The opinion of the court was delivered by: Sarah S. Vance United States District Judge
In this products liability case, defendants Oakmont Investment Company, Inc., American Employers' Insurance Company, and Commercial Union Insurance Company have moved for judgment on the pleadings.*fn1 Because the Court is collaterally estopped from reconsidering the question of whether the plaintiff's positive drug test was caused by drinking the defendants' hemp oil product without knowing that it contained THC rather than by using marijuana, the Court GRANTS defendants' motion.
Plaintiff was a United States Coast Guard-licensed vessel engineer. Before taking a Coast Guard drug test, he allegedly ingested "Hemp Liquid Gold," a product manufactured and distributed by defendant Oakmont Investment, and other similar products. Plaintiff contends that he believed that the products were healthful and free of any ingredients that produce any of the risks associated with marijuana use. Plaintiff later tested positive for THC, the active ingredient in marijuana. As a result of the positive test result, the Coast Guard charged plaintiff with use of a dangerous drug and sought to have his license revoked. A Coast Guard Administrative Law Judge ("ALJ") held hearings on the charges against Dresser in April and June of 1998. On August 17, 1998, plaintiff sued defendants in this Court as manufacturers, markets, distributers, and sellers of certain hemp oil products, the consumption of which caused a "false positive" on the drug test. Plaintiff seeks damages for loss of earnings, job-related benefits, and emotional distress.
In a written opinion dated February 4, 1999, ALJ Boggs ordered plaintiff's license revoked. Dresser appealed that decision to the Commandant of the Coast Guard. The Court stayed this matter on February 28, 2000 while the Coast Guard proceedings against Dresser were ongoing.*fn2 The Court reasoned that if the administrative proceedings resulted in a finding that plaintiff used marijuana, he could be collaterally estopped from arguing otherwise in this case. The Commandant affirmed the ALJ's decision in June of 2002, but the National Transportation Safety Board ("NTSB") reversed the Coast Guard's decision in June of 2003 due to the appearance of a conflict of interest on the part of ALJ Boggs.*fn3 Dresser then moved to reopen this case because there was no longer an administrative opinion to form the basis of a collateral estoppel argument.
The Court reopened this case on July 2, 2003 but reissued the stay on March 8, 2004.*fn4 Plaintiff argued, in opposition to the stay, that he would not be able to fully and fairly litigate his hemp oil defense before the ALJ. The relevant Coast Guard regulation states: "If an individual fails a chemical test for dangerous drugs under this part, the individual will be presumed to be a user of dangerous drugs." 46 C.F.R. § 16.201(b). Dresser argued that he would not be able to rebut this presumption due to a policy memorandum issued to all Coast Guard ALJs by Chief Coast Guard ALJ Ingolia indicating that "accidental or inadvertent ingestion of a food product containing THC will only serve as a valid defense to a charge of use of dangerous drug if the Respondent produces reliable and credible evidence."*fn5
The Court ruled that this policy memorandum, even if it has binding
legal effect, does not foreclose Dresser's defense that he ingested
the hemp oil product without knowing that it contained THC.*fn6
The same issue arises in both this case and the
administrative proceeding: whether Dresser inadvertently consumed THC
by ingesting defendant's hemp oil product. If Dresser tested positive
because he used marijuana or because he ingested hemp oil knowing that
it contained THC, then his license was properly revoked and he cannot
sustain this products liability case. The Court further ruled that the
legal standard that Dresser must meet in the administrative proceeding
to rebut the presumption that he used a dangerous drug is identical to
the "preponderance of the evidence" standard he has to meet in this
case. Thus, the Court stayed these proceedings in the interest of
economy. The Fifth Circuit dismissed Dresser's attempt to appeal the
In the meantime, the Coast Guard revocation proceeding had been reassigned to ALJ Brudzinski. On December 7, 2004, Brudzinski held a hearing in which both sides presented additional witness testimony. Then, on June 14, 2005, ALJ Brudzinski revoked Dresser's Coast Guard license and merchant mariner's document.*fn8 Brudzinski held that Dresser failed to rebut the presumption that he knowingly ingested THC because, among other reasons, Dresser did not support his testimony that he used hemp oil with credible evidence. Dresser appealed that decision to the Commandant of the Coast Guard, who affirmed ALJ Brudzinski's decision.*fn9
Dresser also filed a separate suit against various Coast Guard ALJs, their clerks and administrative staff, and the Commandant and his legal staff for declaratory and injunctive relief, writs of mandamus, and Bivens actions. Dresser maintained that ALJ Brudzinski's decision was unconstitutional because of (1) ex parte communications among ALJ Brudzinski, Chief ALJ Ingolia, and other named defendants, and (2) an institutionalized ALJ policy to rule in favor of the Coast Guard regarding hemp seed oil defenses to positive toxicology tests. In that action, Judge Berrigan ruled that she could not hear Dresser's claims under the Administrative Procedures Act because there was no "final agency action" at that time, as the Commandant had not yet decided Dresser's appeal of ALJ Brudzinski's decision.*fn10 The Fifth Circuit affirmed that ruling.*fn11 The Fifth Circuit also ruled that the court lacked jurisdiction to hear plaintiff's Bivens claims because those claims were "inescapably intertwined" with a review of the ALJ's decision.*fn12
After the Commandant ruled against Dresser, he filed suit again, urging the same APA and Bivens claims. Judge Berrigan held again that she lacked jurisdiction over Dresser's APA claims, despite the Commandant's decision in the interim, because Dresser failed to appeal the decision of the Commandant first to the NTSB and then to the Court of Appeals as required under 49 U.S.C. §§ 1133 and 1153.*fn13 The court also held that Dresser's Bivens claims remained inescapably intertwined with a review of the ALJ's decision, which could not occur without following the appeals process mandated by statute. Dresser appealed that decision to the Fifth Circuit.
Dresser then moved that this civil case be reopened and that the stay be lifted, but the Court denied that motion on September 13, 2010.*fn14 The Court noted that Dresser's appeal of Judge Berrigan's decision denying his APA and Bivens claims was still pending before the Fifth Circuit. If Dresser had won that appeal, he would be able to challenge the Coast Guard's administrative proceedings directly. The Court ruled that such an action, if allowed to proceed, would be a more appropriate vehicle for challenging the fairness of the administrative proceedings than this collateral action.
On December 22, 2010, the Fifth Circuit affirmed Judge Berrigan's
second opinion and held that Dresser's failure to appeal the
Commandant's decision to the NTSB precluded his APA
and Bivens claims.*fn15 This Court then granted
Dresser's unopposed motion to lift the stay in this case.*fn16
Defendants now move for judgment on the pleadings on
collateral estoppel grounds.
Defendants move for judgment on the pleadings under Fed. R. Civ. P. 12(c). Both plaintiff and defendants, however, present evidence outside the pleadings, including an affidavit by a former Coast Guard ALJ and a report by the Office of Inspector General for the Department of Homeland Security. Both parties have had a reasonable opportunity to present any material that is pertinent to the motion. Therefore, in accordance with Fed. R. Civ. P. 12(d), the Court will treat defendants' motion as one for summary judgment under Fed. R. Civ. P. 56.
Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law."
Fed. R. Civ. P. 56(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a dispute as to any material fact exists, the Court considers "all of the evidence in the record but refrains from making credibility determinations or weighing the evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but "unsupported allegations or affidavits setting forth 'ultimate or conclusory facts and conclusions of law' are insufficient to either support or defeat a motion for summary judgment." Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); Little, 37 F.3d at 1075.
If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party "must come forward with evidence which would 'entitle it to a directed verdict if the evidence went uncontroverted at trial.'" Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1263-64 (5th Cir. 1991). The nonmoving party can then defeat the motion by either countering with sufficient evidence of its own, or "showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party." Id. at 1265.
If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See id. at 324. The non-movant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue for trial. See, e.g., id. at 325; Little, 37 F.3d at 1075; Isquith for and on Behalf of Isquith v. Middle South Utils., Inc., 847 F.2d 186, 198 (5th Cir. 1988), cert. denied, 488 U.S. 926 (1988).
Defendants contend that ALJ Brudzinski, in his June 14, 2005 decision, definitively ruled that Dresser has not shown by a preponderance of the evidence that he inadvertently consumed THC by ingesting Hemp Liquid Gold. Therefore, defendants argue, Dresser is collaterally estopped from asserting that Hemp Liquid Gold rather than marijuana caused the positive drug test. Dresser responds by arguing that he did not have a full and fair opportunity to litigate that issue in the Coast Guard's administrative system. Dresser presents a sworn statement by a former Coast Guard ALJ which, he argues, demonstrates that ALJ Brudzinski's decision was essentially predetermined and did not result from a fair process. For the following reasons, the Court finds that Dresser has not demonstrated that he did not have a full and fair opportunity to litigate his hemp oil defense in the Coast Guard proceedings. Therefore, collateral estoppel bars Dresser from arguing that he inadvertently consumed THC by ingesting Hemp Liquid Gold, and he cannot sustain this suit.
A. Collateral Estoppel Doctrine
A final judgment in a federal administrative proceeding has preclusive effect when that proceeding is "judicial" in nature and the elements of collateral estoppel are met. See Grace v. Keystone Shipping Co., 805 F.Supp. 436, 441 (E.D. Tex. 1992) (Coast Guard ALJ's finding that marijuana belonged to seaman was "judicial" and had preclusive effect in later maritime action) (citing Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 107 (1991) and United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422 (1966)); see also Castillo v. Railroad Retirement Bd., 725 F.2d 1012, 1014 (5th Cir. 1984) (administrative determination that employee was not disabled precluded relitigation in later proceeding); Painters District Council No. 38 v. Edgewood Contracting Co., 416 F.2d 1081, 1083-84 (5th Cir. 1969) (N.L.R.B. finding that union had engaged in an unfair labor practice had preclusive effect in subsequent litigation).
Collateral estoppel bars "'successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment,' even if the issue recurs in the context of a different claim." Taylor v. Sturgell, 553 U.S. 880, 892 (2008) (quoting New Hampshire v. Maine, 532 U.S. 742, 748 (2001)). The purposes of collateral estoppel are to protect parties from multiple lawsuits, to avoid the possibility of inconsistent decisions, and to conserve judicial resources. Lytle v. Household Mfg., Inc., 494 U.S. 545, 553 (1990). To establish collateral estoppel, a party must show: "(1) that the issue at stake [is] identical to the one involved in the prior litigation; (2) that the issue has been actually litigated in the prior litigation; and (3) that the determination of the issue in the prior litigation has been a critical and necessary part of the judgment in that earlier action." Rabo Agrifinance, Inc. v. Terra XXI, Ltd., 583 F.3d 348, 353 (5th Cir. 2009).
ALJ Brudzinski's decision is undoubtedly judicial in nature. Moreover, the question at issue in this case - whether Dresser inadvertently consumed THC by ingesting the hemp oil product rather than by using marijuana - is identical to the issue decided by ALJ Brudzinski. That issue was actually litigated before the ALJ, and the ALJ's determination of that issue was a critical and necessary part of his decision.
Collateral estoppel applies, however, only if the party against whom the earlier decision was made had a "full and fair opportunity" to litigate the issue in those proceedings. Kremer v. Chemical Const. Corp., 456 U.S. 461, 480-81 (1982); Utah Constr. & Mining Co., 384 U.S. at 422; Rabo Agrifinance, Inc. 583 F.3d 348 at 353. "Redetermination of issues is warranted if there is reason to doubt the quality, extensiveness, or fairness of procedures followed in prior litigation." Kremer, 456 U.S. at 481 (quoting Montana v. United States, 440 U.S. 147, 164 n.11 (1979)); see also Griffen v. Big Spring Independent School Dist., 706 F.2d 645, 654 (5th Cir. 1983) (same). A party must meet a substantial burden in order to show that he or she did not have a full and fair opportunity to litigate an issue in an earlier proceeding. According to the Restatement of Judgments, relitigation of an issue is not precluded when "[t]here is a clear and convincing need for a new determination of the issue . . . (c) because the party sought to be precluded, as a result of the conduct of his adversary or other special circumstances, did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action." Restatement (Second) of Judgments § 28. A "refusal to give the first judgment preclusive effect should not occur without a compelling showing of unfairness[.]" Id. cmt. j (1982). Further, "such instances must be the rare exception, and litigation to establish an exception in a particular case should not be encouraged." Id. cmt. g. Courts have followed the Restatement's approach and have strictly limited the situations in which parties may relitigate issues under the full-and-fair opportunity test. See Montana, 440 U.S. at 164 n.11 (citing Restatement in setting out full-and-fair opportunity test); Otherson v. Department of Justice, I.N.S., 711 F.2d 267, 277 (D.C. Cir. 1983) (citing Restatement for proposition that "compelling showing of unfairness" is required); Piggly Wiggly Clarksville, Inc. v. Interstate Brands Corp., 83 F.Supp.2d 781, 796 (E.D. Tex. 2000) (finding "no compelling showing of unfairness warranting the application of an exception to the doctrine of collateral estoppel" despite alleged discovery abuses in first case); Shepard v. City of Batesville, Mississippi, No. 2:04CV330-D-B, 2007 WL 108288, at *5 (N.D. Miss. Jan. 8, 2007) (requiring "compelling showing of unfairness or inadequacy in the prior litigation"); see also Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, 18 Fed. Prac. & Proc. Juris. § 4423 (2d ed.) (full-and-fair-opportunity test should not be transformed, "by sheer familiarity, into a new doctrine that threatens serious corrosion of general issue preclusion values").
Litigants who were not parties to the earlier proceeding, such defendants in this case, may nonetheless assert collateral estoppel based on that proceeding. See Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971) (permitting non-mutual defensive collateral estoppel). The full-and-fair opportunity test still applies in such a situation. Restatement (Second) of Judgments § 29. That said, "[w]hen a non-party invokes issue preclusion . . . greater weight may be given to the factors stated in § 28 and additional considerations may indicate the inappropriateness of imposing preclusion." Id. cmt. b; see also Otherson, 711 F.2d at 277 (citing Restatement for this proposition).
Circumstances that courts often look to in determining whether a party had a full and fair opportunity to litigate an issue include: "(1) whether there were significant procedural limitations in the prior proceeding, (2) whether the party had an incentive to litigate fully the issue, and (3) whether effective litigation was limited by the nature or relationship of the parties." Banner v. United States, 238 F.3d 1348, 1354 (Fed. Cir. 2001). Dresser does not argue that any such circumstances were present in the Coast Guard revocation proceeding. ALJ Brudzinski's decision came after a hearing which in which Dresser was represented by counsel, called and cross-examined witnesses, introduced exhibits, received findings of fact and law on the record, and was entitled to and did appeal. Such procedures are sufficient for collateral estoppel purposes. See Grace, 805 F.Supp. at 441 (characterizing a Coast Guard license revocation procedure as "elaborate" and holding that an ALJ's decision had preclusive effect).
Rather, Dresser contends that ALJ Brudzinski's decision was essentially predetermined because Brudzinski was not an impartial adjudicator. The Supreme Court has stated that "what a full and fair opportunity to litigate entails is the procedural requirements of due process." Kremer v. Chemical Const. Corp., 456 U.S. 461, 483 n.24 (1982) (state court decision has preclusive effect if it meets due process); see also Phelps v. Hamilton, 122 F.3d 1309, 1323 (10th Cir. 1997) (applying due process standard in deciding whether party had full and fair opportunity to litigate claim in prior state court proceeding in spite of alleged judicial bias); Dash, Inc. v. Alcoholic Beverage Control Appeals Bd., 683 F.2d 1229, 1232-33 (9th Cir. 1982) (whether state administrative proceedings provided full and fair opportunity to litigate "merges" with the question of whether those proceedings satisfy due process). Therefore, in determining whether Dresser had a full and fair opportunity to litigate the relevant issue in the Coast Guard proceeding, the Court will apply the standard for evaluating allegations of judicial bias that applies in the due process context.
Due process requires "a fair and impartial tribunal, whether at the hands of a court, an administrative agency or a government hearing officer." Valley v. Rapides Parish Sch. Bd., 118 F.3d 1047, 1052 (5th Cir. 1997) (citing Gibson v. Berryhill, 411 U.S. 564, 569 (1973)); see also Withrow v. Larkin, 421 U.S. 35, 46 (1975) (basic principle that decisionmaker must be neutral "applies to administrative agencies which adjudicate as well as to courts"). Due process is violated if the situation "would offer a possible temptation to the average man as a judge to forget [the proper legal standard], or which might lead him not to hold the balance nice, clear, and true[.]" Ward v. Village of Monroeville, Ohio, 409 U.S. 57 (1972) (quoting Tumey v. Ohio, 273 U.S. 510, 532 (1927)). Bias claims are "not lightly established" because they must overcome "two strong presumptions: (1) the presumption of honesty and integrity of the adjudicators; and (2) the presumption that those making decisions affecting the public are doing so in the public interest." Bigby v. Dretke, 402 F.3d 551, 558 (5th Cir. 2005) (quoting Valley, 118 F.3d at 1052-53). There is no violation of due process when the biasing influence is "too remote and insubstantial[.]" Marshall v. Jerrico, Inc., 446 U.S. 238, 243 (1980). Courts have found due process violations in the following circumstances: "(1) where the decision maker has a direct personal, ...