US Supreme Court Briefs

No. 99~155I

IN THE
Supreme Court of the United States

SEMTEK INTERNATIONAL INCORPORATED,
Petitioner,
V.


LOCKHEED MARTIN CORPORATION,
Respondent.

ON WRIT OF CERTIORARI
TO THE COURT OF SPECIAL APPEALS
OF MARYLAND


BRIEF FOR THE PETITIONER



THOMAS C. GOLDSTEIN
4607 Asbury Place, N.W.
Washington, D.C. 20016
(202) 237-7543



WALTER J. LACK
STEVEN C. SHUMAN
ENGSTROM.
LIPSCOMB & LACK
10100 Santa Monica
Blvd.
Los Angeles, CA 90067
(310) 552-3800
JONATHAN S. MASSEY
Counsel of Record
KENNETH J.
CHESEBRO
3920 Northampton St.,
N.W.
Washington, D.C. 20015
(202) 686-0457

THOMAS V. GIRARDI
JAMES KROPFF
GIRARDI & KEESE
1126 Wilshire Blvd.
Los Angeles, CA 90017
(213) 977-0211



[Additional counsel listed on inside cover]

ANDREW W. ZEPEDA
STEVEN L. HOGAN
LuRm & ZEPEDA
j 9107 Wilshire Blvd.
Beverly Hills, CA 90210
(310) 274-8700

Counsel for
Peialoner


QUESTION PRESENTED

In a suit by petitioner against respondent
in 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 state court m 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 Bankv. 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 ofresjudicata. The questions
presented are:

1. Is this Court's holding in Dupasseur
that the resjudicata 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?





H


RULE 29.6 STATEMENT

Petitioner Semtek International Incorporated has no
parent corporation and no publicly held company owns any
of its stock. Semtek International Incorporated has now
merged into Semtek International Corporation, a New Jersey
corporation.


Ill


TABLE OF CONTENTS

Question Presented
Rule 29.6 Statement 11
Table of Contents

11
1
Table of Authorities iv
Brief for the Petitioner
Opinions Below 1
Jurisdiction 1
Constitutional and Statutory and Rule Provisions Involved
I
Statement
1. The California Action 2
2. The Maryland Action 5
3. The Decision Below 8
Summary of Argument 8
Argument 10
I. The Law of the Forum State Controls the Preclusive Effect
of a Federal Diversity Judgment 10
A. Dupasseur Should be Reaffirmed as a Matter
of Stare Decisis 11
B. The Rule of Dupasseur is Correct 15
I. Dupasseur respects state policy choices
concerning res judicata 16
2. Dupasseur avoids forum shopping and the
inequitable administration of state law 19
3. Dupasseur respects the interests of the second
forum state 22
4. Dupasseur respects the interests of the
first forum state 24
5. There is no federal interest that would warrant
departing from Dupasseur 25




-iv-
II. Even if Dupasseur Does Not Control, Federal Law
Should Provide that a Statute of Limitations
Dismissal by a Federal Diversity Court Generally
Does Not Bar a Subsequent Action in Another State
28
A. Federal Law Would Borrow the Rule of the
Forum State 28
B. If This Court Sets a Uniform Rule, It Should
Adopt the Overwhelming Majority Rule that
a Statute-of-Limitations Dismissal Does Not
Preclude Suit in Another Forum 33
III. Rule 41(b) Does Not Require a Contrary Result
34
A. Rule 41(b) Should Not Be Read as
Deciding the
Issue of the Preclusive Effect to
Which Federal
Diversity Judgments are Entitled 34
B. Rule 41(b) Does Not Accord
Preclusive Effect to
a Statute-of-Limitations Dismissal
44
Conclusion
50


TABLE OF AUTHORITIES


Cases:
Page
Agency Holding Corp. v. Malley-Duff& Assocs., 483
U.S. 143 (1987) 30
Alden v. Maine, 527 U.S. 706 (1999) 25
American States Ins. Co. v. Walker, 477
S.E.2d 360
(Ga. App. 1996) 18
Amsterdam Say. Bank v. Marine Midland
Bank, 528
N.Y.S.2d 184 (App. Div. 1988) 18
Angel v. Bullington, 330 U.S. 183 (1947)
16,
22, 24
Angstadt v. Atlantic Mut. Ins. Co., 457
S.E.2d 86
(Va. 1995) 17
Ankenbrandt v. Richards, 504 U.S. 689 (1992) 15
Apparel Art Int'l, Inc. v. Amertex
Enters. Ltd.. 48 F.3d
576 (CAl 1995) 18
Arab African Int'l Bank v. Epstein, 958
F.2d 532
(CA3 1992) 17
Atherton v. FDIC, 519 U.S. 213 (1997) 31,32
Baker Elec. Coop. v. Chaske, 28 F.3d
1466 (CA8 1994) .. 17
Baker v. General Motors Corp., 522 U.S.
222 (1998) 10
Barber v. Barber, 21 How. 582 (1859) 15
Barns v. Sulpicio Lines, 74 F.3d 567
(CAS 1996) 39
Bauserman v. Blunt, 147 U.S. 647 (1893) 33
Benetton S.p.A. v. Benedot, Inc., 642
So. 2d 394
(Ala. 1994) 18
Blonder-Tongue Labs. v. University of
Ill. Found.,
402 U.S. 313 (1971) 13, 17
Board of County Commr's v. United
States, 308 U.S.
343 (1939) 32
Brye v. Brakebush, 32 F.3d 1179, 1185 &
n.7 (CA7
1994) 39
Buie v. Waters, 74 S.E.2d 883 (Ga. 1953) 18
Burgess v. Cohen, 593 F. Supp. 1122,
1124 (E.D. Va.
1984) 47





-vi- -vii-
Cases (continued):
Page
Burnet v. Coronado Oil & Gas Co., 285 U.S. 393 (1932).. 15
Byrd v. Blue Ridge Rural Elec. Coop., 356 U.S. 525
(1958) 38
Campbell v. Haverhill, 155 U.S. 610 (1895) 30
Cashelmara Villas, Ltd. Partnership v. DiBenedetto,
623 N.E.2d 213 (Ohio App. 1993) 17
Chau v. City of Seattle, 802 P.2d 822
(Wash. App.
1990) 18
Colonial Auto Ctr. v. Tomlin, 105 F.3d
933 (CA4
1997) 39
Columbia Cas. Co. v. Playtex FP, Inc.,
584 A.2d 1214
(Del. 1991) 19
Commissioner v. Sunnen, 333 U.S. 591.
597 (1948) 43
Costello v. United States, 365 U.S. 265
(1961) passim
Criales v. American Airlines, 105 F.3d
93 (CA2 1997) ... 49
Cromwell v. County of Sac, 94 U.S. 351
(1877) 43
D'Angelo v. City of New York, 929 F.
Supp. 129
(S.D.N.Y. 1996) 40
DelCostello v. International Bhd. of Teamsters, 462
U.S. 151 (1983) 30
Dupasseur v. Rochereau, 88 U.S. (21
Wall.) 130
(1874) passim
Embry v. Palmer, 107 U.S. 3 (1882) 14
Erie R.R. Co. v. Tompkins, 304 U.S. 64
(1938) ... 20, 21, 29
Federated Dep't Stores v. Moitie, 452
U.S. 394
(1981) 16,43
Ferens v. John Deere Co., 494 U.S. 516
(1990) 20, 30
Gagnon Co. v. Nevada Desert Inn, 45 Cal.
2d 448,
289 P.2d 466 (1955) 27
Gasperii v. Center for Humanities, Inc.,
518 U.S.
415(1996) 16,20,38
Goddard v. Security Title Ins. & Guar.
Co., 92 P.2d
804 (Cal. 1939) 6,28
Cases (continued):
Page
Gottlob v. Connecticut State Univ., No. CV
930521 148S, 1996 WL 57087 (Conn. Super.
Ct. Jan. 19, 1996) 18
Grider v. USX Corp., 847 P.2d 779 (Okla. 1993) 18
Guaranty Trust Co. v. York, 326 U.S. 99
(1945) passim
H. Christiansen & Sons, Inc. v. City of
Duluth, 31
N.W.2d 277 (Minn. 1948) 18
Hacker v. Beck, 91 N.E.2d 832 (Mass.
1950) 18
Haldeman v. United States, 91 U.S. 584
(1875) 46
Hancock National Bank v. Farnum, 176
U.S. 640
(1900) 12, 14
Hanna v. Plumer, 380 U.S. 460 (1965)
21,
38, 42
Harris v. Amoco Prod. Co., 768 F.2d 669
(CAS 1985) .... 49
Hart Steel Co. v. Railroad Supply Co.,
244 U.S. 294
(1917) 16
Hauch v. Conner, 453 A.2d 1207 (Md.
1983) 23
Heckv. Humphrey, 512 U.S. 477 (1994)
13,38
Heiser v. Woodruff, 327 U.S. 726 (1946)
12, 21
Hilton v. South Carolina Public Railways
Comm'n,
502 U.S. 197 (1991) 14
Hofsommer v. Hofsommer Excavating, Inc., 488
N.W.2d 380 (N.D. 1992) 17
Hohn v. United States, 524 U.S. 236
(1998) 14
Holmberg v. Armbrecht, 327 U.S. 392 21
Hughes v. United States 71 U.S. (4
Wall.) 232 (1866) .... 46
Hunt v. Liberty Lobby, Inc., 707 F.2d
1493
(CADC 1983) 17
In re Casse, 198 F.3d 327 (CA2 1999) 39
In re Estate of Cochrane, 391 N.E.2d 35
(Ill.
App. 1979) 18
In re Swine Flu Immuniz. Prods. Liab.
Litig., 880 F.2d
1439(CADC 1989) 48





-viii- -ix-
Cases (continued):
Page
In re Tobacco/Governmental Health Care Costs
Litig., 100 F. Supp. 2d 31 (D.D.C. 2000)
26
International Union v. Hossier Cardinal
Corp., 383
U.S. 696(1966) 30,32
Iowa Coal Mining Co. v. Monroe County,
555 N.W.2d
418Qowa1996) 18
Jones v. Blanton, 644 So. 2d 882 (Ala.
1994) 17
Kanarek v. Bugliosi, 166 Cal. Rptr. 526
(App. 1980) 18
Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487
(1941) 26, 30
Knights of Pythias v. Meyer, 265 U.S. 30
(1924) 13
Knox v. Lichtenstein, 654 F.2d 19 (CA8 1981)
49
Koch v. Rodlin Enters., 223 Cal. App. 3d
1591 (1990).. 6, 50
Kulinski v. Medtronic Bio-Medicus, Inc.,
108 F.3d
904 (CA8 1997) 39
Lackner v. LaCroix, 602 P.2d 393 (Cal.
1979) 6, 50
Magnus Elecs., Inc. v. La Republica
Argentina, 830
F.2d 1396 (CA7 1987) 17
Mallow v. Hinde, 12 Wheat. (25 U.S.) 193
(1827) 47
Marathon Oil Co. v. Babbitt, 938 F. Supp. 575
(D. Alaska 1996) 17
Marrese v. American Academy of Orthopaedic
Surgeons, 470 U.S. 373 (1985) 24
McBurney v. Aldrich, 816 S.W.2d 30 (Tenn.
App. 1991) 18
McCamey v. Ford Motor Co., 657 F.2d 230 (CA8 1981).. 49
McDermott v. Kansas Pub. Serv. Co., 712 P.2d 1199
(Kan. 1986) 17
Metcalf v. City of Watertown, 153 U.S. 671 (1894) ... 12, 14
Mississippi Pub. Corp. v. Murphree, 326 U.S. 438
(1946) 48
Montana v. United States, 440 U.S. 147 (1979) 27
Cases (continued):
Page
Nealey v. Transportacion Maritima Mexicana, S.A..
662 F.2d 1275 (CA9 1980) 37
New York v. United States, 505 U.S. 144 (1992) 25
O'Melveny & Myers v. EDIC, 512 U.S. 79 (1994) . 29, 31, 32
Olsen v. Breeze, Inc., 55 Cal. Rptr. 2d 818
(App. 1996) 18
Pack v. Yusuff, No. 99-60283, 2000 U.S. App.
LEXIS 15843 (5th Cir. July 10, 2000) 49
Palmerv. Hoflinan, 318 U.S. 109 (1943) 39
Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979) 30
Parsons Steel, Inc. v. First Alabama Bank, 474 U.S. 518
(1986) 10
Patterson v. McLean Credit Union, 491 U.S. 164(1989) .. 15
Payne v. Tennessee, 501 U.S. 808 (1991) 14
Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989) 14
Postal Tel. Cable Co. v. City of Newport, Ky., 247
U.S. 464 (1918) 16
PRC Harris, Inc. v. Boeing Co., 700 F.2d 894
(CA2 1983) 42
Printz v. United States, 521 U.S. 898 (1997) 25
Rader v. Baltimore & O.R. Co., 108 F.2d 980 (CA7),
cert. denied, 309 U.S. 682 (1940) 36
Ragan v. Merchants Transfer & Warehouse Co., 337
U.S. 530 (1949) 20,38
Reinke v. Boden, 45 F.3d 166 (CA7 1995) 37, 39
Richards v. Jefferson County, Ala., 517 U.S. 793
(1996) 15, 16
Ritchey v. Upjohn Drug Co., 139 F.3d 1313
(CA9), cert. denied, 525 U.S. 963 (1998) 28
Rivet v. Regions Bank, 522 U.S. 470 (1998) 7, 25
Sack v. Low, 478 F.2d 360 (CA2 1973) 42, 49
Schiavone v. Fortune, 477 U.S. 21(1986) 48
Semler v. Psychiatric Inst. of Washington, D.C., Inc.,
575 F.2d 922 (CADC 1978) 29





Cases (continued):
Page
Semtek Int'l v. Lockheed Martin Corp., 988 F. Supp.
913 (D. Md. 1997) 6
Shoup v. Bell & Howell Co., 872 F.2d 1178
(CA4 1989) 30
Smith v. Gray Concrete Pipe Co., 297 A.2d 721
(Md. 1972) 18
Southern Ry. Co. v. Clift, 260 U.S. 316 (1922) 44
Stogniew v. McQueen, 656 So. 2d 917 (Fla. 1995) 17
Stoll v. Gottlieb, 305 U.S. 165 (1938) 14
Sun Oil Co. v. Wortman, 486 U.S. 717 (1988) .... 14, 34, 39
Swift v. Tyson, 41 U.S. (16 Pet.) 1 (1842) 13
Takahashi v. Board of Educ., 249 Cal. Rptr. 578
(App. 1988) 18
Torcasso v. Standard Outdoor Sales, Inc., 626 N.E.2d
225 (III. 1993) 18
Torres v. Oakland Scavenger Corp., 487 U.S. 312
(1988) 48
Townsend v. Jemison, 50 U.S. (9 Cranch) 407 (1850) .... 34
Turner v. Yamaha Motor Corp., U.S.A., 591 A.2d
886(1991) 6
Union & Planters Bank of Memphis v. Memphis, 189
U.S. 71(1903) 24
Union Nat'l Bank v. Lamb, 337 U.S. 38 (1949) 34
United States v. Donnally, 33 U.S. (8 Pet.) 361 (1834) . ... 34
United States v. Gaubert, 499 U.S. 315 (1991) 2
United States v. Kimbell Foods, 440 U.S. 715 (1979) 31, 32
United States v. Little Lake Misere Land Co., 412 U.S.
580 (1973) 31
United States v. United States Smelting Refining &
MiningCo.,339U.S.186(1950) 43
United States v. Yazell, 382 U.S. 341 (1966) 32
Vanover v. Kansas City Life Ins. Co., 438 N.W.2d
524 (N.D. 1989) 17
-xi-

Cases (continued):
Page
Walker v. Armco Steel Corp., 446 U.S. 740
(1980) 20,21,30,38
Walker v. Kerr-McGee Chem. Corp., 793 F. Supp.
688 (N.D. Miss. 1992) 17
Weissenger v. United States, 423 F.2d 795, 799 (CAS
1970) (en banc) 40, 42
Western Coal & Mm. Corp. v. Jones, 167 P.2d 719
(1946) 48
Wheeldin v. Wheeler, 373 U.S. 647 (1963) 31
Wilson v. Garcia, 471 U.S. 261 (1985) 33
Wong Doo v. United States, 265 U.S. 239 (1924) 43
Constitutional Provisions and Statutes: Page
Full Faith and Credit Clause, Art. IV, 1 1, 10
28 U.S.C. 1257(a)
28 U.S.C. 1404a 20
28 U.S.C. 1441(b) 3
28 U.S.C. 1651(a) 7
Full Faith and Credit Act, 28 U.S.C. 1738 passim
Conformity Act of 1872, Ch. 255, 17 Stat. 196 13
Rules Enabling Act, 28 U.S.C. 2072 34, 36. 42
Rules of Decision Act, 28 U.S.C. 1652 1, 16
Ga. CodeAnn.9-12-19(1993) 17
Ga. Code Ann. 9-12-40 (1993) 17
La. Rev. Stat. Ann. 13:4231 16
Md. Cts. & Jud. Proc. Code Ann. 5-101 6
Md. Cts. & Jud. Proc. Code Ann. 5-115(b) 23
Rules: Page
FRCP I
FRCP 3
FRCP 6(e)
FRCP8(c)
36
38

38





-xii- -xiii-
Rules (continued):
Page
FRCP 23, Advisory Committee Notes 26
FRCP 41(a)(2) 40
FRCP 4 1(b) passim
FRCPS8 4
FRCP 60(a) 7
FRCP 60(b)(6) 7
FRCP 82 36
Local Rule 14.6 of the U.S. District Court for the
Central District of California 4
Local Rule 14.7 of the U.S. District Court for the
Central District of California 4
Md. Rule of Court 2-101(b) 23
Md. Rule of Court3-10I(b) 23
Other Authorities:
Page
P. Bator et al., Hart and Wechsler's The Federal
Courts and the Federal System (3d ed. 1988) 38
Stephen B. Burbank, Interjurisdictional Preclusion,
Full Faith and Credit and Federal Common Law:
A General Approach, 71 Cornell L. Rev. 733
(1985) passim
Clark, Code Pleading (2d ed. 1947) 47
Howard M. Erichson, Inteijurisdictional Preclusion,
96Mich.L.Rev.945(1998) 11,17
Howard P. Fink & Mark V. Tushnet, Federal
Jurisdiction: Policy & Practice (2d ed. 1987) 18
Richard H. Fallon, Daniel J. Meltzer & David L. Shapiro, The
Federal Courts and the Federal System
(4thed. 1996) 10
Moore's Federal Practice (3d ed. 2000) 22, 26
Leflar, American Conflicts Law (3d ed. 1977) 23
Graham C. Lilly, The Symmetry of Preclusion, 54 Ohio
St. L.J. 289 (1993) 11,35
C. Miller, The Supreme Court & Uses of History (1969) .. 41
Other Authorities (continued):
Page
Martin H. Redish et al., Civil Procedure: A Modern
Approach (3d ed. 2000) 39
Ragazzo, Reconsidering the Artful Pleading Doctrine,
44 Hastings L.J. 273 (1993) 25
Restatement of Judgments (1942) 10, 47, 48
Restatement (Second) of Judgments (1982)
17. 30,
36
Restatement (Second) of the Conflict of
Laws
(1971) 5, 6, 22, 23,
29, 33-34
Stuart D. Smith, Note, Erie and the
Preclusive Effect of Federal Diversity
Judgments, 85 Colum. L. Rev.
1505 (1985) 35,38
Allan R. Stein, Erie and Court Access, 100 Yale L.J.
1935 (1991) 35
Charles A. Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice & Procedure
(1981 &2000Supp.) passim
Stephen C. Yeazell, Civil Procedure (5th
ed. 2000) 36





BRIEF FOR THE PETITIONER

OPINIONS BELOW

The decision of the Maryland circuit court dismissing petitioner's suit on the basis of res judicata, App. 36a-47a, is unreported. The decision of the
Maryland Court of Special Appeals. App. I a-34a, affirming the trial court is reported at 736 A.2d 1104. The order of the Maryland Court of Appeals
denying review, App. 35a, is unreported.

JURISDICTION

The Maryland Court of Special Appeals entered a final judgment affirming the state circuit court's order of dismissal on September 7, 1999.
The Maryland Court of Appeals denied Semtek's timely state-court petition for discretionary review on December 21, 1999. This
Court granted Semtek' s timely petition for a writ of certiorari on June 26, 2000. This Court has jurisdiction pursuant to 28 U.S.C. 1257(a).

CONSTITUTIONAL AND STATUTORY
PROVISIONS AND RULE INVOLVED

The Full Faith and Credit Clause, Art. IV, 1, the Full Faith and Credit Act, 28 U.S.C. 1738, the Rules of Decision Act, 28 U.S.C. 1652, and
Fed. R. Civ. P. 41(b) are set out in the Addendum to this brief.

STATEMENT

Petitioner Semtek International Incorporated ("Semtek") brought this lawsuit against respondent Lockheed Martin Corporation ("Lockheed") in
Maryland state court alleging various torts, none of which arises under federal law. The suit was timely under Maryland's three-year statute of
limitations. The question presented is whether Semtek's suit is barred by res judicata because a federal district court sitting in diversity in


2

California previously dismissed, under California's two-year statute
of limitations, a different suit brought by Semtek against
Lockheed. Under both California and Maryland law, Semtek's
Maryland suit is not barred by resjudicata, and under precedents of
this Court that have been settled for more than a century, it
makes no difference that a federal district court rather than a
California state court dismissed the California action. The
judgment below accordingly should be reversed.
1. The California Action.
a. Semtek was formed in 1992 to contract with emerging
Russian enterprises, particularly with respect to satellite
ventures.' Between late 1992 and early 1993, Semtek entered
into various agreements with Merkuriy, Ltd., which had been
licensed by the Russian Space Agency, with the approval of
the Russian Defense Ministry, to contract for the commercial
use of Russian satellites, culminating in a joint venture for the
financing, development, and use of Russian satellite
telecommunication services. App. 49a. In July 1994,
Merkuriy informed Semtek that the joint venture might be in
jeopardy as a result of the involvement of Martin Marietta
Technologies, Inc. ("Martin Marietta"), and a third party.
App. 50a. Semtek then contacted a representative of Martin
Marietta, Samuel M. Ursini, and the president of the third
party, Transworld Communications ("Transworld"), advising
them of Seintek's relationship with Merkuriy. App. Sla. On
August 8, 1994, Merkuriy informed Semtek that it would not
proceed with the joint venture. Merkuriy subsequently
contracted with Martin Marietta and Transworld to provide
the services contemplated by its joint venture with Seintek.
App. 52a.
b. In February 1997, Semtek sued Lockheed (Martin


The description of the parties' relationship is summarized
from the allegations of Sem~ek's Maryland complaint, which
for purposes of these proceedings must be accepted as true.
United States v. (Jaubert, 499 U.S. 315, 327 (1991). For a more detailed
description of the complaint's allegations, see App. 49a-52a.
3
Marietta's successor in interest) and Ursini in California state
court alleging business torts arising from the defendanta~
wrongful conduct (herein~er "the California action"). App. 2a.
Because Iirsinj was a California resident (Complaint 4), there
was no evident basis for removal. But before Semtek formaliy
served the defendants Lockheed learned of the suit and
immediately removed to federal district court on the ground
that Ursini was not yet formally a party. See 28 U.S.C.
i441(b). Semtek filed a motion to remand to state court, which
the district court subsequently denied. App. 61 a.
Seven days after removing the case, Lockheed moved in the
district court to dismiss on a single ground: California's statute of
limitations. As Lockheed has explained in its brief in oppositI~~
in this Court ("BIO") "Semtek'so~ complaint and representations
established that California's two-year statute of limitations had
expired" 13102. Thus, Lockheed's motion was presented to, and
considered by, the district court before any factual development in
the case and without regard to the merits of Semtek's claims.
Notably, Lockheed did not request that the distnct court enter an
order of dismissal that would carry greater preclusive effect than
an equivaJe0~ order entered by a state cowl.
The district court granted Lockheed's
motion to dismiss, concluding that
"California courts have held that the two-
year statute of limitations'~ applies to the causes of action
alleged by Semtek App. 54a (collecting cases). According to the
court, "the Complaint reveals that, as early as July 5, 1994,
Plaintiff was notified that its prospective joint venture could be in
jeopardy due to the involvement of Martin Marietta and
Transworld" as well as that "in July 1994, Plaintiff was also aware
of Martin Mariett~'5 (and, therefore, Ursini 's) potential liability
for interference with Plaintiffs prospective business relationship
with Merkuriy" and that "its agreeme~~ with Merkuriy was
breached on August 8, l994~" Id SSa-56a Furthermore Semtek's
"Complaint fails to state a viable basis for tolling of the statute."
Id 57a. Thus, the suit "could not have





4 S
accrued any later than August 8, 1994, the date of the admitted
breach," such that the California statute of limitations expired
in August 1996, approximately seven months before Semtek
filed the California action.
c. In many instances, when a district court dismisses an
action as inadequately pleaded, it will grant the plaintiff the
opportunity to amend or to file a new action containing
sufficient allegations. Here, however, the district court declined
to follow such a course because of its conclusion that the
pleadings definitively established that Semtek
could not state a claim under California law. On
May 5, 1997, the California district court granted the motion to
dismiss and issued a dismissal order that provided in relevant
part:

According to the allegations of Plaintiff's Complaint, the
two-year statute of limitations could not have been tolled by
fraudulent concealment. The applicable statute of
limitations bars this action in its entirety. Accordingly,
[plaintiff's Complaint] must be DISMISSED WITH
PREJUDICE because, given the allegations in the
Complaint, amendment would be futile (Plaintiff cannot
plead around or contradict its current allegations).

App. 58a.
On May 7, 1997, without being directed to do so by the
district court,2 Lockheed lodged with the court a proposed
judgment purporting to effectuate the dismissal order.
Lockheed's proposed judgment included language specifying that
the dismissal was "on the merits" language not used in the
dismissal order. The proposed judgment was mail-served on May
7, 1997 and was not received by Semtek until May 8.
On May 8. 1997, without affording Semtek any opportunity


2 Compare Fed. R. Civ. P. 58 ("Attorneys shall not submit
forms of judgment except upon direction of the court, and these
directions shall not be
given as a matter of course.").
to object to the proposed judgment,3 the California district court
entered the judgment with the extraneous language inserted by
Lockheed. App. 59a. The judgment thus provided that "the
action be dismissed in its entirety on the merits and with
prejudice." Id The district court did not indicate that its
judgment would have any res judicata effect different from that
of an equivalent judgment entered by a California state court.
On Semtek's appeal, the Ninth Circuit affirmed the district
court's judgment. No. 97-55840, 1999 U.S. App. LEXIS 3150
(CA9 Feb. 25, 1999) (unpublished).
2. The Maryland Action.
a. "[Aidditional investigation by Semtek revealed that much
of the alleged tortious conduct occurred in Maryland," App. 37a,
where Lockheed is headquartered. App. 4a n. I. On July 2, 1997,
Semtek filed suit against Lockheed in Maryland state court.
App. 3a, 62a.
This second lawsuit is timely under Maryland's three-year
statute of limitations. App. 37a, 62a & n.2. See BIO 4 (not
disputing timeliness of the Maryland case for purposes of
proceedings in this Court).
b. California law would permit the second lawsuit to proceed.
California follows the majority rule, under which a statute-of-
limitations dismissal ordinarily does not preclude suit in a
different jurisdiction where it is timely under the relevant
limitations period. Restatement (Second) of the Conflict of
Laws 142, 143 (1971); id 142 (rev. 1989). "[E]ach state
determines for itself when a claim becomes stale. Hence
maintenance of an action in the state of the forum is not
ordinarily precluded by the fact that it is barred by the statute of
limitations of another state. .. ." 142, cmt. g.
Lockheed acknowledges that "California resjudicata law...
does not treat limitations dismissals as judgments on the merits


~ Compare Local Rules 14.6 and 14.7 of the U.S. District Court
for the Central District of California; Fed. R. Civ. p. 6(e) (together
providing for the filing of objections within eight days afier service).





6

with claim preclusive effect." BIO 18. Although California
applies an unusually short two-year statute of limitations for
business torts, it has provided that a dismissal on the basis of
its limitations period will not preclude another state from
applying a longer statute of limitations. Thus, under California
law, the dismissal did not bar Semtek from suing Lockheed in
another state that has adopted a longer statute of limitations if
the other state would permit such a suit. 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).
The fact that, under the common law rule adopted by
California, a statute-of-limitations dismissal is not resjudicata
in a second suit in another state with a longer limitations
period does not necessarily mean that the second suit will be
allowed to proceed. The second state may elect to "borrow"
the statute of limitations of the first. Restatement (Second) of
the Conflict of Laws 142(1) & cmt. f(1971); 142 & cmt.
b (Rev. 1989). Maryland, however, has determined not to
borrow the statute of limitations of a sister state in a business
tort suit such as that filed by Semtek against Lockheed. E.g.,
Turner v. Yamaha Motor Corp., US.A., 591 A.2d 886
(1991). Instead, under Maryland law, such a suit if brought in
Maryland is governed by Maryland's three-year statute of
limitations. Md. Cts. & Jud. Proc. Code Ann. 5-101 ("A
civil action at law shall be filed within three years of the date it
accrues unless another provision of the Code provides a
different period of time within which an action shall be
commenced."); accord BIO 3 ("Relevant Maryland law
provided for a three-year statute of limitations.").
c. Lockheed twice turned to the federal courts in failed
efforts to block the Maryland action. Lockheed first
unsuccessfully attempted to remove the case to the district
court for the district of Maryland. The district court, rejecting
Lockheed's argument that a federal defense is a basis for
removal, remanded the case to Maryland state court. Semteklnt
'I v. Lockheed Martin Corp., 988 F. Supp. 913 (D. Md. 1997);
7

accord Rivet v. Regions Bank, 522 U.S. 470(1998) (so
holding). Lockheed also unsuccessfully
moved in the California district
court to enjoin the Maryland action under
the All Writs Act, 28 U.S.C. l651(a). The
district cowl denied Lockheed's motion. While
cautioning that its statements were
dicta, App. 71 a n. 17, the court
reiterated that its prior decision had
rested on the California statute of limitations and "did
not reach the substantive merits of Plaintiff's tort claims."
App. 71a. Furthermore, because Semtek's filing of the
Maryland action was not in any sense "vexatious" or "patently
without merit," the district court concluded it would be
inappropriate to deprive the Maryland cowls of the
opportunity to resolve the question whether the judgment in
the California action was res judicata. Id Accordingly, the
California district court concluded that it would not bar
"another proper forum" from "afford[ingJ Plaintiff the
opportunity to fully litigate the merits of its causes of action"
if that forum would not apply "a statutory or res judicata bar."
Id Indeed, the district cowl opined that
"it is not obvious to this Court that res judicata
applies to bar Plaintiffs action in Maryland state court." Id at
71a n.17.4


~ After the California district court refused to grant Lockheed's
motion for an Injunction and opined that the dismissal "did not reach
the substantive merits of Plaintiff's tort claims," App. 71a, Semtek
applied to the Ninth Circuit for a limited remand to file motions in the
California district court formally to amend the judgment under Fed. R.
Civ. P. 60(a) governing clerical errors and Fed. R. Civ. P. 60(b)(6)
allowing for extraordinary relief. Semtek sought a further order to
confirm the California district court's dicta (App. 71 a n. 17) that the
dismissal had not reached the substantive merits of the case and that the
judgment was without prejudice to Semtek's suing Lockheed in another
forum. Without prejudice, the Ninth Circuit denied Semtek leave to file
the Rule 60(bX6) motion. The Ninth Circuit requires that the trial court
first indicate that it will entertain a motion to amend an appealed
judgment under Rule 60(b)(6) before the Ninth Circuit will issue a
limited remand allowing the motion to be heard. Record Excerpts 590.
But the Ninth Circuit did not rule on Semtek's request for leave to seek
Rule 60(a) relief. Semtek then returned to the California district court,
requesting it to indicate its willingness to entertain the motion to
amend, but the court declined to hear the





8 9
3. The Decision Below.
With the case returned to the Maryland
state court, Lockheed moved to dismiss on the basis
of res judicata. Accord BIO 4 ("[Flor purposes of its motion to
dismiss, Lockheed argued only that the California district court's
dismissal precluded Semtek from filing the same claim in
Maryland."). Lockheed asserted that the judgment in the
California action had res judicata effect as a result of
Federal Rule of Civil Procedure 41(b). In
particular, Lockheed contended that the California judgment was
"upon the merits" not merely in the sense provided by California
law but also in the far more expansive sense of precluding
Seintek' s claims in another jurisdiction.
The Maryland trial court agreed with Lockheed that the
dismissal of the California action was res judicata as a matter of
federal law under "[t]he plain language of' Fed. R. Civ. P.41(b).
App. 38a-39a.
On appeal, Semtek urged the Maryland
courts to follow Dupasseur v. Rochereau, 88 U.S.
(21 Wall.) 130, 135 (1874). However, the Maryland Special
Court of Appeals affirmed the dismissal, App. la-34a, and the
Maryland Court of Appeals subsequently denied review, id. 35a.

SUMMARY OF ARGUMENT

I. 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." Id at 135. During the ensuing century and a
quarter, this Court has repeatedly reaffirmed Dupasseur and
has never disavowed it. Dupasseur was built on a statutory
jurisdictional framework that



Rule 60(bX6) motion. Record Excerpts at 671. In dicta, the
California
district court noted that it would have denied the Rule 60(b)(6)
motion as
untimely.
has remained unchanged. This Court should continue to adhere
to Dupasseur as a matter of stare decisis. Dupasseur has
proven to be a workable and reliable rule ofjudicial
administration. In addition, Dupasseur promotes important
values of federalism because it ensures that federal diversity
courts will not run roughshod over the deliberate policy choices
made by states regarding their respective laws of preclusion.
Dupasseur reduces incentives for forum-shopping and avoids
inequitable administration of the laws.
II. If this Cowl concludes, contrary to Dupasseur, that
federal law rather than state law governs the res judicata effect
of a limitations dismissal in diversity, thejudgment below should
nonetheless be reversed. This Court should rule that there is no
important federal interest dictating the use of a nationally
uniform rule governing the effect of a statute-of-limitations
dismissal. Instead, as this Court has done with respect to other
issues involving federal litigation of state-law claims where no
federal statute or rule is explicitly controlling, this Court should
hold that the federal common law rule here is one that borrows
the pertinent state-law res judicata rule that would have applied
if the case had been brought in, or had remained in, state court.
Alternatively, this Court could adopt a uniform federal rule
providing that a statute-of-limitations dismissal in a diversity
case does not preclude suit in another forum with a longer
limitations period, a rule mirroring state law in the vast majority
of jurisdictions.
III. Federal Rule 41(b) does not require a contrary result.
The Rule should not be interpreted as deciding the issue of the
preclusive effect to which federal diversity judgments are
entitled. See 18 Charles Alan Wright, Arthur R. Miller & Edward
H. Cooper, FEDERAL PRACTICE & PROCEDURE 4441, at
372-73 (1981 & 2000 Supp.) ("Wright & Miller"). Lockheed's
interpretation of Rule 41(b) would allow each district court, in
the exercise of its own discretion, to prescribe the preclusive
effect of its own judgments. Far from achieving uniformity,
Lockheed's proposed approach would only breed





10 II
uncertainty, contrary to the principles of sound judicial
administration and consistency that underlie the rules of civil
procedure and the doctrine of res judicata.
Even if, as a general matter, Rule 41(b) governed the
preclusive effect of a dismissal order, Rule 41(b) does not
accord preclusive effect to the type of dismissal entered in this
case: a dismissal under a statute of limitations. Controlling here
is Costello v. United States, 365 U.S. 265 (1961), which
excluded from the application of Rule 41(b) dismissals that are
preliminary rather than on the merits. The Restatement of
Judgments 49, cint. a (1942), which was cited by the
Advisory Committee in its 1963 amendment of Rule 41(b),
makes plain that Rule 4 1(b) was never intended to cover a
statute-of-limitations dismissal.
Alternatively, if this Court were to hold that Rule 41(b) as
a general matter addressed the preclusive effect of federal
judgments, this Court should nonetheless hold that the phrase
"upon the merits" must be determined under the law of the
state in which the federal diversity court sits.

ARGUMENT

I. THE LAW OF THE FORUM STATE CONTROLS
THE PRECLUSIVE EFFECT OF A FEDERAL
DIVERSITY JUDGMENT.

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, Art. IV, 1, and 28
U.S.C. 1738, has long been clear: the second forum must give
the same resjudicata effect as would the rendering state court.5
See Baker v. General Motors Corp., 522 U.S. 222,233-
35(1998); Parsons


~ The term "res judicata" is used here in a broad sense to refer
to the entire subject of the effect of a prior judgment in a subsequent
action.
Steel, Inc. v. First Alabama Bank, 474 U.S. 518. 525-26
(1986). No similar constitutional or statutory provision
expressly addresses the res judicata effect owed the judgments
of federal courts, so that the rules in this area are ultimately set
by this Court.6
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: thejudgment has
the same effect as if it had been rendered by a state court in
that forum. This rule has never been rejected or modified;
indeed, in recent decades this Court's res judicata decisions have
been crafted so as to avoid altering this basic rule.
Under this principle, the judgment below should be
reversed.

A. Dupasseur Should Be Reaffirmed As a Matter of Stare
Decisis.

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." Id. at 135. This
Court opined 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


'See Richard H. Fallon, Daniel I. Meltzer & David L. Shapiro. THE
FEDERAL COURTS AND THE FEDERAL SYSTEM 1469, 1473-74
(4th ed. 1996);

Stephen 13. Burbank, Interjurisdictional Preclusion, Full Faith and
Credit
and Federal Common Law: A General Approach, 71 CORNELL L. REv.
733.
739-47, 753-55, 772-73 (1985); Graham C. Lilly, The Symmetry of
Preclusion, 54 Oulo ST. L.J. 289, 315-27 (1993); Howard M. Erichson,
Interjurisdictional Preclusion, 96 MICH. L. REv. 945, 984-89, 1005-08
(1998).





12 13
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 below that the earlier federal diversity
judgment did not bind the defendant in the Louisiana state suit.
Id. at 137.
In Metcalf v. City of Watertown, 153 U.S. 671, 676 (1894),
this Court reaffirmed Dupasseur, stating that "[ut 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 HancockNational Bankv. 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 under 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." Id. at 643; see also
id. at 644-45 ("what credit and effect are given in the courts of
Kansas in a like action to a similar judgment there rendered"
and "[tihe fact that this judgment was rendered in a court of the
United States, sitting within the State of Kansas, instead of one
of the state courts, is immaterial").
The Dupasseur line of cases was left undisturbed in the
following century, 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 displace
Dupasseur.7 Hence, Dupasseur has created a clear, predictable


For example, in Heiser v. Woodruff 327 U.S. 726, 731-33
(1946), involving the res judicata effect of ajudgment 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
rule that proved practical and administrable for over a hundred
years. Even in the days of "general federal common law" of
Swiftv. Tyson, 41 U.S. (16 Pet.) 1(1842), Dupasseur recognized
the virtue of a simple rule under which the res judicata effect of
a state-law adjudication is uniform exactly the same effect as a
state court in the first forum would give it regardless of
whether the adjudication takes place in a state or federal court.
Lockheed suggested in the courts below that Dupasseur was
simply an artifact of the Conformity Act of 1872, Ch. 255, 17
Stat. 196 (repealed 1948). That is untrue. Not once in
Dupasseur or its progeny did this Court even mention the
Conformity Act. Because res judicata is a matter of substance,
not procedure, there is no reason to think that revisions in
federal procedure, such as the adoption of the Federal Rules of
Civil Procedure in 1938, have had an impact on the resjudicata
effect of a diversity judgment.
Authoritative scholarship has established that Dupasseur
rested on substantive concerns rather than on the Conformity
Act. See Burbank, supra note 6, at 741-46, 748-52. The
statutory framework which Dupasseur and its progeny
construed was not the Conformity Act but the statutes
establishing the jurisdiction of the federal courts and laws
setting out the


which the federal court sits," and limited its analysis to reaffirming
that "in non-diversity cases.. . the federal courts will apply their own
rule of res judicala." Id. at 731-33 (citations omitted). In Blonder- Tongue
Labs., Inc. v. University of Ill. Found, 402 U.S. 313 (1971), the Court
reaffirmed its holding in Heiser, again making a narrow statement that as
to res judicata, "[un federal-question cases, the law applied is federal
law." Id. at 324 n. 12. Lending support to the continued vitality of the
Dupasseur line of cases, this Court noted that "[miany 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 stale rule requiring mutuality." Id. at 325
(emphasis added). See also Heck v. Humphrey, 512 U.S. 477, 488 n.9
(1994) (narrow statement that "[sitate courts are bound to apply federal
rules in determining the preclusive effect of federal-court decisions in
issues of federal law") (emphasis added).





14
1
5
obligations of full faith and credit. See, e.g., Embry v. Palmer,
107 U.S. 3, 9-10 (1883); Metcalf v. Watertown, 153 U.S. 671,
676(1894); Hancock Nat'l Bankv. Farnum, 176 U.S. 640,644-
45 (1900); Knights of Pythias v. Meyer, 265 U.S. 30, 33 (1924);
Stoll v. Gottlieb, 305 U.S. 165, 167, 170 & n.6 (1938).
Thus, the rule of Dupasseur was built on a statutory jurisdictional framework
that has remained unchanged. This Court should therefore adhere to the rule of
Dupasseur as a matter of stare decisis. "Stare decisis is the preferred course
because it promotes the evenhanded, predictable, and consistent development of
legal principles, fosters reliance on judicial decisions, and contributes to the
actual and perceived integrity of the judicial process." Payne v. Tennessee, 501
U.S. 808, 827 (1991). Accordingly, this Court has said that it "will not depart
from the doctrine of stare decisis without some compelling justification." Hilton
v. South Carolina Public Railways Comm'n, 502 U.S. 197,202(1991).
Dupasseur involves precisely the sort of simple, black-letter rule where
judicial consistency is important. Untold sessions of state legislatures have
adopted statutes of limitations and other legislative measures against the
background understanding that state law will govern their preclusive effect in
federal litigation as well as in state court. See Pennsylvania v. Union Gas Co.,
491 U.S. 1, 34-35 (1989) (Scalia, J., joined by Rehnquist, C.J., and O'Connor and
Kennedy, JJ., concurring in part and dissenting in part) (noting special stare
decisis concerns where legislatures operate against background understanding
created by prior judicial decisions); Sun Oil Co. v. Wortman, 486 U.S. 717, 728-
29 (1988) (declining to alter longstanding choice of law principles against which
many state statutes of limitations had been adopted).
Moreover, because Dupasseur and its progeny interpreted congressional
enactments which have not changed in relevant part, stare decisis has added
weight in this case. This Court has recognized that "1 c]onsiderations of stare
decisis have special force in the area of statutory interpretation, for [there],
unlike in
the context of constitutional interpretation, the legislative power is implicated,
and Congress remains free to alter what we have done."8 Any change in the rule
of Dupasseur should therefore be made by Congress, not by this Court.

B. The Rule of Dupasseur Is Correct.

Even if Dupasseur had never been decided, basic principles of federalism and
diversity jurisdiction would require the same result. The simple rule of Dupasseur
ensures that the resjudicata effect of a state-law judgment is always the same,
whether the judgment is rendered by a state or federal cowl. Deviating from this
rule would introduce a host of complexities, undermine principles of federalism,
trigger forum shopping, and lead to inequitable administration of state law. When
the cowl rendering the first decision is state rather than federal, the Full Faith
and Credit Act, 28 U.S.C. 1738, requires use of the preclusion law that would
apply in the rendering state's courts. For uniformity's sake the same preclusion
law should govern whether the first action is in state or federal court.
This case provides a perfect illustration: If Semtek's first lawsuit had
remained in California state cowl, there is no dispute that the Maryland courts
would have decided the preclusive effect of the California judgment under state
law rather than federal law, and that Semtek's suit would have been allowed to
proceed in Maryland. Indeed, if the sequence of forums had been reversed a
California state cowl action followed by a Maryland federal cowl suit it is
common ground that, under Section 1738, the federal cowl would have been
required to measure the preclusive effect of the California judgment under
California


Hohn v. United States, 524 U.S. 236, 251(1998) (quoting Patterson v. McLean Credit Union,
491 U.S. 164, 172-173 (1989)); see also Ankenbrand, v. Richards, 504 U.S. 689,699-
700(1992) (adhering to statutory construction adopted in Barber v. Barber, 21 How. 582
(1859)); Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 406-07 (1932) (Brandeis, i.,
dissenting).





16
1
7
law.
1. Dupasseur respects state policy chokes concerning res
judicata. Dupasseur honors the ability of states to make deliberate choices
regarding the scope of their respective laws of preclusion, without fear that their
decisions will be overridden by federal cowls. See Burbank, supra note 6, at 78 1-
82, 794-97.
"For purposes of diversity jurisdiction a federal court is 'in effect, only another
cowl of the State."' Angel v. Bullington, 330 U.S. 183, 187 (1947) (citation
omitted). "Federal diversity jurisdiction provides an alternative forum for the
adjudication of state-created rights, but it does not carry with it generation of rules
of substantive law." Gasperini v. Center for Humanities, Inc., 518 U.S.
415,426(1996). Thus, the Rules of Decision Act, originally 34 of the Judiciary
Act of 1789, provides that "[tlhe laws of the several states, except where the
Constitution or treaties of the United States or Acts of Congress otherwise require
or provide, shall be regarded as rules of decision in civil actions in the courts of the
United States, in cases where they apply." 28 U.S.C. 1652.
Within the body of state law that federal courts are required to apply is the law
of res judicata. "State courts are generally free to develop their own rules for
protecting against the relitigation of common issues or the piecemeal resolution of
disputes." Richards v. Jefferson County, Ala., 517 U.S. 793,797 (1996).
See also Postal Tel. Cable Co. v. City of Newport, Ky., 247 U.S. 464, 475
(1918) ("[r]es judicata like other kinds of estoppel,
ordinarily is a matter of state law"). Moreover, "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...."' Hart Steel Co. v. Railroad Supply Co., 244 U.S.
294,299(1917); see also Federated Dep't Stores v. Moitie, 452 U.S. 394,
401 (1981) (same).
There are important variations among the states on issues of preclusion law. For
example, a number of states (including Alabama, Florida, Georgia, Kansas, Mississippi, North
Dakota,
and Virginia) still retain the traditional mutuality requirement.9 Ohio provides a
limited public policy exception but generally adheres to the mutuality
requirement.'0 "The states that require mutuality are fully aware that they are in
the minority; their decision to retain the requirement is deliberate." Erichson,
supra note 6, at 967. However, without Dupasseur, these variations in state law will
be overridden when federal cowls sit in diversity, because federal law no longer
requires mutuality. Blonder Tongue Labs. v. University of Ill. Found, 402 U.S.
313 (1971).
The same obliteration of state law will occur with
respect to whether alternative holdings are entitled
to issue preclusion (many federal courts give issue-
preclusive effect to each alternative ground, while numerous states
do not);" whether a judgment on appeal has preclusive effect (yes in the federal
courts, no in California, Georgia, Oklahoma, Tennessee, and Washington);'2 the
definition of a "claim" (federal courts


'See, eg, Jones v. Blanton, 644 So.2d 882, 886 & n.2 (Ala. 1994);
Stogniew v. McQueen, 656 So.2d 917, 919-20 (Fla. 1995); Ga. Code Ann.
9-12-40 (1993); McDermott v. Kansas Pub. Serv. Co., 712 P.2d 1199, 1208-
09 (Kan. 1986); Walker v. Kerr-McGee Chem. Corp., 793 F. Supp. 688, 695-
96 (N.D. Miss. 1992); Hofsommer v. Hofsommer Excavating, Inc., 488
N.W.2d 380, 384 (N.D. 1992); Angstadt v. Atlantic Mut. Ins. Co., 457 S.E.2d
86, 87-88 (Va. 1995). Louisiana did not recognize any issue preclusion at all
until 1991 and apparently also requires mutuality. See La. Rev. Stat. Ann.
13:4231.

' See Cashelmara Villas, Ltd Partnership v. DiBenedetto, 623 N.E.2d 213, 215 (Ohio App. 1993).

"Compare Ma gnus Elecs.. Inc. v. La Republica Argentina, 830 F.2d 1396, 1402 (CA7 1987), with
Baker Elec. Coop. v. Chaske, 28 F.3d 1466, 1475-76 (CA8 1994) (applying North Dakota law);
Arab African Int'l Bank v. Epstein, 958 F.2d 532, 535 (CA3 1992) (applying New Jersey law);
Marathon Oil Co. v. Babbitt, 938 F. Supp. 575, 579 & n.9 (D. Alaska 1996); Vanoverv. Kansas
City L~fe Ins. Co., 438 N.W.2d 524, 526 (ND. 1989); Restatement (Second) of Judgments 27,
cmt. i (1982).
'~ Compare Hunt v. Liberty Lobby, Inc., 707 F.2d 1493, 1497-98 (CADC 1983), with Cal. Civ.
Proc. Code l049(West 1990); Ga. CodeAnn. 9-12-





18 19
generally apply a broad transactional test, while many states
do not);'3 and whether a dismissal for failure to state a claim is
treated as a judgment on the merits (it is generally not in
California, Connecticut, Georgia, Illinois, Maryland,
Massachusetts, Minnesota, New York, and Oregon).'4
Consider the situation where the state in which the federal
diversity cowl sits follows a substantively based preclusion rule
that differs from the preclusion rules developed in federal
question cases. For example, a state rule might refuse
nonmutual preclusive effect to judgments in mass disaster cases
for reasons of substantive policy. If the scope of the federal
diversity judgment is not defined by reference to this rule, the
defendant will suffer a disadvantage in the second action by
being precluded by an independent federal rule of nonmutual
preclusion, whereas if the scope of the judgment in the first


19 (1993); Grider v. USA' Corp., 847 P.2d 779, 784 n.1 (OkIa. 1993);
McBurney v. Aldrich, 816 S.W.2d 30,34 (Tenn.. App. 1991); Chau v. City
of
Seattle, 802 P.2d 822, 825 (Wash. App. 1990).

~ Apparel Art Int'l, Inc. v. Amerte.x Enters. Ltd, 48 F.3d 576,583
(CA 11995), with Benetton S.p.A. v. Benedot, Inc., 642 So.2d 394, 399-
402
(Ala. 1994); Olsen v. Breeze, Inc., 55 Cal. Rptr.2d 818, 826-27 (App.
1996);
Takahashi v. Board of Educ., 249 Cal. Rptr. 578, 584-85 (App. 1988),
cert.
denied,490 U.S. 1011 (1989);American St at es Ins. Co. v.
Walker,4775.E.2d
360, 364 (Ga. App. 1996); Torcasso v. Standard Outdoor Sales, Inc.,
626
N.E.2d 225,228-30(111. 1993); Iowa Coal Mining Co. v. Monroe County,
555
N.W.2d 418,441-45 (Iowa 1996). See generally Howard P. Fink &
Mark V.
Tushnet, FEDERAL JURISDICTION: POLICY & PRACTICE
638 (2d ed. 1987)

(discussing variations among the states in the definition of a "claim").

'4See Kanarek v. Bugliosi, 166 Cal. Rptr. 526, 530 (App. 1980);
Gottlob v.
Connecticut State Univ.,No. CV 930521 148S, 1996 WL57087 (Conn.
Super.
Ct. Jan. 19, 1996); Buie v. Waters, 74 S.E.2d 883, 884-85 (Ga. 1953);
In re
Estate of Cochrane, 391 N.E.2d 35, 36 (III. App. 1979); Smith v. Gray
Concrete Pipe Co., 297 A.2d 721, 726 (Md. 1972); Hacker v. Beck, 91
N.E.2d 832,834 (Mass. 1950); H. Christiansen & Sons, Inc. v. City of
Duluth,
31 N.W.2d 277, 279-80 (Minn. 1948); Amsterdam Say. Bank v. Marine
Midland Bank, 528 N.Y.S.2d 184 (App. Div. 1988); Briggs v.
Bramley, 177
F. Supp. 599, 600 (D. Or. 1959).
action is defined by state law, there would be no preclusion in
the second action. Indeed, one could
imagine that, in a jurisdiction where mutuality
is required for collateral estoppel, a farseeing litigant
could use Lockheed's rule deliberately to
circumvent the state policy. By bringing
a diversity case first, the litigant
could obtain a judgment which then could be used for
collateral estoppel purposes without the requirement of
mutuality against the party the litigant wished to collaterally
estop.
The risks to state law are not hypothetical. In Columbia
Cas. Co. v. Playtex FP, Inc., 584A.2d 1214, 1219-20 (Del.
1991), for example, the Supreme Court of Delaware refused to
accord preclusive effect to a prior federal diversity judgment in
Kansas because Kansas law does not recognize nonmutual issue
preclusion: "precedent compels the application of state law
when a federal cowl sitting in diversity is called upon to
determine the preclusive effect to give a prior judgment.. . .
[Wie view the preclusive effect to be given a prior judgment as
an area of substantive law." Had the cowl applied Lockheed's
approach, the outcome would have been different.
2. Dupasseur avoids forum shopping and the inequitable
administration of state law. Without Dupasseur, a
state-law judgment might mean one thing (for res judicata
purposes) if rendered by a federal cowl and quite another if
rendered by a state cowl. Accordingly, Dupasseur
eliminates incentives for forum shopping and prevents the inequitable
application of state law. See Burbank, supra note 6, at 767-68,
789-94.
In Guaranty Trust Co. v. York, 326 U.S. 99, 109
(1945), this Cowl held that a federal diversity court
sitting in equity was required to apply a state statute of limitations:
"[W]here a federal cowl is exercising jurisdiction
solely because of the diversity of
citizenship of the parties, the outcome of the litigation in the
federal court should be substantially the
same, so far as legal rules determine the
outcome of a litigation, as it would be
if tried in a State cowl." Id In Guaranty Trust, the
plaintiffs were barred from seeking
recovery in a state court because the
action was untimely under the statute of limitations. This
Court held





20

that a federal cowl in equity could not take cognizance of the suit
simply because there was diversity of citizenship between the
parties.
Similarly, in Walker v. Armco Steel Corp., 446 U.S.
740 (1980), this Court opined that diversity jurisdiction should
not make a difference in determining whether a state statute of
limitations applied to bar an action: "There is simply no reason
why, in the absence of a controlling federal rule, an action based
on state law which concededly would be barred in the state courts
by the state statute of limitations should proceed through
litigation to judgment in federal cowl solely because of the
fortuity that there is diversity of citizenship between the
litigants." Id at 753.
In this case, the question is analogous: whether a timely suit
in Maryland that would not otherwise be precluded by a
California judgment should be barred simply because there was
diversity in the California action. Guaranty Trust, Walker v.
Armco Steel, and other precedents demonstrate that the
Maryland suit should not be barred. See, e.g., Gasperini v.
Center for Humanities, Inc., 518 U.S. 415, 430-31 (1996)
(Erie R. Co. v. Tompkins, 304 U.S. 64 (1938),
requires a federal district cowl, in ruling
on new trial motion in diversity action, to apply New York
statute regarding judicial review for excessive jury verdicts,
rather than federal law standards: "Just as the Erie principle
precludes a federal court from giving a state-created claim
'longer life . . . than [the claim] would have had in the state
cowl,' so Erie precludes a recovery in federal court
significantly larger than the recovery that would have been
tolerated in state cowl") (citation omitted); Ferens v. John
Deere Co., 494 U.S. 516, 523-28 (1990) (federal district
transferee court must apply the state statute of limitations
that the transferor cowl would apply, because under Erie a 28
U.S.C. 1404(a) transfer should not change the state law
applicable in a diversity case); Ragan v. Merchants Transfer&
Warehouse Co., 337 U.S. 530,533(1949) (when local law that
creates the cause of action qualifies it, "federal cowl must
follow suit," for "a different measure of the
21

cause of action in one court than in the
other [would transgress) the Principle of
Erie").
While the Principle of Erie R. Co. v. Tompkins
304 U.S. 64 (1938), fortifies the rule of
Dupasse~~ the point is even more fundamental
'~ The goals of "di scouragem~~~ offoruin shopping and
avoidance of inequitable administration
of the laws" are rooted in the very
nature of diversity jurisdiction Hanna v.
Plumer, 380 U.S. 460, 468 (1965). Hanna instructs federal
courts to ask "whether application of the
[State's] rule would make so import~t a
difference to the character or result of
the litigation that failure to enforce it
would unfairly discriminate against
citizens of the forum State, or whether
application of the rule would have so
import~t an effect upon the fortunes of
one or both of the litigants that failure
to enforce it would be likely to cause a
plaintiff to choose the federal court."
380 U.S. at 468
n.9. The Policy against different outcomes
on the basis of citizenship is a "policy of
federal jurisdiction" Guaranty Trust Corp. v. York,
326 U.S. 99, 101 (1945). See also Walker v. Armco
Steel Corp., 446 U.S. 740, 753 (1980) ("The
Policies underlying ~ do not support such a
distinction

The rule of Dupasseur is necess~ both to
avoid Opportunities for forum shopping and
to prevent inequi~bJ~ administration of state law.
These dangers are illustrated by this very case. Lockheed
removed the Califorpia action from the Los Angeles Superior
Cowl to the federal district cowl in Los Angeles and then sought
to transform a non-merits limitations dismissal into a judgment
claiming full res judica~ effect by



'5This Court has recognized the relevance of Erie..like Principles to the rule
of Dupasse~~ See Heiser v. Woodruff 327 U.S. 726, 731-32 (1946) (asking
"whether, apart from the requirern~~~ of the full faith and credit
clause of the Constitution, the rule of res judicata applied in the federal
courts, in diversity of citizenship cases, under the doctrine of Erie R. Co. V.
Tompkins 304 U.S. 64; cf. Guaranty Trust Co. v. York, 326 U.S. 99;
Holmberg v. Armbrecht, 327 U.S. 392, can be other than that of the state in
which the federal court sits").





22
2
3
misapplication of Rule 41(b). If the California action had not been removed to
federal cowl (a removal which occurred only by the accident of diversity), the
Maryland suit would have gone forward.
Dupasseur treats residents and non-residents equally by ensuring that the
federal diversity judgment is governed by the preclusion law of the forum state,
regardless of the citizenship of the parties. By contrast, under Lockheed's rule, a
non-resident of the first forum state, who is able to remove the case to federal
court and secure the application of federal preclusion law to the diversity
judgment, is treated differently from a resident of the forum state. The out-of-
state resident is permitted an option denied to the local resident. Yet this Court
has cautioned that the "[a]vailability of diversity jurisdiction which was put into
the Constitution so as to prevent discrimination against outsiders is not to effect
discrimination against the great body of local citizens." Angel v. Bullington, 330
U.S. 183, 192 (1947); see also Guaranty Trust, 326 U.S. at 112 ("Congress
afforded out-of-State litigants another tribunal, not another body of law. The
operation of a double system of conflicting laws in the same State is plainly
hostile to the reign of law. Certainly, the fortuitous circumstance of residence out
of a State of one of the parties to a litigation ought not to
give rise to a discrimination against others equally concerned but
locally resident. The source of substantive rights enforced by a federal court under
diversity jurisdiction, it cannot be said too often, is the law of the States.").
3. Dupasseur respects the interests of the second forum
state. Lockheed's rule would invade the prerogative of the second forum
(Maiyland, in this case) to afford a plaintiff the opportunity to try her claims
within the state's limitations period. Those interests are particularly strong where
the earlier dismissal is based, as here, on limitations, which almost universally bars
only the remedy and not the right. 18 Wright & Miller, supra
4441 at 369; 18 MOORE'S FEDERAL PRACTICE 131 .30[3][g][ii] (3d
ed. 2000); Restatement (Second) of the
Conflict of Laws 142(2) (1971). See also Hauch v. Conner, 453 A.2d
1207, 1214 (Md. 1983) ("With regard to the threshold matter of whether the
cowl is open to a particular litigant, obviously the policy of the forum state is
extremely important.
'Access to forum courts is a matter for forum law to determine.... The
forum's limitations rules represent its policy on the enforcement of stale claims,
and a policy of repose may be relevant to all lawsuits filed in the forum's courts
regardless of where the claims arose. "'(quoting Leflar, AMERICAN COt'3LlcrS
LAW 127, at 253 (3d ed. 1977)).
For example, Maryland has a particular interest in seeing that corporations
incorporated in Maryland or having their principal place of business there, such as
Lockheed, remain accountable in Maryland's cowls if suit is filed within
Maryland's limitations period. In fact, by its adoption of Maryland Rules of Cowl
2-101(b) and 3-101(b), Maryland has Implemented "savings statutes" which
afford a tolling of Maryland's statutes of limitations for any party who has filed
an action elsewhere which has been dismissed under a shorter limitations period.
These rules apply to a party who has filed suit in another state or U.S. district
cowl a suit that would be timely under the Maryland statute of limitations and
then finds itself dismissed under the non-Maryland tribunal's shorter limitations
period. Such a party may timely refile the action in Maryland promptly after the
entry of the foreign cowl's order, even though Maryland's statute of limitations
would otherwise have expired.
Furthermore there is no law providing that Maryland will "borrow" the
shorter limitations period of another jurisdiction and use that period to bar an
action untimely in the foreign jurisdiction Maryland has a borrowing statute
applicable only to products liability cases (Md. Code Ann. Courts and Judicial
Proceedings 5-1 15(b)), which shows that Maryland's legislature has considered
the issue of differences in limitations periods in different jurisdiction5 and has
affirmed Maryland's interest in permitting plaintiffs like Serutek to sue and in
holding defendants like Lockheed accountable in Maryland courts if suit





24 25
is filed within Maryland's limitations period.
Lockheed's theory trumps Maryland's right to make that
choice and closes the doors of the Maryland cowls, contrary
to that state's policy choice to afford a forum to plaintiffs
like Semtek.
4. Dupasseur respects the interests ofthefirstforum
state.
Lockheed's approach would also deprive the first forum of its
interest in controlling the preclusive effect of a judgment
concerning its law. For example, by California Code of Civil
Procedure 1908(a), the California legislature has dictated
the effect of ajudgment in an action applying California law
in state cowl. To enable Lockheed to use the accident of
diversity to accord greater preclusive effect to a dismissal
pursuant to California's statute of limitations, than California
would give a dismissal by one of its own courts, would in a
sense entail hijacking California law. This effect flies in the
face of the principle that "[tihe essence of diversity
jurisdiction is that a federal cowl enforces State law and State
policy. ... [D]iversity jurisdiction must follow State law and
policy." Angel v. Bullington, 330 U.S. 183, 191-
92(1947); see also id at 192 ("A federal court in North
Carolina, when invoked on grounds of diversity of
citizenship, cannot give that which North Carolina has
withheld.").
Under Lockheed's view, California would be compelled,
should it wish not to adopt a statute of limitations with. such
a wide extraterritorial effect, to abandon the two-year statute
of limitations altogether. Just as this Court has recognized
that a federal court should not give a prior state cowl
judgment greater preclusive effect than the state itself would
give it, see Marrese v. American Academy of Orthopaedic
Surgeons, 470 U.S. 373, 384 (1985); Union &
Planters Bank ofMemphis v. Memphis, 189 U.S. 71, 75
(1903), so too California has an interest in avoiding having
the effect of its statute of limitations stretched beyond
anything it intended. Indeed, such commandeering of
California law is analogous to the forbidden commandeering
of state legislative, executive, and judicial branches that this
Cowl
condemned in New York v. United States, 505 U.S. 144
(1992), Printz v. United States, 521 U.S. 898 (1997), and
Alden v. Maine, 527 U.S. 706 (1999).
5. There is no federal interest that would warrant
departing from Dupasseur. As this case illustrates, the
federal interest in affording preclusive effect to a diversity judgment
is attenuated at best. This is not a federal question case. This is
a diversity case in which the plaintiff never wanted to be in
federal cowl and in which the second forum is not a federal
but a state cowl. The plaintiff's subsequent
filing in a state cowl does not tax
federal judicial resources. The
resources in question are those of the
second court here the courts of Maryland
which has made a decision not to borrow
California's statute of limitations and
instead to be available to a subsequent suit. "[T]he federal
interest in enforcing a diversity judgment is not as significant
as the federal interest in enforcing a
federal-question judgment." Ragazzo,
Reconsidering the Artful Pleading Doctrine, 44 HASTINGS
L.J. 273,313-14(1993); see also Burbank, supra note 6, at
778-97; Rivet v. Regions Bank of La., 522 U.S. 470
(1998) (federal interest in enforcing prior federal judgment
does not create federal question
jurisdiction).
There is no interest in "uniform" federal preclusion law
that would justify abandoning Dupasseur.
Variations in state law are the essence of federalism, not an
"evil" to be corrected through the straitjacket of a single
federal rule. As this Cowl explained in holding that federal
courts must apply state choice of law rules:

Otherwise, the accident of diversity of citizenship would
constantly disturb equal administration of justice in
coordinate state and federal courts sitting side by side....
Whatever lack of uniformity this may produce between
federal courts in different states is attributable to our
federal system, which leaves to a state, within the limits
permitted by the Constitution, the
right to pursue local policies
diverging from those of its
neighbors. It is not





26
2
7
for the federal courts to thwart such local policies by enforcing an
independent "general law" of conflict of laws.

Klaxon v. StentorElec. Mfg. Co., 313 U.S. 487, 496 (1941).
Moreover, repudiating Dupasseur hardly ensures the
development of a uniform federal approach. As one court opined in an
analogous context in refusing to displace state law with federal common law,
"there is no guarantee that the assumption of federal jurisdiction would result in
a single position of the United States. There are hundreds of federal judges who
could preside over similar cases and reach different conclusions, and there is no
guarantee that a circuit split would be resolved by the Supreme Cowl." In re
Tobacco/Governmental Health Care Costs Litig, 100 F. Supp. 2d 31, 38
(D.D.C. 2000). Indeed, the federal courts of appeals are split over basic
principles of preclusion law, such as offensive nonmutual issue preclusion. See, e.g., 18
MooRE's FEDERAL PRACTICE 132.04 (3d ed. 2000) (cataloguing cases).
This Cowl rarely has the opportunity to grant review of, and resolve, these
rather recondite preclusion issues. By contrast, the high courts in the several
states are able to address conflicts in a more timely fashion. Therefore,
following the preclusion law of the state in which the federal diversity court sat is
a more efficient, administrable, and reliable system than relying on the development
of a uniform federal preclusion law.
Critics of Dupasseur sometimes contend that the fact that federal law
requires recognition of federal judgments mandates that federal rules of
preclusion be used. That is a non sequitur. For example, federal law also
determines what substantive law a diversity court applies, but
mandates the use of state substantive law (28 U.S.C.
1652), including state statutes of limitations,
Guaranty Trust Corp. v. York, 326 U.S. 99 (1945), and state
choice of law rules. Klaxon v. Stentor Elec. Mfg. Co., 313 U.S.
487 (1941).
Critics of Dupasseur also argue that it should be the
prerogative of the federal courts to determine the scope and effect of their own
judgments. But in a diversity case, those judgments involve application of state
law. A federal cowl is not "demeaned" by having the preclusive effect of its
judgment determined by state law, when state law provides the rule of decision
for the diversity judgment in the first place. In any event, the cowl which
issues a judgment rarely has the Opportunity to rule on its resjudicata
effect. See, e.g, Advisory Committee Notes on Fed. R. Civ. P.
23, 1966 Amendments (referring to the "recogruzed principle that the cowl
conducting the action cannot predetermine the res judicata effect of the
judgment; this can be tested only in a subsequent action").
In statute~of~limitations dismissals, there is ordinarily no significant federal
interest in protecting litigants from having to relitigate the merits. Here, for
example, the judgment in California was on a motion to dismiss, no discovery
was conducted, and Lockheed was not put to the burden of presenting a defense.
Allowing the Maryland action to proceed would not threaten a federal interest
or any federal substantive right and would not interfere with federal procedure,
because the case was not in federal co~. Fwlher, the California federal cowl
never considered whether Semtek's lawsuit was timely under Maryland law.
Hence, the basic aim ofresjudicata to provide finality for matters that the
parties "have had a full and fair opportunity to litigate," Montana v. United States,
440 U.S. 147, 153-54 (1979)
is not implicated here.
Therefore under Dupasseur, Semtek should have been permitted to bring its
claims in Maryland courts. The point is not that the California federal district
cowl erred in dismissing and stating that its judgment was "on the
merits" and "with prejudice." Semtek does not seek any change in the
California federal judgment; the question is what that judgment means.
Under California law, the phrases "on the merits" and "with prejudice" simply
mean issue preclusion in the context of a statute-oflimitations dismissal See
Gagnon Co. v. Nevada Desert Inn, 289 P.2d 466, 472 (Cal. 1955) ("a mere
statement





28

that ajudgment of dismissal is 'with prejudice' is not conclusive. It
is the nature of the action and the character of the judgment that
determines whether it is resjudicata."); Goddard v. Security Title
Ins. & Guar. Co., 92 P.2d 804, 807-08 (Cal. 1939) (disregarding
"with prejudice" language in prior federal diversity judgment and
affording that judgment no res judicata effect: "if the
judgment is clearly not on the merits, the
cowl's intention to make it a bar is immaterial. The
words 'with prejudice' add nothing to the effect ofajudgment in
such a case, no matter what light they throw on the intention of
the cowl"); Ritchey v. Upjohn Drug Co., 139 F.3d
1313, 1319 (CA9), cert. denied, 525 U.S. 963 (1998)
("California has emphasized the fact that the statute of
limitations is a kind of procedural bar, and not one that relates to
the merits of the case. In fact, California has pointed out that a
judgment based on the statute of limitations regarding a cause of
action in one suit is not necessarily res judicata in a second suit,
which pleads a different cause of action based on the same core
of underlying facts.").

II. EVEN IF DUPASSEUR DID NOT CONTROL,
FEDERAL LAW SHOULD PROVIDE THAT A
STATUTE-OF-LIMITATIONS DISMISSAL BY A
FEDERAL COURT GENERALLY DOES NOT BAR A
SUBSEQUENT ACTION IN A DIFFERENT STATE.

If this Cowl concludes, contrary to Dupasseur, that
federal law rather than state law governs the res judicata
effect of a limitations dismissal in diversity, the judgment
below should nonetheless be reversed.

A. Federal Law Would Borrow the Rule of the Forum
State.

Even if the res judicata effect of a diversity judgment is
governed by federal law, there is no important federal interest
dictating the use of a nationally uniform rule governing the
effect
29

of a statute~of4imitations dismissal As
this Cowl has done on other issues
involving federal litigation of state-law
claims where no statute or rule is explicitly controlling this
Court should hold that the federal common law rule here is one
that borrows the pertinent state-law resjudicata rule that would
have applied if the case had been brought in, or had remained in,
state Cowl. 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 I Restatement (Second) of Judgments
87 (1982)). See also Restatement (Second) of Conflict of Laws
95 cmt. h (1988 rev.) ("When a federal judgment adjudicates
claims under State law, State law, as a matter of federal law, may
determine the effects of the judgment ") 16
Borrowing state preclusion law in this context would retain
much of the practical value of the Dupasseur rule in
preventing the accident of a federal diversity forum from leading
to a markedly different result from the one that would have
obtained in state cowl. In so doing, this approach would help
promote the strong federal interest in preventing the inequitable
administration of the laws and in minimizing opportunities for
outcome~determinative forum-shopping '7


" It thus is no answer for Lockheed to assert that the res judicata effect of
the California judgment is a matter of "federal law." "[Kinowing whether
'federal law governs' ... does not much advance the ball. The issue in the
present case is whether the California rule of decision is to be applied..,
and if it is applied it is of only theoretical interest whether the basis for
that application is California's own sovereign power or federal adoption of
California's disposition" O'Melveny & Myers v. FDIC, 512 U.S. 79, 85
(1994) (holding that California law governs whether knowledge of
corporate officers is imputed to corporation in California state law claim
brought by
FDIC).

"See Semler v. Psychiatric Inst. of Washington D. C, Inc., 575 F.2d 922, 927-
928 & n.33 (CADC 1978) (Wilkey, J.) ("[TJhe principles ofErie. . . and





30
31
This Cowl has often directed the borrowing of state-law rules
in diversity cases. See Walker v. Armco Steel Corp., 446 U.S.
740 (1980); Klaxon Co. v. StentorElec. Mfg.
Co., 313 U.S. 487 (1941); see also Ferens, 494 U.S. at 532
(declining to fashion a federal common law of choice-of-law
rules, because "state conflicts-of-law rules already ensure that
appropriate laws will apply to diversity cases"). Of particular
relevance here, in defining the applicable statute of limitations
even for federal law claims where Congress has not addressed the
matter, this Cowl has generally directed the use of the statute-
of-limitations law of the forum state where compatible with
federal interests, despite the substantial variations among fora
caused by such borrowing.'8 If borrowing is appropriate in federal
question cases, afortiori it is warranted in the diversity context.
There is no evident basis for developing a uniform federal
common law rule to determine the res judicata effect of a
statute-of-limitations dismissal in a diversity case. A "significant
conflict" between a federal policy or interest and state law is
"normally a 'precondition"' before federal courts may "fashion



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 1, at least in the absence of an overriding federal
interest."); Shoup v. Bell & Howell Co., 872 F.2d 1178, 1185 (CA4
1989) (Murnaghan, J., dissenting) (citing Restatement (Second) of
Judgments 20 cmt. n)); cf ParkJane Hosiery Co. v. Shore, 439 U.S.
322, 331 (1979) (holding that federal courts should not allow use of
offensive, nonmutual collateral estoppel where "application of offensive
estoppel would be unfair to a defendant").

"Agency Holding Corp. v. Malley-Duff& Assocs., 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. International
Bhd of
Teamsters, 462 U.S. 151, 158-62 (1983); International Union v.
Hossier
Cardinal Corp., 383 U.S. 696, 703-04 (1966); Campbell v.
Haverhill, 155
U.S. 610,614-15(1895).
rules of common law," Atherton v. FDIC, 519 U.S. 213,
218 (1997) (citing O'Melveny & Myers v. FDIC, 512 U.S. 79,
87 (1994); Wallis v. Pan Am. Petro. Corp., 384
U.S. 63,68(1966)), and "cases in which judicial creation of a
special federal rule would be justified" are "'few and restricted."'
0 'Melveny & Myers, 512 U.S. at 87 (quoting Wheeldin v.
Wheeler, 373 U.S. 647, 651 (1963)). In the great majority of
cases in which no federal policy mandates the creation of
uniform, judge-made federal common law, the Cowl will "adopt
the readymade body of state law as the federal rule of decision
until Congress strikes a different accommodation." United States
v. Kimbell Foods, Inc., 440 U.S. 715, 740 (1979).
Application of California law in this case would present no
conflict, much less a "significant conflict," with a federal policy
or interest. The cases in which the Cowl has found such a
conflict all have involved federal causes of action or cases in
which federal entities were parties, and even in those
circunistances the Cowl generally borrows state law." This case
involves only private parties and no interference at all with the
uniform application of any federal cause of action. The need for
a uniform federal rule is further diminished by the state-law
nature of the claims at issue. Indeed, it is particularly important
in a system of federalism to take account of variations among
the



"Compare United States v. Little Lake Misere Land Co., 412 U.S. 580
(1973) (federal law supplants "aberrant" and "hostile" state law intended
to disadvantage federal policy regarding migratory birds) with, e.g.,
Atherton v. FDIC, 519 U.S. 213 (1997) (notwithstanding numerous
federal policies identified by FDIC, application of state standards to
conduct of officers and directors of federally insured depository
institution does not create sufficient conflict with federal law to justify
creation of general federal common law); 0 Melveny & Myers v. FDIC,
512 U.S. 79 (1994) (state law imputing knowledge to FDIC officials
does not conflict with federal banking policy sufficiently to justify
creation of federal common law); United States v. Kimbell Foods, 440 U.S.
715(1979) (asserted conflict between federal policy and state law
governing priority of federal liens not sufficient to justify general federal
common law).





32
states and to be solicitous of the collateral effects that a dismissal
might have upon a cause of action created by a sovereign state
such as Maryland.20
Lockheed's contention that a federal policy in favor of res
judicata can be gleaned implicitly from federal law, including from
the federal rules of civil procedure, is incorrect. See Part III, infra.
It is also erroneous in any event because any such "implicit"
policy is insufficient to justify creating federal common law in
favor of borrowing state law. Congress and the drafters of the
rules of civil procedure act "against the background of the total
corpus juris of the states," recognizing that interstices in federal
law will be filled by reference to state law. Atherton, 519 U.S. at
218. Accordingly, the failure of Congress and the drafters of the
federal rules of civil procedure to announce a clear federal rule of
preclusion is strong evidence that resort to state law is
appropriate.
Finally, adoption of a uniform federal rule would be
inappropriate because it would significantly undermine state
interests. E.g., Board of County Commr 's v. United States,
308 U.S. 343, 351 (1939) (when federal
policy leaves it to courts to determine rule of
decision, "[niothing seems to us more appropriate than [taking]
due regard for local institutions and local interests"). In a closely
analogous series of decisions


~ See, e.g., 0 'Melveny & Myers, 512 U.S. at 88 ("Uniformity of law
might facilitate the FDIC's nationwide litigation of these suits,
eliminating state-by-state research and reducing uncertainty but if the
avoidance of those ordinary consequences qualified as an identifiable
federal interest, we would be awash in 'federal common-law' rules."
(citing United St ates v. Yazell, 382
U.S. 341, 347 n.13 (1966))); International Union v. Hossier Cardinal
Corp., 383 U.S. 696,702 (1966) ("For the most part. statutes of
limitations come into play only when these processes have
already broken down. Lack of uniformity in this area is therefore
unlikely to frustrate in any important way the achievement of any
significant goal of [federal] labor policy."); see also United St ates v.
Kim bell Foodr, 440 U.S. 715,730(1979) (explaining that the
Court's precedents "reject generalized pleas for uniformity as
substitutes for concrete evidence" in determining whether a uniform
federal common law standard must be adopted).
33
establishing a "settled practice" of
borrowing a state statute of
limitations period so long as it does not
conflict with federal policy this Cowl has
emphasized that "federal law incorporates
the State's~d
Jugmen~ on the proper balance between the policies
of repose and the substantive policies of enforcement embodied in
the state cause of action." Wilson v. Garcia, 471 U.S. 261,
267, 271 (1985). Lockheed would abrogate precisely that
state interest in this case. See also Bauserman
v. Blunt, 147 U.S. 647, 652-5 3 (1893) ("No laws
of the several States have been more
steadfastly or more often recognized by this court, from the
beginning as rules of decision in the courts of the United States,
than statutes of limitations of actions, real and personal, as
enacted by the legislature of a State, and as construed by its
highest court.").2'

B. If This Court Sets a Unifom Rule, It Should Adopt
the Overwhl
eming Majority Rule that a Statute..of..
Limitations Dismissaj Does Not Preclude Suit in
Another Forum.

If this Cowl does not borrow state law, a second available
option would be simply to adopt, as a uniform federal common..
law 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 forujn with a longer limitations period
(at least so long as the rule of the rendering jurisdiction bars only
a remedy in that jurisdic~io~'5 courts, and not the right itself) This
is the rule adopted in the Restatement (Second) of


21 The state interests raised by the statute of limitations cases also
were considerably less substantial than here because the "borrowed"
limitations were merely "analogous" to the federal claim in question. In
this case, by contrast, the provision of state law to be borrowed
California's rule that a limitations dismissel does not bar an action
in a different jurisdict where suit is timely without question is
directly on point and was adopted to govern Precisely a case such as
this one.





34

the Conflict of Laws 142(2) & cmt. g, 143, and it is by far
the majority rule. The leading federal cowl opinion articulating
this traditional rule is Justice Story's opinion in United States v.
Donnally, 33 U.S. (8 Pet.) 361, 370 (1834). This rule has
produced "the general conclusion that dismissal on limitations
grounds merely bars the remedy in the first system of cowls, 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 also Townsendv.
Jemison, 50 U.S. (9 Cranch) 407, 413 (1850) ("The rule
inthe 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."); Union Nat '1 Bank v. Lamb,
337 U.S. 38,46(1949) (Frankfurter, J., dissenting) ("[W]here the
enforcement ofajudgment by State A is sought in State B, which
has a longer limitation period than State A, State B is plainly free
to enter its own judgment upon the basis of State A's original
judgment, even though that judgment would no longer be
enforceable in State A."); Sun Oil Co. v. Wortman,
486 U.S. 717, 722-23, 726 (1988) (noting long history of the
view that the bar of the statute of limitations does not prevent
subsequent suit in another jurisdiction).

III. RULE 41(B) DOES NOT REQUIRE A CONTRARY
RESULT.

A. Rule 41(b) Should Not be Read as Deciding the
Issue of the Preclusive Effect to Which Federal
Diversity Judgments Are Entitled.

The court below rested its decision on Fed. R. Civ. P.41
(1,). But the issue of the res judicata effect of a federal
diversity judgment is not a question bound up in the particular
procedures that a federal cowl uses in deciding cases. It is
instead a matter lying outside the bounds of procedure. The
question cannot be answered by simple reference to Fed. R.
Civ. P. 41(b).
The meaning and applicability of Rule 41(b) in this
context
35
has been analyzed by esteemed commentators, including Wright
Miller, and Cooper, who, after an in-depth analysis of the very
problem presented here, conclude:

As complex as these questions of limitations and preclusion
are, one clear proposition can be advanced. Answers canilot
be found in the provision of Civil Rule 41(b).... Although
some decisions have suggested that Rule 41(b) does provide
an answer, the questions are too important to be resolved in
this offhand manner. Here as elsewhere, Rule 41(b) need
mean only that the dismissal precludes relitigation of the
same limitations issues in the same cOwl. Any greater effect
should depend on independent analysis.

18 Wright & Miller, supra, 4441, at 372-73. Numerous
other scholars share the same view. See Burbank, note 6, supra at
782-83 ("[T]he Rules Enabling Act does not authorize Federal
Rules of preclusion, and the rulemakers, with few exceptions,
have not sought to state them. ... [Piroperly viewed, Rule 41(b)
merely states what other sources of federal law, of a nationally
binding character, have the power to determine; it thus provides
fair notice to litigants. Federal law standards are necessary to
determine when a federal judgment can preclude subsequent
litigation, whatever law governs the preclusive effects of that
judgment.~~)n


22 Lilly, supra note 6 at 320-21 & n. 113 (Federal Rules of Civil
Procedure

"probably" do not "operate directly to dictate their res judicata
consequences in other courts" and "under one view, could not,
without running afoul of the Enabling Act"); Stuart D. Smith,
Note, Erie and the Preclusive Effect of Federal Divers itj. .Iudgm t 85
COLUM. L. REv. 1505, 1524 (1985) ("The initial diversityjudgment is
entitled to the same preclusive effect that would be given to a
judgment of a state court in its Jurisdiction"); Allan R. Stein, Erie
and Court Access, 100 YALE L.J. 1935, 1937 n.l 1 (1991) ("a
federal dismissal on the merits of claims cognizable in state court
would appear inconsistent with the basic obligation to apply state
substantive law").





36
37
The text of Rule 41(b) is terse and refers merely to "an
adjudication upon the merits." The significance of a dismissal is
detennined not by the use of those few words but rather by the
considerations of federalism and full faith and credit that are at
stake. Indeed, the phrase "upon the merits" is now considered
unhelpful and is not used in the Second Restatement of
Judgments "because of its possibly misleading connotations."
Restatement (Second) of Judgments 19, cmt. a (1982). See
also Stephen C. Yeazell, CIvIL PROCEDURE 828 (5th ed.
2000) ("This phrase conceals more than it explains, because it
entirely begs the real question: For what reasons should we
attach preclusive effect to a judgment?").
A further indication that Rule 41(b) does not answer the
preclusion question raised here is the presence of the verb
"operates" in the text of the Rule. The question presented here
is: where does a dismissal subject to Rule 41(b) "operate" as
"an adjudication upon the merits"? The answer cannot be found
in Rule 4 1(b). Indeed, it would be odd to construe Rule 41(b) as
supplying that answer for the state courts in the sense of
deciding the preclusive effect that a state cowl is required to give
to a federal diversity judgment because, by their very terms, the
Federal Rules apply only to the federal courts. Rule 1 of
the Federal Rules states: "These rules govern the procedure in
the United States district courts.. . ." See also FRCP 82 ("These
rules shall not be construed to extend or limit the jurisdiction of
the federal courts."). The Rules Enabling Act, 28 U.S.C.
2072, confers the power to make federal rules of practice "for
cases in the United States district courts (including proceedings
before magistrates thereof) and courts of appeals," which rules
"shall not abridge, enlarge or modify any substantive right." No
federal decision has ever required a state court to apply the
Federal Rules of Civil Procedure. E.g., Rader v.
Baltimore & O.R. Co., 108 F.2d 980,986 (CA7),
cert. denied, 309 U.S. 682 (1940) ("It is obvious that
the rules can only have application to proceedings in the Courts
of the United States, and can not be applied to the practice or
procedure in State Courts, nor affect the rights of
parties in such Cowls."); Nealey v. Transportacion Marii'i,na
Mexicana SA., 662 F.2d 1275, 1279 (CA9 1980) ("Rule 41(b)
cannot be invoked to assist the state judiciary in managing its
business."j)23
A dismissal "upon the merits" (or as the California federal
cowl put it, "with prejudice"), in other words, is entitled to
whatever preclusive effect it has under the law governing that
effect. The question of the claim preclusive effect of a statute-
of-limitations dismissal in an action in another jurisdiction is
determined not by Rule 41(b) but rather by what Wright &
Miller and the other noted commentators describe as a
necessarily complex and sophisticated analysis. The question is
not issue vs. claim preclusion, but rather the proper scope of
claim preclusion
in particular, its impact on a subsequent action in another
forum. Thus, the situation here is very much like a case raising a
question of the applicability of the mutuality rule when a
dismissal has occurred "on the merits." Lockheed concedes that
in that instance the question of mutuality vel non is not
answered by Rule 41(b). See BIO 14.
Rule 41(b) should not, and need not, be read to decide this
important and difficult issue of federalism and full faith and
credit. This Cowl has suggested that the Federal Rules of Civil



Although Rule 41(b) has been applied in situations where there have
been successivefederal court filings, here, of course, the second suit
was filed in Maryland state court. Reinkev. Boden, 45 F.3d 166, 171
(CA7), cert. denied, 516 U.S. 817(1995) ("Whatever might be the merit
of this approach [to Rule
41(b)] in cases that involve successive suits in the federal courts and
there has been serious criticism the rationale of these decisions cannot
control our case. Unlike any of these cases, we do not have before us two
successive federal suits. This difference is not a formalistic one. An
intrasystem use of res judicata for dismissals on the ground of the
expiration of a statute of limitations promotes judicial economy within
that system... . In the context of the intersystem use ofresiudicata,
however, the intent of the first forum to save the resources of the second
calmot be so readily presumed. The first forum does not share the same
interest in restricting the scope of its judgment because any subsequent
suit will take place in the fonun of another system.").





38
39
Procedure do not cover preclusion. See Heck v. Humphrey, 512 U.S.
477, 488 n.9 (1994) ("The federal rules on the subject of issue
and claim preclusion.., are 'almost entirely judge made."' (quoting
P. Bator, et aL, HART AND WECHSLER'S THE FEDERAL
COURTS AND THE FEDERAL SYSTEM 1598 (3d ed. 1988)).
Although in Hanna this Court held that the outcome-
determinative test of Guaranty Trust was not to be used
to judge the validity of a Federal Rule, Hanna also opined that
"in measuring a Federal Rule against the standards contained in
the Enabling Act and the Constitution, [a court] need not wholly
blind itself to the degree to which the Rule makes the character
and result of the federal litigation stray from the course it would
follow in state co~... ." 380 U.S. at 473. The application of
federal preclusion law may well make a dramatic difference to
the course of the litigation, as this case illustrates, for variations
between preclusion rules are "rarely nonsubstantial or trivial."
Stuart D. Smith, Note, Erie and the Preclusive Effect of Federal
Diversity Judgments, 85 CoLUM. L. REv. 1505,
1513 (1985).
Similarly, in Byrd v. Blue Ridge Rural Elec.
Coop., 356 U.S. 525, 536 (1958), this Court indicated that
a federal court should apply a state rule if it is "bound up with the
definition of the rights and obligations of the parties." Here,
preclusion law is intertwined with the parties' rights and
obligations under the California statute of limitations. California
has deliberately provided that a statute-of-limitations dismissal
does not preclude suit in another state with a longer limitations
period.
Hence, this Court should follow the established practice of
"interpret[ing] the Federal Rules. . . with sensitivity to important
state interests and regulatory policies" and "to avoid conflict
with important state regulatory policies." Gasperini v. Center for
Humanities, Inc., 518 U.S. 415, 428 n. 7, 438 n.22
(1996). In Walker v. Armco Steel Corp., 446 U.S.
740, 750-52 (1980), for example, this Cowl reaffirmed the
decision in Ragan v. Merchants Transfer & Warehouse Co.,
337 U.S. 530(1949), that state law rather than Rule 3
determines when a diversity action commences for the purposes
of tolling the state statute of
limitations. In Palmer v. Hoffman, 318 U.S. 109, 117 (1943), this
Cowl held that Federal Rule 8(c) does not make contributory
negligence an affirmative defense, but relates only to the manner
of pleading. "The question of the burden of establishing
contnbutory negligence is a question of local law which federal
cowls in diversity of citizenship cases must apply." Id at 117.
Moreover, stretching Rule 41(b) to cover the preclusion
issue presented by this case would not bring the simplicity and
uniformity that Lockheed claims. "[T]he use and application of
the phrase 'on the merits' has been imprecise at best." Bans v.
Sulpicio Lines, 74 F.3d 567, 570 (CAS I 996),judgment
affirmed by an equally divided court, 101 F.3d 367 (CAS 1996),
cert. denied, 520 U.S. 1181(1997). Even one of Lockheed's own
counsel has acknowledged that the words "on the merits" cannot
be taken literally." Martin H. Redish, et al., CIVIL
PROCEDURE: A MODERN APPROACH 1140-41 (3d ed. 2000).
Thus, cowls interpreting Rule 41(b) dismissals are frequently
required to engage in substantial inquiry to determine the
preclusive effect of the judgmentA'



E.g., In re Casse, 198 F.3d 327, 333 (CA2 1999) ("The Order does not
say with prejudice to what, although it could have done so, viz, 'with
prejudice to any further filings underthe Bankruptcy Code,' or 'with
prejudice to any further filings under Chapter 11.' Accordingly 'with
prejudice' may be regarded as ambiguous, as at least one other circuit has
found when the phrase is used in a bankruptcy court's order." (citing
Colonial Auto Ctr. v. Tomlin, 105 F.3d 933,940 (CA4 1997)); Kulinski v.
MedtronicBio..Medi~ Inc., 108 F.3d 904,909 (CA8 1997) (dismissal for
lack ofjurisdiction "with prejudice" does not operate as an adjudication on
the merits because, despite the label, the ruling did not reach the merits);
Reinke v. Boden, 45 F.3d 166, 170-71 (CA7), cert. denied, 516 U.S. 817
(1995) (Minnesota rule stating that judgment was "on the merits" is not
claim preclusive where the dismissal was on limitations grounds); Brye v.
Brakebush, 32 F.3d 1179, 1185 & n.7 (CA7 1994) ("where doubt exists
regarding the finality of a prior order of dismissal, the court may look
beyond the words 'with prejudice' to determine if the dismissal was meant
to be conclusive. . . . [Tb properly determine the preclusive effect of a
priorjudgment, the court not only may, but 'must inspect a judgment
pleaded in bar, and if necessary explore the record, to ascertain





40
41
Indeed, far from achieving uniformity, Lockheed's proposed
approach would only breed uncertainty, contrary to the
principles of sound judicial administration and consistency that
underlie the rules of civil procedure and the doctrine of res
judicata. Lockheed wrongly assumes that Rule 41(b) establishes a
blanket rule of preclusion, such that it renders all limitations
dismissals in diversity res judicata. In reality, as the text of Rule
4 1(b) makes clear and as this Court held in Costello v. United
States, 365 U.S. 265 (1961), dismissals under the Rule "operate
as adjudications on the merits unless the court
specifies otherwise." 365 U.S. at 285 (emphasis
added). The rule thus is nothing more than a default provision
addressing "non-speciI~ring orders. . . of uncertain meaning."
Weissenger v. United States, 423 F.2d 795, 799
(CAS 1970) (en banc) (citing Costello).25 Accordingly,
were this Cowl to adopt Lockheed's view that Rule 4 1(b)
governs the preclusive effect of federal judgments of dismissal,
it would leave district cowls entirely free to deprive any
dismissal order of res judicata effect simply by noting that the
dismissal is "without prejudice." Indeed, for district cowls located
in jurisdictions that follow the common law, there is every
reason to believe that federal district judges would follow the
state rule in diversity cases and provide that such dismissals are
without



what was determined by it."'); D 'Angelo v. City of New York, 929 F.
Supp. 129, 135 (S.D.N.Y. 1996) ("Even where a dismissal is
specifically 'on the merits' or 'with prejudice,' the circumstances must
warrant barring the litigant from further pursuit of his claim in order for
these phrases to be given preclusive effect.").

~ That Rule 41(b) is merely a default rule is reinforced by Rule 41(a),
which sets forth a similar default standard with an exception that
expressly is withdrawn from the district judge's discretion. See FRCP
41(aXl) ("Unless otherwise stated in the notice of dismissal or
stipulation, the dismissal is without prejudice, exceot that a notice of
dismissal operates an adjudication upon the merits when filed by a
plaintiff who has once dismissed. . . an action based on or including
the same claim." (emphases added)); see also FRCP 41 (aX2) ("Unless
otherwise specified in the order, a dismissal under this paragraph is
without prejudice." (emphasis added)).
prejudice.26 Cf Justice Stone to Professor Frankfwler, quoted
in C. Miller, THE SUPREME COURT AND THE USES OF
HISTORY 13 (1969) ("I can hardly see the use of writing judicial
Opinions unless they are to embody methods of analysis and of
exposition which will serve the profession as a guide to the
decision of future cases. If they are not better than an excursion
ticket, good for this day and trip only, they do not serve even
as protective coloration for the writer of the Opinion and would
much better be left unsaid.").
The detrimental consequences that would follow from
Lockheed's reading of Rule 41(b) are substantial. That rule
applies to virtually all dismissals. Lockheed thus would grant
district judges uncabined discretion to determine the resjudicata
effect of their ownjudgments not only for limitations dismissals
in diversity cases but for all dismissals entered on any
jurisdictional basis, whether diversity, federal question, or
supplemental jurisdiction. As Lockheed acknowledges: "Under
Rule 41(b), it is the rendering cowl that has the authority to
determine the preclusive effect of its own statute of limitations
dismissal (as well as all other dismissals not spec!fically
excepted from the scope of the rule)." BIO 18-19 (emphasis



2~ In this very case, the California federal district court apparently
intended that the dismissal merely prevent repleading and refiling of a
complaint in California and not preclude the subsequent Maryland action.
Although the court stated that its views were dicta and should not be
cited to the Maryland courts (App. 71 a n. 17), the California district
court explained in refusing to enjoin the Maryland action that its prior
decision had rested on the California statute of limitations and "did not
reach the substantive merits of Plaintiff's tort claims." App. 71a. The
court opined that it would not bar "another proper forum" from
"afford[ing] plaintiff another opportunity to fully litigate the merits of its
causes of action" if that forum would not apply "a statutory or res
judicata bar." Id In fact, the district court opined that "it is not obvious
to this Court that res judicata applies to bar Plaintiff's action in Maryland
state court." Id at 7 Ia n. 17. Thus, the facts in this case give rise to an
inference that the court's orders meet Rule 41 (b)'s "unless the court
otherwise specifies" exception.





42

omitted and added)." The only dismissals that would be exempted
are those expressly denominated "on the merits" in the rules of
civil procedure themselves or that are expressly exempted in Rule
41(b) itself (i.e., "a dismissal for lack of jurisdiction, for improper
venue, or for failure to join a party under Rule 19").
It simply makes no sense to award district judges such
discretion through the back door of Rule 4 1(b), as is plain from
the fact that Lockheed's position would, ironically, limit the
application of res judicata in those circumstances where this Cowl
(as a matter of federal law governing federal claims) and states (as
a matter of state law governing state claims) have determined
that res judicata should apply. To take the simplest example,
some states (although not California) agree with Lockheed that a
statute-of-limitations dismissal should be res judicata in an action
in another forum. But on Lockheed's view, a federal district
court's dismissal under that state's law might or might not be
res judicata, depending on whether the district cowl



~' Lockheed's position in this regard could not be clearer. See BIO 4-5
(if the district court had "speciflied] that the limitations
dismissal was not on the merits [that] would mean that under
the terms of Rule 41(b), it would not be treated as a merits
adjudication with res judicata effect" (emphasis in original)); id II
("Under Hanna, Rule 41(b) and not state law properly applied
when the district court ruled that its limitations dismissal was
'with prejudice' and 'on the merits,' instead of specifying that its order
should have no res judicata effect."); id 16 (under Rule 41(b) "any
other dismissal is 'on the merits' unless otherwise expressly provided"
and in this case the district court did not "specify something less than
claim preclusive effect"). Courts following Lockheed's view agree. PRC
Harris, Inc. v. Boeing Co., 700 F.2d 894, 896 (CA2), cert. denied,
464 U.S. 936 (1983) ("It is clear that if, at the time of entry, the
Washington judgment had been denominated 'without prejudice,'
Rule 41(b) would have been inapplicable, and Harris could legitimately
have reasserted its allegations in another jurisdiction."); Weissengerv.
United States, 423 F.2d 795,799 (CA5 1970) (en banc) (quoted in the
text); Sack v. Low, 478 F.2d 360, 364 (CA2 1973) (Friendly,
C.J.) (under Rule 41(b) "the District Judge may specify that his
order be without prejudice").
43
elects to denominate the dismissal as "without prejudice" Because
Rule 41(b) governs virtually all dismissals, Lockheed would also
grant district judges the same discretion with respect to a federal
cowl's dismissal of a federal antitn~st suit not only on limitations
grounds but on any number of other bases. The preclusive effect
of such a judgment would reside within the discretion of the trial
judge, a holding that conflicts directly with this Court's
determination that merits dismissals on federal claims are res
judicata without regard to discretionary considerations Federated
Dept. Stores v. Moitie, 452 U.S. 394, 398 (1981) ("There is little to
be added to the doctrine of res judicata as developed in the case
law of this Cowl. A final judgment on the merits of an action
precludes the parties or their privies from relitigating issues that
were or could have been raised in that action." (citing
Commissioner v. Sunnen 333 U.S. 591, 597 (1948);
Cromwell v. County of Sac, 94 U.S. 351, 352-
353 (1877))).
There simply is no basis for displacing the clear and settled
rules of res judicata and preclusion adopted by California and
Maryland (and the forty~eight other states) in favor of such a
policy (if it can be called that) of substantial indeterminacy,
thereby depriving litigants of any way of knowing ex ante the res
judicata effect that will attend the dismissal of almost any action.
To the contrary, such a ruling would conflict with this Cowl's
repeated holding that res judicata, when applicable, is virtually a
per se rule, not amenable to loose discretionary determinations
by the judiciary "'Simple justice' is achieved when a complex body
of law developed over a period of years is evenhandedly applied.
The doctrine of res judicata serves vital public interests beyond
any individual judge's ad hoc determination of the equities in a
particular case." Moitie, 452 U.S. at 401; see also United States v.
United States Smelting Refining & Mining Co., 339 U.S. 186, 199
(1950) (distinguishing the "uniform rule" of resjudicata from the
"discretionary rule of practice" of the law of the case doctrine);
Wong Doo v. United States, 265 U.S. 239, 241 (1924) (describing
resjudicata as an "inflexible doctrine");





44 45


Southern Ry. Co. v. Clvi, 260 U.S. 316, 319
(1922) (distinguishing law of the case, which "directs
discretion," from res judicata, which "compels judgment").
By itself, this difference in ~hamcter between Rule 41(b)
and the nature of res judicata reinforces the conclusion that
Rule 41(b) was not intended to create a federal law of
preclusion. It is no answer to say that district judges would not
necessarily have unfettered discretion in determining whether
to give their dismissals res judicata effect but instead could be
guided by principles of federal law. At the very least,
numerous disputes would arise on appeal regarding whether the
district cowl should have exercised its discretion under Rule
41(b) to deviate from the applicable federal standard. But,
even more importantly, if Lockheed's position requires
looking beyond the text of Rule 41(b) to a background
principle of federal law, Lockheed cannot prevail. As we
explain at length in Part I, supra, that principle is supplied by
Dupasseur and its progeny, which hold that the res
judicata effect of a judgment is determined by the law of the
forum state. Lockheed cannot plausibly maintain that
Dupasseur has been supplanted by Rule 41(b) while
simultaneously arguing that Rule 41(b) requires reference to
precisely the background principles that Dupasseur has
long provided.
Alternatively, if this Court were to hold that Rule 41(b) as
a general matter addressed the preclusive effect of federal
judgments, this Court should nonetheless hold that the phrase
"upon the merits" must be determined under the law of the
state in which the federal diversity cowl sits. In this case,
California law provides that a statute-of-limitations dismissal
does not preclude a subsequent action in a different forum and
therefore is not "upon the merits."

B. Rule 4 1(b) Does Not Accord Preclusive
Effect
to a Statute-of-Limitations Dismissal.

Even if, as a general matter, Rule 4 1(b) governed the
preclusive effect of a dismissal order, Rule 41(b) does not
accord
preclusive effect to the type of dismissal entered here: a
dismissal under a statute of limitations. Controlling here is
Costello v. United States, 365 U.S. 265 (1961), which excluded
from the application of Rule 41(b) dismissals that are
preliminary rather than on the merits.
Costello involved two denaturalization complaints filed by
the government alleging that the petitioner had filed a
fraudulent petition for naturalization. This Cowl invalidated
the government's first complaint because it was not
accompanied by a statutorily required affidavit of good cause.
356 U.S. 256 (1958). On remand, the government argued that
the complaint should be dismissed "without prejudice," but the
district cowl ordered dismissal without further elaboration. See
365 U.S. at
268. The government then filed a second complaint and
prevailed on the merits. When the case returned to this Cowl
for the second time, the petitioner argued that the first
judgment of dismissal was res judicata as to the second
complaint, relying on precisely the theory that Lockheed
invokes in this case viz, "that the second denaturalization
proceeding was barred under Rule 4 1(b) of the Federal Rules
of Civil Procedure by the failure of the District Cowl on
remand of the first proceeding to specify that the dismissal
was 'without prejudice' to the filing of a new complaint." 365
U.S. at 268.
This Court rejected the petitioner's argument, holding
that the dismissal of the first complaint was "a dismissal 'for
lack of jurisdiction,' within the meaning of the exception
under Rule 41(b)." 365 U.S. at 285. The Cowl refused to read
into the language of Rule 41(b), which does not either in its
text or in the accompanying advisory notes evidence an
intent to change the law of res judicata, "a purpose to change"
the rule that governed res judicata before the adoption of the
Federal Rules of Civil Procedure the "common-law principle"
that "dismissal on a ground not going to merits was not
ordinarily a bar to a





46 47


subsequent action on the same claim." 365 U.S. at 285-86.~
To the contrary, "[aill of the dismissals enumerated in Rule
41(b) which operate as adjudications on the merits failure of
the plaintiff to prosecute, or to comply with the Rules of Civil
Procedure, or to comply with an order of the Court, or to
present evidence showing a right to the relief on the facts and
the law primarily involve situations in which the defendant
must incur the inconvenience of preparing to meet the merits
because there is no initial bar to the Court's reaching them."
Id. The Cowl therefore logically "confme[d]" the rule's
application "to those situations where the policy behind the
enumerated grounds is equally applicable," i.e., to cases in
which "the defendant has been put to the trouble of preparing
his defense because there was no initial bar to the Court's
reaching the merits." Id. at 287. In particular, the Court read
the "jurisdictional" exception to Rule 41(b) to encompass
those dismissals in which the district cowl did not exercise its
"jurisdiction" to reach the merits of the case, and rejected as
"misconceive [dl" the petitioner's contention that the
exception is limited "to the fundamental jurisdictional defects
which render a judgment void and subject to collateral attack,
such as lack of jurisdiction over the person or subject matter."
Id at 285.
Costello forecloses Lockheed's argument under Rule 41(b).
If a district cowl holds, as in this case, that a complaint has
been filed outside one state's statute of limitations, the court's
order of dismissal is "for lack ofjurisdiction" for the purposes
of Rule 41(b). The statute of limitations is manifestly "a
ground not
going to merits" and dismissal on that basis pretermits not
only the cowl's examination of the merits but also any burden
on the defendant to prepare a defense. See Costello, 365 U.S. at
285-
87. Just as important, neither the text of Rule 41(b) nor the
accompanying Advisory Committee Notes evidence an intent
to supplant the long-settled holding of Dupasseur and its
progeny that the effect of a statute-of-limitations dismissal is
governed by the forum state's law. See Part I, supra. Accord
Burgess v. Cohen, 593 F. Supp. 1122, 1124 (E.D. Va. 1984)
("Rule 41(b) was not intended to include a dismissal on
limitations grounds as an unqualified decision upon the merits"
(citing Costello)).
Since 1961, when Costello was decided, Rule 41 has been
amended five times. None of those amendments altered the
"jurisdictional" exception or otherwise called Costello into
question. Indeed, in 1963, Rule 41(b) was amended to add
dismissal "for lack of an indispensable party" to the list of
dismissals withdrawn from the district cowl's discretion.
Relevant for present purposes, the 1963 amendment's
Advisory Committee notes explain: "Such a dismissal does not
bar a new action, for it is based merely 'on a plaintiff's failure
to comply with a precondition requisite to the Cowl's going
forward to determine the merits of his substantive claim.' See
Costello v. UnitedStates, 365 U.S. 265,284-88 (1961); Mallow
v. Hinde, 12 Wheat. (25 U.S.) 193 (1827); Clark,
CODEPLEADING 602 (2d ed. 1947); Restatement of Judgments
49, comm. a, b (1942)."
The cited portion of the Restatement of Judgments, in
particular comment a to Section 49, indicates beyond a
shadow of a doubt that Rule 41(b) was not intended to cover a
statute-of-limitations dismissal:




Under the common law, the Court explained, "'there must
be at least one decision on a right between the parties before there can
be said to be a termination of the controversy, and before a judgment
can avail as a bar to a subsequent suit."' Costello, 365 U.S. at 285
(quoting Haldeman v. United States, 91 U.S. 584, 585-86 (1875)). If
the suitwas instead "'disposed of on any ground which did not go to
the merits of the action, the judgment rendered will prove no
bar to another suit."' Id at 286 (emphasis added) (quoting
Hughes v. United States 71 U.S. (4 Wall.) 232, 237 (1866)).


A judgment for the defendant may be based upon the ground
that the plaintiff is not entitled to maintain an action in the
State in which the judgment is rendered and not on a ground
which would be applicable to an action in other States. In such
a case the judgment is on the merits to the extent that it will
bar the plaintiff from maintaining





48 49


a further action in that State, but it is not on the merits so
far as actions in other States are concerned. Thus, if the
plaintiff brings an action to enforce a claim in one State
and the defendant sets up the defense
that the action is barred by the
Statute of Limitations in that State,
the plaintiff is precluded from thereafter maintaining an
action to enforce the claim in that State. He is not,
however, precluded from maintaining an action to enforce
the claim in another State if it is
not barred by the Statute of Limitations in
that State.

Restatement of Judgments 49, cmt. a (1942); see also
Western Coal & Mm. Corp. v. Jones, 167 P.2d 719,
724 (Cal. 1946) (quoting 49, cmt. a, at
length and setting forth California's
policy that "a judgment determining that an action is barred
by the statute of limitations is not one on the merits and
therefore is not res judicata" because "the running of the
statutory period does not extinguish the cause of action, but
merely bars the remedy").
The Advisory Committee's reference to comment a of
Section 49 of the Restatement in the context of Rule 41(b) is
highly revealing. "[lIn ascertaining [the Rules'] meaning the
construction given to them by the Committee is of weight."
Mississippi Pub. Corp. v. Murphree, 326 U.S. 438, 444 (1946);
see also Torres v. Qaldand Scavenger Corp., 487 U.S. 312, 316
(1988); Schiavone v. Fortune, 477 U.S. 21,
30 (1986). Accordingly, even if Rule 41(b) as a general
matter addressed the preclusive effect of federal judgments, it
would not accord preclusive effect to a
statute-of-limitations dismissal.29


Z~ Well-reasoned decisions of the courts of appeals have long
attested to the broad scope of Rule 41 (b)'s 'jurisdictional" provision in
light of Costello. Pack v. Yusuff No. 99-60283, 2000 U.S. App. LEXIS
15843, at *17 (CA5 July 10, 2000) (holding that dismissal with
prejudice should be limited to preliminary jurisdictional issue reached
by district court); In re Swine Flu Immunix. Prods. Liab. Litig., 880 F.2d
1439, 1441 (CADC 1989) (a dismissal
The facts of this case illustrate
perfectly that statute-of-limitations
dismissals fall squarely within Costello's
rationale and holding. In response to
Semtek's California state cowl complaint,
Lockheed immediately removed to federal
cowl and, within days, moved to dismiss
on the basis of the applicable California
statute of limitations. Not only was
Lockheed not put to the burden of preparing a defense
but the parties never conducted any discovery or
factual development at all. To the contrary,
as Lockheed explained in its brief in opposition, "Semtek's
own complaint and representations
established that California's two-year statute of
limitations had expired." BIO 2. It is equally clear
that, in granting Lockheed's motion, the
district court did not consider the
merits of Semtek's claims, as



may be 'jurisdictional"" in the sense that it prevents the court from
reaching the merits of the complaint, and not in the sense that it would
be no bar to that plaintiff bringing a later case"); Harris v. Amoco Prod
Co., 768 F.2d 669, 680 n. 18 (CAS 1985) ("Because of the
obvious effects that accompany a dismissal with prejudice, the
line between on-the-merits adjudications and those based on
jurisdictional defects must lean towards a broader definition of
'jurisdictional' under Rule 41(b)."); McCarney v. Ford Motor Co.,
657 F.2d 230, 233 (CA8 1981) (explaining that Costello holds that
"the term jurisdiction and rule 41(b) should not be interpreted in
a rigid and narrow manner" and therefore encompasses dismissals for
lack of standing); Knox v. Lichtenstein, 654 F.2d 19,22 (CA8 1981) ("If
the first suit was dismissed for defect of the pleadings, or parties,
or a misconception of the form of proceeding, or was disposed of
on any ground which did not go to the merits of the action, the
judgment rendered should not bar another suit."). Although some
courts disagree, those decisions have been the subject of appropriate
criticism. See Sack v. Low, 478 F.2d 360, 363 (CA2 1973) (Friendly,
C.J.) (criticizing Second Circuit authority according limitations
dismissal res judicata effect based on Second Circuit precedent from
1930s and the 1949 Restatement of Judgments, under which "dismissal
on that ground represented only a determination that the particular
remedy the plaintiff had sought to pursue was unavailable, leaving him
free to seek to enforce the right in another forum if the limitations of
that forum allowed," and which "is still the general rule"); see also
Criales v. American Airlines, 105 F.3d 93, 95 (CA2 I 997) (more
recent Second Circuit decision reading Costello broadly and collecting
cases in support of that view).





50
5I
Lockheed sought dismissal on only a single basis expiration
of the statute of limitations. See Koch v. Rodlin Enters., Inc.,
223 Cal. App.3d 1591, 1596 (App. 1990) ("Termination
of an action by a statute of limitations is
deemed a technical or procedural, rather
than a substantive, termination. 'Thus the purpose served by
dismissal on limitations grounds is in no way
dependent on nor reflective of the merits or lack thereof in the
underlying action.' (quoting Lackner v. LaCroix, 25 CaL3d
747, 75 1-52 (1979), and citing additional California
authorities) (emphasis added)).
Accordingly, under Costello, Rule 41(b) does not
deem the California district court's dismissal of Semtek's
complaint to be res judicata as to Semtek's Maryland action.
Instead, applying Dupasseur, the Maryland courts should have
looked to California law, which would hold that the
limitations dismissal does not bar another suit by Semtek in
another jurisdiction.

CONCLUSION
WALTER J. LACK
STEVEN C. SHUMAN
ENGSTROM, LIPSCOMB
& LACK
10100 Santa Monica Blvd.
Los Angeles, CA 90067
(310) 552-3800
THOMAS V. GIRARDI
JAMES KROPFF
GIRARDI & KEESE
1126 Wilshire Blvd.
Los Angeles, CA 90017
(213) 977-0211
ANDREW W. ZEPEDA
STEVEN L. HOGAN
LURIE & ZEPEDA
9107 Wilshire Blvd.
Beverly Hills, CA 90210
(310) 274-8700

Counsel for Petitioner

August 25, 2000
The judgment below should be reversed. Respectfully
submitted.




THOMAS C. GOLDSTEIN
4607 Asbury
Place, N.W.
Washington, D.C.
20016
(202) 237-7543


JONAThAN S. MASSEY
Counsel of
Record
KENNETH J.
CHESEBRO
3920 Northampton St.,
N.W.
Washington, D.C.
20015
(202) 686-0457





ADDENDUM

CONSTITUTIONAL AND STATUTORY
PROVISIONS AND RULE INVOLVED

The Full Faith and Credit Clause, Art. IV, 1, provides:

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, provides in relevant part:

... The records and judicial proceedings of any cowl of any ... State, Territory or Possession. . . shall have the same full faith and credit in every cowl
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.

The Rules of Decision Act, 28 U.S.C. 1652, provides:

The laws of the several states, except where the
Constitution or treaties of the United States or Acts of
Congress otherwise require or provide, shall be regarded
as rules of decision in civil actions in the cowls of the
United States, in cases where they apply.

Federal Rule of Civil Procedure 41(b) provides:

For failure of the plaintiff to prosecute or to comply with these rules or any order of cowl, a defendant may move for dismissal of an action or of
any claim against the defendant. Unless the cowl in its order for dismissal otherwise specifies, a dismissal underthis 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.

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