
USCA1 Opinion

	




          February 8, 1993                            UNITED STATES COURT OF APPEALS                                For The First Circuit                                 ____________________        No. 92-1164                           DIVERSIFIED FOODS, INC., et al.,                                Plaintiffs-Appellants,                                          v.                      THE FIRST NATIONAL BANK OF BOSTON, et al.,                                Defendants-Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                     [Hon. D. Brock Hornby, U.S. District Judge]                                            ___________________                                 ____________________                                        Before                         Torruella and Boudin, Circuit Judges,                                               ______________                             and Keeton,* District Judge.                                          ______________                                 ____________________            Richard E. Poulos with whom John S.  Campbell, Poulos, Campbell  &            _________________           _________________  ___________________        Zendzian, P.A., Daniel G. Lilley and John A. McArdle were on brief for        _____________   ________________     _______________        appellants.            William J. Kayatta, Jr., with whom  Peter W. Culley, Catherine  R.            ______________________              _______________  ____________        Connors and Pierce, Atwood, Scribner, Allen, Smith & Lancaster were on        _______     __________________________________________________        brief for appellees.                                   ____________________                                   February 8, 1993                                 ____________________        __________________        * of the District of Massachusetts, sitting by designation.                 BOUDIN, Circuit Judge.  In this  case the district court                         _____________            dismissed  a suit brought under the Bank Holding Company Act,            12 U.S.C.    1972, on  the ground that  it was barred  by res                                                                      ___            judicata.   The prior litigation, held to bar the new federal            ________            action, was a state-court suit brought by the same plaintiffs            against  the same  defendants  and decided  in  favor of  the            latter.   The disappointed  plaintiffs now appeal,  urging on            several grounds  that res  judicata does not  properly apply.                                  _____________            In full  agreement with  the district  court,  we affirm  its            decision.                 The procedural history  of the two cases is  complex and            intertwined but a  brief summary will suffice  at the outset.            Diversified  Foods, Inc.,  and its  operating subsidiary  New            England Sales,  Inc.  (collectively, "the  borrowers"),  were            engaged in  a specialized  form of wholesale  distribution of            goods.   In  financing  their activities,  they entered  into            various borrowing  arrangements with First  National Bank  of            Boston   and  its   Maine  subsidiary  Casco   Northern  Bank            (collectively, "the  banks").  The arrangements,  at least in            the  borrowers'  view,  contained  terms   restricting  their            ability to obtain alternative sources of financing.                 During 1988, the borrowers  first sought to expand their            business and then suffered large losses.  They attribute this            reversal  of fortune to the  failure of the  banks to provide            adequate credit under  the borrowing arrangements.   Claiming                                         -2-                                         -2-            multimillion  dollar  damages, the  borrowers  on  August 21,            1989, brought suit against the banks in Maine Superior Court,            asserting various  state-law tort  and contract claims.   The            complaint, as later amended in 1990, included the charge that            the  banks violated  an  implied covenant  of  good faith  by            imposing  "unreasonable restrictions  so  as  to prevent  the            [borrowers] from obtaining alternative financing."  Discovery            in the state case proceeded during 1989 and 1990.                 On  September  14,  1990,   while  the  state  case  was            proceeding, the borrowers brought the present action  against            the  banks based  on the  anti-tying  provisions of  the Bank            Holding  Company Act, 12 U.S.C.    1972(1).   The new federal            claims  were  based,  it  appears,  on  information  obtained            through  discovery in the state case.  The borrowers say that            the  new claims  were  asserted in  a  separate action  in  a            different  court because at that  time the borrowers held the            view (contrary to two  circuit decisions) that federal courts            have exclusive jurisdiction over claims under section 1972.1                                            ____________________                 1Two  weeks before  filing  the  federal complaint,  the            borrowers moved to amend their state complaint to charge that            the  banks  had  breached  their   duty  of  good  faith   by            "unreasonable, illegal, and anticompetitive"  restrictions on            alternative financing.   Shortly after the federal  complaint            was filed, the banks  opposed the state amendment.   When the            borrowers responded  that the  federal claims were  not being            asserted  in the  state  case, the  state  court allowed  the            amendment,     striking     the    words     "illegal"    and            "anticompetitive."                                         -3-                                         -3-                 When the banks answered the federal complaint on October            24, 1990, they included  as a defense the assertion  that the            borrowers  "have improperly  split  their causes  of  action,            having  previously filed  in another court  another complaint            arising   out  of   the   same  transaction   or  series   of            transactions."  Thereafter, the banks resisted the borrowers'            efforts in January  1991 to introduce  the state claims  into            the federal action by amendment  of the federal complaint  or            to delay the state proceedings.  The banks  did agree to have            discovery in either case treated as if taken in both.                 On  April 18,  1991,  the Maine  Superior Court  granted            summary  judgment in  favor of  the banks,  a decision  later            affirmed on  appeal.  Diversified Foods, Inc.  v. First Nat'l                                  ______________________      ___________            Bank, 605  A.2d 609  (Me. 1992).   The  banks then  moved for            ____            summary  judgment in  the  federal action  on grounds  of res                                                                      ___            judicata,  and  the  district  court granted  the  motion  on            ________            January  9,  1992.   A belated  attempt  by the  borrowers to            reopen  the state case to add the federal claims was rejected            by  the state  court, and  this action  was also  affirmed on            appeal.  Id.  The  borrowers then pursued this appeal in  the                     __            federal case.                 In  this court  the borrowers  first argue  that federal            courts have exclusive jurisdiction over claims under the Bank            Holding Company Act's anti-tying provisions.  Therefore, they            argue,  res judicata  cannot properly  derive from  the state                    ____________                                         -4-                                         -4-            court  judgment  because they  could  not  have included  the            federal  claims  in their  state case.    We need  not decide            whether  the  conclusion would  follow  if  the premise  were            sound, for the premise  is mistaken.  We follow  two circuits            and  several  other courts  that  uniformly  hold that  state            tribunals  have  concurrent  jurisdiction over  section  1972            claims.  Cuervo  Resources, Inc. v. Claydesta Nat'l Bank, 876                     ______________________     ____________________            F.2d 436 (5th  Cir. 1989);  Lane v. Central  Bank, N.A.,  756                                        ____    __________________            F.2d 814 (11th Cir. 1985).2                   The  Bank  Holding  Company  Act  provides  that  anyone            injured  by a  violation  of section  1972  may sue  "in  any            district court  of the  United States," admittedly  making no            reference to state courts.  12 U.S.C.   1975.  But it is  now            settled that  there is a  presumption in favor  of concurrent            jurisdiction,  so  that state  courts  may  entertain federal            civil  claims  as a  matter  of course  "absent  provision by            Congress  to  the  contrary  or   disabling  incompatibility"            between the federal claim and state court jurisdiction.  Gulf                                                                     ____            Offshore  Co. v.  Mobil  Oil Corp.,  453  U.S. 473,    477-78            ____________      _______________            (1981).   Here  there  is  no  explicit  bar  to  state-court            jurisdiction  and the  subject  matter is  hardly beyond  the                                            ____________________                 2Several state courts have reached the  same conclusion.            See  United Central Bank, N.A. v. Kruse, 439 N.W.2d 849 (Iowa            ___  ________________________     _____            1989); Waite v. Banctexas-Houston, N.A., 792 S.W.2d 538 (Tex.                   _______________________________            Ct. App. 1990).                                         -5-                                         -5-            competence of state  courts, which routinely consider  claims            under their own antitrust laws.                 Of course,  the resemblance  to antitrust law  cuts both            ways,  providing the  borrowers' best argument  for exclusive            federal jurisdiction.   Section 1972 is a  blunter version of            section  3  of the  Clayton  Act, 15  U.S.C.    14,  and with            qualifications courts use Clayton  Act precedents in applying            section  1972.  E.g., Swerdloff v. Miami Nat'l Bank, 584 F.2d                            ___   _________    ________________            54, 58-59 (5th Cir.  1978).  In empowering federal  courts to            hear Clayton Act cases, Congress made  no reference to state-            court  jurisdiction, see  15  U.S.C.    15,  and it  is  well                                 ___            settled  (by judicial  construction)  that federal  antitrust            claims may be  asserted only in  federal court.   Blumenstock                                                              ___________            Bros. Advertising  Agency v. Curtis  Pub. Co., 252  U.S. 436,            _________________________    _______________            440  (1920).   The  borrowers urge  that  the same  gloss  be            applied to the Bank Holding Company Act.                 Exclusive  federal-court   jurisdiction  over  antitrust            claims, although  a firmly  rooted rule,  is  the product  of            reasoning that the  Supreme Court  no longer  applies in  new            matters.    Like  baseball's judicial  "exemption"  from  the            antitrust  laws, see  Flood  v. Kuhn,  407  U.S. 258,  283-84                             ___  _____     ____            (1972), the result persists but is not extended.  This is the            clear  message of  Tafflin v.  Levitt, 493  U.S. 455,  459-60                               _______     ______            (1990), where  the Supreme  Court affirmed the  state courts'            concurrent jurisdiction over  civil RICO claims  and rejected                                         -6-                                         -6-            the  same Clayton Act analogy offered here.  Indeed, the RICO            statute uses  jurisdictional  language quite  similar to  the            Bank Holding Company Act, compare 18 U.S.C.   1964(c) with 12                                      _______                     ____            U.S.C.   1975,  and was passed  by the same  Congress in  the            same  session.   Tafflin  offers the  coup  de grace  to  the                             _______              ______________            borrowers' argument for exclusive jurisdiction.3                 Once  that  issue is  removed,  the  application of  res                                                                      ___            judicata is straightforward in the present case.   The branch            ________            of that doctrine  of concern  here, known for  many years  as            merger  (if the plaintiff had won the first case) and bar (if            the plaintiff had lost),  has lately been rechristened "claim            preclusion"  in the  modern  functional style.    See Roy  v.                                                              ___ ___            Jasper  Corp., 666  F.2d  714, 717  (1st  Cir. 1981).    More            ____________            important,  the doctrine  has  evolved  subtly, although  not            uniformly in all jurisdictions,  to employ a functional "same            transaction" test,  as an overlay to  the traditional inquiry            whether the "cause of  action" in the two cases is  the same.            Maine,  whose  earlier  judgment   is  invoked  here  as  res                                                                      ___            judicata, employs  this test,  which is therefore  binding on            ________                                            ____________________                 3We  give  little  weight to  occasional  references  by            Congress,  in the  legislative  history of  section 1972,  to            suits  in "federal" courts.   See,  e.g., 2  One-Bank Holding                                          ___   ___      ________________            Company  Legislation of  1970:   Hearings  Before the  Senate            _____________________________    ____________________________            Comm. on  Banking and  Currency, 91st.  Cong.,  2d Sess.  966            _______________________________            (1970) (statement of Sen. Bennett) (referring to "the process            of   suit  through  the  Federal  courts  .  .  .").    These            references, if any intent is attributable to them,  appear to            reflect the natural assumption  that Bank Holding Company Act            claims would usually be litigated in federal forums.                                         -7-                                         -7-            us.  See Migra v. Warren City School Dist. Bd.  of Educ., 465                 ___ _____    _____________________________________            U.S. 75, 85 (1984).                 In Currier v. Cyr,  570 A.2d 1205 (Me. 1990),  the Maine                    _______    ___            Supreme  Judicial Court  summarized  the rule  it follows  in            deciding whether new  claims are barred because  they were or            "might have been" litigated in the prior case:                       Maine  has accepted  what is  known as  a                      "transactional test" of cause  of action,                      which defines "the measure of  a cause of                      action  as  the  aggregate  of  connected                      operative  facts  that  can   be  handled                      together  conveniently  for  purposes  of                      trial."            Id. at 1208 (quoting  Gurski v. Culpovich, 540 A.2d  764, 766            __                    ______    _________            (Me. 1988)).   Accordingly, so  long as the  parties are  the            same in  both cases and a  final judgment was  entered in the            prior  action, "a subsequent suit that arises out of the same                                                                 ________            operative  facts shall be barred even  though the second suit            ________________            relies  upon a legal theory  not advanced in  the first case,            seeks  different relief than  that sought in  the first case,            and involves [different] evidence   . .  . ."  Id.  (emphasis                                                           __            added).                 In the present case  the borrowers' federal claims under            section 1972 unquestionably arise  out of "the same operative            facts" as the state claims earlier asserted by the borrowers.            They themselves, in an unsuccessful  attempt to add the state            claims  to the  federal case  based on  pendant jurisdiction,            told  the district court that  "[t]he facts forming the basis                                         -8-                                         -8-            for the state claims are the same facts which  form the basis            of the pending [federal] action . . . ."  A comparison of the            two   complaints   shows   that   the   factual   allegations            substantially overlap.  Further, the central tying allegation            in  the federal  complaint--that  the  banks  restricted  the            borrowers' access  to alternative sources of  credit--was one            of the express claims in the state action.                 In this  court, the  borrowers make only  a half-hearted            effort  to distinguish  the  two complaints  under the  Maine            transactions test for  res judicata, and  we think the  point                                   ____________            needs  no  further   discussion.    The   borrowers'  central            arguments in  resisting res judicata,  exclusive jurisdiction                                    ____________            aside,  are  variants  on a  single  theme.    They argue  in            substance that  the banks themselves  strove to keep  the two            actions separate,  resisted the assertion of  state claims in            the federal case  and vice versa, and now use the judgment in            the  suit first decided to prevent litigation of the other on            the  merits.   This effort  to resist consolidation,  say the            borrowers, should estop the  banks from invoking res judicata                                                             ____________            or should be treated as a waiver of the defense.                    We accept arguendo the  borrowers' version of events,                              ________            although it is unclear whether the banks followed a conscious            strategy or merely opposed seriatim the successive demands of            an  opponent.   But in  either event  we do  not see  how the            gravamen    of   the   charge--the   banks'   resistance   to                                         -9-                                         -9-            consolidation of the federal  and state claims--gives rise to            an estoppel  of the banks.  The banks are not alleged to have            said  anything untrue.  Their  position throughout  has  been            consistent.   There is not even a valid charge of concealment            or surprise:  the banks' answer in the federal case gave fair            warning  of the  risk of  res judicata  by asserting  a claim                                      ____________            splitting  defense, expressly  referring  to  the  borrowers'            state  suit "arising out of the same transaction or series of            transactions."                 As for waiver, it may be  assumed that Maine, consistent            with  general law on the subject, would disallow res judicata                                                             ____________            if the  "parties have agreed  in terms or in  effect that the            plaintiff  may   split  his  claim,  or   the  defendant  has            acquiesced  therein."   Calderon Rosado  v. General  Electric                                    _______________     _________________            Circuit  Breakers, Inc., 805 F.2d 1085,  1087 (1st Cir. 1986)            ______________________            (quoting  Restatement (Second)  of  Judgments     26(1)(a)).4                      ___________________________________            Indeed, in Thompson  v. Gaudette,  148 Me. 288,  92 A.2d  342                       ________     ________            (1952), the Maine Supreme  Judicial Court said that the  rule            against splitting a cause of action will be waived unless the            defendant  asserts it "at the earliest opportunity."  92 A.2d            at 348 (quoting Mayfield v. Kovac, 41 Ohio App. 310, 181 N.E.                            ________    _____                                            ____________________                 4In  Calderon  Rosado  this  court  rejected  on  waiver                      ________________            grounds  a res  judicata defense  in a  federal action.   The                       _____________            defendant  had earlier  agreed to  the  plaintiff's voluntary            dismissal "with  prejudice"  of a  wrongful  discharge  claim            under  Puerto Rican law brought in  a local court, "seemingly            acceding to plaintiff's desire  to litigate in federal court"            under a federal statute.  805 F.2d at 1086.                                         -10-                                         -10-            28, 30 (1931)).  In our case, the banks at the outset pleaded            claim-splitting in their answer and maintained  that position            throughout the case.                 Courts  could, we suppose, disallow the claim preclusion            defense  wherever two  suits  are brought  and the  defendant            thereafter resists their consolidation.  But when a plaintiff            has  chosen  to bring  two lawsuits  in  the same  time frame            relating  to the same operative facts, it  is hard to see why            the defendant should not  be able to resist consolidation  on            proper  grounds, such as undue  delay.  If  the resistance is            unjustified, the plaintiff  may normally litigate  that issue            within the lawsuit.  In fact, the borrowers here  did seek to            add the federal claims to  the state action; but they  did so            only after summary judgment was  granted on the state claims.                 _____            Not surprisingly, the Maine  Supreme Judicial Court said that            this effort came too late.  Diversified Foods, Inc., 605 A.2d                                        ______________________            at 616.5                 Finally, the borrowers suggest that, estoppel and waiver            issues to one side, it would be inequitable to permit the res                                                                      ___            judicata  defense.  They argue that their decision to bring a            ________            separate federal  suit, instead of adding  the federal claims                                            ____________________                 5The borrowers  were  only  slightly  more  diligent  in            seeking to add the state claims to the federal case.  In late            January 1991,  they moved to  amend the federal  complaint to            assert the state claims and  to stay the state action.   This            occurred, however, after the close of state discovery  and on            the  eve of the  banks' deadline for  filing summary judgment            motions.                                         -11-                                         -11-            to the  state case, was  based on  a good  faith belief  that            exclusive federal-court jurisdiction  prevented that  course.            Res   judicata   is   a   judge-made   doctrine   resting  on            ______________            considerations  of policy,  and doubtless  there is  room for            equitable adjustments.   See generally 18  Charles A. Wright,                                     ___ _________            Arthur R.  Miller & Edward  H. Cooper,  Federal Practice  and                                                    _____________________            Procedure     4415 (1981).   But  in  this case  the mistaken            _________            belief in  exclusive federal  jurisdiction was formed  in the            face of two circuit decisions to the contrary.                 Thus,  the  case for  an  equitable  departure from  res                                                                      ___            judicata  is very weak.  True, the banks played an aggressive            ________            hand, but litigation is inherently  aggressive.  Further, the            borrowers  created  their own  dilemma  by  bringing the  two            actions  separately,   ignoring  the  concurrent-jurisdiction            precedents  directly in  point.   Then, in  the teeth  of the            warning furnished by the  banks' claim splitting defense, the            borrowers  failed to assert  the federal claims  in the state            case  until after that  case had been  lost.  Like  the Maine            Supreme  Judicial  Court,  we  see  no  equitable  basis  for            resurrecting claims that the  borrowers themselves allowed to            expire.                 Affirmed.                 ________                                         -12-                                         -12-
