William Tracy Fowler v. Paul Teynor and Intermountain MRO Services, Inc.

¶1 William Tracy Fowler appeals from the district court's entry

of summary judgment in favor of Paul Teynor and Intermountain

MRO Services, Inc. (IMRO). Fowler claims the district court erred

in finding that principles of res judicata barred his claims against

Teynor and IMRO. We affirm.

Fowler v. Teynor

20121097-CA 2 2014 UT App 66

BACKGROUND

¶2 Fowler worked as a mail-room supervisor at Westminster

College (Westminster). In 2001, he began having back problems

that necessitated several surgeries. After the last surgery in April

2004, Fowler realized that he was addicted to his prescription pain

medication. He informed Westminster of his addiction and went on

short-term disability to attend a rehabilitation program. His

working relationship with Westminster deteriorated over the next

year, and in October 2005, Westminster asked Fowler to take a

drug test. Fowler agreed, and Westminster contracted with a local

testing company, IMRO, to perform a urinalysis.

¶3 Teynor, a doctor who owns IMRO and serves as its medical

review officer, reviewed the lab results from Fowler's drug test.

The results showed the presence of certain prescription drugs,

including the muscle relaxant carisoprodol. Teynor knew that

Fowler had a prescription for carisoprodol but informed

Westminster that Fowler had reported taking twice the amount

prescribed. Teynor also reported to Westminster that Fowler was

taking several other prescription drugs and therefore posed a

safety risk. Fowler alleges that Teynor did not inform Westminster

of the limitations of urinalysis in detecting the amount or effect of

drugs in a person's system or that Fowler's self-reported

carisoprodol use, while greater than prescribed, fell within the

standard recommended daily dosage. On November 1, 2005,

Westminster terminated Fowler's employment, citing as its reason

the results of the drug test.

¶4 Fowler sued Westminster in federal court, alleging that

Westminster had discriminated against him and ultimately fired

him because of a disability—his addiction—in violation of the

Americans with Disabilities Act (the ADA). Shortly thereafter,

Fowler initiated this state court action against Teynor and IMRO,

alleging various causes of action including negligence arising from

Teynor and IMRO's handling of the drug test and their reporting

of results with false or incomplete information to Westminster.

Fowler v. Teynor

2. Pursuant to the ADA, Fowler's damages award against

Westminster was capped at $300,000. Fowler was also awarded

other damages, such as back pay, but the amount of those

additional damages is not clear from the record in this case.

3. By this time, Fowler had twice amended his original Complaint.

His Second Amended Complaint alleged only two claims against

Teynor and IMRO: negligence and negligent misrepresentation.

20121097-CA 3 2014 UT App 66

¶5 Fowler's federal case proceeded to trial first. At the federal

jury trial, Westminster defended itself by claiming that the result

of the drug test, and not discrimination, was the reason it

terminated Fowler. The jury specifically rejected that defense and

found, as evidenced by its response on the verdict form, that

"Westminster did not honestly believe and act in good faith on its

stated reasons for terminating Mr. Fowler, making those reasons

pretext for discrimination against Mr. Fowler based on his

disability.” The jury determined that Westminster had violated the

ADA when it terminated Fowler, and the jury awarded him

$500,000 in compensatory damages.2

¶6 After trial, Westminster moved for judgment as a matter of

law, arguing in part that it had proved at trial that it relied in good

faith on the results of the drug test in terminating Fowler. The

federal court denied the motion, reasoning that the jury had found

that "Westminster did not honestly believe and act in good faith on

its stated reasons for terminating Fowler.” Fowler v. Westminster

Coll. of Salt Lake, No. 2:09-cv-591-DN, 2012 WL 4069654, at *3 (D.

Utah Sept. 17, 2012). The federal court further ruled that Fowler

had presented evidence at trial "on which a reasonable jury could

conclude . . . that the drug test was pretext for discrimination.” Id.

¶7 Shortly after the judgment against Westminster in the

federal case, Teynor and IMRO filed a motion for summary

judgment in this case, arguing that Fowler's claims against them

were barred by issue preclusion in light of the federal jury verdict

and resulting judgment. The 3 motion did not focus on any specific

factual question that had been decided in the federal action but

Fowler v. Teynor

4. Prior to the district court's ruling, Teynor and IMRO filed

another motion for summary judgment specifically arguing that

Fowler could not prove causation of his damages in this case

because the federal case established that Westminster's

discrimination caused those damages. The district court granted

the motion for summary judgment on issue preclusion before

Fowler responded to the more specific causation motion.

20121097-CA 4 2014 UT App 66

argued broadly that Fowler had already litigated the issue of his

wrongful termination. Fowler's opposition to the motion argued

that Teynor and IMRO's negligence had not been litigated in the

federal case. Fowler also argued that the federal case focused on

whether Westminster was liable for discrimination under the ADA

and did not decide the question of who else might also be liable for

his damages.

¶8 The district court granted Teynor and IMRO's motion for

summary judgment, concluding that the issue of "the alleged

wrongful termination of [Fowler's] employment with

Westminster” had been litigated in the federal case and that Teynor

and IMRO had established each element of issue preclusion.4 In its

order granting summary judgment, the district court stated that the

federal case had "clearly determined that the drug test was a

'pretext for discrimination' and [was] not the basis for [Fowler's]

termination.” Fowler appeals.

ISSUE AND STANDARD OF REVIEW

¶9 Fowler argues that his claims against Teynor and IMRO are

not barred by issue preclusion and that the district court therefore

erred when it granted summary judgment. "Summary judgment

is appropriate only where there are no genuine issues of material

fact and the moving party is entitled to judgment as a matter of

law.” Salt Lake City Corp. v. Big Ditch Irrigation Co., 2011 UT 33, ¶ 18,

258 P.3d 539. "We review a district court's grant of summary

judgment for correctness and afford no deference to the court's

legal conclusions.” Id.; see also Zufelt v. Haste, Inc., 2006 UT App 326,

Fowler v. Teynor

5. Fowler also addresses the issue of judicial estoppel, arguing that

his suit against Teynor and IMRO is not barred by that doctrine. See

generally Café Rio, Inc. v. Larkin-Gifford-Overton, LLC, 2009 UT 27,

¶ 42, 207 P.3d 1235 (outlining the elements of judicial estoppel).

However, the district court did not rely on judicial estoppel in its

summary judgment ruling, and we do not address the issue here.

6. Teynor and IMRO correctly note that issue preclusion questions

are governed by federal common law where, as here, the issue was

first decided by a federal court. See Oman v. Davis Sch. Dist., 2008

UT 70, ¶ 28 n.5, 194 P.3d 956. Nevertheless, we elect to address

(continued...)

20121097-CA 5 2014 UT App 66

¶ 8, 142 P.3d 594 (stating that we review the application of issue

preclusion "for correctness, according no particular deference to

the trial court”).

ANALYSIS

¶10 The sole issue in this appeal is whether the district court

correctly applied the doctrine of issue preclusion to bar Fowler's

suit against Teynor and IMRO.5 Generally speaking, issue

preclusion prevents the relitigation of facts and issues that have

been previously determined. Moss v. Parr Waddoups Brown Gee &

Loveless, 2012 UT 42, ¶ 23, 285 P.3d 1157.

Issue preclusion applies only when the following

four elements are satisfied: (i) the party against

whom issue preclusion is asserted was a party to or

in privity with a party to the prior adjudication;

(ii) the issue decided in the prior adjudication was

identical to the one presented in the instant action;

(iii) the issue in the first action was completely, fully,

and fairly litigated; and (iv) the first suit resulted in

a final judgment on the merits.

Id. (citation and internal quotation marks omitted).6

Fowler v. Teynor

6. (...continued)

Fowler's appeal under Utah case law because the parties have

briefed the matter under state law and because "the legal analysis

under Utah common law is virtually identical to that under federal

common law” and "our ultimate conclusion would be the same

regardless of whether we applied federal or state law.” See id.; see

also Dodge v. Cotter Corp., 203 F.3d 1190, 1198 (10th Cir. 2000)

(describing the four elements of federal issue preclusion as identity

of issues, final adjudication on the merits, identity of precluded

party, and opportunity for full and fair litigation).

20121097-CA 6 2014 UT App 66

¶11 The district court concluded that Teynor and IMRO had

established each of the four elements of issue preclusion. On

appeal, Fowler does not dispute that the first element is satisfied,

as Fowler was a party to both lawsuits and is the party against

whom issue preclusion is being asserted. However, Fowler argues

that the district court erred in concluding that Teynor and IMRO

established the final three elements. Specifically, Fowler argues that

the issues in his case against Teynor and IMRO are not identical to

the issues that he litigated against Westminster, were not fully and

fairly litigated in the first action, and were not decided by a final

judgment on the merits.

I. Identity of Issues

¶12 Fowler first argues that the issues litigated in his suit against

Westminster are not identical to those he raises in this case. Fowler

contends that the prior action did not address "whether Dr. Teynor

had a duty to Mr. Fowler that he breached when he incorrectly

reported to Westminster that Mr. Fowler told him he had taken

twice the recommended amount of [carisoprodol], nor did [it]

determine whether this conduct by IMRO and/or Dr. Teynor

caused him damages.”

¶13 Fowler is correct that the jury in the prior action did not

decide whether Teynor or IMRO breached any duty they may have

owed to Fowler. We conclude, however, that the federal jury

verdict and judgment conclusively determined why Westminster

Fowler v. Teynor

20121097-CA 7 2014 UT App 66

terminated Fowler. Because Fowler does not allege damages

arising from anything other than his termination, the federal jury

necessarily resolved the issue of whether Teynor and IMRO's

actions damaged Fowler.

¶14 Fowler notes that there are significant substantive

differences between his claim of disability discrimination against

Westminster and his negligence-based claims against Teynor and

IMRO. However, the applicability of issue preclusion "does not

depend on whether the claims for relief are the same.” Robertson v.

Campbell, 674 P.2d 1226, 1230 (Utah 1983). "'[W]hat is critical is

whether the issue that was actually litigated in the first suit was

essential to resolution of that suit and is the same factual issue as

that raised in the second suit.'” Collins v. Sandy City Bd. of

Adjustment, 2000 UT App 371, ¶ 12, 16 P.3d 1251 (emphasis added)

(quoting Robertson, 674 P.2d at 1230).

"[I]t is not the identity of the thing sued for, or of the

cause of action, which determines the conclusiveness

of a former judgment upon a subsequent action, but

merely the identity of the issue involved in the two

suits. If an issue presented in a subsequent suit

between the same parties or their privies is shown to

have been determined in a former one, the question

is res judicata [or collateral estoppel], although the

actions are based on different grounds, or tried on

different theories, or are instituted for different

purposes and seek different relief.”

Robertson, 674 P.2d at 1230 (alterations in original) (quoting Pickeral

v. Federal Land Bank, 15 S.E.2d 82, 85 (Va. 1941)). Thus, the question

is whether an issue that was determined in the resolution of the

federal ADA matter has been raised again in the state court action.

¶15 The trial of Fowler's ADA claims against Westminster

proceeded under the burden-shifting framework first articulated

in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). Under the

Fowler v. Teynor

20121097-CA 8 2014 UT App 66

McDonnell Douglas framework, Fowler bore the initial burden of

making a prima facie showing of discrimination by Westminster.

See Carter v. Pathfinder Energy Servs., Inc., 662 F.3d 1134, 1141 (10th

Cir. 2011). After he made that showing, the burden shifted to

Westminster to identify a legitimate, non-discriminatory reason for

Fowler's termination. See id. When Westminster identified Fowler's

drug test and Teynor's interpretation of the test results as its

legitimate reason for firing Fowler, the burden shifted back to

Fowler to prove that Westminster's "proferred reason [was] in fact

a pretext designed to mask discrimination.” See id.

¶16 Fowler successfully carried his burdens in the federal

litigation, as the jury expressly found that Westminster's alleged

reliance on the drug test was a "pretext for discrimination against

Mr. Fowler based on his disability.” The jury's pretext finding

determined that Westminster did not terminate Fowler's

employment due to the drug test or its results as reported by

Teynor and that the real reason for Fowler's termination was

disability discrimination by Westminster. See Trujillo v. University

of Colo. Health Scis. Ctr., 157 F.3d 1211, 1215 (10th Cir. 1998) ("A

reason is not a '"pretext for discrimination” unless it is shown both

that the reason was false, and that discrimination was the real

reason.'” (quoting St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 515

(1993))).

¶17 In the present action, Fowler alleges that it was Teynor and

IMRO's negligence and negligent misrepresentations regarding the

drug test that caused him to suffer damages. Specifically, Fowler

alleges in his Second Amended Complaint that "Westminster

terminated [his] employment based on Dr. Teynor's

representations.” (Emphasis added.) With respect to his negligence

claim, Fowler pleaded that he was "terminated from his employer

due to [Teynor and IMRO's] breaches of their duties of care.”

Similarly, with respect to his negligent misrepresentation claim, he

pleaded that "Westminster did rely on the information Dr. Teynor

provided, by terminating [his] employment.” The only damages

Fowler v. Teynor

7. Both of Fowler's claims stated only that he "suffered significant

damages due to his termination, which were proximately caused

by [Teynor and IMRO].” The Second Amended Complaint also

sought punitive damages, but punitive damages may not be

awarded unless a plaintiff first establishes non-punitive damages

against a defendant. See Utah Code Ann. § 78B-8-201 (LexisNexis

2012) ("Except as otherwise provided by statute, punitive damages

may be awarded only if compensatory or general damages are

awarded . . . .”).

20121097-CA 9 2014 UT App 66

that Fowler identifies are those flowing from the termination of his

employment with Westminster.7

¶18 Thus, in order to prevail on his claims against Teynor and

IMRO, Fowler must prove that Westminster acted upon the drug

test and the alleged negligent misrepresentations. Westminster

placed this issue squarely before the federal jury by arguing that it

terminated Fowler in good faith reliance on the drug test. The jury

specifically considered and rejected that argument by finding that

Westminster did not honestly believe or act in good faith on the

drug test results.

¶19 The Utah Supreme Court has considered and rejected a

similar attempt to avoid the preclusive effect of a prior finding.

Harline v. Barker, 912 P.2d 433 (Utah 1996), involved an attorney

malpractice action filed after a bankruptcy case. The bankruptcy

court refused to grant Harline a discharge due to inaccuracies in his

statement of affairs and financial schedules. Id. at 435–36. Harline

argued that the inaccuracies were the result of his attorneys'

negligence in preparing the schedules, on which he relied in good

faith. The bankruptcy court rejected the good faith reliance

argument and determined that Harline had "transferred property

with the intent to hinder, delay, or defraud creditors and that he

knowingly and fraudulently made a false oath, even if [counsel]

negligently prepared Harline's statement and bankruptcy

schedules.” Id. at 442.

Fowler v. Teynor

8. Similarly, Fowler's aim here is to have a jury reconsider whether

Westminster relied on Teynor and IMRO in deciding to terminate

Fowler.

20121097-CA 10 2014 UT App 66

¶20 Harline then sued his bankruptcy attorneys for malpractice

in Utah state court, alleging that he was denied his discharge

because of their negligence in preparing his submissions to the

bankruptcy court. Id. at 437. The Utah Supreme Court concluded

that Harline's malpractice action was barred by issue preclusion

because the bankruptcy court had already determined that it was

Harline's fraudulent intent that had prevented discharge. Id. at 443.

The supreme court concluded that the issue of what caused

Harline's damages in his malpractice action—i.e., why the

bankruptcy court denied his discharge—was "identical to the issue

Harline previously litigated in the bankruptcy trial.” Id. Indeed, the

supreme court stated that it "appears that Harline's sole aim in the

. . . malpractice lawsuit is to have a jury reconsider the very issue

that was decided by the bankruptcy court in 1988; namely whether

Harline acted with fraudulent intent or innocently relied on

incompetent attorneys.”8 Id.

¶21 Harline's analysis is instructive. As in Harline, the first

litigation here involved a party—Westminster—that could escape

liability by demonstrating that it had acted in good faith reliance on

others—Teynor and IMRO. See id. ("Harline's good faith reliance

on [his counsel's] advice and preparation of the statement and

schedules was a plausible defense in the bankruptcy discharge

hearing.”). Also as in Harline, Fowler's initial proceeding

determined that Westminster had not acted for its stated reason but

rather for a different, culpable reason. In Harline, the actual reason

was Harline's intent to defraud; in this case, it was Westminster's

discriminatory motive. The conclusion we reach here is analogous

to Harline's holding: issues are identical for res judicata purposes

when a party attempts to relitigate the factual question of why

something occurred and the newly alleged cause for the occurrence

was rejected as a defense in a prior action.

Fowler v. Teynor

20121097-CA 11 2014 UT App 66

¶22 As noted above, Fowler's Second Amended Complaint

alleges that he was "terminated from his employer due to [Teynor

and IMRO's] breaches of their duties of care” and that

"Westminster did rely on the information Dr. Teynor provided, by

terminating [his] employment.” On appeal, Fowler pivots away

from this theory and claims that Teynor and IMRO face liability

because they provided Westminster with the "'legitimate' excuse”

it needed to act upon its discriminatory animus. This theory was

not asserted in either the Second Amended Complaint or in

Fowler's memorandum in opposition to the summary judgment

motion. Because this theory was not raised below, we do not

consider it here. See In re K.O., 2010 UT App 155, ¶ 6, 238 P.3d 59

("[A]ppellate courts generally do not consider claims raised for the

first time on appeal absent plain error or exceptional

circumstances.”).

¶23 Fowler also contends that testimony elicited in the federal

trial suggested collusion among Westminster, Teynor, and IMRO.

Fowler asserts that if the district court had not ruled before he

responded to the summary judgment motion on causation, he

could have presented this evidence to the district court. However,

Fowler does not articulate how changing his theory from

negligence to "more egregious” conduct should change the issue

preclusion analysis. Nor does Fowler explain why he did not

present this argument and evidence in opposition to the motion for

summary judgment that the district court granted. Cf. 438 Main St.

v. Easy Heat, Inc., 2004 UT 72, ¶ 51, 99 P.3d 801 (discussing

preservation requirements).

II. Full and Fair Litigation

¶24 Next, Fowler argues that the issues he seeks to raise against

Teynor and IMRO were not "competently, fully, and fairly

litigated” in his prior action against Westminster because the issues

in the two cases are different. See Macris & Assocs., Inc. v. Neways,

Inc., 2000 UT 93, ¶ 37, 16 P.3d 1214 (citation and internal quotation

marks omitted). As we have just determined, the issue of whether

Westminster terminated Fowler because of the drug test was

Fowler v. Teynor

20121097-CA 12 2014 UT App 66

necessarily litigated and determined in the action against

Westminster. Thus, we need now determine only whether the

litigation of that issue was complete, full, and fair.

¶25 We have no difficulty in concluding that the issue was

completely, fully, and fairly litigated in the federal action. Cf. State

v. Sommerville, 2013 UT App 40, ¶ 33, 297 P.3d 665 ("An 'issue is

actually litigated' when it 'is properly raised . . . and is submitted

for determination, and is determined.'” (omission in original)

(quoting Restatement (Second) of Judgments § 27 cmt. d)). At trial,

Westminster's defense against Fowler's claim of disability

discrimination was that Westminster had terminated Fowler

because of the drug test and Teynor's statements explaining the

results of the drug test. The jury considered evidence of Teynor

and IMRO's actions and statements and determined that

Westminster did not honestly believe or act in good faith on the

results of the drug test.

¶26 The jury squarely determined that Westminster's claimed

reliance on the drug test was a pretext for discrimination, and that

determination was necessary for the jury's ultimate finding of

liability against Westminster. Cf. Zufelt v. Haste, Inc., 2006 UT App

326, ¶¶ 15–16, 142 P.3d 594 (concluding that an issue "was not

completely and fully litigated” when it "was not the central issue

in the [prior litigation], and was only superficially addressed”). The

jury's determination occurred after a full trial on that issue and was

sustained by the federal court after Westminster moved for

judgment as a matter of law. There is simply no basis upon which

we could conclude that the reason for Fowler's termination was not

completely, fully, and fairly litigated in the prior action.

III. Final Judgment on the Merits

¶27 Finally, Fowler argues that there has been no final judgment

"on the merits” of the issues that he now seeks to litigate against

Teynor and IMRO. See Moss v. Parr Waddoups Brown Gee & Loveless,

2012 UT 42, ¶ 23, 285 P.3d 1157 (citation and internal quotation

marks omitted). There is no dispute that Fowler's prior suit against

Fowler v. Teynor

20121097-CA 13 2014 UT App 66

Westminster resulted in a final judgment. See DFI Props. LLC v. GR

2 Enters. LLC, 2010 UT 61, ¶ 17, 242 P.3d 781 (defining a final

judgment as one that disposes of the case as to all the parties and

as to the subject matter of the litigation). Nevertheless, Fowler

argues that the prior final judgment did not resolve the merits of

the issues that he raises in the present case. See Sommerville, 2013

UT App 40, ¶ 32 ("A judgment is upon the merits when it amounts

to a declaration of the law as to the respective rights and duties of

the parties based on . . . facts and evidence upon which the rights

of recovery depend, irrespective of formal, technical, or dilatory

objections or contentions.” (omission in original) (citation and

internal quotation marks omitted)).

¶28 Fowler's argument is merely a reinvocation of the identity

of issues prong addressed in Part I of this opinion. He relies on an

older and differently worded formulation of the issue preclusion

test that expressed the final judgment requirement as "the issue

must have been decided in a final judgment on the merits in the

previous action.” Macris, 2000 UT 93, ¶ 37 (citation and internal

quotation marks omitted). However, the purpose of the "final

judgment on the merits” prong under either formulation of the test

is to establish the finality of the prior determination. See Moss, 2012

UT 42, ¶ 23 (requiring that "the first suit resulted in a final

judgment on the merits” (citation and internal quotation marks

omitted)); see also Macris, 2000 UT 93, ¶ 37. The final judgment

prong is not an invitation to take a second look at the identity of

issues requirement that is present in both versions of the test. See

Moss, 2012 UT 42, ¶ 23; Macris, 2000 UT 93, ¶ 37. Fowler's prior

lawsuit against Westminster resulted in a final judgment on the

merits of that suit, and we reject Fowler's argument to the contrary.

¶29 The district court correctly applied the doctrine of issue

preclusion to bar Fowler’s suit against Teynor and IMRO. All of

Fowler’s alleged damages arise from his termination by

Westminster. Fowler’s prior judgment against Westminster

conclusively established, after full and fair litigation, that the drug

test conducted and reported by Teynor and IMRO was not the

reason that Westminster terminated Fowler. Thus, issue preclusion

prevents Fowler from asserting in this action that Teynor and

IMRO’s negligence regarding the drug test led to his termination

and resulting damages. For these reasons, we affirm the district

court’s entry of summary judgment on issue preclusion grounds.