Moore sued Cotton Exchange alleging federal anti-trust violation for refusing to allow Moore access to its ticker. Cotton Exchange counter-claimed under a state tort cause of action, admitting that it refused the ticker but alleging that Moore was using it anyways. District Court dismissed Moore's claim on the merits, but granted counter-claim relief.
Moore appealed, on the grounds that (1) once his claim was dismissed for lacking jurisdictional facts, counter-claim needed to have been dismissed too, (2) that the counter-claim did not arise out of any transaction which is the subject matter of the suit, and (3) that dismissal of his claim was not justified.
Court finds that (1) Moore's claim was dismissed on the merits, not for lacking jurisdiction, (2) that "transaction" has a flexible meaning that can consist of a series of occurrences, depending not so much upon their immediate connection but upon their logical relationship, and that counter-claim was indeed part of the same "transaction," and (3) that dismissal of Moore's claim was justified.
Because of these three findings, the District Court was within its discretion to retain jurisdiction over the counter-claim. Court held that counter-claims are to be judged by the "logical relationship" test, whether compulsory or permissive.
State of the law after Moore: If one party assert a FQJ claim, and other party counter-claims with a state-law claim, the court can exercise its discretion to hear the additional claim if the counter-claim arises from the same transaction or series of transactions such that they bear a logical relationship to one another, even if the FQJ-invoking claim is dismissed.