Commercial Litigation and Arbitration

RICO — Res Judicata/Collateral Estoppel Bar

The plaintiff in Zhu v. St. Francis Health Center, 2007 U.S. App. LEXIS 2417 (10th Cir. Feb. 1, 2007) (unpublished), originally sued the defendants in state court for medical malpractice arising out of her five-year treatment relationship with a doctor on the hospital staff. After the state court dismissed all claims, she filed a RICO action against the same defendants arising out of the same treatment relationship but alleging some additional facts (e.g., a fraudulent billing statement). Applying state law to determine the preclusive effect of the original dismissal, the Tenth Circuit affirmed dismissal of the federal action on res judicata grounds. First, it held that the difference in legal theory between the state and federal cases was irrelevant because state (Kansas) law defined the claim, for res judicata purposes, "in terms of the factual circumstances of the controversy rather than the legal theory or remedial statute on which the suit is grounded." Second, the court held that the few additional allegations did not change the result because they arose out of the same transaction or series of transactions.

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