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

_______________



### m 03-20202

_______________



### T HE 

### P ROCTER 

### & G AMBLE 

### C OMPANY 

### ;

T HE 

### P ROCTER 

### & G AMBLE 

### D ISTRIBUTING 

### C OMPANY



### ,

Plaintiffs-Appellants,

VERSUS



### A MWAY 

### C ORPORATION



### , ET 

### A L



### .,

Defendants,



### A MWAY 

### C ORPORATION



### ,

Defendant-Appellee.

_________________________

Appeals from the United States District Court

for the Southern District of Texas

_________________________2

Before G ARWOOD , H IGGINBOTHAM , and

S MITH , Circuit Judges.

J ERRY E. S MITH , Circuit Judge:

The Pr o cter & Gamble Company and the

Procter & Gamble Distributing Company

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

appeal a summary judgment in favor of

de fendant Amway Corporation, alleging that

the district court gav e improper r es judicata

effect to a judgment of t he 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. S ee Procter & Gamble Co. v.

Amway Corp.

, 242 F.3d 5 39 (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 Satani sm and has attempted to

identi fy Amway and its distributors as the

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

Amway and other defendants in federal district

court in Utah. P&G then filed a second

amended complaint alleging defamation, common law unfair competition, violations of t h e

Utah Truth in Advertising Act, torti ous

in terference, negligent supervi si on and

violations of the Lanham Act, and v icari ous

liabilit y arising out of the Sat anism rumor.

P&G later filed a third amended complaint

alleging that Amway’s distribution me thod was

an illegal pyramid scheme, and claiming fraud

and product disparagement. The Utah court granted Amway’s m otion

t o dismiss the Third Amended Complaint.

P&G later filed a Fourth Amended Complaint

asserting claims for product disparagement,

based on allegations that Amway had told consumers that 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 Di stri ct of

Texas, alleging causes o f action for unfair

competit i on, negl i gent supervision, negligence,

business disparagement, defamation, torti ous

interference wi

th prospective business

relations, vicarious liabilit y, fr aud, violations of

RICO, violations of the Lanh am Act, and

vio lations of the Texas Business and

Commerce Code. These causes of action were

based on the Satanism rumor, the Crest rumor,

and Amway’s alleged pyramid sc heme. In

April 1999, the Utah court entered a f i nal

judgment dismissing all of P&G’s claims.

The instant case went to trial in May 1999.

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

for judgmen t as a matter of law. The district

court granted the motion and dismissed P&G’s

Lanham Act claim on the basis of the r es

judicata effect of the Utah court ’s judgment.

It also dismissed P&G’s rem aining claims on

the merits. After the Texas court had entered

judgment, but before we heard the appeal, the

Tenth Circuit affirmed in part, reversed in part,

and remanded the Utah district court’s

judgment. S ee Procter & Gamble Co. v.

Haugen

, 222 F.3d 1262 (10th Ci r. 2000)

(“ Haugen I

”).

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

in part the dis t rict court’s rulings on the

merits. Most importantly, we found that at the

time P&G

I was decided, there was no r es3

judicata effect from the Utah c ase. We held

that the distric t court had correctl y accorded

the Utah court’s judgment res judicata effect

and t h at dismissal had been proper when

gra n ted. The Tenth Circuit’s subsequent reversal and remand eliminated, however, any

res judicata bar occasioned by the reversed

and remanded judgment. P &G I, 2 42 F.3d at

546. Accordingly, we vacated on the ground

of res judicata

.

The issue s we considered in P &G II did

no t co ncern Amway or the appeal before us

today. We did, however, note that after

P&G I a nd P&G

II , “the only claims

cu rrent ly 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 Circ u it, the

Utah court dismissed al l o f P&G’s claims.

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

Supp. 2d 1286 (N.D .Utah 2001), a ff’d

, 317

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

Tenth Circuit’s affirmance, the Texas d i strict

co urt granted Amway’s motion for summary

judgment, dismissing P&G’s remaining claims.

P&G filed a timely notice of appeal, and t he

dist r ict court subsequently entered judgment

pursuant to F ED

. R. C IV

. P. 54(b), thus

assuring our jurisdiction over this appeal.

II.

We r eview a summary judgment d e novo,

using the sam

e st andards as did the district

court. B P O il Int’l, Ltd. v. Empresa Estatal

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

2003). The r

es 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’ r es judicata , is the

‘venerable legal canon’ that insures the finalit y

of judgments and thereby conserves judicial resources and protects lit ig ants from multiple

lawsui ts.” U nited States v. Shanbaum

, 10

F.3d 305 (5th Cir. 1994). R es judicata applies

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

the first action is rendere d by a court of

competent jurisdiction; (3) t he first action

concluded with a final judgment on the merits;

and (4) the sa me claim or cause of action is

involved in both suits.” E llis v. Amex Life Ins.

Co.

, 211 F.3d 935, 937 (5th Ci r. 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 o n the same transactions,

and involves substantially the same parties, as

does the Utah suit

. ” H aving already decided

that res judicata based on the Utah court’s

judg ment in H

augen I would have been

appropriate but for the fact that the judgment

had been reversed and remanded, we now

conclude that res judicata was appropri ate

based on the Utah court’s affirmed judgment

on the merits in Haugen II

. 1

1 P&G was not permitt ed to amend its Utah

complaint to include claims for disp aragement 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 Sa t anism

claims, whi ch would make r es 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...)4

P&G contends that the district court erred

in according the Utah court’s judgment res

judicata effect, alleging ( 1) that i t was

improperly based on the res judicata effect of

the later-reversed opinion of the 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 i

t was entered wi thout

giving P&G fair opportunity to be heard.

P&G’s arguments am

o unt 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’s first allegation is faulty, inasmuch as

the Tenth Circuit recognized the pote n tial

difficult y o f 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 dire ct appeal to the

proper court, not an attem pt to avoi d the res

judicata effect of that judgment in another suit

against the same party for the same cause of

action.

Al l t he issues P&G raises assert errors of

law that wo uld 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 eff ect. S ee Parsons Steel, Inc. v. First Ala.

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

“The general rule [of res judicata] stated in

this Section requires tha t 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

. R ESTATEMENT (S ECOND ) OF J UDGMENTS §19

cmt. a (198 2). As a learned treatise puts it,

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

to visit the disput e believes that the second

court’s res judicata r uling was wrong.” 18

W RIGHT

, M IL

LER & C OOPER

, F EDERAL

P RACTICE AND P ROCEDURE : J URISDICTION 2 D

§ 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 res judicata effect of the second court’s

judgment. I

n 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 judgment rendered. C hicago, Rock Island

& Pac. R.R. v. Schendel

, 270 U.S. 611 (1926); 1 (...continued)

t ions only that Amway should be estoppe d from

asserting that the Crest claim does arise from the

common nucleus o f operative facts, but does not

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

the Crest disparagement claim survives the res judicata effect of the Utah judgment. Failure adequately t o brief an issue on appeal constitutes

waiver of that argument. S ee F ED R. A PP

. 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.

Tor r es-Aguilar

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

2003 ) (argument deemed abandoned by appellant

“o nly briefly mentioning it in a footnote of his

opening brief without providing any legal citation

or analysis”).5

see also 18 W RIGHT

, M ILLER & C OOPER

,

supra

, J URISDICTIO N 2 D § 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)).

M aintaining such a litigation strategy alm ost

assures that 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 e xt inguished. “There is no reason why

defendants should be r e quired to defend, or

courts to hear, add it ional or multiple cases,

free from the protecti ons of res judicata, simply because the plaint iff ch o se to file them

piecemeal at the same time rather than in succession.” S idag 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 all owed to take two bi tes

simply because it attem

pts 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 o bjection is misguided.

Nothing in our prior rulings has establis hed

that a valid jud gment from the Utah court

should not be given res judicata effect by the

Texas court; quite to the con trary , we stated

that the Texa s court’s invocation of r es

judicata in P&G

I was proper but for the fact

that the Ut a h 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 of the Utah court and Tenth Circuit o n particular issues

may conflict with our holdings on those issues,

P&G has identif

ied a potential source of

conflict between the application o f collateral

estoppel based on the Utah judgments and the

law of the case or mandate of the Texas case.

This difficult

y 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 r

es judicata

are somewhat related preclusive doctrines,

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

practice, based upon s o und 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 other supersedes it and compels

judgment. In other words, in one it is a

question of power, in the other of submission.”

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

The application of res judicata in t his case

does not conflict with this court’s r ulings 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.