Citation. 531 U.S. 497 (2001)
Brief Fact Summary.
Petitioner sued Respondent in California state court and Maryland state court. Respondent removed both cases to federal court and moved to dismiss the lawsuits.
Synopsis of Rule of Law.
A federal court, hearing a case under diversity jurisdiction, applies the laws of the state within which the federal court is located.
Semtek International, Inc. (Petitioner) sued Lockheed Martin Corp.(Respondent) in California state court for breach of contract and various business torts. Respondent removed the case to the United States District Court for the Central District of California under diversity jurisdiction and then filed a motion to dismiss based on California’s statute of limitations. Petitioner also sued Respondent in Maryland state court for the same claim, and Respondent again removed the case to the United States District Court for the District of Maryland under federal question jurisdiction.
Is the Petitioner’s lawsuit in Maryland barred by res judicata based on the dismissal of Petitioner’s lawsuit in California?
No, Petitioner’s claim is not barred by res judicata. The decision of the Maryland Court of Special Appeals is reversed and remanded.
The Court determined that the Maryland Court of Special Appeals erred in dismissing Petitioner’s lawsuit on the grounds of res judicata. The California federal court’s decision on the merits and with prejudice was based on California’s statute of limitations. Under Rule 41(b), this decision is not automatically given the effect of res judicata. Instead, it prevented the Petitioner from refiling the case in California but had no preclusive effect against the Petitioner outside of California.