Reppert v. Marvin Lumber & Cedar Co.

United States Court of Appeals
For the First Circuit

No. 03-2234

SIBLEY P. REPPERT and
CHRISTINE VEZETINSKI,

Plaintiffs, Appellants,

v.

MARVIN LUMBER AND CEDAR CO., INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]

Before

Torruella and Lipez, Circuit Judges,
and Lisi,* District Judge.

Michael J. Barkoff, for appellants.
Thomas H. Boyd, with whom Charles (C.J.) Schoenwetter,
Winthrop & Weinstine, P.A., Posternak Blankstein & Lund, LLP,
Joseph P. Crimmins and Jennifer L. Finger, were on brief, for
appellee.

February 27, 2004

*
Of the District of Rhode Island, sitting by designation.
 TORRUELLA, Circuit Judge. This is an appeal from an

order and judgment granting defendant-appellee Marvin Lumber and

Cedar Co., Inc.'s ("Marvin Lumber") motion to dismiss the

appellants' complaint pursuant to Fed. R. Civ. P. 12(b)(6). The

complaint alleges damages by reason of defective windows

manufactured by Marvin Lumber, a Minnesota corporation, which were

purchased by appellants, Massachusetts residents, through a

supplier in Massachusetts.

In its motion, Marvin Lumber raised as a defense to the

present suit the preclusive effects of a settlement and judgment

entered in a class action brought in the state courts of Minnesota,

entitled O'Hara v. Marvin Lumber & Cedar Co., Inc., Civil Action

No. PD 00-014027 ("the O'Hara suit"). The district court agreed

with Marvin Lumber, and this appeal followed. Appellants contend

that the district court erred in dismissing their complaint on res

judicata grounds, because they allegedly failed to receive actual

notice of the O'Hara suit and because their claims were distinct

from those litigated in O'Hara. It is their view that to allow

preclusive effect to such a judgment violates their right to due

process.

For the reasons hereinafter stated, we affirm the

decision of the district court.

Between 1985 and 1988, Marvin Lumber, a national

manufacturer of windows and doors, treated its products with a wood

-2-
preservative known as "PILT" which it acquired from PPG Industries,

Inc. This preservative was ineffective and defective, resulting in

the premature deterioration of many of Marvin Lumber's windows.

This situation spawned the O'Hara class action in 1999, in which

the class was defined as all owners of defective windows and doors

manufactured by Marvin Lumber treated with PILT during the years

1985 to 1988. Damages were sought in excess of $70 million

dollars, including damages resulting from Marvin Lumber's alleged

failure to warn about the defective PILT treatment. Recovery was

sought based on the consumer protection statutes of all fifty

states and the District of Columbia.

Eventually, the O'Hara suit was settled, with the

approval of the judge presiding over said matter, in Minnesota's

Fourth Judicial District, that state's trial court of general

jurisdiction. Pursuant to Minnesota Rule of Civil Procedure 23,

which is substantially similar to its federal counterpart, Fed. R.

Civ. P. 23, a fund was established in the amount of $300,000 to pay

for the costs of notifying the class members. Thereafter, direct

mail notices were sent to all identifiable class members, with

similar notices being published in 33 newspapers throughout the

United States. The notices included a toll-free number and the

address of a web-site, established to provide potential class

members with information about the class action and to make

-3-
available appropriate forms for their active participation in the

proceedings or to allow them to opt out of the suit.

Thereafter, and before the class settlement was approved,

the Minnesota court, as required by state law (in similar fashion

to its federal counterpart), held a fairness hearing to determine

whether the settlement was reasonable, adequate, and in the best

interest of the class. At least one Massachusetts resident

appeared at the hearing to challenge the settlement, on the grounds

that under Massachusetts law the claims were not yet time-barred,

an objection that was overruled by the court.1 On December 4,

2001, the O'Hara court determined that the settlement was fair,

adequate, and reasonable, and proceeded to approve it. The court

specifically concluded that the notice provided to class members

was the best notice practicable, and thus entered final judgment.

The appellants purchased windows manufactured by Marvin

Lumber windows in 1988. This was done through a building

contractor who acquired the windows from a local hardware store in

Massachusetts. Thereafter, the windows were installed in their

residences. In the autumn of 2002, it was discovered that they

were suffering from wood decay problems and related damage to

appellants' residence and upon inspection it was concluded that

1
Relying on Cody v. Marvin Lumber & Cedar Co., 167 F. Supp. 2d
166 (D. Mass. 2001)(holding that any claims against Marvin were
time-barred under Massachusetts law).

-4-
these were caused by the inadequate preservatives used in the

manufacturing process.

Appellants filed the present action in the Massachusetts

state courts seeking damages for negligence, failure to warn, and

violation of Mass. Gen. Laws ch. 93A.2 The suit was removed to the

federal jurisdiction by Marvin Lumber, and as previously indicated,

the district court upon motion dismissed the suit, and this appeal

followed.

I. Standard of review

A dismissal pursuant to Fed. R. Civ. P. 12(b)(6) is

reviewable de novo. Carreiro v. Rhodes Gill & Co., Ltd., 68 F.3d

1443, 1446 (1st Cir. 1995). The facts are considered in the light

most favorable to the non-moving party, who receives the benefit of

all reasonable inferences. Id.

II. Class actions and the doctrines of res judicata and release

"It is beyond cavil that a suit can be barred by the

earlier settlement of another suit in either of two ways: res

judicata or release." Nottingham Partners v. Trans-Lux Corp., 925

F.2d 29, 31-32 (1st Cir. 1991). Although in this case the district

court ruled only on res judicata grounds, appellee claims the

applicability of both defenses.

2
Chapter 93A prohibits "[u]nfair methods of competition and
unfair or deceptive acts or practices in the conduct of any trade
or commerce," Mass. Gen. Laws ch. 93A, § 2, and provides for
enforcement by the Attorney General and through civil actions.

-5-
 Res judicata is a valid defense to a later suit if (1)

there is a final judgment on the merits of an earlier action, and

(2) there is identity of the parties and (3) identity of the claims

in both suits. See United States v. Cunan, 156 F.3d 110, 114 (1st

Cir. 1998). In appropriate circumstances these rules are

applicable to class actions. See Matsushita Elec. Indus. Co., Ltd.

v. Epstein, 516 U.S. 367, 379 (1996) ("There is of course no

dispute that under elementary principles of prior adjudication a

judgment in a properly entertained class action is binding on class

members in any subsequent litigation.") (quoting Cooper v. Fed.

Reserve Bank of Richmond, 467 U.S. 867, 874 (1984))(quotation marks

omitted).

The first prong of this rule, whether there is extant a

final judgment on the merits in the first suit, is clearly

satisfied considering the final judgment of the Minnesota court in

O'Hara.

The issue in the second prong, the identity of the

parties, is intermingled with appellants' due process claims,

wherein appellants allege that they failed to receive actual notice

of the O'Hara suit and settlement, and thus are not bound by the

subsequent judgment. Although it is a fundamental requirement of

due process that interested parties be apprised of the pendency of

actions in which they have an interest, and be afforded an

opportunity to present their allegations, such requirements can be

-6-
met in appropriate cases by methods of notification other than

actual personal notice. Cf. Mullane v. Cent. Hanover Tr. Co., 339

U.S. 306 (1950); Lombard v. United States, No. 03-1430, 2004 U.S.

App. LEXIS 1214, *8-11 (1st Cir. Jan. 23, 2004).

"Individual notice of class proceedings is not meant to

guarantee that every member entitled to individual notice receives

such notice," but "it is the court's duty to ensure that the notice

ordered is reasonably calculated to reach the absent class

members." Hallman v. Pa. Life Ins. Co., 536 F. Supp. 745, 748-49

(N.D. Ala. 1982) (quotation marks and citation omitted); see also

In re Viatron Computer Sys. Corp. Litig., 614 F.2d 11, 13 (1st Cir.

1980); Key v. Gillette Co., 90 F.R.D. 606, 612 (D. Mass. 1981); cf.

Lombard, 2004 U.S. App. LEXIS at *8-11. After such appropriate

notice is given, if the absent class members fail to opt out of the

class action, such members will be bound by the court's actions,

including settlement and judgment, even though those individuals

never actually receive notice. Cooper, 467 U.S. at 874; 7B Charles

Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and

Procedure § 1789 (2d ed. 1986).

Such is the present case, with notification by mail to

all known members of the certified class, and the publication of

this notice being placed in 33 newspapers of general circulation

throughout the United States. The record shows that appellants did

not receive mailed notification of the O'Hara proceedings because,

-7-
not having purchased Marvin Lumber's products directly from that

company, their names did not appear in any Marvin Lumber record.

However, the notice was published in the Boston Globe, a

Massachusetts newspaper of general circulation. The O'Hara court

found that the notice procedures met the requirements of the

applicable Minnesota Rule of Civil Procedure and comported with due

process requirements.3 At a minimum, as applied to appellants, the

newspaper notices met the legal requirements of due process. See

Lombard, 2004 U.S. App. LEXIS 1214 at *8-9.

The O'Hara court determined that the class had been

adequately represented and that the settlement was fair, entering

judgment approving the settlement. Appellants, having purchased

Marvin Lumber windows in 1988, were merged into the O'Hara class.

The second prong of the res judicata standard, identity of the

parties, was thus met.

Appellants reserve their strongest arguments in support

of their challenge to compliance with the third res judicata prong,

the identity of the O'Hara action with the present one.

Essentially, appellants argue lack of identity of causes of action

3
Given that such findings and judgment are entitled to full faith
and credit, U.S. Const. art IV, § 1, it is doubtful that their
validity is subject to collateral challenge in a proceeding in the
federal courts. See 28 U.S.C. § 1257; D.C. Court of Appeals v.
Feldman, 460 U.S. 462 (1983); Rooker v. Fidelity Trust Co., 263
U.S. 413 (1923).

-8-
in that the present suit is based on Marvin Lumber's breach of its

post-sale duty to warn persons who purchased its products, while

the O'Hara complaint stated claims for breach of contract, and

breach of express and implied warranties. They attempt to

distinguish the two suits by characterizing the O'Hara suit as one

arising from the sale of Marvin Lumber products while

characterizing their own as one arising from a post-sale duty to

warn, which continued through the O'Hara proceedings and

thereafter. Appellants also claim that the present action is

"qualitatively different" from the O'Hara suit in that the relief

sought in that case was for damages for replacement of the windows

and costs associated with replacement of the same, while in the

present case appellants seek damages for property damages

associated with the defects inherent in the windows.

When viewed in the light of established res judicata

doctrine, these arguments present distinctions without legal

significance.

To begin with, we are unaware of, nor do appellants point

to, any cognizable precedent holding that the type of relief sought

in any way factors into the res judicata formula. Succinctly, it

is the operative facts and the underlying causes of actions that

are of determinative relevance.

-9-
 Although we are not convinced that there is meaningful

difference between the actions,4 appellants must surmount an even

more difficult hurdle. Even if the claims are sufficiently

dissimilar, established law requires us to look to the law of the

state where the prior judgment was entered to determine the res

judicata consequences of that judgment, Nottingham Partners, 925

F.2d at 32, an exercise which does not favor appellants' position.

Under Minnesota law, "res judicata principles apply 'not only as to

every matter which was actually litigated, but also as to every

matter which might have been litigated, therein." Thompson v. Am.

Tobacco Co., Inc., 189 F.R.D. 544, 550 (D. Minn. 1999) (quoting

Youngstown Mines Corp. v. Prout, 124 N.W.2d 328, 340 (Minn. 1963)).

See also Sondel v. Northwest Airlines, Inc., 56 F.3d 934, 938 (8th

Cir. 1995) ("[A] judgment on the merits constitutes an absolute bar

to a second suit for the same cause of action, and is conclusive

between parties and privies, not only as to every other matter

which was actually litigated, but also as to every matter which

might have been litigated therein.")(quoting Dorso Trailer v. Am.

Body & Trailer, 482 N.W.2d 771, 774 (Minn. 1992)) (internal

citations and quotation marks omitted).

4
The common nucleus of operative fact between the two cases is
Marvin's sale of defective windows, and both plaintiffs in O'Hara
and here seek compensation for their injuries caused by those
defective windows. As stated in the district court's dismissal
order, appellant's "argument that the substance of their claims was
not litigated as part of the class action cannot be sustained on
any fair reading of the underlying amended class action complaint."

-10-
 Appellants' reliance on language in Cameron v. Tomes, 990

F.2d 14, 17 (1st Cir. 1993) is misplaced. There, quoting the

Supreme Court in Cooper v. Fed. Reserve Bank of Richmond, 467 U.S.

at 880, we stated that "a class action judgment . . . binds the

class members as to matters actually litigated but does not resolve

any claim based on individual circumstances that was not addressed

in the class action." Cameron 990 F.2d at 17. In Cameron,

however, the prior class action challenged general conditions at a

state treatment center for the sexually dangerous, while Cameron's

later suit rested

primarily on [his] claims that his unusual
situation requires special accommodations;
specifically, that his physical disability
affects his need for outside medical visits,
freer movement within the Treatment Center,
and separate bunking arrangements adapted to
his handicap, and that his mental condition
. . . makes ordinary physical searches,
disciplinary arrangements and other
constraints unsuitable, indeed psychologically
dangerous, for him.

Id. at 18.

Cameron's quoted language is clearly distinguishable from

the present case, in which appellants point to no unique

circumstances applicable to their case which was outside the scope

of the matters actually litigated, or that could have been

litigated, in O'Hara. Appellants place their reliance on allegedly

distinct causes of action, not different factual predicates.

-11-
 Last, it is clear that the release entered into in the

O'Hara case, and approved by the court as part of the settlement

process, is an equally imposing hurdle to the present suit. "[A]

court-approved settlement containing a release may be applied

against a class member who is not a representative member, even if

that member objects to the settlement, so long as acceptable

procedural safeguards have been employed." Nottingham Partners,

925 F.2d at 33. "[I]n order to achieve a comprehensive settlement

that would prevent litigation of settled questions at the core of

a class action, a court may permit the release of a claim based on

the identical factual predicate as that underlying the claims in

the settled class action even though the claim was not presented

and might not even have been presentable in the class action."

Matsushita, 516 U.S. at 377 (citation and quotation marks omitted).

Such was the release in the O'Hara case settlement. It

provides for the release of:

any and all claims, rights, damages, losses,
demands, obligations, actions, causes of
actions, suits, cross-claims, matters, issues,
debts, liens, contracts, liabilities,
arguments, costs or expenses of any nature
whatsoever ascertained or unascertained,
suspected or unsuspected, existing or claimed
to exist, . . . that have been or could have
been asserted arising out of any purchase or
performance of a Marvin PILT unit(either
directly or indirectly) to the extent that
such claims are based upon any allegations
that were or could have been asserted in the
Amended Complaint filed in this Action . . .
or that are based on any theory of breach of
contract, breach of expressed warranty, breach

-12-
 of implied warranties, violation of consumer
protection statutes, unlawful trade practices,
or any other theory . . . that might in the
future be asserted. . . .

Unquestionably, this release is sufficiently broad to encompass the

appellants' complaint and the allegations therein.

III. Conclusion

We have considered all of the issues raised by appellants

and find them without legal merit. The order and judgment appealed

from are hereby affirmed. Costs to appellee.

-13-