8. Should the court grant the editor's motion to dismiss?

Once a final judgment on the merits has been rendered on a particular cause of action, the claimant is barred by claim preclusion (res judicata) from asserting the same cause of action in a later lawsuit. When the claimant wins the earlier lawsuit, the cause of action is said to have been «merged» into the judgment. When the defendant wins, the claimant is said to be «barred» by the earlier adverse judgment. Both terms simply mean that the claimant cannot sue again on the same cause.

Before merger or bar apply, it must be shown that:

(i) the earlier judgment is a valid, final judgment «on the merits»;

(ii) the cases are brought by the same claimant against the same defendant — it is not enough that the same litigants were also parties in the previous case (it must be the same configuration of parties); AND

(iii) the same cause of action or claim is involved in the later lawsuit.

Federal Rule of Civil Procedure (FRCP) 41(b) governs the question of whether claim preclusion should bar a plaintiff whose initial suit ended in an involuntary dismissal from proceeding with a subsequent suit on the same claim. FRCP 41(b) establishes that an involuntary dismissal generally will bar a subsequent suit, but both the Rule and court decisions create exceptions where claim preclusion does not apply.

FRCP 41(b) provides three grounds for ordering an involuntary dismissal:

(i) failure of the plaintiff to prosecute;

(ii) failure of the plaintiff to comply with the FRCP or any order of court; AND

(iii) failure of the plaintiff to show by the close of his evidence a right to relief based upon the facts and the law.

FRCP 41(b) further specifies that all 41(b) dismissals and «any dismissal not provided for in this rule» are to operate as adjudications on the merits except for four types of dismissals. The four exceptions are:

(i) dismissal for lack of jurisdiction;

(ii) dismissal for improper venue;

(iii) dismissal for failure to join a party under Rule 19; AND

(iv) dismissal that the court in its order specifies to be without prejudice.

Although the Erie decision made it clear that there is no general federal common law in the United States, there are still particular instances in which federal common law is applied. More simply put, occasionally the federal court is free to disregard state law in making judicial interpretations.

Federal common law may apply even when the basis for the federal district court's jurisdiction was diversity. In particular, federal common law can be binding when a federal court sitting in diversity issues a judgment, and a state court must later decide claim preclusion effect that earlier judgment should be given.

In Semtek Int'l Inc. v. Lockheed Martin Corp., the Supreme Court decided that under federal common law, a diversity judgment should have whatever preclusive effect that similar judgment issued by the state court in which the diversity court sits would have. Thus, the second state court must apply federal common law to determine how and whether it is bound by the prior diversity judgment.

Semtek notably also held that as a matter of federal common law, the dismissal has whatever effect on later actions in other courts as such a dismissal would have if it had been issued by the state where the federal diversity court sat.

B is correct. The preclusive effect of a federal court's involuntary dismissal of a diversity lawsuit is determined, as a matter of federal common law, by the law of the state in which the federal court that issued the dismissal is located.

Here, the facts indicate that in State A, an involuntary dismissal does not operate as an adjudication on the merits, which means the writer's lawsuit may go forward in State B because the State A federal court's dismissal is not an adjudication on the merits under State A law.

A is incorrect. The second lawsuit's timeliness under State B's statute of limitations may be necessary for the lawsuit to move forward, but it is not sufficient on its own. This answer ignores the prior judgment from State A and the preclusive effect of that judgment must be analyzed when considering the motion to dismiss. Because the first lawsuit was terminated by an involuntary dismissal, federal common law requires State B's federal court to determine whether that dismissal was on the merits. State A law is applicable and holds that the first judgment is NOT on the merits, as stated above.

C is incorrect. The preclusive effect of a federal court's involuntary dismissal of a diversity lawsuit is determined, as a matter of federal common law, by the law of the state in which the federal court that issued the dismissal is located. Therefore, it is State A's preclusionary law that is dispositive here, not State B's. It is of no consequence that State B's law treats involuntary dismissals as an adjudication on the merits.

D is incorrect. This misstates the federal rule on involuntary dismissals. Not every involuntary dismissal acts as an adjudication on the merits, and federal common law will determine which state law to apply. Here, State B's federal court must apply State A's law regarding the preclusive effect of involuntary dismissals, which is that they are NOT considered an adjudication on the merits.