Source: https://www.law.cornell.edu/supct/html/99-1551.ZO.html
Timestamp: 2019-04-19 10:30:48+00:00

Document:
SEMTEK INTL INC. V. LOCKHEED MARTIN CORP.
Petitioner filed a complaint against respondent in California state court, alleging breach of contract and various business torts. Respondent removed the case to the United States District Court for the Central District of California on the basis of diversity of citizenship, see 28 U.S.C. § 1332 1441 (1994 ed. and Supp. IV), and successfully moved to dismiss petitioners claims as barred by Californias 2-year statute of limitations. In its order of dismissal, the District Court, adopting language suggested by respondent, dismissed petitioners claims in [their] entirety on the merits and with prejudice. App. to Pet. for Cert. 59a. Without contesting the District Courts designation of its dismissal as on the merits, petitioner appealed to the Court of Appeals for the Ninth Circuit, which affirmed the District Courts order. 168 F.3d 501 (1999) (table). Petitioner also brought suit against respondent in the State Circuit Court for Baltimore City, Maryland, alleging the same causes of action, which were not time barred under Marylands 3-year statute of limitations. Respondent sought injunctive relief against this action from the California federal court under the All Writs Act, 28 U.S.C. § 1651 and removed the action to the United States District Court for the District of Maryland on federal-question grounds (diversity grounds were not available because Lockheed is a Maryland citizen, Semtek Intl Inc. v. Lockheed Martin Corp., 988 F. Supp. 913, 914 (1997)). The California federal court denied the relief requested, and the Maryland federal court remanded the case to state court because the federal question arose only by way of defense, ibid. Following a hearing, the Maryland state court granted respondents motion to dismiss on the ground of res judicata. Petitioner then returned to the California federal court and the Ninth Circuit, unsuccessfully moving both courts to amend the formers earlier order so as to indicate that the dismissal was not on the merits. Petitioner also appealed the Maryland trial courts order of dismissal to the Maryland Court of Special Appeals. The Court of Special Appeals affirmed, holding that, regardless of whether California would have accorded claim-preclusive effect to a statute-of-limitations dismissal by one of its own courts, the dismissal by the California federal court barred the complaint filed in Maryland, since the res judicata effect of federal diversity judgments is prescribed by federal law, under which the earlier dismissal was on the merits and claim preclusive. 128 Md. App. 39, 736 A. 2d 1104 (1999). After the Maryland Court of Appeals declined to review the case, we granted certiorari. 530 U.S. 1260 (2000).
Petitioner contends that the outcome of this case is controlled by Dupasseur v. Rochereau, 21 Wall. 130, 135 (1875), which held that the res judicata effect of a federal diversity judgment is such as would belong to judgments of the State courts rendered under similar circumstances, and may not be accorded any higher sanctity or effect. Since, petitioner argues, the dismissal of an action on statute-of-limitations grounds by a California state court would not be claim preclusive, it follows that the similar dismissal of this diversity action by the California federal court cannot be claim preclusive. While we agree that this would be the result demanded by Dupasseur, the case is not dispositive because it was decided under the Conformity Act of 1872, 17 Stat. 196, which required federal courts to apply the procedural law of the forum State in nonequity cases. That arguably affected the outcome of the case. See Dupasseur, supra, at 135. See also Restatement (Second) of Judgments §87, Comment a, p. 315 (1980) (hereinafter Restatement) (Since procedural law largely determines the matters that may be adjudicated in an action, state law had to be considered in ascertaining the effect of a federal judgment).
Since the dismissal here did not otherwise specif[y] (indeed, it specifically stated that it was on the merits), and did not pertain to the excepted subjects of jurisdiction, venue, or joinder, it follows, respondent contends, that the dismissal is entitled to claim preclusive effect. Brief for Respondent 34.
is a complete bar to a new suit between [the parties or their privies] on the same cause of action (internal quotation marks and citations omitted)).
But over the years the meaning of the term judgment on the merits has gradually undergone change, R. Marcus, M. Redish, & E. Sherman, Civil Procedure: A Modern Approach 11401141 (3d ed. 2000), and it has come to be applied to some judgments (such as the one involved here) that do not pass upon the substantive merits of a claim and hence do not (in many jurisdictions) entail claim-preclusive effect. Compare, e.g., Western Coal & Mining Co. v. Jones, 27 Cal. 2d 819, 826, 167 P.2d 719, 724 (1946), and Koch v. Rodlin Enterprises, Inc., 223 Cal. App. 3d 1591, 1596, 273 Cal. Rptr. 438, 441 (1990), with Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 228 (1995) (statute of limitations); Goddard, supra, at 5051, 92 P.2d, at 806807, and Allston v. Incorporated Village of Rockville Centre, 25 App. Div. 2d 545, 546, 267 N. Y. S. 2d 564, 565566 (1966), with Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 399, n. 3 (1981) (demurrer or failure to state a claim). See also Restatement §19, Comment a and Reporters Note; 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure §4439, pp. 355358 (1981) (hereinafter Wright & Miller). That is why the Restatement of Judgments has abandoned the use of the termbecause of its possibly misleading connotations, Restatement §19, Comment a, at 161.
And even apart from the purely default character of Rule 41(b), it would be peculiar to find a rule governing the effect that must be accorded federal judgments by other courts ensconced in rules governing the internal procedures of the rendering court itself. Indeed, such a rule would arguably violate the jurisdictional limitation of the Rules Enabling Act: that the Rules shall not abridge, enlarge or modify any substantive right, 28 U.S.C. § 2072(b). Cf. Ortiz v. Fibreboard Corp., 527 U.S. 815, 842 (1999) (adopting a limiting construction of Federal Rule of Civil Procedure 23(b)(1)(B) in order to minimiz[e] potential conflict with the Rules Enabling Act, and [to] avoi[d] serious constitutional concerns). In the present case, for example, if California law left petitioner free to sue on this claim in Maryland even after the California statute of limitations had expired, the federal courts extinguishment of that right (through Rule 41(b)s mandated claim-preclusive effect of its judgment) would seem to violate this limitation.
Finally, if Rule 41(b) did mean what respondent suggests, we would surely have relied upon it in our cases recognizing the claim-preclusive effect of federal judgments in federal-question cases. Yet for over half a century since the promulgation of Rule 41(b), we have not once done so. See, e.g., Heck v. Humphrey, 512 U.S. 477, 488489, n. 9 (1994); Federated Department Stores, Inc. v. Moitie, supra, at 398; Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation, 402 U.S. 313, 324, n. 12 (1971).
use the phrase without prejudice as a contrast to adjudication on the merits); 9 id., §2373, at 396, n. 4 ( [W]ith prejudice is an acceptable form of shorthand for an adjudication upon the merits ). See also Goddard, 14 Cal. 2d, at 54, 92 P.2d, at 808 (stating that a dismissal with prejudice evinces [t]he intention of the court to make [the dismissal] on the merits). The primary meaning of dismissal without prejudice, we think, is dismissal without barring the defendant from returning later, to the same court, with the same underlying claim. That will also ordinarily (though not always) have the consequence of not barring the claim from other courts, but its primary meaning relates to the dismissing court itself. Thus, Blacks Law Dictionary (7th ed. 1999) defines dismissed without prejudice as removed from the courts docket in such a way that the plaintiff may refile the same suit on the same claim, id., at 482, and defines dismissal without prejudice as [a] dismissal that does not bar the plaintiff from refiling the lawsuit within the applicable limitations period, ibid.
Having concluded that the claim-preclusive effect, in Maryland, of this California federal diversity judgment is dictated neither by Dupasseur v. Rochereau, as petitioner contends, nor by Rule 41(b), as respondent contends, we turn to consideration of what determines the issue. Neither the Full Faith and Credit Clause, U.S. Const., Art. IV, §1,3 nor the full faith and credit statute, 28 U.S.C. § 17384 addresses the question. By their terms they govern the effects to be given only to state-court judgments (and, in the case of the statute, to judgments by courts of territories and possessions). And no other federal textual provision, neither of the Constitution nor of any statute, addresses the claim-preclusive effect of a judgment in a federal diversity action.
It is true that for some purposes and within certain limits it is only required that the judgments of the courts of the United States shall be given the same force and effect as are given the judgments of the courts of the States wherein they are rendered; but it is equally true that whether a Federal judgment has been given due force and effect in the state court is a Federal question reviewable by this court, which will determine for itself whether such judgment has been given due weight or otherwise.
When is the state court obliged to give to Federal judgments only the force and effect it gives to state court judgments within its own jurisdiction? Such cases are distinctly pointed out in the opinion of Mr. Justice Bradley in Dupasseur v. Rochereau [which stated that the case was a diversity case, applying state law under state procedure]. Deposit Bank, 191 U.S., at 514515.
In other words, in Dupasseur the State was allowed (indeed, required) to give a federal diversity judgment no more effect than it would accord one of its own judgments only because reference to state law was the federal rule that this Court deemed appropriate. In short, federal common law governs the claim-preclusive effect of a dismissal by a federal court sitting in diversity. See generally R. Fallon, D. Meltzer, & D. Shapiro, Hart and Wechslers The Federal Courts and the Federal System 1473 (4th ed. 1996); Degnan, Federalized Res Judicata, 85 Yale L. J. 741 (1976).
inequitable administration of the laws that Erie seeks to avoid, Hanna, 380 U.S., at 468, since filing in, or removing to, federal court would be encouraged by the divergent effects that the litigants would anticipate from likely grounds of dismissal. See Guaranty Trust Co. v. York, 326 U.S., at 109110.
This federal reference to state law will not obtain, of course, in situations in which the state law is incompatible with federal interests. If, for example, state law did not accord claim-preclusive effect to dismissals for willful violation of discovery orders, federal courts interest in the integrity of their own processes might justify a contrary federal rule. No such conflict with potential federal interests exists in the present case. Dismissal of this state cause of action was decreed by the California federal court only because the California statute of limitations so required; and there is no conceivable federal interest in giving that time bar more effect in other courts than the California courts themselves would impose.
Because the claim-preclusive effect of the California federal courts dismissal upon the merits of petitioners action on statute-of-limitations grounds is governed by a federal rule that in turn incorporates Californias law of claim preclusion (the content of which we do not pass upon today), the Maryland Court of Special Appeals erred in holding that the dismissal necessarily precluded the bringing of this action in the Maryland courts. The judgment is reversed, and the case remanded for further proceedings not inconsistent with this opinion.
1. Rule 41(b), interpreted as a preclusion-establishing rule, would not have the two effects described in the preceding paragraphsarguable violation of the Rules Enabling Act and incompatibility with Erie R. Co. v. Tompkins, 304 U.S. 64 (1938)if the courts failure to specify an other-than-on-the-merits dismissal were subject to reversal on appeal whenever it would alter the rule of claim preclusion applied by the State in which the federal court sits. No one suggests that this is the rule, and we are aware of no case that applies it.
2. We do not decide whether, in a diversity case, a federal courts dismissal upon the merits (in the sense we have described), under circumstances where a state court would decree only a dismissal without prejudice, abridges a substantive right and thus exceeds the authorization of the Rules Enabling Act. We think the situation will present itself more rarely than would the arguable violation of the Act that would ensue from interpreting Rule 41(b) as a rule of claim preclusion; and if it is a violation, can be more easily dealt with on direct appeal.

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