Semtek Intl. Inc. v. Lockheed Martin Corp.

Brief Fact Summary.

Semtek (plaintiff) sued Lockheed (defendant) for various breach of contract and business tort claims. The case was removed and Lockheed moved for dismissal. When the court dismissed the claim on its merits, Semtek refiled the suit in the state circuit court for Baltimore, Maryland. The court dismissed the claim.

Synopsis of Rule of Law.

The res judicata impact of a federal diversity judgment is, for example, would have a place with judgments of the state courts rendered under similar circumstances and may not be accorded any higher sanctity or effect.

Facts.

Semtek Intl. Inc. (Semtek) (plaintiff) sued Lockheed Martin Corp. (Lockheed) (defendant) in California state court for several breaches of the agreement and business tort claims. The case was removed on the premise of diversity citizenship to federal court, and Lockheed moved for dismissal on the premise that Semtek's cases were barred by California's two-year statute of limitations. At the point when the court dismissed the case on its merits, Semtek refiled the suit in the state circuit court for Baltimore, Maryland, under which the case would have been liable to a three-year statute of limitations. The court dismissed the case, nonetheless, because dismissal of the case on its merits in federal court prevented the case from being brought up in state court.

Issue.

Whether dismissal in federal court prevents the case from being brought up in state court?

Held.

No. The res judicata impact of a federal diversity judgment is, for example, would have a place with judgments of the state courts rendered under similar circumstances and may not be accorded any higher sanctity or effect.

Discussion.

Existing federal law does not resolve the issue and since state law is at issue, there is no requirement for a uniform federal rule. To hold generally would promote forum shopping and inequitable administration of laws since parties would try to remove cases to federal court under diversity jurisdiction for their claim-preclusive impact on cases acquired in state courts. Here, the case was dismissed in federal court simply because the California statute of limitations barred claims more than two years, but there is no federal interest in giving that limitation more effect (i.e. by holding it pertinent in Maryland) than California state courts themselves could force. This issue should not have been dismissed by the Maryland court and is remanded for further proceedings.