Headwaters Inc., an Oregon Non-Profit Corporation Forest Conservation Council v. U.S. Forest Service

382 F.3d 1025, 34 Envtl. L. Rep. (Envtl. Law Inst.) 20094, 2004 U.S. App. LEXIS 18930, 2004 WL 1977666

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 8, 2004
• Docket: 01-35898
• Status: Published

Opinions

Opinion by Judge HUG; Dissent by Judge BERZON.

HUG, Circuit Judge:

This case presents a problem peculiar to public law cases. The plaintiffs in this case are suing to vindicate a public right that has already been litigated by other environmental groups. The plaintiffs contest the validity of sales of timber made by the Forest Service. Those particular sales, however, have already been challenged by other environmental groups using the same arguments that the plaintiffs now present. We agree with the district court that the current plaintiffs interests were virtually represented by the previous groups, so we affirm the district court’s dismissal of the case on res judicata grounds.

Headwaters, Inc. and the Forest Conservation Council (collectively “Headwaters”) filed suit against the United States Forest Service seeking declaratory and in-junctive relief for alleged violations of the National Environmental Policy Act (“NEPA”), 42 U.S.C. §§ 4321-4370, the National Forest Management Act (“NFMA”), 16 U.S.C. §§ 1600-1687, and the Administrative Procedures Acts (“APA”), 5 U.S.C. §§ 701-706 in the Rogue River National Forest. The district court dismissed the complaint as barred by res judicata. Headwaters v. United States Forest Service, 159 F.Supp.2d 1253, 1258 (D.Or.2001). We have jurisdiction based upon 28 U.S.C. § 1291, and affirm.

I. Background

On May 13, 1999, six environmental groups and two individuals¹ (“American Lands litigants”) filed suit against the Forest Service challenging various timber sales, including the Beaver-Newt and Silver Fork Timber Sales. American Lands ZAlliance v. Williams, No. 99-697-AA (D.Or.1999). The complaint alleged that the Forest Service’s approval of the sales violated NEPA, NFMA, and the APA. Both the Beaver-Newt and Silver Fork areas are located within the Rogue River National Forest in southwestern Oregon.

On December 13, 1999, pursuant to a settlement agreement, the American Lands litigants signed a stipulation of dismissal of the amended complaint with prejudice. On January 19, 2000, District Judge Ann Aiken entered judgment dismissing the action with prejudice.

On February 21, 2001, the Klamath-Siskiyou Wildlands Center (“Klamath-Sis-kiyou”) filed suit against the Forest Service alleging that the approval of the Beaver-Newt and Silver Fork Timber Sales violated NEPA, NFMA, and the APA. Klamath-Siskiyou Wildlands Center v. United States Forest Service, No. 01-3018-HO (D.Or.2001). The Forest Service moved for judgment on the pleadings based upon res judicata because Klamath-Siskiyou had been a named plaintiff in the American Lands suit. In response, on June 1, 2001, Klamath-Siskiyou filed a motion for relief from the judgment which conceded that res judicata would bar the lawsuit, but argued that the court should grant relief from the American Lands judgment pursuant to Federal Rule of Civil Procedure 60(b). The Rule 60(b) motion was based upon the allegation that the attorney in the American Lands suit did not have authority to enter into the settlement agreement. On July 2, 2001, Judge Michael Hogan granted the Forest Service’s motion for judgment on the pleadings and dismissed the action without prejudice. Klamath-Siskiyou did not appeal that judgment.

Three days later, on July 5, 2001, Headwaters filed the present suit against the Forest Service. Headwaters’ complaint is virtually identical to the complaint filed by Klamath-Siskiyou, and Headwaters is represented by the same counsel that represented Klamath-Siski-you in the prior litigation. The complaint again alleges violations of NEPA, NFMA, and the APA as a result of the Beaver-Newt and Silver Fork Timber Sales. On July 26, 2001, Judge Hogan sua sponte dismissed the new complaint with prejudice on res judicata grounds. Headwaters, 159 F.Supp.2d at 1258. Headwaters appeals.

II. Standard of Review

A district court’s judgment based upon res judicata is a mixed question of law and fact in which legal issues predominate and is reviewed de novo. Gregory v. Widnall, 153 F.3d 1071, 1074 (9th Cir.1998); United States v. Geophysical Corp., 732 F.2d 693, 697 (9th Cir.1984). “[I]f a court is on notice that it has previously decided the issue presented, the court may dismiss the action sua sponte, even though the defense has not been raised.” Arizona v. California, 530 U.S. 392, 412, 120 S.Ct. 2304, 147 L.Ed.2d 374 (2000) (quotation marks and citation omitted). “This result is fully consistent with the policies underlying res judicata: it is not based solely on the defendant’s interest in avoiding the burdens of twice [or thrice] defending a suit, but is also based on the avoidance of unnecessary judicial waste.” Id. (citation omitted).

III. Discussion

“The doctrine of res judicata provides that a final judgment on the merits bars further claims by parties or their privies based on the same cause of action.” In re Schimmels, 127 F.3d 875, 881 (9th Cir.1997) (internal quotation marks omitted). “The application of this doctrine is central to the purpose for which civil courts have been established, the conclusive resolution of disputes within their jurisdiction.” Id. The preclusion doctrine encompasses a vindication of public rights by “avoiding inconsistent results and preserving judicial economy.” Clements v. Airport Auth., 69 F.3d 321, 330 (9th Cir.1995).

The elements necessary to establish res judicata are: “(1) an identity of claims, (2) a final judgment on the merits, and (3) privity between parties.” Tahoe-Sierra, 322 F.3d at 1077 (quotation marks and citation omitted); Western Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir.1997). We examine each of these elements in turn.

A. Identity of Claims

In determining whether the present dispute contains an identity of claims with the prior litigation, the Ninth Circuit considers: Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir.1982) (internal citations omitted).

(1) [Wjhether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of the second action; (2) whether substantially the same evidence is presented in the two actions; (3) whether the two suits involve infringement of the same right; and (4) whether the two suits arise out of the same transactional nucleus of facts. The last of these criteria is the most important.

Headwaters’ suit clearly contains an identity of claims with the American Lands and the Klamath-Siskiyou suits. Headwaters’ complaint alleges an infringement of the same right and arises out of the same nucleus of facts that were present in both the American Lands and Kla-mathr-Siskiyou litigation. Headwaters’ complaint challenges the timber sales on the grounds that the Forest Service is in violations of NEPA, NFMA, and the APA. All three of these claims were present in the prior suits.² Further, the Beaver-Newt and Silver Fork timber sales are the underlying “nucleus of facts” that forms the basis for all three of these suits. Finally, if this court were to rule on the claims that are presented it would have an effect on the prior judgment in the American Lands litigation.

Because the complaint alleges the same causes of action stemming from the same nucleus of facts, we hold that there exists an identity of claims.

B. Final Judgment on the Merits

The dismissal of an action with prejudice constitutes a final judgment on the merits and precludes a party from reasserting the same claims in a subsequent action. International Union of Operating Engineers v. Karr, 994 F.2d 1426, 1429(9th Cir.1993); see Lawrence v. Stein-ford Holding B.V. (In re Dominelli), 820 F.2d 313, 316-17 (9th Cir.1987) (dismissal of action with prejudice pursuant to a settlement agreement constitutes a final judgment on the merits and precludes parties from reasserting the same claims in a subsequent action).

The district court in American Lands entered a final judgment on the merits when it dismissed the action with prejudice pursuant to the stipulated dismissal. Based upon this stipulated dismissal, the court in KlamatL-Siskiyou dismissed the case. We hold that because of the dismissal of the action with prejudice, there exists a final judgment on the merits.

C. Privity

Privity is a flexible concept, dependent on the particular relationship between parties in each individual set of cases. Tahoe-Sierra, 322 F.3d at 1081-82. Federal courts have deemed several relationships “sufficiently close” to justify a finding of “privity” and, therefore, preclusion under the doctrine of res judicata:

“First, a non-party who has succeeded to a party’s interest in property is bound by any prior judgment against the party. Second, a non-party who controlled the original suit will be bound by the resulting judgment. Third, federal courts will bind a non-party whose interests were represented adequately by a party in the original suit.” In addition, “privity” has been found where there is a “substantial identity” between the party and nonparty, where the nonparty “had a significant interest and participated in the pri- or action,” and where the interests of the nonparty and party are “so closely aligned as to be virtually representative.” Finally, a relationship of privity can be said to exist when there is an “express or implied legal relationship by which parties to the first suit are accountable to non-parties who file a subsequent suit with identical issues.”

Id. at 1082 (quoting In re Schimmels, 127 F.3d at 881).

“Courts are no longer bound by rigid definitions of parties or their privies for the purposes of applying collateral es-toppel or res judicata.” United States v. ITT Rayonier, Inc., 627 F.2d 996, 1003 (9th Cir.1980). However, because non-party preclusion is “an exception to the deep-rooted historic tradition that everyone should have his own day in court, courts must ensure that the relationship between the party to the original suit and the party sought to be precluded in the later suit is sufficiently close to justify preclusion.” Tyus v. Schoemehl, 93 F.3d 449, 454 (8th Cir.1996) (internal quotation marks and citations omitted).

“Privity between parties exists when a party is so identified in interest with a party to former litigation that he represents precisely the same right in respect to the subject matter involved.” Stratosphere Litigation L.L.C. v. Grand Casinos, Inc., 298 F.3d 1137, 1142 n. 3 (9th Cir.2002) (quoting In re Schimmels, 127 F.3d at 881). “Even when the parties are not identical, privity may exist if there is substantial identity between parties, that is, a sufficient commonality of interest.” Tahoe-Sierra, 322 F.3d at 1081(internal quotation marks and citations omitted); see In re Gottheiner, 703 F.2d 1136, 1140 (9th Cir.1983); Shaw v. Hahn, 56 F.3d 1128, 1131-32 (9th Cir.1995) (privity found when the interests of the party in the subsequent action were shared with and adequately represented by the party in the former action); ITT Rayonier, Inc., 627 F.2d at 1003(privity may exist when interests are represented by one with authority to do so).

In this case, privity exists between Headwaters with the litigants in both the Klamath-Siskiyou and American Lands litigation. The stated interests of litigants are not simply “closely aligned;” they are the same. The relief sought is also identical. The parties have not sought recognition of any interest peculiar to themselves but rather a vindication of the public right to require Forest Service compliance with NEPA and NFMA. See Richards v. Jefferson County, 517 U.S. 793, 803, 116 S.Ct. 1761, 135 L.Ed.2d 76 (1996) (concerns regarding the broad application of preclusion are lessened when the suit at issue raises claims based upon public law rather than private rights). In the public law context, the number of plaintiffs with standing is potentially limitless. See Los Angeles Branch NAACP v. Los Angeles Unified Sch. Dist., 750 F.2d 731, 741 (9th Cir.1984) (en banc) (litigants were precluded from challenging segregation in public schools because the matter had already been litigated in the state courts). Concerns of judicial economy and cost to defendants, while present in every suit, are particularly important in these cases. Tyus, 93 F.3d at 456.

A deliberate attempt by litigants to evade the prior judgment of the court is a factor to be considered in the privity analysis. See Tahoe-Sierra, 322 F.3d at 1084; see also Tice v. American Airlines, 162 F.3d 966, 971 (7th Cir.1998) (privity can be found when there exists deliberate maneuvering to avoid the effects of the judgment). Three days after the complaint which Klamath-Siskiyou, a named party in the American Lands litigation, filed was dismissed, Headwaters filed a virtually identical complaint with much of the language taken verbatim. Headwaters’ attorney, who also was the attorney for Klamath-Siskiyou, filed the complaint with the only appreciable difference between the documents being the names of the litigants. A finding of privity is not appropriate simply because the same attorney represented parties in prior and subsequent proceedings, South Central Bell Telephone Co. v. Alabama, 526 U.S. 160, 168, 119 S.Ct. 1180, 143 L.Ed.2d 258 (1999), but, when as here, a tactical decision is made to manipulate the court’s decision and avoid the preclusive effect of a prior judgment, privity can be properly found. See Tahoe-Sierra, 322 F.3d at 1081; Tyus, 93 F.3d at 455.

Knowingly refiling a decided action under another party name not only wastes scarce judicial resources but also shows corrosive disrespect for the finality of the decision. Were we to hold otherwise, groups would be free to attack a judgment ad infinitum by arranging for successive actions leaving the Forest Service’s ability to regulate the National Forests perpetually in flux. Tahoe-Sierra, 322 F.3d at 1084; see Alpert’s Newspaper Delivery Inc. v. New York Times Co., 876 F.2d 266, 270 (2d Cir.1989)(finding privity even when the association was not itself a party, but provided substantial “tactical and financial help” to the parties in both actions). Further, the ability of groups to continually bring successive suits based upon the same cause of action and nucleus of facts, calls into question the Federal courts’ ability ever to settle a case based upon public law.

Judge Berzon contends in her dissent that stare decisis is all of the protection that the Forest Service needs against repeat litigation because once a decision has been rendered by this court it would bind future panels of this court and the district court. Although we agree that the doctrine of stare decisis would prevent inconsistent results in successive litigation on the same issue, the purpose behind the principle of res judicata is that the Forest Service should not have to litigate successive claims on the same issue after it has been resolved once. See Schimmels, 127 F.3d at 881. It is as much the burden of repeated litigation as the risk of inconsistent results that justifies resolving this case on res judicata grounds. See Clements, 69 F.3d at 330.

Judge Berzon’s dissent advances the novel theory that in order for the Forest Service to avoid successive repeat litigation of the same public interest, it must treat the litigation, which was not brought as a class action, as through it were a class action under Fed.R.Civ.P. 23(c). We know of no authority for such a proposition.

Reviewing courts properly apply fairly strict scrutiny to sua sponte dismissals on the basis of res judicata. Ordinarily, the adversarial system is likely to provide a more dependable basis for resolving such questions as privity and identity of issues involved in cases of this kind. We are not unmindful of these concerns. However, in this case, it is difficult to imagine a successful argument that could be mounted upon exhaustive briefing and lengthy hearings to show that the legitimate issues and interests of the litigants could be more accurately determined by protracted litigation. Indeed, in terms of both judicial economy and the husbanding of client resources, it would appear that hiring more attorneys to present more argument in this case would be a spectacular waste of resources.

Concerns regarding the protections afforded potential litigants in the public law areas are easily appeased. The district court was quite right in admonishing the litigants that the proper method to attack the American Lands judgment was directly and not collaterally through the refiling of this suit. Headwaters, 159 F.Supp.2d at 1258. Klamath-Siskiyou sought to challenge the American Lands judgment by filing a Rule 60(b) motion in the Klamath-Siskiyou action. The proper method to have challenged the American Lands judgment was to have filed a Rule 60(b) motion in that ease. Klamath-Siskiyou did not challenge the judgment rendered in the second action it brought, either by a 60(b) motion or by an appeal. Instead the attorney for Klamath-Siskiyou filed a virtually identical suit three days later, substituting a different named plaintiff. The doctrine of res judicata is not so easily avoided.

IV. Conclusion

We hold that Headwaters’ complaint was correctly barred by res judicata because there exists in the present dispute, an identity of claims, a final judgment on the merits and privity between Headwaters and the prior litigants in both the American Lands and Klamath-Siskiyou litigation. Therefore, the district court’s decision is affirmed.

AFFIRMED.

1 . The named plaintiffs included: American Lands Alliance, League of Wilderness Defenders, Oregon Wildlife Federation, Santiam Watershed Guardians, Friends of Breitenbush Cascades, Klamath-Siskiyou Wildlands Center, Gregory J. Dyson, and John Rancher.

2 . Each of the six environmental groups in the American Lands litigation and the two environmental groups filing the Headwaters complaint pursued these three claims on behalf of the public to prevent the timber sales for violation of these laws. All of them expressed their standing to assert this public interest for essentially the same reason: the enjoyment of these forest areas by their members. This standing was expressed in somewhat different language, but all involved their particular use of the forest that gave them standing to raise, on behalf of the public, the contention that these three laws had been violated.

The fact that Headwaters, Inc., and the Forest Conservation Council expressed the basis for their standing in slightly different ways did not give them separate claims, as Judge Berzon’s dissent suggests. It only afforded each standing to assert a claim on behalf of the public.