United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 96-3092MN

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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. *

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 Submitted: May 21, 1997

Filed: September 17, 1997

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Before McMILLIAN, FAGG, and HANSEN, Circuit Judges.
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FAGG, Circuit Judge.

The Minneapolis Branch of the National Association for the Advancement of

Colored People (NAACP) and six Minneapolis schoolchildren, on behalf of all

Minneapolis public school students (the student class), filed this class action in

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 Constitution. The Met Council, an administrative agency that coordinates

planning and development in the Minneapolis-St. Paul metropolitan area, removed the

case to federal district court. The NAACP and the student class moved to remand the

case to state court. The district court remanded all claims against the state defendants,

but denied the motion to remand claims against the Met Council. The district court

based its removal jurisdiction on the All Writs Act, 28 U.S.C. § 1651 (1994), and the

artful pleading doctrine recognized in Federated 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 judgment. The NAACP and the student class appeal, contending

their claims against the Met Council were not removable, and even if they were, the

district court improperly applied federal res judicata law because this case and the

earlier lawsuit involve different causes of action against the Met Council as well as

different parties.

The issues in this appeal spring from the relation of this action to an earlier class

action, Hollman v. Cisneros, brought in federal court by the NAACP and a class

consisting of minority persons and their families living in, or applying for, low-income

housing in Minneapolis (the Hollman class). Filed in 1992, the Hollman lawsuit

claimed public housing in Minneapolis was concentrated in racially segregated

neighborhoods. The NAACP and the Hollman class contended the Met Council had
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violated the federal Fair Housing Act by failing to encourage development of lowincome housing in Twin Cities’ suburbs, as well as by approving funding for suburban

sewer and road projects and thus “accelerat[ing] the polarization of the metro area by

income and race.” The lawsuit was settled by consent decree in Hollman v. Cisneros,

Civ. No. 4-92-712 (D. Minn. filed Apr. 21, 1995). In the Hollman decree, the Met

Council agreed to undertake numerous complex responsibilities to help “achieve a

metropolitan distribution of affordable housing.” Among these, the Met Council agreed

to consider low-income housing distribution in its “decisions and recommendations

regarding the . . . funding, construction, or approval of regional wastewater and

transportation facilities.” The parties agreed to submit periodic progress reports to the

district court, and the district court retained jurisdiction to issue “such further orders

as may be necessary or appropriate for the enforcement of this Decree.”

Six months after the district court entered judgment in Hollman, the NAACP

filed this 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 Hollman class. The plaintiffs

(appellants before this court) claimed that because the Minneapolis public schools have

disproportionate enrollments of poor and minority students, generating “negative

effects” that “depress[] . . . educational achievement,” Minneapolis public school

students as a whole are being denied their right to receive an adequate education in

violation of the Education and Equal Protection Clauses of the Minnesota Constitution.

See Skeen v. State, 505 N.W.2d 299, 313 (Minn. 1993) (recognizing education as a

fundamental right under the state constitution). The class-action complaint linked

school enrollments to housing, alleging the defendants, including the Met Council, had

“adopted . . . policies and practices that result in housing segregated by race and

socioeconomic status in the metropolitan area, . . . result[ing] in segregation . . . in the

Minneapolis public schools.” The plaintiffs objected to excessive spending on

suburban infrastructure and to “transportation policies that . . . enable[] ‘white flight’

to suburbs,” and faulted the Met Council for failing “to require . . . suburban
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communities . . . to promote the development of low and moderate income housing.”

 In sustaining removal of, and then dismissing, the claims against the Met Council, the

district court found the claims “focus exclusively on [the Met Council’s] housing

policies and practices, the subject of the Hollman lawsuit.”

We consider first whether the district court properly exercised removal

jurisdiction under the authority granted federal courts by the All Writs Act to “issue all

writs necessary 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 independent grant of jurisdiction, see White v. National Football League, 41

F.3d 402, 409 (8th Cir. 1994), the Act empowers a federal court “to issue such

commands . . . as may be necessary or appropriate to effectuate and prevent the

frustration of orders it has previously issued in its exercise of jurisdiction otherwise

obtained,” United States v. New York Tel. Co., 434 U.S. 159, 172 (1977). There is

no dispute the district court properly obtained jurisdiction in Hollman. Under the terms

of the Hollman decree, the district court retains jurisdiction to supervise compliance

with the decree’s provisions until the year 2002. The decree sets forth the Met

Council’s agreement with the NAACP and the Hollman class that it will alter its

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 NAACP and the student class seek state injunctive relief against

the Met Council concerning the very matters the Hollman decree governs. Although

this class action is not removable under the federal removal statutes, the district court

was confronted with a situation where parties subject to the district court’s continuing

jurisdiction under the Hollman decree--the NAACP and those student class members

belonging to the Hollman class--were resorting to a state forum to relitigate settled and

released claims. Faced with this circumstance, we believe the district court was

warranted in authorizing removal from state court under the All Writs Act to protect the
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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 removal 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

encompass “persons who [were] not parties to the original action”). See also In re

VMS Sec. Litig., 103 F.3d 1317, 1323-24 (7th Cir. 1996) (approving removal under All

Writs Act to enforce orders against relitigation and to guard integrity of earlier rulings

over which district court retained jurisdiction); Sable v. General Motors Corp., 90 F.3d

171, 175 (6th Cir. 1996) (upholding removal under All Writs Act to protect federal

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

protect 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, 1469 (10th Cir. 1997) (holding All Writs Act may not be used as basis for

removal, but district court may “enjoin parties before it from pursuing conflicting

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 the

Hollman 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-federal relations than would later resort to an injunction because it spares the

Hennepin County District Court from expending judicial resources to no avail. Because

we conclude removal was proper under the All Writs Act, we need not determine

whether removal was also warranted under the artful pleading doctrine. 

Having decided the district court properly exercised removal jurisdiction over

claims asserted against the Met Council, we now turn to the district court’s res judicata

dismissal of those claims as precluded by Hollman. Our review is de novo, on both

procedural and substantive 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
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1103, 1105 (8th Cir. 1982) (federal law governs res judicata effect of an earlier federal

judgment based on federal law). Under the doctrine of res judicata, 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 (8th Cir. 1994)

(quoting Montana v. United States, 440 U.S. 147, 153 (1979)). Specifically, the earlier

Hollman litigation precludes claims against the Met Council in this lawsuit if (1) the

earlier suit resulted in a final judgment on the merits, (2) the earlier suit was based on

proper jurisdiction, (3) both suits involved the same cause of action, and (4) both suits

involved the same parties or their privies. See United States EPA v. City of Green

Forest, Ark., 921 F.2d 1394, 1403 (8th Cir. 1990). A consent decree is a final judgment

on the merits, see id., and no one challenges the jurisdiction of the Hollman court.

Consequently, 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 contend this suit and Hollman involve

different causes of action because Hollman claimed Fair Housing Act violations while

this suit asserts violations of a right to an adequate education under the Minnesota

Constitution. This argument misses the mark. The same cause of action framed in

terms of a new legal theory is still the same cause of action. See Gurley, 43 F.3d at

1195. The claims against the Met Council in this suit involve the same cause of action

as the claims against 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 the wrong for which redress

is sought is the same in both actions.” Id. at 1196 (internal quotations omitted;

emphasis in Gurley). As against the Met Council, this suit seeks what Hollman sought:

to end the claimed segregative effect of the Met Council’s policies and practices

concerning housing and related 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
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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 coordinate” 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) (creating

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 Hollman involve the same

parties or their privies. The NAACP was a party to Hollman, and it brought this suit on

behalf of the student class. As defined in the plaintiffs’ complaint, the student class

necessarily includes students who live in low-income housing and belong to the 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 accept 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 nor

are successors-in-interest to the Hollman class, the resolution of the privity issue

depends on whether the student class was adequately represented in the earlier action

by the Hollman class. See Tyus v. Schoemehl, 93 F.3d 449, 454 (8th Cir. 1996), cert.

denied, 117 S. Ct. 1427 (1997). In this circuit, “‘a person may be bound by a judgment

even though not a party if one of the parties to the suit is so closely aligned with [the

person’s] interests as to be [that person’s] virtual representative.’” Id. (quoting AerojetGeneral Corp. v. Askew, 511 F.2d 710, 719 (5th Cir. 1975)). Nonparty preclusion
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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 light of the factors the court identified in Tyus enables us to “ensure that the

relationship between 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.

Although not enough by itself, identity of interests between the parties is

essential. See id. at 455. This requirement is satisfied here. As against the Met

Council, the interests of the Hollman class and the student class are virtually the same.

The only difference is the Hollman class sued the Met Council to secure broader

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 interests it shares

with the student class because the Hollman class had a powerful incentive to establish

the segregative effects of the Met Council’s housing policies and practices. See id. at

455-56. After all, the Hollman class could not prevail in its lawsuit against the Met

Council without successfully litigating the same kind of claims raised against the Met

Council 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 to 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 improve

educational achievement in the Minneapolis schools.

Because the memberships of 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

members of the Hollman class actually participated in that litigation. See id. at 455.

Adding these considerations to the two classes’ closely aligned interests, and the

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
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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.