Do you love nuanced civil procedure rulings? We have just the case for you. It’s actually a Ninth Circuit case, but it originated here in the Eastern District of Washington. That’s why we’re featuring it.
Party A and Party B went to arbitration. The arbitrator issued an award in favor of Party A. Party A filed suit in federal court in Florida to have the award confirmed. The federal court, sitting in diversity, confirmed the award.
Party B then sued Party A in federal court in Washington. Party B’s complaint suggested that Party B was attempting to re-litigate the same claims that were decided in the arbitration. Party A moved to dismiss the case on claim preclusion grounds.
Sounds like a straightforward claim preclusion scenario, right? Well, not exactly. There’s a choice of law question lurking in the shadows. What claim preclusion law applies? Florida law? Washington law? Federal common law? They are all slightly different.
In a decision issued today, the Ninth Circuit held that Florida law applies. Why, you ask? Short answer: it’s an Erie doctrine thing. Stop reading and go turn your attention to more important questions.
If you’re dying for the long answer, here it is. Under the Erie doctrine, the preclusive effect of a judgment entered by a federal court sitting in diversity jurisdiction is governed by the law of the state in which the federal court is located. The same rule applies to a federal court judgment confirming an arbitration award.
The Ninth Circuit affirmed Judge Rice’s dismissal of Party B’s case on claim preclusion grounds. The case is NTCH-WA, Inc. v. ZTE Corp., Ninth Circuit Case No. 17-35833. The Ninth Circuit’s opinion can be found here. Law360 has more about the case here.