United States Court of Appeals
For the First Circuit
No. 09-1624
AIRFRAME SYSTEMS, INC.,
Plaintiff, Appellant,
v.
RAYTHEON COMPANY; JOHN STOLARZ; L-3 COMMUNICATIONS HOLDINGS,
INC.; L-3 COMMUNICATIONS CORP.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Lynch, Chief Judge,
Souter, Associate Justice,* and Stahl, Circuit Judge.
Peter B. Krupp with whom Lurie & Krupp, LLP and Bruce I. Afran
were on brief for appellant.
John F. Batter III with whom Timothy J. Perla, Sarah W. Lowe,
and Wilmer Cutler Pickering Hale and Dorr LLP were on brief for
appellee Raytheon Company.
Alan M. Gelb with whom Randi Maidman and Jones Hirsch Connors
& Bull, PC were on brief for appellee L-3 Communications
Corporation.
March 31, 2010
*
The Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
LYNCH, Chief Judge. The question presented is whether
the doctrine of claim preclusion bars the plaintiff, Airframe
Systems, Inc. (Airframe) from pursuing a later 2007 copyright
infringement action in Massachusetts when its earlier 2006
copyright action in New York, concerning the same series of events,
was dismissed and Airframe took no appeal.
The wrinkle presented is that the earlier New York suit
named as defendant L-3 Communications Corporation (L-3), the later
owner of Aircraft Integration Systems (AIS), the business unit in
both cases said to have infringed through use and/or possession of
Airframe's software source code. The later Massachusetts suit, on
the other hand, named as defendant Raytheon, which owned AIS at the
time of the alleged infringement. Since Airframe was or should
have been well aware of these facts when it filed the New York
lawsuit, and should have amended its suit there, we agree with the
district court that the Massachusetts action is barred. On appeal,
Airframe challenges the dismissal of its suit only with respect to
Raytheon and has waived the argument that its suit against L-3 was
not precluded. The allowance of the motion to dismiss is affirmed.
We summarize our reasoning. Airframe makes two arguments
as to why the present suit against Raytheon is distinguishable from
the New York suit for claim preclusion purposes. First, it says
the causes of action in the New York suit, which claimed
infringement based on unauthorized possession of its source code,
-2-
are different from its present claims of infringement based on the
unauthorized use of its source code to modify software. But both
claims arise from the same series of events in the same timeframe
and meet the common nucleus of operative fact test. Airframe could
have made both claims in the New York suit and chose not to do so.
Moreover, Airframe sought leave to amend its New York complaint to
add the infringing use claim; the New York court impliedly denied
the request, and Airframe did not appeal that decision.
Second, Airframe argues that the New York suit only named
L-3 as a defendant and should not bar its present suit as to
Raytheon, which it says was not an identical party to L-3 because
they were not in privity. But modern claim preclusion doctrine
need not be analyzed solely in terms of common law concepts of
privity. On the facts of this case, Raytheon and L-3 were
sufficiently related parties for Raytheon to be able to invoke
claim preclusion in the Massachusetts suit. Airframe's claims are,
and always have been, about the actions of a single business unit,
AIS. Raytheon and L-3 had a close and significant relationship as
AIS's former and current owners in the relevant period. In the New
York suit, Airframe could have sued Raytheon and L-3, but instead
tried to hold L-3 liable for AIS's actions under both L-3's and
Raytheon's ownership. Airframe made a number of strategic choices;
claim preclusion doctrine requires it to live with those choices.
-3-
I.
Our review of a district court's allowance of a motion to
dismiss for failure to state a claim on preclusion grounds is de
novo. See Haag v. United States, 589 F.3d 43, 45 (1st Cir. 2009).
We accept all well-pleaded facts in the complaint as true, and we
draw all reasonable inferences in plaintiff's favor. See Sutliffe
v. Epping Sch. Dist., 584 F.3d 314, 325 (1st Cir. 2009). Other
undisputed documents about the New York proceedings were also
properly before the district court and us.
AIS is in the business of systems integration, in the
course of which it modernizes and maintains aircraft for its
customers. As part of that business, AIS uses certain software to
manage the servicing and maintenance of airliner fleets. Since at
least 1987, AIS has purchased and renewed an annual license for
Airframe's Maintenance and Engineering software suite, a
copyrighted program that performs those functions.
Around 1997 or 1998, John Stolarz, a former Airframe
employee, went to AIS offices for a maintenance visit to address
installation issues AIS was having with the Maintenance and
Engineering software.1 Once at AIS, Stolarz, supposedly without
1
Airframe suggests that this visit occurred in 1997, while
Raytheon documents indicate that the visit likely occurred in 1998.
The parties agree, however, that this visit was the only time when
Airframe source code could have been downloaded onto AIS computers
and when the source code was used to modify software to make it
compatible with AIS's newer computers. Whether this happened in
1997 or 1998 is not material to our analysis.
-4-
Airframe's authorization, allegedly downloaded Airframe's
copyrighted software source code onto an AIS computer. Software
source code is the base that software programmers use to create
various software applications and can be used to modify and upgrade
those applications. Stolarz allegedly used the source code to
modify the Maintenance and Engineering software so that it would
run on newer AIS computers. The source code remained on AIS's
system, and AIS apparently used the modified software on its newer
computers for some unspecified period thereafter. Nonetheless,
subsequent discovery indicated that AIS stopped using the modified
program before Raytheon sold AIS to L-3.
Raytheon owned AIS from 1995 to 2002, during which time
AIS was an unincorporated business division of Raytheon.2 In 2002,
defendant L-3 purchased AIS's assets from Raytheon, and AIS became
an unincorporated division of L-3. See Anthony L. Velocci, Jr., L-
3's Acquisition of AIS Alters Competitive Field, Aviation Wk. &
Space Tech., Jan. 21, 2002, at 37. L-3 also became the successor
licensee for the Airframe Maintenance and Engineering software.
In 2003, during a trouble-shooting session at AIS
offices, Airframe discovered that the Airframe source code was on
AIS's computer network. Airframe's president, Gordon Rosen, asked
2
Raytheon created AIS by combining the operations of two
prior companies: E-Systems, Inc., which it acquired in 1995, and
Chrysler Technologies Airborne Systems, which it acquired in 1996.
See L-3 Communications Integrated Systems Group, About Us,
http://www.l-3com.com/is/aboutUs.html (last visited Mar. 7, 2010).
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for an explanation, and L-3 sent a September 10, 2003 letter to
Airframe explaining that Airframe employee John Stolarz was the
only person who could have installed the source code.
Also in 2003, in connection with unrelated litigation
between Stolarz and Airframe in the federal district court for the
Southern District of New York, Airframe subpoenaed documents in L-
3's possession regarding AIS's prior dealings with Airframe and
Stolarz. One of these documents, dated June 2, 1998, was a request
from AIS, on Raytheon letterhead, addressed to Stolarz at Airframe.
The request stated that AIS was having problems using certain
software on its newer computers and prompted Stolarz's visit to AIS
to address the issue. It was during this visit that the alleged
download of the Airframe source code occurred.
In 2005, Airframe sued L-3 and Stolarz in the U.S.
District Court for the Southern District of New York. The
complaint alleged that AIS had purchased the initial license for
the Airframe Maintenance and Engineering software suite, and that
L-3, as AIS's present owner, was liable for any infringements. The
complaint asserted, among other claims, that L-3 (1) had conspired
with Stolarz to obtain Airframe's source code and that Airframe had
discovered L-3's possession of its code in 2003; (2) that L-3 could
have used the source code to modify and update Airframe software
without paying Airframe for license renewals or software updates,
though the complaint did not claim such use had occurred; and (3)
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that L-3's ongoing possession of the source code infringed
Airframe's exclusive rights under the Copyright Act. L-3 then
filed a motion to dismiss for failure to state a claim.
During a March 2, 2006, hearing in New York, L-3's
counsel explained his understanding of what had happened during
Stolarz's visit to AIS in the late 1990s, when AIS was owned by
Raytheon. L-3's counsel stated that Stolarz appeared to have
installed the Airframe source code on an AIS computer and had used
it to modify the licensed Airframe Maintenance and Engineering
software. Airframe's counsel portrayed L-3's counsel's statement
as a concession and asserted it was only at this point that it
learned that L-3, through AIS, had used, and not merely possessed,
Airframe's source code. Airframe urged that the alleged concession
of use created a new issue. The court invited Airframe to file a
letter, which the court would use to determine whether the
complaint was sufficient and, if not, whether an amendment would
cure any defects. Airframe did so. Airframe's March 17, 2006,
letter stated that it was prepared to file an amended complaint
incorporating new claims of L-3's unauthorized use of its source
code, but it did not attach an amended complaint or file a formal
motion.
The court did not explicitly rule on whether Airframe
could amend its complaint. On September 6, 2006, the New York
court dismissed the complaint for failure to state a claim. It
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held that because Airframe's complaint had not alleged that L-3 had
actually used the source code, only that it could have done so,
Airframe could not show infringement under the Copyright Act. See
Airframe Sys., Inc. v. L-3 Commc'ns Corp., No. 05-cv-7638, 2006 WL
2588016, at *3-4 (S.D.N.Y. Sept. 6, 2006). Airframe did not appeal
either the merits of this decision or the court's failure to act on
its stated intention to amend the suit to allege infringing use.
Having lost in New York, on January 26, 2007, Airframe
filed suit against L-33 and John Stolarz4 in the federal district
court of Massachusetts and, for the first time, also named Raytheon
as a defendant. The complaint alleged that AIS, under Raytheon's
ownership, had conspired with former Airframe employee Stolarz to
obtain Airframe's source code. It further stated that Raytheon,
through AIS, had infringed Airframe's copyright both by possessing
the source code and by using the code to make the Maintenance and
Engineering software compatible with AIS's new computers. The
complaint alleged that defendant L-3 became the "successor
3
Airframe sued both L-3 Communications Corporation, the
defendant in the New York action, and L-3 Communications Holdings,
Inc., the corporate owner of L-3 Communications Corporation.
Airframe referred to the two companies collectively as "L-3" and
has drawn no distinction between them. Corporate parents and
subsidiaries are generally considered identical parties for claim
preclusion purposes, see, e.g., In re Colonial Mortgage Bankers
Corp., 324 F.3d 12, 17 (1st Cir. 2003), and we also refer to these
parties collectively as "L-3."
4
Stolarz is not a party to the present appeal. The
district court granted his motion to dismiss for lack of personal
jurisdiction, and Airframe does not challenge that ruling.
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licensee" of the Airframe software when it acquired AIS's assets
from Raytheon in 2002, that L-3 had continued to possess the source
code, and that it had continued to use the AIS computers running
the modified software. This, the complaint alleged, made L-3, "as
successor to Raytheon," responsible for infringements based on
possession and use after 2002. The suit again sought recovery
under the Copyright Act, among other claims.
On May 9, 2007, L-3 and Raytheon both filed a motion to
dismiss on the basis of claim preclusion, and on October 31, 2007,
the Massachusetts district court granted this motion as to both
parties.5 Airframe has appealed only the dismissal of Raytheon.
II.
Federal claim preclusion law applies to determine the
preclusive effect to be given a prior federal court judgment. See
Coors Brewing Co. v. Méndez-Torres, 562 F.3d 3, 8 (1st Cir. 2009).
Federal claim preclusion law bars parties from relitigating claims
that could have been made in an earlier suit, not just claims that
were actually made. See Federated Dep't Stores, Inc. v. Moitie,
452 U.S. 394, 398 (1981); Haag, 589 F.3d at 45.
5
The district court held that all claims of infringement
against L-3 and Raytheon arising before September 6, 2006, the date
of the New York action, were precluded. It permitted the suit to
go forward as to any claims of infringement after that date. The
remainder of the case was dismissed on April 7, 2009, after
Airframe told the court it no longer intended to pursue those
claims because discovery had revealed that Raytheon stopped using
the modified program before selling AIS to L-3.
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The doctrine of claim preclusion serves at least two
important interests: protecting litigants against gamesmanship and
the added litigation costs of claim-splitting, and preventing
scarce judicial resources from being squandered in unnecessary
litigation. See Sutliffe, 584 F.3d at 329. Those interests are
especially implicated in a case like this, where the plaintiff had
every opportunity to fully litigate its various claims against the
full range of defendants in an earlier suit and made the strategic
choice not to do so. Plaintiffs cannot obtain a second chance at
a different outcome by bringing related claims against closely
related defendants at a later date.
Claim preclusion applies if (1) the earlier suit resulted
in a final judgment on the merits, (2) the causes of action
asserted in the earlier and later suits are sufficiently identical
or related, and (3) the parties in the two suits are sufficiently
identical or closely related. See id.; Negrón-Fuentes v. UPS
Supply Chain Solutions, Inc., 532 F.3d 1, 10-11 (1st Cir. 2008);
Apparel Art Int'l, Inc. v. Amertex Enter., Ltd., 48 F.3d 576, 583-
84 (1st Cir. 1995).
There is no dispute as to the first of the three prongs
in the analysis. The dismissal of the New York suit for failure to
state a claim was plainly a final judgment on the merits, see AVX
Corp. v. Cabot Corp., 424 F.3d 28, 30 (1st Cir. 2005). Airframe
argues that the second and third criteria have not been met.
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We hold that Airframe should have brought its use claim
in the New York action, either in the initial complaint or in an
amended one, because its claims of infringing possession and use
are so closely related. We further hold that Airframe should have
named Raytheon as a defendant in the New York action given
Raytheon's close relationship with L-3 as to AIS's operations
during the relevant time period. Finally, we conclude there is no
unfairness to Airframe in applying claim preclusion.
A. The Causes of Action Are Sufficiently Related
This court uses a transactional approach to determine
whether the asserted causes of action are sufficiently identical or
related for claim preclusion purposes. A "cause of action" in this
context includes "all rights of the plaintiff to remedies against
the defendant with respect to all or any part of the transaction,
or series of connected transactions, out of which the action
arose." United States v. Cunan, 156 F.3d 110, 114 (1st Cir. 1998)
(quoting Manego v. Orleans Bd. of Trade, 773 F.2d 1, 5 (1st Cir.
1985) (internal quotation marks omitted).
This inquiry does not turn on the labels the plaintiff
attaches to its various claims, but rather "boils down to whether
the causes of action arise out of a common nucleus of operative
facts." Mass. Sch. of Law at Andover, Inc. v. Am. Bar. Ass'n, 142
F.3d 26, 38 (1st Cir. 1998). We determine that by looking to
factors such as "whether the facts are related in time, space,
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origin or motivation," "whether they form a convenient trial unit,"
and whether treating them as a unit "conforms to the parties'
expectations." In re Iannochino, 242 F.3d 36, 46 (1st Cir. 2001)
(quoting Restatement (Second) of Judgments § 24 (1982)) (internal
quotation marks omitted).
We clear away some underbrush. Airframe's assertion that
claim preclusion applies only to those issues that were actually
determined by the court in the previous suit is plainly incorrect
and relies on cases involving issue preclusion, not claim
preclusion. The relevant question remains whether Airframe's
claims of infringing possession (assuming such a claim can be
brought at all) and infringing use share a common nucleus of
operative facts.
Airframe's claims of infringement through possession and
infringement through the use of its source code clearly arise from
the same common core of facts in the same timeframe. Airframe's
complaints in both suits asserted that AIS's allegedly unauthorized
possession of Airframe's source code began when Stolarz installed
the source code on an AIS computer in 1997 or 1998. Airframe's
claim of infringing use arises from Stolarz's apparent use of the
source code to modify software to run on a newer AIS computer
during the same maintenance visit. These infringements continued
for years, Airframe says, simply because the source code remained
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on AIS's system and because AIS continued using the modified
software.6
Even if we assume hypothetically that there was a
separate infringement cause of action for possession, at trial the
claims of infringement based on possession and use would have
relied on the same witnesses and evidence. Airframe's statement of
its desire to amend its New York complaint with the infringing use
claim evidences that these claims could have foreseeably been
brought together.
Airframe says it had no way to bring the claim of
infringing use when the New York suit was filed because it only
learned of this alleged development in the course of litigation.
That is not true. Airframe had the relevant facts concerning
Stolarz's visit in its possession well before it filed the New York
complaint in 2005, thanks to documents it had already subpoenaed
from L-3 in connection with an unrelated suit against Stolarz in
2003.
6
Airframe also tries to argue that because the New York
suit was only directed against L-3, and L-3 only purchased AIS in
2002, the New York suit was necessarily only about infringements
after that date, whereas the present suit seeks to hold Raytheon
accountable for earlier infringements as well. But that argument
is plainly contradicted by the wording of Airframe's New York
complaint, which accused L-3, through AIS, of conspiring with
Stolarz to obtain the original source code and accused it of
infringements thereafter. Airframe's imprecision as to the date
when AIS obtained the source code, and the resulting question of
whether this happened under Raytheon or L-3 ownership, does not
change the essential nature of the claims.
-13-
Nor does Airframe's failure to get leave from the New
York court to amend its complaint somehow deprive the New York
judgment of preclusive effect. Airframe could have appealed and
did not. Airframe also hypothesized that the New York court's
implicit denial of that request was not based on the merits. It
then argued the nonsequitur that this must mean there is no
preclusive effect. But Airframe decided not to appeal the New York
court's decision not to let it amend its complaint, and that
outcome is the same regardless of the New York court's reasoning.
On these facts, Airframe's recourse was to appeal, not to start a
new action. Under these circumstances, and given Airframe's
strategic choice of litigation tactics, Airframe is not entitled to
a second opportunity to litigate this claim.7 See Johnson v. SCA
Disposal Servs. of New England, Inc., 931 F.2d 970, 975-76 (1st
Cir. 1991) (holding that an appeal of the denial of plaintiff's
motion to amend the complaint to add an additional claim was
plaintiff's "only recourse," and a new suit based on the additional
7
For these reasons, even if Airframe had not waived any
appeal from dismissal of L-3, the present suit against L-3 would
still be precluded. Airframe's only argument as to L-3, asserted
at oral argument in response to a question from the bench, was that
the New York claims against L-3 involved infringement based on
possession, whereas the present claims involved claims of
infringing use. This is the same argument discussed and rejected
above. Moreover, Airframe's admission that discovery revealed AIS
had stopped using the modified software before the division was
sold to L-3 would, in any event, appear to undercut all the factual
predicates for the claim of infringing use against L-3 alleged in
the Massachusetts complaint.
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claim was barred by claim preclusion, especially in light of
indications that the failure to include the additional claim was a
"calculated tactical decision"); see also EFCO Corp. v. U.W. Marx,
Inc., 124 F.3d 394, 399-400 (2d Cir. 1997) (holding that "[w]here
a plaintiff's motion to amend its complaint in the first action is
denied, and plaintiff fails to appeal the denial, res judicata
applies to the claims sought to be added in the proposed amended
complaint" where those claims arose from the same transactions as
the initial claims); Restatement, supra, § 25 cmt. b (noting that
a "mere shift in the evidence offered to support a ground held
unproved in a prior action will not suffice to make a new claim
avoiding the preclusive effect of the judgment" and that "[i]t is
immaterial that the plaintiff in the first action sought to prove
the acts relied on in the second action and was not permitted to do
so because they were not alleged in the complaint" and the
plaintiff was unable to amend the complaint). Thus, there was
claim preclusion as to the use claim.
B. The Parties Are Sufficiently Closely Related
We ask whether Raytheon and L-3 were sufficiently related
parties for Raytheon, the new defendant, to assert claim preclusion
as a defense in the present action.
Claim preclusion does not merely bar a plaintiff from
suing the same defendant for the same claims in a different action;
under certain circumstances, a defendant not a party to an original
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action may also use claim preclusion to defeat the later suit.8 We
flatly reject Airframe's contention that nonparty defendants to an
initial action can invoke claim preclusion as a defense in a later
suit only if they can show that the nonparty defendant was in
privity with the initial defendant, for instance because the new
defendant controlled the earlier litigation or used an original
defendant as its de facto representative.
Under our precedents, privity is a sufficient but not a
necessary condition for a new defendant to invoke a claim
preclusion defense. We, along with other circuits, have long held
that claim preclusion applies if the new defendant is "closely
related to a defendant from the original action-who was not named
in the previous law suit," not merely when the two defendants are
in privity. Negrón-Fuentes, 532 F.3d at 10; see id. (collecting
cases); Hermes Automation Tech., Inc. v. Hyundai Elec. Indus. Co.,
Ltd., 915 F.2d 739, 751 (1st Cir. 1990) (reaffirming the "close and
significant" relationship test); In re El San Juan Hotel Corp., 841
F.2d 6, 10-11 (1st Cir. 1988) (holding that the new defendant, an
alleged co-perpetrator of the financial harms litigated in the
first lawsuit, had a sufficiently close relationship to the
original defendant so as to invoke claim preclusion as a defense);
8
Though "[t]he judicial expansion of claim preclusion
doctrine . . . has not gone unchecked," Negrón-Fuentes, 532 F.3d at
10, cases like Taylor v. Sturgell, 128 S. Ct. 2161 (2008), have
limited the circumstances under which nonparty plaintiffs are
precluded from suing the same defendants, id. at 2172-75.
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see also Gambocz v. Yelencsics, 468 F.2d 837, 841-42 (3d Cir. 1972)
(holding that unnamed co-conspirators sued in a subsequent suit
could assert a claim preclusion defense when plaintiff had sued
other conspirators on the same claims in the first suit).
In the corporate context, other circuits have recognized
that this kind of "close and significant relationship" may exist
between a parent corporation and a subsequently sued affiliate, see
Lubrizol Corp. v. Exxon Corp., 929 F.2d 960, 966 (3d Cir. 1991), or
between a corporation and its successor, see Russell v. SunAmerica
Sec., Inc., 962 F.2d 1169, 1175-76 (5th Cir. 1992). This circuit
has not previously addressed the circumstances under which a
successor or predecessor corporation not party to an initial suit
might invoke claim preclusion as a defense in a later action.
Whether a "close and significant relationship" exists
between an original defendant and a defendant only named in a later
suit varies with the facts. For instance, "where some alleged
conspirators are sued in the first (unsuccessful) action and the
remainder in a second suit based on the same allegations," or where
"a government is sued first (unsuccessfully) and officers in their
personal capacities sued afterwards on the same theory," courts
have held the later defendants could raise claim preclusion as a
defense. Negrón-Fuentes, 532 F.3d at 10; see also 18A C. Wright,
A. Miller & E. Cooper, Federal Practice and Procedure § 4464.1, at
720 n.6 (2d ed. 2002) (collecting cases in which new defendants
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successfully asserted nonmutual claim preclusion). The common
factors in these cases were that "the [later] claims were or could
have been brought against the original defendant in the original
suit" and the subsequent suit tried to hold related defendants
liable on related claims. Id.9
Here, all of Airframe's claims of infringement against L-
3 and Raytheon in the present suit could have been brought against
L-3 in the original suit. Indeed, in the New York suit, Airframe
brought claims against L-3 for alleged infringements dating from
the time AIS acquired Airframe's source code--that is, while
Raytheon owned AIS--to 2006, the date of the New York suit.
Airframe argues that it had no way of knowing that AIS
obtained Airframe's source code during Raytheon's ownership, and
that it would have therefore been impossible to sue Raytheon when
the initial complaint was filed. But we need not reach the
complexities of when parties must amend their complaints in light
of newly discovered information in the course of litigation. This
contention, like Airframe's related claim that it had no way of
9
Those conditions were not met on the facts of Negrón-
Fuentes, where we held that the plaintiff could maintain certain
new claims against the additional defendants even assuming that
those claims arose from the same transaction as the claims
plaintiff had brought in his earlier, unsuccessful suit. 532 F.3d
at 10. There, the plaintiff initially sued his employer and later
brought ERISA claims against the administrators of plaintiff's
health care plan. Id. at 9-10. But ERISA applies only to plan
administrators, sponsors, and fiduciaries, and plaintiff could not
have brought ERISA claims against his employer in the initial suit.
Id.
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knowing about the alleged infringing use, is again contradicted by
the documents in Airframe's possession before it filed the New York
complaint. Those documents plainly showed that Raytheon was AIS's
owner in 1998, when Stolarz was allegedly asked to assist AIS with
problems on its newer computers. Airframe was perfectly aware that
AIS had been previously owned by Raytheon, but nonetheless
attributed all of AIS's pre-purchase actions to L-3.10
In sum, in each suit the wrongful action complained of
was allegedly taken by the AIS division. In each suit, the
corporation was named only because it was the superior organization
that included AIS, not because of any wrongful action taken outside
that division. In each suit, the basis for claiming the named
corporation's liability for the actions of AIS was identical to the
grounds claimed in the other suit. The corporations were thus
treated as interchangeable proxies for reaching the actions of AIS.
Since Airframe was in a position to know (and did know) about each
one during the pendency of the earlier litigation, it is reasonable
to treat the two as closely related for purposes of claim
preclusion.
10
Airframe also could have easily found out, through public
filings and its own documentation of AIS software license renewals,
that L-3 only acquired AIS in 2002. Airframe was likewise in a
position to know that the source code had been transferred around
1997, given that its complaint stated that its own former employee,
Stolarz, apparently transferred the code.
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Finally, we see no unfairness to Airframe. It made
choices to bring piecemeal and sequential litigation, apparently
hoping this strategy would maximize its chances of recovery through
settlement or trial. This is a case where "the new party can show
good reasons why [it] should have been joined in the first action
and the old party cannot show any good reasons to justify a second
chance." 18A Wright et al., supra § 4464.1, at 727.
We affirm the district court's dismissal of this suit.
So ordered.
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