Opinion ID: 3183121
Heading Depth: 5
Heading Rank: 2

Heading: Second action involving the same parties

Text: In Ohio, application of res judicata requires the parties to the first action be identical to, or privies with, those in the second (precluded) action. Johnson’s Island, Inc. v. Danbury Twp. Bd. of Trs., 431 N.E.2d 672, 675 (Ohio 1982). Ohio courts “have applied a broad definition to determine whether the relationship between the parties is close enough to invoke the doctrine” of res judicata. Kirkhart v. Keiper, 805 N.E.2d 1089, 1092 (Ohio 2004). “Thus, a mutuality of interest, including an identity of desired result, may create privity.” Id. (internal quotation marks omitted). In this case, both the Ohio and federal actions involve Relator as plaintiff and KHN as defendant. Moreover, because the Ohio court entered judgment in Relator’s state action before the federal district court, the federal case became the second action for res judicata purposes. Relator appears to argue that the parties in her federal and state cases are different because the state case “has two additional parties (Plaintiff Vicki Sheldon’s daughter and her grandson) . . . .” (See Pl.’s Br. at 12.) The relevant inquiry for this element, however, is whether the plaintiff and defendant in the precluded action were opposing parties in the first action; the presence of additional plaintiffs does not affect the analysis. See, e.g., Awad v. Chrysler Grp. LLC, No. 11-14082, 2013 WL 5816505, at  (E.D. Mich. Oct. 29 2013) (“There can be no question that Chrysler was a defendant in both actions. That Chrysler is the only defendant in the subsequent federal court action does not alter the analysis.”); Ray v. Citibank, N.A., No. 256322, 2005 WL 3179677, at  (Mich. Ct. App. Nov. 29, 2005) (“It is also undisputed that plaintiff and defendant were opposing parties in the federal action. Under federal law, it is immaterial for res judicata purposes that the prior action included additional parties.”). Even if this were not the No 15-3075 U.S. ex rel. Sheldon v. Kettering Health Network Page 21 case, the “mutuality of interest, including an identity of desired result” between the parties in Relator’s federal and state actions, would be sufficient to satisfy this element. Kirkhart, 805 N.E.2d at 1092. Relator also argues that because res judicata applies only to “subsequent” actions, this element is not met because her federal case was the first action filed. This misstates the rule: the relevant inquiry for res judicata is which action resulted in judgment first, not which action was filed first. See, e.g., Lesher v. Lavrich, 784 F.2d 193, 195 (6th Cir. 1986) (“[F]ederal courts must give prior state court judgments the same preclusive effect they would have in the courts of that state.” (emphasis added)). Thus, because the Ohio state court issued its final judgment first, despite being the second action filed, Relator’s federal case is the “second” or “subsequent” action for res judicata purposes. For these reasons, the second element of res judicata is met in this case. 3. The second action arises from claims that were or could have been litigated in the first action To apply res judicata in Ohio, it must be true that the claims in the precluded action “could have been litigated in the first action.” Hapgood, 127 F.3d at 493. As the “could have” phrasing implies, this element concerns only the legal possibility of bringing the disputed claims in the previous action. See Hapgood, 127 F.3d at 494; see also Boggs, 655 F.3d at 522–23 (holding res judicata not applicable where disputed claims were not ripe when previous action commenced); Demsey v. Demsey, 488 F. App’x 1, 5–6 (6th Cir. 2012) (emphasizing that the disputed claims “could have been” raised in the previous action); Doe ex rel. Doe v. Jackson Local Sch. Dist., 422 F. App’x 497, 501 (6th Cir. 2011) (holding plaintiff could have litigated disputed claim in previous action where state’s rules of civil procedure allowed such claims). In this case, because the Ohio state court action was the first to reach a final adjudication on the merits, the question is whether Relator could have raised her FCA claim in that action. Below, the district court assumed that state courts have concurrent jurisdiction over FCA claims. See generally U.S. ex rel. Sheldon v. Kettering Health Network, No. 1:14-CV-345, 2015 WL 74950, at –7 (S.D. Ohio Jan. 6, 2015). Plaintiff did not challenge this assumption in the No 15-3075 U.S. ex rel. Sheldon v. Kettering Health Network Page 22 district court and concedes the point on appeal. (See Pl.’s Reply Br. at 11 (“concurrent jurisdiction is present”).) In a recent case involving similar circumstances, we assumed without deciding that state courts do possess concurrent jurisdiction over FCA claims. See United States v. Chrysler Grp., LLC, 571 F. App’x 366, 369 (6th Cir. 2014). We do the same, and therefore conclude that Relator “could have” brought her FCA claim in her state court action. Relator argues that bringing her FCA and state tort claims in the same action would have been tactically inconvenient because “the entire case would presumably have been under seal and languished for months, without discovery . . . .” (Pl.’s Reply Br. at 7.) We addressed a similar argument in Wilkins v. Jakeway, 183 F.3d 528 (6th Cir. 1999). In Wilkins, plaintiff’s counsel argued that splitting FCA claims and other claims “allow[ed] counsel to immediately commence discovery on those claims which were not sealed.” Id. at 535. Although we ultimately held res judicata was inapplicable, we also stated: Although we do not question the veracity of counsel’s intent, the fact remains that, by bringing two different suits which present two different theories of the case arising from the same factual situation, counsel has engaged in the precise behavior the doctrine res judicata seeks to discourage. See generally Restatement (Second) of Judgments § 24, 25 cmt. a, d (explaining that res judicata extinguishes all claims arising out of the same transaction of [sic] series of transactions. As such, a plaintiff is pressured to present all material relevant to the claim in one action, including any and all theories of the case even where those theories are based on different substantive grounds.). This type of duplicity should be avoided at all costs. Id. We agree with Wilkins’ reasoning. Notwithstanding any inconvenience to Relator, the doctrine of res judicata commands attention to the burdens placed on defendants, courts, and the integrity of judgments by allowing similar claims with identical facts to be re-litigated in a second forum. See Restatement (Second) of Judgments § 24 cmt. d (Am. Law Inst. 1982) (“When a defendant is accused of successive but nearly simultaneous acts, or acts which though occurring over a period of time were substantially of the same sort and similarly motivated, fairness to the defendant as well as the public convenience may require that they be dealt with in the same action.”); Wilkins, 183 F.3d at 532 n.4 (summarily rejecting plaintiff’s argument that No 15-3075 U.S. ex rel. Sheldon v. Kettering Health Network Page 23 “although both cases could have been litigated in the same action, it is questionable whether they should have been litigated in the same case”). For these reasons, the third element of res judicata is met in this case. 4. Same transaction or occurrence as the previous action Ohio’s res judicata doctrine precludes a second action based on the same “transaction, or series of connected transactions, out of which the [first] action arose.” Grava, 653 N.E.2d at 229. Quoting the Restatement (Second) of Judgments, Grava held that the second action involves the same “transaction” if it concerns the same “common nucleus of operative facts.” Id. (quoting Restatement (Second) of Judgments § 24 cmt. b (Am. Law Inst. 1982)). Although not quoted in Grava, the full text of the paragraph in the Restatement using the “common nucleus of operative facts” language states: [i]n general, the expression [“transaction, or series of connected transactions”] connotes a natural grouping or common nucleus of operative facts. Among the factors relevant to a determination whether the facts are so woven together as to constitute a single claim are their relatedness in time, space, origin, or motivation, and whether, taken together, they form a convenient unit for trial purposes. Though no single factor is determinative, the relevance of trial convenience makes it appropriate to ask how far the witnesses or proofs in the second action would tend to overlap the witnesses or proofs relevant to the first. Restatement (Second) of Judgments § 24 cmt. b (Am. Law Inst. 1982). Importantly, Grava held that this element does not require the claims in both actions to be identical: [res judicata] “applies to extinguish a claim by the plaintiff against the defendant even though the plaintiff is prepared in the second action (1) To present evidence or grounds or theories of the case not presented in the first action, or (2) To seek remedies or forms of relief not demanded in the first action.” 653 N.E.2d at 229 (quoting Restatement (Second) of Judgments § 25 (Am. Law Inst. 1982)); see also id. at 382 (“That a number of different legal theories casting liability on an actor may apply to a given episode does not create multiple transactions and hence multiple claims. This remains true although the several legal theories . . . would emphasize different elements of the facts.” (quoting Restatement (Second) of Judgments § 24 cmt. c)). In sum, satisfaction of this No 15-3075 U.S. ex rel. Sheldon v. Kettering Health Network Page 24 element under Ohio law does not require that both cases involve identical causes of action, proof of identical elements, or even the presentation of exactly the same evidence. See id. at 382–83. Yet, in this case, Relator’s state and federal cases are nearly identical: the vast majority of the allegations in Relator’s state complaint involve either KHN’s failure to adequately utilize EPIC’s CLARITY reports, or KHN’s alleged violation of HIPAA based on Duane Sheldon’s improper access to Relator’s e-PHI. These allegations are mirrored in Relator’s federal complaint. In other words, the allegations underlying Relator’s state and federal claims are related “in time, space, origin, [and] motivation.” Restatement (Second) of Judgments § 24 cmt. b (Am. Law Inst. 1982). Moreover, because both the state and federal claims are based on KHN’s alleged failure to satisfy HIPAA standards, those claims would “form a convenient unit for trial purposes,” as “the witnesses or proofs in the [federal] action would tend to overlap the witnesses or proofs relevant to the [state action].” Id. For these reasons, we conclude that Relator’s state and federal cases share a “common nucleus of operative facts,” Grava, 653 N.E.2d at 229, and that all four elements of res judicata are therefore met in this case. Thus, res judicata provides an additional basis for our conclusion that the district court did not err by dismissing Relator’s complaint and denying her leave to amend.