proceeding under the doctrines of res judicata and collateral estoppel. Khandhar v. Elfenbein, 943 F.2d 244 (2d Cir. 1991); Katz v. Financial Clearing & Servs. Corp., 794 F. Supp. 88, 94 (S.D.N.Y. 1992); In re Ranni, 58 N.Y.2d 715, 717, 458 N.Y.S.2d 910, 911, 444 N.E.2d 1328 (1982) ("It is settled that the doctrine of res judicata is applicable to arbitration awards and may serve to bar the subsequent relitigation of a single issue or an entire claim").
Res judicata bars the relitigation of issues previously litigated and resolved. It also precludes litigation of claims that could have been raised in the earlier proceeding, even though not actually raised. Res judicata applies where there are the same parties in the new proceeding as in the former, or parties in privity with those in the former proceeding. Katz, 794 F. Supp. at 95.
Plaintiff contends that res judicata does not apply because some of the parties in the lawsuit were not parties to the arbitration. It is true that Daiwa America, the principal party in the arbitration, is not a defendant in the lawsuit, whereas Daiwa Japan is the main defendant. Although two of the individual defendants - Yoneyama and Tsunoda - were respondents in the arbitration, defendant Yuji Rai was not in the arbitration. However, the well-established rule about privity governs the present case. Daiwa Japan is clearly in privity with Daiwa America, and the same must be said of Yuji Rai.
Plaintiff also argues that the issues are different because the gravamen of the claims in the arbitration was that Daiwa America breached its contractual commitments to plaintiff and committed other wrongs against plaintiff, whereas the thrust of the complaint in the lawsuit is that Daiwa Japan wrongly interfered with Daiwa America's contractual obligations and in other ways caused the wrongs charged against Daiwa America in the arbitration.
It would seem a matter of elementary common sense that, if the arbitrators found that plaintiff had failed to prove the wrongs alleged against Daiwa America, this would leave no room to bring a lawsuit charging Daiwa Japan with causing those wrongs. Whether this results, as a technical matter, from the application of res judicata or collateral estoppel is a matter of possible theoretical interest. However, the result is clear, and that is that the claims in the lawsuit are barred.
This ruling not only covers the claims in the lawsuit expressly decided by the arbitrators, but also embraces the two claims not expressly decided. These are the claims of threats relating to the arbitration and of discrimination during employment. It would not be unreasonable to interpret the arbitration ruling as impliedly rejecting these two claims. However, it can at least be said that plaintiff had the opportunity to formally include the claims in his Statement of Claim or an amended Statement of Claim so that they would have been clearly presented for decision by the arbitrators. Thus, these claims were either presented and decided, or could have been presented and decided, in the arbitration. Thus plaintiff is barred from pursuing them in the lawsuit.
Plaintiff contends that res judicata does not apply, at least as to some claims, where different legal theories are asserted in the lawsuit from what was relied on in the arbitration. But it is established law that, where two successive legal proceedings involve the same factual claims, res judicata applies despite the change of legal theory. Cemer v. Marathon Oil Co., 583 F.2d 830, 832 (6th Cir. 1978); 1B James W. Moore et al., Moore's Federal Practice P 0.410 (2d ed. 1988).
The court treats defendants' motion to confirm the arbitration award as being made by the two defendants who were parties to the arbitration -- Yoneyama and Tsunoda -- and as such the motion is granted. The court grants the motion of all defendants to dismiss the action as barred by the arbitration and the arbitration award.
Plaintiff's motion to rescind the arbitration agreement and for other relief is denied.
Although the suit is without merit, the situation does not rise to the level of bad faith or wholly unreasonable pleading. Defendants' application for sanctions is denied.
Dated: New York, New York
January 5, 1994
THOMAS P. GRIESA
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