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March 9, 1984


The opinion of the court was delivered by: Shadur, District Judge.

                             MEMORANDUM OPINION
                                 AND ORDER

In this action (the "1983 Action") Car Carriers, Inc. and eight related entities (for convenience collectively "Car Carriers," treated as a singular noun), including controlling shareholder James P. Byrne, have filed a 24-count, 107-page Amended Complaint (the "Complaint" or "1983 Complaint") accusing Ford Motor Company ("Ford"), Nu-Car Carriers, Inc. ("Nu-Car") and the Norfolk & Western Railway Company ("N & W") of racketeering and various unlawful business practices in contravention of federal and state law. Ford and Nu-Car now move for dismissal under Fed. R.Civ.P. ("Rule") 12(b)(6), claiming Car Carriers is barred from bringing this suit by the res judicata effect of a dismissal with prejudice of its earlier action against them, Car Carriers, Inc. v. Ford Motor Co., No. 82 C 7009 (the "1982 Action").*fn1 N & W also moves to dismiss under Rule 12(b)(6), asserting the Complaint discloses no basis on which it could be held liable for the alleged practices of Ford and Nu-Car. For the reasons stated in this memorandum opinion and order, all defendants' motions are granted and this action is dismissed in its entirety on the terms hereafter specified.

Procedural Profile

Car Carriers' 1982 Action alleged Ford and Nu-Car ran Car Carriers out of the business of shipping Ford automobiles from Chicago. Many of the relevant facts alleged in that suit are set forth in the Opinion, 561 F. Supp. at 886-87. Six claims were advanced by the Complaint in the 1982 Action (the "1982 Complaint"): one federal law count under Sherman Act § 1, 15 U.S.C. § 1, and five pendent state law counts. This Court's Opinion dismissed the Sherman Act claim with prejudice because Car Carriers lacked "antitrust standing" to assert its claim—that is, the 1982 Complaint affirmatively showed no competitive harm to Car Carriers because actions attributed to the defendants (561 F. Supp. at 888) constituted "procompetitive rather than anticompetitive activity." With the Sherman Act claim gone, the state law claims were dismissed without prejudice as not pendent to any valid federal claim (id. at 889).

Car Carriers' 1983 Complaint also alleges facts surrounding Car Carriers' termination as a shipper of Ford automobiles. Except for three conspicuous differences, it is substantially similar to the 1982 Complaint:

    1. It goes into greater detail: 24 counts and 529
  paragraphs, as against the 1982 Complaint's six counts
  and 151 paragraphs.*fn2 Car Carriers' contention
  (discussed below) is the 1983 Complaint invokes facts
  not within the basic fact situation underlying the
  1982 Action.
    2. It invokes different legal theories. Unlike the
  1982 Complaint, which contained only a single federal
  law count based on the Sherman Act and five Illinois
  law counts, the 1983 Complaint brings six counts under
  the Racketeer Influenced and Corrupt Organizations Act
  ("RICO"), 18 U.S.C. § 1961-1968, one count under
  the Elkins Act, codified at 49 U.S.C. § 11902-11904,
  and 17 counts under Illinois law.
    3. It joins somewhat different parties. N & W was
  not a defendant in the 1982 Action and therefore
  cannot join with Ford and Nu-Car in invoking res
  judicata. In addition the 1983 Complaint adds two
  related entities as plaintiffs—Transport
  Terminals, Inc. ("Transport") and Selby Transport
  Co.—but that addition is irrelevant to res
  judicata because the new plaintiffs are in privity
  with the plaintiffs in the 1982 Action. Contrast Beard
  v. O'Neal, 728 F.2d 894, 896-97 (7th Cir. 1984).

Ford and Nu-Car Res Judicata Motions

Res judicata bars a lawsuit if three essential elements are present, Lee v. City of Peoria, 685 F.2d 196, 199 (7th Cir. 1982):

  (1) a final judgment on the merits in an earlier
  action; (2) an identity of the cause of action in both
  the earlier and the later suit; and (3) an identity of
  parties or their privies in the two suits.

N & W does not join in the res judicata motion, and the additional plaintiffs in this action do not deny their obvious privity with the plaintiffs in the 1982 Action. Accordingly only the first two elements of res judicata are at issue.

1. Final Judgment on the Merits

Because the opinion dismissed the 1982 Action for failure to state a claim upon which relief can be granted, it was a disposition of the case on the merits. As our Court of Appeals stated in Bunker Ramo Corp. v. United Business Forms, Inc., 713 F.2d 1272, 1277 (7th Cir. 1983) (citations omitted, emphasis in original):

  A dismissal for lack of subject matter jurisdiction is
  not on the merits and consequently will not bar a
  later suit. . . . A dismissal for failure to state a
  claim upon which relief can be granted, however, is a
  dismissal on the merits and is res judicata. Federated
  Department Stores, Inc. [v. Moitie], 452 U.S. [394,]
  at 398, 101 S.Ct. [2424,] at 2427 [69 L.Ed.2d 103]
  [(1981)]; Harper Plastics, Inc. [v. Amoco Chemicals
  Corp.], 657 F.2d [939,] at 945 [(7th Cir. 1981)]. lB
  Moore's Federal Practice 110.405[1] (2d ed. 1982).

Moreover the Opinion's language makes clear this Court intended to dispose of the 1982 Action on the merits. In its statement of facts the Opinion assumed as true not only allegations of the 1982 Complaint but also factual assertions in Car Carriers' memorandum not contained in that Complaint. This Court said it did so (561 F. Supp. at 886 n. 2) to show plaintiffs "confront more than mere pleading deficiencies." A the Opinion's "Conclusion" section stated (id. at 889, footnote omitted):

    Ford's and Nu-Car's motions to dismiss are granted.
  Because Count I could not possibly be repleaded to
  withstand Rule 12(b)(6) onslaught, this entire action
  is dismissed—Count I with ...

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