Of the Sixth Circuit, sitting by designation. *

United States Court of Appeals

For the First Circuit

No. 04-2656

AVX CORPORATION and AVX LIMITED,

Plaintiffs, Appellants,

v.

CABOT CORPORATION,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Richard G. Stearns, U.S. District Judge]

Before

 Boudin, Chief Judge,

Selya, Circuit Judge,

and Siler, Senior Circuit Judge. *

Evan Slavitt with whom Bodoff & Slavitt LLP was on brief for

appellants.

Robert S. Frank, Jr. with whom Brian A. Davis, Terrence M.

Schwab and Choate, Hall & Stewart LLP were on brief for appellee.

September 13, 2005
Cabot affiliate Cabot Performance Materials, Inc. was also a 1

defendant in the first law suit, but not in the second.

-2-

BOUDIN, Chief Judge. This appeal, raising an interesting

res judicata issue, grows out of two law suits between essentially

the same parties: AVX Corporation and AVX Limited (collectively,

"AVX"), and Cabot Corporation ("Cabot"). AVX makes electronic 1

components and other products in which the metallic element

tantalum is sometimes employed. Cabot purchases tantalum, converts

it into powder or wire, and sells these products to manufacturers

such as AVX.

Because the present case was resolved on a motion to

dismiss, we accept as true the allegations in AVX's complaint.

Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir. 1996). In early 2000,

AVX and Cabot, who had done business for some time, signed a letter

of intent to enter into a two-year tantalum purchase agreement.

Later in the year, as the market for tantalum tightened, the

parties signed a final five-year agreement (effective January 1,

2001) with quantity and price terms less favorable to AVX than

those contemplated by the letter of intent.

In July 2002, AVX Corporation sued Cabot and a Cabot

affiliate in the federal district court in Massachusetts, charging

them with unlawful price discrimination under the Robinson-Patman

Price Discrimination Act, 15 U.S.C. § 13 (2000), and asserting

claims under Massachusetts law; one aim of the suit was to
-3-

invalidate the five-year agreement and to have the 2000 letter of

intent treated as a binding contract. Although the complaint

asserted diversity jurisdiction, AVX Corporation and Cabot

Corporation are both Delaware corporations, precluding diversity.

Nevertheless, the Robinson-Patman count is within the district

court's original jurisdiction, 28 U.S.C. § 1337 (2000), and the

state claims were potentially within the court's pendent

jurisdiction, id. § 1367.

On February 5, 2003, the court held a hearing on a motion

by Cabot to dismiss the action, during which the district judge

agreed with Cabot that the Robinson-Patman claim (and one of the

six state counts) had to be dismissed for failure to state a claim.

Specifically, the court found that the complaint's allegations did

not include all necessary elements of a Robinson-Patman claim,

although it said that AVX could try to repair the pleading

deficiency. The court also found that AVX Limited was a necessary

party and instructed AVX that it must amend the complaint to

include AVX Limited if it wished to move forward, giving AVX thirty

days to file any desired amendment.

Within thirty days AVX filed an amended complaint,

joining AVX Limited as a plaintiff and setting forth its state law

claims but no federal counts. Cabot responded by moving to dismiss

for lack of federal subject-matter jurisdiction, and shortly

thereafter Cabot filed a declaratory judgment action against AVX in
-4-

Massachusetts Superior Court seeking to have the state court

declare the five-year agreement valid. Then, before the district

court took any further action, AVX and Cabot filed a joint

stipulation of dismissal under Fed. R. Civ. P. 41(a)(1)(ii)

dismissing "this action . . . without prejudice . . . ."

Back in state court, AVX subsequently asserted, as

counterclaims, the state law claims asserted in its original

federal court complaint. After a nine-month delay, AVX then sought

to add to its counterclaims an additional count alleging violations

of the Sherman and Clayton Acts, 15 U.S.C. §§ 1, 14, as well as

state antitrust laws. This claim asserted that Cabot used its

monopoly power over certain tantalum products to force AVX to

purchase other tantalum products that it did not need--in antitrust

parlance, a classic tying violation. Once again, AVX targeted the

five-year purchase agreement signed in late 2000.

After the Superior Court denied the motion to amend--

federal courts have exclusive jurisdiction over federal antitrust

claims, 15 U.S.C. §§ 4, 15; see Gen. Inv. Co. v. Lake Shore & Mich.

S. Ry. Co., 260 U.S. 261, 286-87 (1922)--AVX filed the present law

suit against Cabot in federal district court, presenting the same

Sherman and Clayton Act claim it had asserted in its proposed

state-court amended counterclaim. The case was transferred to the

same district judge who had presided over AVX's original 2002
-5-

action. In due course, the district court dismissed the new

complaint on res judicata grounds.

The district court found that the case met the three-part

test for federal claim preclusion set forth in In Re Iannochino,

242 F.3d 36, 43 (1st Cir. 2001): it said that the original Rule

12(b)(6) dismissal of the Robinson-Patman claim was a final

judgment on the merits; that the new Sherman and Clayton Act claim

was sufficiently related to the Robinson-Patman claim to invoke res

judicata; and that the parties to the two federal actions were the

same. AVX now appeals to contest this ruling. Our review is de

novo. Porn v. Nat'l Grange Mut. Ins. Co., 93 F.3d 31, 33 (1st Cir.

1996).

The rules for res judicata, where a federal court is

considering the effect of its own prior disposition of a federal

claim on a newly brought federal claim, are a matter of federal

law. Apparel Art Int'l, Inc. v. Amertex Enters. Ltd., 48 F.3d 576,

582 (1st Cir. 1995). The rules have developed through judicial

decision, drawing on common law res judicata doctrine as it has

developed over time. This case does not involve collateral

estoppel (or issue preclusion) but rather the branch of res

judicata known as merger and bar (or claim preclusion).

Traditional merger and bar doctrine prevents a party from

asserting a claim previously decided on the merits by a final

judgment in another case between the same parties (or their
-6-

privies): the re-asserted claim is deemed "merged" into the prior

judgment if the plaintiff had won or "barred" by it if the

plaintiff had lost. See Restatement (Second) of Judgments § 18 &

cmt. a (1982) (merger); id. § 19 (bar). Ordinarily, a dismissal

for failure to state a claim is treated as a dismissal on the

merits, and there is abundant case law to this effect. E.g.,

United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d

220, 241 (1st Cir.), cert. denied, 125 S. Ct. 59 (2004); AcevedoVillalobos v. Hernandez, 22 F.3d 384, 388-89 (1st Cir.), cert.

denied, 513 U.S. 1015 (1994).

In the common-law vocabulary, a price discrimination

claim under the Robinson-Patman Act would not be the same claim as

monopolization or tying claims under the Sherman and Clayton Acts,

because the Robinson-Patman claim has quite different elements that

must be proved to make out the claim. So one might expect that

claim preclusion would not operate in the present case. However,

as a result of case law development, identity of claims in the

common-law sense is no longer a precondition to federal claim

preclusion. In most situations involving federal claims, it is now

enough to trigger claim preclusion that the plaintiff's second

claim grows out of the same transaction or set of related

transactions as the previously decided claim. Aunyx Corp. v. Canon

U.S.A., Inc., 978 F.2d 3, 6-7 (1st Cir. 1992), cert. denied, 507

U.S. 973 (1993); Kale v. Combined Ins. Co. of Am., 924 F.2d 1161,
-7-

1166 (1st Cir.), cert. denied, 502 U.S. 816 (1991). The implicit

rationale is that for the sake of efficiency, all such claims

should be brought together, if this is possible. In short, the res

judicata doctrine functions not only in its traditional role of

preventing repeat claims, but has become a compulsory joinder

requirement for closely related claims. Compare Fed. R. Civ. P.

13(a).

In this case, there is a substantial argument that the

Sherman and Clayton Act claim grows out of the same transaction or

set of transactions as the Robinson-Patman claim; the district

court so found, although AVX contests the ruling, and both

complaints focus on the same contract. We bypass the "same

transaction" issue because we conclude that the district court's

February 5, 2003, dismissal of the Robinson-Patman count was not a

"final judgment" and that the entire action was ultimately disposed

of by stipulation "without prejudice."

The first requirement for claim preclusion--the rules may

be somewhat different for issue preclusion, see Restatement

(Second) of Judgments § 13 & cmt. g--is that there be a final

judgment in the prior case. Id. §§ 13, 18-19. In this instance,

the district judge in the original federal action announced from

the bench his decision to dismiss the Robinson-Patman count (and

one state count); but a number of state claims were left pending,

quite apart from the leave given to amend the Robinson-Patman claim
-8-

within thirty days. At no point did the court enter a final

judgment as to all of the claims, Fed. R. Civ. P. 58, or a partial

final judgment as to the Robinson-Patman claim, Fed. R. Civ. P.

54(b).

The order from the bench patently did not constitute a

final judgment for purposes of the statutes and rules governing the

timing of appeals from final judgments. Ordinarily, a judgment is

not final unless it disposes of all claims against all parties,

although it is possible to have a partial final judgment as to some

claims or some parties under Fed. R. Civ. P. 54(b). In a few

instances, the statutes or doctrine also permit interlocutory

appeals (e.g., preliminary injunctions and certified controlling

questions of law, 28 U.S.C. § 1292), but no such exception is

applicable here.

In each of the cases cited by the district court and by

Cabot for the proposition that Rule 12(b)(6) dismissals have

claim-preclusive effect, the dismissal disposed of an entire

complaint, not just some subset of the plaintiff's claims. See

Karvelas, 360 F.3d at 223, 241; Acevedo-Villalobos, 22 F.3d at 386;

Isaac v. Schwartz, 706 F.2d 15, 16-17 (1st Cir. 1983) (decided

under Massachusetts law); Andrews-Clarke v. Lucent Techs., Inc.,

157 F. Supp. 2d 93, 97 (D. Mass. 2001); Connaughton v. New England

Tel. & Tel., No. 87-2369-MA, 1988 WL 34321, at *1 (D. Mass. Mar.
The Rule 12(b)(6) dismissal that was the source of the 2

Supreme Court's oft-cited footnote in Federated Dep't Stores, Inc.

v. Moitie, 452 U.S. 394 (1981), stating that "[t]he dismissal for

failure to state a claim under Federal Rule of Civil Procedure

12(b)(6) is a 'judgment on the merits,'" id. at 399 n.3, was

likewise a dismissal of "all of the actions 'in their entirety,'"

id. at 396.

-9-

18, 1988). As such, the dismissal in fact "end[ed] the litigation 2

on the merits and le[ft] nothing for the court to do but execute

the judgment," Acevedo-Villalobos, 22 F.3d at 388 (quoting

Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373-74

(1981)), and thus is properly considered a "final judgment" for

federal claim preclusion purposes.

A final judgment embodying the dismissal would eventually

have been entered if the state claims had been later resolved by

the court. Instead, before any further action by the court, AVX

and Cabot jointly dismissed the entire action without prejudice.

Even without the parties' use of the phrase, the entire action was

automatically dismissed without prejudice by virtue of Rule 41's

terms because the parties did not specify a dismissal with

prejudice. See Fed. R. Civ. P. 41(a)(1).

Thus, if the conventional finality tests for

appealability purposes are applied to determine the finality of a

judgment for claim preclusion purposes, there was never a final

judgment on the Robinson-Patman claim. There was only the

announcement of a dismissal, which would have matured into a final

judgment if the court had ever resolved the remaining claims.
-10-

Courts generally assume that the finality requirements in the two

spheres are interchangeable, 18A Wright, Miller & Cooper, Federal

Practice and Procedure: Jurisdiction 2d § 4432 & n.3, at 53, § 4434

& n.28, at 128 (2002) (collecting cases), and this approach

enhances predictability and avoids confusion. 

The Restatement does contemplate a possible softening of

the traditional final judgment requirement in certain cases

involving issue preclusion. Restatement (Second) of Judgments § 13

cmts. b, g. There is some case law support for this view. See,

e.g., Lummus Co. v. Commonwealth Oil Refining Co., 297 F.2d 80, 89

(2d Cir. 1961) (Friendly, J.), cert. denied, 368 U.S. 986 (1962).

However, while its language on the matter is not crystal clear, the

Restatement appears to adhere to the conventional finality test for

merger and bar. See Restatement (Second) of Judgments § 13 & cmt.

b. While Wright, Miller and Cooper recognize that this may produce

some incongruities in some circumstances, they too appear generally

to support this approach. See 18A Wright, Miller & Cooper, Federal

Practice and Procedure: Jurisdiction 2d § 4434 & nn. 28-30, at 128-

30.

There might be cases that would tempt a court to apply a

more flexible approach to defining finality for federal claim

preclusion purposes. Imagine, for example, that shortly before the

present case, another district court had completed a lengthy trial

of AVX's Robinson-Patman claim and entry of a final judgment was
-11-

awaiting only the disposition of other claims; at that point the

argument for giving the other court's ruling claim-preclusive

effect might appear to be a strong one. Indeed, one could

construct an entirely separate jurisprudence of finality for res

judicata responsive to its purposes rather than to concerns

governing immediate appealability vel non.

But every such deviation from the finality test used for

appealability purposes has a cost, namely, the uncertainty created

by having two different finality tests; it is not clear that much

would be gained; and there are some policy reasons for a single

test. In particular, an interim order that is not accompanied by

an express entry of final judgment "is subject to revision at any

time before the entry of judgment adjudicating all the claims and

the rights and liabilities of all the parties." Fed. R. Civ. P.

54(b); see also, e.g., United States v. Arkansas, 791 F.2d 1573,

1576 (8th Cir. 1986). In all events, nothing in the present facts

suggests that this is a case for an innovating departure from the

prevailing final judgment requirement for federal claim preclusion.

Cabot's position in this case is further weakened by the

dismissal of the entire original federal action without prejudice

by stipulation of the parties. The district court took the view

that at the point that this occurred, "there was no remaining

federal claim in the lawsuit." But this assumes the premise; the

Robinson-Patman claim was in some sense still in the law suit (the
-12-

dismissal could have been reconsidered or eventually appealed) and

in some sense out (absent reconsideration by the judge, it could

not have been pursued at trial without an amendment to the

complaint--and the original time set for amending had expired). 

What was dismissed without prejudice was "the action" in

which a Robinson-Patman claim had been asserted. If the

stipulation is taken at face value, it is easy enough to read it as

encompassing all claims asserted in the law suit at any stage;

Cabot would certainly have been aggrieved if, as soon as the

stipulation were signed, AVX had sought entry of a final judgment

on the Robinson-Patman claim and then attempted to appeal that

dismissal. In one earlier case we said as to a voluntary

dismissal:

Absent explicit conditions to the contrary,

the prior proceedings became a nullity. We

agree with the [In re] Piper [Aircraft

Distrib. Sys. Antitrust Litig., 551 F.2d 213

(8th Cir. 1977)] and [Cabrera v. Municipality

of Bayamon, 622 F.2d 4 (1st Cir. 1980)] panels

that, once an action has been voluntarily

discontinued, all markings are erased and the

page is once again pristine.

Sandstrom v. ChemLawn Corp., 904 F.2d 83, 86 (1st Cir. 1990); see

also Piper, 551 F.2d at 219 (voluntary dismissal without prejudice

under Fed. R. Civ. P. 41(a)(1)(i) "carries down with it previous

proceedings and orders in the action, and all pleadings, both of

plaintiff and defendant, and all issues, with respect to

plaintiff's claim" (internal quotation mark omitted)). Whether or
-13-

not there are qualifications to this generalization, Cabot does not

explain how it is to be reconciled with the district court decision

in this case.

Admittedly, the parties almost surely did not expect that

the Robinson-Patman claim was ever going to be resurrected in this

law suit or any other. If Cabot had insisted, AVX might well have

agreed that the stipulation be drafted to say that the dismissal

was without prejudice except that the Robinson-Patman claim was

dismissed with prejudice. But Cabot did not so insist. However

the stipulation is read, it certainly does not itself constitute a

dismissal of the Robinson-Patman claim with prejudice; at best, it

leaves Cabot free to argue that the original dismissal was a final

judgment--a position we have rejected.

Of course, AVX has not sought to resurrect the RobinsonPatman claim; what Cabot is losing is the arguable ability to

foreclose other antitrust claims (under the Sherman and Clayton

Acts) on which the district court never pronounced. It is hard to

shed too many tears for Cabot because it now has to defend against

claims not previously resolved on the merits at all. In the

unlikely event that AVX sought to assert the Robinson-Patman claim

now--which it has not attempted--the district judge would likely

make short work of the effort. 

Rather, the real loser in this instance is the interest

in judicial efficiency that lies behind the replacement of the
-14-

common law rule defining claims narrowly with the present

transactional test. See Apparel Art Int'l, 48 F.3d at 583 (quoting

Allen v. McCurry, 449 U.S. 90, 94 (1980)); see also Bay State HMO

Mgmt., Inc. v. Tingley Sys., Inc., 181 F.3d 174, 181-82 (1st Cir.

1999), cert. denied, 528 U.S. 1187 (2000). Rule 41(a)(1)(ii)

evidently permits parties to circumvent this interest for reasons

of their own by dismissing without prejudice and without the

district court's consent. There is no limit on when such a

stipulation can be filed, and it could easily occur after the court

had done considerable work on an action.

But one side usually has an interest in resisting such an

unqualified dismissal without prejudice as to any claim on which it

effectively prevailed (albeit short of final judgment), since

otherwise the case can later be resurrected. Further, there is

some interest in letting the parties agree to halt litigation, and

even if there is a net loss in efficiency in a particular case, it

was up to those who framed and approved Rule 41 to balance

efficiency for the court against party autonomy.

There is relatively little circuit case law on the

problem posed in this case. A Seventh Circuit case uses the same

approach we have adopted and so supports our position. See Gilbert

v. Braniff Int'l Corp., 579 F.2d 411 (7th Cir. 1978) (involving

dismissal with leave to amend). But the decision was analyzing the

effect of an earlier decision in a state court where the
-15-

formalities of finality were somewhat different than those in a

federal court; and it is worth noting that in the Seventh Circuit

case a dissenting judge thought that res judicata should apply to

bar the second action. Id. at 414 (Pell, J., dissenting).

Contrary to Cabot's contention, this case is not

controlled by our prior decision in Kale. There, Kale brought a

federal age discrimination suit in the district court together with

associated state claims; when the district court found the federal

claim barred by the statute of limitations, it dismissed the

pendent state claims without prejudice--Kale having not troubled to

press them based on diversity jurisdiction which unquestionably

existed. Kale, 924 F.2d at 1163-64. When Kale then brought new

state claims in state court, the employer removed the new action to

federal court where the judge then invoked res judicata to dismiss

the state claims and we affirmed. Id. at 1164, 1169.

In Kale, there was a final judgment adjudicating the

federal claim and thus a traditional basis for the operation of res

judicata. Kale, 924 F.2d at 1165. The district court in

dismissing related state claims had said that this was without

prejudice, but this court said that because the state claims could

have been pursued in the first law suit based on diversity

jurisdiction, ordinary res judicata rules applied to bar the new

law suit on the same claims. Id. at 1166-67. In this case, there
-16-

is no final judgment on the Robinson-Patman claim so res judicata

cannot operate.

The judgment of the district court is vacated and the

matter remanded for further proceedings consistent with this

decision. Costs are taxed in favor of the Appellants.

It is so ordered.