A Tale of Two Doctrines (Res Judicata and Differing Capacities)

By Kirsten E. Small

On Friday, the Fourth Circuit issued a helpful primer on the differing capacities doctrine and its application in employment litigation. Brooks v. Arthur (No. 09-1551)

Virginia corrections officers Donald Hamlette, James Brooks, and Samuel St. John were fired by Lieutenant Howard Arthur, allegedly because they complained of discrimination by Arthur and Major Randal Mitchell. In administrative proceedings, the Department of Employee Dispute Resolution (EDR) reinstated each officer with back pay, concluding that the officers' misconduct (consisting of various instances of dereliction of duty) did not warrant termination. The EDR also found that none of the officers had established a connection between the protected activity and the termination.

Thereafter, the officers sued Arthur and Mitchel in their individual capacities, alleging civil rights violations (discrimination and witness intimidation) and tortious interference with contract. The district court dismissed, holding that because Arthur and Mitchell were in privity with the Department of Corrections, the EDR proceedings were res judicata as to the civil suit.

The Fourth Circuit reversed. Describing the problem as one of "transitive capacity," the court explained that the EDR proceedings could have preclusive effect only if Arthur and Miller in their individual capacities were in privity with the Department of Corrections, a state entity. Privity could exist only if (1) the Department was in privity with Arthur and Mitchell in their official capacities, and (2) Arthur and Mitchell in their official capacities were in privity with themselves in their individual capacities.

Relying on Andrews v. Daw, 201 F.3d 521 (4th Cir. 2000) ("Daw II"), the court concluded that the analysis failed at the second step: under the doctrine of differing capacities, Arthur and Mitchell could not be in privity with themselves. If sued in their official capacities, Arthur and Mitchell would serve as proxies for the Department of Corrections, the real party in interest. When sued in their individual capacities, however, Arthur and Mitchell would be personally liable for any damages. Additionally, the theories of liability and defenses would differ--for example, the Department of Corrections could claim sovereign (but not qualified) immunity, while Arthur and Mitchel could claim qualified (but not sovereign) immunity.

The court remanded for further proceedings.