Federated Department Stores, Inc. v. Moitie
(1981)
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Rule of Law:
A final, unappealed judgment on the merits is conclusive and bars the same parties from relitigating the same claims, even if the judgment was based on a legal principle that is subsequently overruled in a separate case.
Facts:
- The United States brought an antitrust action against Federated Department Stores, Inc. and other department stores, alleging they agreed to fix the retail price of women's clothing in northern California.
- Following the government's suit, private plaintiffs, including Moitie and Brown, filed seven parallel civil actions against the same defendants based on the same price-fixing allegations.
- Moitie's original complaint was filed in state court, while Brown's was filed in federal court.
- After the initial lawsuits filed by Moitie and Brown were dismissed, the other five plaintiffs in the parallel actions chose to appeal the dismissal.
- The single counsel representing both Moitie and Brown made a calculated choice not to appeal the dismissal of their lawsuits.
- Instead of appealing, Moitie and Brown refiled their lawsuits in state court, making allegations similar to those in their original complaints.
Procedural Posture:
- Moitie filed an action in state court (Moitie I) and Brown filed in the U.S. District Court for the Northern District of California (Brown I).
- Moitie I was removed to the federal district court, and all parallel actions were consolidated before a single judge.
- The District Court dismissed all seven actions, including Moitie I and Brown I, on the merits for failure to allege an 'injury' under the Clayton Act.
- Plaintiffs in five of the parallel suits appealed the dismissal to the U.S. Court of Appeals for the Ninth Circuit.
- Moitie and Brown, the respondents, did not appeal. Instead, they refiled their actions (Moitie II and Brown II) in California state court, alleging only state-law claims.
- Federated Department Stores, the petitioners, removed Moitie II and Brown II back to federal district court.
- The District Court denied the respondents' motion to remand and dismissed Moitie II and Brown II on the grounds of res judicata.
- Respondents appealed this second dismissal to the Ninth Circuit.
- The Ninth Circuit Court of Appeals reversed the District Court's dismissal, creating a 'public policy' and 'simple justice' exception to res judicata.
- The petitioners sought, and the U.S. Supreme Court granted, a writ of certiorari.
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Issue:
Does the doctrine of res judicata bar a plaintiff from relitigating a claim after failing to appeal a final adverse judgment, even when other plaintiffs in similar actions successfully appeal and the legal precedent underlying the original judgment is later overruled?
Opinions:
Majority - Justice Rehnquist
Yes. The doctrine of res judicata bars a plaintiff from relitigating a claim after failing to appeal a final adverse judgment, as there is no general equitable exception based on 'simple justice' or the fact that co-plaintiffs successfully appealed. The Court reasoned that a final judgment on the merits precludes relitigation of issues that were or could have been raised, and this principle is not altered by the fact that the judgment may have been wrong or rested on a legal principle later overruled. The Court stressed the importance of finality, stating that public policy dictates an end to litigation. The plaintiffs made a 'calculated choice' to forgo their appeal and cannot now receive the benefits of a reversal procured by other parties.
Concurring - Justice Blackmun
Yes. While agreeing with the judgment, the concurrence would not foreclose the possibility that in some rare cases, res judicata might give way to overriding concerns of public policy or equity. However, this case is not one of them, as the plaintiffs made a 'deliberate tactical decision' not to appeal. Furthermore, the concurrence would have explicitly held that the dismissal of the first federal suit was res judicata as to the state-law claims as well, because those claims could and should have been raised in the initial federal action under pendent jurisdiction.
Dissenting - Justice Brennan
The Court should not have reached the res judicata question because the federal courts lacked removal jurisdiction over the second lawsuit. The dissent argued that the plaintiffs' second complaint was based entirely on state-law claims, and under the well-pleaded complaint rule, a plaintiff is the master of their claim. The 'artful pleading' doctrine does not apply because federal antitrust law does not completely preempt state law in this area. Therefore, the case should have been remanded to state court, rendering the res judicata analysis moot. The dissent also criticized the majority for not clarifying the res judicata effect on the state-law claims, thereby creating confusion.
Analysis:
This decision powerfully reaffirms the principle of finality in litigation by rejecting the judicial creation of equitable exceptions to the doctrine of res judicata. It establishes that a party's strategic decision not to appeal is binding and final, regardless of subsequent changes in the law or the success of other litigants. The ruling serves as a stark warning that the systemic interest in ending litigation outweighs the desire to correct individual hardships resulting from a party's own procedural choices, thereby discouraging 'wait-and-see' litigation tactics in multi-party actions.
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