although this matter involves a motion to dismiss
Madoff’s Complaint, rather than a motion to transfer venue
pursuant to 28 U.S.C. § 1404(a), case law interpreting that
statute is helpful here.

While the forum selection clause at

issue here states that the case must be brought in Colorado state
court, not federal court, cases involving transfers of venue are
analogous because there is no dispute that the litigation would
proceed in Colorado state court if this court enforced the forum
selection clause.

In other words, the enforcement of the forum

selection clause in this case is akin to other cases seeking
enforcement of forum selection clauses by transferring venue to
another district.
Section 3855 of Federal Practice and Procedure states:
The propriety of employing some form of
interlocutory review seems quite clear if the
issue goes to the power of the district court
to make the order it did and only a question
of law is presented. But a very compelling
argument can be made that if there is no
question of power, and the only issue is
whether the district judge exercised his or
her discretion properly in considering the
factors mentioned in the statute in granting
or refusing the transfer, interlocutory
review ought not to be available. This is
the view of the commentators, it is the view
of the American Law Institute, and it has
been the view of many distinguished appellate
judges.

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15 Charles Alan Wright, Arthur R. Miller, and Edward H. Cooper,
Federal Practice and Procedure § 3855 (2007) (footnotes omitted).
Although the Fifth Circuit has determined that
§ 1292(b) review is available with respect to § 1404(a) motions
to transfer, most other circuits have concluded otherwise.
Compare Humble Oil & Ref. Co. v. Bell Marine Serv., Inc., 321
F.2d 53, 57 (5th Cir. 1963) (allowing interlocutory review of the
denial of a § 1404(a) motion), with Olinick & Sons v. Dempster
Bros., Ltd., 365 F.2d 439, 443 (2d Cir. 1966).

Olinick stated:

We agree with the Third and the Sixth
Circuits that § 1292(b) is not available as a
means to review the grant or denial of
§ 1404(a) motions for incorrect evaluation of
proper factors. The correctness of such an
evaluation can only with difficulty be
described as a ‘controlling question of law’;
and review of such an evaluation is not
likely to advance the termination of the
litigation since, even if the evaluation were
incorrect, no reviewing court would be likely
after a trial on the merits to order a
transfer or retransfer for a new trial on the
merits.
Id.
Indeed, in All States Freight, Inc. v. Modarelli, 196
F.2d 1010, 1011 (3d Cir. 1952), the Third Circuit ruled that
orders transferring or refusing to transfer a case pursuant to
§ 1404(a) are not immediately appealable.

Modarelli noted,

Every litigant against whom the transfer
issue is decided naturally thinks the judge
was wrong. It is likely that in some cases
an appellate court would think so, too. But
the risk of a party being injured either by
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the granting or refusal of a transfer order
is, we think, much less than the certainty of
harm through delay and additional expense if
these orders are to be subjected to
interlocutory review by mandamus.
Id. at 1012.
Although Modarelli made this statement in the context
of discussing review of decisions to transfer by way of writs of
mandamus, Modarelli’s guidance is helpful here.

Because Bold

Earth is not seeking review of a question of law, but is instead
seeking a review of this court’s application of law to facts that
are subject to change, the risk of harm in this court’s refusal
to enforce the forum selection clause such that this case will
proceed in this court rather than in Colorado state court is less
than the certainty of harm that will result from the delay and
expense that would result if interlocutory review of the court’s
order were allowed.

Although the Ninth Circuit might reverse

this court after trial because it might determine that the case
should have proceeded in Colorado, not all of the cost and effort
spent litigating the matter would be wasted.
discovery could be used in any Colorado case.

Certainly, the same
As Judge David

Alan Ezra recognized in Aloha Airlines, Inc. v. Mesa Air Group,
2007 WL 1582707 (D. Haw. May 31, 2007), district courts will
generally not permit interlocutory appeals when doing so would
prolong litigation rather than advance its resolution.

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As noted above, Bold Earth’s proposed interlocutory
appeal is not based on a contention that this court has applied
the wrong law.

Instead, the issue involves Bold Earth’s

disagreement with this court’s determination that having to
proceed in Colorado state court would essentially deprive Madoff
of a meaningful day in court under the current circumstances.
The parties and the court are applying the well-established
Supreme Court precedent of M/S Bremen v. Apata Off-Shore Co., 407
U.S. 1 (1972).

The issue Bold Earth seeks to raise on appeal

involves the application of that case to the facts in issue here,
not a controlling question of law for purposes of § 1292(b).
As noted in the underlying order denying the motion to
dismiss based on the forum selection clauses, the court is
willing to entertain another motion if the facts change.

This

demonstrates that the issue Bold Earth seeks to raise is not a
controlling question of law, which should involve purely legal
issues.

See Thompson v. Crane Co., 2012 WL 2359950 (D. Haw. June

19, 2012) (Kobayashi, J.).

Although Bold Earth is correct that

the Ninth Circuit could assume certain facts to be true, that
does not convert the issue Bold Earth seeks to raise on appeal
into one of pure law.

It is the court’s recollection that Bold

Earth argued that it was unlikely that Madoff would call all
forty-three of the named Hawaii-based witnesses.

It is precisely

because of that recollection that the court stated that it would
entertain another motion if the underlying facts changed.

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It is

also because of the potential for changes in trial witnesses that
an interlocutory appeal is inappropriate.

If this court were to

allow an interlocutory appeal and the Ninth Circuit were to
affirm this court’s order regarding the forum selection clause
under the present circumstances, the court wonders whether Bold
Earth would then seek to file another motion to enforce the forum
selection clause if the facts changed such that only a handful of
witnesses were going to be called by Madoff.

If that happened

and the court again ruled that the forum selection clause was
unenforceable, Bold Earth might seek yet another interlocutory
appeal with another corresponding delay.

This is simply not a

case ripe for appeal, especially because of the potential for
several piecemeal appeals.
Bold Earth’s reliance on Piedmont Label Co. v. Sun
Garden Packing Co., 598 F.2d 491 (9th Cir. 1979), is misplaced.
According to Bold Earth, Piedmont stands for the proposition that
venue issues are appropriate for interlocutory appeal.
Reply, ECF No. 84 at PageID #1050.

See

However, Piedmont did not

involve any relevant factual dispute.

See Piedmont, 598 F.2d at

492 (“Sun Garden did not dispute any of the facts presented by
Piedmont in support of its motion for summary judgment.”).
Instead, it involved the continued viability of the coconspirator theory of venue in light of intervening Supreme Court
precedent.

Because Piedmont involved a controlling question of

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law, its venue ruling does not mean that venue is appropriate for
interlocutory review in cases in which the application of law to
possibly changing facts is involved.
Bold Earth’s citation of Hawaii ex re. Louie v. JP
Morgan Chase & Co., 2013 WL 391024 (D. Haw. Jan. 29, 2013)
(Kobayashi, J.), is similarly unpersuasive with respect to
whether the application of law to facts subject to change should
be considered a controlling question of law.

In that case, Judge

Leslie E. Kobayashi certified an interlocutory appeal of a ruling
challenged as a misapplication of the governing laws and
regulations defining “interest.”

Although Louie involved some

factual issues, Judge Kobayashi determined that “legal issues are
at the heart of Plaintiff’s proposed interlocutory appeal.”
Here, the very facts on which the court relies may change.
Bold Earth’s citation of Thompson v. Crane Co., 2012 W:
2359950 (D. Haw. June 19, 2012) (Kobayashi, J.), is unpersuasive
for the same reason.

In Thompson, Judge Kobayashi certified an

interlocutory appeal concerning the court’s federal officer
removal jurisdiction.

Although there were factual issues, Judge

Kobayashi identified a controlling question of law, noting that
“legal issues were at the heart of Plaintiff’s interlocutory
appeal.”

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VI.

CONCLUSION.
This court declines to certify for interlocutory appeal

its order refusing to enforce a forum selection clause.

Under

the factual circumstances presented, there is no controlling
question of law the determination of which may materially advance
the ultimate termination.

This case involves a factual situation

that is subject to change.

IT IS SO ORDERED.
DATED: Honolulu, Hawaii, June 20, 2013.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge

Madoff v. Bold Earth Teen Adventures, et al., Civ. No. 12-00470 SOM/RLP; ORDER DENYING
DEFENDANTS’ MOTION TO CERTIFY INTERLOCUTORY APPEAL AND STAY CASE

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