Opinion ID: 511771
Heading Depth: 3
Heading Rank: 2

Heading: Does New Jersey Claim Preclusion Contain a Jurisdictional Requirement?

Text: 80 Following the Supreme Court's direction in Marrese, we must consider whether New Jersey's claim preclusion rules would apply where, as here, the first court lacked jurisdiction over the claim advanced in the second court. See Marrese, 470 U.S. at 382, 105 S.Ct. at 1332-33; Eichman v. Fotomat Corp., 759 F.2d 1434, 1437 (9th Cir.1985) (determining that federal courts must apply California preclusion law after Marrese and concluding that in California the court rendering the prior judgment must have had jurisdiction to hear such claims in order to preclude them); id. at 1440 (Kennedy, J., concurring) (maintaining that the jurisdictional requirement is a rule of near universal application). 81 Because the exact question (involving a claim of exclusive federal jurisdiction) could not have been presented to the state court, this question has been described as nearly metaphysical in nature, Marrese v. American Academy of Orthopaedic Surgeons, 628 F.Supp. 918, 919 (N.D.Ill.1986) (on remand from the Supreme Court); see 18 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure Sec. 4470, at 675 (1981 & Supp.1987). 15 Nevertheless, we must examine the relevant case law to glean an understanding of whether New Jersey's claim preclusion law includes a jurisdictional requirement. 82 The general rule to which we have adverted is expressed in Sec. 26(1)(c) of the Restatement (Second) of Judgments, viz., that claim preclusion does not apply where [t]he plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy ... because of the limitations on the subject matter jurisdiction of the courts.... Restatement (Second) of Judgments Sec. 26(1)(c) (1982). Although the Hospital and Executive Committee concede that there is no New Jersey case on point, they argue forcefully that New Jersey would not follow the Restatement rule on the basis of New Jersey cases that demonstrate the breadth of that state's entire controversy doctrine, a breadth sufficient, they submit, to override the Restatement rule. 83 Giudice v. Drew Chemical Corp., 210 N.J.Super. 32, 509 A.2d 200 (App.Div.), certif. granted and remanded on other grounds, 104 N.J. 465, 517 A.2d 448, certif. denied, 104 N.J. 465, 517 A.2d 449 (1986), provides an indication of the breadth of the entire controversy doctrine. In Giudice, the plaintiff, who had been dismissed from his job, brought a defamation action in New York, and then brought a wrongful discharge suit in New Jersey. The court dismissed the later suit on the basis of claim preclusion despite acknowledging that New York probably would not recognize a wrongful discharge cause of action similar to that in New Jersey. Giudice thus indicates the willingness of New Jersey courts to require the plaintiff to select the forum with the widest possible relief. 84 We note, however, that Giudice does not involve a question of the jurisdictional competency of the former court. The New York court in Giudice was empowered to hear the wrongful discharge suit, but would have dismissed the claim because the applicable New York substantive law had not abrogated the employment at will doctrine. Thus, the plaintiff was not prevented from bringing the claim, but simply faced a small prospect of succeeding in the New York court. Given this forum shopping scenario, the New Jersey court's preclusion of Guidice's wrongful discharge claim is understandable. It does not, however, indicate whether New Jersey would have barred the claim if the New York court could not have exercised jurisdiction over it. 85 Notwithstanding the apparent breadth of the New Jersey entire controversy doctrine, we are not at liberty to use the availability of the analogous state law claim to preclude the federal claim here. The Supreme Court in Marrese noted that in states that have a res judicata jurisdictional requirement, an earlier action based on a state statute analogous to a federal statute, e.g., a state antitrust law, does not bar subsequent attempts to secure relief in federal court if the state court lacked jurisdiction over the federal statutory claim. 470 U.S. at 383 n. 3, 105 S.Ct. at 1333 n. 3. Although New Jersey unquestionably applies broad claim preclusion, several factors indicate that it nevertheless requires that any precluded claim be within the jurisdiction of the first court: (1) the reliance of New Jersey courts on the Restatement (Second) of Judgments; (2) the language and application of the New Jersey entire controversy doctrine; and (3) the historic application of res judicata to claims prior to the merger of law and equity. We consider these factors in turn. 86 First, although we have found no instance in which a New Jersey court has adopted Sec. 26(1)(c), the provision setting forth the jurisdictional requirement, New Jersey courts have relied on the Restatement (Second) of Judgments generally in determining the preclusive effect to be given to claims under the entire controversy doctrine. See, e.g., Brown v. Brown, 208 N.J.Super. 372, 506 A.2d 29 (App.Div.1986). In Brown, although the court did not have the opportunity to consider whether prior jurisdictional competency is a requirement of preclusion, the court indicated its approval of the jurisdictional requirement by quoting the entire Sec. 26(1), including subsection (c), in a footnote. 16 506 A.2d at 35 n. 2. 87 Second, the tenor of the New Jersey courts' approach to claim preclusion indicates that the entire controversy doctrine includes a jurisdictional requirement. For example, in Bates Marketing Associates, Inc. v. Lloyd's Electronics, Inc., 190 N.J. Super. 502, 464 A.2d 1142, 1144 (App.Div.1983), appeal dismissed, 97 N.J. 703, 483 A.2d 211 (1984), the court stated that preclusion applies to claims which were not but should have been raised in the initial litigation. Although this formulation is somewhat tautological, presumably a claim over which the earlier court lacked jurisdiction is not one which should have been raised. Thus, New Jersey courts have declared that only those claims that could have been raised are excluded. Gottdiener v. Roxbury Township, 2 N.J.Tax 206 (1981) (citing Bowers v. American Bridge Co., 43 N.J.Super. 48, 127 A.2d 580 (App.Div.1956), aff'd, 24 N.J. 390, 132 A.2d 28 (1957) (applying Pennsylvania law)). 17 88 Third, at its inception, the entire controversy doctrine included a jurisdictional requirement. Prior to the passage of the Judicial Article of the New Jersey Constitution of 1947, the courts of the state were divided between equity and law, a situation which presents an opportunity to determine whether the state would have given, albeit many years ago, preclusive effect to claims that could not have been tried in a court with limited (law or equity) jurisdiction. In Ajamian v. Schlanger, 14 N.J. 483, 103 A.2d 9, 11, cert. denied, 348 U.S. 835, 75 S.Ct. 58, 99 L.Ed. 659 (1954), then-New Jersey Supreme Court Justice Brennan noted that a prior action in an equity court in New Jersey 89 would probably not have barred the subsequent action at law ... because the former Court of Chancery had no jurisdiction to entertain a claim for the purely legal remedy and it was rightly considered to be inordinately harsh and unjust to conclude a complainant, denied the opportunity in the Chancery action, from seeking the only remedy ... in fact available to him. 90 Id. 103 A.2d at 11 (citations omitted). Although Ajamian is distinguishable because, before the merger of law and equity, the legal and equitable claims could not have been tried together in either court, the case nevertheless indicates that when confronted by the question of the limited jurisdiction of courts of equity and law, the New Jersey courts have declined to apply claim preclusion. 91 It is also important to note that New Jersey courts, in cases where a claim was first brought in federal court, have precluded state claims arising out of the same controversy, but only after a careful determination that the federal court had subject matter jurisdiction over the state claims. For example, in assessing whether the entire controversy doctrine barred the assertion of a state claim after a federal district court's dismissal of related claims, the Appellate Division in Blazer Corp. v. New Jersey Sports & Exposition Authority, 199 N.J.Super. 107, 488 A.2d 1025, 1028 (App.Div.1985), stated that [t]he single controversy doctrine is available to bar plaintiffs' claims ... only if the federal court had the 'power' to exercise pendent jurisdiction over those claims. Because it determined that the federal court did have subject matter jurisdiction over the claims raised in the subsequent state claim, the court precluded the state claims. Thus, the court premised its application of claim preclusion on existence of subject matter jurisdiction in the first forum. See also Ferger v. Local 483, 94 N.J.Super. 554, 229 A.2d 532, 541 (Ch.Div.) (where federal court declined to exercise pendent jurisdiction over state claim arising from the same controversy, state claim not precluded in subsequent state action), aff'd per curiam, 97 N.J.Super. 505, 235 A.2d 482 (App.Div.1967), certif. denied, 51 N.J. 181, 238 A.2d 468 (1968). 18 92 To summarize, Marrese sets up a two-part inquiry. The first part concerns whether the factual nexus of the antitrust claim is sufficiently related to the claims tried in state court that New Jersey's entire controversy doctrine would apply. Because we conclude that the second part is not met, however, we do not reach this question. We conclude that the second part is not met because we determine that New Jersey courts, if faced with the question, would follow Restatement (Second) of Judgments approach and would decline to preclude a claim over which the initial court lacked jurisdiction. Our conclusion that Nanavati's antitrust claims are not precluded requires us to address his contention that the district court erred in granting judgment n.o.v. as to those claims.