Dean F. HATCH; Mary L. Hatch, Plaintiffs, Appellants, v. TRAIL KING INDUSTRIES, INC., Defendant, Appellee.
No. 12-1473.
United States Court of Appeals, First Circuit.
Decided Nov. 2, 2012.
Heard Oct. 2, 2012.
Employees who—like the plaintiff—are near the endpoint of their normal work expectancy are especially vulnerable to the loss of retirement benefits. Where, as here, such an employee is unlawfully discharged, the district court has both the authority and the discretion to grant equitable relief to make him whole. The lower court‘s exercise of this authority in the case at hand is well within the bounds of that discretion.8
III. CONCLUSION
This case was tried cleverly, by skilled counsel on both sides, before an able judge and an impartial jury. The briefs on appeal are stellar. When all is said and done, however, the record is freighted with ambiguities. The jury resolved those ambiguities in favor of the plaintiff. Doing so was the jury‘s prerogative—indeed, its duty—and we cannot disturb the jury‘s resolution unless the record compels a contrary conclusion. With the lone exception that we have noted, it does not.
We need go no further. For the reasons elucidated in the foregoing pages, we affirm the judgment below, with only a single exception: we vacate the previously remitted award of emotional distress damages and direct the district court to order the plaintiff either to remit all of that award in excess of $200,000 or else undergo a new trial on that issue. The district court also must adjust its award of multiplied damages to reflect the plaintiff‘s response to this remittitur.
Affirmed in part, vacated in part, and remanded. Two-thirds costs shall be taxed in favor of the plaintiff.
Myles W. McDonough, with whom Christopher M. Reilly and Sloane and Walsh, LLP were on brief, for appellee.
Before LYNCH, Chief Judge, BOUDIN and LIPEZ, Circuit Judges.
LYNCH, Chief Judge.
This case involves the doctrine of claim preclusion.
Dean Hatch was severely injured in a workplace accident and sued Trail King, the custom manufacturer of the trailer involved in the accident, in October 2007. The sad details of the accident and resulting injuries are set forth in our opinion in Hatch v. Trail King Industries, Inc., 656 F.3d 59 (1st Cir.2011).
There, we affirmed a jury‘s finding, in September of 2010, that defendant had not been negligent nor in breach of any warranty, against claims of instructional error and error in the ruling on a motion in limine. Id. at 60-61. On January 19, 2010, in the trial court in that diversity case, plaintiffs had belatedly attempted to amend their complaint to add another claim, one under
This case, which started in 2010 and was stayed during the 2007 suit, concerns whether the plaintiffs may now maintain an independent suit for the c. 93A claims against Trail King. The district court thought not, for two reasons: (1) this case constituted impermissible claim-splitting; and (2) “having heard the evidence in the jury trial, [it] s[aw] no basis on which it could reach a different result,” because “the issues tried to the jury ... are identical to any meriting 93A consideration.” The trial court dismissed those claims with prejudice.
On appeal, plaintiffs argue broadly that
I.
The procedural history is important, so it is set forth in some detail. In October 2007, plaintiffs filed a complaint against Trail King asserting negligence, breach of warranty, and loss of consortium (the “2007 action“). On February 21, 2008, the parties submitted a joint statement to the district court setting a joint discovery plan and motion schedule, which in relevant part set a deadline of May 15, 2009 for amending or supplementing the pleadings. The district court accepted that proposed date as the deadline for filing amendments. Plaintiffs never requested an extension of the deadline to amend the pleadings and the court never altered it, although the trial court granted a number of extensions for the completion of discovery.
On January 15, 2010, Trail King moved for summary judgment. Four days later, on January 19, 2010, more than eight months after the deadline for amending the pleadings, and more than four months after the deadline for completion of fact discovery, plaintiffs moved the court for leave to file a second amended complaint, asserting claims under
Specifically, plaintiffs sought to add c. 93A unfair and deceptive act or practice claims for Trail King‘s alleged breach of warranty as well as for certain post-delivery conduct.1 Defendant opposed the motion for leave to amend, arguing that the amendment was futile because it failed to state a claim upon which relief could be granted.
Plaintiffs sought reconsideration, representing that “[t]he anticipated amendment would simply be to add a claim pursuant to
After being denied, plaintiffs filed a new action in Massachusetts Superior Court on June 14, 2010. This complaint asserted the exact same grounds for c. 93A relief that had been set forth in the proposed second amended complaint in the 2007 action: that as a matter of law, Trail King‘s breach of warranty constituted an unfair and deceptive act or practice, and that the four post-sale actions or inactions by defendant did too.
Defendants removed the case to federal court on diversity grounds on July 12, 2010. Trail King moved to dismiss the suit and for a stay in the alternative. The case was then transferred from Springfield to Boston and was assigned to the same judge who was presiding over the 2007 action and who had denied the proposed second amended complaint as untimely. The district court then stayed the c. 93A action, on August 5, 2010, and reserved ruling on defendant‘s motion to dismiss. In opposing defendant‘s motion to dismiss, plaintiffs expressly stated that they did not oppose the granting of a stay.
The 2007 action proceeded to a six-day jury trial.2 The jury returned a verdict in favor of defendant, rejecting both the negligence and breach of warranty claims, and the court entered judgment for the defendant on September 14, 2010.
Plaintiffs appealed the adverse verdict to this court. Plaintiffs challenged certain jury instructions and a ruling on a motion in limine, but not the trial court‘s denial of their motion for leave to amend, and we affirmed on August 29, 2011. Hatch, 656 F.3d at 59-61.
As to the action filed in 2010, on March 1, 2012, plaintiffs moved to transfer the stayed c. 93A action to the Springfield Division. The Boston district court denied the motion; it also reinstated Trail King‘s motion to dismiss. On April 11, 2012, the district court dismissed the case with prejudice, ruling that:
The court agrees with defendant Trail King that by filing a second and separate Chapter 93A case in Superior Court, plaintiffs have engaged in impermissible claim-splitting. Further, although the court recognizes that a judge may reach a different result on a 93A claim than the jurys [sic] verdict on non-93A claims, here the issues tried to the jury and reached in favor of the defendant (and affirmed by the First Circuit) are identical to any meriting 93A consideration. The court, having heard the evidence in the jury trial, see [sic] no basis on which it could reach a different result. The case is dismissed with prejudice and the clerk will close the case.
This timely appeal followed.
Plaintiffs present this case as being about whether a separate c. 93A action may be maintained after judgment had entered on the earlier action on non-c.93A claims arising out of the same transaction or occurrence. They argue that the preclusive effect of the decision in the 2007 action is to be determined by Massachusetts res judicata rules pursuant to the Supreme Court‘s decision in Semtek, 531 U.S. 497. From that premise, they base their argument on
Except as provided in section ten, recovering or failing to recover an award of damages or other relief in any administrative or judicial proceeding, except proceedings authorized by this section, by any person entitled to bring an action under this section, shall not constitute a bar to, or limitation upon relief authorized by this section.
They argue this means that claims brought under § 9 are excluded from the traditional rules of preclusion. The Massachusetts Supreme Judicial Court (“SJC“) has not provided an interpretation of this statutory provision. See Anderson v. Phoenix Inv. Counsel of Bos., Inc., 387 Mass. 444, 440 N.E.2d 1164, 1167 (1982) (stating that the SJC need not determine the modifying effect, if any, that the provision has on claim preclusion or issue preclusion).3 Plaintiffs do concede that c. 93A, § 9(8) was passed as part of an effort to supersede the ruling in Gordon v. Hardware Mutual Casualty Co., 361 Mass. 582, 281 N.E.2d 573 (1972), which required the exhaustion of administrative remedies as a condition of a § 9 claim, id. at 577; see Keen v. W. New Eng. Coll., 23 Mass. App. Ct. 84, 499 N.E.2d 310, 311 (1986), but they argue § 9(8) has a broader effect.
The question before us is not whether a separate c. 93A claim that has never been raised in a motion to amend in an earlier action can be maintained in a later separate action. Rather, the core question before us is whether plaintiffs may bring a second action asserting c. 93A claims when they earlier sought leave to amend their complaint to add the c. 93A claims, the proposed amendment was denied as untimely, the underlying case proceeded to a decision on the merits, the denial of leave to amend was not appealed, and judgment was entered. We hold that under these facts the doctrine of claim preclusion applies. That conclusion is unaltered by the language of
A. Standard of Review and Choice of Law
The parties dispute the standard of review that applies. Plaintiffs argue that we should review the district court‘s dismissal de novo. See Andrew Robinson Int‘l, Inc. v. Hartford Fire Ins. Co., 547 F.3d 48, 51 (1st Cir.2008)
We apply “the law that would be applied by state courts in the State in which the federal diversity court sits,” except that “in situations in which the state law is incompatible with federal interests,” federal law applies. Semtek, 531 U.S. at 508-09. The Supreme Court has imposed this rule because “any other rule would produce the sort of ‘forum-shopping ... and inequitable administration of the laws’ that Erie seeks to avoid.” Id. (alterations in original) (quoting Hanna v. Plumer, 380 U.S. 460, 468 (1965)). We agree with a number of circuit courts who have read Semtek as applying in successive diversity actions, as is the case here.4
There is no need to address whether Massachusetts law is incompatible with federal interests under Semtek because under either federal or Massachusetts law, the outcome is the same. This case does not present the sort of problems that Erie, 304 U.S. 64, sought to avoid.
Defendant relies heavily on a pre-Semtek decision, Anderson v. Phoenix Investment Counsel of Boston, Inc., 387 Mass. 444, 440 N.E.2d 1164 (1982), to argue that Massachusetts would apply federal, not state, claim preclusion law. There, the SJC stated that “[w]hen a State court is faced with the issue of determining the preclusive effect of a Federal court‘s judgment, it is the Federal law of res judicata which must be examined.” Id. at 1167. The SJC has applied that rule to federal diversity actions. See Whitehall Co. v. Barletta, 404 Mass. 497, 536 N.E.2d 333, 336 (1989) (applying the Anderson rule to an apparent diversity action). However, the SJC has not clarified the rule in light
B. Applying Federal Law, the c. 93A Claim is Claim Precluded
If federal law were to apply, plaintiffs lose. Under the federal law of claim preclusion, “a final judgment on the merits of an action precludes the parties or their privies from relitigating claims that were raised or could have been raised in that action.” Apparel Art Int‘l, Inc. v. Amertex Enters. Ltd., 48 F.3d 576, 583 (1st Cir.1995). Claim preclusion “relieve[s] parties of the cost and vexation of multiple lawsuits, conserve[s] judicial resources, and ... encourage[s] reliance on adjudication.” Breneman v. U.S. ex rel. FAA, 381 F.3d 33, 38 (1st Cir.2004) (alterations in original) (quoting Allen v. McCurry, 449 U.S. 90, 94 (1980)). As the Restatement (Second) of Judgments § 19 comment a (1982), says, “[t]he rule that a defendant‘s judgment acts as a bar to a second action on the same claim is based largely on the ground that fairness to the defendant, and sound judicial administration, require that at some point litigation over the particular controversy come to an end.”
The three elements of claim preclusion are: “(1) a final judgment on the merits in an earlier proceeding, (2) sufficient identicality between the causes of action asserted in the earlier and later suits, and (3) sufficient identicality between the parties in the two actions.” Breneman, 381 F.3d at 38 (quoting In re Colonial Mortg. Bankers Corp., 324 F.3d 12, 16 (1st Cir.2003)).
It is axiomatic that “claim preclusion doctrine requires [a party] to live with [its strategic] choices.” Airframe Sys., Inc. v. Raytheon Co., 601 F.3d 9, 11 (1st Cir.2010). Those strategic choices include whether to attempt to amend a complaint and whether to appeal a denial of such an attempt. When a party chooses to move for leave to amend its complaint and then not to appeal denial of that motion, the party “is not entitled to a second opportunity [in a later action] to litigate [the] claim” that the party sought to add. Id. at 16. Instead, the party‘s “recourse [is] to appeal, not to start a new action.” Id.; Johnson v. SCA Disposal Servs. of New Eng., Inc., 931 F.2d 970, 976 (1st Cir.1991) (“It is widely accepted that appeal is the plaintiff‘s only recourse” where a motion to amend is denied as untimely).
This is a well-accepted principle. As described by commentators,
It appears well-settled ... that claim preclusion bars a second action on the part excluded from the first action. This result is sound. The abstract theory that amendment should be freely allowed is widely honored in practice. There is likely to be good reason when the court that has control of the first action concludes that a party should not be allowed to advance matters so closely related to the action as to be part of a single claim. Unless the court can be persuaded to direct that denial of leave to amend is without prejudice to advancing the new matter in a separate action, preclusion should apply. Any error should be corrected by appeal in the first proceeding.
18 Wright & Miller, Federal Practice and Procedure § 4412 (footnotes omitted).
A number of our sister circuits have so held. “It is well settled that denial of leave to amend constitutes res judicata on the merits of the claims which were the subject of the proposed amended pleading.” King v. Hoover Group, Inc., 958 F.2d 219, 222-23 (8th Cir.1992) (citing Carter v. Money Tree Co., 532 F.2d 113, 115 (8th Cir.1976)).5
C. Because of the Failure to Appeal the Denial of the Motion to Amend, the c. 93A Claim Is Subject to Claim Preclusion Under Massachusetts Law
As noted, there is no relevant SJC precedent on the meaning of c. 93A, § 9(8). The SJC also has not directly answered whether, generally, the failure to appeal the denial of leave to amend, where the denial is on the grounds of untimeliness, and the underlying case proceeds to a final judgment, subjects the claims in the proposed amendment to later claim preclusion. See Shahidi v. Michael, No. 1624, 2005 WL 3294663, at *2 & n. 5 (Mass.App. Div. Nov. 22, 2005) (finding preclusion). Where, as here, that court has not spoken directly to an issue, “the federal court must make an informed prophecy as to the state court‘s likely stance.” Andrew Robinson Int‘l, Inc., 547 F.3d at 51. In completing that inquiry, we look to analogous state court decisions, persuasive opinions from courts of other jurisdictions,6 learned treatises, and any relevant policy rationales. Id.; Blinzler v. Marriott Int‘l, Inc., 81 F.3d 1148, 1151 (1st Cir.1996).
Massachusetts law recognizes claim preclusion, which “makes a valid final judgment conclusive on the parties
We have little doubt that the SJC would adopt the conventional rule that normally a failure to appeal from a denial of a motion to add a claim precludes the later assertion of such a claim in a new action. There are many reasons: Massachusetts law follows the Restatement and this is the Restatement result; the application of basic state preclusion principles reaches the result; and, significantly, an older Massachusetts SJC precedent virtually compels the conclusion.
“Massachusetts courts apply res judicata in a thoroughly conventional way,” Andrew Robinson Int‘l, Inc., 547 F.3d at 54, and they follow the Restatement. See, e.g., Bevilacqua v. Rodriguez, 460 Mass. 762, 955 N.E.2d 884, 898 (2011) (citing to section 11 of the Restatement (Second) of Judgments); Dep‘t of Revenue v. Jarvenpaa, 404 Mass. 177, 534 N.E.2d 286, 289 (1989) (looking to section 20); Osserman v. Jacobs, 369 Mass. 200, 339 N.E.2d 193, 196 (1975) (looking to the current section 19).
According to the Restatement, “[i]ncreasingly ... by statute, rule, or court decision, judgments not passing directly on the substance of the claim have come to operate as a bar,” because “fairness to the defendant, and sound judicial administration, require that at some point litigation over the particular controversy come to an end.” Restatement (Second) of Judgments § 19 cmt. a. Claims can be precluded where a plaintiff was not permitted to prove the claims during the first action because “they were not alleged in the complaint and an application to amend the complaint came too late.” Id. § 25 cmt. h. That is the case here.
Under Massachusetts law, the denial of the motion to amend is a final judgment. The parties were fully heard; the district court provided a reasoned opinion, stating that it denied leave to amend on the ground of untimeliness; and the decision was appealable because the case proceeded to a judgment on the merits, and it was in fact appealed. See Tausevich v. Bd. of Appeals of Stoughton, 402 Mass. 146, 521 N.E.2d 385, 387 (1988). Also, there was a dismissal on the merits. Cf.
Significantly, older SJC precedent virtually compels our conclusion. In the context of demurrers, the SJC has held that the pleading dismissed as defective bars a second action for the same cause of action where “the plaintiff had been granted leave to amend his earlier declaration and had neglected or refused to do so.” Osserman, 339 N.E.2d at 195 (Kaplan, J.) (quoting Hacker v. Beck, 325 Mass. 594, 91 N.E.2d 832, 834 (1950)) (internal quotation mark omitted).
In Osserman, Justice Kaplan explained that where plaintiffs have been given fair and ample opportunity to assert their rights, they are not “allowed to spurn the opportunity, suffer judgment, and, without testing the judgment by appeal, start another action on the same cause.” Id. Earlier cases were cited to this effect. See
This leaves the question of whether the SJC, in light of the language of
We recognize that there may be statutory exceptions to the normal rules of claim preclusion.
There is no support for plaintiffs’ argument that this case is like Department of Revenue v. Jarvenpaa, 534 N.E.2d 286, and that some public policy exists to override the application of traditional claim preclusion. There, the SJC held that an action by a minor child under
Nor was there any unfairness here. The plaintiffs themselves represented to the trial court that the c. 93A claims would essentially depend on the outcome of the warranty and negligence claims. In fact, the plaintiffs told the court that the proposed amendment “would simply be to add a claim pursuant to
D. Rejection of Plaintiffs’ Argument that Trail King Acquiesced or Is Estopped
Plaintiffs make a final argument that Trail King acquiesced to the separate 2010 action through its efforts to keep the c. 93A claims out of the 2007 action and that Trail King should be estopped from asserting a defense based on preclusion.
The argument is without merit and has been rejected in our cases. We have affirmed a dismissal on grounds of res judicata where a defendant had first opposed consolidation of two cases. Diversified Foods, Inc. v. First Nat‘l Bank of Bos., 985 F.2d 27, 31 (1st Cir.1993) (“[W]hen a plaintiff has chosen to bring two lawsuits in the same time frame relating to the same operative facts, it is hard to see why the defendant should not be able to resist consolidation on proper grounds, such as undue delay.“); see also Smith v. Smith, No. 111386, 2011 WL 7090711, at *6 (Mass.Super.Ct. Nov. 15, 2011) (rejecting, as without merit, an argument that a court expressed an intent to allow separate actions when it denied a motion to amend). So too here.
Likewise, any estoppel argument asserted against Trail King fails. Trail King‘s positions were not inconsistent, the district court was not misled, and Trail King did not seek an unfair advantage. See New Hampshire v. Maine, 532 U.S. 742, 750-51 (2001);
III.
We stress that our decision does not address the question of whether the language of
Nor do we address the district court‘s second ground—that based on the evidence it heard at trial, which plaintiffs identified as going as well to the c. 93A claims, it would have denied the c. 93A claims in any event.
Affirmed.