motion to remand

In 1935 Dora Browning Donner, then a domiciliary of Pennsylvania, executed a trust instrument in Delaware naming the Wilmington Trust Company as trustee. The corpus consisted of securities. Mrs. Donner reserved the income for life and retained a power of appointment over the remainder exercisable by inter vivos deed or will. She also retained the rights to amend, alter, or revoke the agreement, to change the trustee, and to require the consent of a trust advisor she appointed for sales of assets, investments, and participation in reorganizations. In 1944 Mrs. Donner became domiciled in Florida and remained there until her death in 1952. On December 3, 1949, while in Florida, she executed both her will and an inter vivos power of appointment. The appointment directed $200,000 to each of two trusts benefiting her grandchildren Donner Hanson and Joseph Donner Winsor, with the balance appointed to her executrix. Mrs. Donner died on November 20, 1952. Her will was admitted to probate in Florida, naming Elizabeth Donner Hanson as executrix. Fourteen months after the death, residuary legatees Katherine N. R. Denckla and Dorothy B. R. Stewart petitioned a Florida chancery court for a declaratory judgment concerning property passing under the residuary clause. Personal service was made on the executrix and beneficiaries. Nonresident defendants including the Wilmington Trust Company and the Delaware Trust Company were served by ordinary mail and local publication under Florida statutes. The Delaware trustee did not appear. After the Florida suit began, the executrix filed a declaratory judgment action in Delaware to determine rights to the trust assets held there. All trust companies and most beneficiaries appeared in the Delaware proceeding. The Florida chancellor initially ruled he lacked jurisdiction over the nonresident trustees because no personal service had been made and the trust corpus was outside Florida. He proceeded as to appearing parties and held the power of appointment testamentary and void under Florida law, so that the $400,000 passed under the residuary clause. The Delaware Chancellor ruled the trust and appointment valid under Delaware law and that the corpus had been properly paid to the appointees. The Florida Supreme Court reversed the jurisdictional ruling, held Florida law applied, and affirmed that the trust was invalid and the appointment ineffective. The Delaware Supreme Court affirmed its own judgment and refused to accord full faith and credit to the Florida decree. The United States Supreme Court postponed the question of jurisdiction in the Florida appeal and granted certiorari to the Delaware Supreme Court. Both state supreme court judgments are before the Court.

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. 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. 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. Plaintiffs in five of the suits appealed that judgment to the Court of Appeals for the Ninth Circuit. The single counsel representing Moitie and Brown chose not to appeal and instead refiled the two actions in state court. 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. 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. The District Court denied respondents' motion to remand, holding that the complaints were properly removed because they raised essentially federal law claims. 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. 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. 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. When the refiled actions came before the Court of Appeals, the court reversed the District Court's dismissals on res judicata grounds. It asserted that non-appealing parties may benefit from a reversal when their position is closely interwoven with that of appealing parties. The court concluded that the doctrine must give way to public policy and simple justice. Moitie II was voluntarily dismissed, leaving Brown II as the subject of the petition. The Supreme Court granted certiorari to consider the validity of the Court of Appeals' novel exception to the doctrine of res judicata.