In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12‐2541
MICHAEL J. DEGUELLE,
Plaintiff‐Appellant,
v.
KRISTEN J. CAMILLI, et al.,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 10‐CV‐103‐JPS — J.P. Stadtmueller, Judge.
____________________
ARGUED JULY 9, 2013 — DECIDED AUGUST 1, 2013
____________________
Before EASTERBROOK, Chief Judge, and POSNER and
WILLIAMS, Circuit Judges.
POSNER, Circuit Judge. The plaintiff, DeGuelle, an ac‐
countant, was employed between 1997 and 2009 in the tax
department of S.C. Johnson & Son, Inc., a large Wisconsin
manufacturer of cleaning supplies. He alleges that while
employed there he discovered that the company had com‐
mitted tax fraud. The company fired him, then sued him in a
Wisconsin state court for breach of contract, conversion, and
2 No. 12‐2541
defamation, all arising from his having taken confidential
corporate tax documents with him when he was fired and
having publicly accused the company, in the media (a news‐
paper), of tax fraud. He counterclaimed for wrongful termi‐
nation and breach of contract, claiming the company had
fired him in retaliation for his opposing the alleged tax
fraud. The company moved for summary judgment, attach‐
ing an affidavit from a tax lawyer at Kirkland & Ellis deny‐
ing there had been any tax fraud. DeGuelle, litigating pro se,
filed no counteraffidavits, and so the judge granted sum‐
mary judgment in favor of S.C. Johnson & Son both on the
company’s claims and DeGuelle’s counterclaims. The Wis‐
consin court of appeals affirmed a month before the present
appeal was argued. S.C. Johnson & Son, Inc. v. DeGuelle, No.
2011AP2427, 2013 WL 2420925 (Wis. App. June 5, 2013) (per
curiam).
DeGuelle had filed the present suit in federal district
court against S.C. Johnson & Son long before the Wisconsin
suit was dismissed. The district court had dismissed the suit
for failure to state a claim, but we had reversed, 664 F.3d 192
(7th Cir. 2011), and remanded the case to the district court.
The federal suit charges both federal and state violations, but
all growing out of the alleged tax fraud. If there was no
fraud, the present suit is groundless, as noted in our previ‐
ous opinion. Id. at 200. On remand the district judge, after
the trial court in Wisconsin granted summary judgment in
favor of the company, did likewise. His ground was that the
finding by the Wisconsin court that there had been no tax
fraud bound him by the doctrine of collateral estoppel (a
term giving way to “issue preclusion”). If his application of
the doctrine was sound, he was right to dismiss because, as
we said, if there was no tax fraud there is no merit to this
No. 12‐2541 3
suit. He was right even though he dismissed the suit before
the state appellate court decided DeGuelle’s appeal. The
pendency of an appeal doesn’t suspend the preclusive effect
of the judgment being appealed. Virnich v. Vorwald, 664 F.3d
206, 216 and n. 4 (7th Cir. 2011) (Wisconsin law).
As collateral estoppel has traditionally been understood,
the resolution of an issue in a previous litigation between the
same parties (or parties “in privity” with them, but that is
not involved in this case) normally is conclusive of the issue
in a subsequent litigation. But there are conditions. The par‐
ty against whom the issue had been resolved must have had,
first, a “full and fair opportunity” to litigate the issue in the
previous suit (where “opportunity” includes incentive—the
parties could foresee that the same issue might arise in a fu‐
ture litigation in which the winner would assert collateral
estoppel), and, second, a meaningful opportunity to appeal
the resolution of the issue. A party would not have had such
an opportunity if for example the resolution had been ines‐
sential to the decision of the trial court, and therefore either
ignored by the parties or treated by the appellate court as
moot. See, e.g., Taylor v. Sturgell, 553 U.S. 880, 892 (2008);
United States v. Kashamu, 656 F.3d 679, 685–86 (7th Cir. 2011);
In re Catt, 368 F.3d 789, 791–92 (7th Cir. 2004); Bell v. Dillard
Dep’t Stores, Inc., 85 F.3d 1451, 1456 (10th Cir. 1996). But
when the conditions for applying collateral estoppel are sat‐
isfied, “the doctrine promotes important goals: it allows a
party only one opportunity to litigate an issue thereby con‐
serving the time and resources of the parties and the court;
promotes the finality of judgments; preserves the integrity of
the judicial system by eliminating inconsistent results; and
ensures that a party not be able to relitigate issues already
4 No. 12‐2541
decided against it in prior litigation.” Johnson v. Watkins, 101
F.3d 792, 795 (2d Cir. 1996).
There is no question of lack of opportunity or incentive to
appeal—DeGuelle got a ruling from the Wisconsin appellate
court on the trial court’s determination regarding tax fraud.
But he argues that he was denied a full and fair hearing in
the trial court (that is, an adequate hearing—“full and fair”
is a redundant expression) by being denied an opportunity
to conduct discovery without which the tax expert he had
hired to counter the Kirkland & Ellis tax expert could not
prepare a proper affidavit. The argument is groundless.
He’d been allowed to conduct discovery and had done so.
But because he had failed to respect confidentiality orders,
the judge directed that confidential financial records of S.C.
Johnson & Son be sent directly to DeGuelle’s expert—and
this was done—with the proviso that while the expert could
discuss the preparation of his expert opinion, and therefore
the pertinent documents, with DeGuelle, he couldn’t show
him the documents without the judge’s permission.
DeGuelle responded by ordering his expert not to prepare
an expert report. That unreasonable behavior could not have
justified the judge in rejecting the Kirkland lawyer’s expert
opinion—as demanded by DeGuelle on the false ground that
the judge had precluded his filing an opinion by his tax ex‐
pert. In all likelihood his expert after reviewing the docu‐
ments concluded that there was no evidence of tax fraud.
But this inference is not necessary to justify the judge’s ac‐
tions.
Were the doctrine of collateral estoppel as compact as we
have thus far assumed, requiring only that the finding
sought to be given collateral estoppel effect in subsequent
No. 12‐2541 5
litigation between the same parties (or their privies) have
been rendered after an opportunity given for (and an incen‐
tive to demand) an adequate hearing and for challenging the
finding in an appeal, we could stop here and affirm. For the
Wisconsin appellate court has now determined that the Kirk‐
land lawyer’s affidavit, plus other evidence, “establish[es]
that [S.C. Johnson & Son] did not engage in any tax fraud or
crimes as DeGuelle publicly stated. The burden to prove
criminal fraud was on DeGuelle, and he submitted no coun‐
teraffidavits. As stated by the trial court, DeGuelle’s claims
were unsubstantiated.” S.C. Johnson & Son, Inc. v. DeGuelle,
supra, 2013 WL 2420925 at ¶ 25. (The reference to “publicly
stated” is to the Johnson company’s defamation claim.) That
determination by the appellate court is itself entitled to col‐
lateral estoppel effect; and once that effect is given to the ap‐
pellate court’s determination that the trial court had proper‐
ly rejected DeGuelle’s claim, any shadow over the proce‐
dures employed by that court is lifted.
But we can’t stop here. We are required to apply not our
own notions of collateral estoppel, or the federal common
law of collateral estoppel (illustrated by the federal cases we
cited earlier—for “the preclusive effect of a federal‐court
judgment is determined by federal common law,” Taylor v.
Sturgell, supra, 553 U.S. at 891), but Wisconsin’s doctrine of
collateral estoppel. True, the full faith and credit clause (U.S.
Const. Art. IV, § 1) requires only states to recognize and en‐
force the judgments of the courts of other states, Franchise
Tax Board v. Hyatt, 538 U.S. 488, 494 (2003); Rosin v. Monken,
599 F.3d 574, 576–77 (7th Cir. 2010), and thus give those
judgments the same preclusive force they would enjoy in the
originating state. Baker v. General Motors Corp., 522 U.S. 222,
233–34 (1998). But the statute that implements the full faith
6 No. 12‐2541
and credit clause, 28 U.S.C. § 1738, goes further than the con‐
stitutional clause and requires federal as well as state courts
to give state court judgments the same preclusive effect that
the state courts that issued the judgments would give them.
E.g., Allen v. McCurry, 449 U.S. 90, 95–96 (1980); Burke v.
Johnston, 452 F.3d 665, 669 (7th Cir. 2006); FPL Energy Maine
Hydro LLC v. FERC, 551 F.3d 58, 63 n. 2 (1st Cir. 2008). And
Wisconsin, like most states if one may judge from the Re‐
statement (Second) of Judgments § 27 (1982), is not content with
a simple, straightforward test of collateral estoppel, the kind
of test, sketched above, that we would find attractive as an
original matter.
Instead Wisconsin’s supreme court has adopted a five‐
factor “test” for deciding whether to give a finding collateral
estoppel effect. In re Estate of Rille ex rel. Rille, 728 N.W.2d
693, 707 (Wis. 2007). No weight is assigned to any factor; the
weighting is in the discretion of the trial court. Id. at 707.
(Such a multifactor test is thus more accurately termed a
multifactor list. United States v. Rosales, 716 F.3d 996, 997 (7th
Cir. 2013).)
The factors are:
1) Could the party against whom preclusion is sought have
obtained review of the judgment as a matter of law;
2) Is the question one of law that involves two distinct
claims or intervening contextual shifts in the law;
3) Do significant differences in the quality or extensiveness
of proceedings between the two courts warrant reliti‐
gation of the issue;
4) Have the burdens of persuasion shifted such that the
party seeking preclusion had a lower burden of per‐
suasion in the first trial than in the second; and
No. 12‐2541 7
5) Are matters of public policy and individual circum‐
stances involved that would render the application of
collateral estoppel to be fundamentally unfair, includ‐
ing inadequate opportunity or incentive to obtain a full
and fair adjudication in the initial action?
In re Estate of Rille ex rel. Rille, supra, 728 N.W.2d at 707.
The first factor gestures, a little mysteriously, to the re‐
quirement that the loser have been able to appeal the ad‐
verse ruling sought to be used against him; the requirement
is diluted in the Wisconsin supreme court’s formulation by
the trial judge’s having discretion as to how heavily to
weight it. Factor 2 we do not understand at all. Factors 3 and
4 are aspects of the requirement that the loser have had an
opportunity for an adequate hearing in the first proceeding.
Factor 5, while also related to the adequacy of that hearing,
opens a Pandora’s Box by invoking public policy, individual
circumstances, and fundamental fairness. So the five‐factor
test is really eight factors. Would we could stop with eight!
We can’t; for after listing the eight factors the opinion states
that “these enumerated factors are illustrative; they are not
exclusive or dispositive…. The final decision whether the
doctrine of issue preclusion [collateral estoppel] should be
applied rests on the [trial] court’s sense of justice and equi‐
ty.” Id. The “test” thus is formless. (And what by the way is
the difference between “justice” and “equity”?)
Later in the opinion we learn that in applying factor 5 the
trial court must “’balance competing goals of judicial effi‐
ciency and finality, protection against repetitious or harass‐
ing litigation, and the right to litigate one’s claims.’” Id. at
712, quoting Michelle T. v. Crozier, 495 N.W.2d 327, 330 (Wis.
1993). That brings the number of factors to 11, though in a
8 No. 12‐2541
later case we learn that “the overarching task” in applying
the doctrine of collateral estoppel is “to make a holistic, dis‐
cretionary determination regarding fundamental fairness.”
Aldrich v. Labor & Industry Review Comm’n, 814 N.W.2d 433,
458 (Wis. 2012). Holistic analysis is the opposite of dissecting
an issue into parts.
Cases from other states applying multifactor tests
abound, but they tend to rely on the Restatement’s test, which
is similar to Wisconsin’s but less baroque. See, e.g., Allen v. V
& A Bros., Inc., 26 A.3d 430, 444–45 (N.J. 2011); Elliott v. State,
247 P.3d 501, 503–05 (Wyo. 2011); Monat v. State Farm Ins.
Co., 677 N.W.2d 843, 845–47 and n. 2 (Mich. 2004); Clusiau v.
Clusiau Enterprises, Inc., 236 P.3d 1194, 1198–99 (Ariz. App.
2010). Section 28 of the Restatement of Judgments lists four fac‐
tors that upon inspection expand to eight, but the list is more
clearly written and narrower than Wisconsin’s; it does not
include fundamental fairness and it is not open‐ended. See
also Restatement, supra, §§ 27, 29.
Conceivably the reference in the Wisconsin decisions to
“fundamental fairness” echoes or alludes to cases in which a
state is asked in the name of comity—the mutual respect of
sovereigns—to give collateral estoppel effect to a finding by
a court in a foreign country. The full faith and credit clause
does not obligate states to respect foreign judgments beyond
what comity requires. See United States v. Kashamu, supra, 656
F.3d at 683; Int’l Transactions, Ltd. v. Embotelladora Agral Regi‐
omontana, SA de CV, 347 F.3d 589, 593–94 (5th Cir. 2003); Phil‐
adelphia Gear Corp. v. Philadelphia Gear de Mexico, S.A., 44 F.3d
187, 191 (3d Cir. 1994).
Free‐wheeling as the Wisconsin courts’ formulation of
the doctrine of collateral estoppel is, none of its curlicues
No. 12‐2541 9
provide a basis for doubting that the rulings by the Wiscon‐
sin trial court and appellate court are entitled to collateral
estoppel effect in this case. The only effect of the curlicues
has been to inveigle DeGuelle into making frivolous argu‐
ments, such as that he should be given a break because he
was pro se in the critical stage of the Wisconsin litigation, as
he is in the present case. He was pro se by choice, as far as
appears, rather than by reason of indigence. And the idea
that litigating pro se should insulate a litigant from applica‐
tion of the collateral estoppel doctrine, or, more broadly, the
doctrine of res judicata, of which collateral estoppel is an as‐
pect, is absurd. See In re Tsamasfyros, 940 F.2d 605, 607 (10th
Cir. 1991); Davis v. U.S. Steel Supply, 688 F.2d 166, 177 (3d
Cir. 1982) (en banc); Noble v. U.S. Postal Service, 93 M.S.P.R.
693, 698 (2003). No doubt a judge might confuse a pro se liti‐
gant to the point of denying him an adequate hearing, but
that didn’t happen in this case. The Wisconsin trial judge
made clear to DeGuelle that he’d have to submit an affidavit
countering the affidavit of the company’s tax expert in order
to survive summary judgment. He had hired an expert who
duly received the documents sought by DeGuelle in discov‐
ery. His refusal to allow his expert to file an affidavit, a re‐
fusal suggesting that the expert found no evidence of the al‐
leged tax fraud, can’t be attributed to the judge.
DeGuelle’s further argument that collateral estoppel
should not apply lest it deter whistleblowers from suing is
also frivolous. It amounts to saying that whistleblowers
should be exempt from preclusion and thus be allowed to
file identical cases against the same parties in succession.
Not even Wisconsin’s open‐ended test would abide such a
blow to finality.
10 No. 12‐2541
DeGuelle makes other arguments, but they are untimely
as well as patently without merit, so we’ll stop here, with a
warning that if DeGuelle persists in harassing S.C. Johnson
& Son with litigation over his claims, now definitively reject‐
ed, based on allegations of tax fraud, he will be courting
sanctions.
AFFIRMED.