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Federated Department Stores v. Moitie

Supreme Court of the United States · 1981 · Civil Procedure

Civil Procedureclaim preclusionfinal judgmentdirect appealantitrustres judicataclaim preclusionfinal judgment on the merits

Facts

The Government filed an antitrust action against department store owners, and several private plaintiffs filed parallel actions, including Brown I. The District Court dismissed all of the actions in their entirety because the plaintiffs had not alleged injury to business or property within the meaning of § 4 of the Clayton Act. Five plaintiffs appealed, but Brown did not; instead, Brown refiled in state court with allegations similar to the earlier complaints, and the case was removed and dismissed as barred by res judicata. While Brown's appeal from that second dismissal was pending, this Court decided Reiter, and the Ninth Circuit reversed the five cases that had actually been appealed.

Issue

Whether res judicata bars relitigation of an unappealed adverse judgment on the merits when other plaintiffs in similar actions against the same defendants successfully appealed identical judgments. More specifically, whether a court of appeals may create an equitable exception allowing nonappealing parties to benefit from another party's successful appeal because their claims are closely interwoven.

Rule

A final judgment on the merits precludes the parties or their privies from relitigating issues that were or could have been raised in that action. The preclusive effect of a final, unappealed judgment is not altered by the possibility that the judgment was erroneous or rested on a legal principle later overruled in another case; such a judgment may be corrected only by direct review, not by a new action on the same claim.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Chicago, Lena Ortiz and three other shoppers separately sued Meridian Plaza Retail Group in federal court, each alleging the same federal pricing conspiracy theory. The district court dismissed all four complaints under Rule 12(b)(6). The three other plaintiffs appealed and later won after the court of appeals relied on a new Supreme Court decision, but Lena chose not to appeal and instead filed a new federal action asserting the same federal theory.

Is Lena's new action barred?

Explanation. A final judgment on the merits precludes the same parties from relitigating claims that were or could have been raised. Under the majority opinion, a Rule 12(b)(6) dismissal counts as a judgment on the merits, and its preclusive effect is not altered because the judgment may have been erroneous or because other parties later obtained a reversal. The proper route was direct review by appeal, which Lena deliberately declined.