costs pursuant to Fed. R. Civ. P. 11, 28 U.S.C. § 1927, and 29 U.S.C. § 1132(g). Plaintiff Hennessy cross-moves for a stay of this action pending final adjudication of an action involving the same parties in the New York State Supreme Court. On May 5, 1997, the Court heard oral argument on the motion.
The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Gallo v. Prudential Residential Servs. Ltd. Partnership, 22 F.3d 1219, 1223 (2d Cir. 1994). "The trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Gallo, 22 F.3d at 1224.
The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrates[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. The substantive law governing the case will identify those facts which are material and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 8 L. Ed. 2d 176, 82 S. Ct. 993 (1962)); see also Gallo, 22 F.3d at 1223.
If the moving party meets its burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). With respect to the issues on which summary judgment is sought, if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is improper. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir. 1994).
There is no material dispute with respect to the following facts. Thomas Hennessy is Local 18A's former Business Manager. (Def.'s 3(g) Statement P 2.) On May 25, 1993, Hennessy pleaded guilty in the United States District Court for the Southern District of New York to the crimes of conspiracy in violation of 18 U.S.C. § 371, extortion of voters' democracy rights in violation of 18 U.S.C. § 1951(b)(3), and extortion of candidates' democracy rights in violation of 18 U.S.C. § 1951. (Def.'s 3(g) Statement P 3; Pl.'s 3(g) Statement P 4.) In or about April 1994, Hennessy commenced an action against Local 18A in New York State Supreme Court, New York County. (Def.'s 3(g) Statement P 4; Pl.'s 3(g) Statement P 3.) In his complaint, Hennessy alleged that he was owed benefits under Local 18A's Termination Pay Plan. (Def.'s 3(g) Statement P 6; Bartlett Aff. Ex. B; Pl.'s 3(g) Statement P 3.) Local 18A answered and asserted counterclaims against Hennessy alleging, among other things, that Hennessy, as Local 18A's Business Manager and officer, breached his fiduciary duty to Local 18A and its members by his illegal acts and interferences with Local 18A's business and members. (Def.'s 3(g) Statement P 8; Bartlett Aff. Ex. C; Pl.'s 3(g) Statement P 3.)
On or about January 17, 1995, Local 18A moved for partial summary judgment on its counterclaims. (Def.'s 3(g) Statement P 11; Pl.'s 3(g) Statement P 3.) In a decision dated February 16, 1995, Justice Gammerman granted Local 18A's motion with respect to the issue of Hennessy's liability to Local 18A, referred the issue of Local 18A's damages to a referee, and directed the parties to prepare for trial on Hennessy's claim for benefits under the Termination Pay Plan. (Def.'s 3(g) Statement P 12; Pl.'s 3(g) Statement P 3.) On March 17, 1995, Hennessy filed a notice of appeal with the Appellate Division, First Department, challenging the order granting summary judgment on Local 18A's counterclaim with respect to liability. (Def.'s 3(g) Statement P 13; Bartlett Aff. Ex. D; Pl.'s 3(g) Statement P 3.) To date, no inquest has been held, and the issue of damages on the counterclaim is still pending. (Def.'s 3(g) Statement P 14; Pl.'s 3(g) Statement P 3.)
On or about April 17, 1995, Local 18A served a motion for summary judgment seeking dismissal of the complaint. (Def.'s 3(g) Statement P 15; Pl.'s 3(g) Statement P 3.) Hennessy served a cross-motion seeking an order discontinuing the state court action. (Def.'s 3(g) Statement P 16; Pl.'s 3(g) Statement P 3.) In an order dated May 23, 1995, the court granted Local 18A's motion for summary judgment, dismissed the complaint, and denied Hennessy's cross-motion for an order of discontinuance. (Def.'s 3(g) Statement P 17; Bartlett Aff. Ex. E; Pl.'s 3(g) Statement P 3.) Justice Gammerman explained on the record:
I have had some familiarity with the case and in my view there is absolutely no basis for the claim. To permit the action to be discontinued without prejudice will merely encourage the plaintiff to seek the monies he's seeking here in another forum, and in my view there is no merit to the claim. There is no basis for seeking it anyplace.
(Bartlett Aff. Ex. E at 2-3.) Hennessy concedes that under New York law he could have appealed the dismissal of his claim for Termination Pay but did not do so. At oral argument on this motion, however, his counsel explained that he chose to await a decision on the damages on the counterclaim before appealing from the dismissal of his claim.
On or about January 10, 1996, Hennessy filed this action against Local 18A in the United States District Court, Southern District of New York.
Defendant Local 18A argues that this action is barred by the doctrine of res judicata because plaintiff Hennessy could have raised his present claim in the prior state court action in which he also sought to recover his Termination Pay from Local 18A. Res judicata is designed to protect "litigants from the burden of relitigating an identical issue with the same party or his privy and [to promote] judicial economy by preventing needless litigation." Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 326, 58 L. Ed. 2d 552, 99 S. Ct. 645 (1977). Res judicata bars subsequent litigation of "any ground of recovery that was available in the prior action, whether or not it was actually litigated or determined." Balderman v. United States Veterans Admin., 870 F.2d 57, 62 (2d Cir. 1989); see also Nevada v. United States, 463 U.S. 110, 129-30, 77 L. Ed. 2d 509, 103 S. Ct. 2906 (1983) ("Simply put, the doctrine of res judicata provides that when a final judgment has been entered on the merits of a case, 'it is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.' Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L. Ed. 195 (1876). The final 'judgment puts an end to the cause of action, which cannot again be brought into litigation between the parties upon any ground whatever.' Commissioner v. Sunnen, 333 U.S. 591, 597, 68 S. Ct. 715, 719, 92 L. Ed. 898 (1948)."); Parklane Hosiery, 439 U.S. at 326 n.5 (describing the standard for res judicata); Greenberg v. Board of Governors of the Federal Reserve Sys., 968 F.2d 164, 168 (2d Cir. 1992) ("The doctrine of res judicata, or claim preclusion, provides that a final judgment on the merits in one action bars subsequent relitigation of the same claim by the same parties and by those in privity with the parties.").
A federal court must accord state court judgments the same preclusive effect as other courts within that state. See U.S. Const. art. IV, § 1; Brooks v. Giuliani, 84 F.3d 1454, 1463 (2d Cir.), cert. denied sub nom. Brooks v. Pataki, 136 L. Ed. 2d 375, 117 S. Ct. 480 (1996); Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994). Under New York law, the transactional approach to res judicata bars "a later claim arising out of the same factual grouping as an earlier litigated claim even if the later claim is based on different legal theories or seeks dissimilar or additional relief." Burgos, 14 F.3d at 790; see also Brooks, 84 F.3d at 1463.
Plaintiff Hennessy argues that res judicata does not bar this action because the order dismissing his state court complaint was not a final judgment, but rather a non-final order that affects final judgment and may, but need not, be appealed until after final judgment has been entered. See N.Y. C.P.L.R. § 5501(a)(1). He does not dispute that if Justice Gammerman's decision was sufficiently final it would bar the present action that seeks to recover the same benefits in this Court as he sought in New York State court, although under a different theory. He argues that the pendency of Local 18A's counterclaim against him prevented the dismissal of his claim against Local 18A from becoming a final judgment. Hennessy's argument confuses the distinction between finality for purposes of res judicata and finality for purposes of appeal.
The requirement of finality for purposes of res judicata does not necessarily mean a final judgment in an action. See Bannon v. Bannon, 270 N.Y. 484, 489, 1 N.E.2d 975 (1936). As explained by the New York Court of Appeals,
[The words 'final judgment'] may include any judicial decision upon a question of fact or law which is not provisional and subject to change and modification in the future by the same tribunal.... The essential element of a conclusive adjudication is finality of the proceedings. A judicial decision can constitute a conclusive adjudication of [a] question of fact or law only when rendered in a proceeding in which a court had jurisdiction to render an irrevocable and final decision upon such question. 'The effect of an adjudication ... must always depend upon the nature of the proceeding.' Everett v. Everett, 180 N.Y. 452, 461, 73 N.E. 231, 233.... The test then is not the form of the decision, but the nature of the proceedings in which the adjudication is made.