DeGuelle v. Camilli
724 F.3d 933
7th Cir.2013Background
- DeGuelle, an accountant at S.C. Johnson (1997–2009), alleges he discovered corporate tax fraud and publicly accused the company; he took confidential tax documents when fired.
- S.C. Johnson sued him in Wisconsin state court for breach of contract, conversion, and defamation; DeGuelle counterclaimed for wrongful termination and breach of contract as retaliation for opposing alleged tax fraud.
- At summary judgment the company submitted an affidavit from a Kirkland & Ellis tax lawyer denying fraud; DeGuelle, pro se, filed no counteraffidavits and his hired expert declined to submit a report after procedural limits on access to confidential documents.
- The Wisconsin trial court granted summary judgment for S.C. Johnson; the Wisconsin Court of Appeals affirmed.
- DeGuelle previously sued in federal court; after this state-court resolution the district court dismissed the federal suit on collateral estoppel grounds.
- The Seventh Circuit (Posner, J.) affirmed, holding the state-court determinations preclusive under Wisconsin law and § 1738/full faith and credit principles.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wisconsin state-court finding that there was no tax fraud precludes DeGuelle’s federal claims (issue preclusion/collateral estoppel) | DeGuelle: he lacked a full and fair opportunity to litigate because discovery limits prevented his expert from filing a counteraffidavit; he was pro se | S.C. Johnson: DeGuelle had opportunity and incentive to litigate; expert refused to submit a report by his own choice; state rulings are binding | Held: Collateral estoppel applies; state trial and appellate rulings bar relitigation and bind the federal court |
| Whether pro se status prevents application of collateral estoppel | DeGuelle: pro se status excused him from preclusion | S.C. Johnson: pro se by choice does not immunize from preclusion; courts may sanction further harassing litigation | Held: Pro se status does not preclude application of collateral estoppel |
| Whether Wisconsin’s multifactor “issue preclusion” test undermines preclusive effect here | DeGuelle: relied on Wisconsin’s open-ended factors to argue unfairness | S.C. Johnson: factors do not change result; trial and appellate courts adequately addressed issues | Held: Even under Wisconsin’s multifactor test, preclusion is appropriate; state appellate decision removes procedural doubt |
| Whether allowing preclusion would deter whistleblowers and thus be unfair | DeGuelle: applying preclusion would chill whistleblowers | S.C. Johnson: finality and prevention of repetitive litigation outweigh that concern | Held: Public‑policy/whistleblower argument is unpersuasive; finality prevails |
Key Cases Cited
- Taylor v. Sturgell, 553 U.S. 880 (2008) (federal collateral estoppel principles and limits on preclusion)
- Virnich v. Vorwald, 664 F.3d 206 (7th Cir. 2011) (under Wisconsin law, appeal does not suspend preclusive effect)
- United States v. Kashamu, 656 F.3d 679 (7th Cir. 2011) (collateral estoppel requirements and adequacy of initial proceeding)
- In re Catt, 368 F.3d 789 (7th Cir. 2004) (issue preclusion and full‑and‑fair‑opportunity standard)
- Bell v. Dillard Dep’t Stores, Inc., 85 F.3d 1451 (10th Cir. 1996) (preclusion requires adequate opportunity and incentive to litigate)
- Johnson v. Watkins, 101 F.3d 792 (2d Cir. 1996) (values served by collateral estoppel)
- Franchise Tax Board v. Hyatt, 588 U.S. 488 (2013) (full faith and credit principles as applied to state judgments)
- Allen v. McCurry, 449 U.S. 90 (1980) (§ 1738 requires federal courts to apply state preclusion rules)