King v. Union Oil Co. of California

UNITED STATES COURT OF APPEALS
Tenth Circuit
Byron White United States Courthouse
1823 Stout Street
Denver, Colorado 80294
(303) 844-3157
Patrick J. Fisher, Jr. Elisabeth A. Shumaker
Clerk Chief Deputy Clerk

July 3, 1997

TO: All recipients of the captioned opinion

RE: 95-7163, King v. Union Oil Co.
July 1, 1997

Please be advised of the following correction to the captioned decision:

In the attorney section on page one of the opinion, counsel are erroneously
listed. The correct designations are Mr. Lee, appearing for Defendant-Appellant,
and Mr. Colbert, appearing for Plaintiff-Appellee.

Please make the correction.

Very truly yours,

Patrick Fisher, Clerk

Susie Tidwell
Deputy Clerk
 F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
JUL 1 1997
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

JERRY L. KING,

Plaintiff - Appellee,

v. No. 95-7163,
96-7051
UNION OIL COMPANY OF
CALIFORNIA, doing business as
Unocal Corporation,

Defendant - Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
(D. Ct. No. CIV-94-502-B)

David W. Lee, Law Offices of David W. Lee, Oklahoma, City, Oklahoma,
appearing for Defendant-Appellant.

Stephen D. Colbert, Flower Mound, Texas, appearing for Plaintiff-Appellee.

Before TACHA, LUCERO, Circuit Judges, and DANIEL, * District Judge.

TACHA, Circuit Judge.

*
The Honorable Wiley Y. Daniel, District Judge for the United States
District Court for the District of Colorado, sitting by designation.
 On September 11, 1992, defendant Unocal Corporation terminated plaintiff

Jerry King’s employment pursuant to a reduction in force. On September 10,

1993, King filed suit in federal district court, alleging that his termination was the

result of unlawful discrimination on the basis of his race, physical disability, and

in retaliation for filing a worker’s compensation claim. The jury returned a

verdict in favor of Unocal and we affirmed. See King v. Unocal Corp., 58 F.3d

586 (10th Cir. 1995) [hereinafter King I].

On September 7, 1994, King brought a second suit against Unocal, alleging

that his former employer failed to pay him severance benefits in violation of the

Employee Retirement Security Act (ERISA), 29 U.S.C. §§ 1001-1461. On cross

motions for summary judgment, the district court concluded that res judicata did

not preclude this second suit and that King was entitled to severance benefits

under the plan. Unocal appeals this decision, and we now reverse on the basis of

res judicata.

BACKGROUND

In 1977, King, an African-American male, began working for Unocal as a

production technician in Carter County, Oklahoma. In May 1992, Unocal

announced that it was planning to implement a reduction in force. In July 1992,

King was injured on a company golf outing and notified Unocal of his injury

pursuant to the Oklahoma Worker’s Compensation Act, Okla. Stat. tit. 85, § 24.2.

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On September 11, 1992, Unocal informed King that his employment was

terminated pursuant to the reduction in force. On September 25, 1992, Unocal’s

human resources department informed King that because of his termination, he

was eligible to participate in Unocal’s Termination Allowance Plan (“Plan”).

Under the Plan, King was entitled to receive two weeks of severance benefits for

every two years of employment. To participate in the Plan, however, Unocal

required King to file a Termination Allowance Claim Form (“Claim Form”),

which included a release of any claims against Unocal arising out of King’s

termination.

On October 2, 1992, King submitted the Claim Form, which contained the

release. King checked a box on the Claim Form indicating that his termination

was due to his “[i]nability to perform job assignment . . . because of a disability

resulting from illness or injury.” App’t. App. at 70. On October 14, 1992,

Unocal’s human resources department informed King that Unocal was unable to

process his claim because he had erroneously checked the box indicating that his

termination was due to a disability instead of, as Unocal asserted, a reduction in

force. King was given another Claim Form for completion.

On October 22, 1992, King’s attorney sent Unocal a letter stating that King

intended to file a discrimination claim against the company arising from his

termination, that King “does not intend to release or relinquish any of his rights,”

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and that the previously executed release was “of no force and effect .” App’t.

App. at 73. The letter also threatened litigation if Unocal failed to pay King

severance benefits under the Plan. Id. On December 10, 1992, Unocal’s legal

department replied to the letter, enclosing another Claim Form and notifying

King’s attorney that participation in the Plan was conditioned upon the execution

of a release by King. Unocal requested that King’s attorney clarify whether King

intended to withdraw his release and go forward with his discrimination suit, in

which case he would not be entitled to receive severance benefits under the Plan.

Unocal received no response.

One year after bringing his discrimination and retaliation claims against

Unocal, King commenced the present suit against Unocal to recover severance

benefits. Unocal moved for summary judgment on the grounds that: (1) King’s

failure to raise his ERISA claim in the first lawsuit precludes this second suit

under the doctrine of res judicata and (2) King’s failure to execute a release of his

claims against Unocal, as required by the Plan as a condition for receiving

benefits, precludes his recovery of benefits. Because we reverse on the basis of

res judicata, we do need to reach Unocal’s contention that King is not entitled to

benefits under the Plan because he failed to execute a release.

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 DISCUSSION

I. Summary Judgment Standard

In reviewing a grant or denial of summary judgment, we apply the same

standard applied by the district court under Federal Rule of Civil Procedure 56(c).

May v. Parker-Abbott Transfer & Storage, Inc., 899 F.2d 1007, 1009 (10th Cir.

1990). Summary judgment is appropriate if “there is no genuine issue as to any

material fact and . . . the moving party is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(c). Where the facts “are not in dispute, this court must

determine de novo whether the substantive law of res judicata was correctly

applied.” May, 899 F.2d at 1009.

II. Res Judicata

Res judicata, or claim preclusion, precludes a party or its privies from

relitigating issues that were or could have been raised in an earlier action,

provided that the earlier action proceeded to a final judgment on the merits.

Lowell Staats Mining Co., Inc. v. Philadelphia Elec. Co., 878 F.2d 1271, 1274

(10th Cir. 1989) (citing Allen v. McCurry, 449 U.S. 90, 94 (1980)). To apply the

doctrine of res judicata, three elements must exist: (1) a judgment on the merits in

an earlier action; (2) identity of parties or privies in the two suits; and (3) identity

of the cause of action in both suits. Satsky v. Paramount Communications, Inc., 7

F.3d 1464, 1467 (10th Cir. 1993); Lowell Staats Mining Co., 878 F.2d at 1274.

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 In the present suit, the parties have not changed from King I, and the first

suit proceeded to a judgment on the merits. Therefore, the sole issue before us is

whether King’s ERISA claim arises from the same “cause of action” as his earlier

discrimination and retaliation claims. If so, this second suit is barred.

In Petromanagement Corp. v. Acme-Thomas Joint Venture, 835 F.2d 1329,

1335 (10th Cir.1988), this circuit adopted the transactional approach of the

Restatement (Second) of Judgments to determine what constitutes a “cause of

action” for res judicata purposes. The “transactional” approach provides that:

[A] final judgment extinguishes all rights of the plaintiff to remedies
against the defendant with respect to all or any part of the
transaction, or series of connected transactions, out of which the
action arose. What constitutes a “transaction” or a “series” is to be
determined pragmatically considering whether the facts are related in
time, space, origin, or motivation, and whether they form a
convenient trial unit.

Lowell Staats Mining Co., 878 F.2d at 1274 (citing Petromanagement Corp., 835

F.2d at 1335, and Restatement (Second) of Judgments § 24 (1982)).

King argues that his claims in the two suits arise from separate

“transactions” because the first suit involved his termination and Unocal’s

conduct leading up to the termination, while the second suit involves Unocal’s

failure to pay severance benefits and its conduct after the termination. We

disagree. King’s claims are one for the purposes of res judicata because Unocal’s

decision to terminate King’s employment and its decision to refuse to pay

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severance benefits are part of a “series of connected transactions.” After King

was discharged, Unocal gave King the option of receiving severance benefits or

suing for discrimination. King chose to sue, and Unocal concomitantly refused to

pay severance benefits. Although the termination and later denial of benefits are

separate factual events, they are not unrelated transactions. Rather, both occurred

during the period of time from September 11 to December 10, 1992, involved

actions by Unocal officials, and arose as a result of King’s termination. Further,

King’s two suits have a substantial overlap of related facts because King’s failure

to execute the required release and his decision to bring the first suit formed the

basis for Unocal’s ultimate decision to deny King’s claim for severance benefits.

Thus, King’s various claims, if brought together, would form a convenient trial

unit. Finally, King was aware of Unocal’s denial of benefits at the time he

commenced his first suit and, in the interests of efficiency and fairness, should

have brought his ERISA claim in the previous lawsuit. His failure to do so bars

this second suit.

We have previously held that an employee’s prior claim for unpaid

overtime compensation bars her later claims for age discrimination and denial of

equal pay. Clark v. Haas Group, Inc., 953 F.2d 1235, 1239 (10th Cir. 1992). In

Clark, an employee sued her former employer to recover unpaid overtime

compensation under the Fair Labor Standards Act, 29 U.S.C. §216(b). Id. at

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1236. After the parties filed a stipulated motion to dismiss and the court entered

an order dismissing the action with prejudice, the employee filed a second

lawsuit, alleging that her employer discriminated against her because of her age in

violation of the Age Discrimination in Employment Act (ADEA), 29 U.S.C.

§§ 621-634, and deprived her of equal pay in violation of the Equal Pay Act, 29

U.S.C. § 206(d). Id. The district court held that res judicata did not bar the

second suit because “the facts needed to prove a charge of discrimination are very

different in motivation and origin from the facts needed to prove the overtime

compensation charge.” Id. at 1237. On appeal, we rejected the district court’s

restrictive interpretation of the Restatement’s transaction test and reversed:

Notwithstanding the district court’s finding to the contrary, we must
hold that the two actions were “related in time, space, origin, or
motivation.” Furthermore, the “claims” asserted in the two cases
formed “a convenient trial unit,” particularly in that the various
“claims” and legal theories were predicated exclusively on [the
plaintiff’s] employment relationship with [her employer].

Id. at 1239 (citations omitted); see also Robinson v. Volkswagenwerk AG, 56

F.3d 1268, 1275 (10th Cir. 1995) (plaintiff’s initial products liability claim barred

later claims of negligence and breach of warranty arising out of the same auto

accident).

King argues that Herrmann v. Cencom Cable Associates, Inc., 999 F.2d 223

(7th Cir. 1993), is more closely analogous to the present situation and

demonstrates that King’s first suit does not bar his later claim for benefits. Like

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this case, Herrmann involved two successive actions by an employee against her

former employer. In the first suit, the employee brought a claim under the

continuation of medical benefits provision (COBRA) of ERISA, 29 U.S.C.

§§ 1161-68, and in the second, she brought a claim for gender discrimination

under Title VII, 42 U.S.C. §§ 2000e to 2000e-17. Id. at 224. The court held that

because the employee’s claims were based on different “factual allegations,” id.

at 226, and had little or no “factual overlap,” id. at 227, the two claims were not

so related for purposes of res judicata as to bar the employee from bringing her

Title VII claim in a second suit:

In the present case . . . only one fact on which the two claims are
based is the same—that the plaintiff was terminated. The other facts
on which the Title VII claim is based concern the conduct of the
defendant leading up to the plaintiff’s discharge, while the other
facts on which the COBRA claim is based concern the processing of
her request for continued benefits after she was discharged.

Id. at 227.

Unocal, on the other hand, likens the present situation to Prochotsky v.

Baker & McKenzie, 996 F.2d 333 (7th Cir. 1992). In Prochotsky, an employee

brought a claim alleging that her discharge resulted from her former employer’s

desire to deprive her of employee benefits in violation of ERISA, 29 U.S.C.

§ 1140. Id. at 333. After that claim was dismissed, the employee brought a

second claim alleging that her discharge was motivated by discrimination based

on her age, national origin, and physical disability in violation of Title VII, 42

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U.S.C. § 2000e to 2000e-17. Id. On appeal, the court rejected the employee’s

contention that res judicata did not apply because the parties were litigating “a

different issue.” Id. at 334-35. The court held that the employee’s claims were

one for the purposes of res judicata because both actions arose from the

employee’s discharge and required a determination of the propriety of the

employer’s motivation in discharging the employee. Id. at 335; see also

Bryzostowski v. Laidlaw Waste Systems, Inc., 49 F.3d 337, 339 (7th Cir. 1995)

(plaintiff’s initial breach of employment contract claim barred a later age

discrimination claim because “resolution of both complaints revolves around the

issue of whether [the employer] complied with its legal obligations—arising out

of either a contract or a federal statute—when it discharged [the employee]”).

In our view, neither Prochotsky nor Herrmann is particularly helpful

because each lies at an extreme: Prochotsky involved claims with a nearly

complete factual overlap while Herrmann involved claims with “a complete or

nearly complete lack of overlap.” Herrmann, 999 F.2d at 226. Our case lies

somewhere in between. Thus, we must ask whether the factual events giving rise

to King’s various claims are so related in “time, space, origin, or motivation” as

to require King to bring his claims in one lawsuit. We conclude that they are.

We recognize that King’s claims are not based on the “same factual

allegations,” Herrmann, 999 F.2d at 226 (“[W]e suggest that two claims are one

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for the purposes of res judicata if they are based on the same, or nearly the same,

factual allegations.”). Nevertheless, that formulation of the Restatement’s

“transaction” test is significantly narrower than the requirement that two claims

arise from the same “series of connected transactions.” Clark, 953 F.2d at 1238.

Although the factual events giving rise to King’s two actions are separate, they

form a “series of connected transactions” and thus are sufficiently related to

require King to bring all his claims in one lawsuit. In particular, King’s claims

are related because his decision to withdraw the release and proceed with his

discrimination and retaliation claims provided the basis for Unocal’s ultimate

refusal to pay him severance benefits, which is the subject of this second suit.

Moreover, unlike Herrmann, where it was unclear whether the employee

could have brought her later Title VII claim in the first suit, id. at 224-25, King

clearly knew of Unocal’s decision to deny him benefits at the time he commenced

his first lawsuit. Thus, King could have brought all his claims in one suit. To

allow King’s second suit to proceed as framed would allow precisely the sort of

piecemeal litigation, unnecessary expense, and waste of judicial resources that the

doctrine of res judicata is designed to prevent. See May, 899 F.2d at 1009.

CONCLUSION

For the foregoing reasons, the order of the district court granting summary

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judgment in favor of King is REVERSED and the case is REMANDED for entry

of summary judgment in favor of Unocal.

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