Derish v. San Mateo-Burlingame Bd. of Realtors

• Decision Date: 23 December 1983
• Docket Number: MATEO-BURLINGAME,No. 83-1791,83-1791
• Citation: 724 F.2d 1347
• Parties: 1984-1 Trade Cases 65,771 Joel and Patty DERISH, Plaintiffs-Respondents, v. SANBOARD OF REALTORS, California Association of Realtors, National Association of Realtors, H. Kent Atwater, Defendants-Petitioners.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1347

724 F.2d 1347

1984-1 Trade Cases 65,771

Joel and Patty DERISH, Plaintiffs-Respondents, v. SAN MATEO-BURLINGAME BOARD OF REALTORS, California Association of Realtors, National Association of Realtors, H. Kent Atwater, Defendants-Petitioners.

No. 83-1791.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 12, 1983.

Decided Dec. 23, 1983.

Moses Lasky, Lasky, Haas, Cohler & Munter, San Francisco, Cal., for defendants-petitioners.

David Barry, Barry & Finley, San Francisco, Cal., for plaintiffs-respondents.

Appeal from the United States District Court for the Northern District of California.

Before WALLACE, ALARCON, and BOOCHEVER, Circuit Judges.

WALLACE, Circuit Judge:

This case arose under section 1 of the Sherman Act, 15 U.S.C. Sec. 1, and comes to us on a certified interlocutory appeal, 28 U.S.C. Sec. 1292(b). The question is appropriately narrow. California has a state antitrust statute, the Cartwright Act, Cal.Bus. & Prof.Code Secs. 16700-60 (West 1964 & Supp.1983), "patterned after the Sherman Act." Marin County Board of Realtors, Inc. v. Palsson, 16 Cal.3d 920, 925, 549 P.2d 833, 130 Cal.Rptr. 1 (1976). When a plaintiff sues under the Cartwright Act and loses, will res judicata bar him from bringing the same suit against the same defendant in federal court under substantially the same law in the Sherman Act? We hold that it will.

I

The San Mateo-Burlingame Board of Realtors (the Board) operates a multiple listing service (MLS) for real estate sales. Only licensed real estate salesmen or brokers may use the MLS. The Derishes sold their house through a real estate broker who, as a licensed member of the Board, could use the MLS. The broker received a standard commission for the sale and helped the Derishes find a new house.

After the sale, the Derishes sued their broker, the Board, and state and national associations of realtors (jointly the Realtors) under the Cartwright Act. The Derishes alleged essentially that by limiting access to the MLS and encouraging the exchange among brokers of information found in the MLS, the Realtors were engaged in a conspiracy in unreasonable restraint of trade and commerce. The state trial court dismissed the complaints with prejudice. The California Court of Appeal affirmed. After analyzing the MLS practices under the rule of reason, the court concluded that "it is not improper to deny access [to a MLS] to persons who are not licensed real estate brokers or sales agents" and the Derishes "fail to allege any harm which might give rise to an antitrust cause of action." Derish v. San Mateo-Burlingame Board of Realtors, 136 Cal.App.3d 534, 536, 542, 186 Cal.Rptr. 390 (Ct.App.1982). The California Supreme Court declined to review this decision.

Before the California Court of Appeal ruled, however, the Derishes filed a suit in federal court against the Realtors based on the same facts and alleging the same conspiracy and unreasonable restraint of trade or commerce. The only difference was that they brought their federal case under the Sherman Act.

Once the California state decision had become final, the Realtors moved to dismiss the federal suit on grounds of res judicata. The district court denied the motion and certified the question for appeal under 28 U.S.C. Sec. 1292(b). We accepted it.

The Derishes filed a third amended complaint in the district court after we accepted the appeal. This proposed amended complaint is not before us, see Dempsey v. Guaranty Trust Co. of New York, 131 F.2d 103, 104-05 (7th Cir.1942) (equivalent circumstances under predecessor to 28 U.S.C. Sec. 1292(a) practice), cert. denied, 318 U.S. 769, 63 S.Ct. 761, 87 L.Ed. 1139 (1943); see also Anderson v. Air West, Inc., 542 F.2d 1090, 1093 (9th Cir.1976); Union Asbestos & Rubber Co. v. Evans Products Co., 328 F.2d 949, 950 n. 4 (7th Cir.1964) ("We must act upon the record as it was at the time the court ruled...."), and therefore cannot change the issue of res judicata presented in the certified question.

II

The doctrine of res judicata incorporates principles of both merger and bar, and is sometimes referred to as "claim preclusion." Wright, The Law of Federal Courts, 680 (4th ed. 1983). The question before us concerns bar. We have held that a "judgment on the merits is an absolute bar to a subsequent action between the same parties on the same claim." Brown v. Federated Department Stores, Inc., 653 F.2d 1266, 1267 (9th Cir.), on remand from Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981); accord, e.g., Board of Trustees of Carpenters Pension Trust Fund v. Reyes, 688 F.2d 671, 673 (9th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 3088, 77 L.Ed.2d 1349 (1983); American Triticale, Inc. v. Nytco Services, Inc., 664 F.2d 1136, 1146 (9th Cir.1981); Ellingson v. Burlington Northern, Inc., 653 F.2d 1327, 1330 (9th Cir.1981). When a state judgment is involved, a second principle must be considered. Congress has commanded federal courts to give state court judgments the same full faith and credit as they would receive in the courts of the state, 28 U.S.C. Sec. 1738. See, e.g., Kremer v. Chemical Construction Corp., 456 U.S. 461, 466 & n. 6, 102 S.Ct. 1883, 1889 & n. 6, 72 L.Ed.2d 262 (1982) (28 U.S.C. Sec. 1738 requires same preclusive effects in federal as state court).

The Derishes acknowledge that a prior judgment on the merits between the same parties exists at the state level. They argue, however, that the state antitrust suit and the federal antitrust suit do not involve the same "claim." If they are correct, res judicata will not bar the federal suit. E.g., Harris v. Jacobs, 621 F.2d 341, 343 (9th Cir.1980) (res judicata precludes only claims arising out of the same "cause of action").

To determine whether the Derishes' state and federal suits involve the same claim, we are assisted by asking:

(1) whether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of the second action; (2) whether substantially the same evidence is presented in the two actions; (3) whether the two suits involve infringement of the same right; and (4) whether the two suits arise out of the same transactional nucleus of facts.

Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 570, 74 L.Ed.2d 932 (1982) (Costantini ), quoting Harris v. Jacobs, 621 F.2d at 343. These are tools of analysis, not requirements, because identity of claims "cannot be determined precisely by mechanistic application of a simple test." Abramson v. University of Hawaii, 594 F.2d 202, 206 (9th Cir.1979). However, examination for an identical "transactional nucleus of facts" is clearly the most important factor, Harris v. Jacobs, 621 F.2d at 343; see also Brown v. Federated Department Stores, 653 F.2d at 1267 ("Two claims are the same if they arise from the same transactions or events.").

This case, however, adds another dimension. Federal courts have exclusive jurisdiction of suits under the federal antitrust laws, Turf Paradise, Inc. v. Arizona Downs, 670 F.2d 813, 821 (9th Cir.), cert. denied, 456 U.S. 1011, 102 S.Ct. 2308, 73 L.Ed.2d 1308 (1982) (rejecting abstention based on "wise judicial administration" because state and federal courts do not have concurrent jurisdiction of federal antitrust claims). There are thus two competing policies which apply to this case. It is by weighing these competing policies of exclusive federal jurisdiction and res judicata that a proper decision may be reached. Weighing those policies brings into focus a third policy: federal res judicata properly based on a state judgment serves to "promote the comity between state and federal courts that has been recognized as a bulwark of the federal system." Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 415, 66 L.Ed.2d 308 (1980).

III

Turning first to the questions we suggested in Costantini, an examination of the record reveals immediately that the Derishes' state and federal suits arose from the same transactional nucleus of facts, and, from all indications, that substantially the same evidence would have been presented in the two actions. The remaining criteria of Costantini ask whether the suits involve the same right and whether the later suit may impair a right affirmed in the earlier case.

The Derishes seek freedom from unreasonable restraints on trade or commerce, and set up that right under two statutes, one state and one federal. If the statutes set the same standards for defining unreasonable restraints and imposing liability, they have defined the same right for purposes of our res judicata inquiry. In contrast, if federal law imposes stricter liability than state law, application of res judicata is inappropriate. See Clark v. Watchie, 513 F.2d 994, 997 (9th Cir.), (securities law) cert. denied, 423 U.S. 841, 96 S.Ct. 72, 46 L.Ed.2d 60 (1975).

California has long held that the Sherman Act and the Cartwright Act are similar and that Sherman Act cases apply in construing the Cartwright Act. E.g., Younger v. Jensen, 26 Cal.3d 397, 405 n. 4, 605 P.2d 813, 161 Cal.Rptr. 905 (1980); Mailand v. Burckle, 20 Cal.3d 367, 376, 572 P.2d 1142, 143 Cal.Rptr. 1 (1978); Marin County Board of Realtors, Inc. v. Palsson, 16 Cal.3d 920, 925, 549 P.2d 833, 130 Cal.Rptr. 1 (1976); Oakland-Alameda County Builders' Exchange v. F.P. Lathrop Construction Co., 4 Cal.3d 354, 362 n. 3, 482 P.2d 226, 93 Cal.Rptr. 602 (1971). Both California and the United States apply their respective Acts to real estate brokerage cases. United States v. Real Estate Boards, 339 U.S. 485, 490-91, 70 S.Ct. 711, 714-15, 94 L.Ed. 1007 (1950); Marin County Board of Realtors, Inc. v. Palsson, 16 Cal.3d at 925, 549 P.2d 833, 130 Cal.Rptr. 1. Both the Sherman Act and the Cartwright Act permit treble damages. See 15 U.S.C. Sec. 15; Cal.Bus. & Prof.Code Sec. 16750 (West 1964). In the Derishes' state case,...