Semtek v. Lockheed Martin case brief
Posture: Starts in Cali state, removed to Cali Federal. Dismissed in cali due to statute of limitations. Second suit in Maryland, was asked that the federal question was removed to Cali, and cali denied requested relief. Case was remanded back to Maryland state and state court dismissed case. Appeals affirmed and SCOTUS reverses
Facts: Plaintiff sued in Cali state court, alleging breach of K and other torts. The case was removed to district court and dismissed with prejudice because it was barred by Cali statute of limitations which was affirmed. Plaintiff brought another suit against defendant in Maryland alleging the same causes of action which were not time barred in Maryland. Defendant asked Cali to enjoin the Maryland action which was also removed the case on federal question. Cali denied requested relief and Maryland remanded the case back. Defendant moved to dismiss which Maryland state granted based on the grounds of res judicata. It was appealed and affirmed because the dismissal by Cali federal court barred the Maryland complaint due to res judicata. The statute of limitations was the reason for its dismissal.
Reasoning: Defendant relies on Rule 41b which allows for a dismissal UNLESS it is otherwise specified by other rules, to operate as an adjudication on the merits. In other words, defendant argues that a decision based on statute of limitations in one state will be an adjudication on the MERITS of the case and bar that suit everywhere else. Which, if true, would mean that defendants would always want to remove case to federal court because the rule would bar absolutely every adjudication.
The court finds that this reasoning is kind of crazy and does not make any sense mostly because the statute of limitations cannot be a bar as to the merits of a case. Also, rule 41 was never used in any previous case so it would be weird to use the rule in this case. Statute of limitations just bars a remedy and not the claim or issue.
In short, federal common law governs the claim-preclusive effect of a dismissal by a federal court sitting in diversity. So in this case, they decided that a statute of limitations does not have claim-preclusive effect. The court looking at this decided that it is appropriate using a state’s preclusion laws instead of creating a whole new federal common law. The only thing this decision does is it says that there is a federal common law that states to use state issue preclusion laws.
There is no reason to give a time bar more power than a California state court would have given. The California law of claim preclusion would have said that the issue was not precluded due to the statute of limitations so case over.