United States District Court, S.D. New York
OPINION & ORDER
VALERIE CAPRONI, District Judge.
Plaintiff William Harrison ("Harrison"), a Mississippi resident, was a traveling salesperson for jewelry wholesaler Ashi Diamonds ("Ashi"), a New York corporation, from March 2005 through January 2012. Second Amended Complaint ("SAC") ¶¶ 19-20. Defendants Rajeev and Sanjay Pandya are brothers who exercised significant control over Ashi's day-to-day business and allegedly served as Harrison's "bosses." SAC ¶¶ 11-17. Harrison's compensation was based on a minimum "draw" or commission rate between 6 and 8 percent; the exact terms of the business relationship - whether that of employer-employee, independent contractor, or otherwise - were never reduced to writing. SAC ¶¶ 21-25; Def. Exh. 6. Ashi's tax filings classified Harrison as an "independent contractor, " not an employee. SAC ¶ 28. Harrison now claims that he is entitled to unpaid wages and statutory damages under the New York Labor Law ("NYLL") because he was an employee of Ashi and not an independent contractor. SAC ¶¶ 29-37. He also claims that he is owed damages under the NYLL, even if properly classified as an independent contractor, because his commissions were not timely paid. SAC ¶¶ 52-55.
When the relationship between Harrison and Ashi ended in January 2012, Harrison was allegedly owed certain commissions. On March 14, 2012, he brought an action in the Circuit Court of Lowndes County, Mississippi, for commissions due to him from 2011 through his termination, as well as related claims for infliction of emotional distress. Pl. Mem. Law Opp. at 1 (hereafter referred to as Harrison I ). Harrison I was removed to the United States District Court for the Northern District of Mississippi and culminated in a small judgment (less than $2000.00) in favor of Plaintiff, dated December 9, 2013. Def. Exh. 4.
During the course of discovery in Harrison I, Plaintiff attempted to add claims under the NYLL; Ashi resisted Plaintiff's attempt, arguing it was too late in the litigation to add claims. Def. Mem. Law at 2-3. This issue was ultimately teed up for decision via a defense motion in limine to preclude "any mention, argument, or evidence at trial of the... New York law or the New York Department of Labor [and] [a]ny dispute over commissions that pre-date Harrison's sales in 2011." Def. Exh. 9 at 5. During oral argument on that motion, Harrison insisted that the Harrison I Complaint sought damages for "the entire amount that Ashi owes him, " and, presumably to bolster the argument that his intent was to encompass the entire relationship in one lawsuit, noted that he had abandoned a separate claim he had made with the New York Department of Labor. Def. Exh. 13 at 7-8. Whatever Plaintiff's intent had been when he filed the Harrison I Complaint, the Court granted Defendant's motion and excluded Harrison's claims for unpaid commissions earned prior to 2011 and any claim arising under New York law. Def. Exh. 11. The Court reasoned that the complaint was silent on these claims and that Ashi was not otherwise on notice of the need to defend or to engage in discovery related to these claims. Def. Exh. 13 at 11-12. That decision was reduced to a formal order dated August 16, 2013. Def. Exh. 11.
On August 30, 2013, while Harrison I was still pending, Harrison filed this action in the Circuit Court of Lowndes County, Mississippi (hereafter referred to as Harrison II ). The Complaint in Harrison II added the Pandya brothers as defendants and asserted a variety of claims under the NYLL spanning Harrison's entire relationship with Ashi from 2005 until 2012, as well as claims for breach of contract and unjust enrichment. SAC ¶¶ 20-22, 38-49, 53-54, 59, 63. Defendants removed the action to the United States District Court for the Northern District of Mississippi, and, in January 2014, the case was transferred to the Southern District of New York. Defendants have moved to dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(6).
The issue presented by Defendants' motion to dismiss is whether the decision in Harrison I constitutes res judicata, precluding this action from proceeding. Although the Court is sympathetic to the Plaintiff, who clearly tried to combine these claims with claims litigated in Harrison I, it is also sympathetic to the Defendants, who have already been put to the expense and business disruption of defending claims arising out of this employment relationship once. Whichever side is more sympathetic, the law of res judicata is designed to prevent precisely this sort of seriatim litigation of matters that should be litigated in a single case. For the reasons discussed more fully below, the Defendants' motion to dismiss is granted because the lawsuit is barred by res judicata.
In deciding a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), "Courts are normally limited to considering the facts alleged in the complaint, documents appended to the complaint or incorporated in the complaint by reference, and matters of which judicial notice may be taken.... However, a court may also look to public records, including complaints filed in [federal] court, in deciding a motion to dismiss." Yan Won Liao v. Holder, 691 F.Supp.2d 344, 351-52 (E.D.N.Y. 2010) (alteration in original) (citations omitted) (internal quotation marks omitted). Courts can take notice of the public records from earlier actions "not for the truth of the matters asserted... but rather to establish the fact of such litigation and related filings." Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir. 1991). Although res judicata is an affirmative defense, "[d]ismissal based on res judicata is appropriate where it is clear from the face of the complaint and from matters of which the Court takes judicial notice that plaintiffs' claims are barred." Greenwich Life Settlements, Inc. v. ViaSource Funding Grp., LLC, 742 F.Supp.2d 446, 452 (S.D.N.Y. 2010) (quoting Tokio Marine & Nichido Fire Ins. Co. v. Canter, No. 07 Civ. 5599 (PKL), 2009 WL 2461048, at *4 (S.D.N.Y. Aug. 11, 2009)); Angell v. U.S. Army Corps of Eng'rs, 149 Fed.App'x 34, 36 (2d Cir. 2005).
A federal court sitting in diversity jurisdiction determines the preclusive effect to be given a prior judgment by applying the res judicata law of the state in which the court that entered the prior judgment sat. Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001). Under Mississippi law, which therefore governs here, four identities between actions must exist for the bar of res judicata to apply: "(1) identity of the subject matter of the action; (2) identity of the cause of action; (3) identity of the parties to the cause of action; and (4) identity of the quality or character of a person against whom the claim is made." Harrison v. Chandler-Sampson Ins., Inc., 891 So.2d 224, 232 (Miss. 2005). "The absence of any one of the elements is fatal to the defense of res judicata." Id.
"The doctrine of res judicata has two primary functions. Under the principle known as bar, ' res judicata precludes claims which were actually litigated in a previous action. Under the principle known as merger, ' res judicata prevents subsequent litigation of any claim that should have been litigated in a previous action." Hill v. Carroll Cnty., 17 So.3d 1081, 1084-85 (Miss. 2009) (citations omitted) (internal quotation marks omitted). In other words, "res judicata serves as a mandatory device for claim joinder by restricting the claims which a party may refrain from asserting against the opposing party." Chandler-Sampson, 891 So.2d at 233. On the whole, "the law is well settled that where one has a choice of recovery for a given wrong, they may not assert them serially in successive actions but must advance all at once on pain of the bar of res judicata.'" Id. at 236 (quoting Walton v. Bourgeois, 512 So.2d 698, 702 (Miss. 1987)).
In addition to the four identities, the earlier action must have reached a final judgment on the merits in order for res judicata to apply. EMC Mortg. Corp. v. Carmichael, 17 So.3d 1087, 1090 (Miss. 2009). That element is not disputed. Because the prior judgment is final and the four identities are present, the doctrine of res judicata bars Plaintiff from litigating these claims in this Court.
I. Identity of Subject Matter
Harrison I and Harrison II both concern Harrison's employment relationship, specifically relative to compensation, with Ashi Diamonds.
Under Mississippi law, actions pursuing different remedies and proceeding under different theories possess the required identity of subject matter so long as "the substance" of the suits is the same. See, e.g., Fason v. Trussell Enters., 120 So.3d 454, 459 (Miss. Ct. App. 2013) (a collection suit and a suit for malicious prosecution, false imprisonment and abuse of process possess an identity of subject matter because both concerned a debt owed and how it was collected). In contrast, courts have found identity of subject matter lacking when the two actions involve entirely distinct subjects. See, e.g., Anderson v. Levere, 895 So.2d 828 (Miss. 2004) (no bar to suit disputing ownership of photographs held by an estate when earlier suit dealt with a determination of heirs to the ...