R. Parungao v. Community Health Systems, Inc.
858 F.3d 452
| 7th Cir. | 2017Background
- Dr. R. Sherwin Parungao practiced surgery at Galesburg Cottage Hospital, later employed by Knox Clinic; Knox Clinic discharged him in May 2013 and he alleges the hospital orchestrated the discharge and manipulated peer review to damage his career.
- Parungao filed multiple suits: an initial state suit he voluntarily dismissed, a petition to refile under seal (denied), a defamation suit against Dr. Daniel K. Piper in Illinois state court alleging Piper sent letters falsely reporting "other action" against Parungao, and this federal suit against hospital affiliates challenging the underlying peer-review process.
- The Piper defamation action resulted in dismissal with prejudice by Illinois courts. Piper’s letters to Weatherby and St. Mary’s (on hospital letterhead) alleged Parungao was subject to "other action."
- The federal complaint alleges breach of contract, tortious interference, intentional infliction of emotional distress, and civil conspiracy based on the sham peer-review and the hospital’s alleged refusal to verify Parungao’s good standing, which impaired his ability to obtain privileges elsewhere.
- Defendants moved to dismiss on res judicata and Illinois’s single-refiling rule grounds; the district court dismissed, finding identity of causes and privity between Piper and the hospital defendants. Parungao appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether res judicata bars the federal suit | Parungao: privity between Piper and hospital defendants is unresolved; claims are different theories | Defendants: federal suit arises from same series of connected events as Piper and defendants are in privity; thus precluded | Court: Res judicata applies; claims arise from same transaction and parties are in privity |
| Whether the causes of action are identical (transactional test) | Parungao: federal claims address different underlying conduct (peer review) not just Piper’s letters | Defendants: both suits arise from same series of events that impaired his employment prospects | Court: Identity of causes satisfied under Illinois transactional test; different legal theories do not avoid preclusion |
| Whether privity exists between Piper and hospital defendants | Parungao: hospital may disclaim responsibility for Piper’s letters; no automatic privity | Defendants: Piper and hospital defended same interests; hospital vicariously liable for letters | Court: Privity found—Parungao’s own filings treated the hospital as responsible for Piper’s letters, aligning legal interests |
| Appropriateness of Rule 12(b)(6) dismissal based on affirmative defense | Parungao: res judicata/privity cannot be resolved on 12(b)(6) now | Defendants: judicially noticeable state-court record shows preclusion; dismissal appropriate where record plainly bars claim | Court: Dismissal appropriate because record and judicially noticeable filings show claims barred as a matter of law |
Key Cases Cited
- Anicich v. Home Depot U.S.A., Inc., 852 F.3d 643 (7th Cir. 2017) (standard for accepting complaint allegations on Rule 12(b)(6) review)
- Conopco, Inc. v. Roll Int’l, 231 F.3d 82 (2d Cir. 2000) (affirmative defenses may justify dismissal when barred on the face of the complaint and judicially noticeable records)
- Rose v. Board of Election Comm’rs for the City of Chicago, 815 F.3d 372 (7th Cir. 2016) (elements of Illinois res judicata/claim preclusion)
- Chicago Title Land Trust Co. v. Potash Corp. of Saskatchewan Sales Ltd., 664 F.3d 1075 (7th Cir. 2011) (Illinois transactional test—claims arising from same series of operative facts are precluded)
- River Park, Inc. v. City of Highland Park, 703 N.E.2d 883 (Ill. 1998) (Illinois transactional test for identity of the cause of action)
- Huon v. Johnson & Bell, Ltd., 757 F.3d 556 (7th Cir. 2014) (preclusion where different suits arose from same series of connected transactions)