Court Opinion

ID: 163186
Source: CourtListenerOpinion
Date Created: 2010-08-14 07:48:27+00
Date Added: 2024-06-11T17:24:42.361974
License: Public Domain

F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                          MAR 6 2003
                             FOR THE TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                               Clerk

    LINDA K. VILLAGRANA;
    CAROLYN MALM, on behalf of
    themselves and all others similarly
    situated,

                 Plaintiffs - Appellants,

    v.

    JAN GRAHAM, individually and in
    her official capacity as Attorney                   No. 01-4023
    General of the State of Utah;                 (D.C. No. 2:00-CV-450-K)
    MICHAEL O. LEAVITT, individually                      (D. Utah)
    and in his official capacity as
    Governor of the State of Utah;
    EDWARD T. ALTER, individually
    and in his official capacity as
    Treasurer of the State of Utah; ROD
    BETIT, individually and in his official
    capacity as Executive Director of the
    Department of Health of the State of
    Utah; MICHAEL DEILY, individually
    and in his official capacity as Director
    of the Division of Health Care
    Financing of the State of Utah,

                 Defendants - Appellees.

                              ORDER AND JUDGMENT         *

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
                                                                       (continued...)
Before O’BRIEN and PORFILIO , Circuit Judges, and         KANE , ** Senior District
Judge.

      After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore

ordered submitted without oral argument.

      Plaintiffs Linda K. Villagrana and Carolyn Malm appeal the district court’s

dismissal of their claims against representatives of the State of Utah (the State)

and its agencies. Plaintiffs claim entitlement to a portion of the proceeds owed to

the State under a settlement agreement with several large tobacco companies.

Because plaintiff Villagrana’s claims are barred by the doctrine of res judicata,

and plaintiff Malm’s claims are foreclosed by our decision in Harris v. Owens,

264 F.3d 1282 (10th Cir. 2001), cert. denied, 122 S. Ct. 2294 (2002), we affirm.

      In 1996, the State brought a federal action against numerous tobacco

companies, seeking, inter alia, reimbursement of medical expenses incurred in

*
 (...continued)
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
**
      The Honorable John L. Kane, Senior District Judge, United States District
Court for the District of Colorado, sitting by designation.

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treating smoking-related illnesses through Medicaid. See Aplt. App. at 7-152

(Amended Complaint in Utah v. R.J. Reynolds Tobacco Co., No. 96-CV-829B

(D. Utah)). The State’s lawsuit was part of a wave of litigation brought by the

various states against tobacco companies. To settle all of the plaintiff states’

claims, in 1998, the parties entered into a comprehensive agreement known as the

Master Settlement Agreement (MSA). See Aplt. App. at 157-258. Under the

agreement, the states will receive payments from the tobacco companies over

several decades. Id. at 175-191.

      In November 1999, plaintiffs Villagrana and Renee A. Masich attempted to

intervene in the tobacco litigation on behalf of the class of smokers receiving

Medicaid payments for smoking-related injuries. The plaintiffs argued that they

should be permitted to intervene into the tobacco litigation because the class they

represented was entitled to part of the MSA proceeds. The federal district court

denied the motion to intervene, holding that the motion was untimely and that

plaintiffs were barred from suing the State by the Eleventh Amendment. See id.

at 259-67. The plaintiffs in that case did not appeal the court’s ruling.

      In the current case, plaintiffs Villagrana and Malm are smokers who

received Medicaid benefits through the State for smoking-related illnesses. They

brought this federal action in June 2000, purportedly on behalf of similarly-

situated Medicaid benefits recipients, seeking declaratory and injunctive relief on

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their claim to a part of the MSA proceeds. Plaintiffs rely on a Medicaid statute,

42 U.S.C. § 1396k(b), which entitles Medicaid recipients to amounts remaining

after a state obtains a judgment from third parties reimbursing the state for

medical payments made on behalf of the recipients.

        The district court dismissed plaintiffs’ action for failure to state a claim,

holding that the MSA did not settle any individual claims and therefore plaintiffs

were not entitled to any portion of the settlement proceeds. As an alternative

ground, the district court held that plaintiffs’ claims were precluded by res

judicata, based on the district court’s ruling in the tobacco litigation that the

Eleventh Amendment barred plaintiffs Villagrana and Masich from intervening in

the suit. 1

       We review de novo the district court’s dismissal of plaintiffs’ action as

precluded by res judicata and for failure to state a claim. See Wilkes v. Wyo. Dep’t

of Employment, 314 F.3d 501, 503 (10th Cir. 2002) (res judicata); Moffett v.

Halliburton Energy Servs., Inc., 291 F.3d 1227, 1231 (10th Cir. 2002) (failure to

state a claim). An action is precluded by the doctrine of res judicata when the

following criteria are met: (1) the identical cause of action was previously

litigated; (2) to a final judgment on the merits; (3) by the same parties or their

1
      We have since held that the Eleventh Amendment did not preclude an
almost identical action because the plaintiffs sought prospective relief only. See
Harris, 264 F.3d at 1289-94.

                                           -4-
privies. See Wilkes, 314 F.3d at 504. “Under res judicata, . . . a final judgment on

the merits of an action precludes the parties or their privies from relitigating issues

that were or could have been raised in the prior action.” Id. at 503-04 (emphasis

in original) (further quotations omitted).

      Here, the district court held that the denial of the motion to intervene in the

original tobacco litigation precluded the claims of both plaintiffs. Clearly the

prior litigation precluded plaintiff Villagrana’s claims because the denial of her

motion to intervene in the tobacco litigation involved the same cause of action,

was a final judgment on the merits, and involved the same parties. The prior

decision did not preclude plaintiff Malm’s action, however, because she was not in

privity with the plaintiffs in the previous action. See Chevron USA Inc. v. Sch. Bd.

Vermilion Parish, 294 F.3d 716, 720 (5th Cir. 2002) (holding that district court’s

order did not bind members of putative class because no class action was

certified); Aguilera v. Pirelli Armstrong Tire Corp., 223 F.3d 1010, 1013 n.1 (9th

Cir. 2000) (holding a summary judgment against an uncertified class only bound

the named members, with no res judicata effect on the claims of unnamed members

of the purported class). As there was no class certified in the tobacco litigation,

the district court’s merits-based denial of intervention did not bind the putative

class members. Therefore, plaintiff Malm was not barred from bringing her claim

to the MSA proceeds.

                                             -5-
      Our decision in Harris, however, makes it clear that plaintiff Malm does not

have a viable cause of action under 42 U.S.C. § 1396k(b). In Harris, we

considered the identical reimbursement argument and held that Medicaid recipients

were not entitled to funds received under the MSA because Congress precluded

reimbursement claims in a rider to the Emergency Supplemental Appropriations

Act, Pub. L. No. 106-31, 113 Stat. 57, 103-04 (1999), codified at 42 U.S.C.

§ 1396b(d)(3)(B)(i) and (ii)). There, Congress clarified that the states would not

be required to reimburse the federal government out of the tobacco settlement

monies, and that the states could use the funds “‘for any expenditures determined

appropriate by the State.’” 264 F.3d 1294 (quoting § 1396b(d)(3)(B)(ii)). We

held that this provision carved out an exception to the general statute requiring

states to turn over excess funds to Medicaid recipients after reimbursing their own

expenses. 264 F.3d at 1296. Although plaintiffs argue that Harris was incorrectly

decided, we are bound by the decisions of other Tenth Circuit panels. See In re

Smith, 10 F.3d 723, 724 (10th Cir. 1993).

      The judgment of the United States District Court for the District of Utah is

AFFIRMED.

                                                    Entered for the Court

                                                    John L. Kane
                                                    Senior District Judge

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