E. Frank Griswold, III v. County of Hillsborough

• Court: Court of Appeals for the Eleventh Circuit
• Decided: March 11, 2010
• Docket: 09-12421
• Status: Published

Opinion

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________ FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT No. 09-12421 MARCH 11, 2010 ________________________ JOHN LEY CLERK D. C. Docket No. 08-02066-CV-T-24-MAP

E. FRANK GRISWOLD, III,

Plaintiff-Appellant,

versus

COUNTY OF HILLSBOROUGH, FLORIDA GOVERNMENT, HILLSBOROUGH COUNTY PUBLIC TRANSPORTATION COMMISSION, DAVID MICHAEL CARR, individually, et al.,

Defendants-Appellees.

________________________

Appeal from the United States District Court for the Middle District of Florida _________________________

(March 11, 2010)

Before BLACK, MARCUS and HIGGINBOTHAM,* Circuit Judges.

BLACK, Circuit Judge:

* Honorable Patrick E. Higginbotham, United States Circuit Judge for the Fifth Circuit, sitting by designation. Appellant E. Frank Griswold is the president and sole shareholder of two

businesses, Med Evac, Inc. and Med Evac, LLC (the Companies), that provide

emergency medical transportation services. Griswold, a disabled veteran, argues

that Appellees violated his rights under the Veterans Benefits Act of 2003, Pub. L.

No. 108-183, § 36, 117 Stat. 2651, 2662 (codified at 15 U.S.C. § 657f (2003)) (the

Veterans Act), by interfering with the Companies’ ability to obtain certain

government contracts. The district court found that Griswold’s claims are barred

under the doctrine of res judicata due to earlier litigation brought by the

Companies arising from the same facts. We affirm the judgment of the district

court.

I. BACKGROUND

The Veterans Act provides contract preferences for small businesses owned

by veterans who were disabled due to military service. See 15 U.S.C. § 657f .

According to Griswold, because he was the only service-disabled veteran in the

State of Florida who was able to compete for emergency medical transportation

contracts, he was entitled to such contracts under the quota system of the Veterans

Act.

Griswold advanced several claims against Appellees, County of

Hillsborough, Hillsborough County Public Transportation Commission (HCPTC),

2 and David Michael Carr,1 for allegedly interfering with his ability to obtain

government contracts he was entitled to receive under the Veterans Act. Griswold

contends Appellees prevented him from receiving the government contracts by

inappropriately delaying the consideration and issuance of a certificate of public

convenience and necessity (COPCN) needed to operate an ambulance service

business in Hillsborough County. Specifically, Griswold advanced claims: (1)

under 42 U.S.C. §§ 1981, 1983, and 1985 for violations of his rights under the

Veterans Act; (2) for tortious interference with prospective business contracts; and

(3) for punitive damages.

In a previous suit, Griswold and the Companies sued Appellees and others

for conspiring to monopolize the ambulance business. The complaint alleged

Appellees and others had engaged in unlawful practices that restricted competition

during the time in which the Companies filed their COPCN applications, including

actions taken to delay the applications’ approval. Although Griswold was

dismissed from the prior litigation because he personally suffered no injury and

lacked standing to assert the Companies’ antitrust claims, judgment was entered

against the Companies.

1 Carr was the co-owner of a competing ambulance company.

3 Appellees filed two motions to dismiss, arguing that Griswold’s claims were

barred under the doctrine of res judicata. The district court granted Appellees’

motions in two separate orders.2 The district court held that Griswold was in

privity with the Companies, and thus could be bound by the prior litigation even

though he was not a party, “[b]ecause as the sole shareholder and President of the

businesses, the [Companies] were ‘so closely aligned to [Griswold’s] interest as to

be his virtual representative.’” The court also found both suits involved the same

cause of action. The court held that both cases arose from a common nucleus of

operative facts—the alleged delay of the Companies’ COPCN applications—and

that the Companies could have raised Griswold’s claims in the prior proceeding

since the Veteran’s Act confers rights on businesses owned by disabled veterans

rather than on the individual veterans themselves.

II. STANDARD OF REVIEW

The district court’s application of res judicata is a question of law which is

reviewed de novo. EEOC v. Pemco Aeroplex, Inc., 383 F.3d 1280, 1285 (11th Cir.

2004). “However, whether a party is in privity with another for preclusion

2 Appellee Michael Carr’s motion to dismiss was granted on December 16, 2008, and Hillsborough County’s motion to dismiss was granted on April 7, 2009.

4 purposes is a question of fact that is reviewed for clear error.” Id.; see also Hart v.

Yamaha-Parts Distributors, Inc., 787 F.2d 1468, 1472 (11th Cir. 1986).

III. DISCUSSION

Under the doctrine of res judicata, a claim is barred by prior litigation if:

“(1) there is a final judgment on the merits; (2) the decision was rendered by a

court of competent jurisdiction; (3) the parties, or those in privity with them, are

identical in both suits; and (4) the same cause of action is involved in both cases.”

Ragsdale v. Rubbermaid, Inc., 193 F.3d 1235, 1238 (11th Cir. 1999). The parties

do not dispute that the prior suit involved a final judgment on the merits by a court

of competent jurisdiction. Res judicata is thus appropriate if the district court did

not err by finding: (a) Griswold was in privity with the Companies; and (b) the

cases involved the same cause of action.

A. Privity

The Supreme Court recently clarified the use of nonparty preclusion in

Taylor v. Sturgell, 128 S. Ct. 2161, 2172–73 (2008). As a general rule, “one is not

bound by a judgment in personam in a litigation in which he is not designated as a

party or to which he has not been made a party by service of process.” Id. at 2171

(quoting Hansberry v. Lee, 311 U.S. 32, 40, 61 S. Ct. 115, 117 (1940)). The rule

against nonparty preclusion, however, is subject to six categories of exceptions.

5 Id. at 2172. A court may apply nonparty preclusion if: (1) the nonparty agreed to

be bound by the litigation of others; (2) a substantive legal relationship existed

between the person to be bound and a party to the judgment; (3) the nonparty was

adequately represented by someone who was a party to the suit; (4) the nonparty

assumed control over the litigation in which the judgment was issued; (5) a party

attempted to relitigate issues through a proxy; or (6) a statutory scheme foreclosed

successive litigation by nonlitigants. See id. at 2172–73.

While announcing the six categories of exceptions listed above, the Taylor

Court also explicitly rejected the virtual representation exception previously used

in this Circuit and elsewhere. See id. at 2178. In this Circuit, “[t]he doctrine of

virtual representation provide[d] in essence that ‘a person may be bound by a

judgment even though not a party if one of the parties to the suit is so closely

aligned with his interests as to be his virtual representative.’” Pemco Aeroplex,

Inc., 383 F.3d at 1287 (quoting Aerojet-Gen. Corp. v. Askew, 511 F.2d 710, 717

(5th Cir. 1975)). The Court in Taylor found that the virtual representation

exception’s “amorphous balancing test” threatened to bypass the limitations found

in the Court’s enumerated exceptions and burdened district courts with “wide-

ranging, time-consuming, and expensive discovery.” Taylor, 128 S. Ct. at

2175–76.

6 The Taylor Court, however, recognized that “[m]any opinions use the term

‘virtual representation’ in reaching results at least arguably defensible on

established grounds. In these cases, dropping the ‘virtual representation’ label

would lead to clearer analysis with little, if any, change in outcomes.” Id. at 2178.

(internal citations omitted). In Taylor, although the District of Columbia Circuit

applied the virtual representation exception, the Supreme Court thus considered

whether its decision could be upheld under one of the six established exceptions.

Id. at 2178–79.

This Court will therefore affirm the district court’s order despite its

erroneous use of the virtual representation exception if its decision can be upheld

under one of the six exceptions enumerated in Taylor. The district court held that

Griswold was in privity with the Companies because, “as the sole shareholder and

President” of the Companies, his interests were “closely aligned” with those of the

Companies in the prior litigation. The district court’s analysis remains valid

because, although a court may no longer find privity based solely on a similarity of

interests, Griswold used his relationship with the Companies to control the prior

litigation.

The Supreme Court explained in Taylor that a “nonparty is bound by a

judgment if she ‘assume[d] control’ over the litigation in which that judgment was

7 rendered. Because such a person has had ‘the opportunity to present proofs and

argument,’ he has already ‘had his day in court’ even though he was not a formal

party to the litigation.” 128 S. Ct. 2173 (internal citations omitted). As

Griswold’s counsel conceded at oral argument, Griswold had complete control

over the prior litigation as the Companies’ president and sole shareholder.3 The

district court therefore did not err by holding that Griswold was in privity with the

Companies.4

B. Same Cause of Action

“[I]f a case arises out of the same nucleus of operative facts, or is based

upon the same factual predicate, as a former action, . . . the two cases are really the

same ‘claim’ or ‘cause of action’ for purposes of res judicata.” Ragsdale, 193

F.3d at 1239 (quoting Citibank, N.A. v. Data Lease Fin. Corp., 904 F.2d 1498,

1503 (11th Cir. 1990)). However, res judicata bars only those claims that could

have been raised in the prior litigation. Id. at 1238.

Griswold does not dispute that the claims asserted in the current litigation

arose from the same nucleus of operative facts as those involved in the prior

3 At oral argument, Griswold’s counsel also “agree[d] that [Griswold] would be barred from bringing claims that the Company should have brought” in the prior litigation. 4 Although the adequate representation exception also likely applies, we need not reach that issue given our finding on the control exception.

8 litigation. Both cases arose from the same allegedly unlawful delay in the

Companies’ COPCN applications. Instead, Griswold argues res judicata should

not apply because the Companies lacked standing to bring claims under the

Veterans Act.5

The Companies had standing to bring Griswold’s claims, however, because

he does not possess any rights under the Veterans Act that are distinguishable

from those granted to the Companies. The Veterans Act establishes the

Procurement Program for Small Business Concerns Owned and Controlled by

Service Disabled Veterans (SDVOSBC), which permits a contracting officer to

award contracts on the basis of competition restricted to “small business concerns

owned and controlled by service-disabled veterans.” See 15 U.S.C. § 657f. While

the SDVOSBC enabling legislation and associated administrative regulations

repeatedly refer to contract preferences for small businesses owned by disabled

veterans, they do not confer any rights directly on the veterans themselves. See 15

U.S.C. § 657f; 13 C.F.R. § 125.8(g); 13 C.F.R. § 125.14; 48 C.F.R. § 6.206; 48

C.F.R. § 18.116. The Companies therefore could have advanced Griswold’s claims

in the prior litigation, making them subject to claim preclusion.

5 Although Griswold’s complaint asserts multiple claims, each claim is based on alleged violations of the Veterans Act.

9 C. Manifest Injustice Exception

Griswold further argues the district court erred by failing to apply a

manifest injustice exception. The Supreme Court, however, has cautioned against

departing from accepted principles of res judicata. In Federated Department

Stores, Inc. v. Moitie, the Court explained that “[t]he doctrine of res judicata

serves vital public interests beyond any individual judge’s ad hoc determination of

the equities in a particular case. There is simply ‘no principle of law or equity

which sanctions the rejection by a federal court of the salutary principle of res

judicata.’” 452 U.S. 394, 401, 101 S. Ct. 2424, 2429 (1981) (quoting Heiser v.

Woodruff, 327 U.S. 726, 733, 66 S. Ct. 853, 856 (1946)). Even if a manifest

injustice exception were to exist, the application of res judicata would not be

unjust in this case. Griswold could have advanced claims under the Veterans Act

during his control of the prior litigation and thus has already had his day in court.

IV. CONCLUSION

The district court did not err by holding that Griswold was in privity with

the Companies in the prior litigation and that both suits involved the same cause of

action. We therefore affirm the district court’s order granting Appellees’ motion

to dismiss on the grounds of res judicata.

AFFIRMED.