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STATE OF MICHIGAN COURT OF APPEALS

PATRICIA BARACHKOV, CAROL DIEHL, and NANCY ENGLAR, Plaintiffs-Appellants/CrossAppellees, v 41B DISTRICT COURT and CHIEF JUDGE LINDA DAVIS, Defendants-Appellees/CrossAppellants.

UNPUBLISHED December 29, 2009

No. 284197 Macomb Circuit Court LC No. 06-004856-CZ

Before: Murphy, P.J., and Meter and Beckering, JJ. PER CURIAM. Plaintiffs appeal as of right from an order granting summary disposition to defendants on the basis of collateral estoppel. We affirm. In 2004, plaintiffs were terminated from their employment1 at the 41B District Court (41BDC) in Clinton Township. Plaintiffs contend that they were terminated under the pretext that they had been dishonest during a State Court Administrative Office (SCAO) investigation, allegedly initiated by Chief Judge Linda Davis of the 41BDC. They contend that the actual reason for their firing was their social and (in the case of plaintiff Nancy Englar, who is his sister-in-law) family ties to Judge William Cannon of the 41BDC, who, according to plaintiffs, had become a "political liability" to Judge Davis. Plaintiffs contend that Judge Davis wanted to merge two divisions of the 41BDC, to her political advantage, and that Judge Cannon opposed such a merger. They contend that Judge Davis began working with the SCAO to investigate the possible abuse of office by Peggy Cannon, Judge Cannon's wife and the 41BDC court administrator.2 Peggy Cannon was fired on

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Nancy Englar and Patricia Barachkov were court clerks and Carol Diehl was a cashier.

Judge Davis contends that the investigation began simply because the 41BDC was losing money annually and because there had been complaints about the efficiency of the 41BDC.

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June 24, 2004. Soon thereafter, a SCAO investigation occurred, with Deborah Green, Region One Administrator for the SCAO, interviewing plaintiffs and with some of the questions focusing on possible wrongdoing by the Cannons. Plaintiffs were later fired, purportedly for being dishonest during the interviews. Judge Davis testified that she only fired plaintiffs at the directive of the SCAO. After the firings, Judge Davis communicated to the court and to local newspapers that plaintiffs had been fired for "lying" during their interviews. Plaintiffs filed a federal lawsuit. They asserted (1) a First Amendment/retaliation claim, stating that they were retaliated against for failure to provide false information to the SCAO, (2) a procedural due process claim, stating that they should have been granted a hearing in connection with their termination, and (3) a substantive due process claim, stating that they should have been provided a "name-clearing hearing." They also alleged state-law claims of wrongful discharge, tortious interference with a contractual relationship, defamation, "a public policy tort," and a violation of the Whistleblower Protection Act (WPA), MCL 15.361 et seq. Judge Paul Borman of the Eastern District of Michigan dismissed the case, granting summary disposition concerning the federal claims and dismissing the state-law claims without prejudice. Plaintiffs then filed the instant lawsuit against the 41BDC and Judge Davis in the Macomb Circuit Court. They alleged (1) wrongful discharge, (2) tortious interference with a contractual relationship or business expectancy against Judge Davis, (3) defamation, (4) a violation of the WPA, (5) a "public policy tort," (6) a freedom of speech and association claim, and (7) a due process violation. Judge Mary Chrzanowski (hereinafter "the trial court") granted defendants' motions for summary disposition of that case, concluding that plaintiffs' claims were barred by collateral estoppel, given the factual findings made by Judge Borman. Essentially, the trial court analyzed each of plaintiffs' claims and determined that the specific factual and legal findings made by Judge Borman in his analysis of the three federal claims raised in the federal lawsuit served to bar the instant state-court lawsuit. On appeal, plaintiffs first argue that the trial court's order granting summary disposition on the basis of collateral estoppel should be reversed3 because "the companion case upon which the collateral estoppel determination was based [i.e., the federal case] is on appeal, subject to reversal."4

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The trial court proceeded through each of plaintiffs' claims in their lawsuit, explaining why they were barred by collateral estoppel. In their main appellate brief, plaintiffs do not address each claim separately but merely focus on the federal appeal.

We note that the trial court dismissed plaintiffs' claim for a "public policy tort" using reasoning aside from collateral estoppel, and plaintiffs do not appeal that dismissal on appeal. While they discuss the "public policy tort" in their response to the cross-appeal, they do not adequately appeal the initial ruling of the trial court.

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"We review de novo both a trial court's decision to grant or deny a motion for summary disposition and issues concerning the application of the doctrine of collateral estoppel." Barrow v Pritchard, 235 Mich App 478, 480; 597 NW2d 853 (1999). Collateral estoppel bars relitigation of an issue in a new action arising between the same parties or their privies when the earlier proceeding resulted in a valid final judgment and the issue in question was actually and necessarily determined in that prior proceeding. [Leahy v Orion Twp, 269 Mich App 527, 530; 711 NW2d 438 (2006).] Moreover, [u]nder federal standards, there are three necessary criteria that must be met for collateral estoppel to apply: (1) that the issue at stake be 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. [Walker v KerrMcGee Chemical Corp, 793 F Supp 688, 694 (ND Miss, 1992).] This Court "must apply federal claim-preclusion law in determining the preclusive effect of a prior federal judgment." Pierson Sand & Gravel, Inc v Keeler Brass Co, 460 Mich 372, 380-381; 596 NW2d 153 (1999); see also RDM Holdings, Ltd v Continental Plastics Co, 281 Mich App 678, 688-689; 762 NW2d 529 (2008). "[T]he established rule in the federal courts is that a final judgment retains all of its preclusive effect pending appeal." Erebia v Chrysler Plastic Products Corp, 891 F2d 1212, 1215 n 1 (CA 6, 1989); see also United States v Szilvagyi, 398 F Supp 2d 842, 847 (ED Mich 2005) ("[t]he winner at the trial court level should not have to wait in limbo while the case makes its way through the appellate process"). At any rate, after plaintiffs filed their initial brief in this Court, the Sixth Circuit issued its ruling in the pending federal appeal. Judge Borman had ruled, with regard to plaintiffs' claims that their First Amendment rights were violated and they were discharged in retaliation for engaging in certain speech, that "a reasonable official could have concluded that Plaintiffs knowingly or recklessly made false statements" and that "[t]he First Amendment does not extend to protect false statements that are knowingly or recklessly made." The Sixth Circuit affirmed Judge Borman's decision on alternative grounds, ruling that (1) First Amendment protection in this context requires that the government employee was speaking "as a citizen," and (2) plaintiffs were speaking at the behest of their employer and "their comments regarding the work habits of Judge Cannon were not made `as citizens.'" Barachkov v 41B District Court, unpublished opinion of the Sixth Circuit Court of Appeals, issued February 20, 2009 (Docket No. 06-2512), slip op at 10, 12. The court stated, "Consequently, Appellants have no First Amendment cause of action and summary judgment was therefore properly granted." Id. at 12-13. The court stated:

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As we have determined that Appellants spoke pursuant to their employment responsibilities, we need not address the district court's holding . . . that Judge Davis would be entitled to qualified immunity against this claim [because] a reasonable official could conclude that the speech at issue constituted false statements knowingly or recklessly made. [Id. at 13.]5 In the federal district court, plaintiffs had made an additional claim that defendants violated their procedural due process rights by failing to provide a hearing in connection with the termination of their employment. Plaintiffs contended that they were "just-cause" and not "atwill" employees and that a hearing therefore was warranted. Judge Borman engaged in a comprehensive evaluation of the evidence submitted by the parties and concluded that "Plaintiffs have not produced sufficient evidence to demonstrate that they had legitimate expectations of `just cause' employment." The Sixth Circuit evaluated the evidence pertaining to "just-cause" or "at-will" employment and stated that there exists a direct conflict in the evidence regarding the exact contours of the termination policy

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