Manego v. Orleans Bd. of Trade

• Decision Date: 27 November 1984
• Docket Number: Civ. A. No. 83-0045-C.
• Parties: Isaac MANEGO, Plaintiff, v. The ORLEANS BOARD OF TRADE, et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

598 F. Supp. 231

Isaac MANEGO, Plaintiff, v. The ORLEANS BOARD OF TRADE, et al., Defendants.

Civ. A. No. 83-0045-C.

United States District Court, D. Massachusetts.

November 27, 1984.

COPYRIGHT MATERIAL OMITTED

Charles Ray Weidman, Chatman, Mass., for plaintiff.

Samuel Hoar, Laura L. Carroll, Goodwin, Procter & Hoar, Boston, Mass., for Cape Cod 5 Cent Savings Bank and David B. Willard.

Albert P. Zabin, Schneider, Reilly, Zabin, Connolly & Costello, Boston, Mass., for Orleans Bd. of Trade & 90 other Persons as Members.

MEMORANDUM

CAFFREY, Chief Judge.

This is a civil action brought pursuant to antitrust statutes, 15 U.S.C. §§ 1-15, which includes a pendant state law claim for unfair business practices. M.G.L. c. 93A. The plaintiff, Isaac Manego, alleges that the defendants conspired to orchestrate the denial of license applications, thereby producing an adverse anticompetitive effect. The defendants are David Willard, The Cape Cod Five Cents Savings Bank ("Bank"), the Orleans Board of Trade ("Board of Trade"), and its members. At times relevant to the events complained of, defendant Willard was both the President of the Board of Trade and an officer of the Bank. The case is now before the court on defendants' motions for summary judgment. Fed.R.Civ.P. 56(b).

This case is the third round of litigation initiated by plaintiff relating to the denial of his application for entertainment and liquor licenses in the Town of Orleans, Massachusetts. In the first case, Manego v. Board of Selectmen of the Town of Orleans, C.A. No. 38824 ("Manego I"), the plaintiff sought a writ of mandamus from the Massachusetts Superior Court. Upon dismissal of that action, plaintiff instituted his second case, a civil rights action in this Court, Manego v. Cape Cod Five Cents Savings Bank, et al, C.A. No. 80-1406-MC (D.Mass. April 13, 1982) ("Manego II") which terminated in summary judgment for the defendants. The Court of Appeals affirmed. Manego v. Cape Cod Five Cents Savings Bank, 692 F.2d 174 (1st Cir.1982).

In substance, the plaintiff's present complaint is based on and addresses the same events that were the subject of both the earlier cases. In early 1979, the Orleans Board of Selectmen denied the plaintiff's applications for the liquor and entertainment licenses necessary to operate a proposed disco. The plaintiff alleges that his application was denied as a result of a conspiracy among the defendants, including the Board of Trade, the Bank, and David Willard. The alleged purpose of the conspiracy was to allow the Bank, through a sham transaction, to offer similar entertainment at the nearby Lower Cape Sports Arena ("Arena") free of competition from Mr. Manego. Indeed, it is undisputed that an entertainment license was issued to the Arena after the denial of plaintiff's application.

Defendants Cape Cod Five Cents Savings Bank and David Willard were also defendants in Manego II. The Orleans Board of Trade was not named as a defendant in the earlier actions, and a reference to Willard's status as president of the Board was stricken from the complaint on defendant Bank's motion.

DEFENDANTS CAPE COD FIVE CENTS SAVINGS BANK AND DAVID WILLARD

Defendants Willard and the Bank move for summary judgment on grounds that the plaintiff's action is barred under the doctrine of res judicata and on the grounds that the alleged conspiratorial acts are protected by the First Amendment.

Under the doctrine of res judicata¹ "a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980). Res judicata is a bar only where the subsequent case concerns the same cause of action or claim. E.g. Cromwell v. County of Sac, 94 U.S. 351, 4 Otto 351, 24 L.Ed. 195 (1876). With the adoption of the Federal Rules of Civil Procedure the concept of "cause of action" has broadened beyond that of a single legal issue narrowly drawn in a writ. See 18 J. Wright, Miller & Cooper, Federal Practice and Procedure § 4407 n. 20. The scope of preclusion has necessarily expanded with the definition of "claim" or "cause of action." Id.

The exact contours of claim preclusion are a subject of much discussion and disagreement. See Id., 18 J. Moore, Moore's Federal Practice ¶ 0.4101. The Restatement (Second) of Judgments (1982) adopts a "transactional" definition of the scope of issue preclusion:

The present trend is to see claim in factual terms and to make it coterminous with the transaction regardless of the number of substantive theories, or variant forms of relief flowing from those theories, that may be available to the plaintiff; regardless of the number of primary rights that may have been invaded; and regardless of the variations in the evidence needed to support the theories or rights. The transaction is the basis the litigative unit and may not be split.

Restatement (Second) § 24 Comment a.

A number of other approaches to the preclusive scope of an earlier action have evolved in the case law. These include:

—Whether the actions are based on identical grounds.

—Whether the factual basis of both claims is the same.

—Whether the essential facts and issues have been similarly presented in both cases.

—Whether the same right is infringed by the same wrong.

—Whether the wrong for which redress is sought is the same in both actions.

—Whether the two actions are so similar that a different judgment in the second would destroy or impair rights or interests established in the first.

21 Federal Procedure Lawyers Edition § 51:201.

The Court of Appeals for the First Circuit has articulated a position closer to the broad restatement view.²Isaac v. Schwartz, 706 F.2d 15 (1st Cir.1983), Lovely v. Liberte, 498 F.2d 1261 (1st Cir.1974). In Lovely, the Court of Appeals held that a state court action for possession barred a subsequent § 1983 action because the parties were the same and concerned the same "operative nucleus of fact." Id. at 1263. In Issac the Court went further in its analysis:

Given the initial dismissal, the issue before us is simply whether the new complaint grows out of the same transaction or series of connected transactions (Restatement (Second) of Judgments § 24) as the old complaint. If so, the fact that appellant now asserts new legal theories ... does not help him.

Supra at 17. Recently the Court of Appeals reaffirmed this approach in Casagrande v. Agoritsas, 748 F.2d 47 (1st Cir. 1984).

I note that plaintiff Manego alleges facts in this antitrust action which are strikingly similar to those in Manego II. The present complaint differs only in that it names additional defendants (the Board of Trade), and alleges that the Bank planned to offer entertainment at its facility similar to that which plaintiff Manego would have provided at his disco.

The plaintiff argues that because he did not learn of the Bank's plans until three days before summary judgment was granted, his action, based upon this new knowledge, is not barred. The plaintiff further argues that because a reference to Mr. Willard's status as president of the Board of Trade was stricken from the Manego II pleading on defendant Bank's motion, the antitrust issues could not have been raised in the earlier proceeding.

Despite the plaintiff's contentions it is apparent that the present case concerns the same transaction or nucleus of fact that was adjudicated in Manego II. The mere fact that plaintiff failed to discover the Bank's plans until shortly before a final judgment does not affect its preclusive effect.³ A judgment bars all claims prior to its entry. Lawlor v. National Screen Service, 349 U.S. 322, 328, 75 S.Ct. 865, 868, 99 L.Ed. 1122 (1955). Given the discovery and amendment provisions of the Federal Rules of Civil Procedure, plaintiff certainly could have obtained the necessary evidence to litigate his alternate theory in the first proceeding. Finally, the addition of new defendants in a subsequent action does not affect the preclusive effect of the judgment as to the original parties. E.g. Scarpa v. Fair, C.A. No. 82-2333, slip op. at 7 (D.Mass. April 11, 1983).

Accordingly, I rule that plaintiff's action against defendants Cape Cod Five Cents Savings Bank and David Willard is barred, and also rule that those defendants are therefore entitled to summary judgment.

DEFENDANT ORLEANS BOARD OF TRADE

The Board of Trade moves for summary judgment on the following grounds: that the doctrine of res judicata bars the present action, that there is no genuine issue of material fact relating to the allegations of conspiracy, and that the alleged conduct had no adverse effect on interstate commerce.

Because the Board of Trade was not a party to Manego II, claim preclusion principles do not bar the present action. Furthermore, those members of the Board of Trade who were parties to the prior action may not rely on claim preclusion insofar as they are presently named as defendants in a different capacity. 1B J. Moore, Moore's Federal Practice ¶ 014113. Issue preclusion, on the other hand, may bar relitigation of issues actually litigated and necessary to a prior judgment in a different cause of action, and may be asserted defensively by a stranger to the original action. Parklane Hosiery v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). Accordingly, the Board of Trade argues that the plaintiff should be estopped from relitigating the issue of conspiracy, claiming that it was resolved in favor of the defendants in Manego II.

Even an express finding that there was no conspiracy among the defendants in Manego II would not bar the present case. Because the Board of Trade was not a party to the earlier action the existence of a conspiracy involving the Board was not before the Court. I rule, therefore, that the prior judgment has no preclusive effect on this aspect of the present case.

The defendant's claim...