Satsky v. Paramount Communications, Inc., Civ. A. No. 90-S-1561.

• Decision Date: 14 November 1991
• Docket Number: Civ. A. No. 90-S-1561.
• Citation: 778 F. Supp. 505
• Parties: Stuart and Wendy A. SATSKY, et al., Plaintiffs, v. PARAMOUNT COMMUNICATIONS, INC., Defendant.
• Court: U.S. District Court — District of Colorado

778 F. Supp. 505

Stuart and Wendy A. SATSKY, et al., Plaintiffs, v. PARAMOUNT COMMUNICATIONS, INC., Defendant.

Civ. A. No. 90-S-1561.

United States District Court, D. Colorado.

November 14, 1991.

COPYRIGHT MATERIAL OMITTED

Herbert Delap, Delap & Barry, Denver, Colo., for plaintiffs.

Thomas Nichols, Davis, Graham & Stubbs, Denver, Colo., for defendant.

MEMORANDUM OPINION AND ORDER

SPARR, District Judge.

THIS MATTER came before the court for hearing on May 3, 1991 on the Defendant's Motion for Partial Summary Judgment on the Plaintiffs' First through Fifth and Seventh through Eleventh Claims for Relief in the Plaintiffs' Amended Complaint, filed December 4, 1990 and on Defendant's Motion to Dismiss the Amended Complaint, filed October 25, 1990. On May 3, 1991, the court dismissed the Plaintiffs' Fifth through Tenth Claims for Relief and granted Plaintiffs leave to amend their complaint to re-plead their Fifth, Sixth, and Tenth Claims for Relief. Also on May 3, 1991, the court took Paramount's Motion for Partial Summary Judgment under advisement.

On July 1, 1991, Plaintiffs filed their Second Amended Complaint, re-pleading the Fifth and Sixth Claims for Relief and re-asserting five claims from the Amended Complaint. Their former Eleventh Claim for Relief was re-numbered the Seventh Claim for Relief. Therefore, Paramount's Motion for Partial Summary Judgment addresses the First through Fifth and Seventh Claims for Relief in the Plaintiffs' Second Amended Complaint.

Since the date of the last hearing, the parties have filed additional motions. This Order will also address Defendant's Motion to Dismiss the Fifth Claim for Relief in Plaintiffs' Second Amended Complaint, filed July 16, 1991. The court has reviewed the motions, the responses, the replies, the extensive exhibits, the applicable law, the argument of counsel in open court, and is fully advised in the premises.

I. Paramount's Motion for Partial Summary Judgment on the First through Fifth and Seventh Claims for Relief in the Plaintiffs' Second Amended Complaint

Paramount argues that the Consent Decree, Order, Judgment and Reference to Special Master (Consent Decree) approved by Judge Carrigan on June 24, 1988 in United States District Court Civil Action No. 83-C-2387 (Paramount I) operates as res judicata in the case at bar. Paramount argues that res judicata bars the First through Fifth and Seventh Claims for Relief in the Plaintiffs' Second Amended Complaint because they were fully adjudicated in the Paramount I litigation.

A. The Doctrine of Res Judicata

The Consent Decree in Paramount I (Defendant's Exhibit 2 to its Motion for Partial Summary Judgment) was approved by the United States District Court. Federal law determines the effects under the rules of res judicata of a judgment of a federal court. Restatement (Second) of Judgments, § 87 (1982); Petromanagement Corp. v. Acme-Thomas Joint Venture, 835 F.2d 1329 at 1332 (10th Cir.1988). The affirmative defense of res judicata, see Fed.R.Civ.P. Rule 8(c), requires that the party asserting such a bar bear the burden of showing that it applies. United States v. Athlone Industries, Inc., 746 F.2d 977, 983 (3d Cir.1984).

The preclusive effects of prior adjudication are traditionally subsumed under the general doctrine of res judicata, used to refer to both claim preclusion and issue preclusion. Carter v. City of Emporia, Kansas, 815 F.2d 617, 619 n. 2 (10th Cir. 1987). Claim preclusion, which Paramount asserts in the case at bar, prohibits the parties or their privies from relitigating issues that were or could have been raised in a previously adjudicated claim. Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 414-15, 66 L.Ed.2d 308 (1980); Northern Natural Gas Co. v. Grounds, 931 F.2d 678, 681 (10th Cir.1990). A final judgment on the merits bars further claims by parties or their privies based on the same cause of action. Brown v. Felsen, 442 U.S. 127, 131, 99 S.Ct. 2205, 2209, 60 L.Ed.2d 767 (1979); Petromanagement Corp. v. Acme-Thomas Joint Venture, 835 F.2d 1329, 1335 (10th Cir.1988).

The Tenth Circuit has summarized the federal claim preclusion doctrine in May v. Parker-Abbott Transfer and Storage, Inc., 899 F.2d 1007, 1009 (10th Cir.1990), as follows:

Res Judicata is "`a rule of fundamental and substantial justice'" that enforces the public policy that there be an end to litigation. Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 401-02, 101 S.Ct. 2424 2429-30, 69 L.Ed.2d 103 (1981) (quoting Hart Steel Co. v. Railroad Supply Co., 244 U.S. 294, 299, 37 S.Ct. 506, 508, 61 L.Ed. 1148 (1917)). By preventing repetitious litigation, application of res judicata avoids unnecessary expense and vexation for parties, conserves judicial resources, and encourages reliance on judicial action. See Montana v. United States, 440 U.S. 147, 153-54, 99 S.Ct. 970, 973-74, 59 L.Ed.2d 210 (1979).

Application of the doctrine of claim preclusion requires a showing that there has been (1) a final judgment on the merits in a prior suit involving (2) the same parties or their privies and (3) a subsequent suit based on the same causes of action. Athlone, 746 F.2d at 983. To qualify for preclusion, a judgment must be valid, final, and on the merits. Lane v. Peterson, 899 F.2d 737, 742 (8th Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 74, 112 L.Ed.2d 48 (1990); Gray v. Lacke, 885 F.2d 399, 405 (7th Cir.1989), cert. denied, Lacke v. Gray, 494 U.S. 1029, 110 S.Ct. 1476, 108 L.Ed.2d 613 (1990); Thomas v. Evans, 880 F.2d 1235, 1240 (11th Cir.1989); Lubrizol Corp. v. Exxon Corp., 871 F.2d 1279, 1287 (5th Cir.1989).

In order to determine what constitutes a cause of action that is precluded by a prior judgment, the Tenth Circuit has applied the transactional approach of the Restatement (Second) of Judgments, § 24 (1982). May, 899 F.2d at 1009; Lowell Staats Mining Co. v. Philadelphia Electric Co., 878 F.2d 1271, 1274 (10th Cir.1989). Section 24 provides:

(1) When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger or bar (see §§ 18, 19), the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.

(2) What factual groupings constitute a "transaction," and what grouping constitutes a "series," are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.

In 1942, Justice Traynor explained the criteria essential to an understanding and analysis of res judicata as follows:

In determining the validity of a plea of res judicata three questions are pertinent: Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?

Northern Natural Gas, 931 F.2d at 681, quoting Bernhard v. Bank of America Nat. Trust & Savings Ass'n, 19 Cal.2d 807, 813, 122 P.2d 892, 895 (1942).

1. Final Judgment on the Merits in a Prior Suit

The general rule is that a final consent decree is entitled to res judicata effect. Amalgamated Sugar Co. v. NL Industries, Inc., 825 F.2d 634, 639 (2d Cir. 1987), cert. denied, Rothenberg v. Amalgamated Sugar Co., 484 U.S. 992, 108 S.Ct. 511, 98 L.Ed.2d 511 (1987). The principles of res judicata apply to consent decrees as well as to ordinary judgments entered by a court. United States v. Jefferson County, 720 F.2d 1511, 1517 (11th Cir.1983). Consent decrees are generally treated as final judgments on the merits and accorded res judicata effect. I.A.M. Pension v. Industrial Gear Mfg., 723 F.2d 944, 947 (D.C.Cir. 1983); Duquesne Light Co. v. E.P.A., 698 F.2d 456, 469 (D.C.Cir.1983). A consent decree is res judicata and thus bars either party from reopening the dispute by filing a fresh lawsuit. May, 899 F.2d at 1009; U.S. v. Fisher, 864 F.2d 434, 439 (7th Cir. 1988); Brooks v. Barbour Energy Corp., 804 F.2d 1144, 1146 (10th Cir.1986).

The Consent Decree, Order and Judgment in Paramount I was entered pursuant to a settlement that resolved the substance of the disputed claims and the court concludes that it constituted a final judgment on the merits.

2. The Same Parties or Their Privies

A judgment by consent binds the parties and those in privity with them. Commercial Union Ins. Co. v. Westrope, 730 F.2d 729, 732 (11th Cir.1984), quoting Rodriguez v. East Texas Motor Freight, 505 F.2d 40, 65 (5th Cir.1974), vacated on other grounds, 431 U.S. 395, 97 S.Ct. 1891, 52 L.Ed.2d 453 (1977). The Order, Judgment, and Reference to Special Master of the Consent Decree states in pertinent part:

"... the terms and provisions of this Consent Decree in their entirety, and the RAP appended hereto, represent a fair, reasonable, final and equitable settlement of all matters which have been raised between the parties to this litigation and ... the foregoing CONSENT DECREE is adopted by the Court and made an order, and final judgment of this Court and disputes are referred to the Special Master of this Court as further detailed herein." (See Defendant's Exhibit 2 p. 70).

The Consent Decree, by its own terms, is "binding upon each of the parties and their successors in interest, privies and assigns." (Defendant's Exhibit 2, paragraph II(B) p. 4).

If a final judgment on the merits will prohibit the parties or their privies from relitigating issues that were or could have been raised in a previously adjudicated claim, Allen, 449 U.S. at 94, 101 S.Ct. at 414-15; Northern Natural Gas, 931 F.2d at 681, then the court must determine whether the Plaintiffs here were in privity with...