# Petition for Writ of Certiorari — Semtek Int'l Inc. v. Lockheed Martin Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0360%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2001 - **Citation:** 531 U.S. 497 ## Text 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 16 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. 2 Fed. R. Civ. P. 41(b) reads: Rule 41. DISMISSAL OF ACTIONS xe (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 3 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. 4 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.). 5 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. 6 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 7 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 9 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. 10 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 12 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 13 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. 14 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). 15 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 16 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). 17 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 19 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). 20 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) 21 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). 22 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 23 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). 24 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). 25 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 26 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 27 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. 28 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. 29 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). 30 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 2a 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 of 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 3a 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. 4a 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. Sa 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 6a 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. 7a 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 8a 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. 9a 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 ) i ) ; : 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 Miss [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0360%3A02. Public record. Not legal advice.