Commercial Litigation and Arbitration

All Writs Act: Does Relitigation Exception Allow Federal Courts to Enjoin State Suits Concerning Claims or Issues That Could Have Been Brought in Prior Federal Action Or Only Those Actually Litigated? Circuit Split & a Hint from the S.Ct.

Dakota Med., Inc. v. RehabCare Grp., Inc., 2018 U.S. Dist. LEXIS 15972 (E.D. Cal. Jan. 31, 2018):

There is a circuit split over whether the relitigation exception allows federal courts to enjoin state suits concerning any claims and issues that could have been brought in the prior federal litigation, or only claims that actually were litigated. However, under binding Ninth Circuit precedent the relitigation exception is not limited to "issues 'actually litigated' in a prior court proceeding." Western Sys., Inc. v. Ulloa, 958 F.2d 864, 869-70 (9th Cir. 1992) (noting that the First, Fifth, Fourth, Sixth, and Second Circuits had all concluded the relitigation exception is narrower than claim preclusion, and therefore is limited only to issues actually litigated). The Supreme Court has not explicitly resolved this circuit split, though it recently suggested this exception is limited only to issues actually litigated. See Smith, 564 U.S. at 308-11 (noting again that the exception applies only to issues that "actually have been decided by the federal court," and declining to apply it where the federal and state courts would apply different law in reaching a decision). Nevertheless, this court recognizes that binding precedent compels the conclusion that the relitigation exception bars claims that were litigated or could [*18]  have been litigated, consistent with claim preclusion principles. See Western Sys., Inc., 958 F.2d at 869-70.

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