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Millennium Labs., Inc. v. Ward

Supreme Court of Nebraska

December 19, 2014

MILLENNIUM LABORATORIES, INC., ET AL., APPELLANTS,
v.
BRIAN WARD, AN INDIVIDUAL, APPELLEE

Page 305

Appeal fro the District Court for Sarpy County: WILLIAM B. ZASTERA, Judge.

REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.

James P. Fitzgerald and Patrick E. Brookhouser, Jr., of McGrath, North, Mullin & Kratz, P.C., L.L.O., and Lance A. Etcheverry and Jessica N. Walker, of Skadden, Arps, Slate, Meagher & Flom, L.L.P., for appellants.

Michael T. Hilgers and Carrie S. Dolton, of Gober Hilgers, P.L.L.C., and Heather A. Boice and Michael R. Osterhoff, of Perkins Coie, L.L.P., for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, STEPHAN, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ.

OPINION

Page 306

Wright, J.

I. NATURE OF CASE

In 2013, as part of ongoing litigation between Ameritox, Ltd., and Millennium Laboratories, Inc. (Millennium), a U.S. district court in Florida (Florida court) denied Millennium's [289 Neb. 719] motion for leave to amend its second amended counterclaims to Ameritox's third amended complaint. Subsequently, Millennium and two of its employees sued Brian Ward, one of Ameritox's employees, in the district court for Sarpy County, Nebraska (district court). Ward moved to dismiss for failure to state a claim. He specifically alleged that the complaint against him was barred under the doctrine of res judicata, or claim preclusion.

The district court determined that the Florida court's denial of Millennium's motion to amend its counterclaims barred the claims against Ward filed in Nebraska and sustained Ward's motion to dismiss. Because we find that the district court erred in concluding that the Florida court's order denying leave to amend barred the action against Ward, we reverse the judgment

Page 307

of the district court and remand the cause for further proceedings.

II. SCOPE OF REVIEW

The applicability of the doctrine of res judicata is a question of law, as to which we are obligated to reach a conclusion independent of the determination reached by the court below. In re Interest of D.H., 281 Neb. 554, 797 N.W.2d 263 (2011).

The applicability of claim and issue preclusion is a question of law. Hara v. Reichert, 287 Neb. 577, 843 N.W.2d 812 (2014).

An appellate court reviews de novo a lower court's dismissal of a complaint for failure to state a claim. Doe v. Omaha Pub. Sch. Dist., 273 Neb. 79, 727 N.W.2d 447 (2007).

III. FACTS

1. Parties

Millennium is a California corporation with its principal place of business in that state. It provides urine and saliva testing services to physicians and other health care professionals. Amos Burdine and Jackson Benefield are employed as sales representatives for Millennium in Nebraska and Iowa. Burdine and Benefield are residents of Nebraska and Iowa, respectively.

[289 Neb. 720] Ameritox provides similar services and is in direct competition with Millennium. Ameritox is a Texas limited partnership with its principal place of business in Maryland. Ward, a Nebraska resident, is employed as a sales representative for Ameritox in Nebraska.

2. Florida Litigation

In 2011, Ameritox sued Millennium in the Florida court. The record does not tell us the nature of Ameritox's claims against Millennium. In August 2012, Millennium filed its second amended counterclaims in response to Ameritox's third amended complaint. Millennium raised counterclaims under state unfair trade practices laws in Florida, California, Texas, and New York; common-law unfair competition; and common-law tortious interference with business relationships.

As part of its counterclaims, Millennium alleged that Ameritox had " engaged in unlawful schemes designed to maintain and enlarge its business . . . at the expense of Millennium and the American public." It alleged that Ameritox did the following to gain customers and increase its sales:

o Encouraged health care providers using Ameritox's services to order medically unnecessary tests and panels of tests rather than individual ...


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