452 U.S. 394, 399 n.3 (1981)
In 1976 the United States brought an antitrust action against petitioners, owners of various department stores, alleging that they had violated § 1 of the Sherman Act by agreeing to fix the retail price of women's clothing sold in northern California.1
Seven parallel civil actions were subsequently filed by private plaintiffs seeking treble damages on behalf of proposed classes of retail purchasers. These included the action of respondent Moitie in state court (Moitie I) and respondent Brown (Brown I) in the United States District Court for the Northern District of California. Each of these complaints tracked almost verbatim the allegations of the Government's complaint, though the Moitie I complaint referred solely to state law.2
The District Court dismissed all of the actions in their entirety on the ground that plaintiffs had not alleged an injury to their business or property within the meaning of § 4 of the Clayton Act.3
Plaintiffs in five of the suits appealed that judgment to the Court of Appeals for the Ninth Circuit.4 The single counsel representing Moitie and Brown chose not to appeal and instead refiled the two actions in state court.5 Although the complaints purported to raise only state-law claims, they made allegations similar to those made in the prior complaints, including that of the Government.6 Petitioners removed these new actions to the District Court for the Northern District of California and moved to have them dismissed on the ground of res judicata.7 The District Court denied respondents' motion to remand, holding that the complaints were properly removed because they raised essentially federal law claims.8 The court then concluded that because Moitie II and Brown II involved the same parties, the same alleged offenses, and the same time periods as Moitie I and Brown I, the doctrine of res judicata required that they be dismissed.9
Pending the appeal of the dismissals of the refiled actions, the Supreme Court decided Reiter v. Sonotone Corp., holding that retail purchasers can suffer an injury to their business or property as those terms are used in § 4 of the Clayton Act.10 The Court of Appeals for the Ninth Circuit reversed and remanded the five cases which had been appealed for further proceedings in light of Reiter.11 When the refiled actions came before the Court of Appeals, the court reversed the District Court's dismissals on res judicata grounds.12 It asserted that non-appealing parties may benefit from a reversal when their position is closely interwoven with that of appealing parties.13 The court concluded that the doctrine must give way to public policy and simple justice.14
Moitie II was voluntarily dismissed, leaving Brown II as the subject of the petition.15 The Supreme Court granted certiorari to consider the validity of the Court of Appeals' novel exception to the doctrine of res judicata.16
Whether the Court of Appeals for the Ninth Circuit validly created an exception to the doctrine of res judicata?17
A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.18 Nor are the res judicata consequences of a final, unappealed judgment on the merits altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case.19 This Court recognizes no general equitable doctrine which countenances an exception to the finality of a party's failure to appeal merely because his rights are closely interwoven with those of another party.20
No. The technical elements of res judicata were satisfied because the decision in Brown I was a final judgment on the merits and involved the same claims and the same parties as Brown II.21 The Court of Appeals' asserted exception based on interwoven positions and simple justice finds no support in precedent such as Reed v. Allen.22 There res judicata was rigorously applied even though the nonappealing party had prevailed in a related appeal procured by the same affected party.23 Respondents here made a calculated choice to forgo their appeals.24
They seek to be windfall beneficiaries of a reversal procured by other independent parties.25
The Court of Appeals for the Ninth Circuit did not validly create an exception to the doctrine of res judicata.26
Related opinions on this issue
Justice Blackmun concurred in the judgment.27 He would not close the door upon the possibility that there are cases in which the doctrine of res judicata must give way to overriding concerns of public policy and simple justice.28 But this case is clearly not one in which equity requires that the doctrine give way.29
Unlike the nonappealing party in Reed, respondents made a deliberate tactical decision not to appeal.30 Nor would public policy be served by making an exception here.31 There is a special need for strict application of res judicata in complex multiple party actions of this sort so as to discourage break-away litigation.32
He would also flatly hold that Brown I is res judicata as to respondents' state-law claims because the dismissal is res judicata not only as to all claims actually raised but also as to all claims that could have been raised.33
Justice Brennan dissented.34 He argued that the Court disregarded statutory restrictions on federal-court jurisdiction by sustaining removal of the state-law claims.35 The complaints stated only state-law causes of action for fraud and deceit, unfair business practices, civil conspiracy, and restitution.36
Under settled principles of federal jurisdiction the lawsuit should not have been removed because a plaintiff is master to decide what law he will rely upon.37 He also dissented from the disposition of the res judicata issue, contending that the Court should have decided that the dismissal of Brown I bars relitigation of the state-law claims as well since an unqualified dismissal on the merits precludes every ground or theory of recovery that might have been presented.38 He would vacate the judgment of the Court of Appeals with instructions to remand to the District Court with instructions to remand to state court.39
Whether the District Court properly denied remand of the refiled actions asserting only state-law claims?40
Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable.41 Removability depends solely upon the nature of the plaintiff's complaint.42 An action arising under state law may not be removed solely because a federal right or immunity is raised as a defense.43 Courts will not permit a plaintiff to use artful pleading to close off defendant's right to a federal forum and will seek to determine whether the real nature of the claim is federal, regardless of plaintiff's characterization.44
Yes. The District Court found after an extensive review and analysis of the origins and substance of the two Brown complaints that respondents had attempted to avoid removal jurisdiction by artfully casting their essentially federal law claims as state-law claims.45 The Court of Appeals expressly agreed that the claims presented were federal in nature.46 The Supreme Court accepted that factual finding and held that at least some of the claims had a sufficient federal character to support removal.47
The District Court properly denied the motion to remand.48
Related opinions on this issue
Justice Blackmun would flatly hold that Brown I is res judicata as to respondents' state-law claims.49 Like the District Court, the Court of Appeals found that those state-law claims were simply disguised federal claims.50 Since respondents have not cross-petitioned from that judgment, their argument that this case should be remanded to state court should be itself barred by res judicata.51
More important, even if the state and federal claims are distinct, respondents' failure to allege the state claims in Brown I manifestly bars their allegation in Brown II.52 The dismissal of Brown I is res judicata not only as to all claims respondents actually raised, but also as to all claims that could have been raised.53
Justice Brennan dissented on the removal issue.54 He maintained that the complaints were predicated solely on California law and that the mere fact that plaintiffs might have chosen to proceed under the Clayton Act does not suffice to transmute their state claims into federal claims.55 The Court's reliance on a supposed factual finding of artful pleading amounts to no more than a pejorative characterization of respondents' decision to proceed under state rather than federal law.56