Opinion ID: 5128872
Heading Depth: 2
Heading Rank: 2

Heading: Claim Splitting

Text: Before we can reach the claim-splitting question, we must resolve a dispute about the applicable standard of review. Framing the main issue in this case as one of claim preclusion, also known as res judicata, Scholz argues that we are bound to review the district court’s motion-to-dismiss decision de novo. See Bell v. Taylor, 827 F.3d 699, 706 (7th Cir. 2016) (“We review de novo a dismissal based on res judicata.”). Instead framing the main issue as one of claim splitting or of dismissal of duplicative litigation, the United States argues we must review only for abuse of discretion. As the United States points out, No. 20-2163 15 In dealing with simultaneous actions on related theories, courts at times express principles of “claim splitting” that are similar to claim pre- clusion, but that do not require a prior judg- ment. A dismissal on this ground has been viewed as a matter of docket management, re- viewed for abuse of discretion, even in decisions that with some exaggeration describe the theory “as an aspect of res judicata.” See 18 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 4406 (3d ed.); see also Elgin v. Dep’t of Treasury, 567 U.S. 1, 34 (2012) (Alito, J., dissenting) (“Plaintiffs generally must bring all claims arising out of a common set of facts in a single lawsuit, and federal district courts have discretion to enforce that requirement as necessary ‘to avoid duplicative litigation.’” (citation omitted)). Our Court has also recognized that a district court has “significant latitude” and “broad discretion to dismiss a complaint ‘for reasons of wise judicial administration ... whenever it is duplicative of a parallel action already pending in another federal court.’” McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 888–89 (7th Cir. 2012) (some internal quotation marks omitted) (quoting Serlin v. Arthur Andersen & Co., 3 F.3d 221, 223 (7th Cir. 1993)). We review such decisions for an abuse of discretion. See id. at 889; Serlin, 3 F.3d at 223. To determine the appropriate standard of review, we must examine whether the district court couched its decision in claim splitting or claim preclusion. The motion to dismiss filed by the government principally asserted that Scholz II “duplicates” Scholz I, and therefore “violates the rule against claim splitting.” Considering this motion, the district court 16 No. 20-2163 likewise framed the issue as whether Scholz II “should be dismissed because it violates the rule against claim splitting.” The court’s “determin[ation] that the entirety of [Scholz’s] complaint is barred by the rule against claim splitting” makes it abundantly clear, then, that the district court reached a claim-splitting, not a claim-preclusion, decision. Thus, appeal from that order calls for us to review only for an abuse of discretion. See McReynolds, 694 F.3d at 888–89; Serlin, 3 F.3d at 223. To be sure, both the defendant’s motion to dismiss and the district court’s eventual dismissal referenced claim preclusion. These references, however, were necessary because, as the district court noted, “claim splitting draws on the law of claim preclusion when determining whether the second lawsuit should be dismissed.” Indeed, the district court correctly observed that “the doctrine of claim splitting is related to, but distinct from, the doctrine of claim preclusion.” See Roumann Consulting Inc. v. Symbiont Constr., Inc., No. 18-C-1551, 2019 WL 3501527, at  (E.D. Wis. Aug. 1, 2019) (citing Curtis v. Citibank, N.A., 226 F.3d 133, 138 (2d Cir. 2000)). Therefore, the references to and reliance on caselaw concerning claim preclusion did not transform the district court’s decision to grant defendant’s motion to dismiss on claim-splitting grounds into a decision based on claim preclusion.
Turning to the primary question on appeal, this Court must assess whether the district court abused its discretion in determining that Scholz II is duplicative of Scholz I such that the rule against claim splitting prohibits Scholz II. We have held that “[a] suit is duplicative if the ‘claims, parties, and available relief do not significantly differ between the two No. 20-2163 17 actions.’” McReynolds, 694 F.3d at 889 (quoting Ridge Gold Standard Liquors, Inc. v. Joseph E. Seagram & Sons, Inc., 572 F. Supp. 1210, 1213 (N.D. Ill. 1983)). When a plaintiff brings such “a suit, arising from the same transaction or events underlying a previous suit, simply by a change of legal theory,” claim splitting has occurred, and the suit cannot be maintained. Carr v. Tillery, 591 F.3d 909, 913 (7th Cir. 2010); see also Bell, 827 F.3d at 707 (“[Plaintiff] cannot use a second lawsuit against [defendant] to take another bite at the apple.”). We have further explained that “claim splitting in duplicative lawsuits” is a subset of the res judicata doctrine. Palka v. City of Chicago, 662 F.3d 428, 437 (7th Cir. 2011); Rexing Quality Eggs v. Rembrandt Enters., Inc., 953 F.3d 998, 1002 (7th Cir. 2020) (“[T]he law on claim-splitting is part of the law of res judicata.”); Carr, 591 F.3d at 914 (noting that claim splitting “is barred by the doctrine of res judicata”). Thus, to determine whether the district court correctly dismissed this case on claim-splitting grounds, we must draw on principles of claim preclusion, although continuing to appreciate the differences between the doctrines. Claim preclusion “blocks a second lawsuit if there is (1) an identity of the parties in the two suits; (2) a final judgment on the merits in the first; and (3) an identity of the causes of action.” Barr v. Bd. of Trs. of W. Ill. Univ., 796 F.3d 837, 840 (7th Cir. 2015). The requirements of claim splitting are not quite as stringent and do not require claim preclusion’s second factor, finality of the judgment. See Katz v. Gerardi, 655 F.3d 1212, 1218 (10th Cir. 2011) (“While it is correct that a final judgment is necessary for traditional claim preclusion analysis, it is not required for the purposes of claim splitting.”). As such, we need only 18 No. 20-2163 examine whether there is an identity of the parties and of the causes of action between the two lawsuits. First, there is no dispute that an identity of parties exists in Scholz I and Scholz II. In both cases, plaintiff Scholz sued the same party as defendant: the United States. In Scholz II, Scholz added the Secretary of Health and Human Services as a named party. Nevertheless, the government argued, and Scholz has not challenged, that the Secretary was not a proper defendant under the FTCA and that the Secretary had not waived sovereign immunity. Scholz’s claim against the Secretary is therefore waived. See Weinstein v. Schwartz, 422 F.3d 476, 477 n.1 (7th Cir. 2005). Even if the Secretary were a properly named party, the identity of parties between the two lawsuits would endure because the Secretary is an official of the United States government, the primary defendant in both cases. See Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 402–03 (1940) (“There is privity between officers of the same government so that a judgment in a suit between a party and a representative of the United States is res judicata in relitigation of the same issue between that party and another officer of the government.”). Second, and most in contention, is whether there is an identity between the causes of action in Scholz I and Scholz II. This element is satisfied if the “claims arise out of the same set of operative facts or the same transaction.” See Matrix IV, Inc. v. Am. Nat. Bank & Tr. Co. of Chi., 649 F.3d 539, 547 (7th Cir. 2011). That is to say, for claim splitting to apply, the legal theories for the claims in each case need not be the same provided “they are based on the same, or nearly the same, factual allegations.” See id. (quoting Herrmann v. Cencom Cable Assocs., Inc., 999 F.2d 223, 226 (7th Cir. 1993)); see also Nalco Co. v. Chen, No. 20-2163 19 843 F.3d 670, 674 (7th Cir. 2016) (“[The plaintiff] was obliged to raise all claims that stem from the same transaction or series of related transactions (what courts sometimes call the ‘core of operative facts’).” (citing Restatement (Second) of Judgments § 24 (1982) (rule against claim splitting))). We now consider the Scholz II Counts I, II, III, and V (claims rooted in mental health treatment) and Counts IV, V, and VI (claims rooted in alleged misconduct arising throughout the course of the Scholz I litigation) in turn.
Here, the lawsuits in Scholz I and Scholz II rest on essentially the same facts, so it was not an abuse of discretion for the district court to dismiss Scholz II on claim-splitting grounds. The complaints in each lawsuit begin almost identically. The Scholz I complaint brought a suit under the FTCA for “negligence and professional malpractice in connection with medical care provided to Plaintiff Scholz by the Department of Veterans Affairs at the Tomah [VAMC], the Zablocki [VAMC], and outpatient programs.” The Scholz II amended complaint similarly brought a suit under the FTCA for “negligence and professional malpractice in connection with medical care provided to Plaintiff Scholz by the Department of Veterans Affairs.” More precisely, Counts I (medical negligence), II (pharmacy and oversight negligence), III (negligent failure to obtain informed consent), and V (negligent hiring, training, supervision, and retention) in Scholz II all implicate defendant’s conduct post-2011. Her failure to secure relief for those alleged wrongs in Scholz I—whether for failure to comply with procedural requirements or for lack of merit—does not entitle 20 No. 20-2163 her to “take another bite at the apple.” See Bell, 827 F.3d at 707. Scholz “was obliged to,” but did not, “raise all claims that stem from the same transaction or series of related transactions” in Scholz I. See Nalco, 843 F.3d at 674. Her attempt to now bring claims resting on the same conduct in Scholz II is “a quintessential example of claim splitting in duplicative lawsuits, a litigation tactic that res judicata doctrine is meant to prevent.” Palka, 662 F.3d at 437. We hold claim splitting was thus appropriate. Scholz tries to argue there is “not a gap but a chasm” between Scholz I and Scholz II by characterizing the lawsuits as addressing different conduct at different times. She argues that Scholz I claims concerned the “botched breast surgery treatment at the Zablocki VA[MC] in 2012” which required four corrective surgeries and which Scholz alleged “was improper given Scholz’s physical and mental afflictions following her 2011 mental health treatment at the Tomah VA[MC].” By contrast, Scholz argues, Counts I, II, III, and V in Scholz II concern the alleged “negligent outpatient mental health treatment after Scholz’s discharge from the Tomah VA[MC]”— treatment that “was rendered by different VA employees at the Appleton, Green Bay, and Cleveland VA clinics from 2011 through 2018,” and therefore not from the Tomah VAMC or Zablocki VAMC. Scholz’s creative attempt to bifurcate the basis of her claims in each lawsuit is belied by her repeated positions in Scholz I. The Scholz I complaint was not temporally limited to defendant’s conduct in 2011 and 2012, and so did not exclude the allegedly negligent mental health treatment between 2011 and 2018 that Scholz II highlighted. Indeed, in stating her Scholz I claims for negligence, she broadly asserted that No. 20-2163 21 defendant “negligently supervis[ed] and retain[ed] incompetent, inexperienced, unqualified and/or inadequately trained or supervised operators, administrators, employees, agents and staff and fail[ed] to take timely corrective action,” and also “negligently fail[ed] to ensure that patient treatment records and deficiencies in care were timely communicated to all VAMC health care providers and to the Plaintiff.” None of these claims were temporally limited to defendant’s conduct in 2011–2012 or limited to the conduct by Tomah VAMC and Zablocki VAMC. That the Scholz I claims turned on defendant’s conduct extending until as late as 2018 can be further gleaned from the litigating positions that Scholz took at the summary-judge- ment stage in Scholz I. In responding to the government’s motion for partial summary judgment in November 2018, Scholz invoked a “continuous treatment” theory based on Wisconsin law and maintained, based on her expert witnesses, that she “received continuous negligent mental health treatment during this entire period [from 2008 through early 2017] from VA healthcare providers.” Referencing her SF-95 from Scholz I, Scholz asserted that “the negligent mental health treatment … occur[ed] ‘on or about January 1, 2011 and continu[ed] to the present.’” She added that her experts “independently determined that plaintiff’s negligent mental health treatment continued after her discharge from the Tomah VAMC program.” In her own motion for summary judgment, Scholz re- peated these same arguments. She argued that her treatment after 2012 was a continuation of the negligence that began with the Tomah VAMC mental health treatment and Zablocki VAMC breast surgery. In particular, Scholz recounted that after the surgery she was “on 28 medications” and that she 22 No. 20-2163 continued to “suffer both physically and mentally in the following years.” She noted how the four corrective surgeries occurred in 2012, 2013, and 2014 and left lingering “pain, breast deformities, scarring and lumps, and more mental health issues.” Beyond the surgery complications, the problematic pharmacy practices, too, “did not stop with Plaintiff’s discharge from the Tomah telehealth program in January 2012.” Indeed, Scholz asserted that her treating psychiatrist Dr. Dy continued to (negligently) ignore over twenty-five pharmacy warnings when medicating Scholz until as late as 2018. Likewise, Scholz’s proffer of, and heavy reliance on, the declarations of Dr. Amsel and Dr. Johnson in Scholz I further undercut Scholz’s argument that Scholz I was limited to 2011 conduct. Both experts outlined the case for why defendant acted negligently not only in its performance of Scholz’s breast reduction surgery and the subsequent corrective surgeries but also in its continuing mental and physical health treatment of Scholz until as late as 2018. Dr. Amsel found “evidence of on-going continuous negligent mental health treatment practices affecting the Plaintiff’s treatment during the years 2011 through the present at the Tomah VAMC, Zablocki VAMC, and VA outpatient clinics.” Dr. Johnson similarly opined that “the pharmaceutical treatment rendered to the Plaintiff by the Department of Veteran Affairs commencing during Plaintiff’s treatment at the Tomah VAMC and outpatient clinics during the years 2011 through 2017 … failed to meet the required standard of care of reasonable health care providers and was a cause of injury to” Scholz. Underscoring the identity of claims in the two cases, these declarations were then attached to the Scholz II administrative claims and Scholz II complaint. No. 20-2163 23 In a final attempt to temporally limit the scope of Scholz I to conduct in 2011, Scholz argues the “controlling time” is the “date of the claims,” rather than the “filing of the federal action on August 8, 2016.” The dates of the underlying alleged harms are certainly relevant, but they are in no way dispositive. In fact, “[t]he crucial date is the date the complaint was filed.” Curtis, 226 F.3d at 139. After that crucial date, a plaintiff “has no continuing obligation to file amendments to the complaint to stay abreast of subsequent events,” and “may simply bring a later suit on those later-arising claims.” Id. Here, Scholz filed her Scholz I complaint in 2016, when the bulk of the allegedly negligent treatment had already occurred. Thus, Scholz’s filing timeline obligated her to include those claims at play on this “crucial date.” The Scholz I litigation reveals that Scholz and her experts consistently aimed the Scholz I claims at the government’s alleged negligent conduct that extended into 2018. Accordingly, it is difficult to accept Scholz’s contrary argument now that Scholz I had nothing to do with defendant’s conduct between 2011 and 2018. Beyond temporal arguments, Scholz tries to pin the course of litigation on administrative exhaustion requirements. Scholz argues, as she unsuccessfully argued to the district court, that she had to bring new administrative claims prior to Scholz II in order to seek recovery for the 2011 to 2018 conduct, and that limitation prevented her from bringing those claims in Scholz I. See McNeil v. United States, 508 U.S. 106, 113 (1993) (“The FTCA bars claimants from bringing suit in federal court until they have exhausted their administrative remedies.”); 28 U.S.C. § 2675 (same). In other words, she contends 24 No. 20-2163 that she should not be barred now from bringing claims that she could not have brought in Scholz I. We rejected a similar argument in the different context of § 1983 and Title VII claims in Palka v. City of Chicago, 662 F.3d 428 (7th Cir. 2011). In Palka, the plaintiffs sued under § 1983, then brought a subsequent lawsuit under Title VII, which was dismissed on claim-splitting grounds. Id. at 430, 437–38. On appeal, the plaintiffs argued that “it was impossible for them to preserve their Title VII claims because they were waiting for their right-to-sue letters from the EEOC.” Id. at 438. We rejected the plaintiffs’ argument because “a litigant in this position has [several] options to preserve his claim,” including seeking a stay of the first suit until he receives the right-to-sue letter. Id. In Palka, res judicata barred the Title VII suit because the plaintiffs “availed themselves of none of these options.” Id. So too here. As the district court in Scholz II noted, Scholz had “a variety of options in navigating this issue, including asking that the administrative agency expedite the process, that the district court stay the first case pending the administrative process, or that the defendant agree to split a claim into two or more suits.” Scholz “availed [herself] of none of these options,” and so her argument about administrative remedies is unconvincing. See Palka, 662 F.3d at 438; see also Barr, 796 F.3d at 840 (“[T]he requirement to exhaust administrative remedies is no excuse for claim-splitting in [the employmentdiscrimination] context.”).
As a point worth discussing separately, Count IV (negligent failure to maintain and release accurate and complete No. 20-2163 25 medical records), part of Count V (negligent failure to hire, train, supervise, and retain employees to ensure compliance with record disclosure obligations), and Count VI (VA misrepresentation)—those claims implicating alleged wrongdoing arising during the course of the Scholz I litigation—fare no better in undercutting the district court’s claim splitting analysis. With respect to Counts IV and V, the Scholz I district court already grappled with alleged discovery violations over the course of the extensive proceedings. 4 Illustrating this claim’s duplicity, Scholz’s October 26, 2020, motion for sanctions— filed during the Scholz I lawsuit—goes so far as to reference and incorporate discovery failure arguments advanced in Scholz II. The district court denied Scholz’s motion for sanctions. Regardless, these Scholz I discovery issues cannot now form the basis of a separate lawsuit. Furthermore, turning to Count VI, Scholz’s surprise that Scholz I’s mental health treatment claims were deemed untimely is unpersuasive. By Scholz’s formulation, “[t]he gravamen of Count VI is simple—the [government] failed to warn Scholz of changes in their administrative claims procedures 4 Attacking defendant’s alleged discovery misconduct in Scholz I under yet another theory, Scholz argues that defendant should not have been entitled to their claim-splitting defense because they had “unclean hands” for allegedly failing to provide Scholz with her requested outpatient pharmacy records until just two days before the discovery deadline in Scholz I, which prevented Scholz from effectively litigating those issues in Scholz I. As the district court in Scholz II made clear, however, Scholz “offer[ed] no evidence that Defendants have engaged in any misconduct,” and has not made any such showing on appeal either. Even if she had, the district court correctly stated that the appropriate remedy would have been sanctions in Scholz I, not a new lawsuit. 26 No. 20-2163 that included adopting Wisconsin statute of limitations that conflicted with the federal statute of limitations and VA claims procedures.” But the administrative denials did include specific warnings that state law may impact the timeliness of FTCA claims, disclaimers present in Scholz I and subsequently incorporated by Scholz into the Scholz II administrative complaint. See Wenke v. Gehl Co., 682 N.W.2d 405, 42526 (Wis. 2004) (“[M]ost jurisdictions recognize the running of a statute of limitation as being procedural …, while some others, including Wisconsin, treat the running of a statute of limitation as substantive.”). Beyond these warnings, the district court also indicated that Scholz was on-notice that her claim might be time-barred more than a year before the case was dismissed. At summary judgment, Scholz had the opportunity to raise all issues relevant to timeliness, including equitable arguments relating to the alleged misrepresentations—an opportunity she did not take. We presently find no reason to disagree with the district court’s determination that Counts IV, V, and VI were reasonably wrapped into the same identity of the causes of action covering the broad set of interactions between Scholz and the VA. See Brzostowski v. Laidlaw Waste Sys., Inc., 49 F.3d 337, 33839 (7th Cir. 1995) (finding identity of causes of action when “claims … clearly arise out of the same core of operative facts and are based on the same factual allegations,” even when “the legal elements of each claim may be different”).