James Kulinski v. Medtronic Bio-Med. ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 95-3682
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James M. Kulinski, *
*
Appellant, *
*
v. *
*
Medtronic Bio-Medicus, Inc., *
*
Appellee. *
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Appeal and Cross-Appeal from the
United States District Court
No. 95-3803 for the District of Minnesota.
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James M. Kulinski, *
*
Appellee, *
*
v. *
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Medtronic Bio-Medicus, Inc., *
*
Appellant. *
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Submitted: October 23, 1996
Filed: March 13, 1997
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Before BRIGHT and MURPHY, Circuit Judges.*
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BRIGHT, Circuit Judge.
*
Judge Magill, who was originally on the panel hearing this
appeal, recused himself after oral argument. Because a quorum of
the court exists and the two remaining judges agree on the outcome,
a third judge is unnecessary for a determination of this appeal.
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James M. Kulinski brought this state law breach of contract
action against Medtronic Bio-Medicus, Inc. The district court
dismissed Kulinski's action pursuant to Minnesota's statute of
limitations for wage claims, Minn. Stat. § 541.07(5)(1990).
Kulinski appealed and Medtronic filed a protective cross-appeal
arguing that Kulinski's claim was precluded by res judicata. We
reverse the dismissal of Kulinski's claim but affirm the denial of
Medtronic's cross-appeal.
BACKGROUND
Kulinski worked for Bio-Medicus, Inc. (Bio-Medicus) as its
national sales manager. In January 1990, Kulinski executed a
change-of-control termination agreement (CCTA), or "golden
parachute" agreement, with Bio-Medicus. This CCTA entitled
Kulinski to a lump sum payment as severance if his employment
terminated or was otherwise detrimentally affected as the result of
a hostile takeover of Bio-Medicus. In June 1990, Kulinski signed
a second CCTA which entitled him to severance benefits if his
employment terminated or was detrimentally affected as the result
of a friendly merger.
In September 1990, Bio-Medicus merged with Medtronic, Inc. to
form Medtronic Bio-Medicus, Inc. (Medtronic). Kulinski refused the
merged entity's offer of a two-year position at a reduced salary.
Kulinski resigned and notified Bio-Medicus and Medtronic, Inc. that
he experienced a "change of control termination" under the second
CCTA. Bio-Medicus rejected Kulinski's request for his lump sum
severance payment.
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Kulinski brought his first action against Medtronic on
February 26, 1991, asserting a claim under the Employee Retirement
Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461 (1988 & Supp.
III 1991), for breach of the CCTA. Both parties and the district
court agreed that federal question jurisdiction existed under
ERISA. Kulinski did not bring any pendant state law claims at this
time. After a bench trial, the district court awarded Kulinski
$254,566 in severance pay, in addition to attorney's fees, costs,
and prejudgment interest.
Medtronic appealed without challenging the application of
ERISA. This court held, sua sponte, that no ERISA plan existed
and, therefore, the district court lacked subject matter
jurisdiction. Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d
254, 258 (8th Cir. 1994). We vacated the judgment for Kulinski and
remanded the case with instructions to dismiss for lack of subject
matter jurisdiction. Id. Kulinski then moved to amend his ERISA
complaint to allege a state law breach of contract claim under
diversity jurisdiction. The district court denied Kulinski's
motion and dismissed the case with prejudice.
Kulinski appealed that decision on July 18, 1994. This court
upheld the district court's decision to dismiss Kulinski's ERISA
action with prejudice. Kulinski v. Medtronic Bio-Medicus, Inc.,
No. 94-2829, 1995 WL 413319, at *1 (8th Cir. July 14, 1995) (per
curiam) (unpublished).
Before we reviewed that appeal, however, Kulinski filed a new
action against Medtronic in federal district court based on
diversity jurisdiction. Kulinski raised the state law breach of
contract claim that the district court previously dismissed by
rejecting Kulinski's motion to amend his first (ERISA) action.
Medtronic moved to dismiss this second action pursuant to Fed. R.
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Civ. P. 12(b)(6) on the grounds of res judicata and the statute of
limitations. The district court held Medtronic's motion under
advisement pending Kulinski's appeal.
After Kulinski lost his appeal, the district court granted
Medtronic's motion to dismiss Kulinski's state law action as barred
by Minnesota's statute of limitations for wage claims, Minn. Stat.
§ 541.07(5). The court, however, rejected Medtronic's argument
that res judicata precluded Kulinski's action. These appeals
followed.
DISCUSSION
Kulinski raises three issues on appeal. Kulinski first argues
that his claim is not barred by the statute of limitations because
he is not bringing a claim for “wages” for purposes of Minn. Stat.
§ 541.07(5). Kulinski also argues that, even if the statute
applies, his claim is not subject to the statute of limitations
because it is saved under Minn. Stat. § 541.18 (1990). Finally,
Kulinski seeks equitable relief from the statute of limitations.
In addition to contesting Kulinski's appeal, Medtronic argues that
Kulinski's claim is precluded by res judicata. We review the
district court's dismissal of Kulinski's complaint de novo, Carney
v. Houston, 33 F.3d 893, 894 (8th Cir. 1994), and presume all of
Kulinski's factual allegations as true. Miree v. DeKalb County,
Georgia, 433 U.S. 25, 27 n.2 (1977).
I.
Section 541.07(5) provides that an action shall be commenced
within two years if it is:
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For the recovery of wages or overtime or damages, fees or
penalties accruing under any federal or state law
respecting the payment of wages or overtime or damages,
fees or penalties except, that if the employer fails to
submit payroll records by a specified date upon request
of the department of labor and industry or if the
nonpayment is willful and not the result of mistake or
inadvertence, the limitation is three years. (The term
"wages" means all remuneration for services or
employment, including commissions and bonuses and the
cash value of all remuneration in any medium other than
cash, where the relationship of master and servant exists
. . . )[.]
Minn. Stat. § 541.07(5).
It is undisputed that the time allotted in § 541.07(5) expired
before Kulinski filed this diversity action. Nearly four years
passed between Medtronic's alleged breach of contract in 1990 and
the filing of Kulinski's second action in 1994. Kulinski, however,
argues that § 541.07(5) is not applicable because he does not bring
a claim for "wages" within the meaning of that section. Instead,
Kulinski argues that his action is covered by Minnesota's six-year
statute of limitations for actions based "[u]pon a contract or
other obligation, express or implied, as to which no other
limitation is expressly prescribed . . . ." Minn. Stat. § 541.05,
subd. 1(1) (1990). We disagree.
Although it appears that no Minnesota court has specifically
addressed whether wages under § 541.07(5) include severance
benefits, Minnesota courts consistently hold that "all damages
arising out of the employment relationship are subject to [§
541.07(5)]." Stowman v. Carlson Companies, Inc., 430 N.W.2d 490,
493 (Minn. Ct. App. 1988) (applying Portlance v. Golden Valley
State Bank, 405 N.W.2d 240, 243 (Minn. 1987)); see also Levin v.
C.O.M.B. Co., 441 N.W.2d 801, 804 (Minn. 1989) (unpaid commissions
due pursuant to an employment contract); Portlance, 405 N.W.2d at
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243 (wrongful discharge based on an oral contract of employment
allegedly modified by an employees' manual); Worwa v. Solz Enters.,
Inc., 238 N.W.2d 628, 631 (Minn. 1976) (contractual wage claims);
Roaderick v. Lull Eng'g Co., 208 N.W.2d 761, 762-63 (Minn. 1973)
(commission or bonus payments); Kohout v. Shakopee Foundry Co., 162
N.W.2d 237, 239-40 (Minn. 1968) (accrued but unpaid vacation pay);
Kletschka v. Abbott-Northwestern Hosp., Inc., 417 N.W.2d 752, 755
(Minn. Ct. App. 1988) (salary increases and "adjustment of all
fringe benefits"); cf. Adamson v. Armco, Inc., 44 F.3d 650, 652-53
(8th Cir.) (construing Stowman to conclude that Minnesota courts
construe § 541.07(5) broadly), cert. denied, 116 S. Ct. 85 (1995).
The Minnesota Supreme Court has also explicitly recognized the
"broad definition of wages stated in [§ 541.07(5)] . . . ."
Roaderick, 208 N.W.2d at 763.
In light of the consistently broad construction given to
§ 541.07(5), we affirm the district court in considering Kulinski’s
claim as one within the general concept of wages.2 The district
court did not err in applying the two-year limitation under §
541.07(5).
II.
Kulinski argues that even if the statute of limitations
applies, his claim is "saved" by Minnesota's savings statute:
Kulinski proposes a very different reading of Minnesota case
law. He cites McDaniel v. United Hardware Distrib. Co., 469 N.W.2d
84 (Minn. 1991), for the proposition that the two-year statute of
limitations does not apply unless the claim is either for hourly
pay or for wages that would have been earned had the employee not
been wrongfully terminated. That action rested on rights created
by statute and is, therefore, distinguishable.
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Except where the uniform commercial code otherwise
prescribes, if judgment be recovered by plaintiff in an
action begun within the prescribed period of limitation
and such judgment be afterward arrested or reversed on
error or appeal, the plaintiff may begin a new action
within one year after such reversal or arrest.
Minn. Stat. § 541.18 (1990). This statute, virtually unchanged
since its enactment in 1851, is rarely utilized and is not
interpreted by any appellate court. Furthermore, no legislative
history is available.
We start, of course, with the plain language of the statute.
Gale v. Commissioner of Taxation, 37 N.W.2d 711, 714-15 (Minn.
1949). Indeed, simply because the statute is quite old does not
release us from our obligation to give the statute its plain
meaning. See, e.g., I.N.S. v. Phinpathya, 464 U.S. 190, 191-92
(1984) (holding that thirty-two-year-old statute must still be
given its plain meaning); see also Minn. Stat. § 645.16 ("Every law
shall be construed, if possible, to give effect to all its
provisions. When the words of a law in their application to an
existing situation are clear and free from all ambiguity, the
letter of the law shall not be disregarded under the pretext of
pursuing the spirit."). Kulinski meets the plainly worded
requirements of Minn. Stat. § 541.18. First, he filed his original
complaint five months after the alleged breach of contract and
within the statute of limitation. Second, Kulinski prevailed at
trial and was awarded over $250,000 in damages. Third, this court
reversed that judgment, not on the merits, but for lack of subject
matter jurisdiction. Fourth, Kulinski began this action based on
diversity jurisdiction within one year of our reversal.
The district court, however, held the savings statute was
"inapplicable to the facts of this case as Kulinski is not bringing
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a new action based on the same claim as had been previously
reversed, rather he is asserting a new claim." Dist. Ct. Order at
8. We disagree.
A ‘cause of action’ is a situation or state of facts
which entitles a party to sustain an action and gives him
the right to seek judicial interference in his behalf.
Under the Federal Rules of Civil Procedure, the word
‘claim’ denotes the same thing, i.e. ‘the aggregate of
operative facts which gives rise to a right enforceable
in the courts.’
Rhodes v. Jones, 351 F.2d 884, 886-87 (8th Cir. 1965) (quoting Dery
v. Wyer, 265 F.2d 804, 807 (2d Cir. 1959)). Here, Kulinski's claim
that Medtronic breached the CCTA agreement is the same in both
actions. Thus, both actions share identical operative documents,
witnesses, measure of recovery and essentially the same legal
issues.3 The only distinction is that Kulinski now asserts a legal
theory, state law breach of contract under diversity jurisdiction,
that is different from his ERISA theory. In fact, Kulinski is
bringing the same claim.
Significantly, Kulinski did not deliberately or carelessly
withhold the state law cause of action as an alternative theory in
his original pleading. ERISA is an "enormously complex and
detailed statute", Mertens v. Hewitt Assoc., 508 U.S. 248, 262
(1993) and "contains a preemption provision that applies to state
common law-based claims . . . ." Bannister v. Sorenson, 1996 WL
731897, at *2 (8th Cir. (Neb.)). This preemptive force explains
Kulinski's decision to proceed without alternative state law
theories. Indeed, both parties and the district court initially
3
Indeed, the only legal issue present in Kulinski's first
(ERISA) action which need not be examined in Kulinski's second
action is whether the CCTA constituted an employee welfare benefit
plan under ERISA.
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believed the CCTA was an ERISA plan and Medtronic's first appeal
did not even contest jurisdiction under ERISA.
We refrain from interpreting the statute to permit a plaintiff
to bring a different claim on a successive appeal because that
issue is not before us. Rather, our holding is narrow. We believe
the statute allows a prevailing plaintiff, like Kulinski, to bring
a renewed action based on the same claim that he originally sought
relief if, through no fault of his own, a jurisdictional error
results in the reversal of his judgment on appeal. Accordingly,
Kulinski's second action, based on diversity jurisdiction, is
covered by the savings statute and, therefore, is not time-barred.
III.
Because we conclude that the savings statute applies to
Kulinski's claim, we decline to reach his request for equitable
relief.
IV.
Medtronic raises a cross-appeal asserting that, even if
Kulinski's claim survives the statute of limitations, his claim is
precluded by res judicata. Claim preclusion requires three
elements: (1) identical parties in the lawsuits; (2) identical
claims or causes of action; and (3) a final judgment on the merits
in the prior action. Lane v. Peterson, 899 F.2d 737, 741 (8th Cir.
1990). In this case, the parties and claims are identical in both
suits. The only issue, then, is whether the district court
rendered a final judgment on the merits in the original action.
The district court held that the dismissal of Kulinski's first
complaint under ERISA for lack of jurisdiction was not an
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adjudication on the merits of that claim and, therefore, was not a
final judgment.
Medtronic first argues that res judicata requires Kulinski to
plead all bases for jurisdiction in his original pleading. This
argument is inconsistent with our precedent. In McCarney v. Ford
Motor Co., 657 F.2d 230 (8th Cir. 1981), we held that a dismissal
based on subject matter jurisdiction:
should preclude relitigation of the same [jurisdiction]
issue but not a second suit on the same claim even if
arising out of the identical set of facts. . . . [W]here
the second suit presents new theories of relief,
admittedly based upon the same operative facts as alleged
in the first action, it is not precluded because the
first decision was not on the merits of the substantive
claim.
Id. at 233-34 (citations omitted); cf. Oglala Sioux Tribe v.
Homestake Mining Co., 722 F.2d 1407, 1411 (8th Cir. 1984) (holding
second action barred by res judicata because plaintiff "assert[ed]
identical claims and jurisdictional grounds" as the first action).
Kulinski based his first action on federal ERISA law and his second
action on state contract law. Thus, the dismissal of Kulinski's
first action precludes another ERISA claim, but not the same claim
under a different theory and jurisdictional basis.4
4
Medtronic's attempt to persuade us to ignore our precedent is
unconvincing. Medtronic cites to two cases for support. Kale v.
Combined Ins. Co. of America, 924 F.2d 1161 (1st Cir. 1991); Shaver
v. F.W. Woolworth Co., 840 F.2d 1361, 1367 n.2 (7th Cir. 1988).
These cases differ significantly from the case at bar because in
both Kale and Shaver the original cause of action was dismissed on
the merits and with prejudice. Here, of course, Kulinski's initial
claim was dismissed for lack of subject matter jurisdiction and was
not on the merits. Johnson v. Boyd-Richardson Co., 650 F.2d 147,
148 (8th Cir. 1981) ("[W]hen a dismissal is for ‘lack of
jurisdiction,’ the effect is not an adjudication on the merits, and
therefore the res judicata bar does not arise.").
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Medtronic next argues that a denial of a motion for leave to
file an amended complaint has preclusive effect as to claims in the
amended complaint. The procedural history of all three cases cited
by Medtronic, however, included an adjudication of the first
complaint on the merits. See, e.g., King v. Hoover Group, Inc.,
958 F.2d 219, 221 (8th Cir. 1992) (original complaint dismissed on
summary judgment); Nagle v. Lee, 807 F.2d 435, 443 (5th Cir. 1987)
(original complaint dismissed for failure to prosecute); Carter v.
Money Tree Co., 532 F.2d 113, 114 (8th Cir. 1976) (original claim
dismissed for failure to state a claim). Kulinski's first
complaint, on the other hand, was dismissed only for lack of
subject matter jurisdiction. We decline to contort the district
court’s denial of Kulinski's proposed amended complaint into a
denial on the merits.
Finally, Medtronic argues that the district court's dismissal
"with prejudice" operates as an adjudication on the merits and,
therefore, precludes subsequent actions. We disagree. In
McCarney, we held the plaintiff's second suit was not barred by the
dismissal of his first suit despite its label "with prejudice"
because it did not reach the merits. 657 F.2d at 234.
CONCLUSION
For the foregoing reasons, we reverse the dismissal of
Kulinski’s contract action and remand for proceedings consistent
with this opinion. We affirm the district court’s ruling of
Medtronic’s cross-appeal.
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A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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