Opinion
No. CV 09-2326-PHX-FJM.
September 13, 2011
ORDER
We have before us defendant's motion for summary judgment (doc. 55), defendant's statement of undisputed facts in support of motion for summary judgment ("DSOF") (doc. 56), plaintiffs' response (doc. 62), plaintiffs' statement of facts in support of opposition to motion for summary judgment ("PSOF") (doc. 63), defendant's reply (doc. 66), and defendant's response to plaintiffs' statement of facts (doc. 67).
I
In November and December 2006, plaintiffs each filed charges of race discrimination and harassment with the Equal Employment Opportunity Commission ("EEOC"). They also alleged that they had been terminated by defendant due to their race. In February 2009, the EEOC filed a Title VII class action lawsuit against defendant, naming the plaintiffs as charging parties. On September 15, 2009, Judge Bolton entered the Consent Decree negotiated by the EEOC and defendant (doc. 36, ex. 1). EEOC v. iPayment, Inc. NPMG Acquisition Sub, LLC, No. CV 08-01790. On November 4, 2009, plaintiffs filed a complaint against defendant alleging a violation of 42 U.S.C. § 1981, based on the same conduct at issue in the EEOC's action (doc. 1). Defendant filed a motion to dismiss on January 6, 2010 (doc. 12). On July 30, 2010, Judge Murguia granted this motion for failure to state a claim for relief under Rule 12(b)(6), Fed.R.Civ.P. (doc. 21). Matthews v. NPMG Acquisition Sub, LLC, 2010 WL 3023300 (D. Ariz. July 30, 2010). Judge Murguia allowed plaintiffs fifteen days to amend their complaint. When plaintiffs failed to meet this deadline, a judgment was entered against them on August 24, 2010 (doc. 23). Nevertheless, the court later granted plaintiffs' motion to vacate and allowed plaintiffs to file an amended complaint on March 22, 2011 (docs. 34, 36). Defendant now moves for summary judgment (doc. 55).
II
The first paragraph of the Consent Decree states:
This Consent Decree resolves all claims of the Commission and of Mssrs. Matthews, Hunt, Buckner, Gawarecki (each a "Charging Party," and collectively the "Charging Parties") . . . against Defendant . . . arising out of the issues that were or could have been raised in this lawsuit up until the date of the execution of this Consent Decree by the parties.Plaintiff's First Amended Complaint, ex. 1 at 8.
When interpreting a consent decree, we follow contract principles and look first to the language's plain meaning. If the language is clear, then extrinsic evidence cannot be used to vary its terms. Judge Murguia previously concluded that "paragraph 1 of the Consent Decree is unmistakably clear; all claims of Plaintiffs Matthews, Hunt, and Buckner, that could have been raised in EEOC v. iPayment have been expressly waived." Matthews v. NPMG Acquisition Sub, LLC, 2010 WL 3023300, at *2 (D. Ariz. July 30, 2010). Thus, if plaintiffs are bound by the Consent Decree, they may not bring a claim under 42 U.S.C. § 1981 because they could have raised this claim in the earlier action.
The crux of plaintiffs' complaint is that they should not be bound because they were not parties to the EEOC lawsuit or Consent Decree. Thus, they argue they did not waive their § 1981 claim by failing to intervene. This argument is without merit. Plaintiffs did not sign the Consent Decree, but they did accept the benefits of it. They "cannot now request additional monetary relief merely because [they are] dissatisfied with the amount [they] voluntarily agreed to accept in the settlement as compensation for [their] claims." Strozier v. General Motors Corp. (Lakewood Assembly Plant), 635 F.2d 424, 426 (5th Cir. 1981).
Similarly, plaintiffs contend their claim is not barred by res judicata because they were not parties in the previous lawsuit. "In order for res judicata to apply there must be: 1) an identity of claims, 2) a final judgment on the merits, and 3) identity or privity between parties." Western Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997). The first two elements are undisputedly present in this case. First, there is an identity of claims because defendant's right to finality would be impaired by prosecution of this action, the same evidence would be presented in both actions, both actions involve infringement of the same rights, and both actions arise out of the same transactional nucleus of facts. See United States v. Liquidators of European Fed. Credit Bank, 630 F.3d 1139, 1150 (9th Cir. 2011) (listing four criteria to decide the identity of claims). Second, a consent decree is a final judgment on the merits. SEC v. Randolph, 736 F.2d 525, 528 (9th Cir. 1984) ("A consent decree is a judgment, [which] has the force of res judicata[.]"). Plaintiffs claim, however, that the third element has not been met because they were not parties to the EEOC lawsuit and privity is no longer a viable concept. Their understanding of Taylor v. Sturgell, 553 U.S. 880, 128 S. Ct. 2161 (2008), is misguided. In this case, the Supreme Court avoided the term "privity" but confirmed the viability of nonparty preclusion based on substantive legal relationships. Id. at 894 n. 8, 128 S. Ct. at 2172 n. 8.
Defendant argues that privity exists between the EEOC and plaintiffs because the EEOC brought an action on plaintiffs' behalf, plaintiffs were identified as charging parties, they had a significant interest in that action, participated in that action, and accepted settlement payments from defendant. The interests of the EEOC and aggrieved individuals may occasionally diverge, however. The United States Court of Appeals for the Eleventh Circuit has held that where there is "a clear divergence of interests," a consent decree is not an absolute bar to an individual's subsequent lawsuit. Riddle v. Cerro Wire Cable Group, Inc., 902 F.2d 918, 922, 923 n. 5 (11th Cir. 1990). While the factual record of the motion to dismiss was insufficient to determine if this showing had been made (doc. 21 at 8), it is now apparent that plaintiffs' interests did not clearly diverge from those of the EEOC.
In Riddle, the plaintiff did not receive any money and notified the EEOC and the defendant before the consent decree was finalized that she was dissatisfied with the EEOC's handling of her case. Id. at 923. Here, to the contrary, each plaintiff has received a payment in the amount promised in the Consent Decree (doc. 36, ex. 1; DSOF ¶¶ 31-32, 66, 79). Plaintiffs Matthews and Buckner never objected to the terms of the Consent Decree, either before or after its entry. DSOF ¶ 37-39, 83. Nor did they notify the EEOC or defendant that they were unhappy with the EEOC's handling of their case. Id. Plaintiff Hunt apparently objected to the terms of the settlement before entry of the Consent Decree, and made his objection known to an EEOC attorney. PSOF ¶ 60. Although the parties disagree about the timing of Hunt's complaint, their disagreement is immaterial. It is undisputed that Hunt received and cashed a check sent to him pursuant to the Consent Decree. DSOF ¶¶ 66, 68. Therefore, this case does not fall within the narrow exception found in Riddle. The plaintiffs' interests did not clearly diverge from the interests of the EEOC. As a result, there was privity between plaintiffs and the EEOC. Because we find an identity of claims, a final judgment on the merits, and privity between the parties, res judicata bars plaintiffs' § 1981 claim.
III
IT IS HEREBY ORDERED GRANTING defendant's motion for summary judgment (doc. 55).