FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, 

No. 07-10424 Plaintiff-Appellee,

D.C. No.

v.  CR-05-00334-SBA

LAL BHATIA,

OPINION Defendant-Appellant. 

Appeal from the United States District Court

for the Northern District of California

Saundra B. Armstrong, District Judge, Presiding

Argued and Submitted

August 12, 2008—San Francisco, California

Filed September 24, 2008

Before: Eugene E. Siler, Jr.,* M. Margaret McKeown, and

Consuelo M. Callahan, Circuit Judges.

Opinion by Judge McKeown

*The Honorable Eugene E. Siler, Jr., Senior United States Circuit Judge

for the Sixth Circuit, sitting by designation. 

13613
COUNSEL

Stanley G. Hilton, Esq., Law Offices of Stanley G. Hilton,

San Francisco, California, for the defendant-appellant. 

Joseph P. Russoniello, United States Attorney, Barbara J. Valliere, Chief, Appellate Section, Stephen G. Corrigan, Assistant United States Attorney, Oakland, California, for the

plaintiff-appellee. 

OPINION

McKEOWN, Circuit Judge: 

The issue we consider is whether there was privity between

the government and a third party in a civil fraud action sufficient to bar a subsequent criminal prosecution of Lal Bhatia

for wire fraud and money laundering. Bhatia argues that

because the government took the “laboring oar” in the civil

UNITED STATES v. BHATIA 13615
action, there was sufficient privity for application of res judicata and collateral estoppel. The facts do not support such a

claim. Instead, Bhatia’s argument is a variation on the “virtual

representation” theory recently rejected by the Supreme Court

in Taylor v. Sturgell, 128 S.Ct. 2161 (2008). Because his

claims of res judicata and collateral estoppel are not colorable,

we dismiss this interlocutory appeal for lack of jurisdiction.

BACKGROUND

In 2004, Bhatia was one of several defendants sued in federal court in Texas. The plaintiff was an entity named Inderra

Houston, L.P. (“Inderra”), which was formed to build a real

estate project in Houston, Texas. Its principals, Ralph Abercia, Sr. and Ralph Abercia, Jr., sought sources of financing for

the project and eventually met with representatives of Wolfe

& Turner and Sherwin & Noble, including Bhatia. Bhatia was

in charge of both entities, and represented that Sherwin &

Noble could fund a $105 million loan upon Inderra’s payment

of a $1.575 million loan commitment fee. Although the Abercias agreed, and paid the fee, Inderra never received the loan

proceeds. It then filed suit against Bhatia and eight other

defendants for fraud, negligence, and breach of fiduciary

duty. In the midst of discovery, Inderra filed a motion for voluntary dismissal of the action. The court eventually dismissed

Bhatia and his co-defendants with prejudice. 

While the civil proceeding was pending, the government

filed a criminal complaint against Bhatia and three other individuals allegedly involved in the Inderra transaction. They

were ultimately indicted in federal court in California on three

counts of wire fraud, 18 U.S.C. § 1343, and four counts of

money laundering, 18 U.S.C. § 1957(a). Bhatia moved to dismiss the criminal indictment on grounds of collateral estoppel

and res judicata, and the district court denied the motion.

After Bhatia filed his notice of appeal, the government

requested that Bhatia’s claims of res judicata and collateral

estoppel be found not colorable, so as to preclude appellate

13616 UNITED STATES v. BHATIA
jurisdiction. The district court denied the government’s

request.

ANALYSIS

[1] Generally, denials of pre-trial motions are not considered final, appealable judgments, but we do have jurisdiction

where a “colorable” claim of double jeopardy is raised.1See

Richardson v. United States, 468 U.S. 317, 322 (1984);

United States v. Cejas, 817 F.2d 595, 596 (9th Cir. 1987). To

be colorable, Bhatia’s claims of res judicata and collateral

estoppel must have “ ‘some possible validity.’ ” United States

v. Zone, 403 F.3d 1101, 1104 (9th Cir. 2005) (per curiam)

(quoting United States v. Sarkisian, 197 F.3d 966, 983 (9th

Cir. 1999)). 

[2] Res judicata, or claim preclusion,2“provides that ‘a

final judgment on the merits bars further claims by parties or

their privies based on the same cause of action.’ ” United

States v. Schimmels (In re Schimmels), 127 F.3d 875, 881 (9th

Cir. 1997) (quoting Montana v. United States, 440 U.S. 147,

153 (1979)). The related doctrine of collateral estoppel, or

issue preclusion, provides that “when an issue of ultimate fact

has once been determined by a valid and final judgment, that

issue cannot again be litigated between the same parties in

any future lawsuit.” Ashe v. Swenson, 397 U.S. 436, 443

(1970). Both doctrines apply to criminal and civil proceedings, Cejas, 817 F.2d at 598, and both require privity between

the parties. See In re Schimmels, 127 F.3d at 881 (noting that,

under res judicata, “parties or their privies” may be bound by

1We review de novo the denial of a motion to dismiss on double jeopardy grounds. United States v. Price, 314 F.3d 417, 420 (9th Cir. 2002).

2The Supreme Court recently clarified that the terms “claim preclusion”

and “issue preclusion” are collectively referred to as “res judicata.” Taylor, 128 S.Ct. at 2171. The record and briefs reflect that the district court

and the parties used the term “res judicata” to mean “claim preclusion,”

and “collateral estoppel” to mean “issue preclusion.” 

UNITED STATES v. BHATIA 13617
a prior judgment); United States v. ITT Rayonier, Inc., 627

F.2d 996, 1000 (9th Cir. 1980) (requiring identity or privity

between parties for collateral estoppel to apply). 

[3] Bhatia grounds his privity argument on the notion that

the government “assisted [Inderra] by procuring evidence and

interviewing witnesses” during the civil action. Privity “is a

legal conclusion ‘designating a person so identified in interest

with a party to former litigation that he represents precisely

the same right in respect to the subject matter involved.’ ” In

re Schimmels, 127 F.3d at 881 (quoting Sw. Airlines Co. v.

Tex. Int’l Airlines, Inc., 546 F.2d 84, 94 (5th Cir. 1977)). The

federal courts “have deemed several relationships ‘sufficiently

close’ to justify a finding of ‘privity’ and, therefore, preclusion under the doctrine of res judicata.” Id. (quoting Sw. Airlines, 546 F.2d at 95). The Supreme Court recently referenced

a relationship justifying a finding of privity where a nonparty

“ ‘assume[d] control’ over the litigation in which that judgment was rendered.” Taylor, 128 S.Ct. at 2173 (quoting Montana, 440 U.S. at 154); see also In re Schimmels, 127 F.3d at

881 (noting that a “non-party who controlled the original suit

will be bound by the resulting judgment”) (quoting Sw. Airlines, 546 F.2d at 95). 

[4] To determine whether a nonparty “assumed control

over” a previous action so as to be bound by its judgment, a

court must evaluate whether the “relationship between the

nonparty and a party was such that the nonparty had the same

practical opportunity to control the course of the proceedings.” 18A Charles Alan Wright, Arthur R. Miller & Edward

H. Cooper, FED. PRAC. & PROC. § 4451, p. 373 (2d ed. 2002).

In Montana, 440 U.S. 147, the Supreme Court concluded that

privity between the government and the civil plaintiff in a

prior action barred the government’s subsequent suit. A private contractor disputed in state court the constitutionality of

a Montana gross receipts tax, alleging that the tax discriminated against the federal government and private companies.

The government later raised the same challenge—the consti13618 UNITED STATES v. BHATIA
tutionality of the gross receipts tax—in federal court. Id. at

151-53. 

The Supreme Court reasoned that the later action by the

United States was barred because the government was in privity with the private contractor in the state court suit. The government stipulated that, in the state action, it had: required the

contractor’s lawsuit to be filed; reviewed and approved its

complaint; paid its attorneys’ fees and costs; directed the

appeal from the state trial court to the Supreme Court;

appeared before and submitted an amicus brief in the Montana Supreme Court; directed the filing of a notice of appeal

to the Supreme Court; and “effectuated” the company’s abandonment of that appeal. Id. at 155. These circumstances demonstrated that “the United States plainly had a sufficient

‘laboring oar’ in the conduct of the state-court litigation to

actuate principles of estoppel.” Id. Central to the Court’s

holding in Montana was the notion that “[b]ecause such a

[third party] has had the ‘opportunity to present proofs and

argument,’ he has already ‘had his day in court’ even though

he was not a formal party to the litigation.” Taylor, 128 S.Ct.

at 2173 (quoting Restatement 2d of Judgments § 39, Comment a, p. 302). 

[5] The facts alleged by Bhatia3 in support of his privity

argument come nowhere close to establishing privity between

the government and Inderra. To be sure, the FBI was involved

in a parallel criminal investigation of Bhatia while the civil

suit was ongoing, but nothing in the record supports the claim

that the government controlled or influenced the civil litigation, or took the “laboring oar.” See Headwaters Inc. v. U.S.

3The government contends that some of the facts alleged by Bhatia to

establish privity were not before the district court, namely, that the FBI

informed witnesses of the government’s theory, located witnesses, induced

them to speak, and gathered discovery. Bhatia mentioned several of these

instances in his motion to dismiss, although phrased differently, and thus

we consider that evidence as part of the record on review. 

UNITED STATES v. BHATIA 13619
Forest Serv., 399 F.3d 1047, 1054 (9th Cir. 2005) (holding

that “parallel legal interests alone, identical or otherwise, are

not sufficient to establish privity”). Inderra’s objective was

understandably self-interested—to obtain repayment of the

$1.575 million loan fee. In contrast, the government’s objective was pursuit of a separate criminal prosecution. Unlike the

government’s actions in Montana, the FBI did not direct or

review Inderra’s filings, had no “opportunity to present proofs

and argument,” and did nothing to influence or affect Inderra’s litigation strategy. 

[6] That fruits of the FBI’s criminal investigation may have

aided Inderra during its action does not rise to the level of a

mutuality of interests necessary to preclude a subsequent

criminal prosecution. Cooperation is not the same as control.

Were we to adopt Bhatia’s theory of privity, it would chill

cooperation in parallel civil and criminal proceedings and

impede the government’s ordinary investigations in a criminal

case. To invoke “control” as the basis for privity requires

something beyond the cooperation and sharing of witness

interviews that Bhatia presents here. At most, as the district

court noted, “the only connection that exists between the parties of both cases can be found in periodic discussions

between Inderra officials and Government agents.” 

[7] Because there was no privity between the government

and Inderra, Bhatia’s res judicata and estoppel claims are

doomed from the start. Given the stark contrast between the

circumstances in Montana, and those presented here, his

claims had no “possible validity.” Zone, 403 F.3d at 1104. We

therefore dismiss his appeal for lack of jurisdiction.4

DISMISSED.

4For the same reason, we dismiss Bhatia’s claim that the district court

abused its discretion in not granting an evidentiary hearing on his motion

to dismiss. 

13620 UNITED STATES v. BHATIA