Semtek Int’l v. Lockheed Martin
Citation and Court
531 U.S. 497 (2001) — Supreme Court of the United States
Facts
Semtek filed a California state lawsuit against Lockheed Martin. The case was removed to federal district court in California and dismissed on the merits under California’s statute of limitations. Semtek then refiled the same claims in Maryland state court. Lockheed argued that the California federal court’s dismissal had preclusive effect barring the Maryland action. The Maryland court agreed, but the question was which preclusion rule applied.
Issue
Whether the claim-preclusive effect of a federal district court’s diversity judgment is governed by federal common law or by the law of the state in which the federal court sits.
Holding
The claim-preclusive effect of a federal court’s diversity judgment is governed by federal common law, but that federal common law rule incorporates the claim preclusion rules of the state in which the federal court sat — unless those rules would be incompatible with federal interests.
Rule / Doctrine
Federal courts in diversity cases develop a federal common law of preclusion, but that common law generally adopts the forum state’s preclusion law as its content. FRCP 41(b) does not itself govern the preclusive effect of dismissals in other courts; it addresses only res judicata within the same federal court system.
Significance
Semtek illustrates the intersection of Erie, federal common law, and claim preclusion. It rejects a rigid federal rule in favor of borrowing state preclusion law, preventing plaintiffs from using diversity jurisdiction to obtain a more limited preclusive effect than state courts would give, while also preserving federal interests in exceptional cases where state preclusion law would undermine federal policy.