Johnson v. Lou Fusz Automotive Network, Inc.
MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that Defendants motion to dismiss is DENIED. ECF No. 10 . Signed by District Judge Audrey G. Fleissig on 10/27/2017. (KCB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
LOU FUSZ AUTOMOTIVE NETWORK, )
Case No. 4:17-cv-01909-AGF
MEMORANDUM AND ORDER
This matter is before the Court on the motion (ECF No. 10) of Defendant Lou
Fusz Automotive Network (“Lou Fusz”) to dismiss Plaintiff Lisa Johnson’s complaint on
res judicata grounds. For the following reasons, the Court will deny the motion.
Johnson worked at Lou Fusz full time until January 24, 2013, when she was
discharged. Johnson alleges that Lou Fusz discharged her to avoid the costs of providing
health insurance coverage for her minor son, who suffers from an incurable medical
On October 9, 2013, Johnson filed a lawsuit against Lou Fusz in Missouri state
court asserting an employment discrimination claim under the Missouri Human Rights
Act (“MHRA”) and a claim for unpaid overtime under the Missouri Minimum Wage
Law. In her MHRA claim, Johnson alleged that Lou Fusz discriminated against her
because of her association with her disabled son. Johnson specifically alleged that her
discharge was motivated by Lou Fusz’s desire to avoid exposure to health care expenses
resulting from Johnson’s son’s medical condition. In her overtime claim, Johnson
alleged that she routinely worked in excess of 40 hours per work week and that Lou Fusz
had a policy of manipulating Johnson’s timesheet to avoid paying her overtime.
On October 8, 2014, Lou Fusz removed the state court lawsuit to this Court,
arguing that the MHRA claim was completely preempted by the Employee Retirement
Income Security Act (“ERISA”) and, thus, properly removable under the Court’s federalquestion jurisdiction, and that the Court could exercise supplemental jurisdiction over the
state-law overtime claim. Johnson moved to remand, arguing that the removal was
untimely and that, in any event, the MHRA claim was not preempted. Another judge of
this Court agreed that the removal was untimely, and on December 22, 2014, remanded
the case to the state court without considering the Lou Fusz’s preemption argument.
Upon remand, the state court, on Lou Fusz’s motion, dismissed the MHRA claim
with prejudice for lack of subject matter jurisdiction, on the ground that the claim was
completely preempted by ERISA. The state court later granted Lou Fusz’s motion for
summary judgment on the overtime claim. The Missouri Court of Appeals affirmed both
rulings on February 28, 2017, but it modified the dismissal of the MHRA claim to be
“without prejudice,” as “there ha[d] been no ruling on the merits of [Johnson’s
discrimination] claim.” ECF No. 11-1 at 363. The appellate court added that “nothing
about the dismissal prevent[ed] Johnson from filing the ERISA claim in the appropriate
forum, a federal district court.” ECF No. 11-1 at 363. Johnson appealed the decision to
the Missouri Supreme Court, which declined review on June 27, 2017.
On July 3, 2017, Johnson filed suit in this Court under Section 502(a)(3) of
ERISA, again alleging that Lou Fusz unlawfully discharged her to avoid the costs of
providing health insurance coverage for her son. Johnson alleges that her discharge
violates Section 510 of ERISA, which prohibits discrimination against an ERISA plan
participant “for the purpose of interfering with the attainment of any right to which such
participant may become entitled under the plan.” 29 U.S.C. § 1140.
Lou Fusz has moved to dismiss the complaint as barred by res judicata. Lou Fusz
argues that all of the elements of res judicata are met here in that the first lawsuit resulted
in a final judgment on the merits and was based on proper jurisdiction, and both suits
involve the same parties and same claims or causes of action.
In response, Johnson argues that the dismissal of her MHRA claim without
prejudice for lack of subject-matter jurisdiction in the first suit was neither a final
judgment on the merits, nor a judgment based on proper jurisdiction. Moreover, Johnson
notes that the state court would not have had jurisdiction over her ERISA claim, as that
claim is subject to the exclusive jurisdiction of the federal courts. Finally, Johnson
argues that the two suits were not based on the same claims or causes of action, as the
first suit also contained an overtime claim.
In reply, Lou Fusz argues that, although the MHRA claim was dismissed without
prejudice, the first suit resulted in a final judgment on the merits on the overtime claim,
which is sufficient to trigger res judicata. Lou Fusz also argues that the first suit was
based on proper jurisdiction because the state court had jurisdiction to enter summary
judgment on the overtime claim, and although the state court lacked jurisdiction over the
MHRA claim (and the ERISA claim), a plaintiff cannot avoid res judicata by choosing to
file suit in a court of limited jurisdiction. In particular, Lou Fusz notes that Johnson
could have consented to the removal of the first suit to federal court and amended her
complaint to assert her ERISA claim. Finally, Lou Fusz argues that the two suits are
based on the same cause of action because both relate to Johnson’s employment.
The defense of res judicata “may be raised in a motion to dismiss when the
identity of the two actions can be determined from the face of the petition itself,”
including “public records and materials embraced by the complaint and materials
attached to the complaint.” C.H. Robinson Worldwide, Inc. v. Lobrano, 695 F.3d 758,
763-64 (8th Cir. 2012) (internal citations omitted). In considering a motion to dismiss
based on res judicata, the Court must “accept the non-moving party’s factual allegations
as true and construe all reasonable inferences in favor of the nonmovant.” Schaefer v.
Putnam, 827 F.3d 766, 769 (8th Cir. 2016) (citation omitted).
“The law of the forum that rendered the first judgment controls the res judicata
analysis.” Id. (citation omitted). “It is now settled . . . that a federal court must give to a
state-court judgment the same preclusive effect as would be given that judgment under
the law of the State in which the judgment was rendered.” Rick v. Wyeth, Inc., 662 F.3d
1067, 1069 (8th Cir. 2011) (citation omitted).
Under Missouri law, res judicata “prohibits a party from bringing a previously
litigated claim” or “claims that should have been brought in the first suit.” Kesterson v.
State Farm Fire & Cas. Co., 242 S.W.3d 712, 715 (Mo. 2008). “As such, the doctrine
applies to every point properly belonging to the subject matter of litigation and which the
parties, exercising reasonable diligence, might have brought forward at the time.” Id. at
715-16 (citation omitted).
Johnson’s ERISA claim was not actually litigated in the first suit, and it is
undisputed that Johnson’s ERISA claim is within the exclusive jurisdiction of federal
courts and, therefore, could not have been properly brought in state court. See 29 U.S.C.
§ 1132(e)(1); see also Smith, Hinchman & Grylls, Assocs., Inc. v. Tassic, 990 F.2d 256,
258 (6th Cir. 1993) (“[I]t is clear that section 510 claims are within the exclusive
jurisdiction of the federal district courts under 29 U.S.C. § 1132(e)(1).”); see also Haynes
v. BIS Frucon Eng’g, Inc., No. 4:08-CV-701 CAS, 2008 WL 3853438, at *3 (E.D. Mo.
Aug. 14, 2008) (“Section 502(a) provides that an action in federal court is the exclusive
remedy for rights guaranteed under ERISA, including those provided by § 510.”) (citing
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 144 (1990)).
In determining whether claim preclusion applies in such a situation, the United
States Supreme Court has advised as follows:
With respect to matters that were not decided in the state proceedings, we
note that claim preclusion generally does not apply where “the plaintiff was
unable to rely on a certain theory of the case or to seek a certain remedy
because of the limitations on the subject matter jurisdiction of the courts.”
Restatement (Second) of Judgments § 26(1)(c)(1982). If state preclusion
law includes this requirement of prior jurisdictional competency, which is
generally true, a state judgment will not have claim preclusive effect on a
cause of action within the exclusive jurisdiction of the federal courts.
Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 382 (1985); see also
United States v. B.H., 456 F.3d 813, 817 (8th Cir. 2006) (holding that in order to
determine “the preclusive effect of a state court judgment on a claim that can be brought
only in federal court,” Marrese instructs that “federal courts must ask if state preclusion
law addresses the more general question of whether preclusion bars related actions over
which the rendering court had no jurisdiction.”) (citing Marrese, 470 U.S. at 382).
Although the parties have not cited, and the Court has not found, a Missouri
Supreme Court case precisely on point, the Missouri Court of Appeals has held that “[a]
judgment is not conclusive of any question which, from the nature of the case or the form
of action, could not have been adjudicated in the case in which it was rendered,” and that
“[i]t is of course obvious that issues outside the jurisdiction of the court to determine,
cannot become res judicata by virtue of its judgment.” Meier v. Thorpe, 822 S.W.2d 556,
559 (Mo. Ct. App. 1992) (citations omitted).
Moreover, “Missouri cases discussing claim preclusion generally follow the
Restatement of Judgments.” Kesterson, 242 S.W.3d at 717. Section 26(1)(c) of the
Restatement (Second) of Judgments, as indicated in Marrese, provides that when “the
plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy or
form of relief in the first action because of the limitations on the subject matter
jurisdiction of the courts . . . , and the plaintiff desires in the second action to rely on that
theory or to seek that remedy or form of relief,” claim preclusion does not apply.
Restatement (Second) of Judgments § 26(1)(c) (1982).
The comments to this section are particularly instructive:
Limitations on the jurisdiction of a system of courts. A given transaction
may result in possible liability under the law of a state and alternatively
under a federal statute enforceable exclusively in a federal court. When the
plaintiff brings an action in the state court, and judgment is rendered for the
defendant, the plaintiff is not barred from an action in the federal court in
which he may press his claim against the same defendant under the federal
Restatement (Second) of Judgments § 26 cmt. c(1) (1982); see also Restatement (Second)
of Judgments § 25 cmt. e (1982) (“If . . . the court in the first action would clearly not
have had jurisdiction to entertain the omitted theory or ground . . . , then a second action
in a competent court presenting the omitted theory or ground should be held not
In short, the Missouri judgment does not have preclusive effect on Johnson’s
ERISA claim. See, e.g., McZeal v. S. Consumers Coop, Inc., No. CIV.A. 05-1080, 2009
WL 1307945, at *3 (W.D. La. May 7, 2009) (“[The plaintiff] could not have brought the
present ERISA action in his state court suit because the state court lacked subject matter
jurisdiction to adjudicate plaintiff’s present federal ERISA claims. Accordingly, res
judicata (claim preclusion) does not apply to bar . . . [the] present ERISA action.”).
IT IS HEREBY ORDERED that Defendant’s motion to dismiss is DENIED.
ECF No. 10.
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 27th day of October, 2017.
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