Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 09 C 7877-Blanche M. Manning, Judge.
The opinion of the court was delivered by: Wood, Circuit Judge.
Before POSNER, ROVNER, and WOOD, Circuit Judges.
Meanith Huon is a lawyer rep-resenting himself in this appeal. After he was fired from his job as an associate at Johnson & Bell, he initiated two lawsuits against the firm and three of its other attorneys. He filed his first action in state court, asserting state-law claims of defamation and intentional infliction of emotional distress resulting from allegedly damaging annual performance evaluations. Huon's second suit was filed in federal court after his state case had been dismissed and was pending on appeal. In his federal suit Huon brought claims under Title VII,42 U.S.C. § 2000e, and 42 U.S.C. § 1981 for discrimination on the basis of race and national origin, alleging that he was treated less favorably than white employees because he did not receive the same employment benefits, assignments, salary, or opportunity for probation before his discharge. Huon also threw in a supplemental state-law claim for tortious interference with a prospective economic advantage.
The district court issued a stay based on the abstention doctrine in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976), reasoning that all of Huon's claims would be barred by res judicata once the judgment in the state case became final. Huon has ap-pealed from that order, arguing that his two suits were not parallel and that the district court abused its discretion because no exceptional circumstances justified the stay. Although the district court was correct to suspect that there are problems with Huon's federal suit, it chose the wrong remedy for those problems. We have no choice but to vacate and remand for further proceedings.
Huon lost his job at Johnson & Bell on January 9, 2008; shortly thereafter, he filed administrative charges with the Illinois Department of Human Rights and the Equal Employment Opportunity Commission complaining of race and national origin discrimination. Before those charges were resolved, Huon filed suit in Illinois state court against the firm and three of its attorneys on January 8, 2009 (the day before the one-year statute of limitations expired for one of his state-law claims). Huon alleged that the three attorneys defamed him when they made false statements about his work during an annual performance evaluation that later was shared with other partners. These statements included comments that Huon "requires a higher level of supervision," that someone of his "experience should be working more independently," and that he had "deadline problems" and was "incompetent." Huon also asserted that the attorneys' statements constituted intentional infliction of emotional distress and that Johnson & Bell, as their employer, was vicariously liable for their alleged misconduct. The defendants moved to dismiss for failure to state a claim and also requested that the court strike "designated immaterial matter" from Huon's complaint, namely, allegations that the attorneys rarely if ever gave Huon substantive work to do and the assertion that "Johnson & Bell discriminated against and terminated Huon on the basis of his race, national origin, and age." The defendants charged that these allegations were "irrelevant and ha[d] nothing to do with Huon's counts for defamation."
The state court granted the defendants' motion to dismiss in July 2009. It concluded that Huon's claims were defective because the allegedly defamatory statements, which the court did not find to be extreme or outrageous, were opinions protected by qualified or absolute privilege. Huon appealed, and almost two years later that case apparently remains pending in the state appellate court.
On September 22, 2009, the EEOC issued Huon a right-tosue letter, and he followed up on December 21 by filing the federal action now before us, while his state suit was pending on appeal. In his federal complaint, Huon asserted claims of discrimination based on race and national origin, as well as a state-law claim for tortious interference with a prospective business relationship. He named as defendants the firm of Johnson & Bell, firm president William Johnson, and two of the three attorneys from the state suit. The defendants again moved to dismiss both counts for failure to state a claim, this time arguing that Huon's complaint was long on conclusions and short on facts. Alternatively, the defendants moved to stay the state-law claim under the Colorado River abstention doctrine. The supplemental state claim, the defendants contended, is based on the same factual allegations (the unfavorable performance evaluation) as Huon's claims in state court and will be barred by res judicata if the state court's decision is affirmed on appeal.
Before Huon could respond to the defendants' motion, the district court sua sponte ordered supplemental briefing on "the applicability of the doctrines of claim splitting and res judicata to this action." The defendants responded by now insisting that all of the claims in Huon's federal and state lawsuits are based on the same transactions or events-the unfavorable evaluation and subsequent termination-and that res judicata will bar Huon's entire federal suit once the defendants have a final (and favorable) state judgment in hand. See 28 U.S.C. § 1738. Noting that Huon included "general allegations of racial discrimination and bias" in his state complaint, the defendants argued that the suits are substantially similar. The defendants also pressed the district court to stay the federal suit under the Colorado River abstention doctrine. In his response Huon argued that the defendants should be estopped from drawing any conclusion from the allegations of discrimination in his state complaint because they had moved to strike those allegations as immaterial. There is no identity of claims between the two suits, Huon continued, because his federal suit "encompasses a broader scope of misconduct" including less favorable work assignments, discipline, promotions, salary, and work conditions, and thus (he thought) res judicata did not apply. Huon also pointed out that he had to file his state suit before the one-year statute of limitations ran on his defamation claim and, at that time, because he had not yet received his right-to-sue letter from the EEOC he could not file his discrimination claims in state court. Huon noted that a stay under Colorado River is justified only by extraordinary circumstances, which, he insisted, did not exist in this instance.
The district court decided to stay the federal suit until the state proceedings reached an end. Applying Illinois's test for res judicata, the court reasoned that Huon's state and federal claims all arise out of the "same core of operative facts." The court explained:
[Huon] asserts in both proceedings that at all times he performed his job in a satisfactory manner. In his state proceedings, he asserts that because he performed satisfactorily, the defendants' performance reviews in which they reported that he performed unsatisfactorily were defamatory and caused him emotional distress. In the instant proceeding, he asserts that because he performed satisfactorily, his termination must have been the result of discrimination, and defendants' reports that he performed unsatisfactorily tortiously interfered with his expectation of continued employment. Be-cause the claims arise from the same core of operative facts, an identity of causes of action exists.
Because of the lack of a final judgment on appeal in the state suit, however, the district court believed that res judicata could not yet bar Huon's federal suit. For that reason it turned to the Colorado River abstention doctrine. Citing three of the 10 factors relevant to whether exceptional circumstances warrant a stay, the court concluded that a stay was appropriate. The court provided a brief explanation for its decision, reasoning that allowing the federal case to proceed would result in piecemeal litigation, that the proceedings in state court were at an advanced stage, and that the ...