Opinion ID: 504453
Heading Depth: 2
Heading Rank: 2

Heading: The Gerson Decision

Text: 10 Employees argue first that, pursuant to the doctrines of res judicata and collateral estoppel, the Missouri state court's ruling in Gerson requires a judgment in their favor. We disagree. 11 28 U.S.C. Sec. 1738 (1982) requires a federal court to give the same preclusive effect to a prior state court judgment as would the courts of the state from which the judgment emerged. See Kremer v. Chemical Constr. Co., 456 U.S. 461, 466, 102 S.Ct. 1883, 1889, 72 L.Ed.2d 262 (1982); Harrison v. Springdale Water & Sewer Comm'n, 780 F.2d 1422, 1431 (8th Cir.1986). Thus, we apply Missouri law in determining whether the Gerson decision precludes relitigation of Diamond Shamrock's obligations under the separation pay policy. 12 Under Missouri law, collateral estoppel applies only where the issue decided in the prior adjudication is identical to the issue presented in the present action. Hudson v. Carr, 668 S.W.2d 68, 70 (Mo.1984). Collateral estoppel forecloses a party from litigating only those exact issues unambiguously decided in the earlier case. Owens v. Government Employees Ins. Co., 643 S.W.2d 308, 310 (Mo.Ct.App.1982) (emphasis added) (quoting Salsberry v. Archibald Plumbing and Heating Co., 587 S.W.2d 907, 915 (Mo.Ct.App.1979)). 13 The Gerson court stated that the seminal issue for decision concerned the meaning of the personnel policy, which the court interpreted in accord with Missouri contract law principles. Gerson, 710 S.W.2d at 369. The issue before the federal district court, on the other hand, was whether Diamond Shamrock's interpretation of its severance pay policy violated ERISA. 14 Collateral estoppel is further inapplicable where the party seeking its application bears a more difficult burden of proof than he/she bore in an earlier action. See Shaffer v. Terrydale Management Corp., 648 S.W.2d 595, 608 (Mo.Ct.App.1983). The Gerson court construed the terms of the separation pay plan against the drafter, Diamond Shamrock, holding Diamond Shamrock to a fairly high standard regarding its obligations to its employees. See Gerson, 710 S.W.2d at 369. The district court, on the other hand, viewed Diamond Shamrock's actions through the considerably more deferential lens mandated by ERISA. The dissimilarity of the issues presented and standards employed by the federal district and Missouri courts defeat plaintiffs' assertion that collateral estoppel applies in this case. 15 Employees' invocation of res judicata is similarly without merit. Under principles of res judicata, a final judgment on the merits in a prior suit bars a later suit involving the same parties or their privies based on the same cause of action. Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 973, 59 L.Ed.2d 210 (1979); Mid-Continent Broadcasting Co. v. Dresser Indus., Inc., 669 F.2d 564, 566 (8th Cir.1982). In Missouri, res judicata requires (1) identity of the thing sued for; (2) identity of the cause of action; (3) identity of the persons and parties to the action; and (4) identity of the quality of the person for or against whom the claim is made. Prentzler v. Schneider, 411 S.W.2d 135, 138 (Mo.1966). The employees in the instant case were neither parties in the Gerson case, nor in privity with the Gerson plaintiffs. Thus, the district court correctly afforded the Gerson decision no preclusive effect. 16 The Gerson decision cannot bind this court for a third related reason. Diamond Shamrock's separation pay plan is governed by ERISA, 4 which preempts Employees' state court claims. See Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S.Ct. 2380, 2389, 85 L.Ed.2d 728 (1985) (the preemption provision was intended to displace all state laws that fall within its sphere, even including state laws that are consistent with ERISA's substantive requirements); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490 (1983) (ERISA preempts state laws which have connection with or reference to an ERISA employee benefit plan); Holland v. Burlington Indus., Inc., 772 F.2d 1140, 1146 (4th Cir.1985), aff'd sub nom. Brooks v. Burlington Indus., Inc., 477 U.S. 901, 106 S.Ct. 3267, 91 L.Ed.2d 559 (1986); Pabst Brewing Co. v. Anger, 610 F.Supp. 214, 216 (D.Minn.1985), aff'd, 784 F.2d 338 (8th Cir.1986). ERISA's preemptive effect extends to state decisional law, as well as to state statutes and regulations. Jung v. FMC Corp., 755 F.2d 708, 714 (9th Cir.1985). Thus, the Gerson decision becomes irrelevant to the action before us. 5