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Stericycle, Inc. v. City of Delavan

July 8, 1997

STERICYCLE, INCORPORATED, MICHAEL D. BRENNAN AND RANDALL R. GARCZYNSKI,

PLAINTIFFS-APPELLANTS,

v.

CITY OF DELAVAN, EMPLOYERS MUTUAL CASUALTY COMPANY AND TWIN CITY FIRE INSURANCE COMPANY,

DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Eastern District of Wisconsin. No. 95 C 950 John W. Reynolds, Judge.

Before CUMMINGS, FLAUM and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

ARGUED MAY 16, 1997

DECIDED JULY 8, 1997

The plaintiffs brought this action under 42 U.S.C. sec. 1983 seeking damages allegedly suffered as the result of an unconstitutional ordinance. The district court granted summary judgment to the City of Delavan, Wisconsin on the ground that the instant action was barred by a prior state court judgment. We affirm.

I. BACKGROUND

Michael Brennan and Randall Garczynski wanted to purchase some land in Delavan and to transfer it to Stericycle. Stericycle in turn had plans to build a medical waste treatment and recycling plant on the property. Delavan accepted a written offer to purchase the land and issued a conditional-use permit that would allow the plaintiffs to construct the planned facility. Delavan then had second thoughts about the matter and enacted an ordinance that prohibited the transportation of medical waste into the city for disposal, incineration and/or processing unless the waste had been originally produced in Delavan.

The plaintiffs sued Delavan in Wisconsin state court, specifically in the Circuit Court of Walworth County. Their complaint prayed for (1) a declaratory judgment that the ordinance was unconstitutional, and (2) an injunction enjoining Delavan from enforcing the ordinance. The plaintiffs prevailed. The state court's findings of fact and conclusions of law stated:

[T]he plaintiffs . . . are entitled to a declaratory judgment . . . declaring the [ordinance] regulating medical waste to be void, unconstitutional, invalid and of no effect. The plaintiffs are further entitled to a judgment enjoining the City of Delavan from enforcing its [ordinance] regulating medical waste as against the plaintiffs in this action, and as against all others. The plaintiffs are further entitled to all taxable costs and disbursements as may be taxed by the Court upon entry of judgment in this matter. R.12, Ex.C at 9.

The court concluded, "LET JUDGMENT BE ENTERED ACCORDINGLY." Id. A few months later, the court entered a judgment on its findings of fact and conclusions of law "for the relief provided therein and for taxable costs in favor of [the] plaintiffs." R.12, Ex.D at 2.

The plaintiffs then brought this action in the district court under sec. 1983 to recover the damages they allege were caused by the ordinance while it was in effect. The plaintiffs contended that the prior Wisconsin judgment had preclusive effect on the issue of Delavan's liability. Delavan, on the other hand, maintained that the doctrine of claim preclusion barred the plaintiffs from bringing the claim at all. The district court, holding that Wisconsin's declaratory judgment exception to the doctrine of claim preclusion was inapplicable, agreed with Delavan and granted it summary judgment. See Stericycle, Inc. v. City of Delavan, 929 F. Supp. 1162 (E.D. Wis. 1996). The plaintiffs now appeal.

II. DISCUSSION

Federal courts must give Wisconsin judgments the same preclusive effect as would the state courts of Wisconsin. See 28 U.S.C. sec. 1738; E.B. Harper & Co. v. Nortek, Inc., 104 F.3d 913, 921 (7th Cir. 1997). Here, both parties agree that the plaintiffs' sec. 1983 claim meets the general requirements for preclusion under Wisconsin law. See Pliska v. City of Stevens Point, 823 F.2d 1168, 1172-74 (7th Cir. 1987) (holding that prior Wisconsin judgment precluded sec. 1983 claim). The plaintiffs, however, maintain that their claim falls within an exception to the general principle that prior judgments bar later suits: They submit that their first state claim was a declaratory judgment action and that, under Barbian v. Lindner Bros. Trucking Co., 316 N.W.2d 371 (Wis. 1982), an action for declaratory judgment does not preclude a subsequent action for damages. The plaintiffs reason that, insofar as they neither sought nor received damages in the state court, the present action for damages under sec. 1983 can go forward.

The Supreme Court of Wisconsin has recognized the general principle that "an earlier judgment is res judicata as to all matters which were or might have been litigated in that proceeding." Id. at 374. In Barbian, it adopted a common exception to that general principle: "We agree with the rule, as set forth in the Restatement, that a declaratory judgment is only binding as to matters which were actually decided therein and is not binding to matters which 'might have been litigated' in the proceeding." Id. at 375 (citing Restatement of Judgments sec. 77 cmt. b (1942)). The district court held that the Barbian exception was inapplicable here because the plaintiffs had sought coercive relief, an injunction, in addition to declaratory relief in the state proceeding. We agree with the district court that Wisconsin's highest court would hold that the Barbian exception operates only if the plaintiff seeks solely declaratory relief in the first proceeding. See Mandarino v. Pollard, 718 F.2d 845, 848 (7th Cir. 1983), cert. denied, 469 U.S. 830 (1984); Restatement of Judgments sec. 77 cmt. b (1942) ("Where a plaintiff seeks a declaratory judgment, he is not seeking to enforce a claim against the defendant. He is seeking rather a judicial declaration as to the existence and effect of a relation between him and the defendant. The effect of the judgment, therefore, . . . is not to merge a cause of action in the judgment or to bar it."), quoted in Barbian, 316 N.W.2d at 374-75; Restatement (Second) of Judgments sec. 33 cmt. c (1982) ("When a plaintiff seeks solely declaratory relief, the weight of authority does not view him as seeking to enforce a claim against the defendant. . . . The effect of such a declaration, under this approach, is not to merge a claim in the judgment or to bar it.") (emphasis added); id. cmt. d ("Pleaders sometimes interpolate declaratory prayers redundantly in standard actions but this should not produce differences in the res judicata consequences of ...


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