Car Carriers, Inc. v. Ford Motor Co.

• Decision Date: 28 March 1984
• Docket Number: No. 83 C 7517.,83 C 7517.
• Parties: CAR CARRIERS, INC., et al., Plaintiffs, v. FORD MOTOR COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

583 F. Supp. 221

CAR CARRIERS, INC., et al., Plaintiffs, v. FORD MOTOR COMPANY, et al., Defendants.

No. 83 C 7517.

United States District Court, N.D. Illinois, E.D.

March 9, 1984.

Supplemental Opinion March 28, 1984.

Francis J. McConnell, McConnell, Ruberry & Beckley, Chicago, Ill., for plaintiffs.

Michael K. Murtaugh, Baker & McKenzie, Chicago, Ill., for Ford Motor Co.

Sheldon Davidson, Marilee Roberg, Pederson & Houpt, P.C., Chicago, Ill., for Nu-Car Carriers, Inc.

Kirk B. Johnson, David F. Graham, Sidley & Austin, Chicago, Ill., for Norfolk & Western Ry. Co.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

In this action (the "1983 Action") Car Carriers, Inc. and eight related entities (for convenience collectively "Car Carriers," treated as a singular noun), including controlling shareholder James P. Byrne, have filed a 24-count, 107-page Amended Complaint (the "Complaint" or "1983 Complaint") accusing Ford Motor Company ("Ford"), Nu-Car Carriers, Inc. ("Nu-Car") and the Norfolk & Western Railway Company ("N & W") of racketeering and various unlawful business practices in contravention of federal and state law. Ford and Nu-Car now move for dismissal under Fed. R.Civ.P. ("Rule") 12(b)(6), claiming Car Carriers is barred from bringing this suit by the res judicata effect of a dismissal with prejudice of its earlier action against them, Car Carriers, Inc. v. Ford Motor Co., No. 82 C 7009 (the "1982 Action").¹ N & W also moves to dismiss under Rule 12(b)(6), asserting the Complaint discloses no basis on which it could be held liable for the alleged practices of Ford and Nu-Car. For the reasons stated in this memorandum opinion and order, all defendants' motions are granted and this action is dismissed in its entirety on the terms hereafter specified.

Procedural Profile

Car Carriers' 1982 Action alleged Ford and Nu-Car ran Car Carriers out of the business of shipping Ford automobiles from Chicago. Many of the relevant facts alleged in that suit are set forth in the Opinion, 561 F.Supp. at 886-87. Six claims were advanced by the Complaint in the 1982 Action (the "1982 Complaint"): one federal law count under Sherman Act § 1, 15 U.S.C. § 1, and five pendent state law counts. This Court's Opinion dismissed the Sherman Act claim with prejudice because Car Carriers lacked "antitrust standing" to assert its claim—that is, the 1982 Complaint affirmatively showed no competitive harm to Car Carriers because actions attributed to the defendants (561 F.Supp. at 888) constituted "procompetitive rather than anticompetitive activity." With the Sherman Act claim gone, the state law claims were dismissed without prejudice as not pendent to any valid federal claim (id. at 889).

Car Carriers' 1983 Complaint also alleges facts surrounding Car Carriers' termination as a shipper of Ford automobiles. Except for three conspicuous differences, it is substantially similar to the 1982 Complaint:

1. It goes into greater detail: 24 counts and 529 paragraphs, as against the 1982 Complaint's six counts and 151 paragraphs.² Car Carriers' contention (discussed below) is the 1983 Complaint invokes facts not within the basic fact situation underlying the 1982 Action.

2. It invokes different legal theories. Unlike the 1982 Complaint, which contained only a single federal law count based on the Sherman Act and five Illinois law counts, the 1983 Complaint brings six counts under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, one count under the Elkins Act, codified at 49 U.S.C. §§ 11902-11904, and 17 counts under Illinois law.

3. It joins somewhat different parties. N & W was not a defendant in the 1982 Action and therefore cannot join with Ford and Nu-Car in invoking res judicata. In addition the 1983 Complaint adds two related entities as plaintiffs—Transport Terminals, Inc. ("Transport") and Selby Transport Co.—but that addition is irrelevant to res judicata because the new plaintiffs are in privity with the plaintiffs in the 1982 Action. Contrast Beard v. O'Neal, 728 F.2d 894, 896-97 (7th Cir.1984).

Ford and Nu-Car Res Judicata Motions

Res judicata bars a lawsuit if three essential elements are present, Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir.1982):

(1) a final judgment on the merits in an earlier action; (2) an identity of the cause of action in both the earlier and the later suit; and (3) an identity of parties or their privies in the two suits.

N & W does not join in the res judicata motion, and the additional plaintiffs in this action do not deny their obvious privity with the plaintiffs in the 1982 Action. Accordingly only the first two elements of res judicata are at issue.

1. Final Judgment on the Merits

Because the opinion dismissed the 1982 Action for failure to state a claim upon which relief can be granted, it was a disposition of the case on the merits. As our Court of Appeals stated in Bunker Ramo Corp. v. United Business Forms, Inc., 713 F.2d 1272, 1277 (7th Cir.1983) (citations omitted, emphasis in original):

A dismissal for lack of subject matter jurisdiction is not on the merits and consequently will not bar a later suit.... A dismissal for failure to state a claim upon which relief can be granted, however, is a dismissal on the merits and is res judicata. Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, at 398, 101 S.Ct. 2424, at 2427 69 L.Ed.2d 103 (1981) ; Harper Plastics, Inc. v. Amoco Chemicals Corp., 657 F.2d 939, at 945 (7th Cir.1981). 1B Moore's Federal Practice ¶ 0.4051 (2d ed. 1982).

Moreover the Opinion's language makes clear this Court intended to dispose of the 1982 Action on the merits. In its statement of facts the Opinion assumed as true not only allegations of the 1982 Complaint but also factual assertions in Car Carriers' memorandum not contained in that Complaint. This Court said it did so (561 F.Supp. at 886 n. 2) to show plaintiffs "confront more than mere pleading deficiencies." And the Opinion's "Conclusion" section stated (id. at 889, footnote omitted):

Ford's and Nu-Car's motions to dismiss are granted. Because Count I could not possibly be repleaded to withstand Rule 12(b)(6) onslaught, this entire action is dismissed—Count I with prejudice and the other counts without prejudice.

Car Carriers interprets Bunker Ramo as holding any dismissal of a claim for lack of antitrust standing is not on the merits and thus is not res judicata. True enough, Bunker Ramo held Judge Aspen's dismissal of an earlier complaint in Bunker Ramo Corp. v. Cywan, 511 F.Supp. 531 (N.D.Ill. 1981)—a dismissal for failure to allege competitive injury—was not on the merits and had no res judicata effect. But in that case Judge Aspen had expressly stated (id. at 534) the dismissal was "for lack of subject matter jurisdiction." By contrast, the language quoted earlier from both the Court of Appeals' Bunker Ramo decision and the Opinion demonstrates this Court's disposition of the 1982 Action, unlike dismissal of the prior suit in Bunker Ramo, was a dismissal on the merits.

Car Carriers' parting shot on this issue is an argument this Court intended to bar only the filing of future antitrust claims, not the filing of claims under different theories as Car Carriers has done in its 1983 Complaint. Car Carriers cites an April 29, 1983 colloquy in open court at a hearing in which Car Carriers sought leave to file an Amended Complaint in the 1982 Action four weeks after the Opinion had dismissed the suit with prejudice. This Court viewed Car Carriers' motion for leave to amend its then-dismissed Complaint as a belated Rule 59(e) motion to alter or amend the judgment, and it thus denied that motion. When Car Carriers' counsel pointed out the proposed Amended Complaint contained RICO counts not lodged in the 1982 Complaint, this Court responded:

You have only asked leave to file an amended complaint. I am denying leave to file the amended complaint. That obviously is not a substantive ruling with respect to counts not previously asserted. Your RICO count, for better or worse, you can take that business to Walgreen's or if it is delivered back into this Court I will deal with it.... I am not making a substantive ruling on your RICO claim.

Car Carriers contends that statement indicates this Court's willingness to consider the merits of the 1983 Complaint's RICO claims.

That argument is deficient for a number of reasons:

1. As an attempt to delve into this Court's state of mind, Car Carriers' argument fails. This Court neither had nor expressed any intention on April 29 to foreclose a later consideration of relevant issues that could bear on Car Carriers' future ability to reassert its claim.

2. Indeed the record in the 1982 Action definitively shows this Court harbored no such intent. In a portion of the April 29 transcript Car Carriers omitted to cite, this Court admonished Car Carriers' counsel:

Then you can file a new lawsuit.... And you may be met with res judicata questions on that score, but that is another lawsuit.

3. Even had this Court intended (as it did not) to permit future consideration of the merits of Car Carriers' RICO claims, under res judicata principles it would not be at liberty to do so. It dismissed the 1982 Action on the merits, and it is bound to abide by the legal consequences of that dismissal.

Thus the 1982 Action was clearly dismissed on the merits. That leaves open only the question whether the 1982 Action's cause of action is the same as that of the 1983 Complaint.

2. Identity of Causes of Action

Under the doctrine of res judicata, a cause of action encompasses all theories that were or could have been used in support of recovery on a single basic fact situation. See Nevada v. United States, ___ U.S. ___, 103 S.Ct. 2906, 2918-19 n. 12, 77 L.Ed.2d 509 (1983); Harper Plastics, Inc. v. Amoco Chemicals Corp., 657 F.2d 939, 944-45 (7th Cir.1981). Accordingly the relevant inquiry is into the facts Car Carriers alleged in its...