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Davis v. United States Steel Supply

decided: August 30, 1982.

THELMA DAVIS
v.
UNITED STATES STEEL SUPPLY, DIVISION OF UNITED STATES STEEL CORPORATION, APPELLANT



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Gibbons, Hunter and Garth, Circuit Judges. Seitz, Chief Judge, Aldisert, Adams, Gibbons, Hunter, Weis, Garth, Higginbotham, Sloviter, and Becker, Circuit Judges. Garth, Circuit Judge, concurring. Gibbons, Circuit Judge, with whom Higginbotham, Circuit Judge joins, dissenting. Sloviter, Circuit Judge, dissenting.

Author: Adams

Opinion OF THE COURT

ADAMS, Circuit Judge.

In this appeal from a district court judgment in favor of plaintiff Thelma Davis under 42 U.S.C. § 1981, United States Steel Corporation (U.S. Steel) raises a number of troublesome as well as important issues. Among these issues one question must, as a prerequisite to the adjudication of the remainder, take precedence: the res judicata effect upon this action of a prior Pennsylvania court judgment with respect to the allegedly discriminatory discharge of Thelma Davis by U.S. Steel. We conclude that further litigation of Davis' claim is barred by res judicata.

I

Thelma Davis, a black woman, commenced her employment with the Steel Supply Division of the United States Steel Corporation on May 5, 1966. She worked as a Flexograph operator and was the first black office employee of the Supply Division's Reedsdale Street location. She had been employed by U.S. Steel for almost four years when she was terminated on February 3, 1970.

During her tenure with U.S. Steel, Davis experienced difficulties with fellow employees. Tension developed between Davis and two other women employees in the Flexograph Room. At least one of these women complained to Boris Pishko, their immediate supervisor, that Davis was uncooperative. Davis, in turn, submitted a letter to Beecher Taylor, Pishko's supervisor, complaining of numerous incidents involving co-workers. Some of these complaints were racial in nature. As a result of these and other actions, at Taylor's direction, Pishko talked to Davis and several other employees in an effort to restore office harmony.

These efforts were to no avail, at least so far as the Flexograph room was concerned, and in early 1969 Pishko moved Davis to the file room. The record is equivocal as to whether Davis' problems continued in this department. On the morning of February 3, 1970, however, Pishko, as a result of complaints made by co-workers, requested that Davis use less perfume on her person. Davis was offended by this request and complained to Paul Sykes, the acting district manager and Pishko's then supervisor. Later that day, Davis discovered that one of her boots was torn, and attributed that action to her fellow employees. She complained to Pishko that the torn boot was another example of the type of harassment she was suffering. During a tempestuous discussion, Davis left Pishko's office and refused his requests that she return. Pishko then went to Sykes, and, after informing him of the events that had transpired, asked Sykes to discharge Davis. Davis was thereupon called to Sykes' office and discharged. She alleges, and Sykes denies, that Sykes told her, among other things, that her discharge was for "her safety's sake."

Davis complained to the City of Pittsburgh Commission on Human Relations (PCHR) on February 4, 1970, the day after her discharge. She claimed that an atmosphere of racial intolerance was maintained at U.S. Steel; that she had been subjected to harassment by fellow employees during the last three years of her employment; that her complaints to supervisors had largely been ignored; that she had been improperly discharged; and that her discharge occurred after Taylor, who had been sensitive to her complaints, was transferred to another city.

The Commission conducted a full adversarial hearing regarding Davis' complaint on June 4, 1971. Nine witnesses -- Davis among them -- testified and were subjected to cross-examination. The PCHR issued its decision on March 6, 1972 and found that U.S. Steel had violated Section 8(a) of the Pittsburgh Human Relations Ordinance because it had treated Davis differently from the way it treated other employees.*fn1 The PCHR accordingly ordered U.S. Steel to cease and desist from racial discrimination, to reinstate Davis, and to award her back pay. A supplemental order of October 2, 1972 specified the amount of damages.

U.S. Steel appealed that decision under 53 Pa. Cons. Stat. Ann. §§ 11307, 11308 (Purdon 1972)*fn2 to the Allegheny County Court of Common Pleas, which concluded that the PCHR's decision was supported by substantial evidence and was neither arbitrary nor capricious. The Common Pleas Court therefore dismissed the appeal. U.S. Steel appealed that determination to the Commonwealth Court of Pennsylvania. In a unanimous opinion the Commonwealth Court reversed the Court of Common Pleas and held, after carefully reviewing the record, that there was inadequate support for the conclusion that the Pittsburgh ordinance had been violated. The court focused on the issue of discriminatory discharge, but clearly indicated in its opinion that it understood that there were also broader charges of racial discrimination in the case. The court stated that "the crucial issue involved in this case is whether or not Davis was treated differently by the Supply Division because of her race." The court concluded that "the findings offer no information concerning how the Supply Division discriminated 'in dismissing Mrs. Davis' and therefore do not support the Commission's conclusion." It also determined that the Commission's finding that Davis' supervisor gave little credence to Davis' complaints was not supported by the evidence. The court also considered a charge that Davis was discriminated against because of the manner in which her file was kept; but it found no evidence that her file was treated differently before her discharge, and considered the post-discharge differences normal for an employer facing a lawsuit. The Commonwealth Court held that there were no findings supported by substantial evidence that U.S. Steel had treated Davis differently because of her race, and accordingly entered a judgment vacating the orders of the PCHR. United States Steel Supply Division of United States Steel Corp. v. City of Pittsburgh, 16 Pa. Commw. 425, 332 A.2d 871 (1975).

Davis did not appeal that decision to any higher Pennsylvania court; nor, of course, did U.S. Steel. Instead, Davis filed suit in the United States District Court for the Western District of Pennsylvania on August 13, 1975, alleging that her discharge by U.S. Steel constituted a violation of 42 U.S.C. § 1981. In her federal complaint, Davis alleged that she was subjected to a pattern of discrimination consisting of racial slurs and racially motivated harassment, and that she was unlawfully dismissed from her employment. She sought damages to compensate her for lost wages, fringe benefits, and pension rights, as well as costs and attorneys fees. Initially, the district court held that her claim was time-barred, 405 F. Supp. 394 (W.D. Pa. 1976). A panel of this Court reversed that determination and held that the complaint was timely. It held that, "where the gist of a § 1981 complaint concerns racially discriminatory discharge of an employee under the facts in this record," then the applicable Pennsylvania statute of limitation is 12 P.S. § 31, which provides a six year period.*fn3 Davis v. United States Steel Supply, Division of United States Steel Corporation, 581 F.2d 335, 341 n.8 (3d Cir. 1978). In its opinion the panel noted that "the res judicata force of state judicial review of local administrative adjudications depends on a variety of factors which have not been developed in the record in this case"; the Court therefore specifically refrained from expressing any view at that time as to the res judicata effect to be accorded to the Commonwealth Court's decision in Davis' subsequent section 1981 action. 581 F.2d at 340 n.5. The panel, however, did not have the advantage of the clarification of the law that the Supreme Court recently supplied in Kremer v. Chemical Construction Corp., 456 U.S. 461, 102 S. Ct. 1883, 72 L. Ed. 2d 262, 50 U.S.L.W. 4487 (U.S. May 17, 1982).

On remand, the district court denied U.S. Steel's motion for summary judgment on res judicata grounds and held that the Pennsylvania Commonwealth Court judgment was not a bar to the federal claim. In its order of February 13, 1979, the district court stated, without lengthy explanation, that " res judicata does not foreclose the instant action where [after an initial administrative decision the] defendant has pursued state appellate remedies rather than the plaintiff." Appendix at 305. It cited in support of that proposition the Second Circuit line of cases following Mitchell v. National Broadcasting Co., 553 F.2d 265, 275 (2d Cir. 1977). The district court's decision, like that of the initial panel, antedated the Supreme Court's Kremer decision.

After the denial of the summary judgment motion, the matter was tried on the merits before the district judge sitting without a jury. By stipulation of both parties and with the consent of the court, the evidence in the federal court proceeding was limited to the PCHR record and a deposition of Davis.*fn4 On the basis of that evidence, the district court concluded in a Memorandum Opinion and Order of October 19, 1979 that U.S. Steel had discharged Davis in violation of 42 U.S.C. § 1981. The court rested this conclusion on a finding that U.S. Steel "practiced racial discrimination in discharging Davis," explaining that the record did not support any of the other motivations for dismissal that were alleged by U.S. Steel. The district court appears to have based its decision solely on the finding of discriminatory discharge, not on the broader discrimination charges. In a subsequent opinion based on the same submissions and three additional exhibits, the court determined the amount of Davis' damages ($44,236.11, and $6,500 in attorney's fees and costs) and the issue of mitigation.

On appeal from that decision, U.S. Steel argues that the district court erred in denying the motion to dismiss on res judicata grounds, that the court's findings of a racially discriminatory motive for the dismissal were clearly erroneous, and that the court erred in awarding damages to Davis. Following a decision by a panel of this Court, we granted a petition to consider the case in banc and vacated the opinion of the panel.

We now hold, in light of the Supreme Court's recent decision in Kremer, that Davis' federal claim under section 1981 is barred by res judicata. Because we so hold, we do not reach the remaining issues raised by U.S. Steel.

II

Under federal law, "the . . . judicial proceedings of any court of any . . . State . . . shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State. . . ." 28 U.S.C. § 1738.*fn5 Thus, section 1738 requires federal courts to give res judicata effect to a state judgment to the extent the state would give its own prior judgment such effect. Res judicata, however, is an affirmative defense, see Fed. R. Civ. P. 8(c), and the party asserting such a bar bears the burden of showing that it applies. According to a recent decision of Pennsylvania's highest court (the "best authority" on the State's law, see Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 18 L. Ed. 2d 886, 87 S. Ct. 1776 (19767)), for res judicata to apply there must be a showing that "between the previous action and the present action there [is] an identity in the thing sued on, identity of the cause of action, identity of the persons and parties to the action, and identity of the quality or capacity of the parties suing or sued." Duquesne Slag Products Co. v. Lench, 490 Pa. 102, 105, 415 A.2d 53, 55 (1980). See also Callery v. Municipal Authority, 432 Pa. 307, 312, 243 A.2d 385, 387 (1968) ("The essential inquiry is whether the ultimate and controlling issues have been decided in a prior proceeding in which the present parties had an opportunity to appear and assert their rights.")

There does not appear to be any relevant failure of proof on the part of U.S. Steel as to at least three of these factors. Thus, there can be little question as to the identity of the parties, the identity of quality and capacity of the parties, or the identity of the thing sued on. Davis and U.S. Steel were the opposing parties in both actions, and both lawsuits challenge the same conduct of U.S. Steel. Nor, given the identity of the parties, is there any reason to suppose that under Pennsylvania law U.S. Steel's ability to assert the res judicata defense would be undermined by the fact that U.S. Steel was the party that instituted the judicial action resulting in the state court judgment. This conclusion is in accord with Pennsylvania's principle of mutuality of estoppel under which "one may not have the benefit of a judgment as an estoppel unless he would have been bound by it had it been the other way. . . ." See Helmig v. Rockwell Mfg. Co., 389 Pa. 21, 32, 131 A.2d 622, 627-28 (citing cases), cert. denied, 355 U.S. 832, 2 L. Ed. 2d 44, 78 S. Ct. 46 (1957). Consequently, if U.S. Steel would not have been bound by an unfavorable state court judgment, it would not now be entitled to assert res judicata. But because U.S. Steel would have been bound by a judgment against it, mutuality of estoppel is not violated by allowing U.S. Steel to raise the res judicata defense now. The principle of mutuality of estoppel is subject to exceptions, but none is applicable here. See Helmig, supra, and Posternack v. American Casualty Co. of Reading, 421 Pa. 21, 25, 218 A.2d 350, 352 (1966).

More difficult is the question of identity of the causes of action. A single cause of action may comprise claims under a number of different statutory and common law grounds. Kremer, supra, 456 U.S. 461, 102 S. Ct. 1883, 73 L. Ed. 2d 262, 50 U.S.L.W. at 4492-93 n.22; Antonioli v. Lehigh Coal and Navigation Co., 451 F.2d 1171, 1176-78 (3d Cir. 1971), cert. denied, 406 U.S. 906, 31 L. Ed. 2d 816, 92 S. Ct. 1608 (1972); Williamson v. Columbia Gas & Electric Corp., 186 F.2d 464, 468 (3d Cir. 1950). Rather than resting on the specific legal theory invoked, res judicata generally is thought to turn on the essential similarity of the underlying events giving rise to the various legal claims, although a clear definition of that requisite similarity has proven elusive. See Donegal Steel Foundry Co. v. Accurate Products Co., 516 F.2d 583, 588 n.10 (3d Cir. 1975) (considering various proposed definitions); C. Wright, A. Miller & E. Cooper, 18 Federal Practice and Procedure § 4407 (1981 & Supp. 1982).

Whatever the conceptual difficulties inherent in any definition of a "cause of action," often the presence of a single cause of action is clear. For example, in the two actions involved in this case, as in Williamson:

the acts complained of and the demand for recovery are the same. The only thing that is different is the theory of recovery. The same witnesses and documents will be necessary in the trial in both cases. No material fact is alleged in [the second action] that was not alleged in [the first]. . . . Everything plaintiff was entitled to ask for from defendant was included in [the first action].

186 F.2d at 470. In both her state and federal proceedings, Davis sought redress for her treatment at the hands of U.S. Steel on the ground that the treatment was racially discriminatory and therefore illegal. Indeed, the closeness of her claims in both the state and federal proceedings is revealed by her decision to rest her federal claim almost entirely upon the record of the state proceeding. Cf. Herendeen v. Champion International Corp., 525 F.2d 130, 133-35 (2d Cir. 1975) (one test for identical causes of action is "whether the same evidence is necessary to maintain the second cause of action as was required in the first").

Section 1981's prohibition against racial discrimination in private employment and the Pittsburgh ordinance forbidding any employer from discriminating against any employee in any way "directly or indirectly related to employment" because of that employee's "race, color, religion, ancestry, national origin or place of birth" both clearly outlaw the discrimination complained about by Davis. The procedural setting of this case in this sense is quite similar to that in Kremer. Kremer, who alleged that he had been subjected to discriminatory employment practices, sought relief in federal court under Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended, 42 U.S.C. § 2000e et seq., after New York courts upheld an administrative decision by the New York Human Rights Division summarily dismissing his claim. The United States Supreme Court, rejecting a contention that res judicata did not apply because the causes of action under Title VII and the New York law were different, observed that "the alleged discriminatory acts are prohibited by both federal and state laws," and that "the elements of a successful employment discrimination claim are virtually identical [under the two statutes]." 456 U.S. 461, 50 U.S.L.W. at 4492. Given the obvious overlapping of the two statutes here, U.S. Steel has, as had the employer in Kremer, satisfied its burden of proving an identity of causes of action. As the Pennsylvania Supreme Court noted in Commonwealth v. Ligon, 454 Pa. 455, 460, 314 A.2d 227, 230 (1973), "[a] litigated claim is not given new life because of the invention of another theory to support that claim." Although Ligon was a criminal appeal, we believe that Pennsylvania would take a similar approach in a case such as the present civil action.

Arguably, a court judgment reviewing an administrative proceeding might in some circumstances be denied res judicata effect if there were procedural deficiencies in the administrative proceeding and the court's standard of review were limited, or if the administrative decision were not deemed to be final. E.g., International Union of Operating Engineers, Local No. 714 v. Sullivan Transfer, Inc., 650 F.2d 669, 672-76 (5th Cir. 1981); Mitchell v. National Broadcasting Co., supra, 553 F.2d at 267-68. Before the PCHR, Davis received the equivalent of a full judicial hearing.*fn6 Indeed, as previously noted, she was willing to rely on the record of that proceeding for her federal claim, and there is no indication that she considered the hearing to have been procedurally inadequate. Moreover, the administrative judgment in Davis' case was fully reviewed by the Pennsylvania courts. Given her decision not to file an appeal to the Pennsylvania Supreme Court, the Commonwealth Court's decision is now final within the state system.*fn7

Davis argues that the appellate review of the PCHR decision by the state courts should not be treated as a judgment on the merits of her federal complaint because the standard of review adhered to by the Commonwealth Court did not constitute an adjudication of whether, in fact, U.S. Steel discriminated against her on the basis of race. Davis contends that the Commonwealth Court's holding -- that "none of the [Commission's] findings is sufficient to support the Commission's conclusion" that U.S. Steel discriminated against her in violation of the Pittsburgh ordinance, 332 A.2d at 876 -- is different from a conclusion that U.S. Steel did not discriminate against Davis for racial reasons. Her argument, however, requires a crabbed and unduly technical reading of the Commonwealth Court's opinion. Whatever language the court utilized, the court clearly concluded that the findings and record in the case were inadequate to support the conclusion that U.S. Steel had discriminated against Davis because of her race. In Kremer the Supreme Court considered and rejected an argument comparable to that advanced by Davis. Kremer contended that the New York Supreme Court decision upholding the NYHRD's dismissal of his claim should not be deemed an adjudication on the substance of his claim because the standard of review for the New York court was whether or not the NYHRD had acted arbitrarily or capriciously. The Supreme Court held that the New York court's affirmance of the dismissal was an implicit determination that the complaint lacked merit as a matter of law. 456 U.S. 461, 50 U.S.L.W. at 4492 n.21.*fn8 Similarly, we conclude here that the state proceedings and in particular the Commonwealth Court's rejection, on the merits, of the PCHR's conclusion that U.S. Steel discriminated against Davis, constitutes a full and fair adjudication of Davis' race discrimination claim.*fn9

It appears, therefore, that Pennsylvania would consider the state court review of the PCHR's decision res judicata against a subsequent race discrimination claim filed in the Pennsylvania courts. By the mandate of 28 U.S.C. § 1738, therefore, the federal courts are obliged to accord to the Pennsylvania judgment the same preclusive effect against Davis' claim filed in federal court, unless some other federal constitutional or statutory policy interdicts application of the statute to her lawsuit. We turn, then, to a consideration of the relevant federal antidiscrimination policies.

III

Whether in federal or state courts, "res judicata and collateral estoppel relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on adjudication." Allen v. McCurry, 449 U.S. 90, 94, 66 L. Ed. 2d 308, 101 S. Ct. 411 (1980). See also Southern Pacific Railroad Co. v. United States, 168 U.S. 1, 48-49, 42 L. Ed. 355, 18 S. Ct. 18 (1897); Switlik v. Hardwicke Co., Inc., 651 F.2d 852 (3d Cir.), cert. denied, 454 U.S. 1064, 102 S. Ct. 614, 70 L. Ed. 2d 601 (1981). Moreover, when applied by a federal court to give preclusive effect to a state court judgment, "res judicata and collateral estoppel not only reduce unnecessary litigation and foster reliance on adjudication, but also promote the comity between state and federal courts that has been recognized as a bulwark of the federal system." Allen v. McCurry, 449 U.S. at 95-96 (citing Younger v. Harris, 401 U.S. 37, 43-45, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971)). See also New Jersey Education Association v. Burke, 579 F.2d 764, 771-72 (3d Cir.), cert. denied, 439 U.S. 894, 58 L. Ed. 2d 239, 99 S. Ct. 252 (1978). The policies behind res judicata and section 1738 go beyond encouraging parties to plead all grounds for relief in a single lawsuit; the rationales cited above seem to be applicable even where a party seeks to relitigate an adjudicated claim on the basis of a legal theory which, for one reason or another, he was unable to invoke in the previous proceeding.

Mindful of these concerns, the Supreme Court has applied section 1738 broadly. Drawing on its decision in Allen v. McCurry, the Court reiterated in Kremer, supra, that "an exception to § 1738 will not be recognized unless a later statute contains an express or implied partial repeal." 456 U.S. at 468, 50 U.S.L.W. at 4489. In order to conclude that 42 U.S.C. § 1981 constitutes an exception to the section 1738 rule of full faith and credit, therefore, we must uncover some indication in the language or legislative history of section 1981, or perhaps in some related legislation, that Congress intended to create such an exception.

Looking first to the language of section 1981, we can discern no sign that Congress intended that a procedurally adequate state court judgment resolving a claim of racial discrimination in employment should not be given full faith and credit in a similar action brought in federal court under section 1981. Indeed, the statute itself provides no guidance whatsoever as to the relationship between state and federal proceedings. It reads, in its entirety:

All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.

Because it neither stipulates the manner in which employment discrimination suits should be pursued,*fn10 nor connotes any suggestion that a party may litigate section 1981 claims even after a full and fair litigation of an identical claim in state court, the statutory language does not provide the clear expression of an intent to modify section 1738 that is referred to by Kremer and McCurry.

We turn, therefore, to the legislative history of section 1981 to determine whether that statute contains an implicit exception to the "full faith and credit" requirement of section 1738. Section 1981 derives from the Civil Rights Act of 1866 and the reenactment of section 1 of that Act in sections 16 and 18 of the Civil Rights Act of 1870. Runyon v. McCrary, 427 U.S. 160, 168-70, 49 L. Ed. 2d 415, 96 S. Ct. 2586 n.8 (1976); Mahone v. Waddle, 564 F.2d 1018, 1030 (3d Cir. 1977). As we observed in Mahone, the legislative history of these acts manifests "Congress' purpose to enact sweeping legislation implementing the thirteenth amendment to abolish all the remaining badges and vestiges of the slavery system." 564 F.2d at 1030. The legislative history also reflects a fear that some state courts might remain hostile forums for adjudication of rights under the thirteenth, and later the fourteenth, amendments. The original 1866 legislation provided that federal court jurisdiction would be exclusive for "persons who are denied or cannot enforce in the courts or judicial tribunals of the State or locality where they may be any of the rights secured to them by the first section of this act." Act of April 9, 1866, ch. 31, § 3, 14 Stat. 27 (1866). In addition, the Act provided that a defendant in any state court proceeding initiated to punish acts committed in furtherance of the Civil Rights Act would have the right to have the case removed to federal court. Id.*fn11

Nowhere in the legislation, in its legislative history, or, indeed, in any of the Act's subsequent refinements,*fn12 did Congress suggest that by conferring jurisdiction on federal courts it meant to render ineffective state court judgments having to do with race discrimination. Quite to the contrary, the 1866 legislation carefully limited federal jurisdiction to those instances in which the states had failed to provide effective enforcement of individual rights. The 1866 legislation in this respect appears quite similar to the Civil Rights Act of 1871, now codified at 42 U.S.C. § 1983. The Supreme Court has held that section 1983 bespeaks no legislative intent to modify the full faith and credit requirement of section 1738. In Allen v. McCurry, supra, the Court reviewed the legislative history leading up to the passage of section 1983 and concluded that the legislators, although concerned about inadequate state enforcement of constitutional rights, did not intend to lessen the credit given to valid state judgments. The Court explained that:

Congress realized that in enacting § 1983 it was altering the balance of judicial power between the state and federal courts. . . . But in doing so, Congress was adding to the jurisdiction of the federal courts, not subtracting from that of the state courts. . . . The debates contain several references to the concurrent jurisdiction of the state courts over federal questions, and numerous suggestions that the state courts would retain their established jurisdiction so that they could, when the current political passions abated, demonstrate a new sensitivity to federal rights.

449 U.S. at 99-100 (footnotes omitted). In support of this interpretation the Court made specific reference to the 1866 Act, observing that:

To the extent that Congress in the post-Civil War period did intend to deny full faith and credit to state-court decisions on constitutional issues, it expressly chose the very different means of postjudgment removal for state-court defendants whose civil rights were threatened by biased state courts and who therefore "are denied or cannot enforce [their civil rights] in the courts or judicial tribunals of the State."

Id. at 99 n.14 (quoting Act of Apr. 9, 1866, ch. 31, § 3, 14 Stat. 27) (emphasis added). The Court thus construed the 1866 Act as affecting the weight properly given to state judgments only if those ...


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