Ellen Needham v. Chubb Corp ( 2023 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 22-1829
____________
ELLEN NEEDHAM, Personal Representative of the Estate of Jonathan Needham;
WALTER DOWMAN, a/k/a Jason Dowman,
Appellants
v.
CHUBB CORP, A New Jersey Corporation; BELLEMEADE DEVELOPMENT CO, A
Florida Corporation; HALIFAX PLANTATION GOLF MANAGEMENT INC, A
Florida Corporation; RETIREMENT ADMINISTRATION COMMITTEE, Plan
Administrator
____________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 3-20-cv-03470)
District Judge: Honorable Peter G. Sheridan
____________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
March 24, 2023
____________
Before: RESTREPO, PHIPPS, and ROTH, Circuit Judges.
(Filed: December 18, 2023)
___________
OPINION*
___________
PHIPPS, Circuit Judge.
After working at a golf club for over twenty years, two employees suspected that
they were wrongfully denied participation in employee benefit plans offered by a
corporation affiliated with the golf club. The two employees filed a claim with the
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
committee that administers those plans. The committee denied the claim initially and
again upon re-evaluation after a remand order from a related lawsuit. The two employees
then filed this suit, and after concluding that the committee did not act arbitrarily or
capriciously, the District Court entered judgment against them on each of their claims.
One of the employees and the surviving spouse of the other now appeal that
judgment. In exercising appellate jurisdiction, 28 U.S.C. § 1291, and reviewing de novo
the District Court’s conclusions, we will affirm.
FACTUAL BACKGROUND
The Chubb Corporation, an insurance company, offered three employee benefit
plans. Those were the Chubb Pension Plan, the Chubb Capital Accumulation Plan, and
the Employee Stock Ownership Plan (collectively, the ‘Plans’).
Chubb also wholly owned Bellemead Development Corporation, a real-estate
management company. Chubb permitted Bellemead to participate in the Plans, and
Bellemead elected to do so, which enabled its employees to participate in the Plans.
Bellemead wholly owned Halifax Plantation Golf Management, Inc. (‘Halifax
Golf’). Halifax Golf operates the golf club at Halifax Plantation, a planned community in
Ormond Beach, Florida. As a Chubb affiliate, Halifax Golf could have taken steps to
offer the Plans to its employees, but it did not do so.
Jonathan Needham and Walter Dowman worked at Halifax Plantation’s golf club
starting in the 1990s. Needham worked at the club in 1993, and then again from 1996 to
2017 as the club’s general manager. In that capacity, he managed the clubhouse and
restaurant, oversaw cleaning schedules, coordinated marketing efforts, and helped with
information technology. In 2014, Needham was promoted to President of Halifax Golf,
2
but still maintained his role as general manager. Dowman, meanwhile, worked at the
club as a golf pro from 1993 to 2018.
For the first few years that Needham and Dowman worked at the golf club,
Halifax Golf did not have its own payroll system. Their paychecks, embossed with the
Chubb logo, as well as their W-2 forms, came from Bellemead instead.
Beginning in 1997, Halifax Golf, though still a wholly owned subsidiary of
Bellemead, took steps to decrease its operational reliance on Bellemead and Chubb. A
memorandum drafted in January of that year listed as agenda items for a “Strategy
Meeting” that Halifax Golf would “[w]ork to isolate departments” and “[m]ake
preparations to leave Chubb payroll.” App. 221 (1/22/1997 Memorandum). Then, in
March 1998, Halifax Golf created its own payroll system and transitioned its employees
away from Bellemead and Chubb’s system. By March 1998, Halifax Golf was directly
paying Needham and Dowman.
Halifax Golf also restructured its employee benefit plans. In 1998, it moved to
terminate its employees’ coverage under a Chubb-sponsored disability plan. It also
segregated Halifax Golf employees into a separate subgroup for billing and
administrative purposes under a different insurance plan. Finally, in 1999, Halifax Golf
established its own employee benefit plan, the Halifax Plantation 401(k) Profit Sharing
Plan & Trust. Needham and Dowman participated in that plan. And while Halifax Golf
remained a Chubb affiliate eligible to participate in the Plans, it still declined to do so.
In March 2014, soon after Halifax Golf promoted Needham to company president,
he discovered that his predecessor in office had participated in the Plans. Although
Needham’s predecessor had also served as the Vice President of Bellemead, the
comparative treatment bothered Needham. If his predecessor participated in the Plans,
3
then, in Needham’s view, other employees of Halifax Golf who could be deemed
employees of Bellemead should have been eligible to participate in the Plans as well.
To vindicate that concern, Needham teamed up with Dowman to file a joint claim
for participation in the Plans with Chubb’s Retirement Administration Committee. But
the Committee denied their claim on the ground that Needham and Dowman each failed
to satisfy the Plans’ definition of an eligible ‘Employee.’
According to the Committee’s interpretation of the Plans, a person had to satisfy
two conditions to qualify as an eligible ‘Employee.’ First, he or she must have been on
the domestic payroll of a participating employer. Second, he or she must have received
compensation for employment services provided to that employer.
The Committee recognized that Needham and Dowman satisfied the first
condition: they were on Bellemead’s domestic payroll until February or March 1998.
The Committee, however, concluded that neither satisfied the second condition. It
explained that the employment services they provided were to Halifax Golf – not
Bellemead. Thus, they could not be ‘Employees’ of Bellemead for purposes of the Plans.
Since Bellemead had adopted the Plans, and Halifax Golf had not, the Committee, in the
exercise of its discretionary authority as the administrator of the Plans, rejected Needham
and Dowman’s claim for benefits.
PROCEDURAL HISTORY
To challenge the Committee’s rejection of their claim, Needham and Dowman
commenced suit in District Court in November 2016. They sued the Committee along
with Chubb, Bellemead, and Halifax Golf. Needham and Dowman’s claims were
grounded in the Employee Retirement Income Security Act, 29 U.S.C. § 1132(a), and
were thus within the District Court’s original jurisdiction, see id. § 1132(e)(1).
4
In response, the defendants filed dispositive motions. The District Court granted
the motions by the three corporations and entered summary judgment in their favor,
reasoning that no defendant other than the Committee had discretion to administer
benefits under the Plans. But the District Court denied the Committee’s motion and
remanded for the Committee to reconsider whether Needham and Dowman performed
any employment services for Bellemead.
On administrative remand, Needham and Dowman asserted that the corporate
division between Bellemead and Halifax Golf – at least during the mid-1990s – was
artificial. They argued that Halifax Golf was nothing more than an alter-ego of
Bellemead and that there was no meaningful distinction between the employees of
Halifax Golf and those of Bellemead.
The Committee evaluated those challenges on remand. It considered around eight
hundred pages of additional documentation. It also interviewed members of Halifax
Golf’s management. And it considered a two-page declaration from Needham detailing
his and Dowman’s experience working at the golf club. After doing so, it reaffirmed its
previous denial of benefits on January 27, 2020.
To challenge that determination, Needham and Dowman commenced this suit in
District Court. Needham passed away shortly afterwards, and his surviving spouse, as
the representative of his estate, was substituted for him as a party. As alleged in an
amended complaint filed against each of the same defendants, Needham’s representative
and Dowman pursued claims for wrongful denial of benefits under ERISA and breach of
fiduciary duty. They also sought an injunction to prevent further violations of the statute.
The four defendants filed dispositive motions. After concluding that the
Committee’s denial of benefits was not arbitrary or capricious and reiterating that the
5
three corporate defendants lacked authority to administer the Plans, the District Court
granted those motions.
Needham’s representative and Dowman timely appealed the resulting final
decision, bringing the matter within this Court’s appellate jurisdiction. See 28 U.S.C.
§ 1291.
DISCUSSION
On appeal, Needham’s representative and Dowman challenge the second
eligibility condition identified by the Committee – the provision of employment services
to a participating employer. They contest the Committee’s interpretation of the Plan
documents to create that condition, and they dispute factually that the condition is unmet.
Under the deferential arbitrary-and-capricious standard applicable for reviewing denial-
of-benefits decisions by plan administrators who are vested with discretionary authority
to interpret the terms of a benefit plan and who determine eligibility based on those
terms, McCann v. Unum Provident, 907 F.3d 130, 147 (3d Cir. 2018), neither argument
succeeds.
Other arguments that were available to the parties have not been presented in the
appellate briefing. By not developing a separate challenge to the District Court’s
conclusion that the three corporate defendants lacked authority to administer the Plans,
Needham’s representative and Dowman have forfeited their only preserved arguments
against those defendants on appeal. See Barna v. Bd. of Sch. Dirs. of Panther Valley Sch.
Dist., 877 F.3d 136, 146 (3d Cir. 2017). For that reason, it is not necessary to address the
6
res judicata and collateral estoppel concerns mentioned, but not developed, by Chubb,
Bellemead, and Halifax Golf in their appellate brief. See Fed. R. App. P. 28(a)(8), (b).1
A. The Committee Did Not Arbitrarily or Capriciously Interpret
the Plan Documents.
To identify the second requirement for Plan eligibility, the Committee considered
several defined terms in the Plans. Chubb’s Pension Plan limited participation to
“Employee[s].” Supp. App. 32–35 (7/12/2016 Committee Letter). It further defined the
term “Employee” as any person “in the employment in the United States or on the United
States payroll of an Employer and who receives Compensation from the Employer.” Id.at 32–33, 36. Based on that text, the Committee determined that it was not enough for
Needham and Dowman to have been on Bellemead’s domestic payroll: they must also
have received ‘Compensation’ from Bellemead. The Committee understood the term
‘Compensation’ to refer to “the aggregate remuneration received by an Employee . . . for
Service with an Employer.” Id. at 37. And ‘Service with an Employer’ meant “any
period of employment . . . as an Employee of an Employer.” Id. From those interlocking
definitions, which had similar limitations to those in the other two plans, the Committee
concluded that Needham and Dowman were required to provide employment services to
Bellemead to participate in the Plans.
Needham’s representative and Dowman argue that such a reading is unreasonable
based on several of the five factors this Circuit identified for consideration in assessing
the reasonableness of an ERISA committee’s interpretation of a benefit plan. See Howley
1
Much of what our concurring colleague has to say on the values served by the barring of
re-litigation of claims is salutary, but it is all inapplicable. This appeal does not implicate
res judicata: that affirmative defense would apply at most to claims rejected by the
District Court and not pursued on appeal. So, to substantively address res judicata would
be to render an advisory opinion.
7
v. Mellon Fin. Corp., 625 F.3d 788, 795 (3d Cir. 2010). They contend that the
Committee’s denial of their claims was inconsistent with the goals of the Plans. See id.(identifying consistency with the goals of a plan as one of the factors used to assess the
reasonableness of a plan administrator’s interpretation of a plan). But they fail to identify
a textual basis in the Plans or a past practice by the Committee that would allow the
conclusion that one of the goals of the Plans was to make benefits available to everyone
on Bellemead’s payroll – even those who never provided any service to Bellemead. They
also argue that the Committee’s interpretation rendered language in the Plans
meaningless or internally inconsistent, and was contrary to the clear language of the
Plans. See id. (identifying the rendering of plan language as meaningless or internally
inconsistent and in contradiction with the clear language of a plan as factors used to
assess the reasonableness of a plan administrator’s interpretation of a plan). Although the
language in the Plans is seemingly circular at times, Needham’s representative and
Dowman do not present a persuasive basis for interpreting the Plans’ definitions of
‘Employee’ and ‘Compensation’ as allowing an employee to participate in the Plans
simply because he or she received paychecks from a participating employer. Without
more, Needham’s representative and Dowman fail to demonstrate that the Committee’s
interpretation of the Plan documents was arbitrary or capricious.
B. It Was Not Arbitrary or Capricious for the Committee to
Conclude that Needham and Dowman Worked Only for Halifax
Golf.
Needham’s representative and Dowman also dispute the Committee’s denial of
benefits under its own interpretation of the Plans. They advance three arguments in
8
support of that contention, but none overcomes the deference owed to the Committee as
the administrator of the Plans. See McCann, 907 F.3d at 147.
Their first argument is based on Halifax Golf’s transition away from Chubb and
Bellemead in the late 1990s. They contend that before that assertion of corporate
independence, the services that Needham and Dowman provided were to Bellemead.
The Committee provided a reasoned basis for rejecting that argument. It reviewed
a January 1997 memorandum that references an effort to isolate departments. But that
alone did not persuade the Committee. The same document indicates that prior to the
transition, Needham’s job responsibilities consisted of golf-related functions, with other
employees handling the real-estate and construction-related matters associated with
Bellemead’s core business. The Committee also examined additional documentation
bearing on Needham and Dowman’s job responsibilities and concluded that both of them
performed purely golf-related services for Halifax Golf, as opposed to real-estate or
construction work for Bellemead. The Committee was likewise not convinced by
Needham and Dowman’s supposed participation in other Chubb-sponsored plans before
1998 because those plans had different eligibility criteria. With little support in the
record other than Needham’s own declaration, which asserted in a conclusory manner
that he rendered services for Bellemead, the Committee rejected this basis for Needham
and Dowman’s claim. That conclusion was not arbitrary or capricious.
As a related, second argument, Needham’s representative and Dowman contend
that Halifax Golf abused its corporate form in the 1990s. They assert that Halifax Golf
was a sham corporation used to avoid paying benefits to certain employees and that its
corporate form must be disregarded in determining their eligibility under the Plans. But
the Committee found that Halifax Golf observed all corporate formalities, filed its own
9
tax returns, used its own employer identification number, and paid unemployment
insurance on behalf of its employees. And based on telephone interviews with Halifax
Golf’s management, the Committee concluded that Halifax Golf had always been
intended to make a profit, was not considered a mere loss leader for Bellemead’s real-
estate business, and was managed apart from Bellemead. The Committee also cited more
recent evidence of Halifax Golf’s distinct corporate identity: the company was sold as a
separate going concern in 2018, independent of the rest of Bellemead’s real-estate
business.
The Committee considered countervailing evidence as well. It appreciated that
Halifax Golf may have been initially undercapitalized and financially dependent on
Bellemead. The Committee also recognized that Halifax Golf and Bellemead had a few
shared-service workers and management personnel in common. But the Committee
explained that the close initial relationship between Halifax Golf and Bellemead was not
“unusual under the circumstances” and, in light of the record as a whole, did not require
ignoring Halifax Golf’s corporate form for purposes of determining Needham and
Dowman’s eligibility under the Plans. Supp. App. 76 (9/13/2019 Committee Letter).
Thus, the Committee’s rejection of this second argument was not arbitrary or capricious.
The third challenge relies on designations internal to Bellemead and Halifax
Golf’s personnel system. That system designated Needham and Dowman as ‘ORU.’ The
Committee concluded that employees with that designation “were consistently treated as
ineligible to participate in the Plans” and “found that this consistent practice, in terms of
administration and application of the Plans, weighed heavily against Mr. Needham’s and
Mr. Dowman’s claim.” Id. at 77. Needham’s representative and Dowman respond that
three ORU-designated employees participated in the Plans, as did a fourth employee who
10
they say worked closely with Halifax Golf. But that fourth employee also provided
services to Bellemead. And the Committee found that, in fact, the three other ORU-
designated employees were not eligible to participate in the Plans because they had
transferred from Bellemead to another non-participating employer. As a result, it was not
arbitrary or capricious for the Committee to reject this final argument.
CONCLUSION
The Committee considered the record as a whole, and its denial of Needham and
Dowman’s claim was not “without reason,” “unsupported by substantial evidence,” or
otherwise arbitrary or capricious. Noga v. Fulton Fin. Corp. Emp. Benefit Plan, 19 F.4th
264, 275 (3d Cir. 2021) (internal quotation marks omitted). Because the Committee
reasonably concluded that Needham and Dowman were not eligible to participate in the
Plans, the District Court did not err in rejecting their claims for wrongful denial of
benefits and breach of fiduciary duty or in denying their request for an injunction.
Accordingly, we will affirm the District Court’s judgment.
11
ROTH, J., Concurring
You may consider me an old curmudgeon, insisting on the judicial standards of
many years ago. I hope I am. I believe that there are certain judicial precepts that are too
vital to the proper running of the courts to be ignored. One of these is res judicata:
When final judgment has been entered in an action, that judgment precludes a second suit
between the same parties on the same cause of action. My colleagues problematically
ignore essential principles of res judicata.1 Therefore, I write separately to emphasize
that it is essential that we apply its principles.
Needham and Dowman first sued the four defendants—Chubb, Bellemead,
Halifax Golf, and the Committee—in 2016.2 Their complaint raised two claims against
all defendants: to enjoin further violations of ERISA, under 29 U.S.C. § 1132(a)(3), and
to recover benefits, under 29 U.S.C. § 1132(a)(1)(B). The parties had a full and fair
opportunity to litigate the matter and the District Court completely addressed both claims.
The District Court ultimately granted summary judgment in favor of Chubb, Bellemead,
and Halifax Golf, but denied summary judgment as to the Committee.3 Because it found
that the Committee had failed to adequately consider several documents that Needham
1
While the Supreme Court has stated in Arizona v. California, 530 U.S. 392, 412–13
(2000), that “trial courts must be cautious about raising a preclusion bar sua sponte,
thereby eroding the principle of party presentation so basic to our system of
adjudication,” Arizona is an Indian water rights case between states. The question behind
the quote here was whether a certain issue could have been decided in the earlier suit,
thereby preluding its assertion in the second suit. Such an issue is far different from the
one in this case: the relitigation of the identical suit over the vociferous objection in the
District Court by the appellees.
2
Complaint, Dowman, 3:16-cv-08129, ECF No. 1, ¶¶ 38–63 (D.N.J. Nov. 1, 2016).
3
Dowman, 2019 WL 1587084, at *9 (D.N.J. Apr. 11, 2019).
1
and Dowman had referred to in their briefs, the court remanded the remaining claims
against the Committee to the Committee, so it could then consider those documents.4 On
administrative remand, the Committee once again denied Needham and Dowman’s
claims for benefits.5 Needham and Dowman did not appeal the outcome of the first case.
In 2020, Needham and Dowman sued the same four defendants and advanced the
same argument: that they were entitled to receive ERISA benefits.6 In this second
lawsuit, they brought the same exact claims as in the 2016 lawsuit, as well as an
additional third claim: breach of fiduciary duty, under 29 U.S.C. § 1132(a)(3).7 District
courts have, however, dismissed breach of fiduciary duty claims in similar instances after
concluding that the claim is “nothing more than a garden-variety, denial-of-benefits claim
that has been improperly pled as a breach of fiduciary duty claim.”8 Moreover, as
elaborated below, the plaintiffs should have brought this third claim in the initial suit.9
Despite the addition of the third claim, the operative complaints in both cases were
essentially identical.
4
Id.5
SA83 (1/27/2020 Committee Letter).
6
A188.
7
A188; Amended Complaint, Dowman, 3:20-cv-3470, ECF No. 8, ¶¶ 42–72 (D.N.J.
Nov. 25, 2020).
8
Laufenberg v. Northeast Carpenters Pension Fund, No. 17-1200, 2019 WL 6975090(D.N.J. Dec. 19, 2019) (dismissing § 1132(a)(3) claim as duplicative of benefits claim);
see also Plastic Surgery Center PA v. Cigna Health & Life Ins. Co., No. 17-2055, 2018
WL 2441768, *13–14 (D.N.J. May 31, 2018) (same); Anonymous Oxford Health Plan
Member v. Oxford Health Ins., No. 12-2367, 2012 WL 12929913, *2–3 (D.N.J. Dec. 27,
2012) (same).
9
Res judicata applies to claims that could have been brought in the initial suit. See C.I.R.
v. Sunnen, 333 U.S. 591, 597 (1948); Duhaney v. Attorney General of the United States,
621 F.3d 340 (3d Cir. 2010).
2
Defendants again filed a motion for summary judgment, arguing in part that res
judicata precluded the plaintiffs from bringing this repeated suit.10 The District Court
granted that motion but failed to address the res judicata argument.11 In doing so—and
in failing to dismiss the case outright on res judicata grounds well before summary
judgment—the court relitigated a matter which it had previously decided.12 It should not
have done so.
“[R]es judicata applies to repetitious suits involving the same cause of action.”13
Under this rule:
when a court of competent jurisdiction has entered a final judgment on the
merits of a cause of action, the parties to the suit . . . are thereafter bound
‘not only as to every matter which was offered and received to sustain or
defeat the claim or demand, but as to any other admissible matter which
might have been offered for that purpose.’14
In other words, a second suit should be precluded where there is “(1) a final judgment on
the merits in a prior suit involving (2) the same parties or their privies and (3) a
subsequent suit based on the same cause of action.”15 However, the causes of action in
10
A77–81.
11
A175–76 (D. Ct. Order); A189–90, 198, 201 (D. Ct. Op.).
12
The District Court’s 2022 opinion explicitly recognized the identical nature between
the 2016 and 2019 lawsuits. It states: “The dispute previously came before me in
November 2016,” A180; “In the 2016 lawsuit, I partially granted Defendants’ motion for
summary judgment . . . for the same reasons I do herein,” A185; “The amended
complaint largely mirrors the 2016 Lawsuit in that it repeats the two claims from the
2016 Lawsuit,” A188; “The same issue was presented in the 2016 lawsuit and there is
nothing herein which changes the result. I addressed the issue in the 2016 Lawsuit,”
A189.
13
C.I.R., 333 U.S. at 597.
14
Id. (quoting Cromwell v. County of Sac, 94 U.S. 351, 352 (1876)); see also Duhaney,
621 F.3d at 347 (citing In re Mullarkey, 536 F.3d 215, 225 (3d Cir. 2009).
15
In re Mullarkey, 536 F.3d at 225.
3
both cases need not be identical.16 “Rather, we look toward the ‘essential similarity of
the underlying events giving rise to the various claims.’”17 This principle is in keeping
with the established requirement that a plaintiff must “present in one suit all the claims
for relief that he may have arising out of the same transaction or occurrence.”18
Res judicata should be “strictly enforced and liberally applied.”19 The Supreme
Court made this clear in Federated Dep’t Stores, Inc. v. Moitie,20 in which the Court
explained that:
This Court has long recognized that public policy dictates that there be an
end of litigation; that those who have contested an issue shall be bound by
the result of the contest, and that matters once tried shall be considered
forever settled as between the parties. We have stressed that the doctrine of
res judicata is not a mere matter of practice or procedure inherited from a
more technical time than ours. It is a rule of fundamental and substantial
justice, of public policy and of private peace, which should be cordially
regarded and enforced by the courts.
Allowing judgments to be voidable “would result in creating elements of
uncertainty and confusion and in undermining the conclusive character of judgments
. . . .”21 The purpose of the doctrine of res judicata is to avert such consequences.22 The
rule “rests upon considerations of economy of judicial time and public policy favoring
the establishment of certainty in legal relations.”23 The Supreme Court has also stated
16
See Lubrizol Corp. v. Exxon Corp., 929 F.2d 960, 963 (3d Cir. 1991).
17
Id. (quoting Davis v. United States Steel Supply, 688 F.2d 166, 171 (3d Cir. 1982) (en banc)).
18
United States v. Athlone Industries, Inc., 746 F.2d 977, 984 (3d Cir. 1984) (internal quotations
omitted).
19
Purter v. Heckler, 771 F.2d 682, 690 (3d Cir. 1985); see C.I.R., 333 U.S. at 597.
20
452 U.S. 394, 401 (1981).
21
Id. (quoting Reed v. Allen, 286 U.S. 191, 201 (1932)).
22
Id.23
C.I.R., 333 U.S. at 597.
4
that res judicata is “central to the purpose for which civil courts have been established,
the conclusive resolution of the disputes within their jurisdictions.”24 Preventing
plaintiffs “from contesting matters that they have had a full and fair opportunity to
litigate protects their adversaries from the expense and vexation attending multiple
lawsuits, conserves judicial resources, and fosters reliance on judicial action by
minimizing the possibility of inconsistent decisions.”25 For all of these reasons, federal
courts are directed to preclude repeated claims under res judicata sua sponte.26
Here, my colleagues claim “it is not necessary to address the res judicata . . .
concerns mentioned, but not developed by Chubb, Bellemead, and Halifax Gold” on
appeal.27 I disagree. The District Court should have determined that the second suit—
which was essentially identical to the first—was precluded by res judicata. Even though
the plaintiffs were unsatisfied with the outcome of the first suit, they were nevertheless
“bound by the result of the contest,” which should have been “forever settled.”28 The
District Court’s decision to relitigate the matter undermined the finality of its initial
judgment—a circumstance which the Supreme Court has explicitly called on the courts to
prevent.29 We can and should rectify that error here.30
24
Montana v. United States, 440 U.S. 147, 153 (1979).
25
Id. at 153–54.
26
See Moitie, 452 U.S. at 401; Arizona v. California, 530 U.S. 392, 412 (2000).
27
NPO at 7.
28
Moitie, 452 U.S. at 401.
29
See id.
30
Circuit courts may dismiss claims based on res judicata sua sponte even if the parties
did not fully brief the issue. See Arizona, 530 U.S. at 412; In re Cassidy, 892 F.2d 637,
641 (7th Cir. 1990) (dismissing an entire claim sua sponte based on judicial estoppel and
noting that “even an appellate court may raise the estoppel on its own motion”); see also
5
I agree that Needham and Dowman were not eligible to participate in the Plans but
I believe that the District Court should have precluded the second lawsuit from being
brought. If we do not dismiss this action on res judicata grounds but allow the judgment
on the merits to stand, we will be indicating to District Judges in the Third Circuit and to
litigants through the country that our Court will allow litigants a second bite of the apple.
I don’t believe that we should send out such a message.
For the above reasons, I write separately to urge that this appeal be dismissed on
res judicata grounds.
Salahuddin v. Jones, 992 F.2d 447, 449 (1993) (explaining that res judicata was “not only
appropriate but virtually mandatory in this case, whether or not the appellees raised res
judicata” because that doctrine “is founded in part on the strong public interest in
economizing the use of judicial resources”), cert. denied, 510 U.S. 902 (1993).
6