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Burlington N. R. Co. v. Strong - 907 F.2d 707 (7th Cir. 1990)

Rule:

In order to be a compulsory counterclaim, Fed. R. Civ. P. 13(a) requires that the claim (1) exist at the time of pleading, (2) arise out of the same transaction or occurrence as the opposing party's claim, and (3) not require for adjudication parties over whom the court may not acquire jurisdiction.

Facts:

Plaintiff Strong was injured in two separate accidents during his employment with defendant Burlington Northern Railway Company. He then brought suit against Burlington to recover for these injuries under the Federal Employers Liability Act (FELA), 45 U.S.C. §§ 51-60. Following a jury trial, Strong was awarded $73,000 in compensation for the 1983 injury; Burlington was found not liable for the 1985 injury. After the trial, Burlington moved for a determination that the amount of the judgment ought to be reduced by $11,678.21, the amount paid to Strong in Supplemental Sickness Benefit (SSB) benefits. The district court held that in the absence of a lien or judgment in its favour, Burlington was not entitled to withhold the sum for any SSB paid to Strong. However, the district court suggested that Strong could not succeed in keeping the money if Burlington sued on the contract. Subsequently, Burlington sued on the contract to recover the SSB payments. Strong argued that the railroad's suit was barred by res judicata because such a claim should have been brought as a compulsory counterclaim to the previous FELA suit. However, the court decided that Burlington's claim was a permissive, not compulsory, counterclaim. The district court granted summary judgment in favour of Burlington. Strong appealed.

Issue:

Was Burlington’s claim a counterclaim barred by res judicata?

Answer:

No.

Conclusion:

The Court held that Burlington’s claim was not a counterclaim because it arose from the benefit agreement, rather than the employee's accident, and did not mature until the employee obtained a recovery. According to the Court, Burlington, as a matter of contract, was entitled under the benefits agreement to recover the benefits paid and was not limited to the amount of premiums.

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