United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 96-3092MN

_____________ National Association for the * Advancement of Colored People, * Minneapolis Branch on behalf of * themselves and all others similarly * situated; Bryston Hill, by his next friend * Lisa Hill; Sophie Krahnke, by her next * friends Steven Krahnke and Jane * McLeod; Miquel McElroy, by his next * friend Annie Pearl McElroy; Gregory * McFarland, by his next friend Linda * McFarland; Solveig Mebust; Anna * Appeal from the United States Mebust, by their next friends Bruce * District Court for the District of Lynn Mebust and Kirsten Ann Scribner * Minnesota. Mebust; Diamond Porter, by his next * friend Jamie Porter, *
* Appellants, *

*
v. *
* Metropolitan Council, a Public Body * Corporate and Politic, *
* Appellee. *

_____________ Submitted: May 21, 1997

Filed: September 17, 1997

_____________ Before McMILLIAN, FAGG, and HANSEN, Circuit Judges.-2- _____________ FAGG, Circuit Judge.

The M inneapolis Branch of the National Association for the Advancement o f Colore d People (NAACP) and six Minneapolis schoolchildren, on behalf of al l Min neapolis public school students (the student class), filed this class action i n Hennepin County District Court against the Metropolitan Council (Met Council) and twenty-one state officials and entities (the state defendants), asserting claims under the Minnesota C onstitution. The Met Council, an administrative agency that coordinates planning and development in th e Minneapolis-St. Paul metropolitan area, removed the case to federal district cour t. The NAACP and the student class moved to remand the case to state court. The district court rema nded all claims against the state defendants, but d enied the motion to remand claims against the Met Council. The district cour t based its remo val jurisdiction on the All Writs Act, 28 U.S.C. § 1651 (1994), and the artful pleading doctrine recognized in Fed erated Dep’t Stores, Inc. v. Moitie , 452 U.S. 394 , 397 n.2 (1981). The district court then granted the Met Council’s motion under Federal Rule of Civil Procedure 12(b)(6) to dismiss all claims against it as precluded by an earlier federal jud gment. The NAACP and the student class appeal, contending their claims against the Met Council were not removable, and even if they were, th e district court improperly applied federal res judicata law because this case and th e earlier lawsuit involve different causes of action against the Met Council as well a s different parties.
The issues in this appeal spring from the relation of this action to an earlier class action, Hol lman v. Cisneros , brought in federal court by the NAACP and a clas s consisting of minority persons a nd their families living in, or applying for, low-income housing in Minneapolis (the Hollman class). Filed in 1992, the Hollmanlawsui t clai med public housing in Minneapolis was concentrated in racially segregate d neighborhoods. The NAACP and the Hollman class contended the Met Council had-3-

violated the federal Fair Housing Act by failing to encourage development of low

income housing in Twin Cities’ subur bs, as well as by approving funding for suburban sewer and road pro

jects and thus “accelerat[ing] the polarization of the metro area by income and race.” The lawsui t was settled by consent decree in Hollman v. Cisneros , Civ. No. 4- 92-712 (D. Minn. filed Apr. 21, 1995). In the Hollmandecree, the Me t Council agreed to undertake numerous complex responsibilities to help “achieve a metropolitan distribution of affordable housing.” Among these, the Met Council agreed to consi der low-income housing distribution in its “decisions and recommendation s reg arding the . . . funding, construction, or approval of regional wastewater an d transportation facilities.” The parties agreed to submit periodic progress reports to the district court, and the district court retained jurisdiction to issue “such further order s as may be necessary or appropriate for the enforcement of this Decree.”

Six months after the district court entered judgment in Hollman , the NAAC P filed th is lawsuit in state court “on behalf of a plaintiff class consisting of all students enrolled . . . in the Minneapolis public schools,” which necessarily includes students who live in low-income housing and belong to the Hollmanclass. The plaintiff s (appellants before this court) claimed that because the Minnea polis public schools have disp roportionate enrollments of poor and minority students, generating “negativ e effects” that “depress[] . . . educational achievement,” Minneapolis public schoo l students as a whole are being denied their right to receive an adequate education i n violation of the Education and Equal Protection Clause s of the Minnesota Constitution. See S keen v. State , 505 N.W.2d 299, 313 (Minn. 1993) (recognizing education as a fundamental right under the state constitution). The class-action complaint linke d school enrollments to housing, alleging t he defendants, including the Met Council, had “adopted . . . policies and practices that result in housing segregated by race an d socioeconomic status in the metropolitan area, . . . result[ing] in segregation . . . in the Minneapolis public schools.” The plaintiffs objected to excessive spending o n subur ban infrastructure and to “transportation policies that . . . enable[] ‘white flight’ to suburbs,” and faulted the Met Council for failing “to require . . . suburban-4-

communities . . . to promote the development of low and moderate income housing.” In sustaining removal of, and t hen dismissing, the claims against the Met Council, the district court found the claims “focus exclusively on [the Met Council’s] housin g policies and practices, the subject of the Hollman lawsuit.”

We con sider first whether the district court properly exercised remova l jurisdiction under the authority granted federal courts by the All Writs Act to “issue all writs nece ssary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a). Although the All Writs Act is not an inde pendent grant of jurisdiction, see White v. National Football League , 41 F.3d 4 02, 409 (8th Cir. 1994), the Act empowers a federal court “to issue suc h

com mands . . . as may be necessary or appropriate to effectuate and prevent th e frustrati on of orders it has previously issued in its exercise of jurisdiction otherwis e obtained,” United States v. New York Tel. Co. , 434 U.S. 159, 172 (1977). There is no dispute the district court properly obtained jurisdiction i n Hollman . Under the terms of the Ho llman

decree, the district court retains jurisdiction to supervise complianc e with the decree’s provisions until the year 2002. The decree sets forth the Me t Council’s agreement with the NAACP and the Hollman class that it will alter it s policies and practices with respect to housing , wastewater facilities, and transportation in the Twin Cities’ metropolitan area. Further, the Hollman decree includes a general release barring relitigation by any party of “any matters alleged in this action.”

In this suit, the NAA CP and the student class seek state injunctive relief against the Met Council concerning the very matters the Hollman decree governs. Althoug h this class action is not removable under the federal removal statutes, the district court was confront ed with a situation where parties subject to the district court’s continuing jurisdiction under the Hollmandecree--the NAACP and those student class member s belonging to the Hollman

class- -were resorting to a state forum to relitigate settled and rel eased claims. Faced with this circumstance, we believe the district court wa s warranted in authorizing removal from state court under the All Writs Act to protect the-5-

integrity of the federal consent decree entered in Hollman , see In re Agent Orange Prod. Liab. Litig. , 996 F.2d 1425, 1431 (2d Cir. 1993), even though re moval also brought into federal court those members of the student class who were not involved in Hollman , see New York Tel. Co. , 434 U.S. at 174 (federal court’s power under All Writs Act may encomp ass “persons who [were] not parties to the original action”). See also In r e VMS Sec. Litig. , 103 F.3d 1317, 1323-24 (7th Cir. 1996) (app roving removal under All Writs Act t o enforce orders against relitigation and to guard integrity of earlier rulings over which district court retained jurisd iction); Sable v. General Motors Corp. , 90 F.3d 171 , 175 (6th Cir. 1996) (upholding removal under All Writs Act to protect federa l consent decree from conflicting state orders); Yonkers Racing Corp. v. City of Yonkers , 858 F.2d 855, 863-65 (2d Cir. 1988) (holding removal proper under All Writs Act to prot ect integrity of federal consent decree and because issues raised in state suit were inseparable from relief provided by the decree); but see Hillman v. Webley , 115 F.3d 1461, 146 9 (10th Cir. 1997) (holding All Writs Act may not be used as basis fo r removal, but district court may “enjoin parties before it from pursuing conflictin g litigation in the state court”). Further, if we held these claims unremovable under the All Writs Act, any state-court orders affecting the Met Council inconsistent with th e H o llman decree “would be subject to the injunctive powers of the federal court under the exception provisions of the Anti-Injunction Act.” Yonkers , 858 F.2d at 864. Given the choices available to the district court, we think removal in this case better preserves state-fed eral relations than would later resort to an injunction because it spares th e Hennepin County District Court from expending judicial resourc es to no avail. Because

we conclude removal was proper under the All Writs Act, we need not determin e whether removal was also warranted under the artful pleading doctrine.
Having decided the district court properly exercised removal jurisdiction ove r claims asserted against the Met Council, we n ow turn to the district court’s res judicata dismissal of those claims as precluded by Hollman . Our review is de novo, on bot h procedural and substant

ive grounds. See Coleman v. Watt , 40 F.3d 255, 258 (8th Cir. 1994) (appeal from dismissal under Rule 12(b)(6)); Poe v. John Deere Co. , 695 F.2d-6-

1103, 1105 (8th Cir. 1982) (federal law governs r es judicata effect of an earlier federal judgment based on federal law). Under the doctrine of res judica ta, or claim preclusion, “‘a final judgment on the

merits bars further claims by parties or their privies based on the same cause of action.’” United States v. Gurley , 43 F.3d 1188, 1195 (8 th Cir. 1994) (quoting Montana v. United States , 440 U.S. 147, 1 53 (1979)). Specifically, the earlier Hollman l itigation precludes claims against the Met Council in this lawsuit if (1) th e earlier suit resulted in a final judgment on the merits, (2) the earlier suit was based on proper jurisdictio n, (3) both suits involved the same cause of action, and (4) both suits in volved the same parties or their privies. See United States EPA v. City of Gree n Forest, Ark. , 921 F.2d 1394, 1403 (8th Cir. 1990). A consent decree i s a final judgment

on the merit s, see id. , and no one challenges the jurisdiction of the Hollmancourt

. Consequen tly, this appeal turns on whether this suit involves the same cause of action against the Met Council, and the same parties or their privies, as in Hollman

. Initially, the NAACP and the student class conten d this suit and Hollman involve different c auses of action because Hollman claimed Fair Housing Act violations while this suit a sserts violations of a right to an adequate education under the Minnesot a Const itution. This argument misses the mark. The same cause of action framed i n terms of a new legal theory is still the same cause of action. See Gurley , 43 F.3d a t 1195. The claims against the Met Council in this suit involve the same cause of action as the claims agains t the Met Council in Hollman if both sets of claims “‘arise[] out of the same nucleus of operative facts.’” Id. ( quoting Lane v. Peterson , 899 F.2d 737, 742 (8th Cir. 1990)). “In the final analysis, the test [is] whether th e wrong for which redress is sough t is the same in both actions.” Id. at 1196 (internal quotations omitted ; emphasis in Gurley ). As against the Met Coun cil, this suit seeks what Hollmansought: to end the claimed segregative effect of the Met Council’s policies and practice s concerning housing and rel ated infrastructure projects in the Twin Cities’ metropolitan area. Despite the argument of the NAACP and the student class to the contrary, the fact their complaint alleges the Met Council failed “to coordinate school-7-

desegregation/integration efforts with the housing, social, economic, and infrastructure needs of the metropolitan area” does not affect our conclusion that, as far as the claims against the Met Council are concerned, this suit and Hollman involve the same cause of action. The “failure to coor dinate” claim pertains to one of the state defendants, the Office of Desegregation

/Integration in Minnesota’s Department of Education, because that Office, not the Met Council, shoulders the statutory responsibility for undertaking coordination efforts. See Minn. Stat. Ann. § 121.1601 (West Supp. 1997) (creatin g Desegregation Office and prescribing its duties). Otherwise, neither the plaintiffs ’ complaint nor their brief suggests the Met Council bears any responsibility for public education under Minnesota law.

Finally, we must determine whether this suit and Hollmaninvolve the sam e parties or their privies. The NAACP was a party to Ho llman , and it brought this suit on behalf of th e student class. As defined in the plaintiffs’ complaint, the student clas s necessarily includes students who live in low-income housing and belong to t he Hollman class. We cannot determine the extent of class overlap, but it may be extensive because the plaintiffs’ complaint states “the Minneapolis public schools have an extraordinary proportion of

children living in poverty among their student populations,” an assertion we must acc ept as true. See Coleman , 40 F.3d at 258. Given the two classes overlap but are not identical, the question we must answer is whether the student class in this case is in privity with the Hollman class.

Because the student class in this suit neither controlled the Hollman action no r
are successors-in-interest to the Hollman class, the resolution of the privity issu e de pends on whether the student class was adequately represented in the earlier action by the Hollman

clas s. See Tyus v. Schoemehl , 93 F.3d 449, 454 (8th Cir. 1996), cert. denied , 117 S. Ct. 1427 (1997). In this circuit, “‘a p erson may be bound by a judgment

ev en though not a party if one of the parties to the suit is so closely aligned with [th e person’s] interests as to be [that person’s] virtual rep resentative.’” Id. (quoting AerojetGeneral Corp. v. Askew , 511 F.2d 710, 719 (5th Cir. 1975)). Nonparty preclusion-8-

based on virtual representation involves an equitable, case-by-case inquiry, and there is no clear test for courts to apply. See id. at 455. Nevertheless, analyzing a particular

case in l ight of the factors the court identified in Tyus enables us to “ensure that th e relationship betw een the party to the original suit and the party sought to be precluded in the later suit is sufficiently close to justify preclusion.” Id. at 454.

Al though not enough by itself, identity of interests between the parties i s
esse ntial. See id. at 455. This requirement is satisfied here. As against the Me t Council, the interests of

the Hollman class and the student class are virtually the same. The only difference is the Hollmanclass sued the Met Council to secure broade r geographical distribution of low-income housing as an end in itself, while the student class seeks the same relief against the Met Council as a means to the end of improving education. Furthermore, the Hollman class adequately represented the i nterests it shares with the stud ent class because the Hollman class had a powerful incentive to establish the segre gative effects of the Met Council’s housing policies and practices. See id. at 455-56. After all, the Hollmanclass could not prevail in its lawsuit against the Me t Council without successfully litigating the same kind of claims raised against the Met C o uncil by the student class in this case. Although incentive to litigate, not results, is the key, see id. at 458, the Hollman plaintiffs secured commitments of more than $100 million t o promote the spread of low-income housing in the Twin Cities’ metropolitan area--which in turn, according to the plaintiffs’ complaint in this suit, will improv e educational achievement in the Minneapolis schools.

Because the memberships o f the student and Hollman classes overlap, it is clear to us the parties in the two suits are not strangers to one another. Indeed, the student membe rs of the Hollmanclass actually participated in that litigation. See id. at 455

. Adding these considerations to the two classes’ closely aligned interests, and th e Hollman class’s incentive to protect those interests in the earlier suit, we are satisfied that the members of the student class were adequately represented by, and thus are in-9-

privity with , the Hollman class. Accordingly, the district court properly dismissed the claims against the Met Council as precluded by Hollman

. We affirm the judgment of the district court.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.