U.S. v. Alky Enterprises, Inc.

• Decision Date: 04 March 1992
• Docket Number: No. 91-2021,91-2021
• Citation: 969 F.2d 1309
• Parties: UNITED STATES of America, Plaintiff, Appellee, v. ALKY ENTERPRISES, INC., Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1309

969 F.2d 1309

61 USLW 2073

UNITED STATES of America, Plaintiff, Appellee, v. ALKY ENTERPRISES, INC., Defendant, Appellant.

No. 91-2021.

United States Court of Appeals First Circuit.

Heard March 4, 1992.

Decided July 20, 1992.

Russell F. Hilliard with whom Upton, Sanders & Smith, Concord, N.H., was on brief for defendant, appellant.

Gretchen Leah Witt, Chief, Civil Div., U.S. Atty.'s Office, with whom Jeffrey R. Howard, U.S. Atty., Concord, N.H., was on brief for the U.S.

Before TORRUELLA, Circuit Judge, CAMPBELL and BOWNES, Senior Circuit Judges.

LEVIN H. CAMPBELL, Senior Circuit Judge.

This appeal requires determination of whether there is privity between the Interstate Commerce Commission (the "ICC") and the United States in the enforcement of the Interstate Commerce Act, so that a prior injunctive action by the ICC was res judicata as to the United States' later action for civil penalties. The district court found no privity between the ICC and the United States. It held, therefore, that the doctrine of res judicata did not bar the Attorney General's subsequent action to impose civil penalties. We affirm.

I.

Defendant-appellant Alky Enterprises Inc., ("Alky"), is a New Hampshire corporation engaged in the business of transporting regulated commodities in interstate commerce. On November 2, 1989, the ICC filed a complaint in United States District Court for the District of New Hampshire alleging that Alky had violated the Interstate Commerce Act (the "Act") by operating in interstate commerce without operating authority and insurance coverage in violation of 49 U.S.C. §§ 10921 and 10927. ¹ See Interstate Commerce Commission v. Alky Enterprises, Inc., Civ. No. 89-504-D (D.N.H. filed Nov. 2, 1989) ("Alky I "). The ICC sought a permanent injunction enjoining Alky from further operation in interstate commerce without operating authority and insurance coverage. On January 2, 1990, the district court granted a permanent injunction enjoining Alky from operating in interstate or foreign commerce unless and until the ICC issued the necessary operating authority and Alky obtained the required insurance coverage. Final judgment in Alky I was entered on January 4, 1990.

On November 9, 1989, prior to the entry of final judgement in Alky I, the ICC wrote Alky a letter claiming $51,000.00 in civil penalties pursuant to the Interstate Commerce Act, 49 U.S.C. § 11901(g). ² The letter from the ICC's Senior Trial Attorney, Stuart B. Robbins, notified Alky that "civil forfeiture claims against your company are hereby made by the Interstate Commerce Commission ... under the provisions of the Interstate Commerce Act and the Federal Claims Collection Act (49 U.S.C. § 11901, 31 U.S.C. § 952, and 49 C.F.R. § 1021.4)." The letter also stated that "[u]nder the regulations adopted by the Commission (49 C.F.R. § 1021.10) ... if there is a prolonged or repeated failure to settle these claims, consideration will be given to referring this matter to the U.S. Attorney's Office ... for the institution of court action for collection of the above claims." According to Robbins' sworn declaration, he advised Alky on November 14, 1989 and again on January 9, 1990, that the ICC was "offering to settle the claims upon the payment of $20,000.00." On February 2, 1990, Alky's president requested a list of the violations. Robbins provided the list on February 6, 1990 and requested that Alky advise him of its position on the settlement of the outstanding claims by no later than February 16, 1990 and that, without settlement, the ICC would refer the case to the Department of Justice for institution of a civil action.

Settlement never occurred. On September 14, 1990, the ICC referred the case to the U.S. Attorney General for the District of New Hampshire. On October 31, 1990, the United States instituted the present action ("Alky II "), seeking $51,500.00 in civil penalties from Alky for the same violations of the Interstate Commerce Act that were the basis of the ICC's request for an injunction in Alky I. ³ In its answer, Alky did not contest the United States' factual allegations. Instead, it merely denied generally having violated the Interstate Commerce Act, and raised the affirmative defense of res judicata, asserting that the United States' action for civil penalties was barred because of the ICC's prior injunctive action in Alky I. Alky moved for summary judgment on the ground that res judicata barred maintenance of Alky II. The United States then filed a motion for summary judgment on the basis that Alky did not contest the factual allegations underlying the complaint and that it was entitled to judgment as a matter of law.

The district court denied Alky's motion for summary judgment, holding that Alky I was not res judicata as to the United States' action for civil penalties. The court then granted the United States' motion for summary judgment on the grounds that the United States was, as a matter of law, entitled to collect $51,500.00 in civil penalties from Alky. This appeal followed.

II.

Alky's sole contention on appeal is that the district court erred in holding that Alky I was not res judicata as to Alky II. The doctrine of res judicata bars all parties and their privies from relitigating issues which were raised or could have been raised in a previous action, once a court has entered a final judgment on the merits of the previous action. Manego v. Orleans Board of Trade, 773 F.2d 1, 5 (1st Cir.1985), cert. denied, 475 U.S. 1084, 106 S.Ct. 1466, 89 L.Ed.2d 722 (1986). There are three essential elements to a claim of res judicata: (1) a final judgment on the merits in an earlier action; (2) an identity of the cause of action in both the earlier and later suits; and (3) an identity of parties or privies in the two suits. Kale v. Combined Ins. Co., 924 F.2d 1161, 1165 (1st Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 69, 116 L.Ed.2d 44 (1991) (citations omitted). The district court found that Alky I did not have res judicata effect on Alky II because there was insufficient identity between the ICC and the United States.

On appeal Alky contends that the ICC and the Attorney General were privies and that, therefore, the United States was barred from bringing a subsequent damages action arising from the same circumstances that had led the ICC to seek and obtain an injunction in Alky I. The United States maintains--as the district court held--that it was not in privity with the ICC and that, therefore, its action is not now barred.

In Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 60 S.Ct. 907, 84 L.Ed. 1263 (1940), the Supreme Court stated as a general rule that,

[t]here is privity between officers of the same government so that a judgment in a suit between a party and a representative of the United States is res judicata in relitigation of the same issue between that party and another officer of the government....

Sunshine Anthracite Coal Co., 310 U.S. at 402-03, 60 S.Ct. at 916-17. The Court went on to say, however, that "[t]he crucial point is whether or not in the earlier litigation the representative of the United States had authority to represent its interests in a final adjudication of the issue in controversy." Id. at 403, 60 S.Ct. at 917. Applying this rule to these facts, we must decide whether in Alky I the ICC also "had authority to represent" the United States' interest in the collection of civil penalties for violations of the Interstate Commerce Act. To resolve this question we first consider the scope of the ICC's enforcement authority under the Interstate Commerce Act. Then, we ask whether the ICC's enforcement authority was broad enough not only to have maintained an injunctive suit as in Alky I, but to have sued to recover for the United States the statutory penalties authorized for the same violations which were the subject of the injunctive suit.

III.

A. The Scope of the ICC's Enforcement Powers

At the time of both Alky I and Alky II, the ICC's enforcement powers were as currently set out in the Interstate Commerce Act at 49 U.S.C. § 11702(a). This section, in relevant part, authorizes the ICC to bring a civil action--

(4) to enforce this subtitle ..., or a regulation or order of the Commission or a certificate or permit issued under this subtitle when violated by a motor carrier or broker providing transportation subject to the jurisdiction of the Commission under subchapter II of chapter 105 of this title or by a foreign motor carrier or foreign motor private carrier providing transportation under a certificate of registration issued under section 10530 of this title: ....

49 U.S.C. § 11702(a)(4). The Interstate Commerce Act also provides for enforcement by the Attorney General. Specifically,

[t]he Attorney General may, and on request of the Interstate Commerce Commission shall, bring court proceedings to enforce this subtitle or a regulation or order of the Commission or certificate or permit issued under this subtitle and to prosecute a person violating this subtitle or a regulation or order of the Commission or certificate or permit issued under this subtitle.

49 U.S.C. § 11703(a). As the district court and the United States acknowledge, there is little in these two provisions standing alone to suggest much difference between the scope of the enforcement authority granted to the ICC and that given to the Attorney General. The legislative history, however, indicates that, over the years, the ICC's enforcement role in court has been limited to seeking injunctive relief, leaving to the Attorney General actions to recover civil monetary penalties. The difference in roles was made clear in the language of the pre-1978 version of the Act, 49 U.S.C. §§ 322(b) and 322(h) (repealed 1978). ⁴

The legislative history also makes clear that Congress intended no substantive changes when it revised and recodified the Interstate Commerce Act in 1978. Pub.L. No. 95-473, § 3a, 92 Stat. 1337 (...