1 F.4th 622
8th Cir.2021Background
- Daredevil contracted with ZTE USA and parent ZTE Corp. for a Missouri “Missouri MSA” (Agreement + Master Supply Agreement) to build a St. Louis cellphone network; documents were treated as a single integrated contract.
- Daredevil and related entities arbitrated claims against ZTE USA in Jacksonville, Florida; ZTE Corp. was excluded from arbitration because it had not agreed to arbitrate the ClearTalk entities’ claims.
- The arbitrator denied all ClearTalk/Daredevil claims; the Middle District of Florida confirmed the award and the Eleventh Circuit affirmed.
- After the arbitration, Daredevil sued ZTE Corp. in the Eastern District of Missouri on essentially the same factual allegations (added a tortious-interference count). The case was stayed during arbitration and later reopened.
- The district court applied Florida claim-preclusion law (because the Florida federal court confirmed the award) and granted summary judgment for ZTE Corp., holding Daredevil’s claims barred by res judicata; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law: which state’s preclusion law governs the preclusive effect of the Florida arbitration judgment? | Missouri law should apply because suit was brought in Missouri. | Florida law governs because the first final judgment (confirmation of the arbitration award) was rendered by a Florida federal court. | Florida law applies; federal common law gives the judgment the preclusive effect the Florida forum would give. |
| Identity of parties (privity between ZTE USA and ZTE Corp.) | ZTE Corp. is not in privity with ZTE USA because ZTE Corp. is alleged to have independent wrongdoing. | Parent/subsidiary relationship and overlapping allegations establish privity; ZTE USA and ZTE Corp. are effectively the same parties for preclusion. | Held: ZTE Corp. and ZTE USA are privies (wholly owned subsidiary relationship and unified allegations satisfy identity-of-parties). |
| Identity of cause of action (are the asserted claims the same as those in arbitration?) | The causes differ because ZTE Corp. had distinct duties and the suit relies on different facts/contracts (and adds tortious interference). | The arbitration and this suit rely on the same integrated Missouri MSA, same facts, same witnesses; claims are the same in substance. | Held: Identity of cause satisfied — the same contract, facts, and evidence were at issue; tortious-interference claim also fails where breach was already rejected in arbitration. |
Key Cases Cited
- Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001) (federal common law governs preclusive effect of diversity judgments)
- Taylor v. Sturgell, 553 U.S. 880 (2008) (res judicata bars successive litigation of the same claim)
- St. Jude Med. S.C., Inc. v. Cormier, 745 F.3d 325 (8th Cir. 2014) (forum law that rendered the first judgment controls preclusion analysis)
- C.H. Robinson Worldwide, Inc. v. Lobrano, 695 F.3d 758 (8th Cir. 2012) (applying forum law for preclusion effect of federal diversity judgment)
- NTCH-WA, Inc. v. ZTE Corp., 921 F.3d 1175 (9th Cir. 2019) (parent/subsidiary privity for preclusion between ZTE entities)
- Dadeland Depot, Inc. v. St. Paul Fire & Marine Ins. Co., 945 So. 2d 1216 (Fla. 2006) (Florida’s four-prong claim-preclusion test)
- ICC Chem. Corp. v. Freeman, 640 So. 2d 92 (Fla. Dist. Ct. App. 1994) (confirmed arbitration awards have claim-preclusive effect under Florida law)
- Albrecht v. State, 444 So. 2d 8 (Fla. 1984) (cause-of-action identity focuses on whether the same facts/evidence are necessary to maintain both suits)