               Vacated by Supreme Court, June 23, 2008




                            PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


LAVONNA EDDY; VERNON EDDY;                
KATHY LANDER; MARK LANDER,
              Plaintiffs-Appellants,
                and
ANN EDDY,                                         No. 04-2505
                             Plaintiff,
                 v.
WAFFLE HOUSE, INCORPORATED,
               Defendant-Appellee.
                                          
           Appeal from the United States District Court
         for the District of South Carolina, at Charleston.
                 David C. Norton, District Judge.
                         (CA-03-2183-2-18)

                      Argued: September 21, 2005

                        Decided: April 6, 2007

 Before WIDENER, NIEMEYER, and MICHAEL, Circuit Judges.



Affirmed by published opinion. Judge Widener wrote the opinion, in
which Judge Niemeyer concurred. Judge Michael wrote a dissenting
opinion.


                             COUNSEL

ARGUED: Mary Elizabeth Kohart, DRINKER, BIDDLE & REATH,
Philadelphia, Pennsylvania, for Appellants. Nancy Elizabeth Rafuse,
2                    EDDY v. WAFFLE HOUSE, INC.
ASHE, RAFUSE & HILL, L.L.P., Atlanta, Georgia, for Appellee.
ON BRIEF: Gerald S. Hartman, DRINKER, BIDDLE & REATH,
L.L.P., Washington, D.C., for Appellants. William B. Hill, Jr., Sandra
Kim, ASHE, RAFUSE & HILL, L.L.P., Atlanta, Georgia, for Appel-
lee.


                              OPINION

WIDENER, Circuit Judge:

   This case is an appeal from the final judgment of the U.S. District
Court of the District of South Carolina. The plaintiffs, an extended
black family, stopped to eat at a Waffle House restaurant in Walter-
boro, South Carolina. There, one of the plaintiffs, Mark Lander, alleg-
edly was told that the restaurant didn’t serve black people.1 He then
collected his family, who had not heard the remark, and left the res-
taurant.

   All the family members then filed this lawsuit, alleging a violation
of 42 U.S.C. § 1981, and § 2000a.2 Additionally, the plaintiffs alleged
violations of South Carolina state law, specifically, S.C. Code Ann.
§ 45-9-10 and § 45-9-30. After the close of discovery, the defendant
moved for summary judgment on all claims. The district court granted
the defendant’s motion with respect to all family members save Mark
Lander, the only individual who allegedly heard the derogatory
remark. Mr. Lander’s case then proceeded to jury trial which ended
with the defendant’s verdict. This appeal followed. We have jurisdic-
tion under 28 U.S.C. § 1291. For the reasons following, we affirm.

                                   I.

  On July 6, 2000, the plaintiffs, Mark and Kathy Lander, a married
couple, Vernon and Ann Eddy, a married couple,3 and Miss Lavonna
    1
    The actual comment allegedly was "We don’t serve niggers here."
    2
    Ann Eddy died during the pendency of the litigation. Her claim is not
being pursued.
  3
    Mrs. Eddy is Mrs. Lander’s aunt.
                     EDDY v. WAFFLE HOUSE, INC.                        3
Eddy, a female and granddaughter of Mr. and Mrs. Eddy stopped for
lunch at the Walterboro Waffle House in South Carolina.4 As Mr.
Lander walked towards a booth, he allegedly heard a waitress utter
the inflammatory remark. Mr. Lander, understandably upset at what
he perceived to have occurred, communicated the comment to the rest
of the group and decided, together with the Eddys, to leave the restau-
rant.

   On July 2, 2003, the Landers and the Eddys commenced the pres-
ent action. The district court granted summary judgment to defendant
with respect to claims of the Eddys and Mrs. Lander. The court rea-
soned that since neither the Eddys nor Mrs. Lander heard the remark
allegedly uttered by one of the waitresses,5 they were not denied ser-
vice. Employing the same reasoning throughout, the court granted
summary judgment to the defendant on both federal and state law
claims of the Eddys and Mrs. Lander. The court denied defendant’s
motion for summary judgment with respect to Mr. Lander, and that
case proceeded to a jury trial which ended in the verdict for the defen-
dant.

   At trial the following events questioned in this appeal are alleged
to have occurred. First, during his opening statement, the defense
counsel said "Mark Lander will tell you that . . . he heard the state-
ment, they don’t serve niggers here." (emphasis added). Second, dur-
ing the closing argument, the defense counsel made a visual
presentation to the jury wherein he compared the stacks of depositions
obtained by the plaintiffs to that obtained by the defendant. The argu-
ment goes that despite the significantly greater number of pages col-
lected by the plaintiffs he still failed to prove his case. According to
the plaintiffs, however, the defense counsel improperly manipulated
the stacks by using condensed transcripts in Waffle House’s stack and
adding extraneous materials into Mr. Lander’s stack. Third, during the
  4
     The Eddys and Mr. Lander entered the restaurant together, while Mrs.
Lander briefly stayed behind, but was intending to join the rest of the
party shortly.
   5
     It is undisputed that the only direct, acknowledged communication
between the Eddys and a Waffle House employee was a waitress’ inquiry
into how she might serve them: "May I help you?" As stated previously,
Mrs. Lander was not inside the restaurant at the time. See ante n.4.
4                     EDDY v. WAFFLE HOUSE, INC.
closing argument, defense counsel stated that based on his own obser-
vations during trial, it was clear that Mr. Lander did not even recog-
nize the waitress who allegedly made the racist remark when the
waitress walked into the courtroom and gave testimony. Fifth, and
finally, in the course of the trial, the district court excluded evidence
of other similar complaints against Waffle House as irrelevant.

   In the present appeal, the plaintiffs contend that the district court
erred when it granted summary judgment with respect to the Eddys’
and Mrs. Lander’s claims against the defendant. The plaintiffs further
contend that the district court abused its discretion in making the fol-
lowing rulings: 1) not granting a mistrial or issuing a curative instruc-
tion in response to the defendant’s counsel’s opening statement; 2)
not granting a curative instruction in response to the defendant’s
counsel’s closing argument; 3) excluding certain evidence from trial.

    We address each of the plaintiffs’ contentions in turn.

                                   II.

   We review a grant of summary judgment de novo, viewing the
facts in the light most favorable to the nonmoving party. Francis v.
Booz, Allen & Hamilton, Inc., 452 F.3d 299, 302 (4th Cir. 2006). We
review the district court’s decisions on such evidentiary matters of
relevance for abuse of discretion. Bright v. Coastal Lumber Co., 962
F.2d 365, 371 (4th Cir. 1992). Similarly, we review for abuse of dis-
cretion the district court’s decisions on grant or denial of a mistrial
or a curative instruction in response to counsel’s opening statements
and closing argument. See Bright, 962 F.2d 365, 370 (4th Cir. 1992).

                                  III.

   We are of opinion that the district court erred in granting summary
judgment to the defendant on the claims of Mrs. Lander and those of
the Eddys. The district court erred in concluding that the Eddys and
Mrs. Lander were not denied service simply because they were out-
side the earshot of the alleged racist remark.

                                   A.

   For the purposes of this discussion, we assume, as we must, that
the remark was actually uttered, was heard by Mr. Lander, and was
                     EDDY v. WAFFLE HOUSE, INC.                        5
related by him to the rest of his group. See Francis, supra, 452 F.3d
at 302. Under these facts, we must conclude that the Eddys and Mrs.
Lander were denied service in no less a degree than Mr. Lander who
actually heard the remark.

   "To prove a § 1981 claim, [ ] a plaintiff must ultimately establish
both that the defendant intended to discriminate on the basis of race,
and that the discrimination interfered with a contractual interest."
Denny v. Elizabeth Arden Salons, Inc., 456 F.3d 427, 434 (4th Cir.
Aug. 9, 2006). Certainly if the defendant’s employee uttered the
phrase she is alleged to have uttered (as we must assume) that is
prima facie evidence of intent to discriminate on the basis of race. See
Spriggs v. Diamond Auto Glass, 242 F.3d 179, 185 (4th Cir. 2001);
Walker v. Thompson, 214 F.3d 615, 626 (5th Cir. 2000). We are
therefore left with the question of whether "the discrimination inter-
fered with a contractual interest." Denny, supra.

    We agree with the Fifth Circuit that "dining at a restaurant gener-
ally involves a contractual relationship that continues over the course
of the meal and entitles the customer to benefits in addition to the
meal purchased." Arguello v. Conoco, Inc., 330 F.3d 355, 360 (5th
Cir. 2003). Certainly, a reasonable person would not expect to be
served in an openly hostile environment. As we have said in Spriggs,
supra, "no single act can more quickly . . . create an abusive environ-
ment than the use of an unambiguously racial epithet such as ‘nigger’
. . . ." 242 F.3d at 185. It is irrelevant whether the customer heard the
epithet for himself or whether he came to know through somebody
else that such language is being used. In either case, a reasonable per-
son would feel it to be a hostile environment.

   Furthermore, it should be noted that the Eddys and the Landers
arrived in the restaurant as a family. One would certainly not expect
anyone in the party to stay and feel welcome when other members of
the same party have been subject to the racial epithets. By denying
service to one member of the party, the defendant effectively denied
service to the other members of the same party. Accordingly, the dis-
trict court erred when it granted summary judgment to the defendant
with respect to the § 1981 claims of Mrs. Lander and the Eddys. For
the same reasons we also hold that it was error to grant summary
6                     EDDY v. WAFFLE HOUSE, INC.
judgment to the defendant on § 2000a and South Carolina state law
claims of Mrs. Lander and the Eddys.

                                    B.

   That, however, is not the end of our inquiry. In view of our decid-
ing here that summary judgment was erroneous, we must inquire
whether failure to do so was prejudicial or was harmless error.

   The defendant argues that even if the grant of summary judgment
was in error, the error was harmless because the claims of Mrs. Lan-
der and the Eddys are the same and based on identical facts as those
of Mr. Lander, which were in turn fully tried to a jury. Thus, the argu-
ment goes, there is no need to allow a separate trial on the claims of
Mrs. Lander and the Eddys, because all issues relevant to their claims
have been heard and rejected by a jury. We agree and have considered
almost exactly the same fact situation in Street, infra.

    Generally,

      summary judgment can be affirmed on appeal only if the
      evidence available to the trial judge at the time he ruled on
      the motion established that there was no genuine issue of
      material fact. This case is extraordinary, however, in that the
      facts material to the [defendant’s] liability were fully devel-
      oped in the subsequent trial against Officer Surdyka.

Street v. Surdyka, 492 F.2d 368, 374-75 (4th Cir. 1974). In the case
at bar, whatever facts may have been in dispute were resolved in the
subsequent jury trial which absolved the defendant. In the ordinary
situation, we apply the doctrine of collateral estoppel to bar relitiga-
tion of an issue that has already been judicially decided. See Sedlack
v. Braswell Servs. Group, 134 F.3d 219, 224 (4th Cir. 1998).

   For collateral estoppel to apply, the proponent must establish that
(1) the issue sought to be precluded is identical to one previously liti-
gated; (2) the issue must have been actually determined in the prior
proceeding; (3) determination of the issue was a critical and necessary
part of the decision in the prior proceeding; (4) the prior judgment
                      EDDY v. WAFFLE HOUSE, INC.                        7
must be final and valid; and (5) the party against whom preclusion is
asserted must have had a full and fair opportunity to litigate the issue
in the previous forum. Sedlack, 134 F.3d at 224. It is clear that criteria
(1)-(4) are satisfied in this case. Certainly, whether or not the racist
statement was actually made was central to the resolution of Mr. Lan-
der’s claim and is the very issue that would be litigated by Mrs. Lan-
der and the Eddys. The only question is whether Mrs. Lander and the
Eddys "had a full and fair opportunity to litigate the issue."

   The Street case is persuasive, even if not controlling. It is on almost
the same facts as the present case. There, Street sued an officer and
two police cadets, under 42 U.S.C. § 1983, for making an allegedly
unlawful arrest. We reasoned that the district court erred if its grant-
ing of summary judgment to the cadets was because it reasoned that
they were not acting under color of law. Street, 374 F.2d at 374-376
and n.10. The case proceeded to trial against the remaining officer
and the jury returned a verdict absolving the officer of liability. On
appeal we held that although it would have been a legal error for the
district court to have granted summary judgment on the claim against
the cadets, "the uncontroverted evidence in the record at the time of
entry of summary judgment, as embellished and explained by Street’s
[the plaintiffs’] subsequent testimony, convinces us that Street is not
entitled to recovery and that a remand for trial against the cadets
would be to no avail." Street, 492 F.2d at 375 (emphasis added). This
court affirmed the judgment of the district court.

  The same logic holds with equal force in the present case. The evi-
dence in the record at the time of summary judgment "as embellished
and explained" by subsequent trial testimony, convinces us that a
remand for trial on the Eddys’ and Mrs. Lander’s claim "would be to
no avail."

   In reaching this conclusion, we are in agreement with the Ninth
Circuit. In Jackson v. Hayakawa, 605 F.2d 1121 (9th Cir. 1979), the
Ninth Circuit faced a similar situation as that present here. In Jackson,
400 students were arrested during a demonstration. Some of the
arrestees later filed suits seeking declaratory judgment challenging
several state statutes. A three-judge district court in Carrillo v.
Hayakawa, No. C—50808 (N.D. Cal., June 27, 1969), rejected the
students’ claims. Subsequently, a different group of students, not
8                     EDDY v. WAFFLE HOUSE, INC.
party to the original action filed a new lawsuit. The district court held,
and the Ninth Circuit affirmed, that the new complaint is barred by
res judicata. In its opinion the court stated:

     The rights sought to be vindicated remain the same, the pas-
     sage of years has not altered their character in any way.
     Both cases arose out of the mass arrests which occurred on
     January 23, 1969.

                                   ***

     Plaintiffs argue that the parties to the Carillo suit are not the
     same as those involved in the present case. They claim that
     Carillo involved different plaintiffs. Although the named
     plaintiffs may have been different, we otherwise disagree
     with this contention. Initially, courts are no longer bound by
     rigid definitions of the parties or their privies for the pur-
     poses of applying collateral estoppel or res judicata. Carrillo
     was brought on behalf of all those who were arrested on
     January 23 at the College. It was brought as a class action
     and treated by the court as a class action. Virtually all of
     those arrested were represented by counsel in the Carrillo
     case. The plaintiffs fail to raise any other arguments as to
     why this claim should not be barred by res judicata.

Jackson, 605 F.2d at 1125-26 (internal citations and footnotes omit-
ted).

   The present facts are similar to the ones in Jackson. The "rights
sought to be vindicated" by the Eddys and Mrs. Lander are the same
as those of Mr. Lander. Both cases arose out of the same incident. All
plaintiffs were represented by the same attorney. On these facts, we
agree with the Ninth Circuit that the claims of the Eddys and Mrs.
Lander should be barred.

   As the jury deemed Mr. Lander’s evidence, including his own testi-
mony, to be insufficient for him to prevail, it necessarily follows that
the same evidence would be insufficient for Mrs. Lander and the
Eddys to prevail.
                      EDDY v. WAFFLE HOUSE, INC.                        9
   As a result, Mrs. Lander’s and the Eddys’ legal claims must fail
with those of Mr. Lander. Because, as explained below, we find that
there was no error at Mr. Lander’s trial, we affirm the judgment of
the district court as to Mrs. Lander and the Eddys.

                                   IV.

   Mr. Lander argues on appeal that the district court committed
errors when it refused to issue a curative instruction or declare a mis-
trial in response to defense counsel’s statements during the opening
statement and closing argument. We are of opinion the argument is
without merit.

   According to Mr. Lander, defense counsel’s statement during his
opening statement that "Mark Lander will tell you that . . . he heard
the statement, they don’t serve niggers here," when Mr. Lander actu-
ally heard the phrase "we don’t serve niggers here," prejudiced and
confused the jury (emphasis added). Mr. Lander argues that defense
counsel led the jury to believe that the statement, being in third person
plural, was made by a customer as opposed to having been made by
an employee who would have used first person plural. Even if we
were inclined to agree with Mr. Lander that counsel’s statement was
prejudicial and confusing, we cannot conclude that it was "so flagrant
or inflammatory as to affect the fairness of the trial." Bright, 962 F.2d
at 370. In light of that fact, we conclude that the district court did not
abuse its discretion in denying a motion for a mistrial. Whatever prej-
udice may have resulted from defense counsel’s opening statement
(and we are far from convinced that there was any)6 is negated by the
court’s proper instruction that "that counsel’s statements were not evi-
dence." Martin v. Cavalier Hotel Corp., 48 F.3d 1343, 1358 (4th Cir.
1995) (internal quotations omitted). We therefore affirm the district
  6
    We note that in his deposition, J.A. 207A, Mr. Lander himself several
times used the third person plural. He now argues that he was simply
using a correct grammatical construction in relaying what he heard,
while always maintaining that the original phrase was in first person plu-
ral. Br. at 11, J.A. 1160-61A. However, that cuts both ways. The defense
counsel also can be said to have used a "correct grammatical construc-
tion" when relaying what his clients were accused of saying.
10                     EDDY v. WAFFLE HOUSE, INC.
court on this issue. The court could hardly have been more clear. Its
instruction to the jury was:

      Certain things are not evidence and you may not consider
      them in deciding what the facts are. I’ll list them for you
      now. Arguments and statements by the lawyers are not evi-
      dence. The lawyers are not witnesses. What they said in
      their opening statements, closing arguments, and at other
      times, is intended to help you interpret the evidence, but it
      is not evidence.

      If the facts as y’all remember them differ from the way the
      lawyers have stated them, your memory then controls.

We affirm the district court as to the decision with respect to the
opening statement.

   Next, Mr. Lander argues that the district court failed to give cura-
tive instructions in response to defense counsel’s supposedly mislead-
ing presentation of the volumes of depositions during the closing
argument. Again, however, Mr. Lander fails to persuade us that the
prejudice resulting from this supposed misrepresentation was "so fla-
grant or inflammatory as to affect the fairness of the trial." Bright,
962 F.2d at 370. We are consequently convinced that the district court
did not abuse its discretion in not instructing the jury on its own
motion, no objection having been made by the plaintiffs. Neither was
there a motion for mistrial. Next, Mr. Lander argues that the defen-
dant’s counsel provided testimony in his closing statement by com-
menting on Mr. Lander’s supposed reaction to the testimony of the
waitress who was accused of making the racist remark. Again, we
cannot conclude that this comment (even if improper) was "so fla-
grant or inflammatory as to affect the fairness of the trial," Bright,
962 F.2d at 370, especially in light of the proper jury instruction "that
counsel’s statements were not evidence." We do not find that the dis-
trict court abused its discretion in not issuing a curative instruction
and affirm it on this issue.7
  7
     The assignment of error states:
      THE COURT ABUSED ITS DISCRETION IN NOT GRANT-
      ING A MISTRIAL OR INSTRUCTING THE JURY TO DIS-
                      EDDY v. WAFFLE HOUSE, INC.                        11
   Finally, Mr. Lander argues that the district court abused its discre-
tion in failing to admit evidence of other lawsuits and complaints
against Waffle House. The plaintiffs recognize that this evidence
would be hearsay and thus inadmissible if offered for the truth of the
matter asserted. Instead, they argue that the evidence would be
offered to prove that the defendant was "on notice" of the racist
behavior of its employees. But the jury concluded that there was no
actionable racist behavior toward Mr. Lander. However, even if we
concluded that this evidence were relevant, we cannot conclude that
the district court decision to preclude the evidence was "arbitrary and
irrational." Mohr, 318 F.3d at 618. Aside from relevancy issues, the
evidence was hearsay, and its exclusion was not an abuse of discre-

    REGARD THE STATEMENTS AND ACTIONS OF
    DEFENSE COUNSEL IN HIS CLOSING ARGUMENT,
    WHICH CONFUSED AND MISLED THE JURY. Br. p.34
  We have read each appendix and transcript reference in the brief to
support this assignment of error: Br. pp.34-37; J.A. 1224A-1225A;
1096A; 1228A; 1227A; and 1144A. The facts disclosed in those refer-
ences to the record do not support the assignment of error. Rather, the
plaintiffs depend on uncomplimentary adjectives and adverbs, for exam-
ple: "Defense counsel’s testimony about evidence and matters not in the
record," Br. p.34; "Counsel’s demonstration was, at best, highly mislead-
ing and, at worst, intentionally false," Br. p.34; "This misleading and
confusing characterization of the evidence," Br. p.35; and "His agenda of
misleading the jury," Br. p.36.
  Despite all of this conduct now complained of, the plaintiffs’ attorneys
did not move for a mistrial in the district court, contemporaneously or
otherwise. No motion was made to set aside the verdict or to alter or
amend the judgment, and plaintiffs apparently simply collected previ-
ously unspoken grievances with the trial court for the first time in their
brief on appeal.
  Along the same line, the special verdict form was not objected to and
was "Did the plaintiff prove by the preponderance of the evidence each
of the elements of his 1981 claim against the defendant?" The answer of
the jury was "no." There was no objection to the court’s jury instructions.
Even now, there is no claim that the evidence does not support the ver-
dict.
  Proceeding in the manner just outlined above does not add weight to
plaintiffs’ argument.
12                     EDDY v. WAFFLE HOUSE, INC.
tion. In short, we conclude that the district court did not abuse its dis-
cretion and affirm it on this issue.

                                   V.

   For the foregoing reasons, we conclude that the district court erred
in granting summary judgments to the defendant on the claims of
Mrs. Lander and the Eddys. However, we conclude that the error was
harmless because after a trial a jury rejected identical claims, based
on the same set of facts, of the remaining family member, Mr. Lander.
Because we find no error in the trial of Mr. Lander, we conclude that
the claims of Mrs. Lander and the Eddys also fall.

     The judgment of the district court is accordingly

                                                            AFFIRMED.

MICHAEL, Circuit Judge, dissenting:

   As an African-American family group sought service at a Waffle
House restaurant, one member of the family, Mark Lander, overheard
an employee say, "[W]e don’t serve niggers in here." This vile state-
ment, which Mr. Lander immediately reported to the other family
members, Kathy Lander, Vernon Eddy, Ann Eddy (now deceased),
and Lavonna Eddy, provides the basis for racial discrimination claims
by all of the family members, who were denied the opportunity to
enjoy a meal at the restaurant. I therefore agree with the majority that
the district court erred in granting summary judgment to Waffle
House on the discrimination claims of Kathy Lander, Vernon Eddy,
and Lavonna Eddy, none of whom actually heard the statement. I
respectfully dissent, however, from the majority’s conclusion that the
error was harmless on the ground that the three dismissed family
members would be collaterally estopped by the verdict returned
against Mr. Lander at his trial. The three dismissed family members
did not have a full and fair opportunity to litigate their claims. Mr.
Lander could not adequately represent the interests of the other family
members because the rights at stake are personal in nature, he was not
accountable to his family members for the results of the litigation, and
the district court did not explicitly or tacitly approve of Mr. Lander
                     EDDY v. WAFFLE HOUSE, INC.                     13
as a representative of the dismissed family members at his trial.
Because Mr. Lander did not represent the interests of the other family
members, the collateral estoppel doctrine does not preclude their
claims. Additionally, I respectfully dissent from the majority’s deter-
mination that the district court did not abuse its discretion when it
excluded evidence of prior complaints of racial discrimination made
against Waffle House. Because of the error in failing to admit this
evidence, Mr. Lander is entitled to a new trial.

                                  I.

   The facts bear repeating. On July 6, 2000, Mark Lander, his wife,
Kathy Lander, Mrs. Lander’s aunt and uncle, Ann and Vernon Eddy,
and the Eddys’ granddaughter, Lavonna Eddy, stopped at a Waffle
House restaurant in Walterboro, South Carolina, intending to eat.
Mrs. Lander stayed in the parking lot to finish an ice cream cone
while the others went inside to find a table. Mr. Lander, upon entering
the restaurant, heard an adult female voice say, "[W]e don’t serve nig-
gers in here." J.A. 189A, 202A. Mr. Lander looked in the direction
of the voice and saw a young girl and two white, female Waffle
House employees standing at the counter. He was certain that the
statement came from one of the two employees. All of the other cus-
tomers and staff members in the restaurant were white. Mr. Lander
went to the booth where the Eddys had seated themselves and told
them what he had heard. The family decided to leave and made no
response when a waitress came over and asked, "May I help you?"
J.A. 192A. Those departing met Mrs. Lander at the door, and Mr.
Lander told her about the discriminatory statement. Mrs. Lander
decided to call a customer complaints hotline listed on a poster in the
restaurant’s window. She called from inside the restaurant so the
employees could hear her conversation. In response to Mrs. Lander’s
complaint, Waffle House sent the Landers and Eddys coupons for use
at Waffle House restaurants. A Waffle House representative also
spoke to the employees on duty at the time of the incident about Waf-
fle House’s nondiscrimination policy. The representative ultimately
concluded that there was no evidence of discrimination.

   In July 2003 the Eddys and Landers sued Waffle House for viola-
tions of 42 U.S.C. § 1981, Title II (42 U.S.C. § 2000a), and South
Carolina law. The district court granted summary judgment against all
14                   EDDY v. WAFFLE HOUSE, INC.
of the family members except Mr. Lander because only he had heard
the statement. Mr. Lander’s case went to trial, and the court excluded
evidence of similar complaints of discrimination that had been made
against Waffle House before the family’s visit. The jury returned a
verdict for Waffle House. Ann Eddy died while the lawsuit was pend-
ing, and her claims were dropped. The four other family members
appeal.

                                   II.

   I respectfully disagree with the majority’s conclusion that the erro-
neous entry of summary judgment against three of the family mem-
bers was harmless. Specifically, collateral estoppel does not bar their
claims on the basis of Mr. Lander’s unsuccessful trial. The doctrine
of collateral estoppel promotes judicial economy and relieves parties
of undue burdens by preventing the retrial of issues actually deter-
mined and necessarily decided in a prior proceeding where there was
a full and fair opportunity to be heard. Va. Hosp. Ass’n v. Baliles, 830
F.2d 1308, 1311 (4th Cir. 1987). I recognize that the requirement of
strict mutuality (or complete identity) of parties between suits has
long been abandoned. Nevertheless, due process concerns require a
court to exercise some caution in binding nonparties to determinations
made in a prior proceeding. See Blonder-Tongue Labs., Inc. v. Univ.
of Ill. Found., 402 U.S. 313, 329 (1971). "[A]s a general rule, nonpar-
ties will not have had a full and fair opportunity to litigate the issues
raised in the previous action," unless the nonparties were in privity
with a prior party. See Va. Hosp. Ass’n, 830 F.2d at 1312. In general,
privity exists if the nonparty (1) controlled the original action, (2) is
a successor-in-interest to a prior party, or (3) was adequately repre-
sented by a prior party. Martin v. Am. Bancorporation Retirement
Plan, 407 F.3d 643, 651 (4th Cir. 2005). In other words, preclusion
will operate against a nonparty when he is "so identified in interest
with a party to former litigation that [the nonparty] represents pre-
cisely the same legal right in respect to the subject matter involved."
Jones v. SEC, 115 F.3d 1173, 1180 (4th Cir. 1997) (quotation marks
and citation omitted). The majority errs in concluding that Mr. Lander
adequately represented the interests of Mrs. Lander and the Eddys.

  Generally, representation is deemed adequate for preclusion pur-
poses in only the narrowest of circumstances. In Klugh v. United
                      EDDY v. WAFFLE HOUSE, INC.                       15
States, 818 F.2d 294 (4th Cir. 1987), this court held that adequate, or
virtual, representation should not be used as a basis for precluding the
claims of nonparties when (1) the interests of the parties and nonpar-
ties are separate; (2) the parties to the first action are not accountable
to the nonparties; or (3) the court did not at least tacitly approve the
virtual representation in the first action. Id. at 300. None of these fac-
tors is present here.

   First, Mrs. Lander and the Eddys have interests in litigating their
claims against Waffle House that are separate and distinct from the
interest of Mr. Lander. Racial discrimination "is a fundamental injury
to the individual rights of a person," and § 1981 guarantees "the per-
sonal right to engage in economically significant activity free from
racially discriminatory interference." Goodman v. Lukens Steel Co.,
482 U.S. 656, 661-62 (1987) (emphasis added). Similarly, the over-
riding purpose of Title II is "to remove the daily affront and humilia-
tion involved in discriminatory denials of access to facilities
ostensibly open to the general public." Daniel v. Paul, 395 U.S. 298,
307-08 (1969) (quotation marks and citation omitted). The family
members here may have suffered the same type of harm from the
same source, but each member suffered his or her own humiliation
from the discrimination. Thus, each had an interest in vindicating his
or her own right to freedom from such discrimination under the law.

   Second, applying collateral estoppel would be inappropriate
because Mr. Lander has no express or implied legal relationship with
the other family members that would make him accountable to them
with respect to their claims. See Klugh, 818 F.2d at 300; Media Techs.
Licensing, LLC v. Upper Deck Co., 334 F.3d 1366, 1370 (Fed. Cir.
2003). Generally, a party is accountable to another party only when
they share a legal relationship such as that between estate beneficia-
ries and administrators, parent corporations and their subsidiaries, and
trust beneficiaries and trustees. Pollard v. Cockrell, 578 F.2d 1002,
1008-09 (5th Cir. 1978). Mr. Lander’s familial ties to the dismissed
parties did not impose on him any legal obligation to vindicate their
interests at his trial. The absent family members may have had the
same lawyers as Mr. Lander, but once the family members were elim-
inated from the suit through summary judgment, the lawyers were
responsible for advocating solely on Mr. Lander’s behalf. Neither Mr.
16                    EDDY v. WAFFLE HOUSE, INC.
Lander nor the lawyers had any obligation to conduct his litigation in
a manner favorable to the absent family members.

   Finally, the district court did not exhibit any explicit or tacit
approval of Mr. Lander’s virtual representation of the other family
members. Tacit approval may be found when the court knew of a
relationship that gave a party authority to appear on behalf of a non-
party. See Martin, 407 F.3d at 651-52. In this case, the district court
could not have tacitly approved of Mr. Lander’s representation of the
absent family members’ interests because it concluded that they had
no interests to be represented (as shown by the summary judgment
against them), and the court had no evidence before it of any relation-
ship that would have made Mr. Lander legally accountable to his wife
and other family members with respect to their claims.

   The absent family members’ separate interests and Mr. Lander’s
lack of accountability to them should have foreclosed any determina-
tion that Mr. Lander adequately represented their interests in his case.
Accordingly, the district court’s grant of summary judgment against
them was not harmless. In concluding otherwise, the majority over-
looks the test announced in Klugh. It relies instead on two cases that
differ sharply from this one. Both of these cases involve plaintiffs
who were themselves parties or class members in the litigation that
precluded their claims. In Street v. Surdyka, 492 F.2d 368 (4th Cir.
1974), we affirmed a grant of summary judgment to nonparty defen-
dants because the same plaintiff had already been unsuccessful in liti-
gating the same claim on the same facts against another defendant. Id.
at 374-375. Similarly, in Jackson v. Hayakawa, 605 F.2d 1121 (9th
Cir. 1979), preclusion was invoked against plaintiffs who were mem-
bers of a class whose representatives had previously litigated the same
claim. Id. at 1126. In Street and Jackson there is no question that the
plaintiffs had a full and fair opportunity to litigate, or to have a class
representative litigate, all relevant issues of law and fact. The majority
mistakenly concludes, however, that these cases support a determina-
tion of harmlessness here. But in direct contrast to the situation in
Street and Jackson, Mrs. Lander and the Eddys never had an opportu-
nity to litigate their claims either directly or through a legally
accountable representative. Mrs. Lander and the Eddys were entitled
to their own day in court. I would therefore reverse the district court’s
grant of summary judgment against them.
                     EDDY v. WAFFLE HOUSE, INC.                       17
                                  III.

   During his trial Mr. Lander sought to introduce evidence of other
complaints of racial discrimination against Waffle House both before
and after the July 2000 incident. The evidence took the form of news
articles, legal pleadings, and testimony of Waffle House employees
who had witnessed similar discrimination. The district court granted
Waffle House’s motion in limine to exclude the evidence. Again, I
respectfully disagree with the majority and would hold that the district
court abused its discretion by excluding evidence of pre-July 2000
complaints. This evidence was relevant non-hearsay, and its exclusion
warrants a new trial.

   The Federal Rules of Evidence instruct that "[a]ll relevant evidence
is admissible, except as otherwise provided" by law or rule. Fed. R.
Evid. 402. Relevant evidence is defined broadly as "evidence having
any tendency to make the existence of any fact that is of consequence
to the determination of the action more probable or less probable than
it would be without the evidence." Fed. R. Evid. 401. A failure to
admit relevant evidence without a legally supported reason constitutes
an abuse of discretion and may require a new trial. See Westfield Ins.
Co. v. Harris, 134 F.3d 608, 615 (4th Cir. 1998).

   The district court did not clearly state its reasons for excluding the
complaints evidence. It lumped the pre-July and post-July 2000 evi-
dence together and deemed it all irrelevant because Waffle House’s
evidence of post-July 2000 training already had been excluded. While
this may have provided a reason for excluding complaints based on
post-July 2000 incidents, it does not explain why pre-July 2000 inci-
dents are irrelevant. The majority fails to acknowledge this significant
gap in the district court’s reasoning.

   The only explanation provided by the district court that covers the
pre-July 2000 evidence is the conclusory statement that newspaper
articles, which account for roughly one-fourth of the evidence, are
generally unreliable. The court did not explain how this prevented the
evidence from being used for the proposed non-hearsay purpose of
showing that Waffle House had notice of the potential ineffectiveness
of its anti-discrimination policies. The majority similarly ignores this
18                    EDDY v. WAFFLE HOUSE, INC.
possible use of the complaints and concludes that they are inadmissi-
ble hearsay.

   An out-of-court statement is not hearsay when it is "offered not for
[its] truth but to prove the extent of . . . a recipient’s notice of certain
conditions." 5-801 Weinstein’s Federal Evidence § 801.11[5][a]. Evi-
dence of prior complaints is often admitted to show notice of an
underlying problem that allegedly injured the plaintiff. See Benedi v.
McNeil-P.P.C., Inc., 66 F.3d 1378, 1385-86 (4th Cir. 1995); United
States v. Chavis, 772 F.2d 100, 105 (5th Cir. 1985); Worsham v. A.H.
Robins Co., 734 F.2d 676, 688-89 (11th Cir. 1984). Complaints prior
to the July 2000 incident are relevant to show that Waffle House had
notice of a potential discrimination problem in its restaurant chain and
knew that its anti-discrimination policies may have been inadequate.
This notice and knowledge is relevant to the issues of whether Waffle
House is liable for the actions of its employee and whether it acted
with sufficient intent or recklessness to warrant punitive damages.

   The erroneous exclusion of the prior complaints deprived Mr. Lan-
der of critical evidence of Waffle House’s knowledge of ongoing dis-
crimination and potential problems with its anti-discrimination
policies at the time of the incident. Because the district court failed
to differentiate between the relevance of the pre- and post-July 2000
complaints and failed to recognize the non-hearsay nature of this evi-
dence, I would grant Mr. Lander a new trial to give a jury the oppor-
tunity to assess his claim in light of this additional evidence.
