Headwaters Inc. v. U.S. Forest Service

• Decision Date: 08 September 2004
• Docket Number: No. 01-35898.,01-35898.
• Citation: 382 F.3d 1025
• Parties: HEADWATERS INC., an Oregon non-profit corporation; Forest Conservation Council, Plaintiffs-Appellants, v. U.S. FOREST SERVICE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1025

382 F.3d 1025

HEADWATERS INC., an Oregon non-profit corporation; Forest Conservation Council, Plaintiffs-Appellants, v. U.S. FOREST SERVICE, Defendant-Appellee.

No. 01-35898.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 10, 2003.

Filed September 8, 2004.

COPYRIGHT MATERIAL OMITTED

Lori J. Cooper, Williams, OR, for the appellants.

Todd S. Aagaard, Attorney, United States Department of Justice, Washington, D.C., for the appellees.

Appeal from the United States District Court for the District of Oregon; Michael R. Hogan, District Judge, Presiding. D.C. No. CV-01-03056-HO.

Before: GOODWIN, HUG, and BERZON, Circuit Judges.

Opinion by Judge HUG; Dissent by Judge BERZON.

HUG, Circuit Judge:

This case presents a problem peculiar to public law cases. The plaintiffs in this case are suing to vindicate a public right that has already been litigated by other environmental groups. The plaintiffs contest the validity of sales of timber made by the Forest Service. Those particular sales, however, have already been challenged by other environmental groups using the same arguments that the plaintiffs now present. We agree with the district court that the current plaintiff's interests were virtually represented by the previous groups, so we affirm the district court's dismissal of the case on res judicata grounds.

Headwaters, Inc. and the Forest Conservation Council (collectively "Headwaters") filed suit against the United States Forest Service seeking declaratory and injunctive relief for alleged violations of the National Environmental Policy Act ("NEPA"), 42 U.S.C. §§ 4321-4370, the National Forest Management Act ("NFMA"), 16 U.S.C. §§ 1600-1687, and the Administrative Procedures Acts ("APA"), 5 U.S.C. §§ 701-706 in the Rogue River National Forest. The district court dismissed the complaint as barred by res judicata. Headwaters v. United States Forest Service, 159 F.Supp.2d 1253, 1258 (D.Or.2001). We have jurisdiction based upon 28 U.S.C. § 1291, and affirm.

I. Background

On May 13, 1999, six environmental groups and two individuals¹ ("American Lands litigants") filed suit against the Forest Service challenging various timber sales, including the Beaver-Newt and Silver Fork Timber Sales. American Lands ZAlliance v. Williams, No. 99-697-AA (D.Or.1999). The complaint alleged that the Forest Service's approval of the sales violated NEPA, NFMA, and the APA. Both the Beaver-Newt and Silver Fork areas are located within the Rogue River National Forest in southwestern Oregon.

On December 13, 1999, pursuant to a settlement agreement, the American Lands litigants signed a stipulation of dismissal of the amended complaint with prejudice. On January 19, 2000, District Judge Ann Aiken entered judgment dismissing the action with prejudice.

On February 21, 2001, the Klamath-Siskiyou Wildlands Center ("Klamath-Siskiyou") filed suit against the Forest Service alleging that the approval of the Beaver-Newt and Silver Fork Timber Sales violated NEPA, NFMA, and the APA. Klamath-Siskiyou Wildlands Center v. United States Forest Service, No. 01-3018-HO (D.Or.2001). The Forest Service moved for judgment on the pleadings based upon res judicata because Klamath-Siskiyou had been a named plaintiff in the American Lands suit. In response, on June 1, 2001, Klamath-Siskiyou filed a motion for relief from the judgment which conceded that res judicata would bar the lawsuit, but argued that the court should grant relief from the American Lands judgment pursuant to Federal Rule of Civil Procedure 60(b). The Rule 60(b) motion was based upon the allegation that the attorney in the American Lands suit did not have authority to enter into the settlement agreement. On July 2, 2001, Judge Michael Hogan granted the Forest Service's motion for judgment on the pleadings and dismissed the action without prejudice. Klamath-Siskiyou did not appeal that judgment.

Three days later, on July 5, 2001, Headwaters filed the present suit against the Forest Service. Headwaters' complaint is virtually identical to the complaint filed by Klamath-Siskiyou, and Headwaters is represented by the same counsel that represented Klamath-Siskiyou in the prior litigation. The complaint again alleges violations of NEPA, NFMA, and the APA as a result of the Beaver-Newt and Silver Fork Timber Sales. On July 26, 2001, Judge Hogan sua sponte dismissed the new complaint with prejudice on res judicata grounds. Headwaters, 159 F.Supp.2d at 1258. Headwaters appeals.

II. Standard of Review

A district court's judgment based upon res judicata is a mixed question of law and fact in which legal issues predominate and is reviewed de novo. Gregory v. Widnall, 153 F.3d 1071, 1074 (9th Cir. 1998); United States v. Geophysical Corp., 732 F.2d 693, 697 (9th Cir.1984). "[I]f a court is on notice that it has previously decided the issue presented, the court may dismiss the action sua sponte, even though the defense has not been raised." Arizona v. California, 530 U.S. 392, 412, 120 S.Ct. 2304, 147 L.Ed.2d 374 (2000) (quotation marks and citation omitted). "This result is fully consistent with the policies underlying res judicata: it is not based solely on the defendant's interest in avoiding the burdens of twice [or thrice] defending a suit, but is also based on the avoidance of unnecessary judicial waste." Id. (citation omitted).

III. Discussion

"The doctrine of res judicata provides that a final judgment on the merits bars further claims by parties or their privies based on the same cause of action." In re Schimmels, 127 F.3d 875, 881 (9th Cir.1997) (internal quotation marks omitted). "The application of this doctrine is central to the purpose for which civil courts have been established, the conclusive resolution of disputes within their jurisdiction." Id. The preclusion doctrine encompasses a vindication of public rights by "avoiding inconsistent results and preserving judicial economy." Clements v. Airport Auth., 69 F.3d 321, 330 (9th Cir. 1995).

The elements necessary to establish res judicata are: "(1) an identity of claims, (2) a final judgment on the merits, and (3) privity between parties." Tahoe-Sierra, 322 F.3d at 1077 (quotation marks and citation omitted); Western Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir.1997). We examine each of these elements in turn.

A. Identity of Claims

In determining whether the present dispute contains an identity of claims with the prior litigation, the Ninth Circuit considers:

(1) [W]hether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of the second action; (2) whether substantially the same evidence is presented in the two actions; (3) whether the two suits involve infringement of the same right; and (4) whether the two suits arise out of the same transactional nucleus of facts. The last of these criteria is the most important.

Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir.1982) (internal citations omitted).

Headwaters' suit clearly contains an identity of claims with the American Lands and the Klamath-Siskiyou suits. Headwaters' complaint alleges an infringement of the same right and arises out of the same nucleus of facts that were present in both the American Lands and Klamath-Siskiyou litigation. Headwaters' complaint challenges the timber sales on the grounds that the Forest Service is in violations of NEPA, NFMA, and the APA. All three of these claims were present in the prior suits.² Further, the Beaver-Newt and Silver Fork timber sales are the underlying "nucleus of facts" that forms the basis for all three of these suits. Finally, if this court were to rule on the claims that are presented it would have an effect on the prior judgment in the American Lands litigation.

Because the complaint alleges the same causes of action stemming from the same nucleus of facts, we hold that there exists an identity of claims.

B. Final Judgment on the Merits

The dismissal of an action with prejudice constitutes a final judgment on the merits and precludes a party from reasserting the same claims in a subsequent action. International Union of Operating Engineers v. Karr, 994 F.2d 1426, 1429 (9th Cir.1993); see Lawrence v. Steinford Holding B.V. (In re Dominelli), 820 F.2d 313, 316-17 (9th Cir.1987) (dismissal of action with prejudice pursuant to a settlement agreement constitutes a final judgment on the merits and precludes parties from reasserting the same claims in a subsequent action).

The district court in American Lands entered a final judgment on the merits when it dismissed the action with prejudice pursuant to the stipulated dismissal. Based upon this stipulated dismissal, the court in Klamath-Siskiyou dismissed the case. We hold that because of the dismissal of the action with prejudice, there exists a final judgment on the merits.

C. Privity

Privity is a flexible concept, dependent on the particular relationship between parties in each individual set of cases. Tahoe-Sierra, 322 F.3d at 1081-82. Federal courts have deemed several relationships "sufficiently close" to justify a finding of "privity" and, therefore, preclusion under the doctrine of res judicata:

"First, a non-party who has succeeded to a party's interest in property is bound by any prior judgment against the party. Second, a non-party who controlled the original suit will be bound by the resulting judgment. Third, federal courts will bind a non-party whose interests were represented adequately by a party in the original suit." In addition, "privity" has been found where there is a "substantial identity" between the party and nonparty, where the nonparty "had a significant interest and participated in the prior action," and where the interests of the nonparty and party are "so closely aligned as to be virtually representative." Finally, a relationship of privity can be said to exist when there is an "express or implied legal relationship...