From Rafter v. Liddle, 2010 U.S. Dist. LEXIS 33952 (S.D.N.Y. Mar. 30, 2010):

As an initial matter, the Court will examine whether New York or federal preclusion law (also referred to as res judicata) applies. In the Previous Action, the district court exercised diversity jurisdiction. *** Where a decision "claimed to have preclusive effect was rendered by a district court sitting in diversity, [a federal court will] apply the preclusion law 'that would be applied by state courts in the State in which the federal diversity court sits.'" Algonquin Power, 2010 U.S. App. LEXIS 1119, 2010 WL 177244, at *2 (quoting Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508, 121 S. Ct. 1021, 149 L. Ed. 2d 32 (2001)); see also Smith v. Woosley, 399 F.3d 428, 435-36 (2d Cir. 2005). Yet, "there is no discernible difference between federal and New York law concerning res judicata and collateral estoppel." Algonquin Power, 2010 U.S. App. LEXIS 1119, 2010 WL 177244, at *2 (quoting Marvel Characters, Inc. v. Simon, 310 F.3d 280, 286 (2d Cir. 2002)); accord Pike v. Freeman, 266 F.3d 78, 91 n.14 (2d Cir. 2001) ("[T]here appears to be no significant difference between New York preclusion law and federal preclusion law . . . ."). Therefore, the Court will apply federal preclusion law to evaluate Rafter's claims.

[Footnote 6] In the Previous Action (as in this case), Rafter asserted several state law claims in addition to one federal cause of action under RICO. The Court may thus have had federal question jurisdiction over that claim. Nonetheless, because New York and federal preclusion law are materially the same, it is irrelevant for the purposes of this motion whether the Court applies federal or state principles of preclusion to the RICO claim. See Algonquin Power Income Fund v. Christine Falls of N.Y., Inc., No. 08-6026-BK, 2010 U.S. App. LEXIS 1119, 2010 WL 177244, at *2 (2d Cir. Jan. 20, 2010).

The doctrine of claim preclusion "holds that a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 547 F.3d 109, 112 n.2 (2d Cir. 2008) (quoting Monahan v. New York City Dep't of Corr, 214 F.3d 275, 284 (2d Cir. 2000)). However, the phrase "could have been raised" in this context does not mean literally any claim that might have been joined in the initial action. Instead, the previous judgment extinguishes only those rights of the plaintiff to remedies against the defendant with respect to "the transaction, or series of connected transactions, out of which the [first] action arose." Maharaj v. Bankamerica Corp., 128 F.3d 94, 97 (2d Cir. 1997) (quoting Restatement (Second) of Judgments § 24(1) (1982)); accord Landau v. LaRossa, Mitchell & Ross, 11 N.Y.3d 8, 892 N.E.2d 380, 383 n.2, 862 N.Y.S.2d 316 (N.Y. 2008) (quoting Restatement test).