Petition for Writ of Certiorari — Semtek Int'l Inc. v. Lockheed Martin Corp.

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IN THE

‘

Supreme Court of the United States

SEMTEK INTERNATIONAL INCORPORATED,

Petitioner,

LOCKHEED MARTIN CORPORATION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE COURT OF SPECIAL APPEALS OF MARYLAND

PETITION FOR A WRIT OF CERTIORARI

WALTER J. LACK

STEVEN C. SHUMAN

ENGSTROM, LIPSCOMB & LACK

10100 Santa Monica Blvd.

Los Angeles, CA 90010

(310) 552-3800

THOMAS V. GIRARDI

JAMES KROPFF

GIRARD! & KEESE

1126 Wilshire Blvd.

Los Angeles, CA 90017

(213) 977-0211

LAURENCE H. TRIBE*

KENNETH CHESEBRO

JONATHAN S. MASSEY

1575 Massachusetts Avenue

Cambridge, MA 02138

(617) 495-4621

ANDREW W. ZEPEDA

STEVEN L. HOGAN

LURIE & ZEPEDA

9107 Wilshire Blvd.

Beverly Hills, CA 90210

(310) 274-8700

Counsel for Petitioner

*Counsel of Record

March 20, 2000

BATEMAN & SLADE, INC.

BOSTON, MASSACHUSETTS

iS or

BO me ee

QUESTIONS PRESENTED

In a suit by petitioner brought against respondent in a

California state court, respondent removed the case to federal

court on the basis of diversity jurisdiction and obtained a

dismissal on the ground that the California statute of limitations

had run. Petitioner then brought the present suit against

respondent in a state court in Maryland — a state whose relevant

statute of limitations had not yet run. Rejecting petitioner’s

argument that this Court’s decisions (especially Dupasseur v.

Rochereau, 88 U.S. (21 Wall.) 130, 135 (1874), and Hancock

National Bank v. Farnum, 176 U.S. 640, 644-45 (1900)),

required the Maryland court to follow California preclusion law

(which would not impose a res judicata bar to the Maryland

action), the Maryland state courts looked only to federal law and

interpreted that law as requiring dismissal of the action on the

basis of res judicata. The questions presented are:

1. Is this Court’s holding in Dupasseur — that the res

judicata effect of the judgment of a federal court sitting in

diversity “is such as would belong to judgments of the State

courts rendered under similar circumstances,” and that “no

higher sanctity or effect can be claimed,” 88 U.S. at 135 — still

good law?

2. If Dupasseur is overruled or modified by this Court,

what should be the res judicata effect of a statute of limitations

dismissal in a federal court diversity suit?

RULE 29.6 CORPORATE

DISCLOSURE STATEMENT

Petitioner Semtek International Incorporated has no parent

corporation. No publicly held company owns any of its stock.

(ii)

LI i i I I I TN

TABLE OF CONTENTS

RULE 29.6 CORPORATE DISCLOSURE STATEMENT ..... ii

TABLE OF AUTHORITIES ...........000ccccccueeeeeees iv

OPINIONS BELOW .............cccccccccuuueeeeceeees

JURISDICTION ............5. Oe Er en Eee

CONSTITUTIONAL AND STATUTORY

PROVISIONS, AND RULE, INVOLVED .................. l

STATEMENT OF THEE CASE 2... nc ccc cccccccscccceccccs 2

REASONS FOR GRANTING THE WRIT .............6665: 8

I. CERTIORARI SHOULD BE GRANTED TO RESOLVE

THE CONFLICT IN THE LOWER COURTS OVER

WHAT LAW GOVERNS THE RES JUDICATA EFFECT

OF A FEDERAL DIVERSITY JUDGMENT ............. 8

Il. IF DUPASSEUR 1S MODIFIED OR OVERRULED,

THIS CASE PRESENTS THE FURTHER QUESTION

OF THE APPROPRIATE RULE GOVERNING

THE RES JUDICATA EFFECT OF A

STATUTE-OF-LIMITATIONS DISMISSAL

OF A FEDERAL COURT DIVERSITY CASE .......... 24

GUUS wccccccceccccccccecceccccecceccecosens 30

(iii)

TABLE OF AUTHORITIES

CASES: p

Aerojet-General Corp. v. Askew, 511 F.2d 710

(Sth Cir.), cert. denied and appeal dismissed,

423 U.S. 908 (1975) ...... 06... eee. ce ecco eee ee. 17, 21

Agency Holding Corp. v. Malley-Duff & Assocs., Inc., ,

483 U.S. 143 (1987)........................ 26

Agostini v. Felton, $21 U.S.203 (1997) ................... ]3

Alcantara v. Boeing Co., 705 P.2d 1222 (Wash. App. 1985) 23

American Home Assurance Co. v. International Ins. Co. ng

641 N.Y.S. 2d 241 (App. 1996) ................ 23

American Motorists Ins. Co. v. General Host Corp,

946 F.2d 1482 (10th Cir.), vacated in part,

946 F.2d 1489 (10th Cir. 1991) ............ 20

Andes v. Paden, Welch, Martin & Albano, PC,

897 S.W.2d 19 (Mo. App. 1995) ........ soees 23

Answering Service, Inc. v. Egan,728F.241500

UU EE bi Di ee 22

Apparel Art International, Inc. v. Amert rises Lid,

48 F.3d 576 (ist Cir. 1995) ...... al eben ve 14

Austin v. Super Valu Stores, Inc., 31 F.3d 615 (8th Ci

, Inc., é; ir. 1994)... 19

Avondale Shipyards, Inc. v. Insured Lloyd's, '

786 F.2d 1265 (Sth Cir. 1986) ...................... 17

Baker v. General Motors Corp., 118 S. Ct. 657

| ., 118 S. Ct. 657(1998)...... 3

Bates v. Union Oil Co., 944 F.2d 647 (9th Cir. 1991),

cert. denied, 503 U.S. 1005 (1992) ............... 20

Bauserman v. Blunt, 147 U.S. 647(1893).................. 2%

Benetton S.p.A v. Benedot, Inc., 642 So.2d 394

, Inc., (Ala. 1994) ... 23

Blonder-Tongue Laboratories, Inc. v. University '

of Illinois Foundation, 402 U.S. 313 (1971) ...... 12

Brooks v. The Arlington Hosp. Ass'n, = 8 =

850 F.2d 191 (4th Cir. 1988) ................ 17

Byrd v. Blue Ridge Rural Elec. Coop,inc, #8

356 U.S. $25 (1958)...................-.. 15

Campbell v. Haverhill, 155 U.S.610(1895)................ 2%

Cemer v. Marathon Oil Co., 583 F.2d 830 (6th Cir. 1978)... 18

Chase Manhattan Bank, N.A. v. Celotex Corp.,

56 F.3d 343 (2d Cir. 1995)..................... 16

(iv)

CASES: PAGE:

Citibank, N.A. v. Data Lease Fin. Corp., :

904 F.2d 1498 (11th Cir. 1990)... 0... ec eee renee 21

City of Rolling Meadows v. National Adv. Co.,

593 N.E.2d 551 (Ill. App. 1991),

cert. denied, 507 U.S. 960 (1993) . #2... ccc eee 23

Coker v. Basic Media, Lid., 303 S.E.2d 620 (N.C. App. 1983)... 24

Collins v. E.1. Dupont de Nemours & Co.,

34 F.3d 172 (3d Cir. 1994)... 0... cee cere eens 16

Columbia Cas. Co. v. Playtex FP, Inc.,

§84 A.2d 1214 (Del. 1991) .........-. peusowtesedeess 23

Consolidated Television Cable Serv., Inc., v.

City of Frankfort, 857 F.2d. 354 (6th Cir. 1988),

cert. denied, 489 U.S. 1082 (1989) ... 2.6... cece cere eee 18

Davis v. Mills, 194 U.S. 451 (1904) 2... 66 eccrine 29

Day v. Volkswagenwerk Aktiengesellschaft,

464 A.2d 1313 (Pa. Super. 1983) .. 2... ee eee eee ee 23

DelCostello v. Teamsters, 462 U.S. 151 (1983) .......-0656: 26

Dual & Assocs., Inc. v. Wells, 403 S.E.2d 354 (Va. 1991) ..... 23

Dupasseur v. Rochereau, 88 U.S. (21 Wall.) 130 (1874) ... passim

Empire Fire & Marine Ins. Co. v. J. Transport, Inc.,

880 F.2d 1291 (11th Cir. 1989) 2.0.0... 6c e eee eee daee 21

Evans v. Cowan, 468 S.E.2d 575 (N.C. App. 1996),

~ aff'd, 477 S.E.2d 926 (N.C. 1996) ... 6. eee reer 23

Federal Insurance Co. v. Gates Learjet Corp.,

823 F.2d 383 (10th Cir. 1987) .. 22... eee eee es 20

Frandsen v. Westinghouse Corp., 46 F.3d 975 (10th Cir. 1995) . 21

Gasbarra v. Park-Ohio Indus., Inc.,

655 F.2d 119 (7th Cir. 1981) 2... 6.6 ee ee eee eee 18

Gatzemeyer v. Vogel, 589 F.2d 360 (8th Cir. ED nendscouse 19

Gelb v. Royal Globe Ins. Co., 798 F.2d 38 (2d. Cir. 1986),

cert. denied, 480 U.S. 948 (1987) ... 2.6... cee eee geoee &

Gibbs v. Air Canada, 810 F.2d 1529 (11th Cir. 1987) ........ 21

Goddard v. Security Title Ins. & Guar. Co.,

92 P.2d 804 (Cal. 1939) 0.0... cc ccc cece eee eee eee eens 5

Gonzales v. Banco Central Corp., 27 F.3d 751 (ist Cir. 1994) . 14

Guaranty Trust Co. v. York, 326 U.S. 99 (1945) ......-+-+- 27-28

Hancock National Bank v. Farnum, 176 U.S. 640 (1900)... .. 7,8

Harborside Refrigerated Servs., Inc. v. Vogel,

959 F.2d 368 (2d Cir. 1992)... cc cee eee eee ees 15

CASES: PAGE:

Harnett v. Billman, 800 F.2d 1308 (4th Cir. 1986),

cert. denied, 480 U.S. 932 (1987) ..................... 17

Hart v. Yamaha-Parts Distributors, Inc.,

787 F.2d 1468 (11th Cir. 1986) ....................... 21

Hart Steel Co. v. Railroad Supply Co., 244 U.S. 294 (1917) ... 28

Hartmann v. Time, Inc., 166 F.2d 127 (3d Cir. 1947),

cert. denied, 334 U.S. 838 (1948) .. 2... cc ee 16

Hauser v. Krupp Steel Producers, Inc.,

Pee Pe EPEG GUID cccccccccccccccccecccces 17

Havoco of America, Lid. v. Freeman, Atkins &

Coleman, Lid., 58 F.3d 303 (7th Cir. 1995) ............. 19

Hayles v. Randall Motor Co., 455 F.2d 169 (10th Cir. 1971) ... 20

Heck v. Humphrey, 512 U.S. 477 (1994) ©... oo cee 12

Heiser v. Woodruff, 327 U.S. 726 (1946) ©... 0.066 o eee cee, 12

Hillary v. Trans World Airlines, Inc., 123 F.3d 1041

(8th Cir. 1997), cert. denied, 522 U.S. 1090 (1998) »...... 19

Holmberg v. Armbrecht, 327 U.S. 392 (1946) ............... 28

Hunt v. Liberty Lobby, Inc., 707 F.2d 1493 (D.C. Cir. 1983) ... 22

Hyatt v. McBurney, 18 S.C. 199 (S.C. 1882) ............... 23

In re Air Crash at Dallas/Ft. Worth Airport,

861 F.2d 814 (Sth Cir. 1988) ..... 0.00000, ban ae

In re Kaplan, 143 F.3d 807 (3d Cir. 1998) ................. 16

lowa Elec. Light & Power Co. v. Mobile Aerial

Towers, Inc., 723 F.2d 50 (8th Cir. 1983) ............... 19

Johnson v. SCA Disposal Services of New England, Inc.,

ES OD ccc ccdicceucsvesctecesenc 14

Kent County Bd. of Educ. v. Bilbrough,

309 Md. 487, 525 A.2d 232 (1987) .. 0... oe eee 6,7

Kern v. Hettinger, 303 F.2d 333 (2d Cir. 1962) ........ 14-15, 28

Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) .... 26

Koch v. Rodlin Enters., Inc., 223 Cal. App. 3d 1591 (1990) ..... 5

Lackner v. LaCroix, 602 P.2d 393 (Cal. 1979) ............... 5

Lane v. Sullivan, 900 F.2d 1247 (8th Cir.),

cert. denied, 498 U.S. 847 (1990) ..................... 19

Lamontagne v. Board of Trustees of the United Wire, Metal &

Mach. Pension Fund, 583 N.Y .S.2d 838 (App. 1992) ...... 23

Lubrizol Corp. v. Exxon Corp., 929 F.2d 960 (3d Cir. 1991) ... 16

Manning v. City of Auburn, 953 F.2d 1355 (11th Cir. 1992) ... 21

(vi)

CASES: Pack:

Makiriw v. Rinard, 336 F.2d 333 (3d Cir. 1964) ............. 16

McCarty v. First of Georgia Ins. Co.,

713 F.2d 609 (10th Cir. 1983) 0.0... .. cece eee ee ee eens 20

McDonald v. Johnson & Johnson, —_

FO ae PEG NEES HEED cdccoccccncccccccesoscces 19

Metcalf v. City of Watertown, 153 U.S. 671 (1894) .......... 11

Mortgageling Corp. v. Commonwealth Land Title Ins. Co.,

ee ee es CPOE ev cccccccccccccecoecccccccss 24

Morgan v. Inter-Continental Trading Corp.,

360 F.2d 853 (7th Cie. 1966) 0.5. ccc cece ccc ccreceveees 18

Murphy v. Klein Tools, Inc., 935 F.2d 1127 (10th Cir.),

cert. denied, 502 U.S. 952 (1991) «0... . 6. ccc cece ee eees 20

NAACP vy. Hunt, 891 F.2d 1555 (11th Cir. 1990) ............ 21

Palmer v. Lanco Constr., Inc., 665 So.2d 1217 (La. App. 1996) 23

Pardo v. Olson & Sons, Inc., 40 F.3d 1063 (9th Cir. 1994) .... 20

Pennconn Enters., Inc. v. Huntington,

SAME SUED ccccddcecevsveccesavesvesees 23

Petromanagement Corp. v. Acme-Thomas Joint Venture,

835 F.2d 1329 (10th Cir. 1988) .... 0... . cece eee eee ees 20

Pierson Sand & Gravel, Inc. v. Keeler Brass Co.,

596 N.W.2d 153 (Mich. 1999)... 0... ccc cee eee es 23

Pilie’ & Pilie’ v. Graham, 547 So.2d 1305 (La. 1989) ....... 23

Pleming v. Universal-Rundle Corp., —

142 F.3d 1354 (11th Cir. 1998) ... 0... cece eee 14, 22

PRC Harris, Inc. v. Boeing Co., 700 F.2d 894 (2d Cir.) ...... 15

Precision Air Parts, Inc. v. Avco Corp., 736 F.2d 1499

(11th Cir. 1984), cert. denied, 469 U.S. 1191 (1985) ...... 21

Provident Tradesmens Bank & Trust Co. v. Lumbermens Mut.

Cas. Co., 411 F.2d 88 (3d Cir. 1969)... 2.6... ce eee eee 16

Real Estate Exch. Corp. v. Muskegon County Drain Comm'r,

8 N.W.2d 652 (Mich. 1943) 0... 6c ccc cc eee eens 23

RecoverEdge L.P. v. Pentecost, 44 F.3d 1284 (Sth Cir. 1995) .. 18

Reimer v. Smith, 663 F.2d 1316 (Sth Cir. 1981) ............. 17

Reinke v. Boden, 45 F.3d 166 (7th Cir.),

cert. denied, 516 U.S. 817 (1995) .. 2.66. ene 18, 29

Robbins v. HNG Oil Co., 878 S.W.2d 351 (Tex. App. 1994) ... 23

Rodriguez de Quijas v. Shearson/American Express, Inc.,

Fs GEV CE 0 ev cvcccecccccecencccccccsoscoes 13

CASES: PAGE:

Schieffler v. Financial Servs. Ins, Co.,

EE oi ccc dvced ewesetuudeeeues

Schneider v. Lockheed Aircraft Corp.,

Sa eS BUUED occcdeccccccccvcoccasecs

Semler v. Psychiatric Inst. of Washington, D.C., Inc.,

FUP Wa Ce Gs COTE ccccccccoccccoscscces 22

Semtek Int'l Inc. v. Lockheed Martin Corp., 988 F.

I i oo ee

Shoup v. Bell & Howell Co., 872 F.2d 1178 (4th Cir. 1989). 17,

Silcox v. United Trucking Serv., Inc.,

Gee Pa SUG COED ccc cccccccsccoscccesecces

Steve D. Thompson Trucking, Inc. v. Dorsey Trailers, Inc.,

870 F.2d 1044 (Sth Cir. 1989) ....... 0... cc cece eee 18

Sun Oil v. Wortman, 486 U.S. 717 (1989) 2... 6 cee

Townsend v. Jemison, 50 U.S. (9 Cranch) 407 (1850) ........

Tucker v. Crikelair, 493 A.2d 247 (Conn. App. 1985) ........

Turner v. Yamaha Motor Corp., U.S.A.,

591 A.2d 886 (Md. App. 1991) ........... cece eee euees

UAW v. Hoosier Cardinal Corp., 383 U.S. 696 (1966) ........

United States v. Donnally, 33 U.S. (8 Pet.) 361 (1834) ........

United States v. Kimbell Foods, Inc., 440 U.S. 715 (1979)...

Venuto v. Witco Corp., 117 F.3d 754 (3d Cir. 1997) ..........

Walker v. Armco Steel Corp., 446 U.S. 740 (1980) ...........

Wedel v. American Elec. Power Serv. Corp.,

681 N.E.2d 1122, (Ind. App. 1997) .............00000-

Wesch v. Folsom, 6 F.3d 1465 (11th Cir. 1993),

cert. denied, 510 U.S. 1046(1994) ......00 occ eee

Weston Funding Corp. v. Lafayette Towers, Inc.,

SOP. od ccckccndccdsscnecotedes

Williams v. Ocean Transp. Lines, Inc.,

GED ae COUP Ge OOF cc cccccccccccceccccesece

Wilson v. Garcia, 471 U.S. 261 (1985) 2... 00. ccc

Wimsatt v. Beverly Hills Weight Loss Clinics Int'l, Inc.,

PEED 6.5 Coscdocccceccescecsccs

Zdanok v. Glidden Co., 327 F.2d 944 (2d Cir.),

cert. denied, 377 U.S. 934 (1964) 2.0.0... ccc eee,

(viii)

.. 26

CONSTITUTION, STATUTES AND RULES: PAGE:

EE) en ee 10

SRR AU cocks cvcvateccencseceousess 1

UE. coc cccnnevesuwsrssecesens 1, 27

EET Te TeeTET ee 2, 27-29

Md. Ct. & Jud. Proc. Code Ann. § 5-101... .......00000 65 4

BOOKs:

Richard H. Fallon, Daniel J. Meltzer & David L. Shapiro,

Hart & Wechsler's The Federal Courts and the

Federal System (4th ed, 1996) .. 6... 6 eee eee 10, 26

Restatement (Second) of the Conflict of Laws

(1971 & Rev. 1989) 2... cece eee ees 4, 29

Restatement (Second) of the Law of Judgments (1982) ...... 9

18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,

Federal Practice and Procedure (1981) .... 9, 25-26, 28-29

ARTICLES:

Stephen B. Burbank, /nterjurisdictional Preclusion, Full Faith

and Credit and Federal Common Law: A General Approach,

71 Cornell L. Rev. 733 (1986) . 9-10, 13, 21-22, 26, 29

Ronan E. Degnan, Federalized Res Judicata,

85 Yale L.J. 741 (1976)... we ee ee ee tee 9-10, 13

Howard M. Erichson, /nterjurisdictional Preclusion,

96 Mich. L. Rev. 945 (1998) ...... 5. cere eee 10, 24

Hon. Robert H. Jackson, Full Faith and Credit

— The Lawyer's Clause of the Constitution,

45 Colum. L. Rev. 1 (1945) 2... eee 14

Graham C. Lilly, The Symmetry of Preclusion,

54 Ohio St. L. J. 289 (1993)... 6. ee ees 9-10, 24

Stuart D. Smith, Note, Erie and the Preclusive Effect of Federal

Diversity Judgments, 85 Colum. L. Rev. 1505 (1985) 9

(ix)

PETITION FOR A WRIT OF CERTIORARI

Semtek International Incorporated (“Semtek”) respectfully

petitions this Court for a writ of certiorari to review the judgment

of the Court of Special Appeals of Maryland.

OPINIONS BELOW

The decision of the Court of Special Appeals of Maryland

is reported at 736 A.2d 1104. See also App. 1a-34a. (References

to the Appendices to this Petition are styled “App. _a.”) The

decision of the trial court (App. 36a-47a) is unreported.

JURISDICTION

The Court of Special Appeals of Maryland entered its

judgment on September 7, 1999. Semtek filed with the Court of

Appeals of Maryland a timely petition for a writ of certiorari,

which was denied on December 21, 1999. See App. 35a. The

jurisdiction of this Court is invoked under 28 U.S.C. § 1257(a).

CONSTITUTIONAL AND STATUTORY

PROVISIONS, AND RULE, INVOLVED

The Full Faith and Credit Clause, art. IV, § 1, reads:

Full Faith and Credit shall be given in each State to

the public Acts, Records, and judicial Proceedings of

every other State. And the Congress may by general

Laws prescribe the Manner in which such Acts, Records

and Proceedings shall be proved, and the Effect thereof.

The Full Faith and Credit Statute, 28 U.S.C. § 1738, reads

in relevant part:

. The records and judicial proceedings of any

court of any . . . State, Territory or Possession . . . shall

have the same full faith and credit in every court within

the United States and its Territories and Possessions as

they have by law or usage in the courts of such State

Territory or Possession from which they are taken.

Fed. R. Civ. P. 41(b) reads:

Rule 41. DISMISSAL OF ACTIONS

(b) Involuntary Dismissal; Effect Thereof. For

failure of the plaintiff to prosecute or to comply with

these rules or any order of court, a defendant may move

for dismissal of an action or of any claim against the

defendant. Unless the court in its order for dismissal

otherwise specifies, a dismissal under this subdivision

and any dismissal not provided for in this rule, other

than a dismissal for lack of jurisdiction, for improper

venue, or for failure to join a party under Rule 19,

operates as an adjudication upon the merits.

STATEMENT OF THE CASE

The underlying litigation involves claims of business torts

allegedly inflicted on Semtek by respondent Lockheed Martin

Corporation (“Lockheed”), none of which arises under federal

law. Semtek’s first complaint, filed in a California state court

and removed by Lockheed to federal court on the basis of

diversity of citizenship, was dismissed as untimely under

California’s two-year statute of limitations. Semtek then refiled

in Maryland, where Lockheed has its corporate headquarters and

where the case is concededly timely under Maryland’s three-year

statute of limitations. The law of both California and Maryland

treats the California dismissal as merely barring suit under

California’s two-year statute of limitations, so as to permit the

case to go forward in Maryland. Nevertheless, Lockheed won

dismissal of the case on the ground that, because the California

dismissal was rendered by a federal court sitting in diversity, a

federal rule of res judicata purportedly applied, one that the

Maryland courts construed as precluding further suit.'

' The term “res judicata” is sometimes used to refer to the entire subject

of the effect of a prior judgment in a subsequent action, and sometimes to

Semtek urged the Maryland courts to adhere to this Court’s

decisions in Dupasseur v. Rochereau, 88 U.S. (21 Wall.) 130,

135 (1874), and its progeny — decisions that this Court has

never overruled or explicitly modified — holding that the res

judicata effect of the judgment of a federal court sitting in

diversity is defined by the state law of the first forum. The

courts below rejected that argument.

Accordingly, this case squarely presents the issue, on which

the lower federal and state courts have been in conflict since the

1960s, of whether Dupasseur is still good law. If this Court

decides to modify or overrule the Dupasseur decision, this case

presents an excellent vehicle for resolving the uncertainty in the

lower courts on a critical question: what is the appropriate

federal rule governing the res judicata effect of a statute-of-

limitations dismissal issued by a federal court sitting in diversity?

1. Semtek’s first lawsuit, filed in California. On February

26, 1997, Semtek filed a business tort suit in California state

court against Lockheed and one of its key executives. App. 2a,

60a. Because the executive was a California resident (Complaint

4 4), there was no evident basis for removal. However, because

defendants’ attorneys were provided with a courtesy copy of the

complaint prior to service, and because defendants filed removal

papers before service on the in-state defendant, Lockheed was

able to remove the case to California federal court. App. 61a.

After removal, Lockheed successfully moved for dismissal

on the sole basis that Semtek’s claims had accrued by August 8,

refer only to the doctrine of claim preclusion. See Baker v. General Motors

Corp., 522 U.S. 222, 233 n.5 (1998). It is here used in its broader sense,

given that the decision below raises the broad question of what law governs

the preclusive effect of a federal court diversity judgment. The dismissal of

this particular action by the Maryland state courts, however, was based on the

doctrine of claim preclusion — specifically, a minority approach to claim

preclusion. This approach holds that the dismissal of an action because of the

statute of limitations of one jurisdiction bars a subsequent action on the claim,

even in a jurisdiction that would allow the action under its own, longer period

of limitations. See pp. 29-30 & note 23, infra.

1994, so that the lawsuit was untimely under California’s two-

year statute of limitations. App. 49a, 54a-58a, aff'd, 1999 U.S.

App. LEXIS 3150 (9th Cir. 1999), The California federal court’s

dismissal was entered on May 8, 1997. App. 59a.’

2. Semtek’s second lawsuit, filed in Maryland. “During

the pendency of the California action, additional investigation by

Semtek revealed that much of the alleged tortious conduct

occurred in Maryland,” App. 37a, where Lockheed is

headquartered. App. 4an.1. On July 2, 1997, Semtek filed suit

against Lockheed in Maryland state court. App. 3a, 62a. As

Lockheed has not contested, this second lawsuit is timely under

Maryland’s three-year statute of limitations.’ Further, California

? The form of judgment prepared by Lockheed and signed by the

California federal district court judge recited that the action was “dismissed

in its entirety on the merits and with prejudice.” App. 59a. In the Maryland

courts, Lockheed argued that this language of its own force barred the

Maryland action. In addition to rebutting this argument in its Maryland filings,

see, e.g., Brief of Appellant, filed Nov. 30, 1998, at 13-14 & n.6 (citing cases

demonstrating that such language is conclusive under neither California nor

federal law), Semtek made an unsuccessful effort to amend the California

federal court judgment to remove this language from the judgment and hence

moot Lockheed’s argument. See App. |la-12a. Ultimately, the Maryland

appellate court ruled that given its holding that federal law controlled, and its

interpretation of federal law, the language cited by Lockheed was “redundant”

of what the court believed the judgment would automatically be deemed to

mean under federal law even absent the language. App. 21a.

*See App. 37a, 62a & n.2 (quoting Md. Cts. & Jud. Proc. Code Ann. § 5-

101). Unlike other states, Maryland has no borrowing statute (see generally

Restatement (Second) of the Conflict of Laws § 142(1) & cmt. f (1971); id

§ 142 & cmt. b (Rev. 1989)) relevant to this case that would adopt the shorter

statute of limitations of any other state where any of the causes of action may

have arisen. See Turner v. Yamaha Motor Corp., U.S.A., 591 A.2d 886 (Md.

App. 1991). Given Maryland law, as Lockheed explicitly acknowledged below,

“the timeliness of [Semtek’s] suit in Maryland under Maryland's statute of

limitations” is “not raised in this case. Lockheed Martin has not sought to

dismiss Semtek’s Maryland suit on the statute of limitations grounds but on

grounds of res judicata.” Lockheed Martin Corporation's Answer to Petition

for Writ of Certiorari, filed Nov. 8, 1999, at 8 n.3 (Md. Ct. App.).

law would permit the second lawsuit to proceed, as California

res judicata law follows the majority rule, under which a statute-

of-limitations dismissal does not foreclose suit in another forum

offering a longer statute of limitations. See Restatement

(Second) of the Conflict of Laws §§ 142, 143 (1971); id. § 142

(Rev. 1989); see, e.g., Koch v. Rodlin Enters., Inc., 223 Cal. App.

3d 1591, 1595-96 (1990). See also Lackner v. LaCroix, 602

P.2d 393, 395 (Cal. 1979); Goddard v. Security Title Ins. &

Guar. Co., 92 P.2d 804, 806 (Cal. 1939).

Relying on federal law, Lockheed sought to end the

Maryland state court action in three ways. First, in the California

federal court, Lockheed sought to enjoin Semtek from

proceeding with the Maryland action. App. 4a-5a, 60a-72a. The

federal court denied this motion, in part because it did “not

consider [it] to be obvious that res judicata would apply to bar

Plaintiff's Maryland state court action.” App. 65a.‘

Second, even though it is a citizen of Maryland and

Semtek’s complaint alleged only state-law claims, Lockheed

sought to remove the lawsuit to the U.S. District Court for the

District of Maryland. Lockheed did so on the theory that it

possessed a res judicata defense based on the California federal

court’s statute-of-limitations dismissal, so that the case was

* See also App. 71a n.17 (reiterating that “it is not obvious to this Court

that res judicata applies to bar Plaintiff's action in Maryland state court,” while

cautioning that “any dicta or other discussion within this opinion should not be

cited or argued as persuasive authority for the Maryland courts’ consideration

of the issues of removal jurisdiction and res judicata preclusion.”); App. 71a

(“This Court's prior order did not reach the substantive merits of Plaintiff's tort

claims. If another proper forum will afford Plaintiff the opportunity to fully

litigate the merits of its causes of action, without applying a statutory or res

judicata bar, the Court does not find it appropriate to bar Plaintiff from

proceeding in that forum.”). The appellate court below quoted this passage in

summarizing the California federal court's holding in denying an injunction.

App. 4a-Sa. But later, in the section of its decision that rejected the California

federal court's analysis of the meaning of its own judgment, the appellate court

stated that the passage was “inconsequential[]” dicta whose persuasive weight

was no greater than that of “cocktail party conversation.” App. 10a-! la.

thereby one “arising under” federal law. The Maryland federal

court granted Semtek’s motion to remand on the ground that

removal cannot be predicated on an alleged federal affirmative

defense. Semtek Int'l, Inc. v. Lockheed Martin Corp., 988 F.

Supp. 913, 915-16 (D. Md. 1997); see also App. Sa.

Third, on remand, as a last resort Lockheed filed a motion in

the Maryland state trial court to dismiss the lawsuit as barred by

res judicata. It argued that the preclusive effect of the statute-of-

limitations dismissal in California is to be measured by federal

law, as the dismissal was entered by a federal court sitting in

diversity — and that the applicable federal rule (supposedly

mandated by Fed. R. Civ. P. 41(b)) bars suit anywhere else in the

country, even in a forum (such as Maryland) offering a longer

limitations period. See Motion to Dismiss, filed March 3, 1998.

The disposition of this motion forms the basis of Semtek’s

petition for a writ of certiorari.

3. The Rulings Below on Whether a Federal Rule is

Controlling, and on the Content of that Federal Rule.

Opposing Lockheed’s motion to dismiss, Semtek argued that the

res judicata effect of the California federal court’s statute-of-

limitations dismissal must be measured “by reference to

California res judicata law,” which does not bar litigants from

filing suit in another forum with a longer limitations period.

Opposition filed March 23, 1998, at 2. Semtek relied both on

general principles of full-faith-and-credit jurisprudence, id. at 4-

6, and on the specific doctrine that the res judicata effect of the

judgment of a federal court sitting in diversity is governed by the

state law of the first forum, id. at 16.

The Maryland trial court agreed with Lockheed. App. 36a-

47a. It reasoned that prior Maryland precedent required it to

apply federal law to determine the res judicata effect of the

California statute-cf-limitations dismissal. App. 38a-39a (citing

Kent County Bd. of Educ. v. Bilbrough, 309 Md. 487, 493, 525

A.2d 232, 235 (1987)).° Examining what it considered

controlling federal law, it held that “[t]he plain language of” Fed.

R. Civ. P. 41(b) “requires that the dismissal of the Plaintiff's

California action be deemed an adjudication on the merits” that

bars a second suit in any other state. App. 39a.

In the intermediate court of appeals, Semtek urged that the

trial court had committed a fundamental error in regarding the

res judicata effect of the California diversity judgment as

governed by federal rules of preclusion. Semtek invoked a line

of cases from this Court starting with Dupasseur v. Rochereau,

88 U.S. (21 Wall.) 130 (1874), for the proposition that the res

judicata effect of the judgment of a federal court sitting in

diversity is the effect that would be given to the judgment by a

state court in the first forum. Brief of Appellant, filed Nov. 30,

1998, at 17-18 (citing Hancock Nat'l Bank v. Farnum, 176 U.S.

640, 645 (1900) (in turn citing Dupasseur, 88 U.S. at 135)).

Semtek noted that “[t]his holding has never been altered by the

Supreme Court” despite several opportunities to do so during the

past three decades. /d. at 18 & n.10.

In the alternative, Semtek argued that even if federal law did

somehow control, the trial court had erred in its construction of

feder«) law as requiring that a statute-of-limitations dismissal

under California law in federal court bars suit in any other court

under any other law. Under such an analysis, the accident of

diversity jurisdiction that permitted Lockheed to remove the case

to federal court before obtaining a dismissal would lead to an

outcome opposite from what would have attached to a statute-of-

limitations dismissal in state court. /d. at 21-34.

The intermediate court of appeals rejected both arguments.

With only minimal reference to the Dupasseur line of cases,

* Further, the trial court stated that even if it were not bound by the

Maryland Court of Appeals’ decision in Kent County Board of Education, it

would reach that result of its own accord based on the analysis set out in the

decisions of several federal circuit courts of appeals, and of a Missouri

appellate court. See App. 40a-46a.

App. 17a-18a (suggesting that Hancock Nat'l Bank v. Farnum,

176 U.S. 640 (190), cealt only with abstract principles

concerning “full faith and credit between the states and the

federal courts”), it held that precedent from the highest court of

Maryland “unambiguously” required it to treat the res judicata

issue as one of federal law. App. 7a. Looking to federal law, the

appellate court agreed with the trial court that Fed. R. Civ. P.

41(b) is most properly read as giving sweeping preclusive effect

to a statute-of-limitations dismissal in a diversity case, even

where no such preclusion would attach to a dismissal if the case

were handled in state court. App. 8a, 12a-34a. Indeed, the court

went so far as to hold that “California state preclusion law” was

“utterly immaterial” to the disposition of this case. App. 32a.

Semtek sought discretionary review in the Court of Appeals

of Maryland, citing the “venerable line of cases,” starting with

Dupasseur, in which this Court “has held that in a diversity case,

the judgment of a federal court on a question of state law has the

same, and no greater, effect than as if it had been rendered by a

court of the state in which the federal court sits.” Petition for a

Writ of Certiorari, filed Oct. 21, 1999, at 16 (citing seven cases).

Semtek also argued that the sweeping effect given Rule 41(b) by

the lower courts had met with substantial criticism by comment-

ators and was inconsistent with leading appellate decisions. /d.

at 8-12, 17-21. The Court of Appeals denied review. App. 35a.

REASONS FOR GRANTING THE WRIT

I. CERTIORARI SHOULD BE GRANTED TO RESOLVE

THE CONFLICT IN THE LOWER COURTS OVER

WHAT LAW GOVERNS THE RES JUDICATA

EFFECT OF A FEDERAL DIVERSITY JUDGMENT

As commentators have been noting for nearly a quarter

century, there exists among the lower courts a deep disagreement

about a fundamental question that warrants this Court’s review:

whether the res judicata effect of a federal diversity judgment is

governed by state or federal law. See, e.g, Ronan E. Degnan,

Federalized Res Judicata, 85 Yale L.J. 741, 750-55 & n.49

(1976); 18 Charles Alan Wright, Arthur R. Miller & Edward H.

Cooper, Federal Practice and Procedure § 4468, at 654-56,

§ 4472, at 725-26, 732-36 (1981) (“Wright & Miller’); Stuart D.

Smith, Note, Erie and the Preclusive Effect of Federal Diversity

Judgments, 85 Colum. L. Rev. 1505, 1505-07, 1514 (1985);

Stephen B. Burbank, /nterjurisdictional Preclusion, Full Faith

and Credit and Federal Common Law: A General Approach, 71

Cornell L. Rev. 733, 778-80 (1986); Graham C. Lilly, The

Symmetry of Preclusion, 54 Ohio St. L. J. 289, 316-17 & n.101,

319, 322-23 & n.121 (1993); Howard M. Erichson,

Interjurisdictional Preclusion, 96 Mich. L. Rev. 945, 989-90,

998, 1005-13 (1998). See also Restatement (Second) of the Law

of Judgments, § 87, cmt. a (1982) (“the legal basis for

recognition of a federal judgment has been a matter of

considerable uncertainty”); id. § 87, Reporter’s Note, cmt. b

(stating that “[m]Jany cases have said flatly that when the federal

court sits in diversity jurisdiction, the law of the state where it

sits determines the res judicata effects of the federal judgment,”

and then critiquing this position).

This basic element of the law of res judicata “has been a

source of confusion” at least since the 1960s. Degnan, supra, 85

Yale L.J. at 764 (citing cases). The confusion should finally be

put to rest by a grant of certiorari in this case. As Professor

Erichson has recently noted:

The need for a clear, reliable rule of interjuris-

dictional preclusion has grown with the phenomenal

growth of multiparty, multiforum litigation. The unpre-

dictability of choice of preclusion law and the tendency

of many courts unthinkingly to apply their own

_ preclusion law to other courts’ judgments highlight the

need for a clear rule. At this point, the question should

not be whether to have a clear rule, but rather what that

rule should be.

96 Mich. L. Rev. at 1015. See also Lilly, supra, 54 Ohio St. L.J.

at 322-23 (“Of course, the need for certainty does not tell us

which solution, state or federal, is preferable. What it does

suggest is that an authoritative uniform approach should be

forged — if not by Congress then by the Supreme Court.

Whatever the ultimate solution with respect to the choice-of-law

problem, the present uncertainties should not be allowed to

linger.”).

We briefly sketch this Court’s decisions to date on this issue,

and then summarize the differing approaches that have been

taken by the federal courts of appeals and the state courts.

A. The Dupasseur Line of Cases in This Court

With regard to the res judicata effect that must be given the

judgments of state courts, under the Full Faith and Credit Clause

and the statute implementing and extending it, the law has long

been clear: the second forum must give the same res judicata

effect as would the rendering state court.© No similar

constitutional or statutory provision addresses the res judicata

effect owed the judgments of federal courts, so that the rules in

this area are ultimately set by this Court.’

More than a century ago, this Court articulated a simple rule

to be followed with respect to the res judicata effect of the

judgment of a federal court sitting in diversity: the judgment has

the same effect as if it had been rendered by a state court in the

first forum. This rule has never been overruled or explicitly

* See U.S. Const. art. IV, § 1; 28 U.S.C. § 1738; Burbank, supra, 71

Cornell L. Rev. at 797-805; Degnan, supra, 85 Yale L.J. at 742-44; Erichson, _

supra, 9% Mich. L. Rev. at 983-84, 991-94; Lilly, supra, 54 Ohio St. L.J. at 291-

93, 301-15.

” See Richard H. Fallon, Daniel J. Meltzer & David L. Shapiro, Hart &

Wechsler's The Federal Courts and the Federal System 1469, 1473-74 (4th ed.

1996); Burbank, supra, 71 Cornell L. Rev. 739-47, 753-55, 772-73, 781-83;

Degnan, supra, 85 Yale L.J. at 744-45; Erichson, supra, 96 Mich. L. Rev. 984-

89, 1005-08; Lilly, supra, 54 Ohio St. LJ. at 315-27.

modified; indeed, in recent decades this Court’s res judicata

decisions have been crafted so as to avoid altering this basic rule.

In Dupasseur v. Rochereau, 88 U.S. (21 Wall.) 130 (1874),

this Court 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 that “no

higher sanctity or effect can be claimed.” /d. at 135. Applying

this principle, this Court stated that it was not enough that under

general common law principles the defendant in the Louisiana

state-court litigation under review would not be considered in

privity with the defendant who had lost the earlier Louisiana

federal court diversity case. Rather, the Court examined “with

some care” the nature of Louisiana law concerning privity, id. at

135, and only after determining that there was nothing “peculiar

in the Louisiana laws” which would support a finding of privity

did the Court affirm the finding of the Louisiana courts below

that the earlier federal diversity judgment did not bind the

defendant in the Louisiana state court suit. /d. at 137.

In Metcalf v. City of Watertown, 153 U.S. 671, 676 (1894),

this Court, in reaffirming Dupasseur, stated: “It cannot be

doubted that . . . the judgment and decrees of” federal courts

sitting in diversity “are entitled to the same sanctity and effect in

the courts of each State, when those courts are held within the

State, as their own judgments, nothing more, but nothing less.”

In Hancock National Bank v. Farnum, 176 U.S. 640 (1900),

this Court overturned the Rhode Island Supreme Court’s attempt

to apply its own res judicata law to shield one of its citizens from

liability pursuant to a Kansas federal court judgment in a

diversity case. In so doing, this Court reiterated again that the

effect of the judgment is “not answered by referring to general

principles of law . . ., but can be answered only by an

examination of the decisions of the courts of Kansas.” /d. at 643;

see also id. at 644-45 (noting that “what credit and effect are

given in the courts of Kansas in a like action to a similar

judgment there rendered” is the key quesgjon to be determined,

and “[t]he fact that this judgment was rendered in a court of the

United States, sitting within the State of Kansas, instead of one

of the state courts, is immaterial”).

By contrast, the Maryland courts below took a quite

different view, holding that “California state preclusion law”

was “utterly immaterial.” App. 32a.

The Dupasseur line of cases has been left undisturbed,

despite this Court’s decisions in several cases in which it might

easily have articulated a rule for the res judicata effect of federal

court judgments that would have displaced Dupasseur. For

example, in Heiser v. Woodruff, 327 U.S. 726 (1946), involving

the res judicata effect of a judgment in a federal question case,

the Court carefully stated that it “need not consider whether . . .

the rule of res judicata applied” in diversity cases “can be other

than that of the state in which the federal court sits,” id. at 731-

32, and limited its analysis to reaffirming that “in non-diversity

cases .. . the federal courts will apply their own rule of res

judicata.” Id. at 733 (citations omitted). In Blonder-Tongue

Laboratories, Inc. v. University of Illinois Foundation, 402 U.S.

313 (1971), the Court reaffirmed its holding in Heiser, again

making a narrow statement that as to res judicata, “[i]n federal-

question cases, the law applied is federal law.” Jd. at 324 n.12.

Lending support to the continued vitality of the Dupasseur line

of cases, this Court noted that “[m]Jany federal courts, exercising

both federal question and diversity jurisdiction, are in accord” in

recognizing non-mutual collateral estoppel, “unless in a diversity

case bound to apply a conflicting state rule requiring mutuality.”

Id. at 325 (emphasis added). See also Heck v. Humphrey, 512

U.S. 477, 488 n.9 (1994) (narrow statement that “[s]tate courts

are bound to apply federal rules in determining the preclusive

effect of federal-court decisions on issues of federal law.”)

(emphasis added).

Even the leading proponent of the view that the res judicata

effect of federal court judgments should always be determined

by federal law recognizes that this Court has never abandoned

the rule set out in the Dupasseur line of cases. See Degnan,

supra, 85 Yale L.J. at 770 (“[S]ince Dupasseur . . . the Supreme

Court has held that the scope of a federal judgment is determined

by the law of the state in which it was rendered, and it has yet to

declare that this is no longer the law.”’).

B. The Conflict and Confusion Among the Federal

Circuit Courts of Appeals on This Issue

The lower courts, federal and state alike, operate under an

elementary obligation to comply with this Court’s past holdings

unless and until overruled, even where the foundation of a

holding may appear shaky to a lower court. See, e.g., Agostini

v. Felton, 521 U.S, 203, 237-38 (1997); Rodriguez de Quijas v.

Shearson/American Express, Inc., 490 U.S. 477, 484 (1989).

Nevertheless, the status of the Dupasseur line of cases in the

federal circuit courts is in flux. As of 1976, the beginnings of a

departure from Dupasseur existed. See Degnan, supra, 85 Yale

L.J. at 756-60, 764-71. Ten years later, several circuits had at

least tentatively adopted a view contrary to the rule set out in

Dupasseur. These courts held that a uniform federal res judicata

rule is to be used to measure the res judicata effect of a diversity

judgment. See Burbank, supra, 71 Cornell L. Rev. at 778-80.

Currently, it appears that only three circuits firmly adhere to

the Dupasseur rule (the Eighth, Ninth, and D.C. Circuits). Four

circuits unambiguously treat the res judicata effect of a diversity

judgment as a federal issue (the First, Fourth, Fifth, and Sixth

Circuits). The law in the other circuits on this issue is undecided

and/or the subject of intracircuit conflicts. (See generally sources

cited on p. 9, supra.). Even in an ordinary case, such broad and

persistent disagreement on an important question of law would

warrant this Court’s review. When the issue involves the

preclusive effect of prior judgments, which necessarily entails

relationships among different jurisdictions, such disagreement is

intolerable. As matters stand, the same federal court diversity

judgment will be given different preclusive effect depending

upon the particular jurisdiction in which that judgment becomes

a matter of dispute. Certiorari is urgently needed.

We briefly summarize the relevant cases, in chronological

order, on a circuit-by-circuit basis.®

First Circuit: Federal Law Applies. Although earlier

decisions are mixed, in Johnson v. SCA Disposal Services of

New England, Inc., 931 F.2d 970, 974 (1st Cir. 1991), the First

Circuit adopted “the rule that, in diversity cases, federal law

governs the preclusive effect of prior federal judgments.”

Gonzales v. Banco Central Corp., 27 F.3d 751, 755 (ist Cir.

1994), appeared to suggest that the use of federal res judicata law

might be limited to federal question cases. But Apparel Art

International, Inc. v. Amertex Enterprises Ltd., 48 F.3d 576, 582

& n.7 (1st Cir. 1995), again articulated a flat rule under which

federal res judicata law is applied to all federal court judgments.

Second Circuit: No Definitive Ruling. In Kern vy.

Hettinger, 303 F.2d 333, 340 (2d Cir. 1962), a decision that has

been widely cited by other circuits that have adopted a federal

rule, the Second Circuit expansively stated that “the effect of a

judgment of a federal court” should not be “governed by the law

of the state where the court sits simply because the source of

federal jurisdiction is diversity.” Kern accorded outcome-

determinative preclusive effect to a California federal court’s

*Given this Court’s flat holding in Dupasseur that state law governs the

res judicata effect of a federal judgment in a diversity case, and given the

obligation of the lower courts to comply with this Court’s holdings until

changed, accounting for the current confusion in the lower courts on this issue

is difficult. One explanation for the disarray may lie with the context in

which full-faith-and-credit issues are typically litigated. As Justice Jackson

once noted, the law in this area “depends generally on private advocacy, not

always supported by the best research and understanding.” Hon. Robert H.

Jackson, Full Faith and Credit — The Lawyer's Clause of the Constitution,

45 Colum. L. Rev. 1, 33-34 (1945); see also id. at 3 & n.6. For example, the

Eleventh Circuit, which suffers from a sharp intracircuit split over the res

judicata effect of a diversity judgment, see pp. 21-22, infra, set out the issue

in a recent decision “in the hope that future litigants will consider and brief the

issue.” Pleming v. Universal-Rundle Corp., 142 F.3d 1354, 1356 n.1 (11th

Cir. 1998).

dismissal for failure to prosecute, reasoning that “[o]ne of the

strongest policies a court can have is that of determining the

scope of its own judgments.” /d. (citing Byrd v. Blue Ridge

Rural Elec. Coop., Inc., 356 U.S. 525 (1958)). Subsequent

decisions read Kern narrowly, then broadly, then narrowly

again.’ Decisions during the past decade make clear that the

Second Circuit is officially undecided on the source of law

governing the preclusive effect of a federal diversity judgment.'°

* In Zdanok v. Glidden Co., 327 F.2d 944 (2d Cir.), cert. denied, 377

U.S. 934 (1964) (Friendly, J.), the Second Circuit signaled that Kern had not

definitively resolved this area of the law, observing that because Zdanok was

a federal question case involving the res judicata effect of judgment in an

earlier federal question case, “we are free to follow our own conceptions”

concerning res judicata, “and need not decide whether” the same result would

be appropriate “if federal jurisdiction in either or both actions rested on

diversity alone.” Jd. at 956 (citing Kern, 303 F.2d at 340). Similarly, in

Weston Funding Corp. v. Lafayette Towers, Inc., 550 F.2d 710, 713 & n.3 (2d

Cir. 1977), the court noted that it “need not decide whether state or federal law

. .. would control the res judicata effect of a dismissal by a federal court in

a diversity action when the dismissal is based not on a federal rule as it was

in Kern, but on a state door-closing statute,” as there was “no reason to

believe” that federal and state law differed on the particular issue in the case

at hand.

By contrast, in PRC Harris, Inc. v. Boeing Co., 700 F.2d 894, 896-97 &

n.1 (2d Cir.), cert. denied, 464 U.S. 936 (1983), a Second Circuit panel

broadly read the Kern decision as holding that “the res judicata effect that will

be given the judgment of a federal court is distinctively a matter of federal

law,” and relied on this view to hold that a prior statute-of-limitations

dismissal barred further suit. More recently, in Gelb v. Royal Globe Ins. Co.,

798 F.2d 38, 42 n.3 (2d. Cir. 1986) (Newman, J.), cert. denied, 480 U.S. 948

(1987), another panel narrowly read the Kern decision, noted that “[flederal

courts routinely apply state law to determine the preclusive effect of a federal

diversity judgment in a subsequent diversity action,” and concluded that given

the nature of the case, “we need not decide the choice of law issue relative to

a federal diversity judgment.”

"© See Harborside Refrigerated Servs., Inc. v. Vogel, 959 F.2d 368, 373

(2d Cir. 1992) (noting that whether state or federal law “governs the

preclusive effect of the judgment of a federal court sitting in diversity on

another federal diversity action” is “a legitimate concern,” and stating that “we

have not definitely decided the issue,” but concluding on the facts that “its

Third Circuit: No Definitive Ruling. In early decisions, the

Third Circuit adhered, without discussion, to the rule that state

law controls the preclusive effect of a federal diversity judgment.

See, e.g., Hartmann v. Time, Inc., 166 F.2d 127, 137-38 (3d Cir.

1947), cert. denied, 334 U.S. 838 (1948); Makiriw v. Rinard, 336

F.2d 333, 334 (3d Cir. 1964); Provident Tradesmens Bank &

Trust Co. v. Lumbermens Mut. Cas. Co., 411 F.2d 88, 94 (3d Cir.

1969). Then, in a puzzling decision, the court applied federal

law to decide the res judicata effect of an earlier diversity court

judgment, on the basis that the second lawsuit was a federal

question lawsuit. Williams v. Ocean Transp. Lines, Inc., 425

F.2d 1183, 1187-90 (3d Cir. 1970) (criticized in Degnan, supra,

85 Yale L.J. at 765-66). During the past decade, however, the

Third Circuit has indicated that it has not yet authoritatively

decided this issue."'

Fourth Circuit: Federal Law Applies. Although earlier

decisions are mixed, since 1986 the Fourth Circuit has held that

decision must await another day”); Chase Manhattan Bank, N.A. v. Celotex

Corp., 56 F.3d 343, 345 n.1 (2d Cir. 1995) (reiterating that “a genuine legal

issue exists as to whether federal law or . . . state law governs the res judicata

effect of a judgment of a federal court sitting in diversity upon a subsequent

federal diversity action,” and stating that “we have not definitively ruled on

this question and decline to do so here because federal law and New York

state law both require the same result”).

" See Lubrizol Corp. v. Exxon Corp., 929 F.2d 960, 962-63 (3d Cir.

1991) (noting “disagreement in the courts of appeal over whether federal or

state law of claim preclusion governs in successive diversity actions,” but

holding that “[w]Je need not resolve this issue here, however, because our

holding would be the same under both federal and state law”); Venuto v. Witco

Corp., 117 F.3d 754, 758 & n.7 (3d Cir. 1997) (declining to decide “whether

federal or state res judicata law governs successive diversity actions,” as “the

same result would be arrived at” under either law, so that question is “still an

open one”); Jn re Kaplan, 143 F.3d 807, 814-15 & n.15 (3d Cir. 1998) (stating

that “this circuit has not yet decided which preclusion law will apply in the

successive-diversity context”). But see Collins v. E.]. Dupont de Nemours &

Co., 34 F.3d 172, 176 (3d Cir. 1994) (applying state law of claim and issue

preclusion, without discussion of the issue).

federal law generally governs the res judicata effect of a federal

diversity judgment. See Harnett v. Billman, 800 F.2d 1308,

1312-13 (4th Cir. 1986) (holding that “where the application of

res judicata rules does not touch upon an important question of

state law such as privity, we will apply federal rules of decision

to measure the preclusive effect” of an earlier diversity

judgment), cert. denied, 480 U.S. 932 (1987); Brooks vy.

Arlington Hosp. Ass'n, 850 F.2d 191, 195 (4th Cir. 1988)

(reaffirming Harnett); Shoup v. Bell & Howell Co., 872 F.2d

1178, 1179-80 (4th Cir. 1989) (reaffirming Harnett in a case

involving the preclusive effect of a statute-of-limitations

dismissal, stating that “federal, not state law determines the

preclusive effect of a prior federal judgment”).

Fifth Circuit: Federal Law Applies. Although earlier

decisions are mixed, the Fifth Circuit, in a 1975 decision relied

upon by other circuits that have adopted a federal rule, held that

in successive diversity cases, “the federal law of res judicata

should be applied.” Aerojet-General Corp. v. Askew, 511 F.2d

710, 716 (Sth Cir.) (critiqued in Degnan, supra, 85 Yale L.J. at

766-68), cert. denied and appeal dismissed, 423 U.S. 908 (1975).

The court reasoned that this Court’s Dupasseur decision requires

only that state law “govern whether a federal court diversity

judgment is res judicata in a subsequent state court action.” /d.

at 717-18 & n.9. The Fifth Circuit has consistently applied this

principle since Aerojet-General.'*

See, e.g., Reimer v. Smith, 663 F.2d 1316, 1325 n.9 (Sth Cir. 1981)

(“When a federal court sitting ir diversity is considering the collateral estoppel

effect of a prior federal judgment, this circuit applies federal common law.”)

(citing cases); Hauser v. Krupp Steel Producers, Inc., 761 F.2d 204, 207 (Sth

Cir. 1985) (“[FJederal law governs the collateral estoppel effect of an earlier

federal judgment, even in diversity cases.”); Avondale Shipyards, Inc. v.

Insured Lloyd's, 786 F.2d 1265, 1269 n.4 (Sth Cir. 1986) (“[W]e apply federal

law to the question of the res judicata or collateral estoppel effect of prior

federal court proceedings, regardless of the basis of federal jurisdiction in either

the prior or the present action.”); /n re Air Crash at Dallas/Ft. Worth Airport,

861 F.2d 814, 816 (Sth Cir. 1988) (“Where one federal court is considering the

Sixth Circuit: Federal Law Applies. Although earlier

decisions are mixed, in Cemer v. Marathon Oil Co., 583 F.2d

830, 831 (6th Cir. 1978), the Sixth Circuit held that in successive

diversity cases, federal law “governs the splitting of a cause of

action.” Since Cemer, the court has applied that approach to the

res judicata effect of federal diversity judgments generally.

See Silcox v. United Trucking Serv., Inc., 687 F.2d 848, 852 (6th

Cir. 1982) (broadly holding that “the scope and effect of a

district court judgment in a diversity action is to be determined

by federal, not state, law, ‘notwithstanding a contrary state rule

of res judicata’) (quoting Cemer, 583 F.2d at 832);

Consolidated Television Cable Serv., Inc., v. City of Frankfort,

857 F.2d. 354, 357 (6th Cir. 1988) (noting that “the scope of a

prior federal court judgment is governed by federal law”) (citing

Cemer), cert. denied, 489 U.S. 1082 (1989).

Seventh Circuit: No Definitive Ruling. In two early

decisions, the Seventh Circuit applied state law to determine the

res judicata effect of an earlier diversity judgment, without

discussion of the issue. See Morgan v. Inter-Continental

Trading Corp., 360 F.2d 853, 855 (7th Cir. 1966); Gasbarra v.

Park-Ohio Indus., Inc., 655 F.2d 119, 121-22 (7th Cir. 1981). In

Reinke v. Boden, 45 F.3d 166, 170-72 & n.13 (7th Cir.), cert.

denied, 516 U.S. 817 (1995), the court criticized cases from other

circuits that had relied on Fed. R. Civ. P. 41(b) to bar a second

Suit in successive-diversity situations where the diversity

judgment in the first case relied on a statute-of-limitations

res judicata [e)ffect of another federal court’s judgment in a diversity action, the

federal common law of res judicata should be applied”); Steve D. Thompson

Trucking, Inc. v. Dorsey Trailers, Inc., 870 F.2d 1044, 1045-46 (Sth Cir. 1989)

(reiterating that “the effect of a prior federal diversity judgment is controlled by

federal rather than state res judicata rules,” and applying this principle to bar

further litigation of a claim after a statute-of-limitations dismissal in another

state); RecoverEdge L.P. v. Pentecost, 44 F.3d 1284, 1290 & n.11 (Sth Cir.

1995) (reaffirming that federal law always determines the preclusive effect of

a prior federal judgment). 7

dismissal. However, in Havoco of America, Ltd. v. Freeman,

Atkins & Coleman, Ltd., 58 F.3d 303, 307 & n. 7, 308 n.9 (7th

Cir. 1995), the court broadly stated, in dicta, that “federal

principles of issue preclusion apply when the first judgment is

ee of a federal court sitting in diversity.”

Eighth Circuit: State Law Applies. In early decisions, the

Eighth Circuit applied the state law of the rendering forum in

deciding the res judicata effect of a federal diversity judgment,

with little or no discussion of the issue.'? During the past decade,

the Eighth Circuit has been urged by litigants to adopt the view

of other circuits that federal law controls this aspect of res

judicata, a request that it has rejected on at least four occasions."

Ninth Circuit: State Law Applies. Although earlier

precedent is not entirely clear, at present it appears that the Ninth

Circuit follows the traditional rule that “[i]n a subsequent

diversity action, . . . the forum state’s law applies to determine

See, e.g., Gatzemeyer v. Vogel, 589 F.2d 360, 362 (8th Cir. 1978)

(upholding trial court’s use of state law to determine res judicata effect in

successive-diversity case); Jowa Elec. Light & Power Co. v. Mobile Aerial

Towers, Inc., 723 F.2d 50, 52 (8th Cir. 1983) (holding that the state law of

collateral estoppel is to be applied in successive-diversity cases); McDonald

v. Johnson & Johnson, 776 F.2d 767, 769-70 (8th Cir. 1985) (noting that “res

judicata is an issue of substantive Jaw requiring the application of state law in

diversity actions”).

See Lane v. Sullivan, 900 F.2d 1247, 1249-50 (8th Cir.) (noting that

“cases from our court have consistently concluded that collateral estoppel in

a diversity action is a question of substantive law controlled by state common

law), cert. denied, 498 U.S. 847 (1990); Austin v. Super Valu Stores, Inc., 31

F.3d 615, 617-18 (8th Cir. 1994) (reaffirming that “we apply state not federal,

law” in determining the “preclusive effect [to be given] to the judgment of

another federal court” sitting in diversity); Schieffler v. Financial Servs. Ins.

Co., 39 F.3d 181, 186 (8th Cir. 1994) (reiterating that “[r]es judicata is an issue

of substantive law requiring the application of state law in diversity actions”);

Hillary v. Trans World Airlines, Inc., 123 F.3d 1041, 1043 (8th Cir. 1997)

(reaffirming that the res judicata effect of a prior diversity judgment is a matter

of state law), cert. denied, 522 U.S. 1090 (1998).

the preclusive effect of a previous judgment.” Bates v. Union

Oil Co., 944 F.2d 647, 649 (9th Cir. 1991), cert. denied, 503

U.S. 1005 (1992). See also Pardo v. Olson & Sons, Inc., 40 F.3d

1063, 1066 (9th Cir. 1994) (“Because this is a diversity case, we

apply the collateral estoppel rules of the forum state.”).

Tenth Circuit: No Definitive Ruling. In early decisions,

the Tenth Circuit held without discussion of the issue that, in

successive-diversity actions, the res judicata effect of the earlier

judgment is to be determined by state law. See Hayles v.

Randall Motor Co., 455 F.2d 169, 173 (10th Cir. 1971);

McCarty v. First of Georgia Ins. Co., 713 F.2d 609, 612-13

(10th Cir. 1983). In Federal Insurance Co. v. Gates Learjet

Corp., 823 F.2d 383, 386 & n.1 (10th Cir. 1987), the court

adhered to the indication in Hayles that “a federal court sitting in

diversity applies state law in determining the collateral estoppel

effect of a prior federal court diversity judgment,” while noting

the existence of a circuit split over “whether state law or federal

law determines the preclusive effect of a federal court diversity

judgment.” !

A year later, in Petromanagement Corp. v. Acme-Thomas

Joint Venture, 835 F.2d 1329 (10th Cir. 1988), the court stated

that it had not yet “resolved the question of whether state or

federal claim preclusion law governs in successive diversity

actions in federal court,” and elected to apply federal law “at

least insofar as the res judicata issue is not clearly substantive,”

which the court found was not the case with respect to rules

concerning claim-splitting. Jd. at 1332-33. In Murphy v. Klein

Tools, Inc., 935 F.2d 1127, 1128-29 (10th Cir.), cert. denied, 502

U.S. 952 (1991), the court applied federal law to determine the

preclusive effect of a statute-of-limitations dismissal in an earlier

diversity action. Based on its most recent decisions, however, it

appears that the Tenth Circuit is officially undecided on this

issue.'*

'$ See American Motorists Ins. Co. v. General Host Corp., 946 F.2d

1482, 1485-86 (10th Cir.), vacated in part, 946 F.2d 1489 (10th Cir. 1991)

Eleventh Circuit: No Definitive Ruling. Shortly after its

creation, the Eleventh Circuit relied on the Fifth Circuit’s

sweeping Aerojet-General decision to hold that “[w]Jhen a federal

court sitting in diversity examines the collateral estoppel or res

judicata effect of a prior federal judgment, based either on

diversity or a federal question, it must apply federal common

law.” Precision Air Parts, Inc. v. Avco Corp., 736 F.2d 1499,

1503 (11th Cir. 1984), cert. denied, 469 U.S. 1191 (1985)

(criticized in Burbank, supra, 71 Cornell L. Rev. at 779 &

n.218). During the next six years, the court followed this broad

holding on at least four occasions. '*

The court abruptly shifted course in NAACP v. Hunt, 891

F.2d 1555 (11th Cir. 1990), where it held that “[flederal courts

apply the law of the state in which they sit with respect to the

doctrine of res judicata.” Jd. at 1560. See also Manning v. City

(noting that “there appears to be some doubt within the Tenth Circuit as to

whether federal or state rules of collateral estoppel, i.e., issue preclusion,

apply in successive diversity actions,” but coricluding that the point need not

be decided in the appeal); Frandsen v. Westinghouse Corp., 46 F.3d 975, 977-

78 (10th Cir. 1995) (noting that “[t}here is some confusion in this circuit as to

whether federal or state rules should apply,” but ruling that resolution of the

issue was not necessary to the decision of the appeal).

"© See Hart v. Yamaha-Parts Distributors, Inc., 787 F.2d 1468, 1470

(11th Cir. 1986) (“Although both actions were based on state law and

originally brought in state court, we apply federal common law because we are

determining the preclusive effect of a federal judgment.”); Gibbs v. Air

Canada, $10 F.2d 1529, 1535 (11th Cir. 1987) (“Federal law governs the res

judicata effect of a prior judgment in a diversity action in a subsequent

diversity case.”); Empire Fire & Marine Ins. Co. v. J. Transport, Inc., 880

F.2d 1291, 1293 n.2 (11th Cir. 1989) (“Although there are still some cases

that say that when the federal court is exercising its diversity jurisdiction, the

law of the state where it sits determines the preclusive effect of its judgment,

this view is erroneous.”) (citation omitted); Citibank, N.A. v. Data Lease Fin.

Corp., 904 F.2d 1498, 1501 & n.4 (11th Cir. 1990) (stating that “even in a case

which rests its subject matter jurisdiction solely upon diversity of citizenship,

a federal court must apply federal law to determine the preclusive effect of a

prior federal court decision,” while noting “that questions have been raised as

to the wisdom of an absolute rule” under which federal law always applies).

of Auburn, 953 F.2d 1355, 1358 (11th Cir. 1992) (holding that

“(flederal courts apply state law to questions of res judicata,”

relying on NAACP v. Hunt), Wesch v. Folsom, 6 F.3d 1465, 1471

(11th Cir. 1993), cert. denied, 510 U.S. 1046 (1994) (same). The

Eleventh Circuit recently noted that on the issue of “whether

state or federal principles of res judicata apply,” its decisions

“appear to lead in two different directions,” but declined to

resolve the issue and called on litigants to “consider and brief the

issue” in future cases. Pleming v. Universal-Rundle Corp., 142

F.3d 1354, 1356 n.1 (11th Cir. 1998).

D.C. Circuit: State Law Applies. In its first substantial

discussion of the issue, the D.C. Circuit, in a case involving the

rule governing claim-splitting in successive diversity cases, held

that Erie and Full Faith and Credit principles “require a federal

court exercising diversity jurisdiction in forum II to give the

judgment of a federal court exercising diversity jurisdiction in

forum | the same full faith and credit that a state court in forum

II would be obliged to give the judgment of a state court in

-~ foru:n I, af least in the absence of an overriding federal interest.”

Semler v. Psychiatric Inst. of Washington, D.C., Inc., 575 F.2d

922, 927-28 (D.C. Cir. 1978). Semler was reaffirmed in

Schneider v. Lockheed Aircraft Corp., 658 F.2d 835 (D.C. Cir.

1981), in which the court agreed with Lockheed (respondent

here) that “a federal court sitting in diversity must look to local

law to determine whether collateral estoppel may be employed.”

Id. at 851 & n.17.

The court appeared to depart from Semler in Hunt v. Liberty

Lobby, Inc., 707 F.2d 1493, 1496 (D.C. Cir. 1983), a case giving

res judicata effect to a federal diversity judgment pending appeal,

in which the court suggested that it was “join{ing] the

burgeoning majority of federal courts” applying a federal law of

res judicata. But in Answering Service, Inc. v. Egan, 728 F.2d

1500, 1505-06 (D.C. Cir. 1984), it reaffirmed the Semler rule

“that, in diversity actions, state res judicata rules govern absent

some overriding federal interest,” and harmonized the result in

Hunt as consistent with an Erie rule requiring the use of all state

res judicata law “that can be characterized as substantive.”

Federal Circuit: No Rulings. Petitioner has located no

pertinent cases from the Federal Circuit. See also Burbank,

supra, 71 Cornell L. Rev. at 780 n.223.

C. The Conflict and Confusion Among

the State Courts on This Issue

Serious conflict and confusion over the res judicata effect of

federal diversity judgments is also apparent in the state courts.

Although a handful of states appear to be in accord with

Maryland in applying federal law,'’ the majority rule among the

states is that state law applies."* Further adding to the conflict

and confusion is that some state courts, and even some federal

district courts, have held that the res judicata effect of a federal

” See, e.g, Pilie’ & Pilie’ v. Graham, $47 So.24 1305, 1306, 1308-09 (La.

1989); Palmer v. Lanco Constr., Inc., 665 So.2d 1217, 1220 (La. App. 1996);

Pierson Sand & Gravel, Inc. v. Keeler Brass Co., $96 N.W.2d 153, 156 n.8

(Mich. 1999) (dictum); Andes v. Paden, Welch, Martin & Albano, P.C., 897

S.W.2d 19, 21 (Mo. App. 1995); Robbins v. HNG Oil Co., 878 S.W.2d 351,

357, 361-62 (Tex. App. 1994); Alcantara v. Boeing Co., 705 P.2d 1222, 1225

(Wash. App. 1985).

" See, e.g, Benetton Sp.A v. Benedot, Inc., 642 So.2d 394, 399 (Ala.

1994); Wimsatt v. Beverly Hills Weight Loss Clinics Int'l, Inc., 32 Cal. App.

4th 1511, 1516-17 (1995); Columbia Cas. Co. v. Playtex FP, Inc., $84 A.2d

1214, 1217-19 (Del. 1991) (analyzed in Erichson, supra, 96 Mich. L. Rev. at

968-69); City of Rolling Meadows v. National Adv. Co., 593 N.E.2d 551, 556

(IL. App. 1991), cert. denied, 507 U.S. 960 (1993), Real Estate Exch. Corp.

v. Harte, 8 N.W.2d 652, 657 (Mich. 1943) (citing Dupasseur), Lamontagne

v. Board of Trustees of the United Wire, Metal & Mach. Pension Fund, 583

N.Y.S.2d 838, 840 (App. 1992); American Home Assurance Co. v

International Ins. Co., 641 N.Y .S.2d 241, 243 (App. 1996), Evans v. Cowan,

468 S.E.2d 575, 577 (N.C. App. 1996), aff'd, 477 S.E.2d 926 (N.C. 1996);

Day v. Volkswagenwerk Aktiengesellschaft, 464 A2d 1313, 1316-17 (Pa

Super. 1983); Hyatt v. McBurney, 18 S.C. 199, 208 (S.C. 1882) (citing

Dupasseur), Pennconn Enters., inc. v. Huntington, $38 A.2d 673, 678 (Vt.

1987); Dual & Assocs., Inc. v. Wells, 403 S.E.2d 354, 356 (Va. 1991).

diversity judgment is not determined by the state law of the first

forum, but rather by the state law of the second forum.”

A grant of certiorari is urgently needed to end the enormous

conflict and confusion among the federal and state courts over

the fundamental issue of what source of law controls the res

judicata effect of a federal diversity judgment. The meaning of

a federal judgment should not vary depending upon the particular

jurisdiction in which that judgment becomes a matter of dispute.

Il. IF DUPASSEUR IS MODIFIED OR OVERRULED, THIS

CASE PRESENTS THE FURTHER QUESTION OF THE

APPROPRIATE RULE GOVERNING THE RES JUDICATA

EFFECT OF A STATUTE-OF-LIMITATIONS DISMISSAL

OF A FEDERAL COURT DIVERSITY CASE

If on plenary review the Court were to answer the first

question by reaffirming in full Dupasseur and its progeny — so

that the res judicata effect attached to a federal diversity

judgment is precisely the effect that would attach to a judgment

of the forum state, no more and no less — then this Court’s work

would be at an end. If Semtek’s California suit had remained in

state court instead of being removed to federal court, the sole res

judicata effect that would have attached to a statute-of-limitations

dismissal would have been that it was too late to sue under

" See Erichson, supra, 96 Mich. L. Rev. at 998 (citing cases); Lilly, supra,

54 Ohio St. LJ. at 321-22 & n.117 (citing cases). See also Tucker v. Crikelair,

493 A.2d 247, 247-48 (Conn. App. 1985) (applying Connecticut law to

determine the res judicata effect of a California federal court's statute-of-

limitations dismissal); Wedel v. American Elec. Power Serv. Corp., 681

N.E.2d 1122, 1131 (ind. App. 1997) (applying Indiana law to determine the

res judicata effect of the judgment of a Kentucky federal court sitting in

diversity); Mortgageling Corp. v. Commonwealth Land Title Ins. Co., 662 A.2d

536, 539-42 (NJ. 1995) (applying New Jersey law to determine the res judicata

effect of the judgment of a Pennsylvania federal court sitting in diversity),

Coker v. Basic Media, Lid, 303 $.E.24 620, 621-22 (N.C. App. 1983)

(applying North Carolina law to determine the res judicata effect of a D.C.

federal district court's statute-of-limitations dismissal).

California’s two-year statute, as Lockheed did not dispute below.

In other words, the ruling would have had only an issue

preclusive effect concerning California’s limitations period; it

would not have had any claim preclusive effect that could bar the

Maryland action, which would be subject to Maryland’s longer

limitations period. California follows the traditional rule “that

dismissal on limitations grounds merely bars the remedy in the

first system of courts, and leaves a second system of courts free

to grant a remedy that is not barred by its own rules of

limitations.” 18 Wright & Miller, supra, § 4441, at 369. See

pp. 4-5, supra (citing cases). Thus, if Dupasseur is still good

law, so that the res judicata effect of a limitations dismissal in

federal court is exactly the same as in state court, then it is clear

that the California dismissal does not preclude Semtek’s

Maryland lawsuit.

If this Court were instead to modify or even overrule the

Dupasseur line of cases, this case would then provide a vehicle

for resolving what rule of federal law should govern the res

judicata effect of a statute-of-limitations dismissal issued by a

federal court sitting in diversity — allowing this Court to set

forth by example, in concrete terms, the manner in which post-

Dupasseur analysis of res judicata questions is to be carried out.

At least three options would then appear to be open to the

Court in articulating the content of the federal rule governing

statute-of-limitations dismissals in diversity cases.

First, this Court might rule that, although the res judicata

effect of a diversity judgment is governed by federal law, there

is no important federal interest in dictating the use of a nationally

uniform rule governing the effect of a statute-of-limitations

dismissal. Instead, as the Court has done on other issues

involving federal litigation of state-law claims where no statute

or rule is explicitly controlling, the Court could hold that the

federal common law rule here is one that borrows the pertinent

state-law res judicata rule that would have applied if the case had

been brought in, or had remained in, state court.” Such an

approach would reflect the philosophy that “although federal law

must ultimately control the choice, federal law should at times

apply state preclusion rules to federal judgments on state

questions. This is the position adopted by the Restatement

Second of Judgments.” 18 Wright & Miller, supra, § 4472, at

734 (citing 1 Restatement (Second) of Judgments § 87 (1982)).

Such an approach would retain much of the practical value

of the Dupasseur rule in preventing the accident of a federal

forum from leading to a markedly different result than would

have obtained in state court. In so doing, this approach would

help promote the principles underlying this Court’s Erie

jurisprudence, carrying out the strong federal interest in

preventing the inequitable administration of the laws and in

minimizing opportunities for outcome-determinative forum-

shopping.”’ As Judge Wilkey put this point, in a decision that

® See generally Fallon, Meltzer & Shapiro, supra note 7, at 820-29; see

also Burbank, supra, 71 Cornell L. Rev. 796 & n.314 (citing as examples

Walker v. Armco Steel Corp., 446 U.S. 740 (1980); and Klaxon Co. v. Stentor

Elec. Mfg. Co., 313 U.S. 487 (1941)). Of particular relevance here, in

defining the applicable statute of limitations on federal-law claims where

Congress has not addressed the matter, this Court has generally directed the

use of the statute-of-limitations law of the forum state where compatible with

federal interests, despite the substantial variations between fora that are the

consequence of such borrowing. See Agency Holding Corp. v. Malley-Duff

& Assocs., Inc., 483 U.S. 143, 146-48 (1987); id. at 157-65 (Scalia, J.,

concurring in the judgment); Wilson v. Garcia, 471 U.S. 261, 266-71 (1985);

DelCostello v. Teamsters, 462 U.S. 151, 158-62 (1983); UAW v. Hoosier

Cardinal Corp., 383 U.S. 696, 703-04 (1966); Campbell v. Haverhill, 155

U.S. 610, 614-15 (1895); Bauserman v. Blunt, 147 U.S. 647, 652-53 (1893);

see also Burbank, supra, 71 Cornell L. Rev. at 768-69 & n.164. The

borrowing of state law as federal common law is, of course, hardly confined

to the context of federal diversity litigation. See, e.g., United States v. Kimbell

Foods, Inc., 440 U.S. 715, 727-29 (1979).

** That concern is well illustrated by the facts of this case. The holding

below that Semtek’s second lawsuit is barred under a federal rule of res

judicata is the product of two forum choices, neither of which, we submit,

should have any bearing on the result in this case. First, because Semtek

remains the leading D.C. Circuit case on the res judicata effect of

a diversity judgment:

[Tjhe principles of Erie . . . and the mandate of the Full

Faith and Credit Clause as supplemented by 28 U.S.C.

§ 1738 require a federal court exercising diversity

jurisdiction in forum II to give to the judgment of a

federal court exercising diversity jurisdiction in forum

I the same full faith and credit that a state court in forum

II would be obliged to give the judgment of a state court

in forum I, at least in the absence of an overriding

federal interest.

Semler v. Psychiatric Inst. of Washington, D.C., Inc., 575 F.2d

922, 927-98 & n.33 (D.C. Cir, 1978) (citation omitted).

There would appear to be no basis for applying a uniform

federal rule to determine the res judicata effect of a statute-of-

limitations dismissal in a diversity case. The jurisdictional

statutes that enabled Lockheed to obtain access to California

federal court were designed to afford “out-of-State litigants

another tribunal, not another body of law,” and “[t]he source of

substantive rights enforced by a federal court under diversity

jurisdiction . . . is the law of the States.” Guaranty Trust Co. v.

York, 326 U.S. 99, 112 (1945). Thus, in the specific context of

provided defendants with a courtesy copy of the complaint prior to service,

Lockheed and the in-state defendant were able to remove the case to federal

court. See p. 3, supra. This change of forum later allowed Lockheed to argue

to the Maryland courts that they must use a federal res judicata rule to

preclude the second suit, a result that would not have been possible if the first

case had been dismissed in California state court.

Second, instead of filing the second lawsuit in Delaware (Lockheed’s

state of incorporation), whose state courts have rejected the use of a federal

res judicata rule, see note 18, supra, and where the statute had not run, Semtek

filed in Maryland (where Lockheed has its headquarters and where much of

the alleged wrongdoing occurred). This choice of forum led to the dismissal

of Semtek’s action on the basis of the sweeping res judicata effect of a statute-

of-limitations dismissal adopted by the Maryland courts in significant part as

a result of their interpretation of Fed. R. Civ. P. 41(b) — an interpretation that

is, we submit, mistaken. See note 22, infra, and authorities cited therein.

the statute-of-limitations rules applicable in federal diversity

litigation, this Court has emphasized that “the outcome of the

litigation in the federal court should be substautially the same .

. . as it would be if tried in a State court.” Jd. at 109. See also

Holmberg v. Armbrecht, 327 U.S. 392, 394 (1946) (reaffirming

York, noting that “a statute of limitation is a significant part of

the legal rules which determine the outcome of a litigation”).

Likewise, this Court has noted that the “doctrine of res judicata

is not a mere matter of practice or procedure,” but rather “a rule

of fundamental and substantial justice.” Hart Steel Co. v.

Railroad Supply Co., 244 U.S. 294, 299 (1917).

By contrast, there may be an overriding federal interest in

giving a uniform res judicata effect to judgments where necessary

to regulate litigant conduct under the Federal Rules of Civil

Procedure, thereby arguably obliging state courts “to honor

preclusion rules that draw not from adjudication but from

procedural penalties.” 18 Wright & Miller, supra, § 4468, at

658. Examples might include the “failure to assert a compulsory

counterclaim” under Rule 13(a), and “dismissals for failure to

prosecute or to comply with court orders or rules,” for example,

under Rule 41(b). Jd.”

#2 This concern has been articulated most prominently by the Second

Circuit in its oft-cited decision in Kern v. Hettinger, 303 F.2d 333, 340 (2d

Cir. 1962), which barred a litigant from proceeding with a second suit in New

York federal court after suffering a Rule 41(b) dismissal for failure to

prosecute in California federal court. The particular, and limited context of

failure to prosecute that triggered Kern’s sweeping language on the strong

federal interest in precluding suit in such an instance was later overlooked by

some Second Circuit panels. See p. 15 & note 9, supra.

Some commentators have questioned the view that the Federal Rules of

Civil Procedure in general, and Rule 41(b) in particular, may or should be

construed as broadly dictating the preclusive effect of federal judgments and

have suggested that the Rules Enabling Act (coupled with the constitutional

principles underlying the Erie decision) may present a barrier to any such

broad construction. See 18 Wright & Miller, supra, § 4441, at 366 (stating

that Rule 41(b) is “clearly inapposite” to the preclusive effect of a statute-of-

limitations dismissal); id. § 4468, at 658-59; id. § 4472, at 732-39; Burbank,

supra, 71 Cornell L. Rev. at 772-75, 780-83, 791-97; Lilly, supra, 54 Ohio St.

A second option available to the Court would be simply to

adopt, as a uniform federal rule governing the res judicata effect

of a statute-of-limitations dismissal, the traditional rule that such

a dismissal does not preclude suit in another forum with a longer

limitations period (at least so long as the rule of the rendering

jurisdiction bars only a remedy in that jurisdiction’s courts, and

not the right itself). See pp. 4-5, 24-25, supra.”

A third option available to this Court — and, we submit, the

least desirable — would be to adopt, again as a uniform federal

rule, the opposite rule: the minority rule that a statute-of-

limitations dismissal in the initial forum bars another suit in any

L.J. at 319-21 & n.113. See also Reinke v. Boden, 45 F.3d 166, 170-71 &

n.13 (7th Cir.) (noting the “serious criticism” of the line of cases relying on

the last sentence of Rule 41(b) to hold that “when successive actions are

brought in different federal courts, a determination by the first federal court

that the cause of action is barred by the statute of limitations of one state bars

a successive action in a second federal court — even though that second court

would apply a different statute of limitations, the statute of the state in which

it sits.”), cert. denied, 516 U.S. 817 (1995).

* The leading federal court opinion articulating the traditional rule that

each forum may apply its own limitations period in deciding the timeliness of

an action is Justice Story’s opinion in United, States v. Donnally, 33 U.S. (8

Pet.) 361, 370, 372-73 (1834). See 18 Wright & Miller, supra, § 4441, at 369

n.9. See also Townsend v. Jemison, 50 U.S. (9 Cranch) 407, 413 (1850)

(“The rule in the courts of the United States, in respect to pleas of the statutes

of limitation has always been, that they strictly affect the remedy, and not the

merits.”); Davis v. Mills, 194 U.S. 451, 453 (1904) (“[T]he ordinary

limitations of actions are treated as laws of procedure and as belonging to the

lex fori, as affecting the remedy only and not the right.”).

This rule has produced “the general conclusion that dismissal on

limitations grounds merely bars the remedy in the first system of courts, and

leaves a second system of courts free to grant a remedy that is not barred by

its own rules of limitations.” 18 Wright & Miller, supra, § 4441, at 369. This

Court reaffirmed the constitutionality of this traditional choice-of-law

approach in Sun Oil v. Wortman, 486 U.S. 717 (1989). This is the rule

adopted in the Restatement (Second) of the Conflict of Laws § 142(2) & cmt.

g, § 143, and it appears to be the majority rule. But see id. § 142 & cmts. e &

g (Rev. 1989) (noting recent decisions departing from the “right” versus

“remedy” analysis).

other forum. This is the rule that was adopted by the Maryland

courts below, and in doing so, they followed the reasoning of

several courts that have interpreted Fed. R. Civ. P. 41(b) to

require such a result. See App. 8a, 12a-16a, 19a-25a (principally

relying on Shoup v. Bell & Howell, 872 F.2d 1178 (4th Cir.

1989), and Thompson Trucking, Inc. v. Dorsey Trailers, Inc., 870

F.2d 1044 (Sth Cir. 1989)). The idea that Rule 41(b) by its terms

dictates any particular preclusive effect has received substantial

criticism. See note 22, supra, and authorities cited therein.

In sum, if this Court elects on the merits to modify or

overrule its holdings in Dupasseur and its progeny, this case

provides a perfect vehicle for explicating, for the benefit of the

lower federal and state courts, the post-Dupasseur approach to

be taken in analyzing the various res judicata issues that are

relevant to judgments in diversity cases.

CONCLUSION

For the foregoing reasons, the petition for a writ of certiorari

should be granted.

Respectfully submitted.

WALTER J. LACK LAURENCE H. TRIBE*

STEVEN C. SHUMAN KENNETH CHESEBRO

ENGSTROM, LIPSCOMB & LACK JONATHAN S. MASSEY

10100 Santa Monica Blvd. 1575 Massachusetts Avenue

Los Angeles, CA 90010 Cambridge, MA 02138

(310) 552-3800 (617) 495-4621

THOMAS V. GIRARDI ANDREW W. ZEPEDA

JAMES KROPFF STEVEN L. HOGAN

GIRARDI & KEESE LURIE & ZEPEDA

1126 Wilshire Blvd. 9107 Wilshire Blvd.

Los Angeles, CA 90017 Beverly Hills, CA 90210

(213) 977-0211 (310) 274-8700

Counsel for Petitioner

* Counsel of Record

a ee ee

TABLE OF APPENDICES

APPENDIX A

Decision of the Court of Special Appeals

of Maryland, dated September 7, 1999

APPENDIX B

Order of the Court of Appeals of Maryland

denying certiorari, dated December 21, 1999

APPENDIX C

Memorandum Opinion of the Circuit Court

for Baltimore City, dated April 30, 1998,

granting defendant’s motion to dismiss

APPENDIX D

Order of the U.S. District Court for the Central

District of California, dated May 5, 1997,

granting defendants’ motion to dismiss,

and judgment dated May 8, 1997

APPENDIX E

Order of the U.S. District Court for the Central

District of California, dated August 11, 1997,

denying Lockheed’s motion for injunction

APPENDIX A

IN THE COURT OF SPECIAL APPEALS

OF MARYLAND

No. 1041

September Term, 1998

SEMTEK INTERNATIONAL

INCORPORATED

Vv.

LOCKHEED MARTIN CORPORATION

Moylan,

Adkins,

Bloom, Theodore R. (Ret., Specially Assigned),

JJ.

OPINION BY MOYLAN, J.

Filed: September 7, 1999

[Page numbering from 736 A.2d 1104 in bold]

[1106] Semtek International Corp. (“Semtek”), the

appellant, challenges an Order issued by Judge Joseph H. H.

Kaplan in the Circuit Court for Baltimore City, whereby

Semtek’s Complaint against Lockheed Martin Corporation

(“Lockheed”), the appellee, was dismissed on grounds of res

judicata. On appeal, Semtek raises the sole issue of whether the

trial court erred in dismissing the Complaint. Although Semtek

has strained, at least before us if not necessarily before Judge

Kaplan, to inject all sorts of peripheral doctrines and issues into

the case, the question before us, in essence, is the single issue

whether Judge Kaplan was entitled to give

preclusive effect to the judgment of a federal

district court dismissing Semtek’s suit against

Lockheed, stating as it did so that the suit was

being “dismissed in its entirety on the merits.”

Procedural Background

A. California State Suit Removed to Federal

District Court on Ground of Diversity:

On February 26, 1997, Semtek filed a Complaint against

Lockheed in the Superior Court for Los Angeles (hereinafter

“the California action”), alleging (1) breach of contract, (2)

intentional interference with prospective economic advantage,

(3) negligent interference with prospective economic

advantage, and (4) civil conspiracy, in relation to Semtek’s

joint venture with a Russian company for the use of former

military satellites for commercial purposes. Lockheed

immediately removed the action to the United States District

Court for the Central District of California (hereinafter

“California District Court”) based on diversity of citizenship.

B. District Court Dismissed Suit and Dismissal

Affirmed by Ninth Circuit:

In the California District Court, Lockheed moved to

dismiss Semtek’s Complaint based on the expiration of

California’s two-year Statute of Limitations. On May 8, 1997,

the California District Court granted Lockheed’s motion and

dismissed the action with prejudice, holding that the causes of

action had accrued in August of 1994, thus making the

February 26, 1997 Complaint untimely. Three days later, the

following Order was issued:

IT IS ORDERED, ADJUDGED AND

DECREED that plaintiff Semtek International

Incorporated take nothing on its complaint in

this action, that the action be dismissed in its

entirety on the merits and with prejudice, and

that this Judgment be entered forthwith in

favor of defendants Lockheed Martin .. . .

(Emphasis supplied).

Semtek appealed that judgment to the United States Court

of Appeals for the Ninth Circuit. On February 25, 1999, the

Ninth Circuit affirmed the California District Court’s dismissal

of Semtek’s Complaint on Statute of Limitations grounds.

Semtek Internat 'l Inc. v. Lockheed Martin Corp., No. CV-97-

55840, 1999 WL 97355 (9th Cir. Feb. 25, 1999).

C. Refiling of Suit in Maryland State Court:

On July 2, 1997, Semtek filed in Maryland another

Complaint against Lockheed (hereinafter “the Maryland

action”), alleging (1) breach of contract, (2) intentional

interference with prospective economic advantage, (3)

negligent interference with prospective economic advantage,

and (4) civil conspiracy, based on the same purported joint

venture between Semtek and a Russian company regarding the

use of military satellites. That suit was filed in the Circuit Court

for Baltimore City, making the underlying claim subject to

Maryland’s three-year Statute of Limitations [1107] rather than

California’s two-year Statute of Limitations.

D. Failed Injunction Attempt in Original

Federal District Court:

In response, Lockheed filed an All Writs Act injunction in

the California District Court on July 23, 1997. Lockheed

asserted that Semtek was barred from bringing suit in Maryland

on the grounds of res judicata. Two days later, Lockheed

removed the Maryland action to the United States District

Court for the District of Maryland (hereinafter “Maryland

District Court”), citing the involvement of a federal question

as grounds for removal.' Specifically, Lockheed maintained

that, even though none of Semtek’s claims presented a federal

question, Lockheed planned to assert the defense of res

judicata based on the California Federal Court’s ruling, thus

presenting a federal question for resolution.

Ultimately, the California District Court denied Lockheed’s

injunctive efforts, holding as follows:

[Tjhis Court is not convinced that the

single action filed by [Semtek] in Maryland

rises to the level of vexatious relitigation

which would warrant the use of the rather

extreme remedy that Lockheed requests.

[Semtek] has not filed subsequent actions that

are either “numerous” or “patently without

merit.” The Court does not view this

chronology as one in which the Court is

justified in summarily precluding [Semtek’s]

access to the courts. This Court’s prior order

did not reach the substantive merits of

[Semtek’s] tort claims. If another proper forum

will afford [Semtek] the opportunity to fully

litigate the merits of its causes of action,

' Lockheed could not remove the action based on diversity of citizenship

because Lockheed is considered a Maryland citizen.

without applying a statutory or res judicata

bar, the Court does not find it appropriate to

bar [Semtek] from proceeding in that forum.

(Citation omitted).

E. Removal From Local Federal District

Court to Maryland State Court:

After the California District Court’s ruling, Lockheed filed

a Motion to Dismiss the Maryland action in the Maryland

District Court on grounds of res judicata. Semtek, on the other

hand, sought to have the Maryland District Court remand the

action to the Circuit Court for Baltimore City, alleging lack of

subject matter jurisdiction in the Maryland District Court. On

December 31, 1997, the Maryland District Court granted

Semtek’s motion to remand the case to the circuit court on the

ground that federal removal could not be predicated on an

alleged federal affirmative defense. Semtek Internat'l, Inc. v.

Lockheed Martin Corp., 988 F. Supp. 913 (D. Md. 1997). The

Maryland District Court did not rule on Lockheed’s Motion to

Dismiss.

The Res Judicata Ruling

Thereafter, Lockheed filed another Motion to Dismiss in

the Circuit Court for Baltimore City, again asserting that the

suit was barred by res judicata. A hearing was held on April

23, and on April 30, 1998, the trial court granted Lockheed’s

Motion to Dismiss. The thorough and well-researched opinion

of Judge Kaplan explained:

The central issue that this court has been

asked to consider is the preclusive effect of a

federal dismissal on a subsequent identical

State court action. ... Pursuant to the clear

language of the Federal Rules of Civil

Procedure and federal preclusion law, federal

law determines the preclusive effect of a prior

federal judgment.

{1108} ***

The Court is convinced that Federal Rule

of Civil Procedure 41(b), Fourth, Fifth, Ninth

Circuit case law and the Andes [v. Paden,

Welch, Martin & Albano 897 $.W.2d 19 (Mo.

1995)} holdings mandate this Court fo find the

Judgment of the District Court for the Central

District of California, dismissing Semtek’s

claims on statute of limitations grounds, a

final judgment on the merits, and therefore

prohibits Semtek from relitigating these claims

in Maryland due to res judicata. Federal law

does not permit [Semtek] to shop indefinitely

for a forum that will give credence to their

arguments. [Semtek] had its day in Court for

this action and apparently was not satisfied

with [the California District Court’s] decision.

Semtek could have originally filed this suit in

Maryland state court, but instead filed this

action in California. Thus, Semtek should be

bound by California’s two year statute of

limitations and [the California District

Court’s] decision dismissing the action.

Lockheed should not be forced to follow

[Semtek] from state to state to defend an

action previously decided in another

jurisdiction. Accordingly, the Court agrees

with Lockheed in that the fairest and most

efficient use of federal and state judicial

resources mandates that this Court grant

Lockheed’s Motion to Dismiss Semtek’s

Maryland Complaint with prejudice.

(Emphasis supplied). This timely appeal followed.

The propriety of Judge Kaplan’s dismissal of Semtek’s suit

on the ground o[f] res judicata is the sole issue before us on

this appeal.

Preclusive Effect of Federal Judgment

Determined by Federal Law

Semtek argues that our analysis of whether the Maryland

action ‘s barred on res judicata grounds should be dictated by

California state law and that Judge Kaplan erroneously applied

federal law when making his determination. We disagree.

In Kent County Bd. of Ed. v. Bilbrough, 309 Md. 487, 494

(1987), the Court of Appeals unambiguously stated that

“federal law determines the effects under the rules of res

judicata of a judgment of a federal court,” quoting with

approval Restatement (Second) of Judgments, § 87 (1982). See

also Douglas v. First Security Federal Savings Bank, Inc., 101

Md. App. 170, 179 (1994). The case law is well settled that it

is federal law that determines the preclusive effect of a federal

judgment. Brooks v. Arlington Hosp. Ass'n, 850 F.2d 191, 195

(4th Cir. 1988); Agrilectric Power Partners, Ltd. v. General

Electric Co., 20 F.3d 663, 664-65 (Sth Cir. 1994); Luxford v.

Dalkon Shield Claimants Trust, 978 F. Supp. 221, 223 n.6 (D.

Md. 1997); Green v. Kadilac Mort. Bankers, Ltd., 936 F. Supp.

108, 114 (S.D.N.Y. 1996); Bostic v. Allstate Ins. Co., 866 F.

Supp. 959, 959 (W.D. Va. 1994).

After quoting from Kent County Bd. of Educ. v. Bilbrough,

Judge Kaplan ruled that federal law would determine the

preclusive effect in Maryland of the May 8, 1997 judgment of

the California District Court:

Accordingly, because Semtek does not

deny that the United States District Court for

the Central District of California dismissed

every claim contained in Semtek’s current

Maryland complaint with prejudice on statute

of limitations grounds, federal law must be

employed to determine the preclusive effect of

this prior federal court judgement.

Federal Rule of Civil Procedure 41(b)

The applicable federal law to which Judge Kaplan then

turned in his Memorandum Opinion was Federal Rule of Civil

Procedure 41(b), which provides, in pertinent part:

Unless the court in its order for dismissal

otherwise specifies, a dismissal under this

subdivision and any dismissal not provided for

in this rule, other than a dismissal for lack of

jurisdiction, for improper venue, or for failure

to join a [1109] party under Rule 19, operates

as an adjudication upon the merits.

(Emphasis supplied). In applying Federal Rule 41(b) to the case

at hand, Judge Kaplan further ruled:

» The plain language of the rule requires

that the dismissal of the Plaintiff's California

action be deemed an adjudication on the merits

and warrants dismissal of Semtek’s duplicative

Maryland complaint with prejudice.

The prior decision that Judge Kaplan afforded preclusive

effect was the May 8, 1997 judgment of the California federal

district court. That judgment, by its express language,

dismissed Semtek’s suit IN ITS ENTIRETY ON THE

MERITS AND WITH PREJUDICE. In the immediate wake

of that judgment, Semtek did not seek to alter, amend, or revise

the wording of the judgment in any way. Semtek appealed the

merits of the decision to the Ninth Circuit. On February 25,

1999, the Ninth Circuit affirmed, on the merits, the District

Court’s dismissal of Semtek’s complaint. The Ninth Circuit

opinion volunteered no adverse comment on the wording of the

dismissal order.

The Federal Court’s Subsequent Reference

To Its Earlier Judgment

In an effort to fend off the preclusive effect of the May 8,

1997 judgment, Semtek argues that the same federal district

court that issued the May 8, 1997 dismissal order has, in effect,

subsequently and significantly ameliorated that order. Judge

Kaplan did not accept that argument nor do we.

After Semtek had refiled its suit in the Circuit Court for

Baltimore city, one of the defensive maneuvers of Lockheed

was to go back to the federal district court in California and to

move, on July 23, 1997, for an All Writs Act injunction seeking

to bar Semtek from bringing the action in Maryland on the

grounds of res judicata. On August 11, 1997, United States

District Court judge Audrey B. Collins, the same judge who

had issued the earlier order of May 8, 1997, denied Lockheed’s

request for an injunction. In her 14-page Opinion and Order

Judge Collins pointed out that the decision to issue -an

injunction under the All Writs Act, 28 U.S.C. § 1651(a), is

" discretionary and is “an extraordinary remedy that should be

narrowly tailored and rarely used.” Moy v. United States, 906

F.2d 467, 470 (9th Cir. 1990). Judge Collins concluded that

“because the resolution of the res judicata issue is far from

obvious, the Court declines to determine the issue.” She

reasoned that the preclusive effect of the earlier action “is

properly left to the Maryland state or district court.” She

expressly stated that “Lockheed’s argument that the doctrine of

res judicata bars the Maryland case may be brought before the

proper court in a motion to dismiss or motion for summary

judgment based on res judicata preclusion.”

In passing, Judge Collins observed, “This Court’s prior

order did not reach the substantive merits of Plaintiff's tort

claims. If another proper forum will afford Plaintiff the

opportunity to fully litigate the merits of its cause of action,

without applying a statutory or res judicata bar, the Court does

not find it appropriate to bar plaintiff from proceeding in that

10a

forum.” That first quoted sentence is the language on which

Semtek now relies for its proposition that the judgment of May

8, 1997, has now been effectively altered.

The Inconsequentiality of Dicta

Judge Collins, however, also stated very emphatically that

the Court must reiterate that these issues are

properly decided by the proper court in

Maryland, and any dicta or other discussion

within this opinion should not be cited or

argued as persuasive authority for the

Maryland courts’ consideration of the issues

of removal jurisdiction and res judicata

preclusion.

(Emphasis supplied).

Judge Kaplan rejected Semtek’s argument and abided by

Judge Collin’s wishes [1110] with respect to the non-

persuasive status of her passing comments.

Semtek argues that Rule 41(b) should not

be applied because the United States District

Court for the Central District of California’s

order denying Lockheed’s request for a

permanent injunction states that the court had

not reached the “substantive merits” of

Semtek’s claims.

Plaintiff s argument is flawed for several

reasons. First and foremost, neither party

stated an objection to the Order signed by

Judge Collins dismissing the United States

District Court for the Central District of

California action, in its entirety on the merits

and with prejudice. This Order states that, “IT

IS ORDERED, ADJUDGED AND

lla

DECREED, that Plaintiff Semtek International

Incorporated take nothing on its complaint in

this action, that the action can be dismissed in

its entirety on the merits and with prejudice,

and that the judgment be entered forthwith in

favor of the defendants . . . .” Secondly, Judge

Collins explicitly stated in footnote 13 of her

opinion that . . . “the Court must reiterate that

these issues are properly decided by the proper

court in Maryland, and any dicta or other

discussion within this opinion should not be

cited or argued [as] persuasive authority for

the Maryland courts’ consideration of . . . res

judicata preclusion.” Furthermore, the District

Court expressly requested that the parties not

cite any dicta contained in that order.

Self-evidently, Judge Kaplan was as free to disregard Judge

Collins’s characterization of her earlier order in the course of

later dicta, indeed to disregard her characterization at her

express direction, as he would have been free to disregard a

similar characterization attributed to her in the course of

cocktail party conversation. We see no error.

The Effort to Amend the Federal Judgment

The very argument in this regard that Semtek now makes

was also made to both the Ninth Circuit and the federal district

court in California. Early in the pendency of Semtek’s appeal

of Judge Kaplan’s decision to this Court, Semtek sought to

have the federal district court amend its judgment of May 8,

1997 in order to correct the allegedly “clerical” mistake of

seeming to have dismissed Semtek’s suit “with prejudice and

on the merits” and to “clarify” the May 8, 1997 judgment by

deleting any reference to its having been “on the merits.”

The memoranda in support of both 1) Semtek’s motion in

the Ninth Circuit, filed on October 5, 1998, and 2) Semtek’s

12a

motion in the federal district court, filed October 19, 1998,

recite at length 1) Judge Kaplan’s decision in the Circuit Court

for Baltimore City to dismiss Semtek’s suit on the ground of

res judicata, 2) Judge Kaplan’s reliance on the fact that the

May 8, 1997 federal district court judgment stated that it was

“on the merits,” and 3) Judge Collins’s later characterization of

her May 8, 1997 judgment. With full knowledge of all the facts

and of the impact of those facts, both the Ninth Circuit and the

federal district court, albeit on procedural grounds, denied

Semtek’s motions “to amend,” “to correct,” or “to clarify” the

judgment of May 8, 1997. That judgment is today exactly as it

was on May 8, 1997. “The moving finger writes and, having

writ, moves on.”

Judge Kaplan’s Further Analysis

Quite aside from Kent County Board of Education v.

Bilbrough and Federal Rule of Civil Procedure 41(b), Judge

Kaplan found independent support for his decision in the

dispositive cases of Shoup v. Bell & Howell, 872 F.2d 1178

(4th Cir. 1989) and Thompson Trucking, Inc. v. Dorsey

Trailers, Inc., 870 F.2d 1044, reh'g denied en banc, 880 F.2d

818 (Sth Cir. 1989). While he “recognize[d] that Fourth Circuit

and Fifth Circuit cases are not binding on Maryland State

Courts,” he nonetheless concluded that they “provide sufficient

persuasive authority on the proper application of federal

preclusion principles [1111] governing the resolution of this

Motion.”

Shoup v. Bell & Howell

Although Shoup and Thompson Trucking are, to be sure,

not binding on Maryland courts, we, like Judge Kaplan, find

them to be highly persuasive authority. In Shoup, as in this

case, suit was originally brought in a state court, in that case in

Pennsylvania. In that case, as in this, the suit was removed to

)

;

eGR ta. eile hanes eet

13a

the federal district court on the basis of diversity of citizenship.

In that case, as in this, the defendant moved to have the suit

dismissed because the state statute of limitations had run before

the suit was originally filed in the state court. The Pennsylvania

statute of limitations in that case, as the California statute of

limitations in this case, was two years. In that case, as in this,

the federal district court dismissed the suit because the

underlying state statute of limitations had run.

In that case, as in this, the plaintiff refiled essentially the

same suit in the Circuit Court for Baltimore City in an obvious

effort to take advantage of Maryland’s more generous three-

year statute of limitations. In that case, unlike this one, the case

was again moved to federal district court on the basis of

diversity of citizenship.’ In that case, as in this, the defendant

moved to have the subsequently filed suit dismissed on the

ground of res judicata.

Whereas in this case Judge Kaplan granted the defendant’s

res judicata motion, in that case Judge Walter E. Black, Jr.

denied that defendant’s res judicata motion. Whereas the

unsuccessful defendant there appealed to the United States

Court of Appeals for the Fourth Circuit, the unsuccessful

plaintiff here has appealed to us. The Fourth Circuit was then,

as we are now, faced with the preclusive effect of an earlier

federal dismissal of a diversity case as time-barred on a

subsequent refiling of essentially the same action in a new

forum. The only difference between the Shoup case and the

case now before us is that the new forum in that case was a

second federal court whereas the new forum in this case was a

Maryland state court.

In the Shoup case, as in this case, the earlier judgment that

was urged as one having preclusive effect was the judgment of

a federal district court, in that case sitting in Pennsylvania as in

this case sitting in California. Before stating the question there,

? It was there consolidated with an identical suit that had simultaneously

been filed in the United States District Court for the District of Maryland.

l4a

which is almost precisely the same as the question here, the

Shoup opinion held that federal law determines the preclusive

effect of an earlier federal judgment:

We note at the outset that federal, not

state, law determines the preclusive effect of a

prior federal judgment, including the question

of whether that judgment was on the merits. It

is true that plaintiff filed her Maryland lawsuit

within that state’s three-year limitations period

for personal injury actions. That fact, however,

does not determine whether an earlier identical

action between the parties, found to be time

barred because it was not filed within

Pennsylvania’s two year statute of limitations,

precluded the plaintiffs from bringing the

Maryland lawsuit.

872 F.2d at 1179 (citations omitted; emphasis supplied).

At the District Court level in Shoup, Judge Black had

ruled, essentially as Semtek argues here, that “Maryland law

regards the Pennsylvania [California] statute of limitations as

procedural,” 872 F.2d at 1179, and, therefore, as no bar to a

subsequent suit in a Maryland Court “where the Pennsy!vania

[California] statute is inapplicable.” Jd. The Fourth Circuit

opinion disagreed, reasoning that it is the federal judgment

itself that is the critical point for measuring possibly preclusive

effect and not some more anterior and peripheral state law that

may have been [1112] considered in arriving at the federal

judgment. Shoup also pointed out that whatever preclusive

effect an earlier federal judgment may have is not diminished

because it was rendered in a diversity case:’

> The case law is well settled that the preclusive effect of a federal

judgment is not in any way diluted because the federal case happens to be

a diversity of citizenship case and that this principle is not in any way in

conflict with the so-called “Erie Doctrine” established by Erie R. Co. v.

15a

While state law certainly controls the rights

and duties of the parties in a federal action

founded upon diversity of citizenship, Erie R.

Co. v. Tompkins (1938), this circuit has

recognized that “whether a federal court sits in

diversity or has some other basis of

jurisdiction, questions of the effect and scope

of its judgment involve the power of the

federal tribunal itself, and are not varied

Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938). In PRC

Harris v. Boeing Co., 700 F.2d 894, 897, n.1 (2nd Cir. 1983), the Second

Circuit observed:

Harris asserts that application of Rule 41(b) to dismissals on

statute of limitations grounds in a diversity case would raise

potential constitutional problems under the “Erie doctrine”. . .

because it would have the effect of abrogating state substantive

law. This court explicitly considered and rejected such a claim in

Kern v. Hettinger, noting that while state law controlled the rights

and obligations of the parties, determining the res judicata effect

that will be given the judgment of a federal court is distinctively

a matter of federal law.

(Citations omitted).

In Kern v. Hettinger, 303 F.2d 333, 340 (2d Cir. 1962), the Second

Circuit also pointed out:

One of the strongest policies a court can have is that of

determining the scope of its own judgments. It would be

destructive of the basic principles of the Federal Rules of Civil

Procedure to say that the effect of a judgment of a federal court

was governed by the law of the state where the court sits simply

because the source of federal jurisdiction is diversity. The rights

and obligations of the parties are fixed by state law. These may

be created, modified and enforced by the state acting through its

own judicial establishment. But we think it would be strange

doctrine to allow a state to nullify the judgments of federal courts

constitutionally established and given power also to enforce state

created rights. The Erie doctrine is not applicable here.

(Citations omitted). See also Cemer v. Marathon Oil Co., 583 F.2d 830,

831 (6th Cir. 1978).

16a

merely because state rules of decision underlie

the judgment.” The judgment of a federal

court is no less a federal judgment because it

was rendered in diversity. “Federal law

determines the effects under the rules of res

judicata of a judgment of a federal court,”

Restatement (Second) of Judgments § 87

(1982), just as in a state court the law of the

state in which the judgment was rendered

determines the preclusive effect a federal court

must give the judgment. Any other result

would consign the effect of federal judgments

to the uncertainties of state law in whatever

jurisdiction a subsequent suit happened to be

brought.

872 F.2d at 1179-80 (citations omitted; emphasis supplied).

Full Faith and Credit:

To Whom and To What?

The misconception the Shoup opinion was attempting to

overcome is the fundamental flaw that permeates Semtek’s

argument in this case. Semtek stubbornly continues to ignore

the May 8, 1997 judgment of the federal district court as the

source of preclusion in this case and to try to look behind it to

anterior California state law. There was no California state

judgment in this case. Although the federal district court may

have considered some underlying California state law, the

federal judgment did not thereby become a California state

judgment nor lose its status as a federal judgment.

Semtek nonetheless persistently argues as if there existed

some ethereal and transcendent California state judgment to

which Maryland should now extend “full faith and credit”

under Article IV, § 1 of the United States Constitution. It has

confected an incorporeal version of the [1113] “fu’. saith and

credit” doctrine, by which full faith and credit should be

17a

extended to a hypothetical judicial proceeding in California that

never occurred. Semtek wants Maryland to extend full faith and

credit to what, in Semtek’s opinion, a California state court

WOULD HAVE DONE, HAD THE SUIT ACTUALLY

BEEN TRIED in a California state court, which it was not.

Article IV, § 1, however, concerns actual “Judicial

Proceedings” in another jurisdiction and not hypotheticals.

Except for narrative purposes, the State of California and the

state law of California do not figure into the preclusion issue

now before us.

It is in this regard that Semtek reads into the opinion of this

Court in Osteoimplant Technology v. Rathe Productions, 107

Md. App. 114, 666 A.2d 1310 (1995), a meaning that we never

intended to convey. In Osteoimplant a judgment was rendered

against a defendant in the United States District Court for the

Southern District of New York. The judgment was

subsequently recorded in the Circuit Court for Baltimore

County so that garnishment proceedings could be initiated

against the judgment-debtor. In that court, however, the

judgment-debtor “filed a motion to vacate the New York

federal court judgment.” 107 Md. App. at 117. Our holding in

Osteoimplant was that, as a general rule, “the judgment is only

subject to reopening in the court which rendered” it. 107 Md.

App. at 117-18.

Prior to entering into an analysis of the actual issue in that

case, an issue not here pertinent, we prefaced that analysis with

a brief one-paragraph preamble to signal that we were about to

deal with the general subject of full faith and credit:

Our analysis begins with Article IV, § 1

of the United States Constitution, which

mandates that States give “full faith and

credit” to each others’ acts, records, and

judicial proceedings. The United States

Congress has prescribed, as authorized under

the Full Faith and Credit Clause, the manner in

which the Clause is to be given effect. 28

18a

U.S.C. § 1738 (1988). Our courts are required

to give full faith and credit to a judgment of a

Federal court located in another state as a

judgment issued by a State court within whose

jurisdiction that Federal court is located.

Hancock Nat'l Bank v. Farnum, 176 U.S. 640,

645, 20 S. Ct. 506, 508-09, 44 L. Ed. 619

(1900).

107 Md. App. at 119.

Our purpose, we thought, was clear. Our first sentence

referred to the obvious starting point of the Full Faith and

Credit Clause of the United States Constitution. That

constitutional provision, however, only expressly mandates full

faith and credit among the states and not between the states and

the federal government. In Osteoimplant, however, we were

dealing with a judgment from a federal court and some further

explanation was therefore required as to why full faith anc

credit was due to it.

Our second sentence made reference to the statutory Full

Faith and Credit Act, now codified as 28 U.S.C. 1738, as an

extension of the full faith and credit principle to the

relationship between the federal courts and the state courts.

Reference in that preamble was also made to the Supreme

Court decision of Hancock National Bank v. Farnum, 176 U.S.

640 (1900), which elaborated on full faith and credit between

the states and the federal courts.

Having thus established our major premise and our minor

premise, our completion of the syllogism with a statement of

the obvious conclusion should have been clear: Maryland

courts will give full faith and credit to a judgment of a federal

court sitting in another state as surely as they will give full faith

and credit to a judgment of the state court itself. With that

preamble thus having established the context, we went on to

discuss the full faith and credit that was due in that case to the

United States District Court for the Southern District of New

York. And see Smith Pontiac v. Mercedes, [1114] 123 Md.

19a

App. 498, 503, 719 A.2d 993 (1998).

Our conclusion, in that preamble, that we would treat the

judgment of a federal court sitting in another state just as we

would treat a judgment of the state court itself, to wit, with

equal deference, was by no means a statement that we would

treat the federal judgment AS IF IT WERE a judgment of the

state court. Such an issue was not remotely before us in

Osteoimplant and the proposition for which Semtek cites

Osteoimplant never crossed our minds.

In retrospect, it might have been more artful if in our third

sentence we had said “just as to” a judgment issued by a state

court instead of “as” a judgment issued by a state court, but in

its unmistakable context that meaning should have been clear.

Appellate opinions are not chiseled in marble and the

inadvertent difference between “as” and “just as to,”

unsupported by any other indication, simply will not hold the

weight that Semtek seeks to place upon it. To refer, moreover,

to this incidental and possibly slack phrasing as the “holding”

of Osteoimplant is deliberately misleading.

The Shoup Ruling

The Shoup opinion went on to point out that, contrary to

Judge Black’s ruling in the District Court, Federal Rule of Civil

Procedure 41(b) articulates the federal preclusion principle that

a dismissal on statute of limitations grounds constitutes an

adjudication on the merits:

The plain language of the Rule indicates

that the dismissal of plaintiffs’ Pennsylvania

action on statute of limitations grounds is an

adjudication on the merits. The federal court

in Pennsylvania did not otherwise specify the

dismissal to be “without prejudice,” and the

Shoups failed to move the court, pursuant to

Fed.R.Civ.P. 59(e) or 60(b)(6), to specify that

the judgment was “without prejudice.”

20a

Moreover, the dismissal was not one “for lack

of jurisdiction, for improper venue, or for

failure to join a party under Rule 19,” nor was

it a dismissal for want of a proper case or

controversy, which some courts have held to

be within the jurisdictional exception of

Fed.R.Civ.P. 41(b).

Numerous courts have held that a Rule

41(b) limitations dismissal is a judgment on

the merits. In a case analogous to the present

one, PRC Harris, 700 F.2d 894 (2d Cir. 1983),

plaintiffs brought an action in New York state

court against Boeing identical to a federal

action in Washington dismissed earlier on

statute of limitations grounds. That case, like

this one, was removed to federal court. The

Second Circuit affirmed the judgment of the

district court in Boeing’s favor, holding that a

“dismissal for failure to comply with the

statute of limitations will operate as an

adjudication on the merits . . .” The court

added that Rule 41(b) dictates this result

because “all but certain enumerated

dismissals will be considered ‘on the merits, '

and the Rule does not exempt a dismissal on

statute of limitations grounds from its general

operation.” We find this reasoning

compelling.

872 F.2d at 1180 (citations omitted; emphasis supplied).

The reasoning of the Shoup opinion, unlike the holding of

the Shoup opinion, is not limited to situations where the second

forum also happens to be a federal forum. The rationale is more

general in its energizing logic:

Federal law, however, does not permit a

plaintiff to shop indefinitely for favorable

2la

statutes of limitations in every state where

personal jurisdiction over a defendant might be

found. We need not ponder all the factors that

may have led plaintiff to file first in a

Pennsylvania forum, for we are not at liberty

to vary the principles of preclusion to

accommodate them. The doctrine of res

judicata “‘is not a mere matter of practice or

procedure inherited from a more technical time

than ours. It is a rule of fundamental and

substantial justice, of public policy and of

private peace, which should [1115] be

cordially regarded and enforced by the

courts.’”

872 F.2d at 1182.

Although the incremental preclusive effect is redundant,

the original judgment in our case is actually more foreclosing

than was the original judgment in Shoup. In that case, the

original dismissal of the suit was silent as to whether it was “on

the merits” and “with prejudice.” Under Civil Rule 41(b),

however, it was deemed to be so in the absence of any

indication to the contrary. In our case, by contrast, the judgment

of the United States District Court was expressly stated to be

“on the merits and with prejudice.”

Thompson Trucking v. Dorsey Trailers

Equally persuasive, both to Judge Kaplan and to us, is the

Fifth Circuit decision of Thompson Trucking, Inc. v. Dorsey

Trailers, Inc., 870 F.2d 1044, reh'g denied en banc, 880 F.2d

818 (Sth Cir. 1989). In Thompson Trucking, as in this case, suit

was filed originally in a state court, in that case Louisiana. In

that case, as in this, the case was moved to a federal district

court on the ground of diversity of citizenship. In that case, as

in this, the federal diversity action was dismissed “with

prejudice” because the underlying state statute of limitations

22a

(the Louisiana one-year statute) had run. In that case, more

anticipatorily than in this, a second and duplicative suit had

already been filed in the United States District Court for the

Southern District of Mississippi before the suit earlier removed

to the United States District Court for the Western District of

Louisiana dismissed. The state of Mississippi had a six-year

statute of limitations.

In that case, as in this, the defendants ultimately moved to

have the second suit dismissed on the ground of res judicata.

In that case, unlike in this one, the federal district court in

Mississippi denied the motion to dismiss. 677 F. Supp. 478

(S.D. Miss. 1988). In an earlier round of litigation in this case,

Semtek relied heavily on that federal district court decision.

Holding that the preclusive “effect of a prior federal

diversity judgment is controlled by federal rather than state res

judicata rules,” 870 F.2d at 1045, the Fifth Circuit reversed. It

posed the question before it as “whether the Louisiana federal

district court’s dismissal of Thompson’s action on prescriptive

grounds was a final judgment on the merits for res judicata

purposes.” /d. Persuaded by the reasoning of both Nilsen v. City

of Moss Point, 674 F.2d 379 (Sth Cir. 1982), affd on

rehearing, 701 F.2d 556 (1983) (en banc) and Mathis v. Laird,

457 F.2d 926 (Sth Cir. 1972), the Fifth Circuit “determined that

the dismissal with prejudice by the Louisiana federal district

court of Thompson’s claims because they had preseribed was

a final judgment on the merits” and that “Thornpson’s

subsequent action filed in Mississippi federal district court is

barred under the doctrine of res judicata.” 870 F.2d at 1046.

A small part of the Fifth Circuit’s rationale dealt, to be

sure, with the intramural value of res judicatc within the four

corners of the federal system, but the major thrust of the

reasoning was of more universal import:

Multiple litigation is costly, both in terms

of the expense incurred by a party who must

defend against the same claim in different

courts as well as the expense resulting from

23a

the inefficient use of the federal judicial

machinery. Allowing plaintiffs who fail to

comply with applicable statutes of limitations

to move to the next state over would have the

undesirable effect of encouraging forum

shopping and rewarding dilatory conduct.

In that regard, if res judicata were

unavailable in the instant case, the defendants,

having once engaged counsel in Louisiana,

would be faced with the prospect of again

hiring counsel in Mississippi to defend against

the same action one more time. Additionally,

the prospect of compelling the already

overburdened district courts of the United

[1116] States to hear the same claims over

and over again in different states is, in our

view, unappealing. If Thompson had elected to

do so, he could have filed suit in Mississippi to

begin with and thereby availed himself of that

State's longer period of prescription.

Thompson chose, however, to file first in

Louisiana and accordingly he was responsible

for compliance with that state’s prescriptive

period.

Id.

The Dominant Theme of the Federal Cases

In addition to the Fourth and Fifth Circuits, almost all of

the United States courts of appeals that have considered this

question have reached the same conclusion, to wit, that the

dismissal of a suit by a federal court based on the running of the

statute of limitations will, absent a clear directive to the

contrary, be deemed a dismissal on the merits that will bar the

filing of a subsequent suit on the ground of res judicata. See

Kale v. Combined Ins. Co. of America, 924 F.2d 1161, 1164,

24a

cert. denied, 502 U.S. 816 (ist Cir. 1991) (“It is beyond

peradventure that the dismissal of a claim as time-barred

constitutes a judgment on the merits, entitled to preclusive

effect.”); Rose v. Town of Harwich, 778 F.2d 77, 80 (ist Cir.

1985), cert. denied, 476 U.S. 1159 (1986) (“Our survey of

recent cases suggests a clear trend toward giving claim-

preclusive effect to dismissals based on statutes of

limitations.”); PRC Harris v. Boeing Co., 700 F.2d 894, 896-

97, cert. denied, 464 U.S. 936 (2nd Cir. 1983) (“The

longstanding rule in this Circuit . . . is that a dismissal for

failure to comply with the statute of limitations will operate as

an adjudication on the merits, unless it is specifically stated to

be without prejudice.”); Kern v. Hettinger, 303 F.2d 333, 339-

40 (2nd Cir. 1962) (“[I]n view of the unequivocal language of

Rule 41(b) and the absence of the words ‘without prejudice,’

we must and do decide that the dismissal was on the merits and

that it was intended to be on the merits.”); Haefner v. County

of Lancaster, 543 F. Supp. 264, 266 (E.D. Pa. 1982), aff'd, 707

F.2d 1401 (3d Cir. 1983) (“[D]ismissal of a suit as time-barred

establishes a res judicata bar.”); Nathan v. Rowan, 651 F.2d

1223, 1226 (6th Cir. 1981) (“A summary judgment on the basis

of the defense of statute of limitations is a judgment on the

merits.”); Cemer v. Marathon Oil Co., 583 F.2d 830, 832 (6th

Cir. 1978); Myers v. Bull, 599 F.2d 863, 865, cert. denied, 444

U.S. 901 (&th Cir. 1979) (Petitioner’s attempt to relitigate

claims “barred by the res judicata effect of the district court’s

decision . . . that the claims were brought outside the period of

the applicable statute of limitations.”); Ellingson v. Burlington

Northern, Inc., 653 F.2d 1327, 1331 n.3 (9th Cir. 1981);

Murphy v. Klein Tools, Inc., 935 F.2d 1127, 1128-29, cert.

denied, 502 U.S. 952 (10th Cir. 1991) (“We therefore agree

with the Sixth Circuit and other circuits in holding that a

dismissal on limitations grounds is a judgment on the merits.”).

Pertinent also is the observation of the Supreme Court in

Plaut v. Spendthrift Farm, Inc., 514 U.S. 211, 228, 115 S. Ct.

1447, 131 L. Ed. 2d 328, 348 (1995):

25a

The rules of finality, both statutory and

judge made, treat a dismissal on the statute-of-

limitations grounds the same way they treat a

dismissal for failure to state a claim, for failure

to prove substantive liability, or for failure to

prosecute: as a judgment on the merits.

(Emphasis supplied). See also 5 J. Moore, Moore's Federal

Practice, § 41.14 (2d ed. 1987).

The Seventh Circuit:

A Minor Counter-theme

The holding of the Seventh Circuit in Reinke v. Boden, 45

F.3d 166, cert. denied, 516 U.S. 817 (7th Cir. 1995), is not out

of line with the other federal cases listed above, although the

tone of the opinion reflects an inclination [1117] to confine the

preclusive effect of Rule 41(b) to the intramural setting of two

successive federal actions.

In the Reinke case itself, however, the forum wherein the

suit was initially dismissed as time-barred under Minnesota’s

six-year statute of limitations was not a federal court but a

Minnesota state court. The suit was subsequently refiled, as a

diversity action, in the federal district court for Northern

Illinois. The defendants there moved to dismiss the suit on the

basis of res judicata. The issue was what preclusive effect

should have been given by the federal district court in Illinois

to the earlier dismissal of the suit by a Minnesota state court on

the basis of limitations.

Art. IV, Sect. 1’s “Full Faith and Credit” requirement

applies, of course, only to the states and not to the federal

courts. The federal statutory counterpart of the full faith and

credit clause is 28 U.S.C. § 1738. In Kremer v. Chemical

Construction Corp., 456 U.S. 461, 463, 102 S. Ct. 1883, 72 L.

Ed. 2d 262, 268 (1982), the Supreme Court explained:

26a

As one of its first acts, Congress directed

that all United States courts afford the same

full faith and credit to state court judgments

that would apply in the State’s own courts. Act

of May 26, 1790, ch 11, 1 Stat 122, 28 U.S.C.

§ 1738.

Pursuant to that statutory full faith and credit provision, the

federal district court in Illinois was enjoined to extend to the

earlier dismissal of the suit in Minnesota on limitations grounds

whatever preclusive effect Minnesota state law indicated the

dismissal should enjoy. “28 U.S.C. § 1738 . . . ‘requires federal

courts to give the same preclusive effect to state court

judgments that those judgments would be given in the courts of

the State from which the judgments emerged.”” Reinke, 45 F.3d

at 167.

The Seventh Circuit concluded that Minnesota is among

the majority of states that treat the limitations defense as

“procedural” in nature and of no preclusive effect on

subsequent filings in other jurisdictions, state or federal.

Because Minnesota adheres to this traditional

view of the procedural nature of statute[s] of

limitations, the Minnesota courts’ conclusion

that the cause of action is barred by its statute

of limitations is, on its face, nothing more than

a determination that the action is time-barred

in Minnesota. A Minnesota judgment holding

that the Minnesota statute of limitations bars

the maintenance of a suit in Minnesota says

nothing about whether I]linois will allow the

suit.

45 F.3d at 170.

Deferring to the non-preclusive approach of the Minnesota

state court in which the judgment of dismissal had been

rendered, the Seventh Circuit held that the subsequent diversity

action in the federal district court in Illinois was not barred by

27a

res judicata. The preclusion law of the first forum controlled

the res judicata ruling of the second forum.

Before the Seventh Circuit, however, the defendants had

strongly pushed the argument that Minnesota referred to a

limitations dismissal as being “on the merits” and that that

linguistic usage, even if in a different context, should somehow

“trump” Minnesota’s otherwise clear position on the non-

preclusive nature of such a dismissal. It was in making that

argument that the defendants referred to the whole body of

Rule 41(b) case law and it was in deflecting that argument that

the Seventh Circuit effectively consigned that whole body of

Rule 41(b) case law to its literal intramural context. That whole

discussion, however, was simply part of a very tangential

argument.‘ [1118]

* The Seventh Circuit primarily rejected the defendants’ argument in this

regard by pointing out that Minnesota clearly did not intend for its use of the

phrase “judgment on the merits” to have the same preclusive effect that that

same phrase has been given within the context of Federal Rule of Civil

Procedure 41(b). The Reinke opinion described the broader connotation that

the defendants sought to attribute to the phrase:

The district court was of the view that this straightforward

analysis was complicated by the fact that Minnesota, as a matter

of its internal procedural rules, has termed a dismissal on the

ground of statutes of limitations to be a “judgment on the merits.”

This rule, according to the district court’s analysis, trumps

Minnesota’s frank and explicit acknowledgment that statute of

limitations matters are procedural and that a forum ought to use

its own procedure.

45 F.3d at 170.

The Seventh Circuit then pointed out that the Minnesota Court of

Appeals obviously did not intend for the phrase to be given so sweeping a

preclusive effect:

Although the Minnesota Court of Appeals has noted that a

Statute of limitations dismissal amounts to a dismissal on the

merits, it has not done so in the context of the intersystem

situation presented here. . . . Moreover, in this very case, the

state trial court in Minnesota noted that it was “well-settled in our

28a

The square holding of Reinke was that the second forum,

where res judicata is being considered, will defer to the

preclusion law of the first forum, where the judgment of

dismissal was initially and formally rendered. With respect to

the potential impact of the first forum’s dismissal of a suit @S

time-barred on a res judicata question in the second forum, it

is the first forum that calls the tune. That first forum in Reinke

was a Minnesota state court, and the second forum was guided

by Minnesota state law. The first forum in our case was not, aS

Semtek would like to hypothesize it, a California state court. It

was the United States District for the Central District of

California where federal preclusion law, not California

preclusion law, prevails.

Extending the Rule

Neither Mandated Nor Forbidden

In attempting to deflect the impact of both Shoup and

Thompson Trucking, Semtek several times makes the

inaccurate assertion that those cases are “expressly limited” to

the intramural situation where the second forum in which

preclusion is sought is also a federal forum. Such a statement

is flatly wrong. The rule of those cases, to be sure, is not

“expressly extended” to a state court as the second forum, but

neither is it “expressly limited” to a second federal forum. With

respect to the possible extension of their preclusive holdings to

a state court, both Shoup and Thompson Trucking were

courts that the limitation of time statutes generally are procedural

and that the law of the forum is applied.” .. . In short, the

Minnesota courts in this litigation took the view that statutes of

limitations are procedural and that each forum ought to apply its

own. It is difficult to attribute to such a court the intent to make

its statute of limitations decision binding on all other

jurisdictions.

45 F.3d at 172 (citation omitted).

29a

completely silent. They “expressed” nothing by way of further

extension or limitation, for such an issue was not remotely

before them.

We find, as did Judge Kaplan, that the policy

considerations and the logic undergirding those decisions

makes it just as reasonable to extend the preclusive effect of an

earlier federal judgment on the merits to a state second forum

as to a federal second forum. In response to Semtek’s effort to

emphasize the jurisdictional distinction, Judge Kaplan ruled:

The Court does not deny the existence of

these distinctions. However, these distinctions

are without difference. The Fourth Circuit's

holding in Shoup illustrates that the uniform

application of federal preclusion law to prior

federal judgments is a prerequisite to

preserving the integrity of the federal system.

For the purpose of this analysis, it is

irrelevant whether Plaintiff decided to file the

second action in state or federal court.

(Emphasis supplied). We affirm that ruling.

A State Court Looks to Federal Preclusion Law

Andes v. Paden, Welch, Martin & Albano, 897 S.W.2d 19

(Mo. App., W.D. 1995), was a case in which a state court

agreed, relying in significant measure on the opinion [1119]

of the Fourth Circuit in Shoup, that a federal dismissal based on

limitations grounds would have preclusive effect on a suit still

pending in a state court. In Andes, the plaintiff sued the

defendants in both the Missouri state court and in the United

States District Court for an invasion of privacy involving an

illegal wiretap. The suit in federal court was dismissed on the

ground that the two-year statute of limitations contained in the

Federal Wiretap Act had run. On the basis of that dismissal, the

defendants then sought to have the suit in the Missouri state

court dismissed on the ground of res judicata. Although the

legal bases for the two suits were statutorily distinct, the

underlying conduct was essentially the same and the two suits

were deemed to be on the same cause of action. The trial judge

granted the motion to dismiss. The issue before the Missouri

Court of Appeals was precisely the issue now before this Court:

In order for a judgment to operate as a bar

to subsequent proceedings, the judgments

must have been on the merits. Therefore, the

threshold issue presented here is whether the

federal dismissal based on the statute of

limitations is a judgment “on the merits” for

res judicata purposes.

897 S.W.2d at 21 (emphasis supplied).

The Missouri Court of Appeals looked in some depth at the

Fourth Circuit decision in Shoup and then catalogued a large

number of federal decisions going the same way. Even though

the federal decisions were not literally binding on it, the

Missouri Court of Appeals was nonetheless persuaded to hold

that the federal dismissal would have preclusive effect in the

state courts of Missouri:

Therefore, we hold that a federal dismissal

based on the expiration of the statute of

limitations is “on the merits” and may have

preclusive effect on a subsequent action filed

in the state courts of Missouri, even though the

substantive issues of the case have not been

addressed.

897 S.W.2d at 23.

The Erie Doctrine

Semtek’s argument based on an alleged violation of Erie

R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188

3la

(1938), is perplexingly diffuse. Semtek seems to ignore the fact

that the present appeal to this Court is from the decision of

Judge Joseph H.H. Kaplan in the Circuit Court for Baltimore

City and not from the decision of Judge Audrey B. Collins in

the United States District Court for the Central District of

California.

The Erie Doctrine applies, of course, to federal courts and

not to state courts. As it, in 1938, overruled the century-old

precedent of Swift v. Tyson, 41 U.S. 1, 16 Peters 1, 10 L. Ed.

865 (1842), Erie held that in cases initiated in or removed to

federal district courts on the basis of diversity of citizenship,

the federal court should apply the substantive law of the state

wherein the justiciable event took place. The justiciable

event in this case took place in the State of California, and

Semtek’s suit against Lockheed was originally filed in a

California state court. When the suit was subsequently removed

to the United States District Court for the Central District of

California, that court was, by the Erie Doctrine, enjoined to

apply the substantive law of the State of California, including

the applicable California statute of limitations. We have every

reason to believe that the federal district court correctly applied

the substantive state law of California.

Semtek’s argument to the contrary seems to run as follows:

1) California, like Minnesota in the Reinke v. Boden case, treats

its statute of limitations as only procedural in nature; 2)

California, therefore, treats its dismissals of actions as time-

barred as not having any preclusive effect on similar suits filed

in other jurisdictions; [1120] 3) California considers its res

judicata or preclusion law as part of its substantive law; and 4)

the federal district court, in this diversity case, should have

treated its judgment of dismissal as similarly non-preclusive.

When Judge Collins ordered, therefore, that the dismissal on

limitations grounds be “on the merits and with prejudice,”

instead of making it clear that the dismissal had no such

preclusive effect, she thereby violated the Erie Doctrine.

' 32a

As we shall discuss infra, we do not believe that to have

been the case. Even if it were, however, Semtek’s appeal to this

Court is totally inappropriate. If the federal district court

judgment was in any way in error, Semtek’s remedies were | )

post-trial motions to the federal district court itself, 2) an appeal

to the United States District Court for the Ninth District, and 3)

a petition for certiorari to the Supreme Court of the United

States. It is not the job of an intermediate appellate court in

Maryland, just as it was not the job of Judge Kaplan in the

Circuit Court for Baltimore City, to reverse, to overrule, to

modify, to alter, to amend, or to reform the judgment of the

United States District Court for the Central District of

California. It is, rather, appropriate for us to extend full faith

and credit to that judgment, not as Semtek thinks it should be

reformulated but as it was unambiguously expressed.

Osteoimplant Technology v. Rathe, 107 Md. App. 114, 117-18,

666 A.2d 1310 (1995) (“We hold . . . that the judgment is only

subject to reopening in the court which rendered the initial

judgment. Hence, if appellant wishes to have the judgment

vacated, altered, or amended, those issues must be addressed by

the United States District Court for the Southern District of

New York.”).

That being said, however, we further believe that, in the

United States District Court, Judge Collins correctly applied the

substantive law of the State of California. What Semtek argues

is the preclusion law or the res judicata law of the State of

California is, when looked at precisely, the law as to how

California characterizes judgments of dismissal on limitations

grounds RENDERED BY CALIFORNIA STATE

COURTS. There was in this case no judgment of dismissal by

a California state court and the California state preclusion law

with respect to such a state court judgment, therefore, is utterly

immaterial. In Costantini v. Trans World Airlines, 681 F.2d

1199 (1982), the Ninth Circuit applied the res judicata law of

the State of California with respect to a judgment earlier

rendered not by a California state court but by a federal district

33a

court sitting, in diversity, in the State of California. The federal

district court had dismissed the diversity claim as one barred by

res judicata. As urged by the plaintiff, the Ninth Circuit agreed

“that a federal court sitting in diversity must apply the res

judicata \aw of the state in which it sits.” 681 F.2d at 1201. It

then pointed out, however, that California law, in turn,

determines the preclusive effect of a prior federal judgment by

looking to federal, not California, preclusion standards. The

holding of the Ninth Circuit was clear: |

California’s law of res judicata dictates

what preclusive effect is to be accorded to the

prior judgment against appellant. That

California law, however, determines the res

judicata effect of a prior federal court

judgment by applying federal standards.

Therefore, those federal standards are

applicable here to determine the preclusive

effect of the prior judgment.

Id. (footnote omitted; emphasis supplied). See also Bates v.

Union Oil Co., 944 F.24647, 649 (1991), cert. denied, 503

U.S. 1005 (1992). Jusige Kaplan expressly relied on the

Ninth Circuit’s decision im Costantini v. Trans World Airlines

as an alternative ground for his ruling that Semtek’s suit was

barred by res judicata:

Even if the Court were to ignore the

language of Rule 41(b) and accept Plaintiff's

arguments distinguishing the [1121] Fourth

and Fifth Circuit cases from the present one,

the Ninth Circuit has also applied federal law

in establishing the preclusive effect of federal

judgments on subsequent identical state court

actions. For example, the Ninth Circuit in

Costantini v. Trans World Airlines, 681 F.2d

1199 (9th Cir.), cert. denied, 459 U.S. 1087

(1982) explained that /the] California state

court would rely on federal law to determine

34a

the preclusive effect of a federal judgment.

(Emphasis supplied). Two decisions of the Supreme Court of

California have also indicated that California will follow

federal preclusion law in determining the res judicata effect of

an earlier federal judgment on a subsequent suit in a California

state court. Younger v. Jensen, 26 Cal.3d 397, 411, 161 Cal.

Rptr. 905, 914, 605 P.2d 813, 822 (1980); Levy v. Cohen, 19

Cal.3d 165, 172-73, 137 Cal. Rptr. 162, 167, 561 P.2d 252, 257

(1977).

Conclusion

We affirm the ruling of Judge Kaplan that Semtek’s

refiling of the suit against Lockheed was barred on the ground

of res judicata. The earlier dismissal of the suit by the United

States District Court for the Central District of California was

a judgment on the merits and was entitled to the preclusive

effect that Judge Kaplan gave it.

JUDGMENT AFFIRMED;

COSTS TO BE PAID

BY APPELLANT.

3Sa

APPENDIX B

IN THE COURT OF APPEALS OF MARYLAND

Petition Docket No. 495

September Term, 1999

(No. 1041, Sept. Term, 1998

Court of Special Appeals)

ORDER

Upon consideration of the petition for a writ of certiorari

to the Court of Special Appeals, and the answer filed thereto,

in the above entitled case, it is

ORDERED, by the Court of Appeals of Maryland, that the

petition be, and it is hereby, denied as there has been no

showing that review by certiorari is desirable and in the public

interest.

Chief Judge

DATE: DEC 21 1999

36a

APPENDIX C

IN THE CIRCUIT COURT

FOR BALTIMORE CITY

SEMTEK INTERNATIONAL, INC., .

Plaintiffs, °

V. * CASE NO.

LOCKHEED MARTIN CORP., et al., * 97183023

: +

Defendants. *

RoeHeeeReereHeenhe fF = = = = =

MEMORANDUM OPINION

Pending before this Court is Defendant’s, Lockheed Martin

Corporation’s Motion to Dismiss.

I, BACKGROUND

Plaintiff, Semtek International Incorporated (hereinafter

“Semtek”’), originally filed this action on February 26, 1997 in

the Los Angeles Superior Court for California. Semtek based

its complaint on four separate causes of action: (1) inducing

breach of contract with Merkuriy, a Russian satellite

communications company; (2) intentional interference with

economic advantage with Merkuriy; (3) negligent interference

with economic advantage with Merkuriy; and (4) conspiracy to

interference with economic advantage with Merkuriy.

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On March 11, 1997, Lockheed Martin Corporation

(hereinafter “Lockheed”) removed the California case to the

United States District Court for the Central District of

California based on federal diversity jurisdiction under 28

U.S.C. §1332 and 1441(b). The District Court for the Central

District of California granted Lockheed’s motion to dismiss

with prejudice based on California’s two year statute of

limitations period. Semtek has subsequently appealed that

decision to the Ninth Circuit.

During the pendency of the California action, additional

investigation by Semtek revealed that much of the alleged

tortious conduct occurred in Maryland where the statute of

limitations in these causes of action is three years.

Accordingly, in July 1997, Semtek filed for relief in the Circuit

Court for Baltimore City seeking the same remedy sought

previously in the California action. Lockheed removed the case

to the United States District Court for the District of Maryland

and simultaneously filed a motion to transfer or stay the case.

At the same time, Lockheed also filed for injunctive relief

seeking to prevent Semtek from proceeding in Maryland based

on theory of res judicata due to Judge Audrey Collins’ (Central

District of California) prior ruling dismissing that action.

Judge Collins denied [Lockheed’s] request for injunctive relief

and after receiving that decision Lockheed withdrew its motion

to transfer.

Semtek also filed a motion to remand and Lockheed filed

a motion to dismiss in the United States District Court for the

District of Maryland. There, the District Court granted

Semtek’s motion to remand but failed to address Lockheed’s

motion to dismiss. The case is now before this Court to

determine whether the California District Court decision should

be given res judicata effect.

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Il. LEGAL STANDARD

A complaint is subject to dismissal for failure to state a

claim upon which relief can be granted where it appears beyond

a doubt that the Plaintiff can prove no facts that would entitle

it to the relief sought. See, e.g., Levy v. E. Stewart Mitchell,

Inc., 585 F. Supp. 1030 (D. Md. 1984); Rosengarten v.

Buckley, 565 Supp. 193 (D.Md. 1983); Hall v. Board of County

Commissioners of Frederick County, 509 F. Supp. 841 (D.Md.

1981). For the purposes of this motions to dismiss, this Court

must “assume the truth of all relevant and material facts that are

well pleaded and all inferences which can be reasonably drawn

from the pleadings.” Sharrow v. State Farm Mut. Auto. Ins.

Co., 306 Md. 754, 768 (1986). Dismissal is appropriate if,

assuming the truth of the facts and allegations, those facts fail

to afford plaintiff relief. Faya v. Almaraz, 329 Md. 435, 443

(1993).

11. INTRODUCTION

The central issue that this court has been asked to consider

is the preclusive effect of a federal dismissal on a subsequent

identical state court action. To accomplish this analysis, the

Court must determine whether to apply federal or state law.

Pursuant to the clear language of the Federal Rules of Civil

Procedure and federal preclusive law, federal law determines

the preclusive effect of a prior federal judgment.

IV. DISCUSSION

A. FEDERAL RULE OF CIVIL PROCEDURE, 41(B)

IS THE CONTROLLING FEDERAL LAw.

In Kent County Bd. of Educ. v. Bilbrough, 309 Md. 487,

493, 525 A.2d 232, 235 (1987) (quoting Restatement (Second)

of Judgments § 87), the Court of Appeals [of] Maryland stated

PRR ee

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that “federal law determines the effects under the rules [of] res

judicata of a judgment of a federal court.” Accordingly,

because Semtek does not deny that the United States District

Court for the Central District of California dismissed every

claim contained in Semtek’s current Maryland complaint with

prejudice on statute of limitations grounds, federal law must be

employed to determine the preclusive effect of this prior federal

court judgment.

The applicable federal law is Federal Rule of Civil

Procedure 41(b). It provides in pertinent part that: “ unless the

Court in its order for dismissal otherwise specifies, a dismissal

under this subsection and any dismissal not provided for in this

rule, other than a dismissal for lack of jurisdiction, for improper

venue, or for failure to join a party under Rule 19, operates as

an adjudication upon the merits.” The plain language of the

rule requires that the dismissal of the Plaintiff's California

action be deemed an adjudication on the merits and warrants

dismissal of Semtek’s duplicative Maryland complaint with

prejudice.

Semtek argues that Rule 41(b) should not be applied

because the United States District Court for the Central District

of California’s Order denying Lockheed’s request for a

Permanent Injunction states that the Court had not reached the

“substantive merits” of Semtek’s claims.

Plaintiff's argument is flawed for several reasons. First

and foremost, neither party stated an objection to the Order

signed by Judge Collins dismissing the United States District

Court Central District of California action, in its entirety on the

merits and with prejudice. This Order states that, “IT IS

ORDERED, ADJUDGED AND DECREED, that plaintiff

Semtek International Incorporated take nothing on its complaint

in this action, that the action can be dismissed in its entirety on

the merits and with prejudice, and that the Judgment be entered

forthwith in favor of defendants . . . .” Secondly, Judge Collins

explicitly stated in footnote 13 of her opinion that . . . “the

Court must reiterate that these issues are properly decided by

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the proper court in Maryland, and any dicta or any other

discussion within this opinion should not be cited or argued as

persuasive authority for the Maryland courts’ consideration of

_. . res judicata preclusion.” Furthermore, the District Court

expressly requested theat the parties not cite any dicta

contained in that order.

B. FEDERAL PRECLUSION PRINCIPLES BAR SEMTEK’S

ATTEMPT TO RELITIGATE IN MARYLAND STATE COURT

CLAIMS PREVIOUSLY DISMISSED WITH PREJUDICE

IN THE CENTRAL DISTRICT OF CALIFORNIA.

Even if this Court was not convinced by Kent County Bd.

of Educ., Fourth and Fifth Circuit case authority serve to

strengthen the Court’s convictions that federal preclusion

principles should be applied to determine the res judicata effect

of the Central District of California’s dismissal of all of

Semtek’s claims on statute of limitations grounds. While this

Court recognizes that Fourth Circuit and Fifth Circuit cases are

not binding on Maryland State Courts, Shoup v. Bell & Howell

Co., 872 F.2d 1178 (4th Cir. 1989) and Steven D. Thompson

Trucking Inc. v. Dorsey Trailers, Inc., 870 F.2d 1044, reh’g

denied. en banc, 880 F.2d 818 (Sth Cir. 1989) (hereinafter

“Thompson Trucking”) provide sufficient persuasive authority

on the proper application of federal preclusion principles

governing the resolution of this Motion.

Defendant relies on Soup to support their proposition that

the action should be dismissed and the Court agrees. In Shoup,

Plaintiffs filed their original lawsuit in Pennsylvania state court

alleging only state law personal injury claims. /d. at 1178.

Defendant removed the case to federal court on diversity of

citizenship grounds. Applying Pennsylvania's statute of

limitations to the Plaintiffs claims, the District Court

dismissed the action as time barred.

Due to the dismissal, the Shoup Plaintiffs refiled the exact

same lawsuit in state and federal courts in Maryland in an effort

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to avail themselves of Maryland's longer statute of limitations.

Id.at 1178. Asa result, the Shoup Defendant removed the state

court action to federal court on the basis of diversity of

citizenship and motioned to have the case dismissed because of

res judicata. Id. The Shoup Plaintiffs argued that because the

original federal action only involved state law claims and

diversity of citizenship was the sole justification for federal

jurisdiction, Maryland law controlled. In addition, Plaintiffs

stated that because Maryland law holds that a dismissal as

result of statute of limitations is procedural in nature, the

Pennsylvania judgment did not represent a final judgment and

therefore was not entitled to any res judicata effect. Thus.

because the case was filed within Maryland’s statute of

limitations, Plaintiffs asserted that their claims should be

permitted to proceed.

. In determining the res judicata effect of the prior federal

judgment, the Fourth Circuit relied on federal law. “Questions

about the effect and scope of a federal court judgment involve

the power of the federal tribunal itself, and are not varied

merely because state rules of decision underlie the judgment”

Id, at 1179. The Court further stated that Rule 41(b) prescribes

that federal judgments based on statute of limitations are final

judgments on the merits. /d. at 1179-80. The Court explained

In pertinent part that:

“Federal law . . . does not permit a

plaintiff to shop indefinitely for favorable

statute of limitations in every state where

personal jurisdiction over a Defendant might

be found. We need not ponder the factors that

may have led Plaintiff to file first in a

Pennsylvania forum, for we are not at liberty

to vary the principles of preclusion to

accommodate them. The doctrine of res

judicata “is not a mere matter of practice or

procedure inherited from a more technical time

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than ours. It is a rule of fundamental and

substantial justice, of public policy and of

private peace, which should be cordially

regarded and enforced by the courts . . .”

872 F.2d at 1182 (quoting Federated Dep't. Stores v. Moitie,

452 U.S. 394, 401 (1981)).

In further support of its proposition Defendant relies on

Stephen D. Thompson Trucking, Inc. v. Dorsey Trailers, Inc.,

870 F.2d 1044 reh'g denied, en banc, 880 F.2d 818 (Sth Cir.

1989) (hereinafter “Thompson Trucking”). In Thompson

Trucking, the Fifth Circuit relying on Shoup held that the

Federal Court's dismissal with prejudice based on the

Louisiana state statute of limitations was a “final judgment on

the merits” pursuant to Rule 41(b) barring relitigation of the

same claims in a Mississippi state court under Mississippi's

longer statute of limitations. Thompson Trucking, 870 F.2d at

1046. In making its decision, the Court explained that policy

reasons behind its decision.

“Multiple litigation is costly, both in

terms of expense incurred by a party who must

defend against the same claim in different

courts . . . [aJllowing plaintiffs who fail to

comply with applicable statute of limitations

to move to next state over would have the

undesirable effect of encouraging forum

shopping and rewarding dilatory conduct.

In that regard, if res judicata were

unavailable in the instant case, the defendants

having once engaged counsel in Louisiana,

would be faced with the prospect of again

hiring counsel in Mississippi to defend the

same action one more time . . . If [plaintiff]

had elected to do so, he could have filed suit in

Mississippi to begin with and thereby availed

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himself of the state’s longer period of

prescription. [Plaintiff] chose, however, to file

first in Louisiana and accordingly he was

responsible for compliance with the state’s

prescriptive period.”

870 F.2d at 1046.

Semtek attempts to distinguish the present action from

Thompson Trucking and Shoup. Similar to Plaintiffs in

Thompson Trucking, Semtek asserts that it chose to file its suit

originally in California and only came to Maryland after the

initial suit was dismissed with prejudice. In addition Plaintiff

argues that because Shoup is a federal case, it has no binding

effect in this action. Relying on the language utilized in the

Shoup opinion, Semtek argues that Shoup is applicable only

where the second case is filed in a federal forum, which they

did not do.

“In this case we must determine if a

dismissal by one federal court on statute of

limitations grounds bars subsequent litigation

of the same claim between the same parties in

a second federal forum. The district court held

it does not. We reverse and hold that pursuant

to Fed. R. Civ. P. 41(b) the earlier statute of

limitations ruling is a judgment on the merits

subject to claim preclusion.”

872 F.2d at 1178.

In both Shoup and Thompson Trucking, Plaintiffs filed

their second action directly in the Federal District Court.

Plaintiffs availed themselves voluntarily to the Federal Rules

of Civil Procedure after another Federal court dismissed their

case. Plaintiffs elected to refile their actions in Federal court

and thus imposed the very burden that Rule 41(b) seeks to

prevent: forum shopping. Accordingly, the Courts in those

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cases applied the doctrine [of] res judicata under Rule 41(b)

and dismissed the cases.

In the present case, Semtek filed the second action in

Maryland state court, not federal court, and Lockheed

subsequently removed it. Semtek never sought relief on its own

initiative from the Federal System. In both Maryland and

California actions, Lockheed removed the cases to Federal

Court. In fact the United States District Court in its r

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