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Federated Department Stores Inc Vs Moitie - Citation 104969 - Court Judgment | LegalCrystal
Federated Department Stores, Inc. Vs. Moitie - Court Judgment
LegalCrystal Citation legalcrystal.com/104969
Case Number 452 U.S. 394
Appellant Federated Department Stores, Inc.
Respondent Moitie
federated department stores, inc. v. moitie - 452 u.s. 394 (1981) u.s. supreme court federated department stores, inc. v. moitie, 452 u.s. 394 (1981) federated department stores, inc. v. moitie no. 79-1517 argued march 30, 1981 decided june 15, 1981 452 u.s. 394 certiorari to the united states court of appeals for the ninth circuit syllabus seven private antitrust actions (including separate actions by each of the respondents) were brought by plaintiffs seeking to represent classes of retail purchasers against petitioners, owners of various department stores, for alleged price fixing. the actions were consolidated in federal district court, which dismissed them for failure to allege an "injury" to the plaintiffs'.....
Federated Department Stores, Inc. v. Moitie - 452 U.S. 394 (1981)
U.S. Supreme Court Federated Department Stores, Inc. v. Moitie, 452 U.S. 394 (1981)
Seven private antitrust actions (including separate actions by each of the respondents) were brought by plaintiffs seeking to represent classes of retail purchasers against petitioners, owners of various department stores, for alleged price fixing. The actions were consolidated in Federal District Court, which dismissed them for failure to allege an "injury" to the plaintiffs' "business or property" within the meaning of the Clayton Act. Plaintiffs in five of the actions appealed, but respondents chose instead to refile their two actions in state court, making allegations similar to those made in the prior complaints. Petitioners removed these new actions to the District Court, which dismissed them under the doctrine of res judicata, and respondents appealed. Because of this Court's intervening decision in Reiter v. Sonotone Corp., 442 U. S. 330 , the Court of Appeals thereafter reversed and remanded the five cases which had been initially decided with respondents' first actions, and later reversed the District Court's dismissal of respondents' subsequent actions. The Court of Appeals held that, because respondents' position was "closely interwoven" with that of the successfully appealing parties, the doctrine of res judicata must give way to "public policy" and "simple justice."
Held: Res judicata bars relitigation of the unappealed adverse judgments against respondents as to their federal law claims. The res judicata consequences of a final, unappealed judgment on the merits are not altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case. There is no general equitable doctrine which countenances an exception to the finality of a party's failure to appeal merely because his rights are "closely interwoven" with those of another party who successfully appeals. Cf. Reed v. Allen, 286 U. S. 191 . Nor is there any principle of law or equity which sanctions rejection of the salutary principle of res judicata on the basis of "simple justice" or "public policy."
Hart Steel Co. v. Railroad Supply Co., 244 U. S. 294 , 244 U. S. 299 . Pp. 452 U. S. 398 -402.
REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, POWELL, and STEVENS, JJ., joined. BLACKMUN, J., filed an opinion concurring in the judgment, in which MARSHALL, J., joined, post, p. 452 U. S. 402 . BRENNAN, J., filed a dissenting opinion, post, p. 452 U. S. 404 .
In 1976, the United States brought an antitrust action against petitioners, owners of various department stores, alleging that they had violated § 1 of the Sherman Act, 15 U.S.C. § 1, by agreeing to fix the retail price of women's clothing sold in northern California. Seven parallel civil actions were subsequently filed by private plaintiffs seeking treble damages on behalf of proposed classes of retail purchasers, including that of respondent Moitie in state court ( Moitie I ) and respondent Brown ( Brown I ) in the United
Plaintiffs in five of the suits appealed that judgment to the Court of Appeals for the Ninth Circuit. The single counsel representing Moitie and Brown, however, chose not to appeal, and instead refiled the two actions in state court, Moitie II and Brown II. [ Footnote 1 ] Although the complaints purported to raise only state law claims, they made allegations similar to those made in the prior complaints, including that of the Government. Petitioners removed these new actions to the District Court for the Northern District of California and moved to have them dismissed on the ground of res judicata. In a decision rendered July 8, 1977, the District Court first denied respondents' motion to remand. It held that the complaints, though artfully couched in terms of state law, were "in many respects identical" with the prior complaints, and were thus properly removed to federal court because they raised "essentially federal law" claims. The court then concluded that, because Moitie II and Brown II involved the "same parties, the same alleged offenses, and the same time periods" as Moitie I and Brown I, the doctrine of res judicata
Pending that appeal, this Court, on June 11, 1979, decided Reiter v. Sonotone Corp., 442 U. S. 330 , holding that retail purchasers can suffer an "injury" to their "business or property" as those terms are used in § 4 of the Clayton Act. On June 25, 1979, the Court of Appeals for the Ninth Circuit reversed and remanded the five cases which had been decided with Moitie I and Brown I, the cases that had been appealed, for further proceedings in light of Reiter.
When Moitie II and Brown II finally came before the Court of Appeals for the Ninth Circuit, the court reversed the decision of the District Court dismissing the cases. 611 F.2d 1267. [ Footnote 2 ] Though the court recognized that a "strict application of the doctrine of res judicata would preclude our review of the instant decision," id. at 1269, it refused to apply the doctrine to the facts of this case. It observed that the other five litigants in the Weinberg cases had successfully
There is little to be added to the doctrine of res judicata as developed in the case law of this Court. A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Commissioner v. Sunnen, 333 U. S. 591 , 333 U. S. 597 (1948); Cromwell v. County of Sac, 94 U. S. 351 , 94 U. S. 352 -353 (1877). Nor are the res judicata consequences of a final, unappealed judgment on the merits altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case. Angel v. Bullington, 330 U. S. 183 , 330 U. S. 187 (1947); Chicot County Drainage District v. Baxter State Bank, 308 U. S. 371 (1940); Wilson's Executor v. Deen, 121 U. S. 525 , 121 U. S. 534 (1887). As this Court explained in Baltimore S.S. Co. v. Phillips, 274 U. S. 316 , 274 U. S. 325 (1927), an
Reed v. Allen, 286 U. S. 191 , 286 U. S. 201 (1932).
In this case, the Court of Appeals conceded that the "strict application of the doctrine of res judicata " required that Brown II be dismissed. By that, the court presumably meant that the "technical elements" of res judicata had been satisfied, namely, that the decision in Brown I was a final judgment on the merits and involved the same claims and the same parties as Brown II. [ Footnote 3 ] The court, however, declined to dismiss Brown II because, in its view, it would be unfair to bar respondents from relitigating a claim so "closely interwoven" with that of the successfully appealing parties. We believe that such an unprecedented departure from accepted principles of res judicata is unwarranted. Indeed, the decision below is all but foreclosed by our prior case law. [ Footnote 4 ]
In Reed v. Allen, supra, this Court addressed the issue presented here. The case involved a dispute over the rights to property left in a will. A won an interpleader action for rents derived from the property and, while an appeal was pending, brought an ejectment action against the rival claimant B. On
Id. at 286 U. S. 198 .
This Court's rigorous application of res judicata in Reed, to the point of leaving one party in possession and the other party entitled to the rents, makes clear that this Court recognizes no general equitable doctrine, such as that suggested by the Court of Appeals, which countenances an exception to the finality of a party's failure to appeal merely because his rights are "closely interwoven" with those of another party. Indeed, this case presents even more compelling reasons to apply the doctrine of res judicata than did Reed. Respondents here seek to be the windfall beneficiaries of an appellate reversal procured by other independent parties, who have no interest in respondents' case, not a reversal in interrelated cases procured, as in Reed, by the same affected party. Moreover, in contrast to Reed, where it was unclear why no appeal was taken, it is apparent that respondents here made a
calculated choice to forgo their appeals. See also Ackermann v. United States, 340 U. S. 193 , 340 U. S. 198 (1950) (holding that petitioners were not entitled to relief under Federal Rule of Civil Procedure 60(b) when they made a "free, calculated, deliberate choic[e]" not to appeal).
The Court of Appeals also rested its opinion in part on what it viewed as "simple justice." But we do not see the grave injustice which would be done by the application of accepted principles of res judicata. "Simple justice" is achieved when a complex body of law developed over a period of years is evenhandedly applied. The doctrine of res judicata serves vital public interests beyond any individual judge's ad hoc determination of the equities in a particular case. There is simply "no principle of law or equity which sanctions the rejection by a federal court of the salutary principle of res judicata. " Heiser v. Woodruf, 327 U. S. 726 , 327 U. S. 733 (1946). The Court of Appeals' reliance on "public policy" is similarly misplaced. This Court has long recognized that
Baldwin v. Traveling Men's Assn., 283 U. S. 522 , 283 U. S. 525 (1931). We have stressed that
Hart Steel Co. v. Railroad Supply Co., 244 U. S. 294 , 244 U. S. 299 (1917). The language used by this Court half a century ago is even more compelling in view of today's crowded dockets:
Reed v. Allen, 286 U.S. at 286 U. S. 198 -199.
14 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3722, pp. 564-566 (1976) (citing cases) (footnote omitted). The District Court applied that settled principle to the facts of this case. After "an extensive review and analysis of the origins and substance of" the two Brown complaints, it found, and the Court of Appeals expressly agreed, that respondents had attempted to avoid removal jurisdiction by "artful[ly]" casting their "essentially federal law claims" as state law claims. We will not question here that factual finding. See Prospect Dairy, Inc. v. Dellwood Dairy Co., 237 F.Supp. 176 (NDNY 1964); In re Wiring Device Antitrust Litigation, 498 F.Supp. 79 (EDNY 1980); Three J Farms, Inc. v. Alton Box Board Co., 1979-1 Trade Cases Ś 62,423 (SC 1978), rev'd on other grounds, 609 F.2d 112 (CA4 1979), cert. denied, 445 U.S. 911 (1980).
The dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is a "judgment on the merits." See Angel v. Bullington, 330 U. S. 183 , 330 U. S. 190 (1947); Bell v. Hood, 327 U. S. 678 (1946).
First, I, for one, would not close the door upon the possibility that there are cases in which the doctrine of res judicata
1B J. Moore & T. Currier, Moore's Federal Practice Ś 0.405 [12], p. 791 (1980) (footnote omitted). See also Reed v. Allen, 286 U. S. 191 , 286 U. S. 209 (1932) (Cardozo, J., joined by Brandeis and Stone, JJ., dissenting) ("A system of procedure is perverted from its proper function when it multiplies impediments to justice without the warrant of clear necessity"). But this case is clearly not one in which equity requires that the doctrine give way. Unlike the nonappealing party in Reed, respondents were not "caught in a mesh of procedural complexities." Ibid. Instead, they made a deliberate tactical decision not to appeal. Nor would public policy be served by making an exception to the doctrine in this case; to the contrary, there is a special need for strict application of res judicata in complex multiple party actions of this sort so as to discourage "break-away" litigation. Cf. Reiter v. Sonotone Corp., 442 U. S. 330 , 442 U. S. 345 (1979). Finally, this is not a case
See Ford Motor Credit Co. v. Uresti, 581 S.W.2d 298, 300 (Tex.Civ.App.1979). *
Second, and in contrast, I would flatly hold that Brown I is res judicata as to respondents' state law claims. Like the District Court, the Court of Appeals found that those state law claims were simply disguised federal claims; since respondents have not cross-petitioned from that judgment, their argument that this case should be remanded to state court should be itself barred by res judicata. More important, even if the state and federal claims are distinct, respondents' failure to allege the state claims in Brown I manifestly bars their allegation in Brown II. The dismissal of Brown I is res judicata not only as to all claims respondents actually raised, but also as to all claims that could have been raised. See Commissioner v. Sunnen, 333 U. S. 591 , 333 U. S. 597 (1948); Restatement (Second) of Judgments § 61.1 (Tent. Draft No. 5, Mar. 10, 1978). Since there is no reason to believe that it was clear at the outset of this litigation that the District Court would have declined to exercise pendent jurisdiction over state claims, respondents were obligated to plead those claims if they wished to preserve them. See id. § 61.1, Comment e . Because they did not do so, I would hold the claims barred.
Respondent Floyd R. Brown [ Footnote 2/1 ] filed this class action ( Brown II ) against petitioners in California state court. The complaint
stated four state law causes of action: (1) fraud and deceit, (2) unfair business practices, (3) civil conspiracy and (4) restitution. Plaintiffs' Complaint ŚŚ 11-14, App. 99-101. It alleged "not less than $600" damages per class member, and in addition sought "appropriate multiple damages," exemplary and punitive damages, interest from date of injury, attorney's fees and costs, and other relief. Id. at 101-102. All four of the causes of action rested wholly on California statutory or common law; none rested in any fashion on federal law.
Nonetheless, petitioners removed the suit to the United States District Court for the Northern District of California, where respondent Brown filed a motion to remand on the ground that his action raised no federal question within the meaning of 28 U.S.C. § 1441(b). Respondent's motion was denied by the District Court, which stated that "[f]rom start to finish, plaintiffs have essentially alleged violations by defendants of federal antitrust laws." App.192. The court reasoned that "[a]rtful pleading" by plaintiffs cannot "convert their essentially federal law claims into state law claims," and held that respondent's complaint was properly removed "because [it] concerned federal questions which could have been originally brought in Federal District Court without satisfying any minimum amount in controversy." Ibid. The court then dismissed the action, holding that, under the doctrine of res judicata, Brown II was barred by the adverse decision in an earlier suit in federal court ( Brown I ) involving "the same parties, the same alleged offenses, and the same time periods." Ibid.
The provision authorizing removal of actions from state to federal courts on the basis of a federal question [ Footnote 2/2 ] is found in 28 U.S.C. 1441(b):
Gully v. First National Bank in Meridian, 299 U. S. 109 , 299 U. S. 112 (1936). An action arising under state law may not be removed solely because a federal right or immunity is raised as a defense. Tennessee v. Union & Planters' Bank, 152 U. S. 454 (1894).
by the allegations in his complaint. The Fair v. Kohler Die & Specialty Co., 228 U. S. 22 , 228 U. S. 25 (1913); accord, Great Northern R. Co. v. Alexander, 246 U. S. 276 , 246 U. S. 282 (1918). Where the plaintiff's claim might
This corollary is well grounded in principles of federalism. So long as States retain authority to legislate in subject areas in which Congress has legislated without preempting the field, and so long as state courts remain the preferred forum for interpretation and enforcement of state law, plaintiffs must be permitted to proceed in state court under state law. It would do violence to state autonomy were defendants able to remove state claims to federal court merely because the plaintiff could have asserted a federal claim based on the same set of facts underlying his state claim. As this Court stated in Shamrock Oil & Gas Corp. v. Sheets, 313 U. S. 100 , 313 U. S. 108 -109 (1941):
(Quoting Healy v. Ratta, 292 U. S. 263 , 292 U. S. 270 (1934).)
Hearst Corp. v. Shopping Center Network, Inc., 307 F.Supp. 551, 556 (SDNY 1969) (emphasis in original) (citation omitted). The federal court must therefore scrutinize the complaint in the removed case to determine whether the action, though ostensibly grounded solely on state law, is actually grounded on a claim in which federal law is the exclusive authority. See Sheeran v. General Electric Co., 593 F.2d 93, 96 (CA9), cert. denied, 444 U.S. 868 (1979); North American Phillips Corp. v. Emery Air Freight Corp., 579 F.2d 229, 233-234 (CA2 1978); New York v. Local 1, Hotel Nursing Home and Allied Health Services Union, 410 F.Supp. 225, 22229 (SDNY 1976). [ Footnote 2/3 ]
This lawsuit concerns the area of antitrust in which federal laws have not displaced state law. See generally Mosk, State Antitrust Enforcement and Coordination with Federal Enforcement, 21 A.B.A. Antitrust Section 358, 361-368 (1962). Thus, respondent Brown had the option of proceeding under state or federal law, or both. So far as is apparent from the complaint, which was carefully limited to four California state law causes of action, this case arises wholly without reference to federal law. Under settled principles of federal jurisdiction, therefore, respondent's lawsuit should not have been removed to federal court. See Gully v. First National Bank in Meridian, 299 U.S. at 299 U. S. 113 .
The Court today nonetheless sustains removal of this action on the ground that "at least some of the claims had a sufficient federal character to support removal." Ante at 397 U. S. 397 , n. 2. I do not understand what the Court means by this. Which of the claims are federal in character? Why are the claims federal in character? In my view, they are all predicated solely on California law. [ Footnote 2/4 ] Certainly, none of them purports to state a claim under the federal antitrust laws, and the mere fact that plaintiffs might have chosen to proceed under the Clayton Act surely does not suffice to transmute their state claims into federal claims.
The Court relies on what it calls a "factual finding" by the District Court, [ Footnote 2/5 ] with which the Court of Appeals agreed, that "respondents had attempted to avoid removal jurisdiction by artful[ly]' casting their `essentially federal law claims' as state law claims." Ibid. But this amounts to no more than
a pejorative characterization of respondents' decision to proceed under state, rather than federal, law. "Artful" or not, respondents' complaints were not based on any claim of a federal right or immunity, and were not, therefore, removable. [ Footnote 2/6 ]
Even assuming that this Court and the lower federal courts have jurisdiction to decide this case, however, I dissent from the Court's disposition of the res judicata issue. Having reached out to assume jurisdiction, the Court inexplicably recoils from deciding the case. The Court finds it "unnecessary" to reach the question of the res judicata effect of Brown I on respondents' " state law claims." Ante at 452 U. S. 402 (emphasis in original). "It is enough for our decision here," the Court says, "that Brown I is res judicata as to respondents' federal law claims." Ibid. But respondents raised only state law claims; respondents did not raise any federal law claims.
Thus, if the Court fails to decide the disposition of respondents' state law claims, it decides nothing. And in doing so, the Court introduces the possibility -- heretofore foreclosed by our decisions [ Footnote 2/7 ] -- that unarticulated theories of recovery may survive an unconditional dismissal of the lawsuit.
Like JUSTICE BLACKMUN, I would hold that the dismissal of Brown I is res judicata not only as to every matter that was actually litigated, but also as to every ground or theory of recovery that might also have been presented. See ante p. 452 U. S. 402 (opinion concurring in judgment); 1B J. Moore & T. Currier, Moore's Federal Practice Ś 0.410[2], p. 1163 (1980). An unqualified dismissal on the merits of a substantial federal antitrust claim precludes relitigation of the same claim on a state law theory. Woods Exploration & Producing Co. v. Aluminum Co. of America, 438 F.2d 1286, 1312-1315 (CA5 1971), cert. denied, 404 U.S. 1047 (1972); Ford Motor Co. v. Superior Court, 35 Cal.App.3d 676, 680, 110 Cal.Rptr. 59, 61-62 (1973); see Restatement (Second) of Judgments § 61.1, Reporter's Note to Illustration 10, Comment e , pp. 178-179 (Tent. Draft No. 5, Mar. 10, 1978). The Court's failure to acknowledge this basic principle can only create doubts and confusion where none were before, and may encourage litigants to split their causes of action, state from federal, in the hope that they might win a second day in court.
In this context, it is often said that a plaintiff may not "fraudulently" defeat removal by manipulation of the complaint. See, e.g., Sheeran v. General Electric Co., 593 F.2d at 96; Jones v. General Tire & Rubber Co., 541 F.2d 660, 664-665 (CA7 1976); see also Great Northern R. Co. v. Alexander, 246 U. S. 276 , 246 U. S. 281 , 282 (1918). Where, however, both state and federal laws would support a claim, it makes little sense to suggest that the plaintiff acts "fraudulently" if he chooses to proceed under state law in state court, rather than under federal law in federal court. See Romick v. Bekins Van & Storage Co., 197 F.2d 369, 371 (CA5 1952).
Indeed, the Court admits that the additional claims in Brown II, not included in Brown I, such as unfair competition, fraud, and restitution, are "state law claims." Ante at 452 U. S. 402 .
The decisions cited by the Court in support of its approach, all from District Courts, are inapplicable. In re Wiring Device Antitrust Litigation, 498 F.Supp. 79 (EDNY 1980), and Three J Farms, Inc. v. Alton Box Board Co., 1979-1 Trade Cases Ś 62,423, p. 76,550 (SC 1978), rev'd on other grounds, 609 F.2d 112 (CA4 1979), cert. denied, 445 U.S. 911 (1980), were cases in which the State itself had confined application of the state antitrust laws to purely intrastate commerce, thus leaving federal law the sole basis for suit. Similarly, Prospect Dairy, Inc. v. Dellwood Dairy Co., 237 F.Supp. 176 (NDNY 1964), concerned a claim of an unfair labor practice, which is governed exclusively by federal law. See 29 U.S.C. § 187; Teamsters v. Morton, 377 U. S. 252 (1964).
See Brown v. Felsen, 442 U. S. 127 , 442 U. S. 131 (1979); United States v. Munsingwear, Inc., 340 U. S. 36 , 340 U. S. 38 (1950); Commissioner v. Sunnen, 333 U. S. 591 , 333 U. S. 597 (1948); Chicot County Drainage District v. Baxter State Bank, 308 U. S. 371 , 308 U. S. 378 (1940); Cromwell v. County of Sac, 94 U. S. 351 , 94 U. S. 352 -353 (1877).