652 F.2d 852 (9th Cir. 1981), 79-4209, Seattle Totems Hockey Club, Inc. v. National Hockey League

Docket Nº:79-4209.
Citation:652 F.2d 852
Party Name:SEATTLE TOTEMS HOCKEY CLUB, INC., Eldred W. Barnes and Vincent H. D. Abbey, Plaintiffs-Appellees, v. The NATIONAL HOCKEY LEAGUE, et al., Defendants, Northwest Sports Enterprises, Ltd., Defendant-Appellant.
Case Date:August 03, 1981
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
FREE EXCERPT

Page 852

652 F.2d 852 (9th Cir. 1981)

SEATTLE TOTEMS HOCKEY CLUB, INC., Eldred W. Barnes and

Vincent H. D. Abbey, Plaintiffs-Appellees,

v.

The NATIONAL HOCKEY LEAGUE, et al., Defendants,

Northwest Sports Enterprises, Ltd., Defendant-Appellant.

No. 79-4209.

United States Court of Appeals, Ninth Circuit

August 3, 1981

Argued and Submitted Jan. 7, 1981.

Page 853

Frederic C. Tausend, Seattle, Wash., argued, for defendant-appellant; James M. Rupp, Rex Stratton, Schweppe, Doolittle, Krug, Tausend & Beezer, Richard S. White, Seattle, Wash., on brief.

Wayne R. Parker, Midway, Wash., for plaintiffs-appellees.

Appeal from the United States District Court for the Western District of Washington.

Before WRIGHT, POOLE, and NORRIS, Circuit Judges.

NORRIS, Circuit Judge:

This appeal arises out of a private antitrust action brought in federal district court by appellees Vincent Abbey and Eldred Barnes, owners of the Seattle Totems, an ice hockey team in the now-defunct Western Hockey League. Named as defendants were the National Hockey League (NHL), Northwest Sports, owners of the Vancouver Canucks of the NHL, and various League officers and club owners. The suit charges defendants with unlawful monopolization of the ice hockey industry in North America and seeks, among other relief, to have certain agreements between Abbey and Barnes and Northwest Sports relating to the sale and management of the Seattle Totems declared void and unenforceable. 1

Approximately twenty-seven months after the filing of the antitrust action, Northwest Sports sued Abbey and Barnes in British Columbia Supreme Court for damages for breach of the same agreements that are being challenged as illegal and unenforceable in the appellees' antitrust action in federal district court. Abbey and Barnes then moved in the federal court action to enjoin Northwest Sports from prosecuting its contract claim in British Columbia on the ground that the claim constitutes a compulsory counterclaim to plaintiffs' antitrust complaint and must be pleaded in the pending federal antitrust action in Washington. The district court granted plaintiffs' motion and issued the injunction against prosecution of the Canadian suit. Northwest Sports appeals pursuant to 28 U.S.C. § 1292(a)(1).

I.

Northwest Sports does not deny that under Federal Rule of Civil Procedure 13(a) its contract claim would constitute a compulsory counterclaim in the pending antitrust action. Rather, it contends that Canadian law, and not Rule 13(a), governs the determination whether the contract claim is compulsory and that Canadian law would not require Northwest Sports to plead its claim as a compulsory counterclaim in the pending antitrust suit. In concluding that Rule 13(a) governs, the district court below relied on the general choice of law principle, restated in § 122 of the Restatement (Second) of Conflict of Laws (1971), that a court will apply its own rules of procedure to regulate the conduct of litigation before it. 2 See also Bournias v. Atlantic Maritime Co., 220 F.2d 152, 154 (2nd Cir. 1955). Northwest Sports argues, however, that this general rule is inapplicable because the issue in question is "one whose resolution would be

Page 854

likely to affect the ultimate result of the case." Restatement (Second) of Conflict of Laws § 122, Comment a (1971). We find this argument without merit.

The issue before this court is not whether Canadian law governs the interpretation or the validity of the agreements between Northwest Sports and appellees, but rather whether all claims arising out of these agreements should be heard in a single forum. A determination that appellant's claim is a compulsory counterclaim which must be pleaded in the district court of Washington cannot reasonably be expected to affect the merits of appellant's contract claim. 3 Moreover, the Supreme Court has emphasized the federal courts' overriding interest in applying their own rules of procedure and has indicated that in federal court the Federal Rules of Civil Procedure will almost invariably be applied if there is a Federal Rule governing the point in dispute. See Hanna v. Plumer, 380 U.S. 460, 469-74, 85 S.Ct. 1136, 1142-46, 14 L.Ed.2d 8 (1965); see also TPO Inc. v. Federal Deposit Ins. Corp., 487 F.2d 131, 133-34 (3d Cir. 1973) (in a diversity action, Fed.R.Civ.P. 13(a) relating to compulsory counterclaims applies without reference to conflicting state rule); Tolson v. Hodge, 411 F.2d 123, 125-29 (4th Cir. 1969) (same).

Northwest Sports nevertheless argues that Canadian law is controlling because (1) the parties designated Canadian law as the law to be applied to the contract, and (2) Canada is the jurisdiction with the most significant relationship to the transaction. However, as noted above, the controlling choice of law principle is that a court's own local rules will be applied to determine how litigation shall be conducted. Appellants have failed to demonstrate why this principle is inapplicable in this case. Accordingly, we conclude that the district court properly looked to Fed.R.Civ.P. 13, and not Canadian law, to determine whether a defendant's contract claim must be pleaded as a compulsory counterclaim in the federal antitrust action pending before it.

II.

Federal Rule of Civil Procedure 13(a) requires a defendant in federal court to state as a counterclaim any claim he may have against the plaintiff that "arises out of the transaction or occurrence that is the subject matter" of the plaintiff's claim. 4 The purpose of requiring a defendant to assert his claim as a counterclaim in a pending action is "to prevent multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters." Southern Construction Co. v. Pickard, 371 U.S. 57, 60, 83 S.Ct. 108, 110, 9 L.Ed.2d 31 (1962). The Rule bars a party who failed to assert a compulsory counterclaim in one action from instituting a second action in which that counterclaim is the basis of the complaint. See Southern Construction Co. v. Pickard, 371 U.S. at 60, 83 S.Ct. at 110; Wright & Miller, Federal Practice and Procedure, Civil §§ 1417-1418 (1971). It is well-settled that in order to enforce this bar, a federal court may enjoin a party from bringing its compulsory...

To continue reading

FREE SIGN UP