February 8, 1993
UNITED STATES COURT OF APPEALS
For The First Circuit
No. 92-1164
DIVERSIFIED FOODS, INC., et al.,
Plaintiffs-Appellants,
v.
THE FIRST NATIONAL BANK OF BOSTON, et al.,
Defendants-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
Before
Torruella and Boudin, Circuit Judges,
and Keeton,* District Judge.
Richard E. Poulos with whom John S. Campbell, Poulos, Campbell &
Zendzian, P.A., Daniel G. Lilley and John A. McArdle were on brief for
appellants.
William J. Kayatta, Jr., with whom Peter W. Culley, Catherine R.
Connors and Pierce, Atwood, Scribner, Allen, Smith & Lancaster were on
brief for appellees.
February 8, 1993
* of the District of Massachusetts, sitting by designation.
BOUDIN, Circuit Judge. In this case the district court
dismissed a suit brought under the Bank Holding Company Act,
12 U.S.C. 1972, on the ground that it was barred by res
judicata. The prior litigation, held to bar the new federal
action, was a state-court suit brought by the same plaintiffs
against the same defendants and decided in favor of the
latter. The disappointed plaintiffs now appeal, urging on
several grounds that res judicata does not properly apply.
In full agreement with the district court, we affirm its
decision.
The procedural history of the two cases is complex and
intertwined but a brief summary will suffice at the outset.
Diversified Foods, Inc., and its operating subsidiary New
England Sales, Inc. (collectively, "the borrowers"), were
engaged in a specialized form of wholesale distribution of
goods. In financing their activities, they entered into
various borrowing arrangements with First National Bank of
Boston and its Maine subsidiary Casco Northern Bank
(collectively, "the banks"). The arrangements, at least in
the borrowers' view, contained terms restricting their
ability to obtain alternative sources of financing.
During 1988, the borrowers first sought to expand their
business and then suffered large losses. They attribute this
reversal of fortune to the failure of the banks to provide
adequate credit under the borrowing arrangements. Claiming
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multimillion dollar damages, the borrowers on August 21,
1989, brought suit against the banks in Maine Superior Court,
asserting various state-law tort and contract claims. The
complaint, as later amended in 1990, included the charge that
the banks violated an implied covenant of good faith by
imposing "unreasonable restrictions so as to prevent the
[borrowers] from obtaining alternative financing." Discovery
in the state case proceeded during 1989 and 1990.
On September 14, 1990, while the state case was
proceeding, the borrowers brought the present action against
the banks based on the anti-tying provisions of the Bank
Holding Company Act, 12 U.S.C. 1972(1). The new federal
claims were based, it appears, on information obtained
through discovery in the state case. The borrowers say that
the new claims were asserted in a separate action in a
different court because at that time the borrowers held the
view (contrary to two circuit decisions) that federal courts
have exclusive jurisdiction over claims under section 1972.1
1Two weeks before filing the federal complaint, the
borrowers moved to amend their state complaint to charge that
the banks had breached their duty of good faith by
"unreasonable, illegal, and anticompetitive" restrictions on
alternative financing. Shortly after the federal complaint
was filed, the banks opposed the state amendment. When the
borrowers responded that the federal claims were not being
asserted in the state case, the state court allowed the
amendment, striking the words "illegal" and
"anticompetitive."
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When the banks answered the federal complaint on October
24, 1990, they included as a defense the assertion that the
borrowers "have improperly split their causes of action,
having previously filed in another court another complaint
arising out of the same transaction or series of
transactions." Thereafter, the banks resisted the borrowers'
efforts in January 1991 to introduce the state claims into
the federal action by amendment of the federal complaint or
to delay the state proceedings. The banks did agree to have
discovery in either case treated as if taken in both.
On April 18, 1991, the Maine Superior Court granted
summary judgment in favor of the banks, a decision later
affirmed on appeal. Diversified Foods, Inc. v. First Nat'l
Bank, 605 A.2d 609 (Me. 1992). The banks then moved for
summary judgment in the federal action on grounds of res
judicata, and the district court granted the motion on
January 9, 1992. A belated attempt by the borrowers to
reopen the state case to add the federal claims was rejected
by the state court, and this action was also affirmed on
appeal. Id. The borrowers then pursued this appeal in the
federal case.
In this court the borrowers first argue that federal
courts have exclusive jurisdiction over claims under the Bank
Holding Company Act's anti-tying provisions. Therefore, they
argue, res judicata cannot properly derive from the state
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court judgment because they could not have included the
federal claims in their state case. We need not decide
whether the conclusion would follow if the premise were
sound, for the premise is mistaken. We follow two circuits
and several other courts that uniformly hold that state
tribunals have concurrent jurisdiction over section 1972
claims. Cuervo Resources, Inc. v. Claydesta Nat'l Bank, 876
F.2d 436 (5th Cir. 1989); Lane v. Central Bank, N.A., 756
F.2d 814 (11th Cir. 1985).2
The Bank Holding Company Act provides that anyone
injured by a violation of section 1972 may sue "in any
district court of the United States," admittedly making no
reference to state courts. 12 U.S.C. 1975. But it is now
settled that there is a presumption in favor of concurrent
jurisdiction, so that state courts may entertain federal
civil claims as a matter of course "absent provision by
Congress to the contrary or disabling incompatibility"
between the federal claim and state court jurisdiction. Gulf
Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 477-78
(1981). Here there is no explicit bar to state-court
jurisdiction and the subject matter is hardly beyond the
2Several state courts have reached the same conclusion.
See United Central Bank, N.A. v. Kruse, 439 N.W.2d 849 (Iowa
1989); Waite v. Banctexas-Houston, N.A., 792 S.W.2d 538 (Tex.
Ct. App. 1990).
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competence of state courts, which routinely consider claims
under their own antitrust laws.
Of course, the resemblance to antitrust law cuts both
ways, providing the borrowers' best argument for exclusive
federal jurisdiction. Section 1972 is a blunter version of
section 3 of the Clayton Act, 15 U.S.C. 14, and with
qualifications courts use Clayton Act precedents in applying
section 1972. E.g., Swerdloff v. Miami Nat'l Bank, 584 F.2d
54, 58-59 (5th Cir. 1978). In empowering federal courts to
hear Clayton Act cases, Congress made no reference to state-
court jurisdiction, see 15 U.S.C. 15, and it is well
settled (by judicial construction) that federal antitrust
claims may be asserted only in federal court. Blumenstock
Bros. Advertising Agency v. Curtis Pub. Co., 252 U.S. 436,
440 (1920). The borrowers urge that the same gloss be
applied to the Bank Holding Company Act.
Exclusive federal-court jurisdiction over antitrust
claims, although a firmly rooted rule, is the product of
reasoning that the Supreme Court no longer applies in new
matters. Like baseball's judicial "exemption" from the
antitrust laws, see Flood v. Kuhn, 407 U.S. 258, 283-84
(1972), the result persists but is not extended. This is the
clear message of Tafflin v. Levitt, 493 U.S. 455, 459-60
(1990), where the Supreme Court affirmed the state courts'
concurrent jurisdiction over civil RICO claims and rejected
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the same Clayton Act analogy offered here. Indeed, the RICO
statute uses jurisdictional language quite similar to the
Bank Holding Company Act, compare 18 U.S.C. 1964(c) with 12
U.S.C. 1975, and was passed by the same Congress in the
same session. Tafflin offers the coup de grace to the
borrowers' argument for exclusive jurisdiction.3
Once that issue is removed, the application of res
judicata is straightforward in the present case. The branch
of that doctrine of concern here, known for many years as
merger (if the plaintiff had won the first case) and bar (if
the plaintiff had lost), has lately been rechristened "claim
preclusion" in the modern functional style. See Roy v.
Jasper Corp., 666 F.2d 714, 717 (1st Cir. 1981). More
important, the doctrine has evolved subtly, although not
uniformly in all jurisdictions, to employ a functional "same
transaction" test, as an overlay to the traditional inquiry
whether the "cause of action" in the two cases is the same.
Maine, whose earlier judgment is invoked here as res
judicata, employs this test, which is therefore binding on
3We give little weight to occasional references by
Congress, in the legislative history of section 1972, to
suits in "federal" courts. See, e.g., 2 One-Bank Holding
Company Legislation of 1970: Hearings Before the Senate
Comm. on Banking and Currency, 91st. Cong., 2d Sess. 966
(1970) (statement of Sen. Bennett) (referring to "the process
of suit through the Federal courts . . ."). These
references, if any intent is attributable to them, appear to
reflect the natural assumption that Bank Holding Company Act
claims would usually be litigated in federal forums.
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us. See Migra v. Warren City School Dist. Bd. of Educ., 465
U.S. 75, 85 (1984).
In Currier v. Cyr, 570 A.2d 1205 (Me. 1990), the Maine
Supreme Judicial Court summarized the rule it follows in
deciding whether new claims are barred because they were or
"might have been" litigated in the prior case:
Maine has accepted what is known as a
"transactional test" of cause of action,
which defines "the measure of a cause of
action as the aggregate of connected
operative facts that can be handled
together conveniently for purposes of
trial."
Id. at 1208 (quoting Gurski v. Culpovich, 540 A.2d 764, 766
(Me. 1988)). Accordingly, so long as the parties are the
same in both cases and a final judgment was entered in the
prior action, "a subsequent suit that arises out of the same
operative facts shall be barred even though the second suit
relies upon a legal theory not advanced in the first case,
seeks different relief than that sought in the first case,
and involves [different] evidence . . . ." Id. (emphasis
added).
In the present case the borrowers' federal claims under
section 1972 unquestionably arise out of "the same operative
facts" as the state claims earlier asserted by the borrowers.
They themselves, in an unsuccessful attempt to add the state
claims to the federal case based on pendant jurisdiction,
told the district court that "[t]he facts forming the basis
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for the state claims are the same facts which form the basis
of the pending [federal] action . . . ." A comparison of the
two complaints shows that the factual allegations
substantially overlap. Further, the central tying allegation
in the federal complaint--that the banks restricted the
borrowers' access to alternative sources of credit--was one
of the express claims in the state action.
In this court, the borrowers make only a half-hearted
effort to distinguish the two complaints under the Maine
transactions test for res judicata, and we think the point
needs no further discussion. The borrowers' central
arguments in resisting res judicata, exclusive jurisdiction
aside, are variants on a single theme. They argue in
substance that the banks themselves strove to keep the two
actions separate, resisted the assertion of state claims in
the federal case and vice versa, and now use the judgment in
the suit first decided to prevent litigation of the other on
the merits. This effort to resist consolidation, say the
borrowers, should estop the banks from invoking res judicata
or should be treated as a waiver of the defense.
We accept arguendo the borrowers' version of events,
although it is unclear whether the banks followed a conscious
strategy or merely opposed seriatim the successive demands of
an opponent. But in either event we do not see how the
gravamen of the charge--the banks' resistance to
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consolidation of the federal and state claims--gives rise to
an estoppel of the banks. The banks are not alleged to have
said anything untrue. Their position throughout has been
consistent. There is not even a valid charge of concealment
or surprise: the banks' answer in the federal case gave fair
warning of the risk of res judicata by asserting a claim
splitting defense, expressly referring to the borrowers'
state suit "arising out of the same transaction or series of
transactions."
As for waiver, it may be assumed that Maine, consistent
with general law on the subject, would disallow res judicata
if the "parties have agreed in terms or in effect that the
plaintiff may split his claim, or the defendant has
acquiesced therein." Calderon Rosado v. General Electric
Circuit Breakers, Inc., 805 F.2d 1085, 1087 (1st Cir. 1986)
(quoting Restatement (Second) of Judgments 26(1)(a)).4
Indeed, in Thompson v. Gaudette, 148 Me. 288, 92 A.2d 342
(1952), the Maine Supreme Judicial Court said that the rule
against splitting a cause of action will be waived unless the
defendant asserts it "at the earliest opportunity." 92 A.2d
at 348 (quoting Mayfield v. Kovac, 41 Ohio App. 310, 181 N.E.
4In Calderon Rosado this court rejected on waiver
grounds a res judicata defense in a federal action. The
defendant had earlier agreed to the plaintiff's voluntary
dismissal "with prejudice" of a wrongful discharge claim
under Puerto Rican law brought in a local court, "seemingly
acceding to plaintiff's desire to litigate in federal court"
under a federal statute. 805 F.2d at 1086.
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28, 30 (1931)). In our case, the banks at the outset pleaded
claim-splitting in their answer and maintained that position
throughout the case.
Courts could, we suppose, disallow the claim preclusion
defense wherever two suits are brought and the defendant
thereafter resists their consolidation. But when a plaintiff
has chosen to bring two lawsuits in the same time frame
relating to the same operative facts, it is hard to see why
the defendant should not be able to resist consolidation on
proper grounds, such as undue delay. If the resistance is
unjustified, the plaintiff may normally litigate that issue
within the lawsuit. In fact, the borrowers here did seek to
add the federal claims to the state action; but they did so
only after summary judgment was granted on the state claims.
Not surprisingly, the Maine Supreme Judicial Court said that
this effort came too late. Diversified Foods, Inc., 605 A.2d
at 616.5
Finally, the borrowers suggest that, estoppel and waiver
issues to one side, it would be inequitable to permit the res
judicata defense. They argue that their decision to bring a
separate federal suit, instead of adding the federal claims
5The borrowers were only slightly more diligent in
seeking to add the state claims to the federal case. In late
January 1991, they moved to amend the federal complaint to
assert the state claims and to stay the state action. This
occurred, however, after the close of state discovery and on
the eve of the banks' deadline for filing summary judgment
motions.
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to the state case, was based on a good faith belief that
exclusive federal-court jurisdiction prevented that course.
Res judicata is a judge-made doctrine resting on
considerations of policy, and doubtless there is room for
equitable adjustments. See generally 18 Charles A. Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice and
Procedure 4415 (1981). But in this case the mistaken
belief in exclusive federal jurisdiction was formed in the
face of two circuit decisions to the contrary.
Thus, the case for an equitable departure from res
judicata is very weak. True, the banks played an aggressive
hand, but litigation is inherently aggressive. Further, the
borrowers created their own dilemma by bringing the two
actions separately, ignoring the concurrent-jurisdiction
precedents directly in point. Then, in the teeth of the
warning furnished by the banks' claim splitting defense, the
borrowers failed to assert the federal claims in the state
case until after that case had been lost. Like the Maine
Supreme Judicial Court, we see no equitable basis for
resurrecting claims that the borrowers themselves allowed to
expire.
Affirmed.
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