Boccardo v. Safeway Stores, Inc.

• Decision Date: 13 August 1982
• Citation: 184 Cal.Rptr. 903,134 Cal.App.3d 1037
• Court: California Court of Appeals Court of Appeals
• Parties: James F. BOCCARDO, et al., Plaintiffs and Appellants, v. SAFEWAY STORES, INC., et al., Defendants and Respondents. Civ. 47500.

Page 903

184 Cal.Rptr. 903

134 Cal.App.3d 1037

James F. BOCCARDO, et al., Plaintiffs and Appellants, v. SAFEWAY STORES, INC., et al., Defendants and Respondents.

Civ. 47500.

Court of Appeal, First District, Division 4, California.

Aug. 13, 1982.

Hearing Denied Oct. 7, 1982.

Law Offices of Jerrold N. Offstein, Jerrold N. Offstein, Michael E. Dietrick, Jane C. Van Praag, Michael Weisberg, San Francisco, Scott & Kolb, Pittsburg, for plaintiffs and appellants.

Pillsbury, Madison & Sutro, Richard W. Odgers, C. Douglas Floyd, Brian D. Bellardo, San Francisco, Hawley, Troxell, Ennis & Hawley, Jess B. Hawley, Boise, Idaho, Arnold & Porter, Alexander E. Bennett, Washington, D. C., McCutchen, Doyle, Brown & Enersen, J. Thomas Rosch, San Francisco, Kemp, Smith, White, Duncan & Hammond, E. Link Beck, El Paso, Tex., Mitchell, Silberberg & Knupp, Roy Lewis Shults, Los Angeles, Wilmer, Cutler & Pickering, C. Loring Jetton, Jr., Washington, D. C., Donahue, Gallagher, Thomas & Woods, Robert N. Wood, Oakland, McKenna & Fitting, Les J. Weinstein, Munger, Tolles & Richershauser, Ronald L. Olson, Los Angeles, McDermott, Will & Emery, Theodore A. Groenke, Chicago, Ill., Morgan, Lewis & Bockius, Benjamin M. Quigg, Jr., Philadelphia, Pa., Morgan, Lewis & Bockius, Kenneth Wright, Los Angeles, Stein, Rosen & Ohrenstein, David A. Rosen, New York City, Jones, Waldo, Holbrook & McDonough, Donald B. Holbrook, Michael R. Murphy, Salt Lake City, Utah, Cahill, Gordon & Reindel, Henry G. Bisgaier, New York City, Brobeck, Phleger & Harrison, Charles E. Hanger, San Francisco, Bodkin, McCarthy, Sargent & Smith, Timothy J. Sargent, Los Angeles, Bedell, Bedell, Dittmar & Zehmer, Charles P. Pillans, III, Jacksonville, Fla., Heller, Ehrman, White & McAuliffe, Stephen V. Bomse, San Francisco, for defendants and respondents.

CHRISTIAN, Associate Justice.

James F. Boccardo and others appeal from judgments dismissing an antitrust action brought by them against Safeway Stores, Inc. and others, respondents in this appeal.

Boccardo and many cattlemen and feed lot operators sued respondents, operators of retail food chain stores, in the United States District Court (Northern District of California) (Boccardo I ). Seeking damages under section 4 of the Clayton Act (15 U.S.C. § 15), plaintiffs-appellants charged that respondents combined to fix at artificially low levels the price at which beef is purchased from meat packers, and ultimately from cattle ranchers and feeders. (See In re Beef Industry Antitrust Litigation (5th Cir. 1979) 600 F.2d 1148, 1153, cert. den. 449 U.S. 905, 101 S.Ct. 280, 66 L.Ed.2d 137.) The Judicial Panel on Multidistrict Litigation consolidated this federal lawsuit with seven other lawsuits commenced in six other federal districts, and transferred all the cases to the United States District Court for the Northern District of Texas. (See In re Beef Industry Antitrust Litigation (J.P.M.L.1976) 419 F.Supp. 720.)

The district court dismissed all the consolidated actions with prejudice for failure to state a claim upon which relief could be granted. Plaintiffs in all of the other consolidated lawsuits appealed to the United States Court of Appeals. (In re Beef Industry Antitrust Litigation, supra, 600 F.2d 1148, 1155.) The present appellants, however, did not challenge the judgment of dismissal; instead, they moved the federal court for leave to file a second amended complaint to allege antitrust violations under the Cartwright Act. (Bus. & Prof.Code, § 16700 et seq.) The district court denied the motion.

Appellants then commenced the present action in the superior court based on the California statute. (Boccardo II.) The complaint in Boccardo II named the same plaintiffs and defendants (excluding Allied Supermarkets, Inc.) as did the amended federal complaint, and made identical allegations of price-fixing and monopolization. The superior court sustained without leave to amend a general demurrer by respondents on the ground of res judicata, and dismissed the action. The present appeal followed.

Respondents contend that the district court's dismissal of appellants' federal anti-trust claims bars the superior court from entertaining appellants' state law causes of action. California courts must give full faith and credit to the judgment of a federal court (Code Civ.Proc., § 1908); therefore, this court must give the same effect to the federal dismissal as would be accorded to it in a federal court. (Levy v. Cohen (1977) 19 Cal.3d 165, 173, 137 Cal.Rptr. 162, 561 P.2d 252, cert. den. 434 U.S. 833, 98 S.Ct. 119, 54 L.Ed.2d 94.)

(a) Was the dismissal of Boccardo I a final judgment on the merits?

A final judgment in favor of a defendant ordinarily operates as a complete bar to further litigation on the same cause of action. (Slater v. Blackwood (1975) 15 Cal.3d 791, 795, 126 Cal.Rptr. 225, 543 P.2d 593.) To determine whether Boccardo II was barred by res judicata, this court must first decide whether the dismissal of Boccardo I was a final judgment on the merits.

A dismissal for failure to state a claim (Fed.Rules Civ.Proc., rule 12(b)) is ordinarily treated as an adjudication on the merits. (Bell v. Hood (1946) 327 U.S. 678, 682, 66 S.Ct. 773, 776, 90 L.Ed. 939; Federated Department Stores, Inc. v. Moitie (1981) 452 U.S. 394, 399, fn. 3, 101 S.Ct. 2424, 2428, fn. 3, 69 L.Ed.2d 103; Bobby Jones Garden Apartments, Inc. v. Suleski (5th Cir. 1968) 391 F.2d 172.) Such a dismissal bars further litigation of the claim when it determines " 'the real or substantial grounds of action or defense as distinguished from matters of practice, procedure, jurisdiction or form.' " (1B Moore's Federal Practice, p 0.409 at p. 1003.) Stated another way, "[t]he judgment is on the merits if it is based on the substantive law, and determines that the plaintiff has no cause of action.... The judgment is not on the merits if it is based merely on rules of procedure, and determines only that the plaintiff is not entitled to recover in the particular action; e.g., dismissal for lack of jurisdiction, or judgment after special demurrer sustained." (4 Witkin, Cal. Procedure (2d ed. 1971) Judgment, § 168, p. 3311 [emphasis deleted]; Rest.Judgments, § 49.)

The basis for the dismissal of Boccardo I was the absence of any allegation that appellants sold cattle directly to the respondent food chains. The district court apparently interpreted the rule of Illinois Brick Co. v. Illinois (1977) 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707, as restricting the right of action under section 4 of the Clayton Act to parties who have dealt directly with alleged antitrust law violators. (In re Beef Industry Antitrust Litigation, supra, 600 F.2d 1148, 1155.) Appellants contend that because the Illinois Brick holding is a rule of standing, and therefore a procedural bar, the dismissal of Boccardo I was not a judgment on the merits and cannot preclude a second action in the state courts. But the holding of Illinois Brick is not a rule of standing. In that case the United States Supreme Court held that a purchaser of goods who is indirectly affected by an alleged price-fixing conspiracy has no cause of action against the members of that alleged conspiracy. (Illinois Brick Co. v. Illinois, supra, 431 U.S. 720, 735, 97 S.Ct. 2061, 2069, 52 L.Ed.2d 707.) The court noted that "we do not address the standing issue, except to note, as did the Court of Appeals below...that the question of which persons have been injured by an illegal overcharge for purposes of § 4 [of the Clayton Act] is analytically distinct from the question of which persons have sustained injuries too remote to give them standing to sue for damages under § 4." (Id., at p. 728, fn. 7, 97 S.Ct., at p. 2065, fn. 7.) Thus, the court upheld the Seventh Circuit's view that the failure to show that antitrust violations caused plaintiffs' injuries was not a deficiency of standing. "Rather, the question is one of fact [citations], and any decision thereon is an adjudication on the merits." (State of Ill. v. Ampress Brick Co., Inc. (7th Cir. 1976) 536 F.2d 1163, 1166, rev. on other grounds, 431 U.S. 720.) In applying the rule of Illinois Brick, therefore, the federal court based its dismissal not on lack of standing but on a substantive determination that appellants had no cause of action under section 4 of the Clayton Act. Thus the dismissal of Boccardo I was a judgment on the merits; subject to other considerations which we shall discuss it may operate to bar further litigation on the same cause of action. (Slater v. Blackwood, supra, 15 Cal.3d 791, 795, 126 Cal.Rptr. 225, 543 P.2d 593.)

(b) Are the federal claim in Boccardo I and the state law claim in Boccardo II a single cause of action?

Appellants could not be barred from suing in the superior court unless Boccardo I and Boccardo II are based on the same cause of action. But res judicata precludes piecemeal litigation by splitting a single cause of action. (Wulfjen v. Dolton (1944) 24 Cal.2d 891, 894, 151 P.2d 846.) It also precludes relitigation of the same cause of action on a different legal theory or for different relief. (Slater v. Blackwood, supra, 15 Cal.3d 791, 795, 126 Cal.Rptr. 225, 543 P.2d 593; Panos v. Great Western Packing Co. (1943) 21 Cal.2d 636, 638-639, 134 P.2d 242.)

For the purposes of res judicata, California defines a cause of action according to the "primary right" theory: the violation of a single primary right constitutes a single cause of action even though it may entitle the injured party to diverse forms of relief. (Wulfjen v. Dolton, supra, 24 Cal.2d 891, 895-896, 151 P.2d 846.) The primary right alleged to have been violated in the instant case is appellants' right to be free from economic injury caused by an unlawful conspiracy to fix meat prices. The federal claim in Boccardo I and appellants' present state law claim are based on the same facts and the same harm. A " 'cause of action' is based upon the harm suffered, as...