United States Court of Appeals,
Eleventh Circuit.
No. 95-2077.
AQUATHERM INDUSTRIES, INC., a foreign corporation, Plaintiff-
Appellant,
v.
FLORIDA POWER & LIGHT COMPANY, Defendant-Appellee.
June 11, 1996.
Appeal from the United States District Court for the Middle
District of Florida. (No. 92-1047-Civ-Orl-22), Anne C. Conway,
Judge.
Before HATCHETT and BARKETT, Circuit Judges, and OAKES*, Senior
Circuit Judge.
OAKES, Senior Circuit Judge:
Appellant Aquatherm Industries, Inc. ("Aquatherm") appeals
from a judgment entered on December 9, 1994, by the United States
District Court for the Middle District of Florida, Anne C. Conway,
Judge, dismissing Aquatherm's federal antitrust and Lanham Act
claims against appellee Florida Power & Light Company ("FPL"). On
appeal, Aquatherm argues that the district court erred in
concluding that res judicata barred Aquatherm's claims under
Florida preclusion law. While we agree with the district court
that Aquatherm's Lanham Act claims were barred, we find that res
judicata did not preclude Aquatherm's pursuit of its federal
antitrust claims. We therefore affirm in part, reverse in part,
and remand.
BACKGROUND
*
Honorable James L. Oakes, Senior U.S. Circuit Judge for the
Second Circuit, sitting by designation.
Aquatherm is a manufacturer of solar-powered heating systems
for swimming pools. FPL is a regulated utility that sells
electricity in an area of Florida containing more than 250,000
in-ground swimming pools. The underlying dispute in this case
involves FPL's statements to its customers regarding electric pool
heat pumps and solar pool heaters, and Aquatherm's contention that
these statements have unfairly advantaged the market for pool
heaters reliant on electricity.
Aquatherm and FPL have expended a great deal of energy on
their journey to this court. Aquatherm commenced its suit in 1991
by filing state antitrust claims in Florida state court; it later
amended its complaint to include a federal claim for unfair
competition under the Lanham Act, 15 U.S.C. 1125(a) (1994). FPL
then removed the action to the United States District Court for the
Southern District of Florida, at which point Aquatherm voluntarily
withdrew its Lanham Act claim. The District Court consequently
remanded the action to state court.
After remand, Aquatherm again amended its complaint to include
state law claims of trade libel and product disparagement. FPL
moved for dismissal and the state court dismissed all of
Aquatherm's claims with prejudice in November 1992. The state
court's decision was affirmed by a Florida appellate court in March
1994.
Prior to dismissal of the state action, Aquatherm filed a
federal action in the United States District Court for the Middle
District of Florida in November 1992. The complaint alleged
federal antitrust violations under the Sherman Act, 15 U.S.C. §§ 1
and 2 (1994), and reasserted Aquatherm's Lanham Act claim. After
Aquatherm amended this complaint to add antitrust claims under the
Clayton Act, 15 U.S.C. § 15 (1994), FPL moved for dismissal. The
district court stayed the action pending resolution of the state
court appeal.
When the Florida appellate court affirmed the dismissal of
Aquatherm's claims, FPL renewed its motion to dismiss in the
federal district court on the basis of res judicata and failure to
state any colorable claim. In December 1994, the district court
granted FPL's motion to dismiss on the ground that res judicata
barred Aquatherm's antitrust and Lanham Act claims.
In this appeal, Aquatherm contends that the district court
erred in its construction and application of res judicata
principles in several ways: (1) by misapplying United States
Supreme Court precedent to reach the conclusion that prior
resolution of Aquatherm's state antitrust claims barred its later
federal antitrust claims; (2) by misinterpreting Florida
preclusion law to find that res judicata bars a subsequent
antitrust claim when an earlier court lacked subject matter
jurisdiction over the original antitrust claim; (3) by applying
only two of the four elements required for res judicata under
Florida law to hold that Aquatherm's Lanham Act claim was barred;
and (4) by ignoring the "manifest injustice" exception to res
judicata. We agree with Aquatherm that the district court erred in
its analysis of Aquatherm's antitrust claims under res judicata
principles. We therefore reverse the dismissal of the antitrust
claims and remand for further proceedings. Because we find that
the district court properly dismissed Aquatherm's Lanham Act claim,
we affirm that portion of the district court's decision.
DISCUSSION
The application of res judicata principles to Aquatherm's
claims constitutes a pure question of law that we review de novo.
Meshulam v. General Motors Corp., 995 F.2d 192, 194 (11th
Cir.1993); Israel Discount Bank Ltd. v. Entin, 951 F.2d 311, 314
(11th Cir.1992). We therefore must assess whether Aquatherm can
prove any set of facts entitling it to relief on its antitrust and
Lanham Act claims. St. Joseph's Hosp., Inc. v. Hospital Corp. of
America, 795 F.2d 948, 953 (11th Cir.1986). Because Aquatherm's
two sets of claims raise discrete issues under the doctrine of res
judicata,1 we address them separately.
I. Antitrust Claims
This case presents the question whether a federal district
court may give a Florida court judgment preclusive effect in a
federal action brought under antitrust laws that are within the
exclusive jurisdiction of the federal courts and therefore could
not have been raised in the state court proceeding due to lack of
1
As noted by the Supreme Court, the terminology used to
discuss the preclusive effects of earlier litigation is somewhat
confusing because res judicata is often used to refer both to
claim preclusion and to issue preclusion. Migra v. Warren City
Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n. 1, 104 S.Ct. 892, 894
n. 1, 79 L.Ed.2d 56 (1984). Here, we adopt for the purposes of
continuity the district court's use of the term "res judicata" as
a synonym for "claim preclusion," which refers to "the effect of
a judgment in foreclosing litigation of a matter that has never
been litigated, because of a determination that it should have
been advanced in an earlier suit." Id. We are not confronted
with any question of issue preclusion, also known as collateral
estoppel, in this case.
subject matter jurisdiction. 2 While this issue appears to be one
of first impression in this circuit, we are not without guidance:
the Supreme Court has laid out the approach for determining whether
a prior state court judgment may bar a later federal antitrust suit
in Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S.
373, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985); see also Matsushita
Electric Industrial Co., Ltd. v. Epstein, --- U.S. ----, ----, 116
S.Ct. 873, 878, 134 L.Ed.2d 6 (1996) ("Marrese provides the
analytical framework for deciding whether the [state] court's
judgment precludes this exclusively federal action.").
In Marrese, the Court reversed a lower court ruling that held
that, as a matter of federal law, res judicata barred federal
antitrust claims in a federal suit brought after an Illinois state
court judgment. Balancing the exclusivity of federal court
jurisdiction over federal antitrust claims with the full faith and
credit given state court proceedings pursuant to 28 U.S.C. § 1738,
the Court outlined a two-step analysis for federal courts to apply
in cases such as the one before us.
Marrese directs a court "to look first to state preclusion
law in determining the preclusive effects of a state court
judgment." 470 U.S. at 381, 105 S.Ct. at 1332. If state
preclusion law indicates that res judicata should bar a claim in a
subsequent federal suit, a court must then evaluate whether to
2
Exclusive federal jurisdiction is provided by statute for
Sherman Act claims, 15 U.S.C. § 4 (1994), and Clayton Act claims,
15 U.S.C. § 15 (1994). See Freeman v. Bee Machine Co., Inc., 319
U.S. 448, 451, 63 S.Ct. 1146, 1147-48, 87 L.Ed. 1509 (1943),
Hayes v. Solomon, 597 F.2d 958, 984 (5th Cir.1979), cert. denied,
444 U.S. 1078, 100 S.Ct. 1028, 62 L.Ed.2d 761 (1980).
permit the claim nevertheless as an exception to the full faith and
credit requirements of § 1738. Id. at 383, 105 S.Ct. at 1333. The
Court noted that:
With respect to matters that were not decided in the state
proceedings, ... claim preclusion generally does not apply
where "[t]he plaintiff was unable to rely on a certain theory
of the case or seek a certain remedy because of the
limitations of the subject matter jurisdiction of the
courts...." Restatement (Second) of Judgments § 26(1)(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.
Id. at 382, 105 S.Ct. at 1333.
Under Marrese, therefore, we must determine whether Florida
law would give preclusive effect to a judgment by a Florida court
that lacked subject matter jurisdiction over the original claims.
Id. at 386, 105 S.Ct. at 1334-35. If, as Marrese recognizes is
usually the case, Florida preclusion law requires that the state
court have subject matter jurisdiction for res judicata to apply,
then Aquatherm's federal antitrust claims cannot be barred.
It is well-established that the general rule against
splitting causes of action does not apply when suit is brought in
a court that does not have jurisdiction over all of a plaintiff's
claims. See Restatement of Judgments (Second) § 25 cmt. e (1982)
("If ... the court in the first action would clearly not have had
jurisdiction to entertain the omitted theory or ground ... then a
second action in a competent court presenting the omitted theory or
ground should be held not precluded."); 18 Charles A. Wright,
Arthur R. Miller, Edward H. Cooper, Federal Practice and Procedure:
Jurisdiction § 4470 (1981) ("On balance, it seems better to reject
claim preclusion" when jurisdiction is exclusively federal); see
also Hayes v. Solomon, 597 F.2d 958, 984 (5th Cir.1979) (holding
that "[t]he principle of res judicata which prohibits splitting a
cause of action "applies only to claims capable of recovery in the
first action.' " (citations omitted)), cert. denied, 444 U.S.
1078, 100 S.Ct. 1028, 62 L.Ed.2d 761 (1980).
From a review of Florida law, it appears that Florida does
follow this general rule requiring subject matter jurisdiction over
claims in the original action in order for res judicata to act as
a bar to those claims in a later action. As stated in Florida
Jurisprudence 2d:
The doctrine of res judicata applies to the judgments or
decrees of courts of competent jurisdiction....
32 Fla.Jur.2d Judgments and Decrees § 130 (1994) (emphasis added).
In order for a judgment or decree to operate as a bar, it must
be rendered by a court having jurisdiction over the parties
and subject matter.
33 id. at § 177.
Case law also supports the conclusion that Florida does not
permit preclusion unless the prior court had jurisdiction over the
claim. See, e.g., Albrecht v. State, 444 So.2d 8, 11 (Fla.1984)
("The general principle behind the doctrine of res judicata is that
a final judgment by a court of competent jurisdiction is
absolute...."); United Bhd. of Carpenters and Joiners v. Graves
Inv. Co., 15 So.2d 196, 197 (Fla.1943) ("If the court failed to
acquire jurisdiction of the subject matter ... [there is] no right
to rely on the validity of the decree....").
It is not surprising that neither party can offer, nor can we
find, any direct statement made by the Florida courts on the
particular problem presented here. As noted in Marrese, "a state
court will not have occasion to address the specific question
whether a state judgment has ... claim preclusive effect in a later
action that can be brought only in federal court," 470 U.S. at 381-
82, 105 S.Ct. at 1332, because the state court will never obtain
jurisdiction over such an action. Given the assumption of
competent jurisdiction reflected in Florida's approach to res
judicata, as well as the absence of any indication that Florida
does not follow the usual rule, we find that Florida's preclusion
laws do not permit a prior state court judgment to act as a bar to
claims over which the state court did not have subject matter
jurisdiction. Therefore, Aquatherm's antitrust claims cannot be
barred by res judicata in its federal action.
The district court did not engage in the above analysis,
concluding instead that Aquatherm's state antitrust claims, which
of course were litigated in a court of competent jurisdiction
below, barred any federal claim against the same defendant arising
from the same facts. The district court also found that Aquatherm,
once removed to federal court, was required to raise its federal
antitrust claims in that forum. We believe both these holdings
were in error.
First, Marrese directly rejected the proposition that
asserting state antitrust claims can eliminate the right to bring
federal antitrust claims in a subsequent federal action. The
Seventh Circuit plurality opinion in Marrese had held:
[A] state court judgment bars the subsequent filing of a
federal antitrust claim if the plaintiff could have brought a
state antitrust claim under a state statute "materially
identical" to the Sherman Act.
Marrese, 470 U.S. at 377, 105 S.Ct. at 1330. In reversing the
Seventh Circuit, the Supreme Court stated clearly that:
We ... reject a judicially created exception to § 1738 that
effectively holds as a matter of federal law that a plaintiff
can bring state law claims initially in state court only at
the cost of forgoing subsequent federal antitrust claims.
Id. at 386, 105 S.Ct. at 1335; see also Eichman v. Fotomat Corp.,
759 F.2d 1434, 1437 (9th Cir.1985), amended on other grounds, 880
F.2d 149 (9th Cir.1989). Marrese therefore repudiates the district
court's conclusion that Aquatherm's state antitrust claims served
as its sole opportunity to present an antitrust complaint.
Second, there is no authority for the district court's
proposition that Aquatherm was required to assert its federal
claims when it found itself in federal court by virtue of removal.
The district court rested its holding on our decision in Olmstead
v. Amoco Oil Co., 725 F.2d 627 (11th Cir.1984), where we found that
a state court plaintiff who failed to transfer his suit to another
court of the same state in order to escape monetary limits on
jurisdiction was barred from bringing a second state claim. The
district court read Olmstead to mean that whenever there is an
opportunity to avoid jurisdictional constraints, a plaintiff must
avail itself of them. While this reading may be accurate when
different divisions of a state's courts are involved, as in
Olmstead, it does not apply when claims are raised first in state
and then in federal court. As stated in Marrese:
The rule that the judgment of a court of limited jurisdiction
concludes the entire claim assumes that the plaintiff might
have commenced his action in a court in the same system of
courts that was competent to give full relief. See
Restatement (Second) of Judgments § 24, cmt. g (1982).
470 U.S. at 383 n. 3, 105 S.Ct. at 1333 n. 3. Here, Aquatherm
could not have received full relief on its claims in state court,
and it chose not to commence its action in federal court. The
district court's broad reading of Olmstead is therefore in error.
Marrese recognizes that our "parallel systems of state and
federal courts" raise concerns of comity in the application of res
judicata. Id. at 385, 105 S.Ct. at 1334. In analyzing Aquatherm's
antitrust claims without regard for the effect of subject matter
jurisdiction, the district court overlooked these concerns.
Because the district court failed to apply the preclusion analysis
set forth in Marrese and instead based its dismissal of Aquatherm's
antitrust claims on erroneous conclusions of law, we reverse its
decision as to the antitrust claims.
II. Lanham Act Claims
Aquatherm's Lanham Act claim differs from its antitrust
claims in a crucial respect: Federal courts do not have exclusive
jurisdiction over an action brought under the Lanham Act. 28
U.S.C. § 1338(a) (1994); 15 U.S.C. § 1121 (1994). Therefore,
Aquatherm could have litigated its Lanham Act claim while in state
court, but chose not to do so. The concurrent jurisdiction shared
by the state and federal courts over the Lanham Act requires us to
analyze res judicata under the standard set forth in Migra v.
Warren City School Dist. Bd. of Educ., 465 U.S. 75, 104 S.Ct. 892,
79 L.Ed.2d 56 (1984).
In Migra, the Supreme Court held that when a federal cause of
action can be initially litigated in either state or federal court,
a federal court must look to the preclusion law of the state in
which it sits to determine the res judicata effect of a prior
judgment from a state court of competent jurisdiction. Id. at 85,
104 S.Ct. at 898. The Court rejected the argument that a plaintiff
should not be precluded from suit in federal court when its federal
claim could have been litigated in a prior state court proceeding,
stating that a plaintiff is not:
guarantee[d] ... a right to proceed to judgment in state court
on [its] state claims and then turn to federal court for
adjudication of [its] federal claims.
Id. Instead, federal courts must give state court judgments full
faith and credit under 28 U.S.C. § 1738 and apply the state's
preclusion law. Id. at 84, 104 S.Ct. at 897-98; Stockton v.
Lansiquot, 838 F.2d 1545 (11th Cir.) (per curiam), cert. denied,
488 U.S. 891, 109 S.Ct. 225, 102 L.Ed.2d 216 (1988).
Under Florida law, res judicata bars a second suit when a
court of competent jurisdiction has entered final judgment in an
earlier suit and the following four conditions are met:
identity of the thing sued for; identity of the cause of
action; identity of the parties; [and] identity of the
quality in the person for or against whom the claim is made.
Albrecht v. State, 444 So.2d 8, 12 (Fla.1984). Here, the Florida
court had jurisdiction over Aquatherm's Lanham Act claim and its
dismissal with prejudice of Aquatherm's state court action served
as a final judgment. See Crews v. Dobson, 177 So.2d 202, 205
(Fla.1965). There is also no doubt that the same parties were
acting in the same capacity in both actions, thus satisfying
Albrecht's third and fourth conditions.
Aquatherm argues, however, that its Lanham Act claim in
federal court involved both a different cause of action and a
different form of requested relief than the claims for trade libel
and product disparagement it made in state court, and that
therefore res judicata should not bar the litigation of the Lanham
Act claim in federal court. We agree with neither of these
contentions.
Albrecht provides that "[t]he determining factor in deciding
whether the cause of action is the same is whether the facts or
evidence necessary to maintain the suit are the same in both
actions." 444 So.2d at 12. Here, Aquatherm's state claims for
trade libel and product disparagement relied on the same essential
facts, namely, the alleged statements made by FPL to its customers,
as its later Lanham Act claim. Indeed, the state claims appear to
be simply a refashioning of the Lanham Act claim that Aquatherm
voluntarily dropped from its original complaint so that it could
return to state court after being removed to federal court by FPL.
To treat such claims as non-identical would ignore the teaching of
the Restatement (Second) of Judgments § 25, cmt. e., ill. 11, which
offers almost the exact situation presented here as an example of
how res judicata bars a federal claim that could have been raised
in an earlier state court suit.3 We see no reason to disregard
such wisdom.
Aquatherm also can find no purchase with its argument that
3
Illustration 11 reads:
A sues B on a common law basis in a state court for
unfair competition. After trial judgment is entered for the
defendant. A then attempts to bring an action against B in
federal court upon the same behavior, now claiming
infringement of A's federally protected trademark. The
action is barred. The claimed violation of federal right
could have been urged as a ground of liability in the state
court action, as state courts have concurrent jurisdiction
with the federal courts to enforce that right.
the compensatory damages it sought in state court were a different
form of relief from the treble damages and profits it requested in
federal court. Aquatherm relies exclusively on Sivilla v. State
Farm Mut. Auto. Ins. Co., 614 So.2d 553 (Fla.3d Dist.Ct.App.1993)
(per curiam) for this contention, ignoring that Sivilla involved
two separate claims for breach of contract and bad faith that
Florida law required be split for trial. Here, Aquatherm
voluntarily chose not to urge a federal ground for recovery for the
same conduct that served as the foundation of its state law claims.
When the plaintiff itself splits the cause of action to suit its
own purposes, we find that damages are damages, regardless of
amount, for the purposes of res judicata. See Amey, Inc. v. Gulf
Abstract & Title, Inc., 758 F.2d 1486, 1509 (11th Cir.1985)
(finding that identity of thing sued for existed when plaintiff
sued for $2,500 in damages in first suit and $35,000 in second
suit), cert. denied, 475 U.S. 1107, 106 S.Ct. 1513, 89 L.Ed.2d 912
(1986).
Florida law is clear that "[t]he rule against splitting
causes of action makes it incumbent upon plaintiffs to raise all
available claims involving the same circumstances in one action."
Department of Agric. and Consumer Serv. v. Mid-Florida Growers,
Inc., 570 So.2d 892, 901 (Fla.1990). Aquatherm did not abide by
this rule, but elected instead to bring only its state law claims
in the initial state court litigation. We therefore agree with the
district court that Aquatherm's Lanham Act claim is barred by res
judicata.4
CONCLUSION
For the foregoing reasons, we REVERSE the dismissal of
Aquatherm's antitrust claims and REMAND to the district court for
further proceedings. We AFFIRM the dismissal of the Lanham Act
claim.
4
Aquatherm also contends that to allow res judicata to bar
its Lanham Act claim would work a "manifest injustice." After
reviewing the argument for this contention, we deem it wholly
without merit.