Students for Fair Admissions v. Univ of TX

Case: 21-50715 Document: 00516362859 Page: 1 Date Filed: 06/20/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
June 20, 2022
No. 21-50715 Lyle W. Cayce
Clerk
Students for Fair Admissions, Incorporated,
Plaintiff—Appellant,
versus
University of Texas at Austin; James B. Milliken,
Chancellor of the University of Texas System in his Official Capacity; Steven
Leslie, Executive Vice Chancellor for Academic Affairs of the University of
Texas System in his Official Capacity; Daniel H. Sharphorn, Vice
Chancellor and General Counsel of the University of Texas System in his Official
Capacity; Jay Hartzell, Interim President of the University of Texas at
Austin in his Official Capacity; Board of Regents of the Texas
State University System; David J. Beck, Member of the Board of
Regents in his Official Capacity; Christina Melton Crain, Member of
the Board of Regents in her Official Capacity; Kevin P. Eltife, Member of
the Board of Regents in his Official Capacity; R. Steven Hicks, Member of
the Board of Regents in his Official Capacity; Jodie Lee Jiles, Member of
the Board of Regents in his Official Capacity; Janiece Longoria, Member
of the Board of Regents in her Official Capacity; Nolan Perez, Member of
the Board of Regents in his Official Capacity; Kelcy L. Warren, Member
of the Board of Regents in his Official Capacity; James C. (Rad)
Weaver, Member of the Board of Regents in his Official Capacity; Daniel
Jaffe, Interim Executive Vice President and Provost; Rachelle
Hernandez, Senior Vice Provost for Enrollment Management and Student
Success; Miguel Wasielewski, Executive Director for Office of
Admissions,
Case: 21-50715 Document: 00516362859 Page: 2 Date Filed: 06/20/2022
No. 21-50715
Defendants—Appellees,
The Black Student Alliance; The Texas Orange
Jackets; Texas NAACP; Adaylin Alvarez; Morgan
Bennett; Liz Kufour; Brianna Mallorie McBride;
Desiree Ortega-Santiago; Nima Rahman; Alexandra
Trujillo; Rosaleen Xiong,
Intervenor Defendants—Appellees.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:20-CV-763
Before King, Jones, and Duncan, Circuit Judges.
Stuart Kyle Duncan, Circuit Judge:
Students for Fair Admissions, Inc. (SFFA), a nonprofit organization
committed to ending race discrimination in higher-education admissions,
sued the University of Texas at Austin (UT) 1 over its use of race in admitting
students. The district court concluded SFFA has standing but dismissed its
claims as barred by res judicata. It reasoned that SFFA’s claims were already
1
Defendants are the University of Texas at Austin; the Board of Regents of the
University of Texas System; James B. Milliken, Chancellor of the University of Texas
System; Steven Leslie, Executive Vice Chancellor for Academic Affairs of the University
of Texas System; Daniel H. Sharphorn, Vice Chancellor and General Counsel of the
University of Texas System; Jay Hartzell, President of the University of Texas at Austin;
David J. Beck, Christina Melton Crain, Kevin P. Eltife, R. Steven Hicks, Jodie Lee Jiles,
Janiece Longoria, Nolan Perez, Kelcy L. Warren, and James C. “Rad” Weaver, as
members of the Board of Regents; Daniel Jaffe, Interim Executive Vice President and
Provost; Rachelle Hernandez, Senior Vice Provost for Enrollment Management and
Student Success; and Miguel Wasielewski, Executive Director for Office of Admissions.
We collectively refer to Defendants as “UT.”
2
Case: 21-50715 Document: 00516362859 Page: 3 Date Filed: 06/20/2022
No. 21-50715
litigated in a prior challenge to UT’s admissions policies. See Fisher v. Univ.
of Tex. (Fisher II), 579 U.S. 365 (2016); Fisher v. Univ. of Tex. (Fisher I), 570
U.S. 297 (2013). We agree that SFFA has standing, but we disagree that res
judicata bars its claims. The parties here are not identical to or in privity with
those in Fisher, and this case presents different claims. Accordingly, we
reverse the district court’s judgment and remand for further proceedings.
I.
A.
Before 1997, UT used race in deciding which students to admit. After
we held the practice unconstitutional, UT stopped. See Hopwood v. Texas, 78
F.3d 932, 948, 955 (5th Cir. 1996). From 1998 to 2004, UT instead used a
facially race-neutral process to evaluate applicants not automatically
admitted under the “Top Ten Percent Plan,” which the legislature enacted
in 1997. 2 In 2004, UT swiftly reintroduced race into admissions after the
Supreme Court sanctioned its limited use in Grutter v. Bollinger, 539 U.S. 306(2003). See Fisher II, 579 U.S. at 395 (Alito, J., dissenting) (“UT leapt at the
opportunity to reinsert race into the process.”).
In 2008, Abigail Fisher, a white high school senior who was denied
admission, challenged UT’s admissions policy under the equal protection
clause and Title VI of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000d et seq.
Fisher received outside help in her lawsuit. A nonprofit legal-defense
foundation, the Project on Fair Representation (PFR), covered her legal fees.
Edward Blum, PFR’s executive director and a longtime family friend,
2
The plan requires UT to admit all Texas seniors who rank in the top ten percent
of their high school class. Tex. Educ. Code Ann. § 51.803 (West 1997).
3
Case: 21-50715 Document: 00516362859 Page: 4 Date Filed: 06/20/2022
No. 21-50715
recommended attorneys for Fisher and served as a “conduit” between her
and them. Fisher, however, retained ultimate control over her case.
In 2016, the Supreme Court rejected Fisher’s claims and held that
UT’s admissions practices, as of 2008, satisfied strict scrutiny. See Fisher II,
579 U.S. at 388. The Court’s inquiry was “limited to the narrow question”
of whether Fisher “was denied equal treatment at the time her application
was rejected.” Id. at 380. The Court stressed that, moving forward, UT may
“not necessarily . . . rely on that same policy without refinement” and has an
“ongoing obligation to engage in constant deliberation and continued
reflection regarding its admissions policies.” Id. at 388.
B.
Formed in 2014, SFFA is a registered 501(c)(3) organization
incorporated in Virginia. Its stated purpose is “to defend human and civil
rights secured by law, including the right of individuals to equal protection
under the law, through litigation and any other lawful means.”
SFFA’s governing documents set forth membership policies,
organizational structure, and leadership positions. Its articles of
incorporation provide that, pursuant to the Virginia Nonstock Corporation
Act (the “Act”), SFFA “shall have no members.” Its initial bylaws, adopted
contemporaneously with the articles, provide for “no members within the
meaning of the Act” but for “one class of affiliate members with rights,
privileges, and obligations established by the Board of Directors.” “Affiliate
members,” the bylaws explain, “have no voting rights and are not members
within the meaning of the Act.” Affiliate membership is open to “[a]ny
individual who seeks to support the purposes and mission of the
Corporation . . . , subject to any additional standards that may be set from
time to time by the Board.” The bylaws provide for no fewer than three but
no more than five directors, to be elected “by an affirmative vote of a majority
4
Case: 21-50715 Document: 00516362859 Page: 5 Date Filed: 06/20/2022
No. 21-50715
of the directors then in office.” At its founding, SFFA’s directors were Blum,
Fisher, and Fisher’s father Richard.
In SFFA’s early stages, individuals could become affiliate members by
submitting identifying information and expressing an intent to join. To
encourage participation and aid recruitment, SFFA did not require
membership fees or dues. Membership grew steadily by the hundreds in its
first year, before exploding to 20,000 members in June 2015. To account for
this rapid growth, SFFA amended its bylaws to provide for “one class of
members, referred to as General Members, which shall not be ‘members’
within the meaning of the Act and shall have only the rights specifically set
forth in these Bylaws.” SFFA also began requiring a one-time assessment of
$10 as membership dues. And, to give members “a direct voice in [SFFA’s]
decision-making, including the management and direction of ongoing
litigation,” SFFA expanded its board to five directors, one of whom would
be elected by its members.
SFFA’s current board consists of Blum, Fisher, Fisher’s father, Joe
Zhou, and Eva Guo. Each is serving a two-year term. Blum also serves as
SFFA’s president and is responsible for “day-to-day operations,
membership recruitment, and efforts to publicize its mission.” Fisher also
serves as secretary and “is responsible for keeping an accurate record of the
proceedings of all [board] meetings.” Fisher’s father also serves as treasurer
and “is responsible for the financial management of the organization.” Mr.
Zhou is a parent of a child who experienced racial discrimination in applying
to college. And Ms. Guo is a parent of younger children who fears they will
suffer racial discrimination in the admissions process. Collectively, the board
manages SFFA’s business and affairs, including its litigation.
5
Case: 21-50715 Document: 00516362859 Page: 6 Date Filed: 06/20/2022
No. 21-50715
C.
In July 2020, SFFA sued UT, claiming the use of race in its admissions
policy violates the Fourteenth Amendment, sections 1981 and 1983, and Title
VI. See U.S. Const. amend. XIV, § 1, cl. 4; 42 U.S.C. §§ 1981, 1983,
2000d et seq. It sued on behalf of its members, including two white students
who were denied admission to UT and who are able and ready to transfer
there if UT stops discriminating.
SFFA alleges UT’s current admissions policy has “changed
dramatically” from the 2008 policy challenged in Fisher. It alleges “there has
been a steady increase in racial diversity since 2008,” as 51% of students were
white in 2008 and only 36% of students were white in 2018. It also claims that
“direct statistical evidence” shows UT “racially balances its entering
freshman class to ensure a specific proportion[]” of black students, i.e., a
“quota.” Specifically, UT’s admitted class was 5–6% black in each of the last
ten years. Further, while UT previously reported that “racial/ethnic status”
was merely a factor “considered” in admissions decisions, UT now
characterizes it as a “very important” factor.
Over SFFA’s objection, the district court bifurcated discovery. It
allowed UT to take discovery on its anticipated standing and res judicata
challenges, to be raised in dispositive motions, but prohibited SFFA from
taking discovery on the merits of its claims. UT deposed SFFA and its two
members who were denied admission, and SFFA produced documents and
responded to interrogatories.
In March 2021, UT moved for summary judgment or dismissal based
on lack of standing, res judicata, and collateral estoppel. UT argued SFFA
was not a traditional membership organization because it did not have
“statutory members” under Virginia law and so lacked standing. UT also
argued that res judicata and collateral estoppel barred this suit because it
6
Case: 21-50715 Document: 00516362859 Page: 7 Date Filed: 06/20/2022
No. 21-50715
overlaps with Fisher. A group of eight minority UT students and three
organizations (Intervenor Defendants) intervened and moved to dismiss on
the ground that SFFA lacks standing. 3
The district court granted the motions in part and denied them in part.
Students for Fair Admissions, Inc. v. Univ. of Tex. (SFFA), No. 1:20-CV-763-
RP, 2021 WL 3145667 (W.D. Tex. July 21, 2021). The court ruled that SFFA
has associational standing as a “traditional membership organization,” id. at
*5–7, and that two of SFFA’s members would have standing to challenge
UT’s admissions policy, id. at *6–7. The court therefore denied the motions
to dismiss premised on standing. But the court held res judicata barred
SFFA’s claims, finding the plaintiffs in this case and the Fisher litigation are
in privity and the causes of action in the two cases are the same. Id. at *8–12.
The court thus granted summary judgment, dismissing SFFA’s claims with
prejudice. Id. at *12. SFFA timely appealed.
II.
We review summary judgments de novo, applying the same standards
as the district court. Salinas v. R.A. Rogers, Inc., 952 F.3d 680, 682 (5th Cir.
2020) (citation omitted); Fed. R. Civ. P. 56(a). We also review de novo the
district court’s rulings on standing and res judicata. See Tex. All. for Retired
Ams. v. Scott, 28 F.4th 669, 671 (5th Cir. 2022) (citations omitted); SED
Holdings, L.L.C. v. TM Prop. Sols., L.L.C. (In re 3 Star Props., L.L.C.), 6 F.4th
595, 604 (5th Cir. 2021) (citations omitted).
3
The Intervenor Defendants are Adaylin Alvarez, Morgan Bennett, Brianna
Mallorie McBride, Liz Kufour, Desiree Ortega-Santiago, Nima Rahman, Alexandra
Trujillo, Rosaleen Xiong, the Texas NAACP, the Black Student Alliance, and the Texas
Orange Jackets.
7
Case: 21-50715 Document: 00516362859 Page: 8 Date Filed: 06/20/2022
No. 21-50715
III.
Seeking reversal, SFFA contests the district court’s res judicata ruling.
Seeking affirmance on alternate grounds, UT and the Intervenor Defendants
contest the district court’s ruling that SFFA lacks standing. 4 We address
standing first because it is jurisdictional. Sw. Elec. Power Co. v. EPA, 920 F.3d
999, 1014 n.18 (5th Cir. 2019) (citations omitted).
A.
The district court ruled that SFFA has associational standing. SFFA,
2021 WL 3145667, at *5–7. An association has standing to bring claims on
behalf of its members when (1) individual members would have standing, 5
(2) the association seeks to vindicate interests germane to its purpose, and
(3) neither the claim asserted nor the relief requested requires the individual
members’ participation. See, e.g., Sw. Elec. Power Co., 920 F.3d at 1014 n.18
(citing Assoc. of Am. Phys. & Surgeons v. Tex. Med. Bd., 627 F.3d 547, 550 (5th
Cir. 2010)). 6 UT and the Intervenor Defendants attack the district court’s
ruling on two different grounds. Neither has merit.
4
UT and the Intervenor Defendants were not required to cross-appeal because
their arguments regarding SFFA’s standing, if accepted, would be an alternate ground for
affirmance. See, e.g., United States v. Am. Ry. Express Co., 265 U.S. 425, 435–36 (1924);
Maxim Crane Works, L.P. v. Zurich Am. Ins. Co., 11 F.4th 345, 350–51 (5th Cir. 2021); see
also 15A Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure § 3904 (3d ed.), Westlaw (database updated Apr. 2022)
(“[A]rguments that support the judgment as entered can be made without a cross-
appeal.”).
5
An individual has standing to sue if his injury is traceable to the defendant and a
ruling would likely redress it. See U.S. Const. art. III, § 2; see also Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560–61 (1992).
6
Alternatively, an association may show it has “organizational standing” to sue in
its own right. See, e.g., Tenth St. Residential Ass’n v. City of Dallas, 968 F.3d 492, 500 (5th
8
Case: 21-50715 Document: 00516362859 Page: 9 Date Filed: 06/20/2022
No. 21-50715
UT argues that SFFA cannot sue on behalf of its members because it
is not a “traditional membership organization.” It points out that SFFA’s
articles of incorporation state, “[t]he Corporation shall have no members.”
For that reason, SFFA contends that SFFA must satisfy the threshold
“indicia-of-membership” test, which it claims SFFA fails. See, e.g., Funeral
Consumers All., Inc. v. Serv. Corp. Int’l, 695 F.3d 330, 344 n.9 (5th Cir. 2012)
(citing Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 344–45
(1977)) (discussing indicia-of-membership test). 7 The district court correctly
rejected this argument. See SFFA, 2021 WL 3145667, at *5–6.
SFFA is a traditional membership organization. When it sued in 2020,
“SFFA was a validly incorporated 501(c)(3) nonprofit with [thousands of]
members who joined voluntarily to support its mission of ‘defend[ing]
human and civil rights secured by law, including the right of individuals to
equal protection under the law.” Students for Fair Admissions, Inc. v. President
& Fellows of Harvard Coll. (Harvard II), 980 F.3d 157, 184 (1st Cir. 2020), cert.
granted, 142 S. Ct. 895 (2022) (first brackets added). Its amended bylaws
provide for a single class of “General Members,” who pay membership dues
and elect one of SFFA’s five directors. In light of that structure—and in
agreement with every other court to consider the issue, including the district
Cir. 2020) (citation omitted). The district court did not address that kind of standing and
neither do we.
7
Under the indicia-of-membership test, we consider whether an organization’s
purported “members” (1) elect the organization’s leaders, (2) serve in the organization’s
leadership, (3) finance the organization’s activities, (4) associate voluntarily with the
organization, and (5) provide sworn testimony of membership. See Hunt, 432 U.S. at 344–
45; Funeral Consumers All., 695 F.3d at 344 n.9.
9
Case: 21-50715 Document: 00516362859 Page: 10 Date Filed: 06/20/2022
No. 21-50715
court here—we “conclude that SFFA is a valid membership organization
and applying an indicia of membership test to SFFA is unwarranted.” Ibid. 8
UT responds by making the novel argument that SFFA’s bylaws
conflict with its articles of incorporation and, therefore, the bylaws cannot
create valid members under Virginia law. Relying on our decision in Friends
of the Earth, Inc. v. Chevron Chemical Co., 129 F.3d 826 (5th Cir. 1997), UT
thus argues that SFFA is not a traditional membership organization. We
disagree.
Friends of the Earth is inapposite. There, we applied the indicia-of-
membership test to a nonprofit corporation that had violated its own bylaws
and D.C. law by failing to set membership requirements. Id. at 827, 829. The
corporation merely treated “those who gave a donation” as “members.” Id.
at 827. 9 That case is not like this one. It is undisputed that SFFA complied
with its bylaws in creating its members. As the district court explained,
“SFFA’s bylaws state that it will have members, whereas in Friends of the
Earth the plaintiff’s bylaws provided that its board of directors would set
membership requirements—which they never did.” SFFA, 2021 WL
3145667, at *6.
UT stresses that SFFA’s articles state it “shall have no members,”
but UT misunderstands that statement. It refers to statutory “members”
8
See also Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll.
(Harvard Corp.) (Harvard I), 261 F. Supp. 3d 99, 103–11 (D. Mass. 2017), aff’d, Harvard II,
980 F.3d at 184; Students for Fair Admissions, Inc. v. Univ. of N.C., No. 14-CV-954, 2018
WL 4688388, at *3–6 (M.D.N.C. Sept. 29, 2018), cert. before judgment granted, 142 S. Ct.
895 (2022); SFFA, 2021 WL 3145667, at *5–6.
9
We nonetheless found the indicia-of-membership test satisfied because the
corporation’s “purported members” elected its governing body, financed its activities, and
“voluntarily associated themselves with [the organization].” Id. at 829.
10
Case: 21-50715 Document: 00516362859 Page: 11 Date Filed: 06/20/2022
No. 21-50715
under relevant Virginia law. 10 UT cites no authority that Virginia nonprofit
corporations cannot create other membership classes through their bylaws
and give those membership classes certain rights. See id. § 13.1-823(B)
(providing corporation’s “bylaws . . . may contain any provision that is not
inconsistent with law or the articles of incorporation”). As the district court
found, SFFA’s bylaws did just that by creating “one class of members,
referred to as General Members, who shall not be ‘members’ within the
meaning of the [Virginia Nonstock Corporation] Act.” SFFA, 2021 WL
3145667, at *6. UT is thus mistaken that SFFA’s bylaws conflict with its
articles or Virginia law. So, we have no occasion to apply the indicia-of-
membership test under Friends of the Earth.
The Intervenor Defendants take a different tack. They argue SFFA’s
two members lack Article III injury because they merely allege “they are
white, were denied admission, and are willing to transfer [to UT].” This is
insufficient, say the Intervenor Defendants, because unlike a racial set-aside
or quota, the policy challenged here is a “holistic race-conscious admissions
plan” that does not “automatically place white applicants on unequal
footing.” This argument is specious.
In an equal protection challenge to a race-conscious admissions policy,
an applicant is injured by being denied the “opportunity to compete for
admission on an equal basis.” Gratz v. Bollinger, 539 U.S. 244, 262 (2003). 11
10
See Va. Code Ann. § 13.1-819(A)(2)–(3) (requiring articles to state whether
corporation will have “one or more classes of members” or “no members”); id. § 13.1-187
(providing corporation “may have one or more classes of members or may have no
members”).
11
See also Ne. Fla. Chapter of the Associated Gen. Contractors of Am. v. City of
Jacksonville, 508 U.S. 656, 666 (1993) (explaining “the ‘injury-in-fact’ [from a racial set-
aside] is the inability to compete on an equal footing in the bidding process, not the loss of
a contract” (citation omitted)); Moore v. Bryant, 853 F.3d 245, 250 (5th Cir. 2017)
11
Case: 21-50715 Document: 00516362859 Page: 12 Date Filed: 06/20/2022
No. 21-50715
SFFA’s complaint contains detailed allegations that UT’s current
admissions policy “gives special preference to applicants who fall within
racial categories that the university considers ‘underrepresented,’” such as
blacks and Hispanics, thereby “diminish[ing] the chances of admission” for
whites and Asian-American applicants. It also alleges that UT uses its
“holistic admissions process” as a cloak to pursue “racial balancing” that
amounts to a “quota” of admitted black students. Finally, it alleges that at
least two of its members are white, applied to UT but were not admitted, and
were thereby “denied the opportunity to compete for admission to [UT] on
equal footing with other applicants on the basis of race or ethnicity because
of [UT’s] discriminatory admissions policies.” Those students “are ready
and able to apply to transfer to [UT] when it stops discriminating against
applicants on the basis of race and ethnicity.”
These allegations establish Article III standing. Indeed, they are
identical to allegations held sufficient to create standing in Gratz. There, the
Supreme Court found the plaintiff had standing to seek prospective relief
against the University of Michigan because he alleged he had “applied,” had
been “denied admission,” and was “able and ready to apply as a transfer
student should the University cease to use race in undergraduate
admissions.” Gratz, 539 U.S. at 262. Every other court to consider the issue
has agreed that SFFA’s members have standing. See Harvard II, 980 F.3d at
183 (holding SFFA’s members have standing under Gratz); Harvard I, 261
F. Supp. 3d at 109–10 (same); Univ. of N.C., 2018 WL 4688388, at *5 (same).
And no court has drawn the distinction that the Intervenor Defendants press
(explaining “the gravamen of an equal protection claim is differential governmental
treatment” (citations omitted)).
12
Case: 21-50715 Document: 00516362859 Page: 13 Date Filed: 06/20/2022
No. 21-50715
here—namely, between a racial set-aside or quota and a “holistic race-
conscious admissions plan.”
Nor will we. The Intervenor Defendants may sincerely believe that
UT’s “holistic” plan “may be beneficial to any UT . . . applicant—including
whites and Asian-Americans.” Br. of Intervenor-Defendants at 9 (quoting
Fisher II, 136 S. Ct. at 2207). 12 But that belief has nothing to do with standing.
For standing purposes, the only question at this stage is whether SFFA has
adequately alleged that UT’s race-conscious policy puts its white members
on unequal footing with other applicants based on race. They have.
In sum, SFFA has associational standing to challenge UT’s race-
conscious admissions policy and the district court correctly denied the
motions to dismiss based on standing.
B.
We turn to the district court’s res judicata holding. “The rule of res
judicata encompasses two separate but linked preclusive doctrines: (1) true
res judicata or claim preclusion and (2) collateral estoppel or issue
preclusion.” Stevens v. St. Tammany Par. Gov’t, 17 F.4th 563, 570 (5th Cir.
2021) (quoting Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 571 (5th
Cir. 2005)). The district court found SFFA’s claims were barred by claim
preclusion and so did not reach issue preclusion. SFFA, 2021 WL 3145667,
at *12.
12
The Intervenor Defendants’ brief appears to quote from the Supreme Court
itself, but the Court was quoting the district court, which was in turn quoting UT’s own
summary judgment motion. See Fisher II, 579 U.S. at 375 (quoting Fisher v. Univ. of Tex.,
645 F. Supp. 2d 587, 606 (W.D. Tex. 2009)). In other words, Fisher II did not conclude that
UT’s race-conscious admissions policy was “beneficial” to whites and Asian-Americans.
13
Case: 21-50715 Document: 00516362859 Page: 14 Date Filed: 06/20/2022
No. 21-50715
“Claim preclusion bars the litigation of claims that have been or
should have been raised in an earlier suit.” Snow Ingredients, Inc. v.
SnoWizard, Inc., 833 F.3d 512, 521 (5th Cir. 2016) (citing Petro–Hunt L.L.C.
v. United States, 365 F.3d 385, 395 (5th Cir. 2004)). The test for claim
preclusion has four elements: “(1) the parties are identical or in privity;
(2) the judgment in the prior action was rendered by a court of competent
jurisdiction; (3) the prior action was concluded by a final judgment on the
merits; and (4) the same claim or cause of action was involved in both
actions.” Ibid. (quoting Test Masters, 428 F.3d at 571). The second and third
elements are not disputed.
1.
As to the first element, the district court found SFFA is in privity with
the Fisher plaintiffs because “Fisher and Blum both exerted control over the
litigation in Fisher and exert control over this lawsuit as directors of SFFA.”
SFFA, 2021 WL 3145667, at *10. SFFA argues that Fisher’s and Blum’s
personal involvement in Fisher cannot bind SFFA and that, even if it could,
they do not control SFFA. We agree with SFFA.
A “basic premise of preclusion law” is that “[a] court’s judgment
binds only the parties to a suit, subject to a handful of discrete and limited
exceptions.” Smith v. Bayer Corp., 564 U.S. 299, 312 (2011) (citing Wright
& Miller, supra note 3, § 4449). The Supreme Court has taken a
“constrained approach to nonparty preclusion,” Taylor v. Sturgell, 553 U.S.
880, 898 (2008), recognizing only six exceptions, see id. at 893–95. One is
relevant here: “a nonparty is bound by a judgment if she assumed control
over the litigation in which that judgment was rendered.” Id. at 895 (cleaned
up). Control for nonparty preclusion “requires that a person have effective
choice as to the legal theories and proofs to be advanced in behalf of the party
to the action” and “have control over the opportunity to obtain review.”
14
Case: 21-50715 Document: 00516362859 Page: 15 Date Filed: 06/20/2022
No. 21-50715
Benson & Ford, Inc. v. Wanda Petroleum Co., 833 F.2d 1172, 1174 (5th Cir.
1987) (quoting Hardy v. Johns–Manville Sales Corp., 681 F.2d 334, 339 (5th
Cir. 1982)); see also Gonzalez v. Banco Cent. Corp., 27 F.3d 751, 758 (1st Cir.
1994) (control is the power “to call the shots” (collecting sources)).
The identity-of-parties or privity requirement is not met where “a
party appears in one action in an individual capacity and in a subsequent
action in a representative capacity.” Clark v. Amoco Prod. Co., 794 F.2d 967,
973 (5th Cir. 1986) (citing Restatement (Second) of Judgments
§ 36 (1980)); see Howell Hydrocarbons, Inc. v. Adams, 897 F.2d 183, 188 (5th
Cir. 1990); see also Wright & Miller, supra note 3, § 4454
(“[L]itigation in one capacity, individual or representative, does not preclude
relitigation in a different capacity, individual or representative.”). And,
specifically, the control exception to nonparty preclusion “cannot apply to a
person who, as a party, controls litigation in one capacity, and then is
involved in subsequent litigation in another capacity.” Wright &
Miller, supra note 3, § 4451. 13
The district court erred in applying the control exception to nonparty
preclusion in two key respects. First, it mistakenly rejected SFFA’s
argument about the different capacities in which Fisher and Blum acted in
Fisher and act in this case. See SFFA, 2021 WL 3145667, at *9. SFFA cannot
be precluded from bringing its own suit merely because one of its directors
(Fisher) previously sued in her personal capacity, with the help of a second
13
“Application of the control principle in these circumstances would defeat the
basic perception that representative capacities must be held separate in order to ensure
vigorous pursuit of litigation without concern about the possible impact on other interests.”
Wright & Miller, supra note 3, § 4451; see also id. § 4454 (“The rule against
extending preclusion from litigation undertaken in one capacity to litigation in a different
capacity is designed to free the representative to conduct each action for the best interests
of the people who would benefit from that action.”).
15
Case: 21-50715 Document: 00516362859 Page: 16 Date Filed: 06/20/2022
No. 21-50715
director (Blum). 14 The different capacities in which Fisher and Blum acted
in Fisher (personal) compared to this case (directors of SFFA) makes the
control exception to nonparty preclusion inapplicable. See Clark, 794 F.2d at
973; Wright & Miller, supra note 3, § 4454 (“[I]t is necessary to reject
any attempt to establish preclusion on the ground that the same person who
appears in different capacities fully participated in and controlled the prior
action.”); id. § 4460 (“[A] corporation cannot be bound [by a judgment]
simply because a director, officer, or minor shareholder has lost an action
pursued in an individual capacity.”). 15
Second, even if Fisher’s and Blum’s different capacities did not
foreclose applying claim preclusion, the district court erred in finding that
Fisher and Blum control SFFA. The court found that Fisher and Blum
“control at least three, if not four, of the five board seats,” SFFA, 2021 WL
3145667, at *10, because “there are five total . . . directors, one is Fisher’s
father, and the three collectively have a majority vote to direct any decisions
from the board,” id. at *9. Nothing in the record supports this finding. Fisher
and Blum form only a minority, noncontrolling contingent of SFFA’s five-
member board. Absent evidence to the contrary, we presume the remaining
three directors “will exercise independent judgment.” FDIC v. Henderson,
14
SFFA disputes the district court’s finding that Blum “exerted sufficient control
over Fisher.” SFFA, 2021 WL 3145667, at *9. We need not address and so express no view
on whether or to what extent Blum controlled the Fisher litigation.
15
See also Assurance Co. of Am. v. Kirkland, 312 F.3d 186, 190 (5th Cir. 2002)
(holding res judicata did not apply because prior judgment against corporation did not bind
later action by its sole owner concerning coverage of same insurance policy); Johnson v.
City of Houston, 444 F. App’x 26, 31 (5th Cir. 2011) (per curiam) (finding identity-of-the-
parties element not met where plaintiff brought claims in first suit as executrix of estate and
in second suit in individual capacity); Restatement (Second) of Judgments § 59
cmt. e (1982), Westlaw (database updated Oct. 2021) (“[A] judgment for or against persons
who are stockholders, members, or managers of a corporation does not in general bind or
redound to the benefit of the corporation.”).
16
Case: 21-50715 Document: 00516362859 Page: 17 Date Filed: 06/20/2022
No. 21-50715
61 F.3d 421, 431 (5th Cir. 1995). Because the parties in this case and Fisher
are not identical or in privity, claim preclusion does not apply.
2.
Even if the parties were identical or in privity, the claims in this case
differ from those in Fisher. “We use a transactional test to answer the ‘same
claim’ question, barring the new claim if it arises from the same nucleus of
operative facts as the prior claims.” ASARCO, L.L.C. v. Mont. Res., Inc., 858
F.3d 949, 956 (5th Cir. 2017) (citing N.Y. Life Ins. Co. v. Gillispie, 203 F.3d
384, 387 (5th Cir. 2000)); see also Hous. Pro. Towing Ass’n v. City of Houston,
812 F.3d 443, 447 (5th Cir. 2016). “We consider ‘whether the facts are
related in time, space, origin, or motivation; whether they form a convenient
trial unit; and whether their treatment as a unit conforms to the parties’
expectations.’” OJSC Ukrnafta v. Carpatsky Petroleum Corp., 957 F.3d 487,
504 (5th Cir. 2020) (quoting Oreck Direct LLC v. Dyson Inc., 560 F.3d 398,
402 (5th Cir. 2009)).
Under our transactional test, SFFA’s claims are not the same as those
in Fisher. First, the claims are not related in time and space. SFFA’s standing
members were denied admission in 2018 and 2019, whereas Fisher was
denied admission in 2008. SFFA challenges UT’s admissions policies used
in 2018 and 2019, whereas Fisher concerned only the policies used in 2008.
Fisher II, 579 U.S. at 380. As the Supreme Court has observed, “Claim
preclusion generally ‘does not bar claims that are predicated on events that
postdate the filing of the initial complaint.’” Lucky Brand Dungarees, Inc. v.
Marcel Fashions Grp., Inc., 140 S. Ct. 1589, 1596 (2020) (quoting Whole
Woman’s Health v. Hellerstedt, 579 U.S. 582, 600 (2016)).
Second, the operative facts are not the same. SFFA alleges that
“[t]hings have changed dramatically since 2008,” “there has been a steady
increase in racial diversity since [then],” and “UT[] has increased its
17
Case: 21-50715 Document: 00516362859 Page: 18 Date Filed: 06/20/2022
No. 21-50715
reliance on race,” citing data on the racial composition of each entering class
at UT from 2008 to 2018. See Test Masters, 428 F.3d at 572 (claim preclusion
did not apply where “the operative facts between the current litigation and
the previous litigation are not the same” and the “the nucleus of facts in the
current action concern[ed] allegations . . . that did not occur at the time of
the previous action”); cf. Steen v. Harvey, 247 F. App’x 511, 514–15 (5th Cir.
2007) (per curiam) (applying res judicata where the claims were “based on
identical facts occurring during the same time period”). SFFA alleges UT is
employing a different policy than the one challenged in Fisher.
Third, the origin and motive of the claims are unrelated. The Fisher
plaintiffs sought to recover damages for injuries they personally suffered
from the denial of admission in 2008. See Fisher v. Univ. of Tex., 631 F.3d 213,
217 (5th Cir. 2011). SFFA, however, seeks forward-looking relief: if it
prevails, then its members can apply to UT under an admissions process that
does not discriminate on the basis of race. Moreover, SFFA did not even exist
when UT’s admissions policies were challenged in Fisher. And given their
significant factual differences, the two cases would not form a convenient
trial unit. See OJSC Ukrnafta, 957 F.3d at 504 (citation omitted).
* * *
Because the parties here and in Fisher are not identical or in privity,
and because this case presents different claims, the district court erred in
holding SFFA’s lawsuit is barred by claim preclusion. 16
16
While the district court did not address issue preclusion, UT and the Intervenor
Defendants claim the doctrine also bars SFFA’s suit. We disagree. Because issue
preclusion requires party privity and identical issues, see Parklane Hosiery Co., Inc. v. Shore,
439 U.S. 322, 326–27 (1979); Rabo Agrifinance, Inc. v. Terra XXI, Ltd., 583 F.3d 348, 353
(5th Cir. 2009), our discussion above forecloses its application in this case.
18
Case: 21-50715 Document: 00516362859 Page: 19 Date Filed: 06/20/2022
No. 21-50715
IV.
We REVERSE the district court’s judgment and REMAND for
further proceedings consistent with this opinion.
19