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Rasch v. Tyson Fresh Meats, Inc.

United States District Court, N.D. Iowa, Central Division

May 19, 2017

COREY RASCH, Plaintiff,


          Leonard T. Strand, Chief Judge


         These two closely-related cases are before me on numerous motions. In Case Number C16-3006, the first case filed by plaintiff Corey Rasch (Rasch), the parties have filed cross motions for summary judgment. Doc. Nos. 36, 37. Defendant Tyson Fresh Meats, Inc., a/k/a Tyson Foods, Inc. (Tyson), filed its motion for summary judgment on January 31, 2017. Doc. No. 36. Rasch filed a resistance (Doc. No. 41) and Tyson filed a reply (Doc. No. 46). Rasch also filed a motion for partial summary judgment on January 31, 2017. Doc. No. 37. Tyson filed a resistance (Doc. No. 40) and Rasch filed a reply (Doc. No. 47).

         In Case Number C16-3102, the second case filed by Rasch, all of the defendants[1]filed a motion to dismiss and a motion to consolidate the two cases. Doc. No. 5. Rasch filed a resistance (C16-3102, Doc. No. 7), which seemingly only resisted the motion to dismiss but not the motion to consolidate. Defendants then filed a reply. C16-3102, Doc. No. 10. On the same day Tyson filed its motion for summary judgment in C16-3006, the defendants filed a similar motion in C16-3102. C16-3102, Doc. No. 15. Rasch filed a resistance (C16-3102, Doc. No. 16) and defendants filed a reply (C16-3102, Doc. No. 19).

         Finally, on May 18, 2017, Rasch filed a renewed motion (Doc. No. 54) to remand C16-3006 on grounds the requirements for this court's diversity jurisdiction did not exist at the time the case was removed.

         These motions are fully submitted and ready for decision.[2]


         Because of the unique history of these cases, a detailed discussion of the procedural history is necessary.

         The First Case (C16-3006). Rasch filed the first case in the Iowa District Court for Kossuth County on December 24, 2015. Doc. No. 2-1. In his state court petition, he alleged in a single count that the then-named defendants - Tyson and Jack Walker - had breached his contract and violated Iowa's Wage Payment Collection Act (Iowa Code chapter 91A). Id. at 4. On January 29, 2016, those defendants removed the case to federal court based on diversity jurisdiction. Doc. No. 2. On February 4, 2016, Rasch filed an amended complaint (Doc. No. 5) in which he dismissed Walker as a defendant and alleged that Tyson “discharged the plaintiff effective in October, 2014.” Doc. No. 5 at 1. Tyson filed an answer on February 18, 2016. Doc. No. 8.

         On February 5, 2016, Rasch filed a motion to remand the case to state court, arguing that the amount in controversy did not exceed $75, 000. Doc. No. 6. On March 11, 2016, I denied that motion, noting that Rasch's original state court petition explicitly demanded more than $75, 000 in damages. Doc. No. 11.

         On July 30, 2016, Rasch attempted to file a second amended complaint that would have added new defendants, including Walker (again), Todd Neff and “other unnamed employees of Tyson.” Doc. No. 18. Tyson moved to strike the second amended complaint, arguing that: (1) Rasch already used his one automatic amendment; (2) the deadline to file additional amendments had passed; (3) Rasch failed to comply with the local rules regarding conferring with opposing counsel; and (4) Rasch filed his second amended complaint without leave of the court. Doc. No. 20. Rasch resisted the motion to strike (Doc. No. 21) and filed a motion for leave to file an amended complaint (Doc. No. 22).

         On August 30, 2016, Chief United States Magistrate Judge C.J. Williams granted Tyson's motion to strike. Doc. No. 23. Contemporaneously, Rasch filed a motion to file the second amended complaint out of time, which Tyson resisted. Doc. No. 22. In that motion, Rasch requested leave:

to file a Second Amended Complaint “to add Count II and add additional parties to the claim . . . .” Doc. 22. Count II of the attached Second Amended Complaint alleges an unjust enrichment claim against Tyson, two named Tyson employees (Jack Walker and Todd Neff), and other unnamed Tyson employees whom plaintiff alleges financially benefited by receiving bonuses to which plaintiff alleges he was entitled. Doc. 22-1, at 3-6.

Doc. No. 25 at 1. On October 11, 2016, Judge Williams granted the motion in part and denied it in part. He found Tyson had failed to allege any prejudice from the out-of-time amendment. However, Judge Williams further found that Rasch's claims against the non-Tyson defendants were futile. Accordingly, Judge Williams allowed Rasch to add an unjust enrichment claim against Tyson but not the non-Tyson defendants. Doc. No. 25 at 8-12. Tyson remains the sole defendant in the first case.

         On October 19, 2016, Rasch filed his revised second amended complaint (Doc. No. 26), consistent with Judge Williams' order. On December 29, 2016, Tyson filed a motion to amend its answer to assert an affirmative defense (Doc. No. 29). Judge Williams granted Tyson's motion as it was unresisted. Doc. No. 34. On February 6, 2017, Tyson filed a second motion to amend its answer (Doc. No. 38). In that motion, Tyson requested that it be allowed to retract a prior admission as to the date Rasch alleged he was discharged. Id. Tyson stated that it realized the error after reviewing Rasch's motion for summary judgment. Id. Judge Williams granted that motion, finding that a true mistake had occurred regarding defendant's prior admission. Doc. No. 43 at 7-11. Specifically, Judge Williams stated:

The Court finds plaintiff will not suffer prejudice as a result of allowing defendant to correct its mistaken admission. It is clear from the depositions submitted by the parties in connection with this motion that the parties have staked out their positions regarding the dates of plaintiff's employment. In other words, plaintiff cannot be surprised by this amendment as it is consistent with the position defendant has taken throughout the litigation. Allowing this amendment will also not result in any delay in this litigation.

Doc. No. 43 at 10.

         The Second Case (C16-3102). Rasch filed his second case in the Iowa District Court for Kossuth County on August 30, 2016, more than a month before Judge Williams denied his motion to add the non-Tyson defendants to the first case. C16-3102, Doc. No. 2-1. In his second state court petition, which undisputedly arises out of the same set of facts, he cited his discharge and requested compensation based on a theory of unjust enrichment against Tyson, Walker, Neff and “other unnamed employees of [Tyson].” Id. at 5. Defendants removed the case to this court on October 4, 2016. C16-3102, Doc. No. 2. They then filed their motions to dismiss and to consolidate. C16-3102, Doc. No. 5.


         The first issue I will address is the motion to consolidate (C16-3102, Doc. No. 5).

According to Rule of Civil Procedure 42, “[i]f actions before the court involve a common question of law or fact, the court may: (1) join for hearing or trial any or all matters at issue in the actions; (2) consolidate the actions; or (3) issue any other orders to avoid unnecessary cost or delay.” Fed.R.Civ.P. 42. “[C]onsolidation pursuant to Rule 42(a) is permissive and vests a purely discretionary power in the district court ... In exercising that discretion, district courts must weigh the risk of prejudice and confusion wrought by consolidation against the risk of inconsistent rulings on common factual and legal questions, the burden on the parties and the court, the length of time, and the relative expense of proceeding with separate lawsuits if they are not consolidated. Pigott v. Sanibel Dev., LLC, 2007 WL 3245019 (S.D. Ala. 2007).

Matlock v. Smith, No. C12-4086-DEO, 2013 WL 595892, at *4 (N.D. Iowa 2013); see also Stillmunkes v. Givaudan Flavors Corp., No. C04-0085-MWB, 2008 WL 7662422, at *4 (N.D. Iowa 2008).

         Defendants filed a combined motion to consolidate and motion to dismiss. In the context of the motion to consolidate, defendants argue:

because it makes no sense to have two separate lawsuits demanding the same payment and because the claims against the individual defendants remain without basis, Tyson hereby moves to consolidate the two cases . . .

C16-3102, Doc. No. 5-1 at 2. Rasch filed a resistance to the motion that is largely nonsensical. Because the defendants combined their motion to consolidate and motion to dismiss into one document, Rasch seemingly saw his resistance as an opportunity to argue why both cases should be remanded to state court. Specifically, he stated:

The court should deny the motion to dismiss the claims against Todd Neff, Jack Walker, and other unnamed employees of Tyson Fresh Meats, Inc., and should consolidate the removed case caption above with Case No. 3:16-CV-03006. The court should, sua sponte remand the proceedings to the Iowa District Court for further proceedings under the claims of contract rights and unjust enrichment against Tyson Fresh Meats, Inc. a/k/a Tyson Foods, Inc., Jack Walker, Todd Neff, and Other Unnamed Defendants, employees of Tyson Fresh Meats, Inc., who profited from the distribution of the bonus that was earned by the plaintiff and apparently distributed to other unnamed employees of the defendant, Tyson Fresh Meats, Inc.

C16-3102, Doc. No. 7 at 6.

         I agree with both parties that consolidation is appropriate. There is no doubt these cases arise from the same set of facts, as plaintiff previously tried to assert identical claims in C16-3006. Additionally, the parties have seemingly conducted discovery assuming that these cases will proceed together. Accordingly, there is no risk of prejudice. Finally, it is in the interest of both the parties' and the court's time to consolidate these cases.

         Because the parties do not dispute that these cases should be consolidated, and because all factors weigh in favor of consolidation, I will grant the defendants' motion. These cases will be consolidated and will proceed together under docket number C16-3006. All issues in the consolidated case will be controlled by the scheduling orders set out in C16-3006. Additionally, I decline to sua sponte remand the case. (See plaintiff's brief, C16-3102, Doc. No. 7-1 at 6, stating, “[o]nce consolidated, it is believed that the court lacks diversity and subject matter jurisdiction of claims less than $75, 000 . . . and the consolidated case should be remanded to the Iowa District Court …”) Based on my review of the newly consolidated case, I reaffirm my prior finding (C16-3006, Doc. No. 11) that this court has subject matter jurisdiction as the amount in controversy at the time of removal exceeded $75, 000 and the parties are actually diverse.[3]


         Next, I will consider defendants' motion to dismiss (C16-3102, Doc. No. 5). For a number of reasons, not the least of which are the numerous motions to amend that have been filed, no party in this case can be accused of excessive precision in that party's filings. Nowhere is this more clear than in the context of the motion to dismiss. Defendants' argument is that Rasch's unjust enrichment claim against the non-Tyson defendants in the second case is barred by the doctrine of res judicata because Judge Williams deemed that claim to be futile in the first case. However, their argument is not particularly helpful. For example, they state:

Nor may Mr. Rasch now relitigate the same issue. Casciani v. Town of Webster, 501 Fed. App'x 77, 79-80 (2d Cir. 2012) (holding that denial of leave to amend “constitute[d] a final judgment sufficient to preclude any claims contained in the proposed amended complaint” where the proposed amendment was denied as futile “because it ‘could not have withstood[] a motion to dismiss for failure to state a claim”‘); United States ex rel. Pentagen Techs. Int'l Ltd. v. United States, No. 00-cv-6167 (DAB), 2001 WL 770940, at *9 (S.D.N.Y. July 10, 2001) (applying claim preclusion based on the denial of leave to amend where the denial was based on the proposed amendment's futility); Lozowski v. Benedicl, No. 271626, 2007 WL 39722I, at *2 (Mich. Ct. App. Feb. 6, 2007) (“the denial of a motion to amend a complaint on the ground that the amendment would be futile constitutes a determination that the claims are without merit and is entitled to res judicata impact”). Thus, claims against Neff and Walker should be rejected again and dismissed.

C16-3102, Doc. No. 5-1 at 3-4.

         Rasch's resistance (C16-3102, Doc. No. 7) takes the confusion to another level. Instead of addressing any issue raised by the defendants, he argues about the difference in pleading standards between state and federal court. For example, he states:

[T]he standard for review of the pleadings in the above captioned cause with regards to claims against Jack Walker, Todd Neff, and other unnamed employees of Tyson Fresh Meats, Inc., are not subject to the Federal District Court rules for pleadings. Such a dismiss [sic] would take from the plaintiff a due process right to litigate his unjust enrichment claims and the right to proceed with appropriate discovery. It should be noted that the plaintiff filed a claim against other unnamed employees of the defendant, Tyson Fresh Meats, Inc.

C16-3102, Doc. No. 7-1 at 3. Defendants' reply addresses only the previously disposed of remand argument. C16-3102, Doc. No. 10.

         Looking past the parties' filings, I turn to the appropriate standards for applying the doctrine of res judicata, which were recently set out by United States District Judge Linda Reade:

Res judicata, or claim preclusion, “may be raised in a motion to dismiss when ‘the identity of the two actions can be determined from the face of the petition itself.'” C.H. Robinson Worldwide, Inc. v. Lobrano, 695 F.3d 758, 763 (8th Cir. 2012) (quoting Potamitis v. Pittsburgh Plate Glass Co., 82 F.3d 472, 473 (8th Cir. 1936)). “[T]he phrase ‘face of the complaint ... include[s] public records and materials embraced by the complaint.'” Id. at 764 (quoting Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978 (8th Cir. 2008)). “The law of the forum that rendered the first judgment controls the res judicata analysis.” Id. (quoting Laase v. Cty. of Isanti, 638 F.3d 853, 856 (8th Cir. 2011)). In the Eighth Circuit, whether res judicata bars a claim “in a diversity action is a question of substantive law controlled by state common law.” Hillary v. Trans World Airlines, Inc., 123 F.3d 1041, 1043 (8th Cir. 1997) (quoting Austin v. Super Valu Stores, Inc., 31 F.3d 615, 617 (8th Cir. 1994)). “This rule applies when the original judgment is that of another federal court sitting in diversity.” Id. (quoting Follette v. Wal-Mart Stores, Inc., 41 F.3d 1234, 1237 (8th Cir. 1994)). Therefore, the court will apply Iowa law to the instant action to determine if res judicata bars JLI's claims.
Under Iowa law, res judicata “applies only when a party has had a ‘full and fair opportunity' to litigate in the first trial.'” George v. D.W. Zinser Co., 762 N.W.2d 865, 868 (Iowa 2009) (quoting Spiker v. Spiker, 708 N.W.2d 347, 353 (Iowa 2006)). “A party asserting res judicata must establish the following: (1) ‘the parties in the first and second action were the same'; (2) ‘the claim in the second suit could have been fully and fairly adjudicated in the prior case'; and (3) ‘there was a final judgment on the merits in the first action.'” Id. (quoting Spiker, 708 N.W.2d at 353) (formatting omitted). Res judicata bars further litigation “not only to matters actually determined in an earlier action but to all relevant matters that could have been determined.” Pavone v. Kirke, 807 N.W.2d 828, 835 (Iowa 2011) (quoting Penn v. Iowa State Bd. of Regents, 577 N.W.2d 393, 398 (Iowa 1998)). “An adjudication in a prior action between the same parties on the same claim is final as to all issues that could have been presented to the court for determination. Simply put, a party is not entitled to a ‘second bite' simply by alleging a new theory of recovery for the same wrong.” Id. at 836 (quoting Bennett v. MC #619, Inc., 586 N.W.2d 512, 516-17 (Iowa 1998)).

J. Lloyd Int'l, Inc. v. Super Wings Int'l, Ltd., No. 15-CV-74-LRR, 2016 WL 498428, at *5-6 (N.D. Iowa Feb. 8, 2016).

         As set out above, Rasch clearly tried to assert the identical claim in the first case but Judge Williams rejected it. See Doc. No. 25, stating:

Plaintiff asserts in his proposed unjust enrichment claim that Tyson, and named Tyson employees Jack Walker and Todd Neff, and “other unnamed employees of Tyson . . . financially benefited from the plaintiff's efforts in 2013 and 2014, without appropriate compensation to the plaintiff.” Doc. 22-1, at ¶5. Plaintiff continues to assert in conclusory fashion that “plaintiff by his actions benefited the defendants who were knowingly enriched by plaintiff's efforts without full and reasonable compensation to the plaintiff.” Doc. 22-1, at ¶13 Plaintiff further asserts that defendants “Jack Walker, Todd Neff, and other unnamed employees of Tyson . . . were knowingly enriched and financially benefited from plaintiff's efforts and from the purchases made by the plaintiff for Tyson . . . and further benefited from increased company profitability from not compensating plaintiff for his efforts . . . .” Doc. 22-1, ¶18. . . . [However, ] plaintiff's mere conclusory assertions that these employees received a benefit is insufficient.

Doc. No. 25 at 7, 8, 9. Accordingly, Judge Williams granted the motion to add the unjust enrichment claim but denied Rasch's request to add the non-Tyson defendants. The question is now whether that decision was a ruling on the merits such that res judicata would apply.

         For three reasons, I decline to find that Rasch's unjust enrichment claim against the non-Tyson defendants is barred by res judicata. First, as Judge Williams stated, there is a question as to whether or not a United States Magistrate Judge is empowered to dispose of claims or, instead, must submit a Report and Recommendation to the District Judge. See Doc. No. 25 at 10-11. I agree with Judge Williams that he had the authority to reject the proposed amendment as futile. See E.E.O.C. v. Exel Inc., 259 F.R.D. 652, 652 n.1 (N.D.Ga. 2008) (internal citation omitted). However, this rebuts defendants' argument that Judge Williams' ruling was a ruling on the merits. See Hall v. Norfolk S. Ry. Co., 469 F.3d 590, 595 (7th Cir. 2006):

The magistrate judge was authorized to rule on the motion for leave to file the Third Amended Complaint pursuant to 28 U.S.C. § 636(b)(1)(A), which provides that the district court may designate a magistrate judge to hear and determine, with certain exceptions not relevant here, any nondispositive pretrial matter.

(emphasis added) (internal citations omitted). In short, while a magistrate judge may deny proposed amendments on grounds of futility, a magistrate judge may not make dispositive rulings (absent, of course, the unanimous consent of the parties). Thus, it follows that Judge Williams' denial of Rasch's proposed ...

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