In the
United States Court of Appeals
For the Seventh Circuit

No. 99-1303

EDWARD G. STAATS,

Plaintiff-Appellant,

v.

COUNTY OF SAWYER and COUNTY OF BAYFIELD,

Defendants-Appellees.



Appeal from the United States District Court
for the Western District of Wisconsin.
No. 98-C-593-S--John C. Shabaz, Chief Judge.


Argued September 28, 1999--Decided July 17, 2000




  Before Bauer, Flaum, and Diane P. Wood, Circuit
Judges.

  Diane P. Wood, Circuit Judge. In September 1994,
Edward Staats learned that he suffers from bi-
polar disorder. He received treatment for it, but
when he attempted to return to his job as
personnel director for Sawyer and Bayfield
Counties, Wisconsin (the Counties), he was told
that the job had been eliminated. Believing that
this was a poor disguise for disability
discrimination, he pursued his state
administrative remedies. Ultimately, the Labor
and Industry Review Commission (LIRC) rejected
his claims, and the Circuit Court for LaCrosse
County affirmed that decision. Meanwhile, Staats
had also filed charges with the federal Equal
Employment Opportunity Commission (EEOC), which
in due course issued him a right-to-sue letter.
This case followed in federal court. The district
court dismissed Staats’s claims under Titles I
and II of the Americans with Disabilities Act
(ADA) and the Rehabilitation Act of 1973 on the
ground of claim preclusion. Because we find that
Wisconsin would permit claim splitting under the
circumstances presented here, we reverse and
remand for further proceedings.

I

    There is little more to the underlying facts
than we have already recounted. Staats began
working as the full-time personnel director for
the Counties in May 1993 under an arrangement
whereby he split his time between them. Either
county was entitled to terminate the agreement by
filing written notice before September 1 of the
year preceding termination. Everything proceeded
smoothly until September 1994, when Staats began
acting strangely. He was hospitalized the same
month for his bi-polar disorder; in October, he
was hospitalized again and remained in the
hospital until mid-November. In late November
1994, he attempted to return to work. At that
point, the Counties told him that he needed a
release from his doctor. He complied, but the
work release his doctor gave him restricted him
to "working no more than 40 hours per week,
taking no work home to complete after hours,
attending regular therapy sessions with
psychiatrists, in complian[ce] with his
medication, monthly laboratory testing of
medication blood level and abstinence from
alcohol for the next 90 days." In mid-December
1994, one of Staats’s treating physicians
completed a medical form indicating that Staats
was able to perform work as a personnel director
as of November 20, 1994.

  A return to work, however, was not in Staats’s
future. Instead, on December 19, the Counties’
attorney informed Staats that he could continue
to work until the end of the calendar year, at
which time his job position itself would be
eliminated. On March 3, 1995, Staats filed a
claim of employment discrimination with the State
of Wisconsin Equal Rights Division, alleging
violations of the Wisconsin Fair Employment Act
(WFEA), Wis. Stat. sec. 111.31 et seq. The Equal
Rights Division found probable cause to believe
that the Counties had discriminated against
Staats and certified the matter to a hearing
before an administrative law judge. After a full
hearing on the merits, the ALJ issued a decision
concluding that the Counties had violated the
WFEA and had failed to determine what sort of
accommodation Staats might need.

  The Counties appealed the decision to the LIRC.
Conducting the appeal on the record, the LIRC
reversed the ALJ’s decision. It found that
although the Counties had eliminated Staats’s
position because of his disability, the Counties
had not violated the WFEA. Staats sought review
of the LIRC decision in state court under the
Wisconsin state administrative review procedures.
See Wis. Stat. sec. 111.395. The state court
conducted a review limited to the administrative
record, as it was required to do by statute. See
Wis. Stat. sec. 227.57. It upheld the LIRC’s
decision. See id. Staats did not appeal.
  Two weeks after Staats filed his complaint with
the Equal Rights Division, he cross-filed with
the EEOC. Sometime in May 1998, he received his
right-to-sue letter from the EEOC and shortly
thereafter filed the present action in federal
district court. His complaint alleged that the
Counties had discriminated against him because of
his disability (bi-polar disorder) by failing to
provide reasonable accommodations for him and
eliminating his position, in violation of Titles
I and II of the Americans with Disabilities Act,
42 U.S.C. sec. 1201, et seq., and the
Rehabilitation Act of 1973, as amended, 29 U.S.C.
sec. 794, et seq. The Counties filed a motion for
summary judgment on the basis that the state
court decision affirming the decision of the LIRC
barred the federal court action under the
doctrine of claim preclusion. See 28 U.S.C. sec.
1738; Northern States Power Co. v. Bugher, 525
N.W.2d 723, 728-29 (Wis. 1995). The district
court agreed and entered judgment for the
Counties; Staats now appeals.

II

  We review a district court’s grant of summary
judgment on the basis of claim preclusion de
novo. Roboserve, Inc. v. Kato Kagaku Co., Ltd.,
121 F.3d 1027, 1034 (7th Cir. 1997). As Staats
was the nonmoving party, we draw any inferences
from the facts in his favor. Broadcast Music,
Inc. v. Claire’s Boutiques, Inc., 949 F.2d 1482,
1486 (7th Cir. 1991).

  Staats suggests three reasons why the state
court judgment does not bar his claims under the
federal anti-discrimination laws: (1) Wisconsin
law would not give the state court judgment
preclusive effect; (2) the state court had
limited jurisdiction in conducting its review of
the administrative decision and therefore Staats
could not have brought his federal claims in the
earlier proceeding; and (3) the standards and
remedies provided by Wisconsin discrimination law
are narrower than those of federal law, and so an
exception to claim preclusion should apply.

  As we recently observed in Froebel v. Meyer,
No. 98-3925, 2000 WL 862519 (7th Cir. June 28,
2000), the federal court was required to give the
Wisconsin court’s judgment the same full faith
and credit that it would have received in a
Wisconsin court. Id. at *4; 28 U.S.C. sec. 1738.
The fact that this was a state court judgment
affirming an administrative decision does not
exempt it from the normal rules of preclusion.
State administrative findings that have been
subjected to state judicial review are entitled
to both claim and issue preclusive effect in
federal courts. Kremer v. Chemical Construction
Corp., 456 U.S. 461, 481-82 n.22 (1982). The
Supreme Court has also held that "it is sound
policy to apply principles of issue preclusion to
the factfinding of administrative bodies acting
in a judicial capacity." University of Tennessee
v. Elliott, 478 U.S. 788, 797 (1986). See also
East Food & Liquor, Inc. v. United States, 50
F.3d 1405, 1411-12 (7th Cir. 1995) (applying
administrative issue preclusion to state agency
findings in a food stamp case). On the other
hand, the Court has drawn the line at claim
preclusion for unreviewed state agency findings,
concluding in Elliott that "Congress did not
intend unreviewed state administrative
proceedings to have preclusive effect on Title
VII claims." 478 U.S. at 796.

  Although Staats’s claims arise under the ADA
and the Rehabilitation Act, not Title VII, we
think the logic of Kremer and Elliott applies
equally to other federal anti-discrimination
statutes. Because the Wisconsin circuit court
entered a judgment in Staats’s case, we have a
"reviewed" state administrative decision, which
is entitled to whatever degree of claim
preclusion Wisconsin would give it. In Froebel,
we reviewed the principles that govern in
Wisconsin:

  The Wisconsin Supreme Court recently summarized
its approach to deciding when a subsequent action
is barred in Sopha v. Owens-Corning Fiberglas
Corp., 601 N.W.2d 627 (Wis. 1999). There the
court indicated that three factors had to be
present in order to preclude the later action:
(1) identity between the parties or their
privies in the prior and present suits; (2) prior
litigation resulted in a final judgment on the
merits by a court with jurisdiction; and (3)
identity of the causes of action in the two
suits.

Id. at 637.

Froebel, 2000   WL 862519 at *4. See also Northern
States Power,   525 N.W.2d at 728; Patzer v. Board
of Regents of   the University of Wisconsin System,
763 F.2d 851,   855 (7th Cir. 1985).

  The first requirement--identity of the parties--
is plainly met here, as Staats and the Counties
were the opposing parties in both cases. We
assume for the sake of argument that the third
requirement--identity of claim--is also
satisfied, under the transactional approach that
prevails in Wisconsin. See Northern States Power,
525 N.W.2d at 728-29; Parks v. City of Madison,
492 N.W.2d 365, 370 (Wis. Ct. App. 1992), citing
Juneau Square Corp. v. First Wisconsin National
Bank, 364 N.W.2d 164, 170 (Wis. Ct. App. 1985).
Staats’s WFEA, ADA, and Rehabilitation Act claims
arose out of the same basic factual situation and
the same basic conduct of the Counties: the
elimination of his position of employment. Under
the transactional approach, Wisconsin would
probably find that these claims are the same. See
Brye v. Brakebush, 32 F.3d 1179, 1184 (7th Cir.
1994); DePratt v. West Bend Mutual Ins. Co., 334
N.W.2d 883, 886 (Wis. 1994) ("[The] claim is
coterminous with the transaction, regardless of
the number of substantive theories or variant
forms of relief flowing from these theories; the
transaction is the basis of the litigative unit
or entity which may not be split."), quoting
Restatement (Second) of Judgments sec. 24 cmt. a.


  As in Froebel, the problem arises with the
second factor--whether this is the kind of final
judgment to which Wisconsin gives preclusive
effect. As we explained in Froebel, there are
really two elements to this inquiry: finality and
jurisdiction. Here, it is undisputed that the
state court’s review of the LIRC decision
concluded with a final judgment. Its finality is
unaffected by the fact that the procedures
governing this type of proceeding are somewhat
truncated and the standard of review is quite
deferential. Standing behind the court’s judgment
were adversarial administrative proceedings with
sufficient procedural safeguards for the state
court findings to satisfy due process. See
Kremer, 456 U.S. at 483-85.

  As in Froebel, however, we must also consider
the jurisdiction of the state agency and state
court, because the second factor used by the
Wisconsin Supreme Court requires consideration of
the jurisdiction of the first forum. See 2000 WL
862519 at *5. Under Wisconsin’s law of judgments,
"[t]he earlier judgment is conclusive ’as to all
matters which were litigated or which might have
been litigated’ in that proceeding." Jantzen v.
Baker, 388 N.W.2d 660, 662 (Wis. Ct. App. 1986),
quoting DePratt, 334 N.W.2d at 885, quoted in
Parks, 492 N.W.2d at 368 (emphasis from Jantzen).
This proposition is reflected in the Second
Restatement:

A given claim may find support in theories or
grounds arising from both state and federal law.
When the plaintiff brings an action on the claim
in a court, either state or federal, in which
there is no jurisdictional obstacle to his
advancing both theories or grounds, but he
presents only one of them, and judgment is
entered with respect to it, he may not maintain
a second action in which he tenders the other
theory or ground. If however, the court in the
first action would clearly not have had
jurisdiction to entertain the omitted theory or
ground (or, having jurisdiction, would clearly
have declined to exercise it as a matter of
discretion), then a second action in a competent
court presenting the omitted theory or ground
should be held not precluded.

Restatement (Second) of Judgments, sec. 25 cmt.
e; see also id. sec. 26(1)(c).

  Under this reasoning, if there was a forum in
which all claims arising out of the single
transaction could have been brought, and the
plaintiff chooses a forum of limited jurisdiction
instead, then the plaintiff’s other claims are
barred by the doctrine of claim preclusion,
because the other claims could have been brought
in the forum of general jurisdiction. If, on the
other hand, no such forum exists, and the
plaintiff is forced to split her claims, a suit
in one forum does not bar the plaintiff from also
bringing suit in another. See Marrese v. American
Academy of Orthopaedic Surgeons, 470 U.S. 373,
382-83 & n.3 (1985).

  We explained Waid v. Merrill Area Public
Schools, 91 F.3d 857 (7th Cir. 1996), why claim
preclusion does not require litigants to choose
between claims:

For example, if state law creates a right and
gives a state agency exclusive original
jurisdiction over claims relating to that right,
pursuit of a claim with the agency does not
preclude the subsequent pursuit of related claims
based on federal or state rights that could not
have been asserted before the agency. Because the
principles of claim preclusion do not require
plaintiffs to make this kind of choice, she may
therefore proceed in the forum of limited and
exclusive jurisdiction without losing the
opportunity to later litigate the claims not
within that forum’s jurisdictional competency.

Id. at 865, citing Restatement (Second) of
Judgments sec. 26. Waid, which involved the same
administrative scheme before us now, held that
because the jurisdiction of the Equal Rights
Division is limited, its decision did not
preclude a plaintiff from bringing a separate
action in federal court to assert federal claims
arising from the same factual situation. Id. at
865-66. See also Jones v. City of Alton, 757 F.2d
878, 886-87 (7th Cir. 1985) (holding federal
claims and defenses were not precluded where
plaintiff tried to raise them in state
proceedings but they were improperly excluded).

  We find Waid indistinguishable from the present
case. The Equal Rights Division’s jurisdiction is
limited; it can hear claims brought under WFEA
but not the federal anti-discrimination statutes.
Even though in a free-standing case the Wisconsin
state courts could have heard Staats’s federal
law claims, see Yellow Freight System, Inc. v.
Donnelly, 494 U.S. 820, 821 (1990), the Equal
Rights Division could not: it lacked jurisdiction
to do so. See Waid, 91 F.3d at 865. Thus, it was
impossible for Staats to raise his federal claims
in addition to his WFEA claims in his action
brought before the Equal Rights Division.
Conversely, the Equal Rights Division was the
exclusive forum in which Staats could bring his
WFEA claims: the WFEA does not create a private
right of action, see Bourque v. Wausau Hosp.
Ctr., 427 N.W.2d 433, 437 (Wis. Ct. App. 1988);
Bachand v. Connecticut Gen. Life Ins. Co., 305
N.W.2d 149, 152 (Wis. Ct. App. 1981), and Staats
therefore could not assert his WFEA claims in
state or federal court.

  The net result was that Staats had no way to
consolidate his WFEA, ADA, and Rehabilitation Act
claims in any single forum. He was forced to
split his claims and litigate them in separate
fora. See Parks, 492 N.W.2d at 369-70 (holding
prior federal court action did not preclude
plaintiff’s later state action where federal
court declined to retain jurisdiction over
pendent state claims after granting summary
judgment for defendant on federal claims). Cf.
Balcerzak v. City of Milwaukee, 163 F.3d 993, 997
(7th Cir. 1998) (holding plaintiff’s sec. 1983
claims were precluded where, due to his
litigation strategy, he chose not to raise
government defendant’s race discrimination as a
defense to his termination in state proceedings);
Humphrey v. Theraldson Enters., Inc., 95 F.3d
624, 627 (7th Cir. 1996) (holding plaintiff’s
federal claims precluded when he chose to file
state law claims in administrative forum of
limited jurisdiction where state law provided a
private right of action).

  The Counties speculate that Staats could have
filed two suits at once in the state courts: one,
his appeal from the LIRC, see Wis. Stat. sec.sec.
111.395, 227.52, and two, an independent suit
raising the ADA and Rehabilitation Act claims.
Once the two suits were pending in the same state
court, they continue, that court could have
consolidated them for disposition. See Wis. Stat.
sec. 805.05. That theory, however, is
inconsistent with the Wisconsin Supreme Court’s
recent decision in Hanlon v. Town of Milton, No.
99-1980-CQ, 2000 WL 793968, *3-4 (Wis. June 21,
2000) (holding property owner’s failure to join
sec. 1983 action with certiorari proceeding under
Wis. Stat. Ch. 68 did not result in sec. 1983
action being claim precluded). Hanlon tells us
that the Wisconsin courts, though they might
permit the addition of the federal claims to the
administrative review petition, will not require
a litigant to do so and will not find claim
preclusion for those who do not. 2000 WL 793968
at *4. There is no reason not to apply the same
rule to Staats’s case.

  The Counties argue Waid is distinguishable
because that case involved a state administrative
decision and not a state court judgment. That
could be significant, if we were relying on the
principle that unreviewed state administrative
findings do not have claim preclusive effect.
Here, however, the critical variable is the scope
of jurisdiction of both the initial tribunal and
the reviewing court. Froebel involved a state
administrative tribunal (the Wisconsin Department
of Natural Resources) with jurisdiction broad
enough to entertain the plaintiff’s federal
environmental claims; in that situation, we found
that the plaintiff was not entitled to raise
those claims in a separate federal suit. In
Staats’s case, in contrast, the state court’s
jurisdiction on review was as circumscribed as
that of the Equal Rights Division and the LIRC:
it could hear only the WFEA claim and was not
required to consolidate other actions with it.
See Patzer, 763 F.2d at 858 n.8; Wis. Stat. sec.
227.57 (providing judicial review of
administrative proceedings "confined to the
record"). In short, because the WFEA claims had
to be adjudicated in a forum of limited
jurisdiction, Staats is not precluded from
bringing his federal claims in another forum.

  We note that there are other important
preliminary issues that the district court will
have to consider on remand. First, although we
have found that Staats is not barred by claim
preclusion from bringing his federal claims in
federal court, both Elliott and East Food &
Liquor suggest that his claim may be de facto
dead because of issue preclusion. Elliott, 478
U.S. at 797; East Food & Liquor, 50 F.3d at 1411.
See also Marrese, 470 U.S. at 385 ("[U]nder sec.
1738 state issue preclusion law may promote the
goals of repose and conservation of judicial
resources by preventing the relitigation of
certain issues in a subsequent federal
proceeding."); Lindas v. Cady, 515 N.W.2d 458,
465 (Wis. 1994) (holding plaintiff precluded from
relitigating issue of sex discrimination in state
court after having litigated issue in state
personnel commission proceedings); Moore v. Labor
and Indus. Review Comm’n, 499 N.W.2d 288, 292
(Wis. Ct. App. 1993) (holding federal court’s
adverse determination of whether plaintiff was an
"employee" under Title VII issue precluded his
claim that he was an "employee" under the WFEA).
At a broad level of generality, the Equal Rights
Division, the LIRC, and the reviewing court were
all considering the question whether Staats was
a victim of discrimination. On the other hand, it
is unclear whether the WFEA incorporates the
federal standards from the ADA and the
Rehabilitation Act, see Target Stores v. Labor
and Indus. Review Comm’n, 576 N.W.2d 545, 553
n.13 (Wis. Ct. App. 1998), and so it is possible
that the relevant issues are distinct enough that
Wisconsin would not find preclusion. The Counties
raised issue preclusion in their brief in support
of their motion for summary judgment, but the
district court did not rule on issue preclusion
because it based the decision on claim preclusion
instead.

  Second, assuming the issue has not been waived
(as neither party raised it apart from a comment
Staats’s counsel made at oral argument), it is
unclear if Title II of the ADA applies to public
employers, and, if so, whether administrative
exhaustion requirements apply. The circuits are
split as to whether Title II of the ADA covers
discrimination by public entities in their
employment practices. Compare, e.g., Bledsoe v.
Palm Beach County Soil and Water Conservation
Dist., 133 F.3d 816, 820 (11th Cir.), cert.
denied 525 U.S. 826 (1998) (applying Title II to
employment discrimination context), with
Zimmerman v. Oregon Dep’t of Justice, 170 F.3d
1169, 1173, reh’g en banc denied 183 F.3d 1161
(9th Cir.), petition for cert. filed 68 U.S.L.W.
3129 (August 10, 1999) (No. 99-243) (holding
Title II does not apply to employment
discrimination), as are the district courts of
this circuit, compare, e.g., Dertz v. City of
Chicago, 912 F.Supp. 319, 323-24 (N.D. Ill. 1995)
(applying Title II to employment claim brought
against public entity); Petersen v. University of
Wisconsin Board of Regents, 818 F.Supp. 1276,
1278 (W.D. Wis. 1993) (same), with Patterson v.
Illinois Dep’t of Corrections, 35 F.Supp.2d 1103,
1109-10 (C.D. Ill. 1999) (holding Title II does
not cover employment disputes between public
employers and their employees). This court has
never addressed the issue, and we decline to do
so without its being squarely presented to us.

  On a related point, we note that we also have
yet to decide whether Title II, like Title I,
requires that plaintiffs first exhaust their
state court remedies before they may seek their
federal remedies in federal court. Some lower
courts that have considered the issue have
concluded that Title II has no exhaustion
requirement. See, e.g., Petersen, 818 F.Supp. at
1280 (holding Title II does not require
exhaustion of remedies). That question too has
not been raised before us. Assuming it is neither
waived nor moot because of issue preclusion, we
leave any further proceedings on this issue for
the district court on remand.

III

  The judgment of the district court is REVERSED and
the case is REMANDED for further proceedings
consistent with this opinion.
