Matthews, et al v. NPMG Acquisition Sub, LLC

Filing 68

ORDER granting defendant's 55 Motion for Summary Judgment. (See document for further details). Signed by Judge Frederick J Martone on 9/13/11.(LAD)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Calvin Matthews; Tyrone Hunt; Michael)
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Buckner,
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Plaintiffs,
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vs.
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NPMG Acquisition Sub, LLC,
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Defendant.
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No. CV 09-2326-PHX-FJM
ORDER

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We have before us defendant's motion for summary judgment (doc. 55), defendant's
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statement of undisputed facts in support of motion for summary judgment ("DSOF") (doc.
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56), plaintiffs' response (doc. 62), plaintiffs' statement of facts in support of opposition to
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motion for summary judgment ("PSOF") (doc. 63), defendant's reply (doc. 66), and
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defendant's response to plaintiffs' statement of facts (doc. 67).
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I
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In November and December 2006, plaintiffs each filed charges of race discrimination
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and harassment with the Equal Employment Opportunity Commission ("EEOC"). They also
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alleged that they had been terminated by defendant due to their race. In February 2009, the
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EEOC filed a Title VII class action lawsuit against defendant, naming the plaintiffs as
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charging parties. On September 15, 2009, Judge Bolton entered the Consent Decree
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negotiated by the EEOC and defendant (doc. 36, ex. 1). EEOC v. iPayment, Inc. & NPMG
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Acquisition Sub, LLC, No. CV 08-01790. On November 4, 2009, plaintiffs filed a complaint

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against defendant alleging a violation of 42 U.S.C. § 1981, based on the same conduct at

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issue in the EEOC's action (doc. 1). Defendant filed a motion to dismiss on January 6, 2010

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(doc. 12). On July 30, 2010, Judge Murguia granted this motion for failure to state a claim

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for relief under Rule 12(b)(6), Fed. R. Civ. P. (doc. 21). Matthews v. NPMG Acquisition

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Sub, LLC, 2010 WL 3023300 (D. Ariz. July 30, 2010). Judge Murguia allowed plaintiffs

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fifteen days to amend their complaint. When plaintiffs failed to meet this deadline, a

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judgment was entered against them on August 24, 2010 (doc. 23). Nevertheless, the court

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later granted plaintiffs' motion to vacate and allowed plaintiffs to file an amended complaint

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on March 22, 2011 (docs. 34, 36). Defendant now moves for summary judgment (doc. 55).

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II

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The first paragraph of the Consent Decree states:

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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.

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Plaintiff's First Amended Complaint, ex. 1 at 8.

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When interpreting a consent decree, we follow contract principles and look first to the

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language's plain meaning. If the language is clear, then extrinsic evidence cannot be used

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to vary its terms. Judge Murguia previously concluded that "paragraph 1 of the Consent

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Decree is unmistakably clear; all claims of Plaintiffs Matthews, Hunt, and Buckner, that

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could have been raised in EEOC v. iPayment have been expressly waived." Matthews v.

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NPMG Acquisition Sub, LLC, 2010 WL 3023300, at *2 (D. Ariz. July 30, 2010). Thus, if

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plaintiffs are bound by the Consent Decree, they may not bring a claim under 42 U.S.C. §

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1981 because they could have raised this claim in the earlier action.

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The crux of plaintiffs' complaint is that they should not be bound because they were

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not parties to the EEOC lawsuit or Consent Decree. Thus, they argue they did not waive

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their § 1981 claim by failing to intervene. This argument is without merit. Plaintiffs did not

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sign the Consent Decree, but they did accept the benefits of it. They "cannot now request
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additional monetary relief merely because [they are] dissatisfied with the amount [they]

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voluntarily agreed to accept in the settlement as compensation for [their] claims." Strozier

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v. General Motors Corp. (Lakewood Assembly Plant), 635 F.2d 424, 426 (5th Cir. 1981).

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Similarly, plaintiffs contend their claim is not barred by res judicata because they were

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not parties in the previous lawsuit. "In order for res judicata to apply there must be: 1) an

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identity of claims, 2) a final judgment on the merits, and 3) identity or privity between

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parties." Western Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997). The

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first two elements are undisputedly present in this case. First, there is an identity of claims

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because defendant's right to finality would be impaired by prosecution of this action, the

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same evidence would be presented in both actions, both actions involve infringement of the

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same rights, and both actions arise out of the same transactional nucleus of facts. See United

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States v. Liquidators of European Fed. Credit Bank, 630 F.3d 1139, 1150 (9th Cir. 2011)

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(listing four criteria to decide the identity of claims). Second, a consent decree is a final

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judgment on the merits. SEC v. Randolph, 736 F.2d 525, 528 (9th Cir. 1984) ("A consent

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decree is a judgment, [which] has the force of res judicata[.]"). Plaintiffs claim, however,

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that the third element has not been met because they were not parties to the EEOC lawsuit

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and privity is no longer a viable concept. Their understanding of Taylor v. Sturgell, 553 U.S.

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880, 128 S. Ct. 2161 (2008), is misguided. In this case, the Supreme Court avoided the term

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"privity" but confirmed the viability of nonparty preclusion based on substantive legal

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relationships. Id. at 894 & n.8, 128 S. Ct. at 2172 & n.8.

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Defendant argues that privity exists between the EEOC and plaintiffs because the

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EEOC brought an action on plaintiffs' behalf, plaintiffs were identified as charging parties,

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they had a significant interest in that action, participated in that action, and accepted

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settlement payments from defendant. The interests of the EEOC and aggrieved individuals

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may occasionally diverge, however. The United States Court of Appeals for the Eleventh

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Circuit has held that where there is "a clear divergence of interests," a consent decree is not

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an absolute bar to an individual's subsequent lawsuit. Riddle v. Cerro Wire & Cable Group,

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Inc., 902 F.2d 918, 922, 923 n.5 (11th Cir. 1990). While the factual record of the motion to
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dismiss was insufficient to determine if this showing had been made (doc. 21 at 8), it is now

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apparent that plaintiffs' interests did not clearly diverge from those of the EEOC.

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In Riddle, the plaintiff did not receive any money and notified the EEOC and the

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defendant before the consent decree was finalized that she was dissatisfied with the EEOC's

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handling of her case. Id. at 923. Here, to the contrary, each plaintiff has received a payment

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in the amount promised in the Consent Decree (doc. 36, ex. 1; DSOF ¶¶ 31-32, 66, 79).

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Plaintiffs Matthews and Buckner never objected to the terms of the Consent Decree, either

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before or after its entry. DSOF ¶ 37-39, 83. Nor did they notify the EEOC or defendant that

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they were unhappy with the EEOC's handling of their case. Id. Plaintiff Hunt apparently

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objected to the terms of the settlement before entry of the Consent Decree, and made his

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objection known to an EEOC attorney. PSOF ¶ 60. Although the parties disagree about the

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timing of Hunt's complaint, their disagreement is immaterial. It is undisputed that Hunt

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received and cashed a check sent to him pursuant to the Consent Decree. DSOF ¶¶ 66, 68.

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Therefore, this case does not fall within the narrow exception found in Riddle. The plaintiffs'

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interests did not clearly diverge from the interests of the EEOC. As a result, there was privity

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between plaintiffs and the EEOC. Because we find an identity of claims, a final judgment

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on the merits, and privity between the parties, res judicata bars plaintiffs' § 1981 claim.
III

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IT IS HEREBY ORDERED GRANTING defendant's motion for summary
judgment (doc. 55).
DATED this 13th day of September, 2011.

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