## Facts

- Swift Transportation Company, Inc. discharged its employee, Fernando Pavon.
- Pavon filed a state-court action against Swift seeking back pay allegedly owed to him.
- The parties settled the back-pay dispute, and the state court dismissed the action.
- After the state case ended, Pavon filed a federal lawsuit alleging that Swift discharged him because of his race.
- Swift moved for summary judgment in federal court, arguing that claim preclusion barred the federal discrimination claim because Pavon could have asserted it in the earlier state action.
- The district court denied Swift’s summary-judgment motion.
- The case proceeded to trial, and a jury returned a verdict for Pavon.
- Swift appealed to the Ninth Circuit, challenging the judgment and arguing, among other things, that the federal action was barred by claim preclusion.

## Issues

1. Did claim-preclusion principles bar Pavon’s federal race-discrimination discharge claim because he previously settled and dismissed a state-court back-pay action arising out of the employment relationship?
2. Did the district court err in rejecting Swift’s claim-preclusion defense and allowing Pavon’s discrimination claim to proceed to a jury verdict?

## Decision

- The Ninth Circuit affirmed the judgment for Pavon.
- The court held that Pavon’s prior state-court back-pay settlement and dismissal did not claim-preclude his later federal race-discrimination discharge suit.
- The court affirmed the district court’s rejection of Swift’s claim-preclusion argument and left the jury’s verdict intact.

## Legal Principles

- Under the Full Faith and Credit Act, federal courts give a state-court judgment the same preclusive effect it would receive under the law of the state that issued the judgment.
- Claim preclusion generally requires (1) the same parties (or their privies), (2) a final judgment on the merits in the earlier action, and (3) the same claim (or cause of action) in both suits, as defined by the rendering state’s preclusion rules.
- A settlement followed by dismissal in state court can constitute a final judgment for claim-preclusion purposes, but the later suit is barred only if it involves the same claim as the earlier action under the applicable state standard.
- A wage/back-pay dispute and a statutory race-discrimination discharge claim are not automatically the same claim for preclusion purposes; whether preclusion applies turns on the scope of the earlier case and the state’s definition of what claims must be brought together.

## Conclusion

Pavon v. Swift Transportation Co., Inc. holds that a settled and dismissed state-court back-pay action did not bar a later federal suit alleging race-based discharge, and the Ninth Circuit affirmed the judgment entered on the jury’s verdict for the employee.


Pavon v. Swift Transportation Co., Inc., 192 F.3d 902 (1999)