United States Court of Appeals

Fifth Circuit

FILED

July 19, 2004

Charles R. Fulbruge III

Clerk

Revised July 21, 2004

In the

United States Court of Appeals

for the Fifth Circuit

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m 03-20202

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THE PROCTER & GAMBLE COMPANY;

THE PROCTER & GAMBLE DISTRIBUTING COMPANY,

Plaintiffs-Appellants,

VERSUS

AMWAY CORPORATION, ET AL.,

Defendants,

AMWAY CORPORATION,

Defendant-Appellee.

_________________________

Appeals from the United States District Court

for the Southern District of Texas

_________________________
2

Before GARWOOD, HIGGINBOTHAM, and 

SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

The Procter & Gamble Company and the

Procter & Gamble Distributing Company

(jointly referred to in the singular as “P&G”)

appeal a summary judgment in favor of

defendant Amway Corporation, alleging that

the district court gave improper res judicata

effect to a judgment of the United States

District Court for the District of Utah.

Concluding that the Utah court’s judgment is

entitled to res judicata effect, we affirm. 

I.

The dispute between Procter &Gamble and

Amway has been before this court on two

prior occasions. See Procter &Gamble Co. v.

Amway Corp., 242 F.3d 539 (5th Cir. 2001)

(“P&G I”); Procter & Gamble Co. v. Amway

Corp., 280 F.3d 519 (5th Cir. 2002)

(“P&G II”). Because the complete factual

history is set out in those opinions, we only

summarize the relevant procedural history.

P&G has long been the subject of rumors

linking it to Satanism and has attempted to

identify Amway and its distributors as the

source of those rumors. In 1995, P&G sued

Amwayand other defendantsin federaldistrict

court in Utah. P&G then filed a second

amended complaint alleging defamation, common law unfair competition, violations of the

Utah Truth in Advertising Act, tortious

interference, negligent supervision and

violations of the Lanham Act, and vicarious

liability arising out of the Satanism rumor.

P&G later filed a third amended complaint

alleging that Amway’s distributionmethod was

an illegal pyramid scheme, and claiming fraud

and product disparagement. 

The Utah court granted Amway’s motion

to dismiss the Third Amended Complaint.

P&G later filed a Fourth Amended Complaint

asserting claims for product disparagement,

based on allegationsthat Amway had told consumersthat P&G’s Crest toothpaste scratches

teeth, and asserting fraud, but the Utah court

dismissed that complaint as untimely filed.

Meanwhile, P&G sued in the United States

District Court for the Southern District of

Texas, alleging causes of action for unfair

competition, negligent supervision, negligence,

business disparagement, defamation, tortious

interference with prospective business

relations, vicariousliability,fraud, violations of

RICO, violations of the Lanham Act, and

violations of the Texas Business and

Commerce Code. These causes of action were

based on the Satanismrumor, theCrest rumor,

and Amway’s alleged pyramid scheme. In

April 1999, the Utah court entered a final

judgment dismissing all of P&G’s claims. 

The instant case went to trial in May 1999.

At the close of P&G’s case, Amway moved

for judgment as a matter of law. The district

court granted themotionand dismissed P&G’s

Lanham Act claim on the basis of the res

judicata effect of the Utah court’s judgment.

It also dismissed P&G’s remaining claims on

the merits. After the Texas court had entered

judgment, but before we heard the appeal, the

TenthCircuit affirmed in part, reversed in part,

and remanded the Utah district court’s

judgment. See Procter & Gamble Co. v.

Haugen, 222 F.3d 1262 (10th Cir. 2000)

(“Haugen I”). 

In P&G I, we affirmed in part and reversed

in part the district court’s rulings on the

merits. Most importantly, we found that at the

time P&G I was decided, there was no res
3

judicata effect from the Utah case. We held

that the district court had correctly accorded

the Utah court’s judgment res judicata effect

and that dismissal had been proper when

granted. The Tenth Circuit’s subsequent reversal and remand eliminated, however, any

res judicata bar occasioned by the reversed

and remanded judgment. P&G I, 242 F.3d at

546. Accordingly, we vacated on the ground

of res judicata. 

The issues we considered in P&G II did

not concern Amway or the appeal before us

today. We did, however, note that after

P&G I and P&G II, “the only claims

currently before the district court relate to

spreading the Satanism and Crest toothpaste

rumors.” P&G II, 280 F.3d at 524.

On remand from the Tenth Circuit, the

Utah court dismissed all of P&G’s claims.

Procter & Gamble Co. v. Haugen, 158 F.

Supp. 2d 1286 (N.D.Utah 2001), aff’d, 317

F.3d 1121 (10th Cir. 2003). Shortly after the

Tenth Circuit’s affirmance, the Texas district

court granted Amway’s motion for summary

judgment, dismissingP&G’sremaining claims.

P&G filed a timely notice of appeal, and the

district court subsequently entered judgment

pursuant to FED. R. CIV. P. 54(b), thus

assuring our jurisdiction over this appeal.

II.

We review a summary judgment de novo,

using the same standards as did the district

court. BP Oil Int’l, Ltd. v. Empresa Estatal

Petoleos de Ecuador, 332 F.3d 333 (5th Cir.

2003). The res judicata effect of the Utah

judgment is a question of law that we also review de novo. P&G I, 242 F.3d at 546. 

A.

Under the law of this circuit, “[c]laim preclusion, or ‘pure’ res judicata, is the

‘venerable legal canon’ that insuresthe finality

ofjudgments and therebyconservesjudicialresources and protects litigants from multiple

lawsuits.” United States v. Shanbaum, 10

F.3d 305 (5thCir. 1994). Resjudicata applies

where “(1) the partiesto both actions are identical (or at least in privity); (2) the judgment in

the first action is rendered by a court of

competent jurisdiction; (3) the first action

concluded with a final judgment on the merits;

and (4) the same claim or cause of action is

involved in both suits.” Ellis v. Amex Life Ins.

Co., 211 F.3d 935, 937 (5th Cir. 2000). If

these conditions are satisfied, all claims or defenses arising from a “common nucleus of operative facts” are merged or extinguished. Agrilectric Power Partners, Ltd. v. Gen. Elec.

Co., 20 F.3d 663 (5th Cir. 1994).

In P&G I, 242 F.3d at 544, we noted that

“[t]his suit is based on the same transactions,

and involves substantially the same parties, as

does the Utah suit.” Having already decided

that res judicata based on the Utah court’s

judgment in Haugen I would have been

appropriate but for the fact that the judgment

had been reversed and remanded, we now

conclude that res judicata was appropriate

based on the Utah court’s affirmed judgment

on the merits in Haugen II.

1

1 P&G was not permitted to amend its Utah

complaint to include claims for disparagement of

Crest toothpaste. This leaves open the possibility

that the events giving rise to the Crest disparagement claim were not a part of the common nucleus

of operative facts giving rise to the Satanism

claims, which would make res judicata inapplicable to the Crest claims. 

P&G, however, has waived this argument by

failing to raise it in its opening brief, which men-

(continued...)
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P&G contends that the district court erred

in according the Utah court’s judgment res

judicata effect, alleging (1) that it was

improperly based on the res judicata effect of

the later-reversed opinion ofthe Texas court in

P&G I, (2) that it was based on incorrect legal

conclusions, contrary to those established in

P&G I, and (3) that it was entered without

giving P&G fair opportunity to be heard.

P&G’s arguments amount to the contention

that the Utah court decided the case wrongly,

or at least differently from how the Texas

court would have done so under this circuit’s

law. 

P&G’sfirst allegation isfaulty, inasmuch as

the Tenth Circuit recognized the potential

difficulty of the Utah court’s basing its

decision on res judicata and proceeded to

consider and affirm the Utah court’s decision

on the merits. This, highlights a flaw in P&G’s

argument: The proper remedy for an allegedly

erroneous judgment is direct appeal to the

proper court, not an attempt to avoid the res

judicata effect of that judgment in anothersuit

against the same party for the same cause of

action. 

All the issues P&G raises assert errors of

law that would undermine the correctness of

the Utah court’s judgment. The question

whether that judgment on the merits was correct, however, does not enter into our inquiry

on the subject of res judicata, for even an incorrect judgment is entitled to res judicata effect. See Parsons Steel, Inc. v. First Ala.

Bank, 474 U.S. 518, 525 (1986). 

“The general rule [of res judicata] stated in

this Section requires that errors underlying a

judgment be corrected on appeal or other

available proceedings to modify the judgment

or to set it aside, and not made the basis for a

second action on the same claim.

RESTATEMENT (SECOND) OF JUDGMENTS §19

cmt. a (1982). As a learned treatise puts it,

“[r]es judicata applies even if the next court

to visit the dispute believes that the second

court’s res judicata ruling was wrong.” 18

WRIGHT, MILLER & COOPER, FEDERAL

PRACTICE AND PROCEDURE:JURISDICTION 2D

§ 4404 (2d ed. 2002). Even where the second

court incorrectly gives preclusive effect to the

first court’s judgment, the first court is bound

by the resjudicata effect of the second court’s

judgment. In re Brady, Tex., Mun. Gas Corp.,

936 F.2d 212 (5th Cir. 1991).

When two suits proceed simultaneously, as

in this case, res judicata effect is given to the

first judgmentrendered. Chicago,Rock Island

&Pac. R.R. v. Schendel, 270 U.S. 611 (1926);

1

(...continued)

tions only that Amway should be estopped from

asserting that the Crest claim does arise from the

common nucleus of operative facts, but does not

provide contentions, facts, legal citations, arguments, or analysis to allow us to conclude that it

theCrest disparagement claimsurvivesthe resjudicata effect of the Utah judgment. Failure adequately to brief an issue on appeal constitutes

waiver of that argument. See FED R. APP. P.

28(a)(9)(A); United States v. Martinez, 263 F.3d

436 (5th Cir. 2001) (noting the rule); State v.

Thames, 214 F.3d 608, 611 n.3 (5th Cir. 2000)

(waiver for failure to include argument in statement

of issue or body of brief); L&A Contracting Co. v.

S. Concrete Servs., 17 F.3d 106 (5th Cir. 1994)

(waiver for failure to cite authority); United States

v. Beaumont, 972 F.2d 553, 563 (5th Cir. 1992)

(failure to argue issue adequately); United States v.

Torres-Aguilar, 352 F.3d 934, 936 n.2 (5th Cir.

2003) (argument deemed abandoned by appellant

“only briefly mentioning it in a footnote of his

opening brief without providing any legal citation

or analysis”).
5

see also 18 WRIGHT, MILLER & COOPER,

supra, JURISDICTION 2D § 4404 (citing Jones

v. Sheehan, Young & Culp, 82 F.3d 1334,

1338-39 n.3. (5th Cir. 1996); In re Hansler,

988 F.2d 35, 38-39 (5th Cir. 1993)).

Maintaining such a litigation strategy almost

assuresthat at some point one of the cases will

become barred by a judgment in the other; the

successful party will find that all its claims and

defenses have merged into the judgment, while

the unsuccessful party will find that its have

been extinguished. “There is no reason why

defendants should be required to defend, or

courts to hear, additional or multiple cases,

free from the protections ofresjudicata, simply because the plaintiff chose to file them

piecemeal at the same time rather than in succession.” Sidag Aktiengesellschaft v. Smoked

Foods Prods. Co., 776 F.2d 1270 (5th Cir.

1985). A party gets only “one bite at the

apple” and is not allowed to take two bites

simply because it attempts to take both at

once rather than seriatim. 

B.

P&G contends that, in according the Utah

judgment res judicata effect, the district court

improperly disregarded the law of the case as

established by this court and slighted the mandate in P&G I. This objection is misguided.

Nothing in our prior rulings has established

that a valid judgment from the Utah court

should not be given res judicata effect by the

Texas court; quite to the contrary, we stated

that the Texas court’s invocation of res

judicata in P&G I was proper but for the fact

that the Utah court’s decision was later

reversed and remanded. It did not, therefore,

run afoul of our mandate for the district court

to accord the Utah judgment res judicata

effect.

To the degree that the decisions ofthe Utah

court and Tenth Circuit on particular issues

may conflict with our holdings on those issues,

P&G has identified a potential source of

conflict between the application of collateral

estoppel based on the Utah judgments and the

law of the case or mandate of the Texas case.

This difficulty does not arise, however, where

res judicata operates not to determine issues

within a case but to extinguish the case as a

whole. 

Although law of the case and res judicata

are somewhat related preclusive doctrines,

“the law of the case doctrine is merely a rule of

practice, based upon sound policy,” while

“[r]es judicata . . . is categoric and requires

that respect be accorded the prior judgment.”

Loumar, Inc. v. Smith, 698 F.2d 759, 762 (5th

Cir. 1983). In discussing the relationship between the doctrines of law of the case and res

judicata, the Supreme Court noted that “there

is a difference between such adherence [to law

of the case] and res judicata; one directs

discretion, the othersupersedesit and compels

judgment. In other words, in one it is a

question of power, in the other ofsubmission.”

S. R.R. v. Clift, 260 U.S. 316, 319 (1922).

The application of res judicata in this case

does not conflict with this court’s rulings or

mandates on the merits of P&G’s claims.

Rather, it bars them a priori. 

The district court properly dismissed

P&G’s claims. The judgment, accordingly, is

AFFIRMED.