Sherman v. Ludington

• Decision Date: 07 July 1992
• Docket Number: No. 91-3936,91-3936
• Citation: 968 F.2d 1216,1992 WL 158878
• Parties: NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit. Roy E. SHERMAN, Plaintiff-Appellant, v. William F. LUDINGTON; Chase Packaging Corp.; Union Camp Corp.; Bag Merger Corp., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1216

968 F.2d 1216

NOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.

Roy E. SHERMAN, Plaintiff-Appellant, v. William F. LUDINGTON; Chase Packaging Corp.; Union Camp Corp.; Bag Merger Corp., Defendants-Appellees.

No. 91-3936.

United States Court of Appeals, Sixth Circuit.

July 7, 1992.

Before NATHANIEL R. JONES and ALAN E. NORRIS, Circuit Judges, and WOODS, District Judge. ^*

PER CURIAM.

Plaintiff-appellant, Roy E. Sherman, appeals the district court's grant of summary judgment to defendants-appellees, William F. Ludington; Chase Packaging Corp.; Union Camp Corp.; and, Bag Merger Corp., on plaintiff's claims for intentional and/or negligent misrepresentation. The district court determined that Ohio res judicata principles bar plaintiff's claims. For the following reasons, we affirm the result of the district court judgment, but rely on the federal doctrine of res judicata to reach that conclusion.

I.

Plaintiff-appellant, Roy E. Sherman, an employee of Chase Packaging Corp. for twenty-six years, was terminated from his job as Chase's Chagrin Falls, Ohio office manager, effective on or about January 6, 1989. In June, 1989, Sherman brought a suit in federal district court against Chase Packaging Corp. alleging federal claims of age discrimination and denial of pension and employment benefits. Sherman v. Chase Packaging Corp., No. 89-CV-1230 (N.D.Ohio, June 27, 1989) ("Sherman I ") (Jt.App. pp. 7-11). The Court took jurisdiction over the federal questions as well as pendant claims for age discrimination under Ohio law, wrongful discharge, negligent performance of contractual obligations, and promissory estoppel. ¹ Chase Packaging Corp. moved the Court for summary judgment on September 11, 1990. Seventeen days before trial, appellant motioned for leave to amend the complaint. Eleven days before trial, plaintiff moved for leave to file a second amended complaint to dismiss the claim for negligent contractual performance and add state law claims for intentional and/or negligent misrepresentation. Appellant offered a transcribed January 13, 1989 telephone conversation between Sherman and William Ludington, the President of Chase Packaging Corp., as a basis for the amended claims. In the conversation, Ludington is purported to have told Sherman:

I'll try to help you. I haven't got a job to give you at Chase. I won't fool you. If one comes up, you're gonna be the first guy I'm gonna call for it, but I can't create one. I just can't create a job just because its what I'd like to to (sic) give you employment.

(Jt.App. p. 33). The district court denied appellant's motions on the eve of trial, finding that the facts that formed the basis of the new claims, i.e., the January, 1989 phone conversation, "either were or should have been apparent to plaintiff's counsel at the outset of this case." Sherman v. Chase Packaging Corp., No. 89-CV-1230, slip op. (N.D.Ohio, Oct. 22, 1990) (Jt.App. pp. 154-155). In that same opinion, the Court granted defendant's motion for summary judgment. (Jt.App. pp. 174). Plaintiff then appealed to this Court. This Court affirmed the district court judgment. Sherman v. Chase Packaging Corp., No. 90-4033, slip op. (6th Cir. May 21, 1991) (Jt.App. p. 176). This Court agreed that because the January, 1989 Ludington-Sherman telephone conversation:

occurred five months prior to the filing of the original complaint ... the facts which formed the basis of plaintiff's 'new claims' were known to him from the time the original complaint was filed and should have been apparent from the outset.

(Jt.App. p. 179). The Court explained that plaintiff's motions made so close to trial could be and were properly denied because of the absence of new facts (Jt.App. p. 178).

While the appeal was pending before this Court, plaintiff filed a second action in Ohio state court alleging intentional and/or negligent misrepresentation based on Ludington's January, 1989 telephone conversation with Sherman. ² The matter was removed to federal district court based on diversity. Sherman v. William F. Ludington, et.al., No. 91-CV-0673 (N.D.Ohio, March 21, 1991) ("Sherman II ") (Jt.App. p. 13). Defendants jointly motioned the Court for summary judgment. (Jt.App. p. 58). The Court, relying on Ohio res judicata principles, granted defendants' motion. Sherman v. William F. Ludington, et. al., No. 90-CV-0673, slip op. (N.D.Ohio, Sept. 10, 1991) (Jt.App. p. 305). It is from this judgment that plaintiff now appeals.

II.

In Sherman I, the district court enjoyed jurisdiction over the federal question claims and pendent state law claims. The district court in Sherman II enjoyed jurisdiction over appellant's claims of intentional and negligent misrepresentation because of diversity of citizenship. Relying on the language found in Hackler v. Indianapolis & Southeastern Trailways, 437 F.2d 360 (6th Cir.1971) and Migra v. Warren City School District Board of Education, 465 U.S. 75 (1985), the Sherman II Court applied Ohio res judicata law, barring plaintiff's cause of action and granting defendants' motion for summary judgment on that ground. In their brief, appellees first questioned whether federal res judicata principles should, in fact, govern this particular situation. Appellant did not respond to this inquiry. At oral argument, this Court requested both parties to submit supplemental briefs arguing their position on the proper res judicata principle to apply.

Appellant cites Hackler and Federal Insurance Co. v. Gates Learjet Corp., 823 F.2d 383 (10th Cir.1987), and urges that the Erie doctrine requires the application of Ohio res judicata law in diversity cases before a federal district court. Appellees insist that persuasive authority indicates that a judgment given by a federal court acting under federal question jurisdiction is to receive federal res judicata examination in a later action. Following review of the briefs and the law, this Court concludes that the district court's decision to utilize Ohio law, instead of federal law, was improper.

This Circuit has supported the use of federal res judicata principles where a plaintiff, initially in federal court on a federal claim, later brought a diversity suit. Cemer v. Marathon Oil Co., 583 F.2d 830, 832 (6th Cir.1978). The Cemer Court announced that federal law controls the effect of an earlier federal judgment. Id. at 832. This Circuit has also determined that federal res judicata is proper against federal decisions that originated with diversity jurisdiction. Silcox v. United Trucking Service, Inc., 687 F.2d 848 (6th Cir.1982). ³

Other circuits have agreed that federal res judicata properly applies when the earlier suit involved a federal claim and resulted in a federal judgment. Kale v. Combined Insurance Company of America, 924 F.2d 1161 (1st Cir.1991), Poe v. John Deere Co., 695 F.2d 1103 (8th Cir.1982), Nilsen v. City of Moss Point, Miss., 701 F.2d 556 (5th Cir.1983). Of particular significance is the recent First Circuit opinion in Kale ("Kale II "). In his first suit ("Kale I "), the plaintiff invoked federal question jurisdiction under the Age Discrimination in Employment Act ("ADEA") and brought related state law claims under pendent jurisdiction. The Kale I Court granted summary judgment for defendant and dismissed the ADEA claim. The Kale I Court then dismissed the state law claims. When the plaintiff later brought state claims into federal court through diversity jurisdiction, the Kale II Court stated:

While the parties do dispute whether the other state-law claims pleaded in Kale II were "brought" in Kale I, we need not enter that debate. The judgment in Kale I was rendered by a federal court acting under its federal question jurisdiction. Hence, the availability of a res judicata defense in this case depends on the federal-law standard. See, e.g., Cemer, 583 F.2d at 832.

Kale, 924 F.2d at 1164. Whether or not all of plaintiff's claims were actually pleaded in Kale I, the Kale II Court invoked the doctrine of federal res judicata. The Kale II Court said, simply:

[T]he disposition of the ADEA claim in Kale I comprised a suitable springboard for the deployment of res judicata.

Id. at 1164.

Appellant's contentions that Hackler and Gates mandate the use of state law res judicata are unpersuasive. Hackler, as well as Migra, stand for the proposition that state law collateral estoppel principles apply when the second cause of action is based on diversity and the first action has yielded a state law judgment. The cases do not, however, address the proper preclusionary rule when the original judgment is entered in federal court, as is the case here. Furthermore, the Gates decision is expressly limited to a situation far different then that presented here. In Gates, the Tenth Circuit proclaimed:

We do not announce a broad rule regarding whether state law or federal law should determine the preclusive effect of a federal diversity court judgment. In this case, where the question is whether there is privity between the parties in different diversity suits, a federal court must employ state rules of privity.

Gates, 823 F.2d at 386. The issue in Sherman does not involve privity. Due to the self-imposed restriction, Gates has no application here.

Appellant also argues that the authority of Silcox, Poe and Nilsen do not apply in the instant matter because those cases are limited to situations where plaintiff essentially pleads the same claim in the subsequent action. Specifically, appellant insists that the pleading of a separate and unrelated claim from that asserted in the earlier suit, in this case, intentional and/or negligent misrepresentation, precludes following the authority of Silcox, Poe and Nilsen.

There is no clear formula for determining when a...