Indiana Law Review


Applying Res Judicata in Antitrust Cases: Marrese

Provides an Approach, But Few Answers

I. Introduction

Federal courts have long been plagued by the question of what

effect, if any, a state court judgment' should have on a subsequent

federal antitrust suit^ involving the same parties^ and based on the

same operative facts/ Bringing a federal antitrust suit after a state

court action causes the confrontation of two strongly-held legal principles:^

'The issue of the effect of a state court judgment on a subsequent federal antitrust

suit has arisen not only when the original action was a state antitrust action, see Derish

V. San Mateo-Burlingame Board of Realtors, 724 F.2d 1347 (9th Cir. 1983); Nash County

Board of Education v. Biltmore Co., 640 F.2d 484 (4th Cir.) cert, denied, 454 U.S. 878

(1981); Straus v. American Publishers' Ass'n, 201 F. 306 (2d Cir. 1912), but also after

state contract actions, see Marrese v. American Academy of Orthopaedic Surgeons, 105
S. Ct. 1327 (1985); Hayes v. Solomon, 597 F.2d 958 (5th Cir. 1979), cert, denied, 444

U.S. 1078 (1980), and following a state unfair competition suit, see Cream Top Creamery
V. Dean Milk Co., 383 F.2d 358 (6th Cir. 1967). Additionally, the issue has been addressed

where a state defendant brought a federal antitrust suit after raising the federal antitrust

laws as a defense against a state contract action. See Lyons v. Westinghouse Electric

Corporation, 222 F.2d 184 (2d Cir.), cert, denied, 350 U.S. 825 (1955) (collateral estoppel).

federal antitrust actions have been brought under the Sherman Antitrust Act, 15

U.S.C. §§1-7 (1982), see Marrese v. American Academy of Orthopaedic Surgeons, 105

S. Ct. 1327 (1985), and Derish v. San Mateo-Burlingame Board of Realtors, 724 F.2d at

1348; under the Clayton Antitrust Act, 15 U.S.C. §§ 12, 13, 14-21, 22-27 (1982), see

Hayes v. Solomon, 597 F.2d 958, 960 (5th Cir. 1979); Cream Top Creamery v. Dean

Milk Co., 383 F.2d 358, 363 (6th Cir. 1967); and under the Robinson-Patman Act, 15

U.S.C. §§ 13-13b, 21a (1982), see Lyons v. Westinghouse Electric Corporation, 222 F.2d

184, 185 (2d Cir.), cert, denied, 350 U.S. 825 (1955) (action also based on Clayton Act).

For the purpose of analyzing the issue of res judicata, there is no significant

difference between the federal antitrust statutes cited. See infra note 8.

^The same issue is involved if "privies" of parties to the original action are parties

in the subsequent suit. See, e.g., Nash County Board of Education v. Biltmore Co., 640

F.2d 484 (4th Cir.), cert, denied, 454 U.S. 878 (1981).

*See, e.g., Marrese v. American Academy of Orthopaedic Surgeons, 726 F.2d 1150
(7th Cir. 1984), rev'd and remanded, 105 S. Ct. 1327 (1985); Derish v. San Mateo-

Burlingame Board of Realtors, 724 F.2d 1347 (9th Cir. 1983); Nash County Board of

Education v. Biltmore Co., 640 F.2d 484 (4th Cir.), cert, denied, 454 U.S. 878 (1981);

Hayes v. Solomon, 597 F.2d 958 (5th Cir. 1979), cert, denied, 444 U.S. 1078 (1980);

Cream Top Creamery v. Dean Milk Co., 383 F.2d 358 (6th Cir. 1967); Lyons v. West-
inghouse Electric Corporation, 222 F.2d 184 (2d Cir.), cert, denied, 350 U.S. 825 (1955);
Straus v. American Publishers' Ass'n, 201 F. 306 (2d Cir. 1912).

^Often the goals and underlying principles of the policies of res judicata and exclusive

federal jurisdiction are at odds, especially in the context of parallel antitrust regulation

by both the federal and state governments. See, e.g., Marrese v. American Academy of
Orthopaedic Surgeons, 726 F.2d 1150 (7th Cir. 1984), rev'd and remanded, 105 S. Ct.
1327 (1985); Derish v. San Mateo-Burhngame Board of Realtors, 724 F.2d 1347 (9th Cir.

1983); Nash County Board of Education v. Bihmore Co., 640 F.2d 484 (4th Cir.), cert,
denied, 454 U.S. 878 (1981); Hayes v. Solomon, 597 F.2d 958 (5th Cir. 1979), cert.

573



574 INDIANA LAW REVIEW [Vol. 18:573

res judicata^ and exclusive federal jurisdiction.^ Historically, the courts,

deeming the two principles to be mutually exclusive, have based their

denied, AAA U.S. 1078 (1980). See generally Rubin, Rethinking State Antitrust Enforcement,

26 U. Fla. L. Rev. 653 (1974); Note, The Res Judicata Effect of Prior State Court

Judgments in Sherman Act Suits: Exalting Substance Over Form, 51 Fordham L. Rev.
1374, 1374-75, nn.3-4 (1983).

Among the other areas in which res judicata and exclusive federal jurisdiction may
clash are cases involving patents, see, e.g., Becher v. Contoure Laboratories, Inc., 279

U.S. 388 (1929); bankruptcy, see, e.g.. Brown v. Felsen, 442 U.S. 127 (1979); In re

Houtman, 568 F.2d 651 (9th Cir. 1978); and securities regulation, see, e.g., Connelly v.

Balkwill, 174 F. Supp. 49 (N.D. Ohio 1959), aff'd per curiam, 279 F.2d 685 (6th Cir.

1960). See generally Note, Exclusive Federal Court Jurisdiction and State Judgment Finality
- The Dilemma Facing the Federal Courts, 10 Seton Hall L. Rev. 848 (1980); Note,

Res Judicata: Exclusive Federal Jurisdiction and the Effect of Prior State-Court Deter-

minations, 53 Va. L. Rev. 1360 (1967). See also Dickinson, Exclusive Federal Jurisdiction

and the Role of the States in Securities Regulation, 65 Iowa L. Rev. 1201 (1980); Note,

Res Judicata and Collateral Estoppel in Bankruptcy Discharge Proceedings, 37 Wash. &
Lee L. Rev. 281 (1980).

'^Res judicata, also known as "claim preclusion," provides that "a final judgment

on the merits bars further claims by parties or their privies based on the same cause of

action." Montana v. United States, 440 U.S. 147, 153 (1979). See also Kremer v. Chemical

Construction Corp., 456 U.S. 460-61, n.6 (1982). See generally 18 C. Wright, A. Miller

& E. Cooper, Federal Practice and Procedure § 4402 (1981).
The elements essential for the application of res judicata include: (1) a final judgment

on the merits in an earlier suit, (2) an identity of the cause of action in both suits, and

(3) an identity of the parties or their privies in both suits. Nash County Board of Education

V. Biltmore Co., 640 F.2d 484, 486 (4th Cir.), cert, denied, 454 U.S. 878 (1981).

The doctrine of res judicata is often confused with the doctrine of collateral estoppel,

which provides another means by which a prior suit can affect a current suit. Collateral

estoppel, also known as issue preclusion, "bars the relitigation of issues actually adjudicated,

and essential to the judgment, in a prior litigation between the same parties." Kaspar

Wire Works, Inc. v. Leco Engineering & Machine, Inc., 575 F.2d 530, 535-36 (5th Cir.
1978); see also Cromwell v. County of Sac, 94 U.S. 351, 352-53 (1876).

Like res judicata, collateral estoppel requires a prior suit between parties or privies

to the present suit and a final judgment on the merits in that suit. Unlike res judicata,

however, application of collateral estoppel does not require that the cause of action in

both suits be the same. The only requirements for collateral estoppel are that the issue

common to both suits actually was litigated in the first suit and that its adjudication was
essential to the judgment in the first action. See 18 C. Wright, A. Miller & E. Cooper,
Federal Practice and Procedure § 4402 (1981).

The purposes of the doctrine of res judicata are to promote fairness to the defendant,

to preserve judicial resources by bringing adjudication to a conclusion with reasonable

promptness, and to prevent inconsistent decisions in separate actions on the same claim.

See Derish v. San Mateo-Burlingame Board of Realtors, 724 F.2d 1347, 1350 (9th Cir.

1983); F. James & G. Hazard, Civil Procedure, § 11.2 at 531-32 (2d ed. 1977).
'Whereas res judicata seeks to promote judicial economy and consistency, exclusive

federal jurisdiction promotes the uniform national application of a law. Congress has

granted the federal courts exclusive jurisdiction to decide claims arising under certain

federal laws. See generally 18 C. Wright, A. Miller & E. Cooper, Federal Practice
AND Procedure § 4470 (1981).
One of the goals of this grant of exclusive federal jurisdiction is the uniform interpretation

of federal laws through review by judges who have expertise in administering the federal
laws and who have a sensitivity to the national concerns which the federal laws are
intended to address. F. James & G. Hazard, Civil Procedure, § 11.2 at 530 (2d ed.
1977).



1985] RES JUDICATA 575

decisions on their evaluation of whether a federal antitrust action,

considered to be within the exclusive jurisdiction of the federal courts,^

can constitute the same claim or cause of action^ as a state suit

brought in state court. '° Until recently, courts have generally asserted

that exclusive jurisdiction considerations precluded the possibility of

res judicata being applied." Since 1981, three courts of appeals have

held that applying res judicata is appropriate where doing so would

significantly compromise the underlying purposes of neither res judi-

cata nor exclusive federal jurisdiction. '^ In these instances, the two

policies, previously thought to be irreconcilable, were harmonized. In

contrast to the earlier suits'^ where exclusive federal jurisdiction con-

siderations generally prevailed, these recent appellate court decisions

have favored applying res judicata to preclude the federal suit.'"*

The Supreme Court reviewed the most recent of these cases.

In its review, the Supreme Court had the opportunity to establish

definitive standards to be applied uniformly by the lower courts in

determining when a federal antitrust suit following a state action should

^Unlike the statutes in several other areas of law (see supra note 5), the federal

antitrust statutes do not explicitly state that federal courts have exclusive jurisdiction over

federal antitrust actions. However, the United States Supreme Court has held that en-

forcement of federal antitrust laws is within the exclusive jurisdiction of the federal courts.

See, e.g.. General Investment Co. v. Lake Shore & Michigan Southern Ry. Co., 260 U.S.
261, 287 (1922); Blumenstock Brothers Advertising Agency v. Curtis Publishing Co., 252

U.S. 436, 440-41 (1920). See also State of Washington v. American League of Professional

Baseball Clubs, 460 F.2d 654, 658 (9th Cir. 1972).

^Res judicata is to be applied to preclude a subsequent action only where the same

claim was, or could have been, brought in a previous suit between the parties or their

privies. See Brown v. Felsen, 442 U.S. 127, 131 (1979).
'°The dilemma, neatly stated by one commentator, is that "[n]either legislative history

nor judicial pronouncement [indicates] whether Congress's grant of an exclusive remedy

[under the antitrust laws] rests upon a policy so strong as to immunize the federal courts

from the effect of state court judgments." Comment, Exclusive Federal Jurisdiction: The

Effect of State Court Findings, 8 Stan. L. Rev. 439, 447 (1956). But see infra note 121

and accompanying text.

''See, e.g., Hayes v. Solomon, 597 F.2d 958 (5th Cir. 1979), cert, denied, AAA U.S.

1078 (1980); Cream Top Creamery v. Dean Milk Co., 383 F.2d 358 (6th Cir. 1967); Lyons
V. Westinghouse Electric Corp., 222 F.2d 184 (2d Cir.), cert, denied, 350 U.S. 825 (1955);
Straus V. American Pubhshers' Ass'n, 201 F. 306 (2d Cir. 1912). See also infra notes 34-51

and accompanying text.

'^See Marrese v. American Academy of Orthopaedic Surgeons, 726 F.2d 1150 (7th
Cir. 1984), rev'd and remanded, 105 S. Ct. 1327 (1985); Derish v. San Mateo-Burlingame

Board of Realtors, 724 F.2d 1347 (9th Cir. 1983); Nash County Board of Education v.

Biltmore Co., 640 F.2d 484 (4th Cir.), cert, denied, 454 U.S. 878 (1981).

''See, e.g., Hayes v. Solomon, 597 F.2d 958 (5th Cir. 1979), cert, denied, AAA U.S.

1078 (1980); Cream Top Creamery v. Dean Milk Co., 383 F.2d 358 (6th Cir. 1967); Lyons
V. Westinghouse Electric Corp., 222 F.2d 184 (2d Cir.), cert, denied, 350 U.S. 825 (1955)
(collateral estoppel).

"^See Marrese v. American Academy of Orthopaedic Surgeons, 726 F.2d 1150 (7th
Cir. 1984), rev'd and remanded, 105 S. Ct. 1327 (1985); Derish v. San Mateo-Burlingame

Board of Realtors, 724 F.2d 1347 (9th Cir. 1983); Nash County Board of Education v.

Bihmore Co., 640 F.2d 484 (4th Cir.), cert, denied, ASA U.S. 878 (1981).



576 INDIANA LAW REVIEW [Vol. 18:573

be precluded. The Supreme Court adopted a test'^ based on the Full

Faith and Credit Statute,'^ an approach completely unlike those utilized

in any appellate court decision in the antitrust context.'^ Unfortunately,

the Court did not totally settle the issue because it failed to give guidance

on how to apply its test.'^ As a result, federal district courts can be ex-
pected to use methods and reach decisions as varied as those prior to

the Supreme Court pronouncement.

A review of the cases reveals the wide variety of factors, consid-
erations, and approaches used by the courts when confronted with the
issue of the preclusive effect of a state court judgment on a subsequent

federal antitrust suit. This Note will discuss the various historical ap-

proaches to this question, will analyze the Supreme Court's 1985 decision

on the issue, and will recommend an appropriate method of implementing
the Supreme Court's approach.

II. Historical Development

The courts' analyses in the early cases can be divided into three

categories. In Straus v. American Publishers' Association,^'^ the court

based its determination primarily on equitable considerations rather than

on a reasoned balancing of res judicata and exclusive federal jurisdiction

considerations, noting that the plaintiff's original choice to file the action

in state court should preclude him from bringing substantially the same

suit in the federal forum. ^^ In a second line of cases, Lyons v. West-

inghouse Electric Corporation,^^ Cream Top Creamery v. Dean Milk

'^Marrese v. American Academy of Orthopaedic Surgeons, 105 S. Ct. 1327 (1985).
See also infra note 121, and text accompanying notes 119-124.

'^28 U.S.C. § 1738 (1982) provides in pertinent part that authenticated Acts by state

legislatures or "records and judicial proceedings" of state courts: "shall have the same

full faith and credit in every court within the United States and its Territories and

Possessions as they have by law or usage in the courts of such State, Territory or Possession

from which they are taken." The full faith and credit statute requires, therefore, that

federal courts give preclusive effect to prior state court judgments. See generally Atwood.

State Court Judgments in Federal Litigation: Mapping the Contours of Full Faith and
Credit, 58 Ind. L.J. 59 (1982).

The full faith and credit statute should be distinguished from the Full Faith and

Credit Clause, article IV, section 1 of the United States Constitution, which states that

"Full Faith and Credit shall be given in each State to the public Acts, Records, and

Judicial Proceedings of every other State," and generally requires that state courts give

preclusive effect to the judgments of courts in other states.

'^While the circuit courts of appeals generally have approached the issue involved

in the seven principal cases analyzed {see cases cited supra note 4) as a confrontation

between exclusive federal jurisdiction and res judicata (or, as in Lyons, collateral estoppel),

these courts generally have given little, if any, attention to the full faith and credit statute,

28 U.S.C. § 1738.

"*See infra notes 131, 140-43 & 151-52 and accompanying text.
•'201 F. 306 (2d Cir. 1912).

^°See infra text accompanying notes 27-33.

^'222 F.2d 184 (2d Cir.), cert, denied, 350 U.S. 825 (1955).



1985] RES JUDICATA 577

Company, ^^ and Hayes v. Solomon, ^^ the courts found exclusive federal

jurisdiction considerations compelling. These courts reasoned that, be-

cause the state court could not adjudicate federal antitrust suits, the

claims in the two actions were different. Therefore, because res judicata

applied only where the same claim was involved in two actions, exclusive

federal jurisdiction required that the second suit not be precluded. Finally,

in Nash County Board of Education v. Biltmore Company, ^"^ Derish v.

San Mateo-Burlingame Board of Realtors, ^^ and Marrese v. American

Academy of Orthopaedic Surgeons, ^^ the courts determined that a state
claim could be equivalent to a federal antitrust action if the state and

federal statutes were similar enough in terms of damages, standard of

liability, and procedural safeguards. If the state and federal claims were

equivalent, these courts said, res judicata should apply to preclude the

federal suit.

A. Straus v. American Pubhshers' Association: A
Scout for the Proponents of Choice

The first case to address the res judicata question in the federal

antitrust context was decided in 1912. In Straus v. American Publishers'

Association,^^ Straus sued American Pubhshers' Association in the Supreme

Court of New York, alleging an illegal conspiracy by the publishers
comprising the Association.^^ Although the state court prohibited certain

activities of the Association and awarded damages to Straus, the court

order did not prohibit the Association from all the activities Straus had

alleged were illegal. ^^ While Straus was appealing this state court decision

to the United States Supreme Court, he brought suit in federal district

court against many of the same defendants alleging federal antitrust
violations. The federal district court held that res judicata precluded the

federal suit, and Straus appealed. ^^

The Second Circuit Court of Appeals applied res judicata principles

to bar the federal suit, based primarily on the fact that the plaintiff in

both suits originally had his choice of bringing suit in the state or federal

court. ^' Having elected to sue in state court, the plaintiff should not

^^383 F.2d 358 (6th Civ. 1967).

"597 F.2d 958 (5th Cir. 1979), cert, denied, AAA U.S. 1078 (1980).

^^640 F.2ci 484 (4th Cir.), cert, denied, 454 U.S. 878 (1981).
^'724 F.2d 1347 (9th Cir. 1983).

2^726 F.2d 1150 (7th Cir. 1984), rev'd and remanded, 105 S. Ct. 1327 (1985).
^^201 F. 306 (2d Cir. 1912).

^^Straus alleged that the publishers comprising the Association were illegally conspiring

to supply materials only to distributors who agreed to sell the materials at the suggested
retail price. Id. at 308.

^^The court order only prohibited the Association from interfering with Straus's

purchases of uncopyrighted materials, but did not extend to the Association withholding

copyrighted materials from Straus. Id.

""Id. at 309.

''Id. at 310.



578 INDIANA LAW REVIEW [Vol. 18:573

later be permitted to sue in federal court. ^^ The court dismissed as
unimportant the exclusive federal jurisdiction argument."

B. Proponents of Exclusive Federal Jurisdiction

The federal appeals courts' next opportunity to address the res

judicata claim in the federal antitrust context again fell to the Second

Circuit. That court, unconcerned with exclusive federal jurisdiction in

the Straus case decided forty-three years earlier, deemed this principle

important enough in Lyons v. Westinghouse Electric Corporation to

hold that the earher state suit did not preclude a federal action. ^"^ Although

the issue in Lyons involved collateral estoppel, the Second Circuit Court

of Appeals' decision that a state court's factual determinations in a prior

state antitrust suit had no effect on a subsequent federal antitrust action"

had a far-reaching impact on later courts' decisions to apply res judicata

to preclude a subsequent federal antitrust suit.^^ Although the court could

have distinguished Lyons from Straus, it did not do so and, some

commentators argue, overruled Straus?^

In the Lyons case, Westinghouse originally had sued Lyons in state

court for breach of contract. As a defense, Lyons alleged that West-
inghouse had violated state antitrust laws. The state trial court held for

Westinghouse, indicating that Lyons had failed to prove the antitrust

charges. While Lyons' appeal of the state action was pending, he sued

Westinghouse in federal court on federal antitrust charges. The federal

district court stayed the federal proceedings until disposition of the state

appeal. Westinghouse appealed the stay. The Second Circuit Court of
Appeals ordered the district court to proceed with the trial because the

state appeal could have no effect on the federal action. ^'^

In reaching its decision, the Lyons court indicated that collateral

estoppeP^ clearly did not apply because of the grant to the federal courts

of exclusive jurisdiction over federal antitrust actions. "^^ This rule applied,

""The fact that the judgment in the state court depended upon the state statutes

and that the complaint in this case is founded on the federal statute, which is not within

the jurisdiction of the state court, makes no difference," the unanimous court declared.

Id. at 310.

^'222 F.2d 184 (2d Cir.), cert, denied, 350 U.S. 825 (1955).

''Id. at 190.

''See, e.g., Hayes v. Solomon, 597 F.2d 958 (5th Cir. 1979), cert, denied, 444 U.S.

1078 (1980); Cream Top Creamery v. Dean Milk Co., 383 F.2d 358 (6th Cir. 1967).
'''See, e.g.. Note, The Res Judicata Effect of Prior State Court Judgments in Sherman

Act Suits: Exalting Substance Over Form, 51 Fordham L. Rev. 1374, 1382-83; Note, Res
Judicata: Exclusive Federal Jurisdiction and the Effect of Prior State Court Determinations,

53 Va. L. Rev. 1360, 1367 (1967).

''Lyons, 222 F.2d at 190.

''^See supra note 6.

^^222 F.2d at 189. Lyons involved the Clayton and Robinson-Patman acts rather

than the Sherman Act which was involved in Straus and in most post-Lyons res judicata

cases. See supra note 2.



1985] RES JUDICATA 579

the court stated, "at least on occasions, like those at bar, where the

putative estoppel includes the whole nexus of facts that makes up the

wrong. "^' *'[E]ffective and uniform" enforcement of federal antitrust

laws "would best be achieved by an untrammelled jurisdiction of the

federal courts," the court declared/^ In this case, it concluded that the

drawbacks inherent in holding two sets of trials—one state and one
federal—were more than offset by the benefits of allowing the federal
courts to exercise jurisdiction uninhibited by previous state court ruHngs."*^

The Sixth Circuit Court of Appeals continued to emphasize the

significance of exclusive federal jurisdiction determining the effect of a

prior state court action on a subsequent federal antitrust suit in Cream

Top Creamery v. Dean Milk Company. "^"^ Cream Top Creamery sued
Dean Milk Company in state court on a state unfair competition charge.
The suit was dismissed with prejudice, and Cream Top sued Dean in

federal court on federal antitrust charges. '^^ The Sixth Circuit Court of

Appeals, citing Lyons, pointed out that federal courts have exclusive

^'222 F.2d at 189. The holding by the Second Circuit Court of Appeals directly

conflicted with a 1929 United States Supreme Court ruling in Becher v. Contoure Lab-

oratories, Inc. 279 U.S. 388 (1929). In Becher, an inventor sued in state court on a state

contract action after his employee surreptitiously obtained a patent on an item invented

by the employer. The court imposed on the employee a constructive trust of the patent

in favor of the inventor. The employee subsequently sued the inventor in federal court

alleging patent infringement. Id. at 389-90. Although enforcement of patent laws was

within the exclusive jurisdiction of the federal courts, id. at 390, the Supreme Court held

that the employee was estopped to challenge the facts found in the state suit, even though

such estoppel effectively determined the outcome of the federal patent case. Id. at 391-

92. "That decrees validating or invalidating patents belong to the Courts of the United

States does not give sacrosanctity to facts that may be conclusive upon the question in
issue," the Court said. Id. at 391.

The Second Circuit, in a weak attempt to differentiate Becher from Lyons, asserted

that Becher dealt only with giving effect to specific "constituent facts," whereas Lyons

involved "the entire congeries of such facts, taken as a unit." Lyons, 222 F.2d at 188.

Estoppel should apply to the Becher facts, but not to those in Lyons, the Second Circuit

claimed. Id.

In a later case involving bankruptcy, an area within the exclusive jurisdiction of the

federal courts, the United States Supreme Court held that res judicata would not apply

to preclude an action in federal bankruptcy court following a state collection suit. Brown
V. Felsen, 442 U.S. 127, 138-39 (1979). The court noted in dicta, however, that "collateral

estoppel, in the absence of countervailing statutory policy, would bar relitigation of those

issues [decided in the previous state action] in bankruptcy court." Id. at 139, n.lO.

^^222 F.2d at 189.

"Vof. at 190. The court also acknowledged that the plaintiff in the federal suit had

been the defendant in the state suit. Id. at 189. Unlike the plaintiff in Straus, the federal

plaintiff in Lyons did not have the opportunity to choose the original forum for the

action. Id. Some commentators have argued that Judge Hand should have differentiated
Lyons from Straus on this basis and have criticized him for failing to do so. See, e.g..

Exalting Substance Over Form, supra note 37, at 1382-83; Prior State Court Determinations,

supra note 37, at 1367.

^^383 F.2d 358 (6th Cir. 1967).

''Id. at 360-61.



580 INDIANA LAW REVIEW [Vol. 18:573

jurisdiction over federal antitrust actions^^ and that the state court could

not have granted the rehef sought by Cream Top in the federal action/^
The second suit was not precluded because the state case ''did not and

could not have involved a claim under the federal anti-trust statutes"

and, therefore, "the dismissal with prejudice in the state action could

not have adjudicated Dean's alleged violations of these statutes. ""^^

In Hayes v. Solomon, "^^ the Fifth Circuit Court of Appeals agreed

that a decision in a state contract action did not preclude a subsequent

federal antitrust action under res judicata principles, and that res judicata

applied only to claims " 'then capable of recovery' in the first action. "^°

Res judicata did not apply because the state court could not have provided

the federal antitrust damages sought in the second action, the court

said.^^

C. Nash and Its Progeny—Res Judicata Wins the Battle
Cream Top Creamery and Hayes represented the state of the law

until 1981. In that year, the Fourth Circuit, in Nash County Board of
Education v. Biltmore Company,^^ held that a state antitrust action could

have a res judicata effect on a subsequent federal antitrust suit if the

two actions were based on the same fact situation and if the state and

federal antitrust laws were the same."

In Nash, the attorney general of North Carolina brought an antitrust

action in state court against Biltmore Company and eight other dairies,
alleging conspiracy to restrain price competition in violation of state law

and seeking injunctive rehef and treble damages. A consent judgment
was issued. Shortly thereafter, the Nash County Board of Education,

in its own behalf and seeking to represent a class including those school
districts that had purchased dairy products from the offending companies,

sued in federal court the same dairies as had been named in the attorney

"^Id. at 363. The court went on to quote the Second Circuit Court of Appeals'

decision in International Railways of Central America v. United Fruit Co., 373 F.2d 408,

419 (2d Cir.), cert, denied, 387 U.S. 921 (1967), which stated that "the utmost effect the

prior judgment could have had . . . would . . . have been as an estoppel on questions

of fact actually litigated." Cream Top Creamery, 383 F.2d at 363. The estoppel did not

apply here because "there were no findings of fact and no adjudication of the case on

its merits in the State Court action." Id.

^•^383 F.2d at 363.

'Hd.

'^591 F.2d 958 (5th Cir. 1979), cert, denied, 444 U.S. 1078 (1980).

'°/<i. at 984 (quoting United States v. Pan-American Petroleum Co., 55 F.2d 753,
782 (9th Cir.), cert, denied, 287 U.S. 612 (1932)).

^'597 F.2d at 984. The court further stated that the state trial court lacked jurisdiction

over the federal antitrust claim and, citing International Railways, the Hayes court stated:

"A plaintiff's successfully suing in a state court on a claim that might have been but
was not made the basis for state or federal antitrust relief does not bar a subsequent
federal antitrust suit." 597 F.2d at 984.

"640 F.2d 484 (4th Cir.), cert, denied, 454 U.S. 878 (1981).

"Compare supra notes 27-33 and accompanying text.



1985] RES JUDICATA 581

general's state suit. Nash sought only treble damages. The district court

granted the defendants' motion for summary judgment, ruling that the

federal suit was barred under the doctrine of res judicata. The Board

appealed. ^^

Using a three-element test of "(1) a final judgment on the merits

in an earlier suit; (2) an identity of the cause of action in both the

earher and the later suit, and (3) an identity of parties or their privies

in the two suits, "^^ the Fourth Circuit Court of Appeals determined

that res judicata applied to preclude the federal suit.^^ The court first

cited authority indicating that a consent judgment constituted a final

judgment on the merits," thus satisfying the first element. ^^ The third

requirement was also met because in the state suit the attorney general

had represented the Nash County Board of Education and other school

districts which purchased milk products from the defendants. ^^

The primary issue in this case, as in most similar federal antitrust

suits, was whether the federal antitrust count constituted the same "cause

of action" or claim as the state suit. The Nash court noted that the

term "cause of action" has no standard apphcation and "depend[s]

largely on the facts of each case .... [I]n some cases, it has depended

for its application on whether the facts in the two cases are the same;

in other cases, on whether the same primary right is asserted. "^° Here,

the court said, regardless of which test was used, the causes of action

in both suits were the same.

Although courts in previous suits had held that a federal antitrust

suit constituted a different cause of action from a state antitrust action,^'

the Nash court asserted that "the identity of two actions, as intimately

tied together as these two, [would] not be destroyed in the res judicata

context simply because the two suits are based on different statutes. "^^

The court pointed out that, except for the federal interstate commerce

requirement, the two statutes were identical." The real issue in deter-

mining whether res judicata applied was whether the two suits "involve[d]

the same 'operative facts' and the same basic 'delict' or wrong. "^"^

^'•640 F.2d at 486.

"/d/. See supra note 6.

5^640 F.2d at 487.

"See generally. Note, Civil Procedure, Res Judicata: Exclusive Federal Jurisdiction

and State Court Consent Judgments, Fourth Circuit Review, 39 Wash. & Lee L. Rev.
501 (1982).

5«640 F.2d at 486-87.

'"Id. at 495-96.

"^Id. at 487-88.

^^See, e.g.. Cream Top Creamery, 383 F.2d 358 (6th Cir. 1967). See also supra notes
34-51.

"'Nash, 640 F.2d at 488.

"Id.

""Id.



582 INDIANA LAW REVIEW [Vol. 18:573

The Fourth Circuit distinguished Nash from Hayes v. Solomon^^

and Cream Top Creamery v. Dean Milk Company,^^ by indicating that
the state antitrust law in North CaroHna, Hke the federal statute, allowed

for treble damages, while the applicable state antitrust laws in Hayes

and Cream Top Creamery failed to provide for treble damages.^^ The
Nash court held that a suit brought in state court under North Carolina's
antitrust statute, modeled after the federal statute and including the

same right to treble damages, precluded a subsequent federal antitrust

suit in federal court. ^^

In the case of Derish v. San Mateo-Burlingame Board of Realtors, ^^

decided in December of 1983, the Ninth Circuit Court of Appeals followed

the Fourth Circuit by holding that a prior state antitrust action barred

the state plaintiff from bringing a subsequent federal antitrust suit. The

Derishes brought suit in state court against the San Mateo-Burlingame

Board of Realtors and others, alleging violations of the state antitrust

statute. ^° The trial court dismissed the complaint with prejudice, and

the appellate court affirmed. The California Supreme Court declined to

review the appellate court decision.^'

Following the trial court decision, the Derishes filed a Sherman Act

suit in federal court against the defendants in their state action. ^^ When
the state court decision became final, the Board and the other defendants

moved to dismiss the federal suit on res judicata grounds. The district
court denied the motion, but certified the question for interlocutory

appeal. ^^ The Ninth Circuit reversed the lower court decision, holding

that the dismissal with prejudice in the prior state action barred the

federal antitrust suit.^"^

The Derishes had argued that res judicata did not apply because

the state and federal actions did not involve the same claim. ^^ In de-

termining whether the same claim was involved in both actions, the

court considered four questions:

(1) whether rights or interests established in the prior judgment

would be destroyed or impaired by prosecution of the second

^^597 F.2d 958 (5th Cir. 1979), cert, denied, 444 U.S. 1078 (1980).

^^383 F.2d 358 (6th Cir. 1967).

"640 F.2d at 490.

^^724 F.2d 1347 (9th Cir. 1983).

'°The Derishes had sold their house through a broker who used a multiple listing
service operated by the San Mateo-Burlingame Board of Realtors. After the sale, the

Derishes brought their state action against the Board. In their complaint, the Derishes

alleged that limiting the use of the listing service to licensed real estate brokers and

salesmen violated the Cartwright Act, Cal. Bus. & Prof. Code §§ 16700-60 (West 1964
& Supp. 1983). 724 F.2d at 1348.

^'724 F.2d at 1348.

'^Id.

''Id.

''Id.

''Id. at 1349.



1985] RES JUDICATA 583

action; (2) whether substantially the same evidence was presented

in the two actions; (3) whether the two suits involved infringement

of the same right; and (4) whether the two suits arose out of

the same transactional nucleus of facts. ^^

These questions, the court stated, were "tools of analysis, not re-

quirements, because identity of claims 'cannot be determined precisely

by mechanistic application of a simple test.' "^^ Focusing on the four

questions, the court determined that the state and federal suits "involved

the same transactional nucleus of facts, and . . . that substantially the

same evidence" would be required in both actions. ^^ In determining

whether the two suits involved the infringement of the same right, the

court said its test would be whether the state and federal statutes "set

the same standards for defining unreasonable restraints and imposing

liability . . . ."^^ Res judicata should not be applied, the court stated,

if the federal law imposed stricter Hability standards than those in the

state law.^° The court noted that the federal and state antitrust actions

involved here were similar and that the Derishes had not identified any

difference in the substantive law of the two statutes. The Derishes' rights

under both laws were the same.^'

Regarding the remaining question posed, the Derish court said the

Board's "right ... to be free from this claim as established in the state

suit would be destroyed or impaired by the federal suit."^^ Therefore,

the court concluded, answers to all four questions supported a res judicata

finding. ^^

In analyzing exclusive federal jurisdiction considerations, the court

said there were times res judicata should not be applied.*^ The Derish

case, however, "[did] not involve such factors that would persuade us,

without further analysis, to forego res judicata and find an implied

exception" to the federal full faith and credit statute. ^^ Therefore, the

court said, it must go on to "balance the general policies behind exclusive

'''Id.

''Id. (quoting Abramson v. University of Hawaii, 594 F.2d 202, 206 (9th Cir. 1979)).
The Derish court noted that exclusive federal jurisdiction added "another dimension" to

this case, 724 F.2d at 1349, and asserted that "[i]t is by weighing these competing policies

of exclusive federal jurisdiction and res judicata that a proper decision may be reached."
Id.

-"124 F.2d at 1349.

'^Id. at 1350.

'°Id.

^'Id.

^Hd.

'Ud.

''"As an example, the court cited cases involving discharge of a debt in bankruptcy

where "Congress clearly specified the exclusive jurisdiction of the bankruptcy court in

this area." Id. at 1351.

^^Id. See infra notes 119-21 and accompanying text for a discussion of the Supreme

Court's interpretation of the full faith and credit statute.



584 INDIANA LAW REVIEW [Vol. 18:573

federal jurisdiction against those of res judicata. "^^ The state case would

not hinder uniform interpretation of the Sherman Act because the state

case would not be precedent in federal antitrust cases. ^^ Further, the

traditional "expertise of federal judges" argument^^ was met because

state court judges were experienced in trying antitrust claims, applying

federal law collaterally in state cases. ^^ The remedies under both the

federal and state laws were the same,^^ as were the opportunities for a

jury trial and for discovery proceedings consistent with federal due process

requirements.^' Therefore, the court concluded, the policies supporting

exclusive federal jurisdiction would not be "heavily impUcated" if the

federal suit were precluded. ^^

On the other hand, the policies supporting res judicata would be
heavily implicated. ^^ These policies included removing most of the trial

from crowded court dockets, sparing the Board from paying much of
the expense involved with defending a claim against which it already

had defended, upholding *' *[t]he principles of comity and repose

embodied' "^"^ in the federal full faith and credit statute,^^ avoiding

possible inconsistent results in the state and federal trials, and fostering

"[c]onsidered reliance on both state and federal judiciary to resolve

disputes. "^^ The Derish court ultimately concluded that "[w]hen both

state and federal law offer a plaintiff equally sharp teeth for enforcing

the same claim he may indeed have but 'one bite at the apple.' "^^

In January, 1984, just one month after Derish was decided, the
Seventh Circuit Court of Appeals followed the Fourth and Ninth circuits

in precluding a federal antitrust suit after the federal plaintiff had brought

a state action against the same defendant based on the same fact situation.

In Marrese v. American Academy of Orthopaedic Surgeons,^^ the court

"^724 F.2d at 1351.

''Id.

^'See supra note 7.

'^''Derish, 724 F.2d at 1351-52.

""Id. at 1351.

"^'Id. at 1352. The court distinguished previous cases in which courts did not apply

res judicata, see, e.g., Hayes v. Solomon, 597 F.2d 958 (5th Cir. 1979), cert, denied, 444

U.S. 1078 (1980); Cream Top Creamery v. Dean Milk Co., 383 F.2d 358 (6th Cir. 1967),
by indicating that, in those cases, the state law did not provide for treble damages as

did the federal law. 724 F.2d at 1351 (citing Hayes v. Solomon, 597 F.2d 958 (5th Cir.

1979), cert, denied, 444 U.S. 1078 (1980); Cream Top Creamery v. Dean Milk Co., 383
F.2d 358 (6th Cir. 1967); Lyons v. Westinghouse Electric Corp., 222 F.2d 184, 189 (2d

Cir. 1955)). Here, the state and federal damage provisions were the same, 724 F.2d at

1351, as was the right to a jury trial. Id.
^^724 F.2d at 1351.

"'Id. at 1352.

''Id. (citing Kremer v. Chemical Construction Corp., 456 U.S. 461, 463 (1982)); see

infra note 119.

''^See supra notes 6 & 10 and see infra notes 175-181 and accompanying text.
""Derish, 724 F.2d at 1352.

"'Id.

"^26 F.2d 1150 (7th Cir. 1984), rev'd and remanded, 105 S. Ct. 1327 (1985).



1985] RES JUDICATA 585

extended the Nash and Derish reasoning to a situation in which the

original state suit was not an antitrust suit but rather was a state contract

action.

In Marrese, two orthopedic surgeons, Drs. Marrese and Treister,

sought admission to the American Academy of Orthopaedic Surgeons.
Their appHcations were rejected without a hearing and the doctors sued,

alleging breach of contract and due process violations. The state appellate

court ordered Treister's complainf^^ dismissed for failure to state a claim,

and the state supreme court denied leave to appeal. After losing in the

state appellate court, the doctors brought a federal antitrust suit seeking

damages and injunctive relief. The federal district court denied the

Academy's motion to dismiss the claim based on res judicata and refused

to certify the res judicata question for immediate appeal. When the
Academy, in violation of a court order, refused to cooperate in pretrial

discovery, the district court held the Academy in criminal contempt. The
Academy appealed the contempt citation and the underlying refusal to
dismiss the federal suit on res judicata grounds. '^^

The Seventh Circuit noted that Drs. Marrese and Treister could have

alleged state antitrust violations in their state suit but did not do so.'°'

In language reminiscent of the "choice of forum" reasoning in Straus, ^^^

the Marrese court pointed out other options which the doctors originally

had open to them: they could have brought state or federal antitrust

suits or they could have brought both federal and state antitrust suits

simultaneously in federal court, joining the state claims through pendent

jurisdiction. '°^

The plurality opinion in Marrese^^'^ acknowledged that while the state

and federal statutes involved in Nash were virtually identical, '°^ the

'^Dr. Marrese was not a party to Dr. Treister's appeal, but Marrese's suit was stayed

pending the outcome of Treister's appeal. After the appeal was denied, Marrese's suit

was dismissed. Id. at 1151.

'°«M at 1151-52.

'"•M at 1152.

^^^See supra text accompanying notes 27-33.

'°3726 F.2d at 1152.

"^As noted by Judge Cudahy, Judge Posner's opinion in Marrese was joined by a

majority of the nine-member panel on the second issue in the case involving the validity

of a contempt judgment after the order on which the citation was based was deemed

invalid. However, on the res judicata issue, two judges joined Judge Posner, and two

judges joined Judge Cudahy's stinging dissent on the res judicata issue, which charged

that "[t]he plurality opinion is in fact an aggressive tour de force—going well beyond
existing law—in the abdication of federal jurisdiction." Id. at 1174 (Cudahy, J., dissenting).
Judge Eschbach wrote a concurrence and dissent, concurring on discovery but dissenting

on res judicata, id. at 1162 (Eschbach, J., concurring and dissenting); Judge Bauer concurred

in the result, id. (Bauer, J., concurring), and Judge Flaum dissented on discovery but

concurred on res judicata, although Judge Flaum reached a res judicata finding through

an entirely separate route from Judge Posner, id. at 1163 (Flaum, J., concurring and

dissenting). The final count was five judges favoring a res judicata finding—although no
more than three could agree on the reasoning—and four against it.

'°'See supra text accompanying note 63.



586 INDIANA LAW REVIEW [Vol. 18:573

Statutes here were not.'^^ Nevertheless, the statutes did not need to be

identical for res judicata to apply. Instead, the decisions should be based

on "the specific provisions of the state and federal statutes, read in
light of the specific allegations of the complaint. If, applied to the

particular case, the state and federal standards are the same, it should

not matter that applied to some other case they might be different. "'^^

The court considered two possible areas in which the standards might
be different. First, the court observed that the liability standards, although

different when applied in some cases, were the same here.'°^ Second,
the damage provisions of the two laws were considered. Under federal
law, violations were subject to an automatic tripling of actual damages;

the state statute, on the other hand, provided that damages awarded
could be up to three times the amount of actual damages, but only if
the violation was willful. '^^ Although the doctors requested damages in
their state suit, damages were only sought on a state contract theory. ^'^

However, the court noted that the doctors' "federal antitrust suit

contain[ed] no reference to the facts underlying the breach of contract
claim."''* This and other facts''^ in the case satisfied the Marrese court

that the doctors were not concerned about treble damages."^ The plurality
concluded that a state antitrust suit would have been a "perfect sub-

stitute" for the federal antitrust action."''

The court began with the premise that because the doctors could
have joined a state antitrust action with their other state claims, a federal

antitrust action should be precluded if the state and federal antitrust

laws were "materially identical.""^ It concluded that the "materially

identical" standard was met."^ Therefore, the court held, based on res
judicata principles, the doctors were barred from bringing the federal

suit."^

III. The Supreme Court Decision in Marrese:
The Full Faith and Credit Statute Controls

The United States Supreme Court, in reversing the Seventh Circuit's
decision in Marrese v. American Academy of Orthopaedic Surgeonsy^^^

'"^726 F.2d at 1155.

^^Id. at 1155-56. Compare the great reliance placed on equivalent state and federal
damage provisions in Derish, see supra note 91, with the relative insignificance the Marrese

court placed on the differences in state and federal damage provisions.
"°726 F.2d at 1156.

"^The court cited the fact that the doctors filed the federal antitrust action more

than four years after the contract action was filed and the doctors' supposed concern

that they could not show any actual damages—a prerequisite for collecting treble damages

—

as indicators that they were not really interested in recovering damages. Id.

'''Id.

'''Id.

'"Id. at 1153.

"Hd. at 1156.

'"Id.

"«105 S. Ct. 1327 (1985).



1985] RES JUDICATA 587

reiterated the test regarding preclusion of a federal suit following a state

action developed in its 1982 decision in Kremer v. Chemical Construction

Corporation^ ^'^ and followed in 1984 in Migra v. Warren City School

District Board of Education, ^^^ and extended its applicability to a claim

'"456 U.S. 461 (1982). In Kremer, the Supreme Court had faced the confrontation

of res judicata principles and section 1738 in the context of the concurrent jurisdiction

of federal and state courts in employment discrimination cases. Rubin Kremer, the employee

charging discrimination, was one of a number of workers laid off by his employer. UnUke

many of his co-workers who were laid off at the same time, Kremer was not rehired.
He filed a discrimination charge with the Equal Employment Opportunity Commission
(EEOC) which lacked jurisdiction over the charge until the appropriate state agency, the

New York State Division of Human Rights, had had sixty days to handle the matter.
The discrimination charge was referred to the state agency, which concluded that no

probable cause for a finding of discriminatory practices by the employer existed. Kremer

pursued his claim through the administrative and judicial review procedures established

by state law. The determination of the state agency was affirmed at each stage. During

the pendency of the state judicial review, Kremer again filed with the EEOC, which
reached the same finding as had the state agency. He then brought in the district court
a claim under Title VII which ultimately was dismissed on res judicata grounds. Id. at

463-66.

Beginning with section 1738 as the basis for its analysis and decision, the Supreme

Court in Kremer noted that section 1738 required "federal courts to give the same preclusive

effect to state court judgments that those judgments would be given in the courts of the

State from which the judgments emerged." Id. at 466 (footnote omitted). Citing a New
York statute, the Supreme Court determined that state law would preclude the federal

litigation under Title VII. Id. at 466-67.

Having determined that the action was precluded under state law, the final inquiry

required examining Title VII to ascertain whether an express or implied exception to

section 1738 existed which would allow the federal suit to advance. Id. at 468. The Court

found no express exception or repeal of Section 1738 in the language of Title VII. Id.

at 469-70. Furthermore, the Supreme Court noted that "[s]ince an implied repeal must

ordinarily be evident from the language or operation of a statute, the lack of such manifest

incompatability between Title VII and § 1738 is enough to answer our inquiry." Id. at

470. To the contrary, the Court determined that the state antidiscrimination laws were
integral to the legislative scheme established by Congress. Id. at 468-69. Finally, the

legislative history revealed no indication of a congressional intent for Title VII to repeal

section 1738 and its effect. Id. at 470-76.

As an aside, the Supreme Court noted that the concepts of comity and federalism

underlying section 1738 are not "compromised" by applying preclusion rules to Title VII

cases:

On the contrary, stripping state court judgments of finality would be far more
destructive to the quality of adjudication by lessening the incentive for full

participation by the parties and for searching review by state officials. Depriving

state judgments of finality not only would violate basic tenets of comity and

federalism . . . , but also would reduce the incentive for States to work towards

effective and meaningful antidiscrimination systems.

Id. at 478 {citing Board of Regents v. Tomanio, 446 U.S. 478, 491-92 (1980)).
'2° 104 S. Ct. 892 (1984). In Migra, the Supreme Court was confronted with the same

concerns faced in Kremer, except now in the context of an allegation of constitutional
rights violations asserted under 42 U.S.C. §§ 1983 and 1985.

In the prior state court suit, Ethel Migra, a teacher whose appointment was withdrawn

shortly after its renewal, asserted a breach of contract claim and a wrongful interference

with contractual relations claim against the school board and its individual members. The
state court reinstated Migra to her teaching position, awarded her compensatory damages.



588 INDIANA LAW REVIEW [Vol. 18:573

within the exclusive jurisdiction of the federal court. '^' The Court's two-

step analysis looks first to the law of the state in which the state court

judgment was rendered. If that state's law would allow a subsequent

federal antitrust suit, the second suit is permitted. If the state law would

preclude the second suit, the federal court then must perform the second

step in the test. At this stage, the court must determine whether the

antitrust statute underlying the second suit provides for actions under

that statute to be exempted from the provisions of the Full Faith and

Credit Statute. '^^ If the court finds an express or implied exception

but dismissed any claim regarding the liability of the individual board members. Subse-

quently, Migra filed an action in federal court, asserting that her due process and equal

protection rights had been violated. Her federal claims arose under the first, fifth, and

fourteenth amendments to the Constitution and under sections 1983 and 1985. The federal

court dismissed the federal action based on res judicata and statute of limitations. Id. at

894-95.

After briefly reviewing the concepts regarding the effect of state court judgments

and their preclusive effect under state law enunciated in Kremer and Allen v. McCurry,

449 U.S. 90, 96 (1980), the Supreme Court restated the appropriate test that "m the
absence of federal law modifying the operation of [section] 1738, the preclusive effect in

federal court of petitioner's state-court judgment is determined by Ohio law." 104 S. Ct.

at 896 (emphasis added). Thereafter, the court examined whether section 1983 created an

exception to section 1738, focusing on the decision of Allen v. McCurry, which had

decided the question as to issues actually litigated in the state court proceeding. Id. at

896-97. Finding the reasoning of Allen equally applicable to both issue preclusion and

claim preclusion, the court held that section 1983 did not "override" section 1738 and

that Ohio law must determine the claim preclusive effect of the prior state court judgment.

Id. at 898.

The Supreme Court then examined the development of the claim preclusion law in
Ohio, noting the recent broadening of its applicability. Id. at 898-99. Nonetheless, the specific

issue confronting the Supreme Court had not been addressed in Ohio. Recognizing that

the role of interpreting Ohio preclusion law belonged in the federal district court rather

than in the Supreme Court, the Migra court remanded the case to the federal district

court. Id. at 899.

'2' 105 S. Ct. at 1332. None of the Supreme Court's earher decisions had specifically

applied the two-part analysis implicitly required by section 1738 to a claim within the

exclusive jurisdiction of the federal courts. However, the court reached its decision without

addressing any special characteristics or special interests of exclusive federal jurisdiction

which may support a different analysis or may dictate the weighing of different concerns.
Rather, the court first noted that state res judicata law had precluded a subsequent action

under patent law, a law within the exclusive jurisdiction of the federal courts, although

the Supreme Court had reached this decision without application of section 1738. Id.

(citing Becher v. Contoure Laboratories, Inc., 279 U.S. 388 (1929)). Second, while re-

cognizing that it had not determined whether Title VII claims were limited to federal

jurisdiction, the Supreme Court nonetheless stated that Kremer "implie[dl that absent an

exception to [section] 1738, state law determines at least the issue preclusion effect of a

prior state judgment in a subsequent action involving a claim within the exclusive jurisdiction

of the federal courts." 105 S. Ct. at 1332. Finally, the court relied on Kremer for its
determination that section 1738 requires the preclusive effect of a state court judgment

to be ascertained through the application of state law. Id. After stating these three concepts,

the Supreme Court summarily concluded "that the basic approach adopted in Kremer
applies in a lawsuit involving a claim within the exclusive jurisdiction of the federal

courts." Id.

'^^28 U.S.C. § 1738 (1982).



1985] RES JUDICATA 589

to these provisions, the court hearing the second suit need not give full

faith and credit to the judgment in the first action; therefore, the second

suit is permitted. '^^ If no exception is found, full faith and credit must

be afforded to the initial judgment and the second action is precluded.'^"*

The Seventh Circuit Court of Appeals erred, the Supreme Court

held, when it failed to consider whether the law of Illinois, the state
in which the initial suits by Drs. Marrese and Treister were brought,

would preclude the second suit. Instead, both the plurality opinion'^^

and Judge Flaum's concurrence'^^ incorrectly "express[ed] the view that

Section 1738 [the Full Faith and Credit Statute] allows a federal court

to give a state court judgment greater preclusive effect than the state

courts themselves would give it."'^^ Because the lower courts had failed

to determine whether Illinois state law required preclusion of the federal

Sherman Act suit, the Supreme Court remanded the case to the district

court to determine whether, under lUinois law, the federal action would

be barred. '^^

Although the majority declined to examine whether Illinois law

would preclude the subsequent federal suit and refused to determine

whether an express or implied exception to section 1738 applied un-

der the Sherman Act,'^^ it felt compelled to launch into a discussion

of state preclusion rules. In its discourse, the majority, without citing

a single case, suggested that the rule espoused in the Restatement

(Second) of Judgments was generally followed, and the Court pro-

ceeded to determine the "appropriate" interpretation of the Restate-

ment rule.'^*^ However, in its generalities, the Court provided few
guidelines for the federal district court faced with determining the state

preclusion law in a situation as yet unconfronted by most states.'^'

In a well-reasoned concurrence. Chief Justice Burger agreed with

the two-step test set forth by the majority, but criticized the majority

for its failure to provide guidance to the federal district court. Like-

wise, the Chief Justice disagreed with the majority's interpretation of

the effect and implementation in the antitrust context of the preclusion

•"105 S. Ct. at 1333.

'''Id.

'^'726 F.2d 1150 (7th Cir. 1984), rev'd and remanded, 105 S. Ct. 1327 (1985).

'^*/<i. at 1162 (Flaum, J., concurring).

'^^105 S. Ct. at 1334.

''Hd. at 1335.

'-^The Supreme Court in Kremer had no difficulty in determining the preclusive effect

of the state law judgment under state law, 456 U.S. at 466-67, and determining whether

an express or imphed repeal of section 1738 was established under Title VII. Id. at 468-

76. Furthermore, the Supreme Court in Migra restated the Kremer rule so that the federal

issue required resolution first. 104 S. Ct. at 896. After resolving the question of the

appUcability of section 1738 on claims arising under 42 U.S.C. § 1983 and finding no

implied or express repeal thereunder, the court remanded the decision to the district court

for resolution of the state preclusion law issue. Id. at 899.

'3°105 S. Ct. at 1333.

'''Id.



590 INDIANA LAW REVIEW [Vol. 18:573

rule espoused by the majority as that generally accepted by the

states.
'^^

IV. Marrese: More Questions Than Answers

In developing its two-part test regarding the preclusive effect of the

state suit, the Supreme Court focused on distinctly different sources at

each stage of the test, although relying on the full faith and credit

statute as the foundation for each step. First, the Court looked to the

original state court judgment.'" Second, the Court considered the statute

underlying the substantive federal claim in the second suit.'^"* The Su-
preme Court's decision to extend its two-step test to areas of exclusive

federal jurisdiction'^^ such as antitrust was not unreasonable.'^^ The

Court may be faulted, however, for failing to provide meaningful guid-
ance for lower courts which must apply this test.'^^

A. '*Divining'* the Effects of State Court Judgments

The Court's first consideration was the original state court judgment.

The Court apparently believed that the possible res judicata effect of

a judgment, as determined by the law of the state in which the judgment

was rendered, was akin to being itself an element of the judgment.

Although Congress could statutorily limit a state court judgment's pre-

clusive effect as it related to a subsequent federal action, the Supreme

Court, citing its 1984 decision in Migra v. Warren City School District

Board of Education, ^"^^ asserted that federal courts could not give the

state judgment preclusive effect beyond that which had originally become

a part of that judgment. '^^

Having established that state law should be applied, however, the

Supreme Court gave no clear guidance for discerning the state's res

judicata law relative to the preclusion of a subsequent federal antitrust

'"/c^. at 1335-37. (Burger, C.J., concurring).

'"/cf. at 1332. Section 1738 " 'commands a federal court to accept the rules chosen

by the State from which the judgment is taken.' " Id. (quoting Kremer v. Chemical

Construction Corp., 456 U.S. 461, 481-82 (1982)).
'"/g?. at 1333. The second part of the test specifically looks to section 1738 by

requiring the court to determine whether the statute underlying the suit provides for an

exemption to the full faith and credit statute.
'^'105 S. Ct. at 1334.

'^*The end result of the extension of the Kremer analysis to claims within the exclusive

jurisdiction of the federal courts is not itself problematic and should eliminate the variety

of approaches—although not the differing applications—which the lower courts have
adopted in initially applying claim preclusion to antitrust settings. See supra text accom-

panying notes 19-117. However, the majority's superficial analysis and application of earlier

cases and their implications does not naturally lead to the conclusion reached by the Court

nor does it consider the special concerns of exclusive federal jurisdiction. See supra note

121.

'"See infra text accompanying notes 140-41 & 151-52.
"M04 S. Ct. 892 (1984).
"n05 S. Ct. at 1334.



1985] RES JUDICATA 591

suit. While the Court readily acknowledged that *'a state court will not

have occasion to address the specific question whether a state judgment

has issue or claim preclusive effect in a later action that can be brought

only in federal court, ""*^ the Court nevertheless directed the district

court to rely on Illinois' general preclusion principles to determine the

effect of an earlier state judgment on the subsequent litigation.'^' Al-
though the Supreme Court declined to determine Illinois' stance re-
garding the res judicata effect of its state court judgments, ''^^ in dictum,

the Court observed:

[w]ith respect to matters that were not decided in the state

proceedings, we note that claim preclusion generally does not
apply where "[t]he plaintiff was unable to rely on a certain

theory of the case or to seek a certain remedy because of the

limitations on the subject matter jurisdiction of the courts . . . ."

Restatement (Second) of Judgments § 26(l)(c) (1982). If state

preclusion law includes this requirement of prior jurisdictional

competency, which is generally true, a state judgment will not

have claim preclusive effect on a cause of action within the
exclusive jurisdiction of the federal courts.'''^

Although this language clearly is dictum, the Court's use of such broad,

unsupported statements is troublesome for several reasons. First, the

Court, by characterizing the Restatement provision as one of "jurisdic-

tional competency," strongly suggests that a judgment from a state
court in a state where this Restatement provision has been adopted can

never preclude an action within the exclusive jurisdiction of the federal

courts because the state court lacked jurisdiction to hear the federal

claim. '"^^ This simphstic approach totally ignores the sound reasoning in

'^M at 1332.
""/c/. at 1335. Interestingly, two of the Seventh Circuit judges in Marrese had examined

the Illinois preclusion law, applied it to the situation confronting the court, and reached

opposite conclusions. Judge Cudahy's dissenting opinion recognized a jurisdictional com-

petency requirement in Illinois law which, he concluded, resulted in the non-preclusion

of the federal antitrust suit. 726 F.2d 1150, 1177 (7th Cir. 1984)(Cudahy, J., dissenting).

However, under Judge Flaum's analysis, examination of Illinois res judicata principles

would result in the preclusion of the subsequent federal antitrust suit. Id. at 1164 (Flaum,

J., concurring and dissenting).

'^M05 S. Ct. at 1335.

"•Vi/. at 1333. The Restatement (Second) of Judgments provision which the majority
opinion cites as the general rule establishes that a claim is not precluded if:

[t]he plaintiff was unable to rely on a certain theory of the case or to seek a

certain remedy or form of relief in the first action because of the limiation on

the subject matter jurisdiction of the courts or restrictions on their authority

to entertain multiple theories or demands for multiple remedies or forms of

relief in a single action. . . .

Restatement (Second) of Judgments § 26(1 )(c) (1982).
'*^The conclusion reached by the majority opinion is based on the illustration to the

Restatement (Second) of Judgments provision:

A Co. brings an action against B Co. in a state court under a state antitrust
law and loses on the merits. It then commences an action in a federal court
upon the same facts, charging violations of the federal antitrust laws, of which
the federal courts have exclusive jurisdiction. The second action is not barred.

Restatement (Second) of Judgments § 26 at 237, comment c, illustration 2 (1980).



592 INDIANA LAW REVIEW [Vol. 18:573

Nash County Board of Education v. Biltmore Company^ "^^ and Dehsh

V. San Mateo-Burlingame Board of Realtors^ "^^ in which the courts carefully

analyzed the applicable state and federal statutes and determined that,

where the two statutes were virtually identical, the plaintiff could not prop-

erly assert that he had been
*

'unable to rely on a certain theory" or "to

seek a certain remedy." If the state antitrust statute mirrors the federal

law, the plaintiff may effectively rely on the same theories or seek the
same remedies in state court as he could in federal court. If res judicata

principles have any vaHdity, there is no sound reason to suggest that a

plaintiff, who has his choice of court systems in which to bring his initial
suit, ought to have a second opportunity to relitigate functionally the same

claim by suing in federal court.

A second point of concern is that the Supreme Court's assertion
that the "jurisdictional competency" requirement embodied in the Res-

tatement has "generally" been adopted by the states is totally unsup-

ported. ''*'' Interestingly, the Court cites to a Restatement provision as if

it were law, while providing not even one citation indicating that any

state has adopted this provision. '"^^

Finally, by suggesting that the Restatement provision represents the

law in most states, a district court faced with applying the Marrese

decision might reasonably assume that the Restatement provision should

be applied unless there are clear indications that the state in which the

original state judgment was rendered would reach a different result. The

high Court made this view plain when it stated, again unsupported by
case law, that "[u]nless application of Illinois preclusion law suggests,

contrary to the usual view, that petitioners' federal antitrust claim is

somehow barred, there will be no need to decide in this case if there
is an exception to [section] 1738."'^^ Clearly it is inappropriate for the

Supreme Court to dictate to states what their common law should be
and how it should be interpreted by making unsupported statements
concerning the "general" or "usual" view of the law.

These problems were recognized and addressed by Chief Justice

Burger in his thoughtful concurrence. '^° Although the majority directed

the district court to determine whether the second suit would be pre-

cluded under lUinois law, the concurrence noted that the majority pro-

vided "no guidance ... as to how the District Court should proceed
if it finds state law silent or indeterminate on the claim preclusion

question."'^' The majority's "refusal to acknowledge this potential

'^'640 F.2d 484 (4th Cir.), cert, denied, 454 U.S. 878 (1981); see supra notes 55-68

and accompanying text.
'"'"724 F.2d 1347 (9th Cir. 1983); see supra notes 75-97 and accompanying text.
'"^05 S. Ct. at 1333.

'''Id.

'"^105 S. Ct. at 1333 (italics provided).

''°Id. at 1336-37 (Burger, C.J., concurring).

'''Id. at 1336.



1985] RES JUDICATA 593

problem appears to stem from a belief that the jurisdictional competency

requirement of res judicata doctrine will dispose of most cases like

this."'" Even in a state which required jurisdictional competency as an

element of res judicata, this requirement might be met constructively

even though the federal action was within the exclusive jurisdiction of

the federal courts. Such would be the case where "state law provides

a cause of action that is virtually identical with the federal statutory

cause of action. "'^^

Under the majority's interpretation of the "usual view" of state

preclusion laws, the similarity of the state and federal antitrust statutes

would be irrelevant. Alternatively, a court using the sound reasoning

of the concurrence would consider the statutes' similarity as highly

significant where the state which rendered the original judgment had

not determined the preclusive effect of the state court judgment on a

subsequent federal action. Because most states would not have had

reason to address the issue of the preclusive effect of a judgment of

one jurisdiction relative to a subsequent suit in a different jurisdiction,'^"^

the concurrence asserted that "it may be consistent with [section] 1738
for a federal court to formulate a federal rule to resolve the matter. '"^^

In arguing for a federal rule to be used when the state preclusion

law on the issue is not settled, the concurring opinion recognized the

competing interests which must be balanced to fashion such a rule.'^^

The interests, predictably, are the same ones addressed by the courts

in Nash County Board of Education v. Biltmore Company and Derish
V. San Mateo-Burlingame Board of Realtors and by the Seventh Circuit

Court of Appeals in Marrese: the principles underlying exclusive federal

jurisdiction and res judicata. '^^ While the concurrence espoused a "full

and fair opportunity" test when the "state statute is identical in all
material respects with a federal statute within exclusive federal jurisdic-

tion,"'^^ the underlying principles of the competing interests may have
to be balanced to ascertain when a party has had a "full and fair

opportunity" to litigate or when the state and federal statutes are "iden-
tical in all respects."

'"/of.

•"/of.

Id.

'5^05 S. Ct. at 1332. See also id. at 1336-37 (Burger, C.J., concurring).

'"/<i. at 1337 (Burger, C.J., concurring).

'^^The concurrence noted:

If state law is simply indeterminate, the concerns of comity and federalism

underlying [sction] 1738 do not come into play. At the same time, the federal
courts have direct interests in ensuring that their resources are used efficiently

and not as means of harassing defendants with repetitive lawsuits, as well as

in ensuring that parties asserting federal rights have an adequate opportunity

to litigate those rights.

'"See supra notes 5-7 and accompanying text.
'^«105 S. Ct. at 1337 (Burger, C.J., concurring).



594 INDIANA LAW REVIEW [Vol. 18:573

Courts faced with balancing these competing interests should be

guided by the considerations and analyses of the courts of appeals in

Nash County Board of Education v. Biltmore Company, ^^^ Derish v.

San Mateo-Burlingame Board of Realtors^^^ and Marrese.^^^ In those

cases, the courts expressly or impliedly balanced the policies underlying

the principles of res judicata and exclusive federal jurisdiction. '^^ It is

critical that the federal district court analyze and balance these principles

when determining state preclusion law in the absence of any law on
the subject to determine if the party was given a "full and fair op-

portunity" to litigate his rights under the federal statute.*" Although

the balancing must be somewhat fact-sensitive, certain factual common-
alities in antitrust cases may reveal when one policy will, or should,
prevail over the other.

Among the principles underlying res judicata are fairness to the
defendant and preservation of judicial resources by "bring[ing] an ad-

judication to a final conclusion with reasonable promptness and within

reasonable limits of cost."'^"^ Clearly, any time a federal trial follows

a similar state action, these pohcies will be compromised to some extent.

Simply conducting the second trial expends judicial resources and costs

the parties both time and money. Because the same claims are involved

in the two suits where state and federal antitrust and procedural laws

are substantially the same, the policies underlying res judicata would

be compromised if the second suit were not precluded. Nonetheless,

because the second suit will always compromise the pohcies underlying

res judicata, the most significant factors the court should consider in

the balance are the policies behind exclusive federal jurisdiction and the

extent to which they are affected by the second suit or its preclusion.

Reasons suggested for giving federal courts exclusive jurisdiction

over federal antitrust actions include the need for uniform interpretation

of federal antitrust law, the expertise of federal judges to handle these

suits, and the desire to provide the specified federal remedies and federal

procedures relating to the right to a jury trial and liberal discovery

provisions. *^^ These policies may not always be implicated by applying
res judicata to preclude the federal antitrust suit.

Under the reasoning outlined in Derish, uniform enforcement of

federal antitrust laws would not be implicated if the federal suit were

precluded because the state courts' rulings on their own laws would
have no precedential effect on the interpretation of federal antitrust

laws.'^^ If a court precluded the federal suit, however, the federal plaintiff

'^^640 F.2d 484 (4th Cir.), cert, denied, 454 U.S. 878 (1981).
'«'724 F.2d 1347 (9th Cir. 1983).

'^'726 F.2d 1150 (7th Cir. 1984), rev'd and remanded, 105 S. Ct. 1327 (1985).

'"5ee supra text accompanying notes 52-117.

'"105 S. Ct. at 1337 (Burger, C.J., concurring).

'"F. James & G. Hazard, Civil Procedure, § 11.2, 530 (2d ed. 1977).
''''Derish, 724 F.2d at 1351-52.

'""/c^. at 1351.



1985] RES JUDICATA 595

would have to settle for the state court's interpretation of state anti-

trust laws. Even if the state law mirrored the federal law, that par-

ticular plaintiff would have been denied the benefit of the uniform

enforcement of the federal law. Nevertheless, this inequity would be

offset in a situation where the federal plaintiff had brought the state

suit as well. There, the plaintiff's action in bringing the state suit

first cost him his chance to bring the federal claim. '^^ But where the

federal plaintiff was the state defendant, '^^ the inequity to him would

not be offset by the original choice of forum factor. In such a situa-

tion, exclusive federal jurisdiction factors would be compromised if

the federal suit were precluded.

The argument that the expertise of federal judges is needed in

federal antitrust cases carries less weight than it once may have car-
ried because state court judges have increased opportunity to develop

expertise in trying antitrust cases. One means by which state judges
develop this expertise is when a defendant in a state action asserts a
federal antitrust violation as a defense. '^^ Also, state judges try state

antitrust cases involving laws similar to the federal statutes. '^^ There-

fore, this policy behind exclusive jurisdiction will seldom provide a

strong reason not to apply res judicata in the second action.

If state and federal antitrust and procedural laws are materially

identical or similar, the exclusive federal jurisdiction policy of provid-

ing the benefits of substantive and procedural laws would not be

compromised by applying res judicata. The boundaries outlining how
closely the state statute must mirror the federal law have not yet been

drawn. While the concurrence encouraged the adoption of a "similar-

ity" standard of "identical in all material respects," this standard still

would leave open questions regarding the "materiahty" of any varia-

tions between the state and federal antitrust statutes. The three appel-
late courts addressing this issue, faced with state statutes which were

progressively more dissimilar to the federal antitrust law, each deter-
mined that the appropriate similarity standard was met. In Nash, for

example, the state statute was identical to the federal law except for

the federal requirement of interstate commerce, which was not pres-

ent in the state law.*^' The California law considered in Derish, al-
though apparently not identical to the federal statute, was "similar"

''''See, e.g., Straus v. American Publishers' Ass'n, 201 F. 306 (2d Cir. 1912).

'''^See, e.g., Lyons v. Westinghouse Electric Corp., 222 F.2d 184 (2d Cir.), cert,

denied, 350 U.S. 825 (1955).

'''^See Currie, Res Judicata: The Neglected Defense, 45 U. Cm. L. Rev. 317, 347
(1978).

''"Dehsh, 124 F.2d at 1351-52.

'''Nash, 640 F.2d at 488.

Similarly, Indiana's antitrust law, Ind. Code §§ 24-1-2-1 to -2-12 (1982), has been
patterned after the Sherman Antitrust Act, 15 U.S.C. §§ 1-7 (1982), and courts are
admonished to look to the federal law in construing Indiana's statute. See Orion's Beh,

Inc. V. Kayser-Roth Corp., 433 F. Supp. 301 (S.D. Ind. 1977).



596 INDIANA LAW REVIEW [Vol. 18:573

to the Sherman Act, and both laws provided the same rights. '^^ In

Marrese, however, the circuit court had said the federal and state statutes

only had to be equivalent "not in gross but with reference to the specific

provisions of the state and federal statutes, read in light of the specific

allegations of the complaint. "'^^ This expansive language opens the door

to very liberal rulings precluding federal antitrust suits. The mischief

which can be achieved by this approach was amply illustrated in Marrese.

There, although the state and federal damage provisions were different,

the court said this difference was insignificant because the plaintiffs

really were not interested in collecting damages. '^'* This questionable

reasoning should not be extended. Nonetheless, the "equivalency" or

"nonequivalency" of the state and federal antitrust laws, especially in

terms of remedies, represents a significant factor which should tilt the

balance in favor of res judicata or exclusive federal jurisdiction, although

the court may construe the statutes broadly or focus only on certain
"pertinent" portions to support the desired poHcy and decision.

In almost every situation involving a second suit, the poHcies sup-

porting res judicata—fairness to the defendant and preservation of ju-
dicial resources—will be implicated to some extent. On the other hand,
the policies behind exclusive federal jurisdiction—uniform interpretation
of federal laws and the protection of federal remedies and procedures

—

may tilt the balance in favor of allowing the second suit in instances
where the state and federal antitrust statutes are not truly "identical in

all material respects" or where the federal plaintiff was the defendant

in the prior suit.

Although the balancing of the competing interests involved in de-

termining whether a party has had a "full and fair opportunity" to

litigate his rights under the federal antitrust statute does not provide a

concrete standard, it does provide needed guidance to the courts con-

fronted with the difficult task of determining the first step mandated

by the Supreme Court in Marrese.

B. The Full Faith and Credit Exception:

A Decision for Another Day

The second part of the Supreme Court's test is directed toward the

statute underlying the federal action. The courts must now decide whether
actions brought under the federal antitrust laws are to be excepted from

the requirements of section 1738.

At this stage in the analysis, section 1738 will bar federal suits filed

subsequent to litigation in state courts concerning the same operative

facts unless a court finds an exception to the Full Faith and Credit

''^Derish, 724 F.2d at 1350.

'''Marrese, 726 F.2d at 1155.

'''Id. at 1156.



1985] RES JUDICATA 597

Statute in the federal statute. '^^ Quoting its 1982 decision in Kremer v.

Chemical Construction Corporation, the Supreme Court stated in Marrese

that " 'an exception to [section] 1738 will not be recognized unless a

later statute contains an express or implied repeal.' "'^^ In determining

whether such an exception exists, the court should look to "the par-

ticular federal statute as well as the nature of the claim or issue involved

in the subsequent federal action. "'^^ However, in the final analysis, "the

primary consideration must be the intent of Congress. "'^^

The Supreme Court refused to determine whether Illinois state law

precluded Dr. Marrese's federal antitrust claim, '^^ and therefore decided

that it did not have to reach the issue whether the Sherman Antitrust

Act precluded the subsequent suit because if Illinois law would permit

the second suit, the existence of an exception to section 1738 would be

irrelevant because the inquiry would end at that point and the suit

would be permitted. The court's failure to determine the state law issue,

however, need not have ended its inquiry. Where state law would pre-
clude the subsequent suit, the determination of whether an exception

to section 1738 exists determines whether the federal antitrust suit will

be allowed. Further, although the Supreme Court made clear in Marrese
that state law must be applied first, ^^^ where there is an exception to

section 1738, the second suit will always be permitted, regardless of state

law.

The order of the two steps makes no difference in the result. If
the section 1738 determination were made before the state law decision,
the court would simply allow the second suit if an exception to section

1738 existed and would look to state law to decide the issue if no

section 1738 exception applied. Regardless of the order in which the steps are

taken, the second suit would be precluded only if both the state law

and section 1738 determinations would preclude the second suit; if it

would be permitted under either step of the test, the second suit would

be allowed.

The Supreme Court's failure to address the section 1738 exception

question raises the possibility that the district court, on remand, will

do its best to apply Illinois law to determine whether the second Marrese

suit is precluded, only to discover that this determination was irrelevant

because the Sherman Act provides an impUed exception to section 1738,

'^'Marrese v. American Academy of Orthopaedic Surgeons, 105 S. Ct. 1327 (1985).
See also supra notes 122-124 and accompanying text.

"M05 S. Ct. at 1332 (quoting Kremer v. Chemical Construction Corp., 456 U.S.
461, 468 (1982)). For a discussion of Kremer, see supra note 119.

'"105 S. Ct. at 1335.

'^'The refusal of the Supreme Court in Marrese to decide whether state law precluded

the second suit is in sharp contrast with the Court's Kremer decision in which it apparently

felt no reluctance to determine the preclusive effect of the appropriate state law. See

supra note 120.

'«°105 S. Ct. at 1335.



598 INDIANA LAW REVIEW [Vol. 18:573

thus permitting the second suit regardless of Ilhnois res judicata law."^'

IV. Conclusion

The Supreme Court's decision in Marrese v. American Academy of
Orthopaedic Surgeons provided an opportunity for the Court to enun-

ciate definitively the approach which the lower courts should use to

determine when to preclude a federal antitrust suit following a state
court judgment and, more generally, when the courts should preclude
exclusive federal jurisdiction actions. Although the Supreme Court out-
lined a two-part test in Marrese, its remand of the case to the district
court with little meaningful guidance regarding the test's application

virtually ensures that the courts, applying the two-part test as they deem
appropriate, will continue to take varying approaches, and reach dif-

fering results, in making these res judicata determinations.

Where state law is unclear, a court deciding whether state law
precludes a subsequent federal antitrust suit would be well-advised to

consider the factors balanced by the courts of appeals in Nash County
Board of Education v. Biltmore Company, Derish v. San Mateo-Bur-
lingame Board of Realtors, and Marrese and implicitly approved in the
"full and fair opportunity" to litigate standard set out in Chief Justice

Burger's Marrese concurrence. These considerations provide a sounder

and more realistic basis for approaching the res judicata question in
the exclusive federal jurisdiction context than do the simpHstic gener-

alities described by the majority in the Supreme Court's Marrese de-
cision. Fortunately, the majority's generahties were mere dictum; by

taking a more considered approach to applying the two-part test than
was implied by the Supreme Court, courts may yet fulfill the high
Court's mandate while still considering the important poHcies underlying
res judicata and exclusive federal jurisdiction to yield fair, equitable,

and well-reasoned preclusion decisions.

Mark A. Bailey

'*'This possible result would be avoided if the Court were to follow the method it

used to apply the two-part test in Migra v. Warren City School District Board of Education,

104 S. Ct. 892 (1984). There the Supreme Court looked first to whether a section 1738

exception applied; finding none, the Court then looked to whether state law would preclude

the second suit.