Apseloff v. Family Dollar Stores

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0380n.06
Filed: June 7, 2007
No. 06-4200
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
MARK APSELOFF, )
)
Plaintiff-Appellant, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
FAMILY DOLLAR STORES, INC., ) SOUTHERN DISTRICT OF OHIO
)
Defendant-Appellee. )
Before: SUHRHEINRICH, CLAY, and ROGERS, Circuit Judges.
ROGERS, Circuit Judge. Mark Apseloff appeals the magistrate judge’s order granting
Family Dollar’s motion to dismiss on the basis of res judicata. Apseloff, a former Family Dollar
employee, filed this suit for wrongful termination under Ohio law after previously litigating in Ohio
small claims court two separate lawsuits for vacation and stock option benefits allegedly owed to
him as part of his employment agreement. The magistrate judge granted Family Dollar’s motion to
dismiss after concluding that the subject matter of the earlier and present suits is part of the same
transaction or occurrence. We now affirm.
Mark Apseloff was hired by Family Dollar to serve as a district manager in July 2001.
Family Dollar fired Apseloff in February 2002. This lawsuit is the third that Apseloff has brought
against Family Dollar since his termination.
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Apseloff v. Family Dollar Stores
First, on August 26, 2002, Apseloff filed a Small Claim Complaint against Family Dollar in
Hamilton County Municipal Court. According to the complaint, Apseloff sought $2,480 for
“nonpayment of stock options that w[ere] part of [the] hiring agreement.” On February 14, 2003,
judgment was entered for Family Dollar. The record does not reveal the basis for the court’s
decision.
Second, on March 12, 2003, Apseloff filed another Small Claim Complaint against Family
Dollar in Hamilton County Municipal Court. This time, Apseloff sought $2,059.08 for “vacation
due as part of [the] hiring offer.” On May 21, 2003, the court granted Family Dollar’s motion to
dismiss on the grounds of res judicata.
Third, on February 10, 2006, Apseloff filed the current lawsuit against Family Dollar in the
Hamilton County Court of Common Pleas. Apseloff alleged that in January and February of 2002,
he complained to Family Dollar corporate management that a purported Family Dollar policy
opposing “the placement of male employees in the position of cashier, based on the rationale that
male employees are more prone to steal money than female employees” constituted unlawful
employment discrimination. Apseloff alleges that Family Dollar fired him in February 2002 in
retaliation for voicing these concerns, in violation of Ohio Revised Code section 4112.01 et seq and
Ohio public policy.1 Apseloff sued for past and future earnings he would have received had he not
1
On April 11, 2002, before Apseloff’s first small claims lawsuit, Apseloff filed a charge of
discrimination with the EEOC. The charge claimed unlawful retaliation in violation of Title VII for
the same reason Apseloff argues Family Dollar violated Ohio law in this case.
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Apseloff v. Family Dollar Stores
been terminated, compensation for pain and suffering, punitive damages, attorney’s fees and costs,
and “any other relief to which he is legally and equitably entitled.”
On March 10, 2006, Family Dollar removed the action to the United States District Court for
the Southern District of Ohio in accordance with 28 U.S.C. § 1446(a), claiming diversity jurisdiction.
On that same date, Family Dollar filed a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) based on res judicata.
The magistrate judge, who was assigned to the case with the consent of the parties, granted
Family Dollar’s motion to dismiss on the basis of res judicata. The magistrate judge stated that res
judicata
requires four elements of proof: (1) that the instant action involves the same two
parties; (2) that the instant action arose out of the same transaction or occurrence that
was the subject of earlier actions; (3) that the instant action could have been asserted
in at least one of those previous actions; and (4) that there was a final decision on the
prior action by a court of competent jurisdiction.
JA 26 (citing Davis v. Sun Oil Co., 148 F.3d 606, 611 (6th Cir. 1999) (per curiam); In re Fordu, 201
F.3d 693, 703-04 (6th Cir. 1999)).
The magistrate judge held that Apseloff conceded the first two elements of the test because
in his memorandum in opposition to Family Dollar’s motion to dismiss, Apseloff characterized the
small claims court actions as “1) an action claiming money for stock options upon his separation
from Family Dollar; and 2) an action claiming vacation pay due to him upon his separation from
Family Dollar.” JA 26 (quoting motion, emphasis in magistrate judge’s opinion). According to the
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magistrate judge, “both the first and second actions clearly arose out of [Apseloff’s] termination
from Family Dollar (i.e., ‘his separation from Family Dollar’)” and Apseloff’s current lawsuit “arises
directly from the ‘same transaction’—i.e., [Apseloff’s] separation from Family Dollar.”
The magistrate judge also held that the third and fourth elements of the test were met.2 The
judge held that the third element was met because Apseloff could have brought the wrongful
termination action in the previous actions, even though he could not have brought the action in the
Municipal Court (a court of limited jurisdiction), because he could have brought all the actions
together in the Hamilton County Court of Common Pleas. The magistrate judge also held that the
fourth element was met because the Municipal Court “was certainly competent to adjudicate
[Apseloff’s] claims for vacation pay and stock options upon his separation from Family Dollar.”
Apseloff timely filed a notice of appeal.
This court reviews a district court’s grant of a 12(b)(6) motion de novo. Gao v. Jenifer, 185
F.3d 548, 552 (6th Cir. 1999). “In considering the motion, all factual allegations in the complaint
are accepted as true.” Id. “A court may dismiss a complaint only if it is clear that no relief could
be granted under any set of facts that could be proved consistent with the allegations.” Hishon v.
King & Spalding, 467 U.S. 69, 73 (1984); accord Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514
(2002).
2
Apseloff does not challenge these conclusions on appeal.
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“[W]hen asked to give preclusive effect to a prior state court judgment, a federal court must
look to the law of the rendering state to determine whether and to what extent that prior judgment
should receive preclusive effect in a federal action.” Hapgood v. City of Warren, 127 F.3d 490, 493
(6th Cir. 1997). This rule applies equally where the present suit is a diversity action. See McAdoo
v. Dallas Corp., 932 F.2d 522, 524 (6th Cir. 1991). Therefore, this court applies Ohio res judicata
law.
The magistrate judge did not err by holding that the doctrine of res judicata (otherwise known
as “claim preclusion”) prevented Apseloff from recovering in this wrongful termination suit. Under
Ohio law, “[a] valid, final judgment rendered upon the merits bars all subsequent actions based upon
any claim arising out of the transaction or occurrence that was the subject matter of the previous
action.” Grava v. Parkman Twp., 653 N.E.2d 226, Syllabus ¶ 1 (Ohio 1995). The only issue in
dispute here is whether Apseloff’s current action is “based upon any claim arising out of the
transaction or occurrence that was the subject matter” of the previous Municipal Court actions.3
Although Ohio law controls, the Ohio Supreme Court “expressly adhere[s] to the modern application
of the doctrine of res judicata, as stated in 1 Restatement of the Law 2d, Judgments (1982), Sections
3
Ordinarily, only the first Municipal Court judgment would be entitled to claim preclusive
effect because the second Municipal Court judgment was based on res judicata, and thus was not a
judgment “rendered on the merits.” However, neither party argues this distinction, and it does not
make a difference to the resolution of this case.
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24-25.” Id.4 Thus, the Restatement and cases from other jurisdictions applying the Restatement are
instructive as to how the Ohio Supreme Court would answer the question in this case.
Family Dollar’s termination of Apseloff formed the transaction or occurrence out of which
Apseloff’s former and current lawsuits arose. Apseloff’s prior suits in Municipal Court were for
“nonpayment of stock options that w[ere] part of [the] hiring agreement” and “vacation due as part
of [the] hiring offer.” The present suit is for wrongful termination and concerns Family Dollar’s
motivations for firing Apseloff. As Apseloff conceded below, vacation and stock option benefits
were due to him “upon his separation from Family Dollar.” Apseloff’s present and former suits all
involve the same transaction—namely, Apseloff’s termination—and res judicata prevents Apseloff
from litigating piecemeal different causes of action arising out of this transaction. Cf. Clark v. Haas
Group, 953 F.2d 1235, 1239 (10th Cir. 1992) (applying the Restatement and holding that decision
on earlier suit under the Fair Labor Standards Act seeking unpaid overtime compensation precluded
4
The Restatement provides:
(1) When a valid and final judgment rendered in an action extinguishes the plaintiff’s
claim pursuant to the rules of merger or bar (see §§ 18, 19), the claim extinguished
includes all rights of the plaintiff to remedies against the defendant with respect to
all or any part of the transaction, or series of connected transactions, out of which the
action arose.
(2) What factual grouping constitutes a “transaction”, and what groupings constitute
a “series”, are to be determined pragmatically, giving weight to such considerations
as 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 or business understanding or usage.
Restatement (Second) of Judgments § 24.
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later suit under the Equal Pay Act and the Age Discrimination in Employment Act seeking, among
other things, damages for age discrimination).
The fact that Apseloff’s present suit involves a different cause of action, alleges a different
injury, and involves different factual issues than his earlier suits does not change the result. In this
regard, Apseloff’s situation is no different from Illustration 5 of the Restatement:
A brings an action against B Co., a street railway company, alleging that the
motorman was negligent in starting the car while A was alighting and that as a result
A broke his arm. After a verdict and judgment for A, A brings a new action against
B Co. alleging that after alighting from the car he fell into a trench negligently left
by B Co. beside the road and broke his leg. The action is precluded.
Restatement (Second) of Judgments § 24 cmt. d, illus. 5. In this illustration, A suffered two distinct
injuries resulting from two distinct acts of negligence on the part of B, and the facts relevant to both
causes of action were different as well. Similarly here, Apseloff allegedly suffered two distinct
injuries from two distinct illegal acts (lack of benefits from breach of contract versus firing due to
discrimination), and the two causes of action involve different sets of facts (terms of employment
contract versus Family Dollar’s motivation for firing Apseloff).
Apseloff also advances two policy reasons for reversing the magistrate judge’s order, which
are ultimately unpersuasive. First, Apseloff argues that applying res judicata in this case “will
discourage litigants from bringing relatively simple cases” to small claims court. Although this may
be true, the doctrine of res judicata advances the opposing policy concern of preventing piecemeal
litigation and promoting judicial efficiency. National Amusements, Inc. v. City of Springdale, 558
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N.E.2d 1178, 1180 (Ohio 1990). In addition, Ohio courts routinely give preclusive effect to small
claims court judgements, and therefore have demonstrated a preference for the latter, rather than the
former, policy. See, e.g., Heisler v. Mallard Mech. Co., – N.E.2d –, 2007 WL 778622 (Ohio Ct.
App. 2007). Second, Apseloff claims that applying res judicata here results “in a de facto shortening
of the current Ohio six-year statute of limitations for bringing a wrongful termination [claim].” But
this is true in every res judicata case where the claim precluded has a statute of limitations period
longer than the earlier claim that formed the basis of the earlier lawsuit that was given preclusive
effect. This is simply a consequence of Ohio having adopted the modern application of res judicata,
which focuses on transactions rather than causes of actions. See Grava, 653 N.E.2d at 228-29. This
court, when sitting in diversity, is not free to disagree with the policy reasons behind a state’s legal
rules.
For the foregoing reasons, we AFFIRM the magistrate judge’s order granting Family Dollar’s
motion to dismiss.
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