Marrese v. Orthopedic Surgeons
470 U.S. 373 (1985)

Annotate this Case

U.S. Supreme Court

Marrese v. Orthopedic Surgeons, 470 U.S. 373 (1985)

Marrese v. American Academy of Orthopaedic Surgeons

No. 83-1452

Argued December 4, 1984

Decided March 4, 1985

470 U.S. 373

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SEVENTH CIRCUIT

Syllabus

After being denied membership in respondent American Academy of Orthopaedic Surgeons, petitioner orthopaedic surgeons each filed an action in an Illinois Circuit Court, alleging that the denial of membership violated their associational rights under Illinois common law. After the Illinois Appellate Court ultimately held that the complaint in one action failed to state a cause of action, the Circuit Court then dismissed the other complaint. Subsequently, petitioners filed an action in Federal District Court, alleging that the denial of membership constituted a boycott in violation of § 1 of the Sherman Act. Respondent filed a motion to dismiss on the ground that claim preclusion barred the federal antitrust claim because the state actions concerned the same facts and were dismissed with prejudice. The District Court denied the motion, holding, in reliance on federal law, that the state judgments did not bar the Sherman Act claim. Thereafter, the District Court held respondent in criminal contempt for refusing to comply with a discovery order as to its membership application files. Respondent then appealed from the contempt order, and, while this appeal was pending, the District Court certified its denial of the motion to dismiss for immediate appeal. The Court of Appeals authorized an interlocutory appeal and ordered it consolidated with the appeal from the contempt order. Ultimately, the Court of Appeals held that, as a matter of federal law, claim preclusion barred the federal antitrust action, and reversed the contempt order because the discovery order was invalid.

Held:

1. The Court of Appeals had jurisdiction to review the District Court's denial of the motion to dismiss. The pendency of the appeal from the contempt order did not prevent the District Court from certifying such denial for immediate appeal. Pp. 470 U. S. 378-379.

2. The courts below erred in not considering Illinois law in determining the preclusive effect of the state judgments. Pp. 470 U. S. 379-386.

(a) Title 28 U.S.C. § 1738 which provides that state judicial proceedings

"shall have the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such State . . . from which they are taken"

-- requires a federal court to look

Page 470 U. S. 374

first to state law in determining the preclusive effects of a state court judgment. Kremer v. Chemical Construction Corp.,456 U. S. 461. The fact that petitioners' antitrust claim is within the exclusive jurisdiction of the federal courts does not necessarily make § 1738 inapplicable in this case. While a state court will have no occasion to address the question whether a state judgment has issue or claim preclusive effect in a later action that can be brought only in federal court, a federal court may nevertheless rely in the first instance on state preclusion principles to determine the extent to which an earlier state judgment bars subsequent litigation. Pp. 470 U. S. 379-382.

(b) Reference to state preclusion law may make it unnecessary to determine if a federal court, as an exception to § 1738, should refuse to give preclusive effect to a state court judgment. Here, unless application of Illinois preclusion law suggests that petitioners' federal antitrust claim is barred, there will be no need to decide if there is an exception to § 1738. This Court will not create a special exception to § 1738 for federal antitrust claims that would give state court judgments greater preclusive effect than would the courts of the State rendering judgment, and 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. Pp. 470 U. S. 383-386.

726 F.2d 1150, reversed and remanded.

O'CONNOR, J., delivered the opinion of the Court, in which BRENNAN, WHITE, MARSHALL, POWELL, and REHNQUIST JJ., joined. BURGER, C.J., filed an opinion concurring in the judgment, post, p. 387. BLACKMUN and STEVENS, JJ., took no part in the consideration or decision of the case.

Page 470 U. S. 375

JUSTICE O'CONNOR delivered the opinion of the Court.

This case concerns the preclusive effect of a state court judgment in a subsequent lawsuit involving federal antitrust claims within the exclusive jurisdiction of the federal courts. The Court of Appeals for the Seventh Circuit, sitting en banc, held as a matter of federal law that the earlier state court judgments barred the federal antitrust suit. 726 F.2d 1150 (1984). Under 28 U.S.C. § 1738, a federal court generally is required to consider first the law of the State in which the judgment was rendered to determine its preclusive effect. Because the lower courts did not consider state preclusion law in this case, we reverse and remand.

I

Petitioners are board-certified orthopaedic surgeons who applied for membership in respondent American Academy of Orthopaedic Surgeons (Academy). Respondent denied the membership applications without providing a hearing or a statement of reasons. In November, 1976, petitioner Dr. Treister filed suit in the Circuit Court of Cook County, State of Illinois, alleging that the denial of membership in the Academy violated associational rights protected by Illinois common law. Petitioner Dr. Marrese separately filed a similar action in state court. Neither petitioner alleged a violation of state antitrust law in his state court action; nor did either petitioner contemporaneously file a federal antitrust suit. The Illinois Appellate Court ultimately held that Dr. Treister's complaint failed to state a cause of action, Treister v. American Academy of Orthopaedic Surgeons, 78 Ill.App.3d 746, 396 N.E.2d 1225 (1979), and the Illinois Supreme Court denied leave to appeal. 79 Ill.2d 630 (1980). After the Appellate Court ruled against Dr. Treister, the Circuit Court dismissed Dr. Marrese's complaint.

Page 470 U. S. 376

In March, 1980, petitioners filed a federal antitrust suit in the United States District Court for the Northern District of Illinois based on the same events underlying their unsuccessful state court actions. As amended, the complaint alleged that respondent Academy possesses monopoly power, that petitioners were denied membership in order to discourage competition, and that their exclusion constituted a boycott in violation of § 1 of the Sherman Act, 15 U.S.C. § 1. App. 8, 26-30, 33. Respondent filed a motion to dismiss, arguing that claim preclusion barred the federal antitrust claim because the earlier state court actions concerned the same facts and were dismissed with prejudice. [Footnote 1] In denying this motion, the District Court reasoned that state courts lack jurisdiction over federal antitrust claims, and therefore a state court judgment cannot have claim preclusive effect in a subsequent federal antitrust suit. 496 F.Supp. 236, 238-239 (1980), on reconsideration, 524 F.Supp. 389 (1981). Discovery began, and respondent refused to allow petitioners access to certain files relating to membership applications. After respondent persisted in this refusal despite a discovery order, the District Court held respondent in criminal contempt. App. to Pet. for Cert. N-1.

The judgment of contempt was reversed by a divided panel of the Court of Appeals in an opinion holding that the District Judge had abused his discretion by authorizing discovery of the membership files, and also suggesting that the federal action was barred by claim preclusion, and that the antitrust claims were groundless. 692 F.2d 1083 (1982). This opinion was vacated by an en banc vote, and the original panel issued a narrower opinion that did not discuss claim preclusion.

Page 470 U. S. 377

706 F.2d 1488 (1983). The Court of Appeals then vacated the second opinion and ordered rehearing en banc. In a divided vote, the Court of Appeals held that claim preclusion barred the federal antitrust suit and reversed the contempt order because the discovery order was invalid. 726 F.2d 1150 (1984).

On the claim preclusion issue, no opinion commanded the votes of a majority of the Court of Appeals. A plurality opinion concluded that 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. Id. at 1153. The plurality examined the Illinois Antitrust Act, Ill.Rev.Stat., ch. 38, 1160-3(2) (1981), and found that it is sufficiently similar to the Sherman Act to bar petitioners' federal antitrust claims in the instant case. Id. at 1155-1156. An opinion concurring in part concluded that res judicata required petitioners to bring their "entire cause of action within a reasonable period of time." Id. at 1166 (Flaum, J.). To avoid preclusion of their federal antitrust claim, petitioners should have either filed concurrent state and federal actions or brought their state claims in federal court pendent to their Sherman Act claim. Ibid.

Five judges also concluded that the discovery order was invalid, and therefore the contempt judgment should be reversed. A plurality opinion first observed that the discovery order was invalid because the District Court should have dismissed the suit on claim preclusion grounds before the discovery order was entered. Id. at 1158. Alternatively, the order constituted an abuse of discretion, because it did not adequately prevent petitioners from misusing the discovery process. Id. at 1158-1162. Three judges joined the entire discussion concerning the discovery order. A fourth judge did not believe that claim preclusion applied, but he agreed that the discovery order constituted an abuse of discretion. Id. at 1162 (Eschbach, J., concurring in part and dissenting in part). Finally, the fifth judge observed that it was sufficient

Page 470 U. S. 378

to hold that the complaint should have been dismissed on claim preclusion grounds; he added, however, that, if he thought it necessary, he would join the portion of the plurality opinion holding the discovery order invalid. Id. at 1162 (Bauer, J., concurring).

We granted certiorari limited to the question whether the Court of Appeals correctly held that claim preclusion requires dismissal of the federal antitrust action, 467 U.S. 1258 (1984), and we now reverse.

II

Before addressing the merits of the decision below, we first examine whether the Court of Appeals had jurisdiction to review the District Court's denial of the motion to dismiss. Although the parties did not raise the jurisdictional issue before this Court, we address it to assure that the claim preclusion issue is properly before us. See, e.g., United States v. Storer Broadcasting Co.,351 U. S. 192, 351 U. S. 197 (1956). In the present case, the District Court initially refused to certify its denial of the motion to dismiss for immediate appeal pursuant to 28 U.S.C. § 1292(b). The District Court subsequently held respondent in criminal contempt for refusing to comply with a discovery order. Respondent then appealed from the judgment of criminal contempt pursuant to 28 U.S.C. § 1291. See Bray v. United States,423 U. S. 73 (1975) (per curiam). While the appeal from the contempt judgment was pending, the District Court amended the earlier denial of the motion to dismiss in order to certify it for immediate appeal. App. to Pet. for Cert. I-1. The Court of Appeals authorized interlocutory appeal pursuant to § 1292(b), and ordered proceedings consolidated with the appeal from the contempt order. 726 F.2d at 1152; App. to Pet. for Cert. J-1.

Petitioners argued below that, because the appeal from the contempt order was pending, the District Court lacked jurisdiction to amend its order denying the motion to dismiss to

Page 470 U. S. 379

allow interlocutory appeal. In general, filing of a notice of appeal confers jurisdiction on the court of appeals and divests the district court of control over those aspects of the case involved in the appeal. Griggs v. Provident Consumer Discount Co.,459 U. S. 56, 459 U. S. 58 (1982) (per curiam). This proposition, however, does not imply that an appeal from a judgment of criminal contempt based on noncompliance with a discovery order transfers jurisdiction over the entire case to the court of appeals. Criminal contempt judgments are immediately appealable pursuant to § 1291, because they result from "a separate and independent proceeding . . . to vindicate the authority of the court'" and are "`not a part of the original cause.'" Bray, supra, at 423 U. S. 75, quoting Gompers v. Bucks Stove & Range Co.,221 U. S. 418, 221 U. S. 445, 221 U. S. 451 (1911).

Thus, prior to certification of the claim preclusion issue pursuant to § 1292(b), the contempt judgment was the only matter before the Court of Appeals. See 706 F.2d at 1497-1498; 692 F.2d at 1096. The District Court's amendment of its initial denial of the motion to dismiss did not interfere with, but instead facilitated, review of the pending appeal from the contempt order. We agree with the Court of Appeals, 726 F.2d at 1152, that the pendency of the appeal from the contempt judgment did not prevent the District Court from certifying the denial of the motion to dismiss for immediate appeal under § 1292(b). Accordingly, the Court of Appeals properly exercised jurisdiction over the consolidated appeals, and we have jurisdiction to review that court's decision with respect to dismissal of the antitrust claim.

III

The issue presented by this case is whether a state court judgment may have preclusive effect on a federal antitrust claim that could not have been raised in the state proceeding. Although federal antitrust claims are within the exclusive jurisdiction of the federal courts, see, e.g., 260 U. S. S. 380

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