902 F2d 1580 Williams v. McDonnell Douglas Helicopter Company

902 F.2d 1580

Unpublished Disposition

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

Merrill L. WILLIAMS, Robert G. Ferry, Frederick L. Riess,
Eleanor Hench, as the personal representative of
the Estate of Charles E. Hench, and Jack
L. Zimmerman, Plaintiffs-Appellants,

No. 89-55187.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 10, 1990.
Decided May 18, 1990.


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Plaintiffs appeal from the district court's entry of judgment in favor of defendant McDonnell Douglas Helicopter Co. The district court held that this action was barred by res judicata. We affirm.



Plaintiffs were test pilots for Hughes Helicopter Co. ("HHI"). On April 13, 1982, HHI advised plaintiffs it had adopted a "Stop Flying" policy for all pilots over specified ages. HHI notified plaintiffs that if they elected to retire before September 30, 1982, they would receive a one-time severance payment. This payment was a severance plan pursuant to the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001-1461. 29 U.S.C. Sec. 1002(1)(B).


Subsequently, HHI offered retiring pilots a Supplemental Early Retirement Plan ("SERP") as an alternative to the lump-sum retirement pay option. The SERP was also an ERISA plan. 29 U.S.C. Sec. 1002(2)(A). Both the severance plan and the SERP offered benefits in addition to those ordinary employees would receive.


On June 25, 1982, plaintiffs signed memoranda confirming their elections to retire. Those plaintiffs choosing the severance payment option noted on their memoranda that their retirements were not voluntary. Those plaintiffs choosing the SERP did not.


On October 1, 1982, plaintiffs retired and, on October 12, 1982, filed charges of age discrimination with the Equal Employment Opportunity Commission ("EEOC"). On January 18, 1983, HHI rescinded the "Stop Flying" policy and notified plaintiffs that they had the option to be re-employed or to retire. Plaintiffs received several notices of this sort. The latest, on March 9, indicated that if plaintiffs did not report to work by March 28, HHI would assume plaintiffs did not wish to be re-employed.


In the meantime, on January 27, 1983, HHI circulated an internal memorandum stating that SERP payments should be suspended because of the pending offer of re-employment. SERP payments then ceased. HHI never made severance payments to the plaintiffs electing that option. On March 16, 1983, plaintiffs filed EEOC complaints alleging that HHI's failure to make retirement payments was in retaliation for their age discrimination claims.

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On April 1, 1983, plaintiffs filed the complaint in Merrill L. Williams, et al. v. Hughes Helicopters, Inc., No. 83-0631 GT (H) (Williams I). Plaintiffs alleged claims under the Age Discrimination in Employment Act of 1967, 29 U.S.C. Sec. 621-634 ("ADEA"), Fair Labor Standards Act, 29 U.S.C. Secs. 201-219 ("FLSA"), and under state law. The complaint included an allegation that their retirement benefits had been withheld in retaliation for their age discrimination claims brought before the EEOC. Trial before a jury resulted in judgment for HHI. The jury found that age was a bona fide occupational qualification. This court affirmed on appeal. Williams v. Hughes Helicopters, Inc., 806 F.2d 1387 (9th Cir.1986).


Plaintiffs then inquired in 1987 about receiving their retirement benefits. HHI, which had in the meantime been acquired by McDonnell Douglas and was renamed McDonnell Douglas Helicopter Co., refused to pay. On June 25, 1987, plaintiffs filed this action (Williams II). In their amended complaint, plaintiffs asserted a claim under ERISA, a claim for declaratory relief, and a claim for discriminatory withholding of benefits. HHI answered that the action was barred by res judicata and filed a motion for summary judgment on the same basis. The district court granted the motion. We affirm.



This court reviews a grant of summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989). Under federal res judicata law, a prior judgment has preclusive effect if (1) it is a final judgment, (2) on the merits, (3) in a subsequent action with the same parties or those in privity with them, and (4) is based on the same cause of action. Hooker v. Klein, 573 F.2d 1360, 1367 (9th Cir.), cert. denied, 439 U.S. 932, 99 S.Ct. 323, 58 L.Ed.2d 327 (1978). There is no dispute that the first two elements are satisfied.


Plaintiffs claim that the same parties are not involved. They argue that in Williams I HHI was sued in its capacity as employer, while in Williams II HHI is being sued in its capacity as ERISA fiduciary. In Williams I, HHI was in fact sued in both capacities. The complaint in that action referred to actions taken by HHI to withhold ERISA benefits. HHI could not have undertaken this allegedly retaliatory action, except in its capacity as ERISA fiduciary. We have recognized that a plaintiff may be deemed to have sued an employer in its fiduciary capacity, if the fiduciary is sufficiently identified in the body of the complaint. Yeseta v. Baima, 837 F.2d 380 (9th Cir.1988). Because plaintiffs sued HHI in both capacities, this case is quite distinguishable from Hurt v. Pullman Inc., 764 F.2d 1443 (11th Cir.1985), in which ERISA plan benefits were not in issue in the former adjudication.


Next, plaintiffs argue that the claims are distinct. In deciding this issue, this court must consider (1) whether the rights or interests established in the prior litigation would be impaired by this action, (2) if the same evidence would be presented, (3) if the same right is infringed, and (4) if the suit arises from the same transactional nucleus. Constantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 570, 74 L.Ed.2d 932 (1982). The last factor is the most important. Id.


Each of these factors weighs in favor of finding the claims to be the same. First, the action in Williams I did encompass a claim that the defendant, as a part of its age discrimination against the plaintiffs, also undertook to retaliate against them by withholding their benefits. In fact, the Williams II claims of discrimination and wrongful refusal to pay suggest that defendant was engaged in just the sort of wrongdoing that Williams I absolved it of.


Second, there would be a substantial overlap in evidence. The Williams I complaint described the creation of the retirement benefit plans, as well as the termination of benefits. Evidence as to both of those events would be produced in Williams II. Indeed, the context of the creation of the plans and ultimate withholding of benefits is at the heart of this case, just as it was at the heart of Williams I.


Third, while plaintiffs asserted the right to continued employment in Williams I, plaintiffs also asserted a right to plan benefits, free of retaliation. Plaintiffs now assert the same right to benefits which was in issue in Williams I. Plaintiffs do not allege that the benefit claim was dismissed without prejudice or otherwise severed. Retaliation did not go to the jury, but claim preclusion covers both theories that were litigated and those that could have been litigated. Gallagher v. Frye, 631 F.2d 127, 129 (9th Cir.1980). Also, even if the plaintiffs silently dropped the retaliation claim in mid-stream in Williams I, that will not permit them to resurrect it here. See Clark v. Yosemite Community College Dist., 785 F.2d 781 (9th Cir.1986). It is true that, in Williams II, plaintiffs argue that the termination was in violation of ERISA. Nevertheless, the mere fact that plaintiffs argue a new legal theory does not prevent this court from applying res judicata to Williams II. McClain v. Apodaca, 793 F.2d 1031, 1034 (9th Cir.1986).


Fourth, Williams II arises out of the same transactional nucleus as Williams I. Plaintiffs decided to raise the termination of retirement benefits issue in the Williams I complaint. As formulated by the complaint, the "transaction" included both termination of employment and termination of retirement benefits. In fact, as we have already pointed out, the creation of the plans at issue, and the refusal to pay benefits under them, were part and parcel of defendant's initial attempt to terminate plaintiffs.


Taking all of these factors together, it becomes apparent that plaintiffs' claim of retaliation by termination of plan benefits is, at root, the same as their current claim of discrimination in the refusal to pay these benefits. Whether plaintiffs were required to raise the termination of benefits issue in their prior ADEA action is not before us. The fact is that they did raise it. If they then chose to allow that issue to quietly wander off, they cannot bring it back to the fold by means of this action.


Finally, plaintiffs seek to raise issues regarding the interpretation and administration of the plans. All of those simply boil down to an attempt to raise questions that were part of the retaliation issue mooted in Williams I. They were an inevitable part of that claim, since the propriety of the termination of benefits would have been before the court. The res judicata bar applies to them also.



Eight years ago, HHI decided to cease employing plaintiffs as test pilots. Plaintiffs considered themselves wronged, and commenced litigation. In Williams I, they had a full opportunity to raise all of their grievances before a court, and they took advantage of that opportunity. Res judicata precludes them from raising those grievances again.




This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3