Twaddle v. Diem ( 2006 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 06a0710n.06
Filed: September 29, 2006
No. 05-4428
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
WILLIAM TWADDLE, et al.,
Plaintiffs-Appellants,
v. On Appeal from the United
States District Court for the
EDWARD DIEM, et al., Southern District of Ohio
Defendants-Appellees.
/
Before: GUY, GILMAN, and ROGERS, Circuit Judges.
RALPH B. GUY, JR., Circuit Judge. Plaintiffs appeal from the district court’s
order (1) granting the motion of defendants Edward Diem and James Kibler, supervisors at
RKE Trucking Company, to dismiss the complaint; and (2) denying plaintiffs’ motion to
consolidate this case with the pending action that these plaintiffs previously filed against
RKE Trucking.1 The two cases filed by these plaintiffs, which we will call Twaddle I and
Twaddle II for ease of reference, asserted the same causes of action against different
defendants to recover for the same failure to pay regular and/or overtime wages. The heart
1
The first action was filed by five plaintiffs, one of whom voluntarily dismissed his claims against
RKE Trucking and did not join in this case.
No. 05-4428 2
of the district court’s decision was the conclusion that this case was filed in an improper
attempt to make an “end run” around the expired deadline for filing a motion to join parties
or amend pleadings in Twaddle I. Plaintiffs argue both that the scheduling order in Twaddle
I did not restrict their ability to bring other legal actions, and that they were not interested in
“splitting” their claim but rather joining it through consolidation. After a review of the
record, we find it was an abuse of discretion to dismiss this case on the merits and we
therefore reverse.
I.
Plaintiffs filed the first action, Twaddle I, in June 2004 against RKE Trucking only,
asserting claims for violation of federal and state wage laws, breach of contract, and
promissory estoppel. The magistrate judge entered a Preliminary Pretrial Order in October
2004 that provided, among other things, that “[m]otions addressing the joinder of additional
parties and amendments to the pleadings may be filed, if at all, by February 2, 2005.” Other
deadlines included a discovery cutoff of June 1, 2005, and that motions for summary
judgment be filed no later than July 1, 2005.2
In exchanging offers of settlement in early May 2005, counsel for RKE Trucking
added, in closing, that other economic conditions were placing a heavy financial burden on
the company such that it was possible that further litigation might result in bankruptcy.
There is little question that the suggestion of bankruptcy was the spark that prompted
plaintiffs to bring claims against Diem and Kibler, president and vice-president of RKE, as
2
Plaintiffs objected to consideration of the pretrial order entered in Twaddle I, but it is a matter of
record that we may take notice of, and the order was added by supplement to the record in this case.
No. 05-4428 3
“employers” under the definitions for federal and state wage laws. There is also no question
that plaintiffs could have chosen to make an untimely motion to amend the complaint to add
Diem and Kibler as defendants in Twaddle I, which would have required plaintiffs to show
“good cause” for an extension of the expired deadline under Fed. R. Civ. P. 16(b) before
leave to amend could be considered under Fed. R. Civ. P. 15(a). Leary v. Daeschner, 349
F.3d 888 (6th Cir. 2003). Plaintiffs did not choose that route, however.
Instead, plaintiffs filed a separate complaint on May 4, 2005. Diem and Kibler filed
both an answer and a motion to dismiss the complaint in July 2005, which was met by
plaintiffs’ motion to consolidate this case with Twaddle I. The two cases were pending in
the same federal district court before different district judges (although the same magistrate
judge was assigned to each). Without citing to a court rule or case authority, the district court
concluded that allowing plaintiffs to pursue the case would “arguably endorse the pursuit of
wasteful, expensive, and duplicative litigation if claim-splitting became an issue.” Also,
“[c]oncerns about claim-splitting aside, granting the motion to consolidate would effectively
endorse the strategic circumvention of judicial orders.” Judgment dismissing the complaint
was entered, and this appeal followed.
II.
The district court’s decision rested on its rejection of the plaintiffs’ proffered reasons
for filing a second action to assert the claims against Diem and Kibler. Plaintiffs explained
that the claims in Twaddle II were brought in response to the threat of possible bankruptcy,
and that they did not attempt to assert those claims by amendment in Twaddle I because any
No. 05-4428 4
delay in a decision on a motion to amend would have caused additional periods of lost pay
to fall outside the statute of limitations. Although the second action was filed on the heels
of the disclosure that RKE was in financial difficulty, the district court agreed with
defendants that the risk of bankruptcy was present as soon as the complaint was filed in
Twaddle I. The district court took umbrage at the suggestion that a motion to amend might
not have been resolved in a timely way, noted that expedited consideration could have been
requested, and pointed out that plaintiffs had alleged a wilful violation of federal wage and
overtime laws for which the limitations period would be three years.3
To be sure, the claims asserted in Twaddle II could have been brought in Twaddle I
either initially or by amendment. While the district court was not satisfied with the
explanations of plaintiffs’ counsel for not having done so, as we see it, the important question
is whether plaintiffs were required to bring these claims in Twaddle I.
To start, plaintiffs contend that the pretrial scheduling order entered in Twaddle I did
not address, let alone prohibit, plaintiffs from instituting another legal action. This is evident
from the district court’s finding that to allow this case to proceed would effectively endorse
the strategic circumvention of the scheduling order in Twaddle I. Although Fed. R. Civ. P.
41(b) authorizes the involuntary dismissal on the merits for failure of the plaintiff to comply
with any order of the court, the district court did not rely on this provision in dismissing the
complaint in this case.
3
Plaintiffs argue on appeal that the limitations bar was a real one as they had already been time-
barred from seeking lost wages for pay periods more than three years before the complaint was filed in
Twaddle I.
No. 05-4428 5
Nor has there been any suggestion that Diem and Kibler should have been joined as
necessary parties to the first case. F ED. R. C IV. P. 19. Rather, the district court’s decision
emphasized that if this action were permitted to proceed, it would be reasonable to expect
that Diem and Kibler might seek to join RKE Trucking as a defendant in this case. The
district court added that it could not see how RKE “would not be an indispensable party,”
which would cause RKE to face the prospect of dual litigation on the same issues. Whether
or not RKE would be an indispensable party, dismissal of this case for nonjoinder would only
be proper if RKE could not be joined as a party. Id. No impediment to joinder is apparent
from this record. Further, the potential burdens of dual litigation would be addressed by the
proposed consolidation. F ED. R. C IV. P. 42(a) (“When actions involving a common question
of law or fact are pending before the court, it may order a joint hearing or trial of any or all
the matters in issue in the actions; it may order all the actions consolidated; and it may make
such orders concerning proceedings therein as may tend to avoid unnecessary costs or
delay.”).4
Although it seems that the district court stopped short of dismissing Twaddle II as
duplicative of Twaddle I, defendants Diem and Kibler squarely argued for dismissal on that
basis. “As between federal district courts, . . . though no precise rule [concerning the
contemporaneous exercise of concurrent jurisdiction] has evolved, the general principle is
to avoid duplicative litigation.” Colo. River Water Conservation Dist. v. United States, 424
4
Consolidation would not raise the prospect of relation back because consolidation does not merge
the suits into a single action, change the rights of the parties, or make parties in one suit parties in the other.
Johnson v. Manhattan Ry. Co., 289 U.S. 479, 496-97 (1933) (interpreting predecessor of Rule 42(a)).
No. 05-4428 6
U.S. 800, 817 (1976) (citing Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180,
183 (1952)). Faced with a duplicative suit, the federal court may exercise its discretion to
stay or dismiss the suit before it, allow both federal cases to proceed, or enjoin the parties
from proceeding in the other suit. Smith v. SEC, 129 F.3d 356, 361 (6th Cir. 1997).
“[S]imple dismissal of the second suit is [a] common disposition because plaintiffs
have no right to maintain two actions on the same subject in the same court, against the same
defendant at the same time.” Curtis v. Citibank, N.A., 226 F.3d 133, 138-39 (2d Cir. 2000);
see also Missouri v. Prudential Health Care Plan, Inc., 259 F.3d 949, 953-54 (8th Cir. 2001)
(joining other courts that have held a district court may dismiss one of two identical pending
actions). It is an abuse of discretion, however, to prevent a party from proceeding in a suit
that is not truly duplicative. Smith, 129 F.3d at 361. Here, Twaddle I and Twaddle II were
filed in the same court, arise out of the same facts, employ the same legal theories, and seek
to recover for the same lost wages. The actions are not identical, however, because they were
brought against different defendants.
Finally, defendants argued in the district court that filing two actions arising out of the
same facts amounted to “claim-splitting,” which this court strongly disapproved of in Wilkins
v. Jakeway, 183 F.3d 528, 532 n.4, 534-35 (6th Cir. 1999) (by bringing two different suits
which presented two different theories of the case arising from the same factual situation,
counsel engaged in the precise behavior that the doctrine of res judicata seeks to discourage).
As plaintiffs point out, however, Wilkins does not invite dismissals based on claim-splitting.
In fact, despite what was described as a “classic case” of claim-splitting, this court reversed
No. 05-4428 7
entry of summary judgment on the grounds of res judicata (or claim preclusion) in favor of
defendants. The court added an admonition that although the plaintiff had “lucked out”
because the first case was not resolved by a final decision on the merits as to all of the
defendants named in the second suit, “not every claimant who brings two separate suits
arising from one mutual set of facts will be so fortunate.” 183 F.3d at 535. This implies that
plaintiffs engage in claim-splitting at the peril of having one case barred by the decision in
the other. 18 James Wm. Moore, et al., M OORE’S F EDERAL P RACTICE § 133.51 (3d ed. 1997)
(preclusion is the enforcement mechanism against claim-splitting); 1 A M. J UR. 2 D Actions §
103 (penalty for violating rule against claim-splitting is that adjudication reached first in one
action will have preclusive effect on the second action).
The filing of multiple federal actions arising out of the same facts is strongly
discouraged, and plaintiffs take such a course at the peril that the adjudication of one case
will have preclusive effect on the other. Here, there was no violation of a court order, no
grounds for dismissal for nonjoinder, and no basis to conclude that the cases were
duplicative. Accordingly, dismissal of the complaint on the merits is REVERSED and the
case is REMANDED for further proceedings consistent with this opinion.