Cole, Gayle D. v. Bd Trustees Univ IL ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-2161
GAYLE D. COLE,
Plaintiff-Appellant,
v.
THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 03 C 4799—Ronald A. Guzman, Judge.
____________
ARGUED JANUARY 10, 2007—DECIDED AUGUST 16, 2007
____________
Before POSNER, MANION, and SYKES, Circuit Judges.
MANION, Circuit Judge. Gayle Cole (“Cole”) filed suit
in federal court against her employer, the Board of Trustees
of the University of Illinois (the “Board”),1 in 2002 alleging
racial harassment pursuant to Title VII (“Cole I”). After the
1
As noted in the district court’s opinion, Cole incorrectly
named the University of Illinois as the defendant in this case,
when she is actually suing the “Board of Trustees of the Uni-
versity of Illinois.” The defendant will be referenced as “the
Board” throughout this opinion.
2 No. 06-2161
parties settled Cole I, the district court dismissed the case
with prejudice. In July 2003, Cole filed a second suit in
federal court against the Board asserting claims under the
False Claims Act and the Illinois Whistleblower Reward
and Protection Act (Cole II). Following the Board’s mo-
tion, the district court granted the Board’s motion and
dismissed Cole II because it is barred by res judicata. Cole
appeals, and we affirm.
I.
Cole worked as a pharmacist at a pharmacy run by the
University of Illinois at Chicago. In 2002, Cole filed a
complaint against the Board pursuant to Title VII, 42 U.S.C.
§ 2000e, et seq., alleging racial harassment. In her com-
plaint, she asserted that “the effect of the practices com-
plained of . . . has been to deprive Gayle D. Cole of equal
employment opportunities and otherwise adversely
affect her status as an employee, because of her race and
act of ‘Whistle Blowing.’ ” Cole further alleged:
The unlawful employment and retaliatory practices
complained of . . . commenced after the plaintiff, Gayle
D. Cole, became aware and brought to the attention of
the Defendant, the Defendant’s violation of the Illinois
Pharmacy Practice Act of 1987, the Illinois Wholesale
Drug Distribution Licensing Act and the Drug Abuse
Control Act . . . .
Cole then set forth the acts in three subparagraphs. After
the parties settled the case, on April 8, 2003, the district
court dismissed Cole’s complaint with prejudice with leave
to reinstate within forty-five days. A final order of dis-
missal with prejudice was entered on October 2, 2003.
No. 06-2161 3
On July 11, 2003, Cole filed a qui tam action against the
Board alleging violations of the False Claims Act, 31 U.S.C.
§§ 3729, et seq., and the Illinois Whistleblower Reward
and Protection Act, 740 ILCS 175/1, et seq.2 In Counts I, II,
III, and IV of her complaint, Cole asserted that the Board
submitted false information and fraudulent claims to the
state and federal government to obtain payment. In Counts
V and VI, Cole alleged that the Board threatened, harassed,
and discriminated against her because of her whistleblow-
ing activities. The Board moved to dismiss this case on
grounds that it was barred by res judicata. The district
court granted the Board’s motion and dismissed the case
with prejudice as to Cole and without prejudice as to the
United States.
II.
On appeal, Cole argues that the district court improperly
interpreted the res judicata test and wrongly concluded
that her claims in Cole II were barred by res judicata.
Specifically, Cole argues that the her Title VII claims
asserted in Cole I and her whistleblower and false claims
act claims asserted in Cole II are not based on the same
2
A private person, known as a relator, may file a civil suit for
false claims known as a qui tam action “for the person and for
the United States Government.” 31 U.S.C. § 3730. See also 740
ILCS 175/4. “[T]he statute gives the relator himself an interest
in the lawsuit, and not merely in the right to retain a fee out of the
recovery.” Vt. Agency of Nat. Res. v. United States, 529 U.S. 764,
772 (2000). The government was not involved with Cole II other
than to decline to intervene. This opinion addresses only
Cole’s ability to raise these false claims act claims, and not the
government’s ability to bring such a suit.
4 No. 06-2161
factual allegations. We review a district court’s dismissal
of a case based on res judicata de novo.3 Anderson v.
Chrysler Corp., 99 F.3d 846, 852 (7th Cir. 1996).
“Under the doctrine of res judicata, ‘a final judgment on
the merits of an action precludes the parties or their privies
from relitigating issues that were or could have been raised
in that action.’ ” Highway J Citizens Group v. United States
Dept. of Transp., 456 F.3d 734, 741 (7th Cir. 2006) (quoting
Allen v. McCurry, 449 U.S. 90, 94 (1980)). There are three
requirements for res judicata: “(1) an identity of the parties
or their privies; (2) an identity of the causes of action; and
(3) a final judgment on the merits.” Id. “If these require-
ments are fulfilled, res judicata ‘bars not only those issues
which were actually decided in a prior suit, but also all
other issues which could have been raised in that action.’ ”
Id. (citation omitted). There is identity of causes of action
if the claim “emerges from the same core of operative facts
as that earlier action.” Id. (citation omitted). “[T]wo claims
are one for purposes of res judicata if they are based on the
same, or nearly the same, factual allegations.” Herrmann v.
Cencom Cable Assoc., Inc., 999 F.2d 223, 226 (7th Cir. 1993)
(citations omitted). In other words, “a subsequent suit is
barred if the claim on which it is based arises from the
same incident, events, transaction, circumstances, or other
factual nebula as a prior suit that had gone to final judg-
ment.” Okoro v. Bohman, 164 F.3d 1059, 1062 (7th Cir. 1999).
Also, “[w]hile the legal elements of each claim may be
different, the central factual issues are identical.”
3
When we speak of “res judicata” in this opinion, we do so only
in terms of claim preclusion and not issue preclusion, “which is
governed by the doctrine of collateral estoppel.” Tartt v. Nw.
Cmty. Hosp., 453 F.3d 817, 821 n.2 (7th Cir. 2006).
No. 06-2161 5
Brzostowski v. Laidlaw Waste Sys., Inc., 49 F.3d 337, 339 (7th
Cir. 1995).
Cole contends that the district court improperly inter-
preted res judicata to “not only preclude[ ] those issues
raised and decided in prior law suits, but also that could
have been raised in a prior lawsuit.” However, contrary to
Cole’s position, res judicata, in fact, precludes all issues
that could have been raised. See Highway J Citizens Group,
456 F.3d at 741 (quoting Allen v. McCurry, 449 U.S. 90, 94
(1980) (“[A] final judgment on the merits of an action
precludes the parties or their privies from relitigating
issues that were or could have been raised in that ac-
tion.”)). Therefore, the district court employed the proper
test.
Alternatively, Cole claims that while there is identity
of parties and a final judgment, the third element of the res
judicata test, i.e., the identity of causes of action, was not
satisfied. Specifically, Cole argues that her whisteblower
claims and her Title VII claim “are not based on the
same factual allegations.” She asserts that her civil rights
claim involved some co-workers and a supervisor, where-
as her whistleblower claim involved an administrative
official and senior supervisors.
In her complaints, Cole did not specify who allegedly
committed the unlawful acts against her, whether premised
on race or as a result of her whistleblowing activity. Rather,
she specifically stated in Cole I that the Board’s unlawful
employment and retaliatory practices were “because of her
race and act of ‘Whistle Blowing.’ ” Cole also asserted in
Cole I that the “unlawful and retaliatory practices” “com-
menced after [she] became aware and brought to the
attention of the [Board], the [Board’s] violation of the
Illinois Pharmacy Practice Act of 1987, the Illinois Whole-
6 No. 06-2161
sale Drug Distribution Licensing Act and the Drug Abuse
Control Act. . . .” In Cole II, Cole alleged that she notified
the Board of its unlawful practices and “[a]s a result of
[her] lawful acts done by her on behalf and in furtherance
of an action under the [false claims act claims], [she] has
been threatened, harassed, and in other ways discriminated
against in terms and conditions of her employment.”
Her own allegations demonstrate that Cole sought
recovery for the same injury in both actions—harassment
and discrimination. The discrimination claims Cole as-
serted in Cole I and the whistleblower claims asserted in
Cole II arise from the same operative facts, and therefore
she could and should have asserted the whisteblower
claims in Cole I. See Highway J Citizens Group, 456 F.3d
at 741 (citing Allen v. McCurry, 449 U.S. 90, 94). As the
district court aptly reasoned:
Both Complaints allege roughly the same series of
events: the Board was engaged in wrongdoing, Cole
notified the Board that she knew of the wrongdoing,
and the Board harassed Cole. There is no indication
that the Board’s defrauding or harassing conduct
described in the two suits were in any way distinct.
Indeed, Cole even described the same illicit claim filing
scheme in her first complaint and stated that the
harassment was not only due to her race, but also her
“act of “Whistle Blowing.” These events provide the
factual bases for the present and prior lawsuits [ ]. Cole
could have, and should have, included her whistle-
blower claims in her prior lawsuits.
Cole v. Univ. of Ill., No. 03-4799-Civ (N.D. Ill. Marcy 28,
2006). Accordingly, Cole’s whistleblower claims are barred
by res judicata.
No. 06-2161 7
Next, we review Cole’s false claims act claims. Again,
Cole argues that there is no identity of causes of actions
between these claims and her first case because her Title
VII claims in Cole I involved racial harassment by her co-
workers and supervisors while she was at work, but her
false claims act counts involved conduct between the Board
and governmental health care programs. She argues that
“[w]hat defendant did or did not do regarding plaintiff is
irrelevant to her false claims act counts.”
Whether all of the facts of one particular claim are
relevant to another claim is not a fact considered when
determining whether a later-brought claim is barred by res
judicata. Rather, “[a] claim has identity with a previously
litigated matter if it emerges from the same core of opera-
tive facts as that earlier action.” Highway J Citizens Group,
456 F.3d at 741 (quoting Brzostowski, 49 F.3d at 338-39 (7th
Cir. 1995)). The Cole I complaint set forth operative facts
that
[t]he unlawful employment and retaliatory practices
complained of in paragraph 9 commenced after [Cole]
became aware of and brought to the attention of the
[Board], the [Board’s] violation of the Illinois Pharmacy
Practice Act of 1987, the Illinois Wholesale Drug
Distribution Licensing Act and the Drug Abuse Control
Act for conduct including, but not limited to [ ]
[e]ngaging in the sale of drug samples provided at no
cost by drug manufacturers[,] [e]ngaging in the sale of
drugs without valid prescriptions[,] [f]ailing to “Credit
Back” the accounts of the Illinois Department of
Public Aid for nondispursed drugs.
Cole v. Univ. of Ill., No. 02-5151-Civ (N.D. Ill. July 19, 2002)
(Complaint at ¶ 13).
8 No. 06-2161
Just as with her whistleblower claims, Cole’s false claims
act counts in Cole II arise from the same “events,” “factual
nebula,” or “event cluster” asserted in Cole I. See Okoro, 164
F.3d at 1062. The same factual allegations are at play in
both cases: the pharmacy submitted false claims for
prescriptions for compensation from both the federal and
state government, Cole brought these false claims to the
pharmacy’s attention, and Cole suffered discrimination
and retaliatory actions following her complaint.4
This is not, as Cole contends, the “but for” scenario we
warned against in Herrmann. In Herrmann, the plaintiff was
terminated from her job and first filed a suit for continua-
tion of benefits under ERISA which the district court
4
Cole cites Colonial Penn Life Insurance v. Hallmark Insurance,
31 F.3d 445, 449 (7th Cir. 1994), contending that the evidence of
Cole II bore no relation to her claim in Cole I. In Colonial Penn the
claim asserted in the second case, collection of a paid guarantee
of a defaulted loan, was not barred by res judicata because in the
first case there was no allegation of a default or payment of the
guarantee. Id. However, in Cole I, Cole did not merely mention
the facts that serve as the basis for her false claims act claims in
Cole II. Rather, in her first case Cole averred that she had
“brought to the attention of the Defendant, the Defendant’s
violation of the Illinois Pharmacy Practice Act of 1987, the Illinois
Wholesale Drug Distribution Licensing Act and the Drug Abuse
Control Act for conduct. . . .” Cole I, Complaint ¶ 13 (emphasis
added). Further, Cole overlooks the fact that in Colonial Penn
we found the reference to the loan amount irrelevant in the
first case, in part, because Colonial Penn had not yet paid on
the guaranty at the time of the first case. Id. at 448. Cole’s
false claims act claims were ripe at the time of her first case,
could have been asserted then, and are thus barred by res
judicata.
No. 06-2161 9
dismissed with prejudice. Herrmann, 999 F.2d at 224.
Herrmann then filed a Title VII suit alleging discrimination
based on race and sex, and the district court determined
her case was barred by res judicata because her suit for
continuation of benefits under ERISA had been dismissed
with prejudice. Id. Even though the claims would not have
arisen but for Herrmann’s termination, we reversed not-
ing that the only fact that was the same for both claims
was Herrmann’s termination. Conversely, here we have
an instance of two nearly identical lawsuits asserting
different claims. Unlike Herrmann, Cole’s claims not only
precipitated from the same starting point, i.e., the Board’s
alleged reporting violations, but Cole alleged those vio-
lations and the subsequent alleged harassment and re-
taliation in both her Cole I Title VII claim and now in Cole
II. In short, the facts asserted in both complaints are the
same, varying only in degrees of specificity, and Cole could
have asserted her false claims act claims in Cole I. Based on
Cole’s own factual allegations, we conclude that there is
identity of the causes of action between Cole I and Cole II,
and Cole’s false claims act claims are barred by res judi-
cata.
III.
Cole’s whistleblower and false claims act claims could
and should have been asserted in her first suit along with
her Title VII claim. Therefore, these claims are barred by
res judicata, and the district court properly granted
the Board’s motion and dismissed Cole’s complaint.
We AFFIRM.
10 No. 06-2161
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-16-07