Daewoo Electronics America Inc. v. Opta Corp.
875 F.3d 1241
| 9th Cir. | 2017Background
- Daewoo obtained a default judgment (~$7.75M) against GoVideo (non‑party) and then sued related corporate entities (Opta, TCLM, TCLI, TCLC) to collect that debt via guaranty, alter‑ego, and successor‑liability theories.
- In New Jersey federal court Daewoo sued TCLI and Opta on a written guaranty; the court granted summary judgment for defendants, holding the guaranty expired before most debt accrued.
- Daewoo later filed a second diversity suit in the Northern District of California asserting alter‑ego and successor liability (and fraudulent transfer claims, later dismissed voluntarily) against Opta, TCLM, TCLI, and TCLC.
- The California district court (Judge Chhabria) raised res judicata sua sponte and granted judgment on the pleadings, concluding Daewoo could have raised these claims in the New Jersey guaranty action; Daewoo appealed.
- The Ninth Circuit majority held that under Semtek the preclusive effect of the New Jersey federal judgment is governed by New Jersey law, applied New Jersey res judicata and entire‑controversy principles, and reversed — res judicata did not bar Daewoo’s alter‑ego/successor claims and New Jersey’s entire‑controversy joinder rule does not bind federal courts outside New Jersey.
- A strong dissent (Judge Bybee) argued Semtek requires applying New Jersey state‑court preclusion (including the entire‑controversy doctrine) as a New Jersey court would, and would have affirmed dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the New Jersey federal guaranty judgment precludes Daewoo’s later alter‑ego and successor claims (res judicata/claim preclusion) | Daewoo: claims are legally and factually distinct (different wrong, different elements, different evidence) so res judicata does not apply | Defendants: the new claims could and should have been brought in the prior action; facts overlapped and claims arise from same transaction/occurrence | Held: Res judicata (New Jersey law) does not apply—theories, relief, and material evidence differ sufficiently to avoid claim preclusion |
| Whether New Jersey’s entire‑controversy doctrine bars the California action | Daewoo: even if doctrine would bar suit in NJ, New Jersey does not export that procedural joinder rule to courts outside the state | Defendants: entire‑controversy doctrine is a New Jersey preclusion rule that should be given effect under Semtek | Held: Entire‑controversy doctrine does not apply extraterritorially; New Jersey declines to impose its joinder rule on other jurisdictions, so F2 (a California federal court) may hear the claims |
| Choice‑of‑law for preclusion (what law governs preclusive effect of FI’s federal diversity judgment) | Daewoo: Semtek requires applying New Jersey preclusion law; but that includes limits on extraterritorial application | Defendants: Semtek mandates applying New Jersey preclusion doctrines (including entire controversy) | Held: Semtek governs; Ninth Circuit applies New Jersey law but follows New Jersey’s rule that the entire‑controversy doctrine is not exported to other jurisdictions |
| Whether federal interests or Semtek exceptions require use of federal preclusion instead of New Jersey law | Daewoo: New Jersey rule limiting export controls outcome; federal interests not offended | Defendants: should apply entire‑controversy to prevent forum shopping; fairness favors New Jersey rule | Held: Even assuming forum‑shopping concerns, Semtek allows applying federal preclusion when state rule is incompatible with federal interests; court concluded New Jersey’s non‑export rule applies and federal interests do not compel departure here |
Key Cases Cited
- Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001) (federal court sitting in diversity must apply state preclusion rules from the rendering court’s state when determining claim‑preclusive effect of a federal diversity judgment)
- Mortgagelinq Corp. v. Commonwealth Land Title Ins. Co., 142 N.J. 336, 662 A.2d 536 (1995) (New Jersey’s entire‑controversy doctrine reflects a policy of joinder but New Jersey courts decline to export the doctrine’s preclusive effect to other jurisdictions)
- Culver v. Ins. Co. of N. Am., 115 N.J. 451, 559 A.2d 400 (1989) (four‑factor test to determine whether claims grow out of the same transaction or occurrence for res judicata analyses)
- Taylor v. Sturgell, 553 U.S. 880 (2008) (federal common law governs preclusion rules for federal‑question judgments; distinguishes treatment based on source of jurisdiction)
- Thomas v. Washington Gas Light Co., 448 U.S. 261 (1980) (a State cannot unilaterally determine the extraterritorial effect of its judgments; limits on exporting state procedural rules to other forums)