Yapp v. Excel Corp.

• Court: U.S. Court of Appeals — Tenth Circuit
• Writing for the Court: Before TACHA, HENRY, and MURPHY; MURPHY; HENRY
• Citation: Yapp v. Excel Corp., 186 F.3d 1222 (10th Cir. 1999)
• Decision Date: 03 August 1999
• Docket Number: Nos. 98-1061,s. 98-1061
• Parties: (10th Cir. 1999) KENNETH E. YAPP, Plaintiff-Appellant, v. EXCEL CORPORATION, a Delaware corporation, Defendant-Appellee. & 98-1069

Page 1222

186 F.3d 1222 (10th Cir. 1999)

KENNETH E. YAPP, Plaintiff-Appellant, v. EXCEL CORPORATION, a Delaware corporation, Defendant-Appellee.

Nos. 98-1061 & 98-1069

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

August 3, 1999

Appeal from the United States District Court for the District of Colorado. D.C. Nos. 96-S-1350 and 96-1578

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Pamela A. Shaddock, (Bradley D. Laue and Kathleen M. Flynn with her on the briefs), of Brega & Winters P.C., Greeley, Colorado, for Appellant.

Walter V. Siebert, (Heather Fox Vickles with him on the brief), of Sherman & Howard L.L.C., Denver, Colorado, for Appellee.

Before TACHA, HENRY, and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

Kenneth E. Yapp appeals the judgment of the United States District Court for the District of Colorado, granting summary judgment to Excel Corporation ("Excel") on the basis of claim preclusion. In the summer of 1996, Yapp filed suit against his former employer, Excel, for overtime compensation due under the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. §§ 201-219. Two weeks later he filed suit against Excel alleging numerous claims for wrongful termination. After the first case was settled and an Order of Dismissal with Prejudice was entered, the district court granted Excel's motion for summary judgment in the second case on the basis of claim preclusion. Yapp's appeal is primarily a challenge to that summary judgment. This court exercises jurisdiction pursuant to 28 U.S.C. § 1291 and AFFIRMS.

I. BACKGROUND

Plaintiff Kenneth E. Yapp worked in Excel's beef slaughter plant in Sterling, Colorado from 1987 until he was terminated in 1995. [Appee. Appx. 4] On June 7, 1996, Yapp sued Excel in the United States District Court for the District of Colorado for violations of the FLSA seeking unpaid overtime compensation [hereinafter "Overtime Action"]. Approximately two weeks later, Yapp sued Excel in a Colorado state court, alleging wrongful discharge premised on theories of violation of public policy, breach of employment contract, promissory estoppel, violation of implied covenant of good faith and fair dealing, negligent misrepresentation, and multiple torts [hereinafter "Wrongful Discharge Action"]. Excel removed the Wrongful Discharge Action to the same federal district court in which the Overtime Action was pending, and then filed a motion to consolidate the two cases, arguing that "[c]onsolidation . . . will eliminate much duplication of effort and will result in decreased costs and expenses to both parties." Yapp responded in kind, arguing that consolidation would result in delay and increased costs for both parties. The district judge denied the motion, reasoning that "[p]laintiff has stated valid reasons for filing the two cases separately and separate trials will be conducive to expedition and economy."

The parties negotiated a settlement in the Overtime Action, agreeing that Excel would pay Yapp $14,000 in return for a Stipulation for Dismissal with Prejudice, signed by both parties on September 9, 1997. The district court issued an Order of Dismissal with Prejudice in the Overtime Action on September 11, 1997. Approximately two weeks after the Overtime Action was dismissed with prejudice, Excel filed motions to supplement its answer, its pending motion for summary judgment, and the final pretrial order in the Wrongful Discharge Action to include the affirmative defense of claim preclusion premised on the dismissal of the Overtime Action. ¹ Yapp resisted Excel's effort to supplement on the grounds that the parties fully understood that settlement of the Overtime Action did not extend to the Wrongful Discharge Action. Yapp relied upon language in a proposed settlement agreement ² and a September 9, 1997, letter from Yapp's counsel to Excel's counsel, ³ both of which Yapp asserts shielded the Wrongful Discharge Action from claim preclusion flowing from the dismissal in the Overtime Action. The district court granted Excel's motion to supplement.

On October 20, 1997, Yapp filed a 60(b) motion, seeking to rescind the Stipulation for Dismissal with Prejudice and Order for Dismissal with Prejudice in the Overtime Action. Yapp argued that relief should be based upon fraud, misrepresentation, misconduct of the adverse party, breach of covenant of good faith and fair dealing, failure to achieve a meeting of the minds, mistake of law, and mutual mistake. On February 2, 1998, the district court denied Yapp's 60(b) motion. A week later, the district court granted Excel's Motion for Summary Judgement on the basis of claim preclusion.

On appeal, Yapp primarily targets the summary judgment. He also challenges the district court's order allowing Excel to amend its answer in the Wrongful Discharge Action and the district court's denial of Yapp's 60(b) motion in the Overtime Action.

II. DISCUSSION

A. Motion for summary judgment

A grant or denial of summary judgment is reviewed using the same standard applied by the district court. See King v. Union Oil Co. of California, 117 F.3d 443, 444-45 (10th Cir. 1997). Summary judgment is appropriate if "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed. R. Civ. Pro. 56(c); see also King, 117 F.3d at 445. Issues of fact are reviewed in a light most favorable to the nonmoving party. See Craig v. Eberly, 164 F.3d 490, 493 (10th Cir. 1998).

Federal law of claim preclusion applies. See Murdock v. Ute Indian Tribe of Uintah & Ouray Reservation, 975 F.2d 683, 687 (10th Cir. 1992) (citing, inter alia, Restatement (Second) of Judgments § 87, at 314 (1982) ("Federal law determines the effects under the rules of res judicata of a judgment of a federal court.")). Claim preclusion requires: (1) a judgment on the merits in the earlier action; (2) identity of the parties or their privies in both suits; and (3) identity of the cause of action in both suits. ⁴ See King, 117 F.3d at 445. The parties agree that the first two elements are present. The issue here is whether the Wrongful Discharge Action is sufficiently similar to the Overtime Action to warrant the operation of claim preclusion. Yapp argues that his two suits are rooted in different transactions. Excel argues that all claims arising from an employment relationship constitute a single transaction or a series of sufficiently connected transactions for purposes of claim preclusion.

This court has adopted the transactional approach of the Restatement (Second) of Judgments in determining what constitutes identity of the causes of action. See Petromanagement Corp. v. Acme-Thomas Joint Venture, 835 F.2d 1329, 1335-36 (10th Cir. 1988). The transactional approach provides that a claim arising out of the same "transaction, or series of connected transactions" as a previous suit, which concluded in a valid and final judgment, will be precluded. Restatement (Second) of Judgments § 24 (1982) [hereinafter "Restatement"]; see also Nwosun v. General Mills Restaurants, Inc., 124 F.3d 1255, 1257 (10th Cir. 1997) ("[A] cause of action includes all claims or legal theories of recovery that arise from the same transaction, event, or occurrence."). What constitutes the same transaction or series of transactions is "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." Restatement § 24; see also King, 117 F.3d at 445.

The transactional test has been rearticulated by courts in a variety of ways, most of which focus upon whether the two suits are both based upon a discrete and unitary factual occurrence. For example, the First Circuit queries whether both suits depend upon "the same operative nucleus of fact." Kale v. Combined Ins. Co. of Am., 924 F.2d 1161, 1166 (1st Cir. 1991). The Seventh Circuit assesses whether the two claims "are based on the same, or nearly the same, factual allegations." Herrman v. Cencom Cable Assoc's Inc., 999 F.2d 223, 226 (7th Cir. 1993). Some courts focus upon whether the two suits seek to redress the same injury. See, e.g., Kale, 924 F.2d at 1166 (noting as part of transactional test whether suits "sought redress for essentially the same basic wrong").

In a case factually indistinguishable from the one here, this court concluded that the transactional test was met because "the 'claims' in each case were predicated on [plaintiff's] employment." See Clark v. Haas Group, Inc., 953 F.2d 1235, 1239 (10th Cir. 1992). The plaintiff Clark first sued her former employer under the FLSA, seeking to recover unpaid overtime compensation. See id. at 1236. Three months after the issuance of a stipulated order dismissing the action with prejudice, the plaintiff again sued her former employer, this time for wrongful termination ⁵ under the Age Discrimination in Employment Act and for violations of the Equal Pay Act. See id. The case proceeded to trial on the ADEA issue only. See id. at 1237. On appeal, this court held that the district court erred in failing to hold that the plaintiff's second claim was precluded by the first since both were based upon a single transaction: the employment relationship. Id. at 1239.

The pertinent facts of Clark and the case here are identical: both plaintiffs first sued their former employers for unpaid overtime compensation under the FLSA, and then both plaintiffs subsequently sued their former employers for wrongful discharge. The court in Clark eliminated all ambiguity in the meaning of "transaction" in this factual context: it stated that "the 'transaction' was Clark's employment." Id. No other court applying the transactional test has held that suits arising from the same employment relationship are thereby necessarily grounded upon the same...