CA3: State court could have heard § 1983 case, so issue preclusion barred federal action

Plaintiff’s injuries were caused by the defendants’ illegal warrantless searches and penalties without due process. However, the claim was barred by issue preclusion because of a state court order that essentially decided the issues and could have heard the § 1983 claim. Cycle Chem, Inc. v. Jackson, 465 Fed. Appx. 104 (3d Cir. 2012) (unpublished):

All three requirements are met here. The judgment rendered by the New Jersey Appellate Division was valid, final and on the merits. There is also identity of the parties, for Cycle Chem was a party to the first action and the Defendant, the DEP Commissioner, is the DEP’s privy. See Jones, 29 F.3d at 830 (finding that the defendants, who were employees of a state agency, were in privity with that state agency, which was the defendant in the first action); see also Schuster v. Martin, 861 F.2d 1369, 1373 (5th Cir. 1988) (“It is also a general principle of the law of preclusion that state officials are, as a matter of law, in privity with the agency or department in which they serve.”).

Finally, the claims presented in this action grow out of the same transaction or occurrence as the claims in the first action; indeed, the New Jersey Appellate Division considered and rejected the same claims that Cycle Chem brings here. Cycle Chem’s claims here stem from the DEP’s allegedly illegal search of Cycle Chem’s facilities and imposition of penalties on Cycle Chem for impeding the attempted search. In its opinion, the Appellate Division listed Cycle Chem’s arguments, among them that the DEP “lacked authority to conduct a warrantless search” and that the penalties were wrongfully imposed. … The Appellate Division then rejected those arguments, discerning “no basis in the record of this matter justifying a departure from the general rule permitting ‘administrative,’ i.e. warrantless, searches of highly or pervasively regulated industries” and finding that the penalties were therefore properly imposed. (Id. at A38-39.) By doing so, the Appellate Division demonstrated that it would have exercised its original jurisdiction to resolve the § 1983 claims had Cycle Chem brought them in state court. See Jones, 29 F.3d at 831-32 (predicting whether a state court would have exercised original jurisdiction over a § 1983 claim in an appeal from an administrative decision). Accordingly, res judicata bars a federal court from entertaining Cycle Chem’s suit.