Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—1stCir: Claim Preclusion Doctrine Barred CPA Claim, (Nov 5, 2012)

By Jody Coultas, J.D.

The doctrine of claim preclusion barred an employee’s Massachusetts Consumer Protection Act (CPA) claim that was not alleged in the employee’s original complaint against a manufacturer, according to the U.S. Court of Appeals in Boston (Dean F. Hatch v. Trail King Industries, Inc, November 2, 2012, Lynch, S.).

After being severely injured in a workplace accident involving a trailer manufactured by Trail King Industries, Inc., Dean F. Hatch filed a claim against Trail King in 2007 for negligence and breach of warranty. In 2010, Hatch belatedly attempted to amend his complaint to add another claim, one under Mass. Gen. Laws c.93A (CPA) for unfair and deceptive trade practices. The trial judge denied the motion, finding the effort to amend untimely. Hatch did not appeal the denial of the motion. A separate CPA action was filed, but it was stayed during the earlier case. After a jury found Trail King was not negligent or in breach of any warranties, a district court dismissed the CPA claim because it constituted impermissible claim-splitting and the issues tried by the jury were identical to the CPA claim and the court would not reach a different result than the jury.

Hatch argued that the CPA claim was not precluded by the earlier decision based on Section 9(8) of the CPA, which states that recovering or failing to recover an award of damages or other relief in any judicial proceedings shall not constitute a bar to or limitation upon relief authorized by the CPA.

Claim preclusion under federal law applies where a final judgment was entered on the merits in an earlier proceeding, the two complaints were sufficiently identical, and the parties were sufficiently identical. Massachusetts law also recognizes claim preclusion which makes a valid final judgment conclusive on the parties and prevents relitigation of all matters that were or could have been adjudicated.

The federal doctrine of claim preclusion barred the CPA claims, according to the court. The issue was whether a plaintiff may bring a second action asserting CPA claims when they earlier sought leave to amend an earlier complaint to add a CPA claim, the proposed amendment was denied as untimely, the underlying case was decided, the denial of leave to amend was not appealed, and judgment was entered. Hatch waited eight months until after the deadline for amending the 2007 proceedings had passed to try to add the CPA claim and did not appeal the decision to appeal the denial of the motion for leave to amend.

Hatch’s claims were also subject to claim preclusion under Massachusetts law, according to the court. Section 9(8) did not apply in this case to circumvent the common law rule. The relief barred was the attempt to add a claim and the CPA section did not address rules of civil procedure about amendment of complaints. It was unlikely that Massachusetts courts would deviate from the claim preclusion rules when there is a failure to appeal from a denial of a motion to amend and the subject matter of that motion is a CPA claim. The circumstances of the case were not such that public policy should override the application of claim preclusion. Nor was there evidence of unfairness.

The case is No. 12-1473.

J. Michael Conley (Kenney & Conley, P.C.) for Dean F. Hatch. Myles W. McDonough (Sloane and Walsh, LLP) for Trail King Industries, Inc.

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