Luсiano MANGANELLA, Plaintiff, Appellant, v. EVANSTON INSURANCE COMPANY, Defendant, Third-Party Plaintiff, Appellee, v. Jasmine Company, Inc., Third-Party Defendant.
No. 12-1137
United States Court of Appeals, First Circuit.
Nov. 27, 2012.
700 F.3d 585
At the resentencing hearing, the appellant sought to interject a belated double jeopardy claim with respect to count nine. The district court refused to consider his entreaty.
Double jeopardy “forbids successive prosecution and cumulative punishment for a greater and lesser included offense.” Brown v. Ohio, 432 U.S. 161, 169 (1977). Consequently, courts may not impose multiple punishments for what is essentially the same offense. Id. at 165; Allen v. Att‘y Gen. of Me., 80 F.3d 569, 572 & n. 3 (1st Cir.1996). While the appellant‘s claim of double jeopardy appears at first blush to fall within this proscription, there is a rub.
Here, the appellant‘s double jeopardy claim was fully matured and could have been advanced at the time of his first appeal. Yet he did not preserve it, and the original panel dismissed the сlaim on that basis. See Catalán-Roman, 585 F.3d at 472 n. 25.
The law of the case doctrine “bars a party from resurrecting issues that either were, or could have been, decided on an earlier appeal.” United States v. Matthews, 643 F.3d 9, 12-13 (1st Cir.2011). Hence, a successor appellate panel in the same case is normally bound to respect the decision of the original panel. Id. at 13. In this instance, there has been no material change in the applicable law between the time of the first appeal and the present time. The appellant‘s fleeting reference in his brief to the “serious injustice” arising out of the claimed double jeopardy violation is undone by our earlier observation that his “conviction on count nine does not and cannot affect his sentence, which is life imprisonment,” see Catalán-Roman, 585 F.3d at 472 n. 25; and, thus, the normal rule applies. Consequently, the law of the case doctrine binds us to honor the original panel‘s disposition. We therefore uphold the district court‘s refusal to take a fresh look at the double jeopardy claim (without prejudice, however, to whatever rights the appellant may have to рursue that claim in a petition brought under
We need go no further.4 For the reasons elucidated above, we reject the appellant‘s claims of error.
Affirmed.
Bruce S. Barnett, with whom Daniel E. Rosenfeld and DLA Piper LLP were on brief, for appellant.
Harvey Nosowitz, with whom Anderson & Krieger LLP was on brief, for appellee.
Before LYNCH, Chief Judge, SELYA and STAHL, Circuit Judges.
This insurance coverage dispute arises from charges of sexual harassment brought by a one-time employee against appellant Luciano Manganella, the former president of Jasmine Company, Inc. Manganella sought a defense to and indemnity for the harassment claims from appellee Evanston Insurаnce Co., Jasmine‘s liability insurance provider. The district court ruled that Manganella was not entitled to coverage from Evanston because, under the doctrine of issue preclusion, a prior arbitration between Manganella and the purchaser of his business conclusively established that Manganella‘s conduct fell within an exclusion to Evanston‘s insurance policy. After careful consideration, we affirm.
I. Facts & Background
Before the events giving rise to this action, Manganella was the president and sole shareholder of Jasmine, a clothing retailer thаt he founded in the 1970s. Donna Burgess, whose sexual harassment allegations against Manganella form the underlying claims here, was Jasmine‘s human resources manager from 1997 to 2006.
In 1998, a former Jasmine employee, Sonia Bawa, filed claims of sexual harassment against Jasmine based on Manganella‘s conduct. Soon thereafter, Jasmine purchased from Evanston the Employment Practices Liability Insurance Policy at issue here (the “Policy“). Jasmine‘s coverage from Evanston under the Policy consisted of a series of annually renewed one-yeаr installments. The Policy covers any “claim” that seeks “relief for a Wrongful Employment Practice” and is made and reported to Evanston during the policy period or an extended reporting period. A Wrongful Employment Practice includes, as relevant here, “conduct of an Insured with respect to [an] employee that allegedly culminated in violation of any state, federal or local civil rights or anti-discrimination law and/or fair employment practices law.” For a resulting claim to be covered, a Wrongful Employment Practice must have “happened” in its “entirety” during the policy period or after the retroactive date (here, April 28, 1999). Importantly, one of the Policy‘s exclusions (the “Disregard Exclusion“) bars coverage for claims based on “conduct . . . committed with wanton, willful, reckless or intentional disregard of any law or laws that is or are the foundation for the Claim.”
In July 2005, Manganella sold Jasmine to Lerner New York, Inc. for approximately $30 million. Manganella and Lerner executed a stock purchase agreement (“SPA“) to effectuate the sale and an employment agreement under which Manga
In May 2006, further allegations of sexual harassment by Manganella prompted Jasmine to hire an outside investigator, Stier Anderson LLC, which interviewed several employees, including Burgess; she recounted inappropriate comments that Manganella had made in the past. On June 22, 2006, as a result of conduct revealed by the investigation, Manganella was fired. In a letter to Manganellа, Lerner accused him of committing multiple Major Employment Breaches by sexually harassing four female employees and downloading sexually explicit images on company computers, all in violation of Lerner‘s Code of Conduct. Lerner demanded that Manganella agree to release the escrowed $7 million.
One week later, Lerner invoked the SPA‘s arbitration clause, contending that Manganella had forfeited the escrowed funds by committing a Major Employment Breach. The arbitration panel held ten days of hearings and received extensive written and oral argumentation. The panel issued its ruling in April 2007, finding that Manganella had “sexually propositioned several women employees and inappropriately touched and propositioned one of these employees,” in willful violation of Lerner‘s corporate Code of Conduct. The panel explained: “We find, despite his protestations to the contrary, that [Manganella] was well acquainted with the Company‘s policy on sexual harassment and other acts of inappropriatе conduct. We find thus that he did not comply with the policy and that his refusal was willful.”
The panel also found, however, that Lerner had failed to give Manganella notice of and an opportunity to remedy these violations, as required by the SPA. Consequently, the panel awarded Manganella the escrowed funds, along with interest and attorneys’ fees. The arbitration award was confirmed by a federal court in August 2007. Manganella v. Lerner N.Y., Inc., No. 07-cv-06250-RJH (S.D.N.Y. Aug. 7, 2007) (order confirming arbitration award).
On March 19, 2007 (roughly a month before the arbitration ended), Burgess filed a charge of discrimination against Manganella, Lerner, and Jasmine with the Massachusеtts Commission Against Discrimination (“MCAD“). The MCAD charge alleged that, “[t]hroughout her employment with Jasmine[ ], Manganella subjected Ms. Burgess to nearly constant physical and verbal sexual harassment,” including “inappropriate comments about Ms. Burgess‘[s] body, inappropriate touching,” and, eventually, coerced sexual activity on five separate occasions. Manganella also “made sexual comments about other women in Ms. Burgess‘[s] presence,” and threatened Burgess (and others) with physical violence.
Ten days after Burgess filed the MCAD chargе, Manganella notified Evanston of her claims and requested coverage under the Policy. Less than two weeks later, Evanston replied, denying coverage for Burgess‘s claims on the ground that it was “apparent” that the harassment alleged in her MCAD charge “did not happen in its entirety subsequent to the [April 28, 1999]
Manganella filed this action against Evanston in July 2009, seeking a ruling that Evanston was required under the Policy to defend and indеmnify him against Burgess‘s MCAD charge. He also alleged breaches of contract, breach of the duty of good faith and fair dealing, and violations of
II. Analysis
We review a grant of summary judgment de novo. Baker v. St. Paul Travelers Ins. Co., 670 F.3d 119, 125 (1st Cir.2012). Likewise, “[w]e review de novo the district court‘s application of the doctrine of issue preclusion because ‘[t]he applicability vel non of preclusion principles is a question of law.‘” Keystone Shipping Co. v. New Eng. Power Co., 109 F.3d 46, 50 (1st Cir.1997) (second alteration in original) (quoting Monarch Life Ins. Co. v. Ropes & Gray, 65 F.3d 973, 978 (1st Cir. 1995)).
The crux of this appeal is whether the district court properly applied the doctrine of issue preclusion to bar Manganella from litigating whether the Policy‘s Disregard Exclusion applies to the conduct alleged in Burgess‘s MCAD charge. As described above, the district court held that the arbitration between Lerner and Manganella had decided, in the affirmative, the crucial question of whether Manganеlla‘s acts, as alleged by Burgess, were committed with wanton, willful, reckless, or intentional disregard for the Massachusetts sexual harassment law that formed the basis for her claims against him. 746 F.Supp.2d at 348. Although the parties dispute whether Massachusetts or federal preclusion princi
Issue preclusion (also called collateral estoppel) “prevents a party from relitigating issues that have been previously adjudicated.” Rodríguez-García v. Miranda-Marín, 610 F.3d 756, 770 (1st Cir. 2010). The doctrine applies to issues of fact as well as those of law, Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980), and can apply where the subsequent proceeding involves a cause of action different from the first, see Comm‘r v. Sunnen, 333 U.S. 591, 601, 68 S.Ct. 715, 92 L.Ed. 898 (1948). Under modern preclusion doctrine, “the central question is ‘whether a party has had a full and fair opportunity for judicial resolution of the same issue.‘” Rodríguez-García, 610 F.3d at 771 (quoting Fiumara v. Fireman‘s Fund Ins. Cos., 746 F.2d 87, 92 (1st Cir.1984)).
Generally, final arbitral awards are affоrded the same preclusive effects as are prior court judgments. See FleetBoston Fin. Corp. v. Alt, 638 F.3d 70, 79 (1st Cir. 2011) (citing Wolf v. Gruntal & Co., 45 F.3d 524, 528 (1st Cir.1995)). As we have noted, however, “there may be particular difficulties” in applying preclusion principles to an arbitral award, especially where the reasoning behind the award is unexplained. Id. at 80. Thus, “it has been suggested that courts have discretion as to whether issue preclusion is appropriate” in the arbitration context. Id. (citing 18B Charles Alan Wright et al., Federal Practice & Procedure § 4475.1, at 518 (2d ed.2002)). Here, though, “[w]e need not consider that suggestion, as we find it clear that the outcome we reach is consistent with the traditional requirements.” Id.
Under those traditional requirements, issue preclusion may be applied to bar relitigation of an issue decided in an earlier action where: (1) the issues raised in the two actions are the same; (2) the issue was actually litigated in the earlier action; (3) the issue was determined by a valid and binding final judgment; and (4) the determination of the issue was necessary to that judgment. Id.; accord Mercado-Salinas v. Bart Enters. Int‘l, Ltd., 671 F.3d 12, 21-22 (1st Cir.2011). Here, Manganella argues that two of these predicates are missing: identity of the issues and necessity to the judgment. We begin with identity of the issues.
For issue preclusion to apply here, the arbitrators must have decided an issue “the same as the one presented” in this case. Smith v. Bayer Corp., — U.S. —, 131 S.Ct. 2368, 2376, 180 L.Ed.2d 341 (2011). The identity of the issues need not be absolute; rather, it is enough that the issues are in substance identical. See Montana v. United States, 440 U.S. 147, 155, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979) (asking “whether the issues presented [in the two actions] are in substance the same“). Further, the issue need not have been the ultimate issue decided by the arbitration; issue preclusion can extend to necessary intermediate findings, Rodríguez-García, 610 F.3d at 771, even where those findings are not explicit, Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 30-31 (1st Cir.1994). Nevertheless, the arbitrators must have effectively resolved the issue presented here: whether Manganella‘s conduct, as described in the MCAD charge, was committed “with wanton, willful, reckless or intentional disregard of” the Massachusetts sexual harassment law underlying the charge.
We think that Manganella overstates the differences between the Code of Conduct and the state law referenced in the Disregard Exclusion. The relevant portion of the Code provides:
We are committed to maintaining a workplace entirely free from illegal disсrimination or harassment. . . .
The term “harassment” may include unwelcome slurs and other offensive remarks, jokes and other verbal, graphic or unwelcome physical contact. Harassment may also include unwelcome sexual advances, requests for sexual favors or unwelcome or offensive touching and other verbal, graphic or physical conduct of a sexual nature. . . .
The applicable state law similarly provides that sexual harassment means:
sexual advances, requests for sexual favors, and other verbal or physiсal conduct of a sexual nature when (a) submission to or rejection of such advances, requests or conduct is made either explicitly or implicitly a term or condition of employment or as a basis for employment decisions; [or] (b) such advances, requests or conduct have the purpose or effect of unreasonably interfering with an individual‘s work performance by creating an intimidating, hostile, humiliating or sexually offensive work environment.
To be sure, the law does impose a severity requirement absent from the Code; the behavior described above is unlawful only if it involves a quid pro quo or “creat[es] an intimidating, hostile, humiliating or sexually offensive work environment.” But this requirement does not, as Manganella suggests, mean that a single incident cannot constitute unlawful sexual harassment. In fact, the Supreme Judicial Court has declined to require sexual harassment claims to be based on any particular number of incidents. See Gnerre v. Mass. Comm‘n Against Discrim., 402 Mass. 502, 524 N.E.2d 84, 88-89 (1988) (citing Coll.-Town, Div. of Interco, Inc. v. Mass. Comm‘n Against Discrim., 400 Mass. 156, 508 N.E.2d 587, 591 (1987)); see also Maltese v. Thacker, No. CA963864, 2000 WL 1180285, at *2 (Mass.Super.Ct. May 3, 2000) (“A single incident can, depending on the nature and severity of the conduct, constitute sexual harassment.“). Thus, the fact that the arbitrators did not expressly find that Manganella had propositioned any particular employee more than once does not mean that his conduct could not have run afoul of the law.
None of this is to say that we see no distinction between the standard imposed by the Code and that created by the law. Rather, the point is that the two standards are similar еnough that we are unable to discern a meaningful difference, on the facts of this case, between acting in willful violation of the former (which the arbitrators found Manganella to have done) and acting with wanton disregard of the latter
Manganella‘s fall-back position is that the two issues are nevertheless not the same because the arbitrators did not make any findings specific to Burgess herself. Thus, he contends, the arbitration could not have decided whether the conduct alleged in Burgess‘s MCAD charge was committed in disregard of the law. This argument, however, is impossible to square with Manganella‘s admission below that “Burgess is one of the Jasmine employees who the Arbitration panel found Mr. Manganella had sexually harassed.” In light of that concession, the only open question is whether Burgess was one of the “several” employees Manganella was found to have “sexually propositioned” or was instead the one employee he “inappropriately touched” and “propositioned.” But for present purposes, this distinction is immaterial; for the reasons given above, we do not see how Manganella could have undertaken any of this conduct without a wanton or reckless disregard for its legality. Thus, the lack of factual findings expressly tied to Burgess herself does not place the present issue beyond the scope of the arbitrators’ decision.
One final point bolsters our conclusion that the arbitrators effectively decided the issue presented here: proof of a willful violation of the Code and proof of conduct committed in disregard of the law would be extremely similar. See 18 Wright et al., supra, § 4417, at 413 n.2 (noting that, in defining the issues precluded by a prior action, courts consider, among other factors, whether there is a substantial overlap between the evidence or argument advanced in the two proceedings); accord Restatement (Second) of Judgments § 27 cmt. c (1982). Apart from the question of findings specific to Burgеss, discussed above, the only obvious difference in proof is that the evidence in the arbitration was geared toward showing Manganella‘s familiarity with the Code, whereas the evidence in a proceeding based on the Disregard Exclusion would be aimed at showing his familiarity with state law. But we believe that the arbitration sufficiently established this point; as the arbitrators found, Manganella was “quite familiar with the subject of sexual harassment,” having in 1998 updated Jasmine‘s company policy to reflect the same Massachusetts sexual harassment law that undergirded Burgеss‘s claims against him. Thus, we believe that a subsequent proceeding to litigate the applicability of the Disregard Exclusion would involve substantially the same discovery, testimony, and argument as did the arbitration.
Consequently, we turn to the other element of issue preclusion that Manganella contends is missing here: necessity to the judgment. Manganella asserts that the arbitrators’ finding that he engaged in sexual harassment in willful violation of Lerner‘s Code of Conduct was not essential to their ruling. Because the arbitrators’ decision ultimately turned on whether Lerner had given Manganella the contractually required notice of and opportunity to remedy his misdeeds, Manganella argues that the arbitrators could have reached the same result by simply assuming the validity of the harassment allegations and not making explicit findings thereon. Based on what was actually decided by the arbitrators, we disagree.
To begin with, although Manganella argues here that the arbitrators could have just assumed the truth of the harassment allegations, he did not ask them to do so.
In any event, Manganella‘s argument that the arbitrators’ findings as to his sexually harassing conduct were not necessary to the arbitral judgment is based on a misapprehension of the necessity-to-the-judgment requirement. We do not ask whether the resolution of an issue was necessary to reach the same outcome; rather, the inquiry is whether the issue was necessary to the decision actually rendered. See 18 Wright et al., supra, § 4421, at 548-49 (suggesting that courts should resist the urge “to speculаte that a prior decision could have been rested on narrower grounds than those actually chosen, so that resolution of the broader issues was not necessary to the decision“); cf. Rodríguez-García, 610 F.3d at 771. Here, the arbitrators’ determination that Manganella sexually harassed his employees in willful violation of the Code was necessary to the actual decision reached because the panel had to decide whether Lerner‘s undisputed failure to comply with the SPA‘s notice-and-remedy requirement was excusable. New York law, which govеrned the arbitration, sometimes allows non-breaching parties to eschew such contractually mandated measures, including where they would prove futile. See Wolff & Munier, Inc. v. Whiting-Turner Contracting Co., 946 F.2d 1003, 1009 (2d Cir. 1991); Sea Tow Servs. Int‘l, Inc. v. Pontin, 607 F.Supp.2d 378, 389 (E.D.N.Y.2009). To assess whether this doctrine excused Lerner‘s omission, the arbitrators weighed a raft of factors, including the specifics and severity of Manganella‘s conduct. Ultimately, they determined that, although Manganella‘s behavior was egregious and willfully violated the Code, notice was still feasible under the circumstances; in particular, they concluded that Manganella could have bеen given the requisite notice after being placed on administrative leave. The panel‘s factual findings as to Manganella‘s conduct were part and parcel of its resolution of this issue, and were thus “necessary intermediate findings,” to which we give preclusive effect. See Rodríguez-García, 610 F.3d at 771 (citation and emphasis omitted).2
In sum, the arbitration presented Manganella with the “full and fair opportunity” for adjudication of the issue at hand that is the centerpiece of modern issue preclusion doctrine. See id. (quoting Fiumara, 746 F.2d at 92). The extent of his harassing conduct and his knowledge that it was prohibited were vigorously litigated and were essential to the panel‘s judgment. Allowing Manganella to contest these
That conclusion, in turn, forecloses the other contentions that Manganella presses on appeal. Manganella avers that Evanston must reimburse him for the cost of the arbitration with Lerner because it was “reasonably related to the defense of” Burgess‘s harassment claims. But, because the Disregard Exclusion applies to Burgess‘s claims against Manganella, her claims were not covered and Evanston had no duty to defend Manganella against them, let alone to defend him in a proceeding “reasonably related” thereto.
Likewise, the applicability of the Disregard Exclusion is fatal to Manganella‘s state law claims, which allege breaches of contract and violations of
III. Conclusion
For the foregoing reasons, we affirm.
STAHL
CIRCUIT JUDGE