Opinion ID: 2639670
Heading Depth: 2
Heading Rank: 3

Heading: The district court erred in granting Harrah's summary judgment motion based on issue preclusion regarding prior federal decisions

Text: The district court based its decision to grant Harrah's summary judgment motion, in part, on judgments in several prior federal cases. Appellants argue that they were not adequately represented by the plaintiffs in these prior cases, and therefore, issue preclusion is inapplicable. Harrah's argues that the district court properly granted it summary judgment because the prior federal plaintiffs adequately represented appellants' interests. We agree with appellants' argument because we conclude that the prior federal plaintiffs did not adequately represent appellants. In this case, the district court relied on five prior federal decisions in determining that issue preclusion barred appellants' claims. In Yvette Barreras v. Harrah's Laughlin, Inc., No. CV-S-03-0661-RLH-PAL (D.Nev. Mar. 18, 2005), the jury returned a verdict for Harrah's on similar claims but against different plaintiffs. In four other cases, federal district courts granted Harrah's summary judgment on similar claims but against different plaintiffs. Sweers v. Harrah's Laughlin, Inc., No. CV-S-04-0378-RCJ-RJJ (D.Nev. Dec. 22, 2004); Nolan v. Harrah's Laughlin, Inc., No. CV-S-02-1611-PMP (LRL) (D.Nev. Jan. 14, 2005); Alcantar v. Harrah's Laughlin, Inc., No. CV-S-03-1195-HDM (RJJ) (D. Nev. June 14, 2005); Schoenleber v. Harrah's Laughlin, Inc., 423 F.Supp.2d 1109 (D.Nev.2006). We analyze these cases and conclude that none of the plaintiffs in these prior federal cases adequately represented appellants, and the district court erred in determining that these cases barred appellants' claims based on issue preclusion.
The district court found that the March 2005 decision in the Yvette Barreras case barred appellants' claims based on issue preclusion because Yvette Barreras' claims were identical to appellants' claims, and the jury returned a verdict in favor of Harrah's, specifically finding that the brawl was not foreseeable to Harrah's. Appellants argue that Yvette Barreras did not adequately represent their interests, and therefore issue preclusion does not bar their claims. We agree with appellants' argument. We conclude that Yvette Barreras did not adequately represent appellants because she did not know she was representing appellants' interests, the court did not protect appellants' interests, and appellants had no notice of Yvette Barreras' suit. Harrah's failed to cite to any evidence in the record to establish that Yvette Barreras knew she was representing the appellants' interests. Regarding whether the Yvette Barreras court took care to protect appellants' interests, Harrah's argues that discovery in the federal and state cases was consolidated, appellants' attorney was involved in discovery since January 2004, and the cases were essentially treated as a class action. However, Harrah's points to no evidence in the record that appellants' case was consolidated with the Yvette Barreras case or that appellants' attorney was involved with discovery in the Yvette Barreras case. Also, Harrah's points to no evidence in the record indicating that appellants had notice of Yvette Barreras' suit, and therefore, failed to prove this element of adequate representation. Thus, Harrah's has failed to establish that Yvette Barreras knew she was representing appellants' interests, that the court took care to protect appellants' interests, or that appellants had notice of her suit. Taylor, 553 U.S. at ___, 128 S.Ct. at 2176. Therefore, Harrah's has not met its burden to establish adequate representation, and nonparty issue preclusion based on the Yvette Barreras case does not bar appellants' claims.
The district court also based its decision, in part, to grant Harrah's summary judgment motion on several federal cases arising out of the same brawl, in which Harrah's prevailed on summary judgment motions. These cases included Sweers, Nolan, Alcantar, and Schoenleber. An issue decided on summary judgment motion has a preclusive effect for issue preclusion purposes. Scripps Clinic and Res. Found, v. Baxter Travenol, 729 F.Supp. 1473, 1475 (D.Del.1990). We discuss each of these prior federal summary judgment decisions separately. Applying the same analysis used above regarding the Yvette Barreras case, nonparty issue preclusion was not appropriate regarding the federal summary judgments because the plaintiffs did not adequately represent appellants' interests.
In Sweers, the plaintiff sued for negligence and premises liability arising out of the brawl. The district court granted Harrah's summary judgment because it concluded that Sweers failed to prove the standard of care that Harrah's owed its guests and that Harrah's breached that standard of care. Harrah's failed to establish that the plaintiffs in the Sweers case adequately represented appellants because the Sweers plaintiffs did not know they were representing appellants' interests, the court did not take care to protect appellants' interests, and appellants did not have notice of the Sweers case. Taylor, 553 U.S. at ___, 128 S.Ct. at 2176. Thus, the district court erred by applying nonparty issue preclusion to bar appellants' claims based on the Sweers case.
The federal court in Nolan granted Harrah's summary judgment based on issue preclusion. However, the record is unclear as to the basis for the Nolan court's decision. In January 2005, the federal district court in Nolan denied Harrah's motion for summary judgment on the merits because there were material facts in dispute, including foreseeability, proximate cause, and whether Nolan committed any wrong. Then in May 2005, the Nolan court granted Harrah's renewed motion for summary judgment when Nolan's counsel failed to appear at the hearing. Harrah's states in its answering brief that the Nolan court granted Harrah's summary judgment based on issue preclusion, and the district court's order granting Harrah's summary judgment states the same. This contradicts the record, which shows that the Nolan court denied Harrah's initial summary judgment motion based on the merits of Nolan's case, and then entered a default judgment against Nolan based on his counsel's failure to appear. Therefore, neither decision appears to be based on issue preclusion. Also, the record does not contain Harrah's initial or renewed summary judgment motion, making it unclear if Harrah's raised issue preclusion below. Therefore, the Nolan case is postured very differently from this case because the district court ultimately entered a default judgment for Harrah's; whereas here, the district court granted Harrah's summary judgment motion based solely on issue preclusion. Also, Harrah's did not establish that the Nolan plaintiffs adequately represented appellants' interests. Therefore, the district court erred in determining that nonparty issue preclusion barred appellants' claims.
The district court also relied on the Alcantar case, in which a federal district court granted Harrah's summary judgment motion based on issue preclusion. The Alcantar court relied on the prior jury verdicts for Harrah's in the Yvette Barreras and Ramirez cases in determining that issue preclusion barred Alcantar's claims. However, the Alcantar case is both factually and legally distinguishable from this case. Factually, the Alcantar case is distinguishable from this case for four reasons. First, the Alcantar plaintiffs and the plaintiffs in Yvette Barreras and Ramirez were all either members of the Mongols or related to members of the Mongols. Here, none of the appellants were members of or related to members of either biker gang. Second, several of the Alcantar plaintiffs testified in the Yvette Barreras and Ramirez cases. In contrast, none of the appellants testified in prior trials. Third, the same attorney represented the Alcantar plaintiffs and the Yvette Barreras and Ramirez plaintiffs. Here, appellants were not represented by the same attorney as the Alcantar plaintiffs. Fourth, the Alcantar, Yvette Barreras, and Ramirez cases were consolidated for discovery purposes; whereas the Bower case was not consolidated with the Alcantar case. Thus, there are many more factual and procedural connections between the Alcantar and Yvette Barreras and Ramirez cases than there are between the Alcantar case and appellants' case. Legally, the Alcantar court's analysis is distinguishable from this case because it applied the virtual representation analysis set forth in Irwin v. Mascott, 370 F.3d 924 (9th Cir.2004), and determined that issue preclusion was appropriate because: (1) the plaintiffs in Alcantar and Yvette Barreras and Ramirez had a close relationship because they were all members or relatives of the Mongols; (2) the Alcantar plaintiffs substantially participated in the prior cases because several of them testified in those cases; (3) the plaintiffs in all three cases participated in tactical maneuvering because they were represented by the same counsel and the cases were consolidated for discovery purposes; (4) all of the plaintiffs had a commonality of interest because they all sought to establish that the brawl was foreseeable, Harrah's owed them a duty, Harrah's breached that duty, the cases arose out of the same nucleus of facts, and the evidence was the same in all the cases; and (5) the Yvette Barreras and Ramirez plaintiffs adequately represented the Alcantar plaintiffs' interests because they were all represented by the same attorney who controlled the discovery and decision making. In contrast, as discussed above, this court must apply the adequate representation analysis set forth in Taylor, 553 U.S. at ___, 128 S.Ct. at 2176. In this case, Harrah's presents no evidence that the Alcantar plaintiffs understood that they were representing appellants or that the Alcantar court knew of appellants' cases so that it could protect their interests. The record is also void of any indication that appellants had notice of the Alcantar case. Therefore, although the Alcantar court found that issue preclusion barred the Alcantar plaintiffs' claims, because of the distinguishable facts in the Alcantar case and because this court is applying Taylor, we conclude that issue preclusion does not bar appellants' claims.
The district court also relied on Schoenleber, 423 F.Supp.2d 1109, as a basis for issue preclusion of appellants' claims. The Schoenleber court granted Harrah's summary judgment based on issue preclusion. Id. at 1113-14. Appellants argue that, like in the other cases, the Schoenleber plaintiffs did not adequately represent appellants' interests, and the district court erred in barring appellants' claims based on issue preclusion. Harrah's argues that appellants' interests were especially aligned with the Schoenleber plaintiffs because the same attorney represented appellants and the Schoenleber plaintiffs. Harrah's also argues that the district court took special care to protect appellants' interests because discovery was consolidated in the appellants' and Schoenleber cases, appellants' attorney was involved in the discovery process, and the two cases were essentially treated as a class action. We conclude that Harrah's arguments lack merit because representation by the same attorney and the court's alleged treatment of the case as a class action are insufficient to establish adequate representation. The Schoenleber court, like the Alcantar court, applied the virtual representation analysis under Irwin, 370 F.3d 924, and determined that Yvette Barreras virtually represented the Schoenleber plaintiffs because both were guests at Harrah's who suffered damage because of the brawl, and they shared a common interest in arguing that Harrah's had a duty to protect its guest and that the brawl was reasonably foreseeable. Schoenleber, 423 F.Supp.2d at 1113. Although this may have been an adequate basis for applying nonparty issue preclusion under Irwin, we conclude that it is insufficient to demonstrate the adequate representation exception as clarified in Taylor. Although the same attorney represented the appellants and the Schoenleber plaintiffs, the record is void of any indication that the Schoenleber plaintiffs knew they were acting as representatives for appellants. In fact, they likely believed the contrary if they knew their attorney was representing appellants but pursuing appellants' claims in a separate state case. Representation by the same attorney does not establish that the Schoenleber plaintiffs were representing appellants' interests, that the court protected appellants' interests, or that appellants had notice of the Schoenleber case. Taylor, 553 U.S. at ___, 128 S.Ct. at 2176. Therefore, representation by the same attorney is insufficient to establish adequate representation. Similarly, although discovery was consolidated in the two cases, this is insufficient to prove that the district court was protecting appellants' interests. In fact, in analyzing whether the adequate representation exception applies, the United States Supreme Court has specifically rejected the common law kind of class action concept, holding that class actions are an exception to the general rule against nonparty preclusion because of the due process protections afforded by FRCP 23. Taylor, 553 U.S. at ___, 128 S.Ct. at 2176. For a class action to be certified, FRCP 23(a) requires that: (1) the class is so large that joinder is impracticable, (2) there be common questions of law or fact among the class members, (3) the claims and defenses of the representatives must be typical of the class, and (4) the representative parties must be able to fairly and adequately protect the interests of the class. It also provides protections for class members throughout the litigation. FRCP 23. The Supreme Court concluded that a class action not certified under FRCP 23 would not provide the necessary due process protections and would be an expansive application of nonparty preclusion. Taylor, 553 U.S. at ___, 128 S.Ct. at 2176. Because appellants' case was not part of a certified class action with the Schoenleber plaintiffs, the Schoenleber plaintiffs did not adequately represent appellants' interests, and the Schoenleber case does not provide an adequate basis for issue preclusion to bar appellants' claims.