On June 30, 1961, Trans World Airlines, Inc., the plaintiff in this later filed action, instituted an anti-trust suit for treble damages in the District Court of the United States for the Southern District of New York against Howard R. Hughes, Hughes Tool Company, and Raymond M. Holliday, an official of the corporate defendant and a director of plaintiff, which complained of injuries allegedly suffered by plaintiff as a result of the improperly administered control exercised over the affairs of such corporation by the defendants Howard R. Hughes and Hughes Tool Comрany, which latter corporation (all of the stock of which was owned by Mr. Hughes) had prior to the inception of such federal action held an unfettered controlling 78% interest in the voting shares of the plaintiff.
The gist of the charges levelled against Hughes Tool Company and others in such action was that as a condition precedent to the furnishing of financial aid to plaintiff, Hughes Tool Company and others associated with it, had required that plaintiff acquire its needed aircraft solely through such defendant corporation and was thus caused to boycott all other suppliers of aircraft. Further complaint was made that plaintiff had been improperly forced by Hughes Tool Company and others associated with it to acquire needed aircraft through borrowings rather than through equity financing.
*117 The complaint in question consisted of two federal claims alleging violations of federal anti-trust laws together with a third pendent state claim which alleged tortious interference by defendants with the business оf TWA, which claim was based on the same facts pleaded in the first and second claims.
The complaint in this suit, which was filed on April 18, 1962, alleges substantially the same facts as those set forth in the federal complaint, the relief sought herein, however, being based on equitable principles governing the conduct required of corporate officers and majority stockholders in their dealings with their corporation, such action claiming breaches by the named defendants of their fiduciary duty to plaintiff and its minority stоckholders.
This is the decision of the Court on the motion of the defendants to dismiss the pending complaint on the grounds of res judicata and collateral estoppel as well as under the provisions of Rule 41(b), Del.C. Ann., and, in the alternative, on the ground that approval by the Civil Aeronautics Board of business dealings between TWA and its controlling stockholder, Hughes Tool Company, here in issue, has resulted in the granting of immunity to defendants from this suit on the basis of the provisions of section 414 of the Federal Aviation Act, 49 U.S.C. § 1384, 1 defendаnts contending that the operative facts on which plaintiff relies in this case are substantially the same as those relied on in the federal litigation and that plaintiff may not be permitted to retry the consequences implicit in a prior ruling based on such facts merely because a different legal theory is now being pursued. Also ready for decision is the motion of the additional defendants for dismissal of the counterclaims asserted against them by the corporate defendant on the ground that such clаims are also barred by the principle of res judicata.
Litigation between TWA and defendants, concerned with the control exercised over TWA by Hughes Tool Company by reason of the eventual ownership by Hughes Tool Company of 78% of TWA’s voting stock, began, as noted above, in 1961, following the deposit of Hughes Tool Company’s TWA stock in a voting trust, by the filing of an anti-trust action by TWA in the Federal District Court of the United States for the Southern District of New York. Thereafter, following almost a year of parrying over resрective rights to discovery, this holding action was filed on April 18, 1962, Howard R. Hughes and again Hughes Tool Company being named as defendants. The motion of the defendant Howard R. Hughes to quash an order of sequestration, which had seized designated property of Mr. Hughes situate in Delaware for the purpose of compelling his appearance, as well as a motion to dismiss the complaint, having been denied, this Delaware action was thereafter held in abeyance without the entrance of a fоrmal stay pending the outcome of the New York litigation.
In its answer to the New York complaint Hughes Tool Company pleaded as a defense that the transactions complained of in such action, having been conducted between two entities engaged in the aeronautics business, fell within the jurisdiction of the Civil Aeronautics Board and that by virtue of the Federal Aviation Act, 49 U.S.C. § 1301 et seq., such transactions, which had been found by the Board to have been essential to the public interest, were accоrdingly immune from prosecution under the provisions of the anti-trust laws. On the basis of such defense, Hughes Tool Company moved to dismiss the complaint,
*118
which motion was denied (S.D.N.Y.),
Such federal action was then remanded to the trial сourt which ordered the introduction of evidence on the issue of damages before a special master, a proceeding which the trial judge characterized as an inquest. The result of such proceeding was an initial award to plaintiff of $137,-611,435.95. The judgment of the trial court was then affirmed.
Thereafter, the Supreme Court of the United States again granted certiorari, and reversed the judgment of the Court of Appeals on the ground that the trial court had erred in denying the corporate defendant’s motion to dismiss the complaint on the ground of its immunity from prosecution under the anti-trust laws because of the above cited provisions of the Civil Aeronautics Act, Hughes Tool Company v. TWA,
The present action, which has lain dormant since 1963 but as to which defendants have not sought dismissal for inaction, is now sought to be brought to trial by plaintiff, which seeks to have the named defendants held liable for breaches оn their part of their fiduciary duty to plaintiff and its minority stockholders. The defendants, as noted above, have again moved to dismiss the complaint on the basis of the defenses above noted.
In support of their present motion to dismiss, defendants cite the case of Chadwick v. Gill,
Res judicata is a principle which “ * * * embodies a rule of public policy, that courts as well as litigants should have rest and repose from the vexatious renewal of the same law suit.”, Epstein v. Chatham Park, Inc.,
In other words, a plaintiff will not be permitted, after losing a case on one theory, to pursue a different theory based on the same proof which has been rejected in the first action. Thus, in Norman Tobacco & Candy Company v. Gillette Safety Razor Company (C.A.5),
However, if the defense of res judicata is to be successfully advаnced, the earlier judgment on which a movant relies must be a valid and personal judgment, and for the defense of collateral estoppel to be successfully advanced, the final judgment in the prior case must have been predicated on those issues or matters sought to be litigated in the second action, Cromwell v. County of Sac, supra.
In short, a valid and final personal judgment is one which “ * * * reaches and determines ‘the real or substantial grounds of the action or defense as distinguished from matters оf practice, procedure, jurisdiction or form,’, Clegg v. United States (C.A.10),
“If the determination of a question is not actually necessary to sustain the prior judgment or order, it is, however, regarded as a mere collateral or incidental matter, and will not sustain a plea of res judicata.”
*120
On the other hand, in the case of Brady v. Trans World Airlines, Inc. (Del.Super.),
“It suffices if the prior judgment has determined the issues of fact raised by the pleadings essential to the maintenance of the second action, even though in form the second action differs from the first.”
In reversing the judgment below in the federal litigation here relied on as a bar tо the present action, the Supreme Court of the United States held:
“Whether or not that complaint states a cause of action under the anti trust laws is a question we do not reach. Another defense of Toolco was that those transactions were under the control and surveillance of the Civil Aeronautics Board and by virtue of the Federal Aviation Act these transactions have immunity from the anti trust laws.
“It is our view that the Court of Appeals erroneously rejected that defense.”,409 U.S. 363 ,93 S.Ct. 647 ,34 L.Ed.2d 577 .
Thus, the gist of the ruling by the Suрreme Court was that the surveillance of the Civil Aeronautics Board over the conduct of Hughes Tool Company, in its capacity as the controlling stockholder of TWA, had rendered Hughes Tool Company immune from attack under the provisions of the anti-trust laws. And I find it significant that while the Supreme Court stated by way of dictum that such Civil Aeronautics Board approval would have undoubtedly barred a derivative stockholders suit under the anti-trust laws filed the day after the Board’s primary order, no reference was madе in such opinion to a stockholders suit thereafter filed based on the ground of common law principles governing the fiduciary duties of corporate officers and majority stockholders to their corporation. In short, plaintiff, in 1961, had alternative remedies, one of which was based on federal anti-trust laws, the other based on common law principles of fiduciary duty, including the wrong inherent in an alleged seizing of a corporate opportunity, and elected to proceed on its antitrust rеmedies. It is its equitable remedies which TWA now seeks to pursue in this litigation.
I conclude that the ruling of the Supreme Court in the federal action, which involved the same parties and events here in issue, was solely to the effect that the federal statutory remedies under the antitrust laws pursued in such action by plaintiff and granted in the lower federal courts were unavailable to plaintiff solely because the intercorporate dealings allegedly forced on TWA by Hughes Tool Company had been rendered immune from attack under the anti-trust laws by reason of the provisions of the Federal Aviation Law. Such ruling does not, therefore, in my opinion, furnish a basis for the defense of res judicata in this litigation. Accordingly, defendants’ motion to dismiss, insofar as it is grounded on such theory, must therefore be denied. 3 Nor does such federal holding support a plea of collateral estoppel because the issue in the present case, namely defendants’ alleged commission of acts constituting breaches of their fiduciary duties toward plaintiff was likewise not determined in such litigation. Therefore, defendants’ motion to dismiss, insofar as it is based on the theory of collateral estoppel, is also denied.
Finally, defendants rely on Rule 41(b) as an alternative ground for barring the present action, pointing out that the order dismissing the federal complaint in the *121 companion litigation here relied on did not provide that such dismissal was without prejudice. In other words, defendants contend that under the provisions of Rule 41 (b), which govern involuntary dismissals, that the dismissal of the federal litigation in New York was accordingly with prejudice and thus constituted a dismissal of such case on the so-called merits.
However, the history of such litigation, when read in conjunction with the language of Rule 41(b) and the construction placed on such rule in the case of Costello v. United States,
The corporate defendant’s motion in the federal court, which was ultimately upheld by the Supreme Court of the United States, was not made after plaintiff had presented all or even any of its evidence as to liability but rather on the theory that as a matter of law plaintiff had failed to establish its claim. Indeed, because defendant chose to rely solely on its defense of immunity from prosecution under the anti-trust laws on the basis of the Federal Aviation Act, the issue of liability was resolved in favor of plaintiff as a result of a default judgment (S.D.N.Y.),
Finally, the case of Costello v. United States, supra, holds that in a situation in which a litigant has not been required to defend on the merits, a dismissal with prejudice will not be presumed. In the federal case defendants did not defend on the merits but rather acquiesced to the entry of a default judgment. I conclude that defendants’ motion to dismiss the present complaint insofar as it is predicated on Rule 41(b) must be denied.
Having failed on their motion to dismiss the complaint on the ground of res judicata, defendants also seek dismissal of the pending complaint on the ground that they are immunized from attack under state law by virtue of 49 U.S.C. § 1384. In opрosing such motion, plaintiff argues that no provision of the Federal Aviation Act precludes the type of redress which it seeks here and that its common law and statutory remedies under state law have *122 been expressly preserved by 49 U.S.C. § 1506. 4
In response, defendants ask this Court to adopt a construction of 49 U.S.C. § 1384 which would provide for blanket immunity from virtually all restraints imposed by state law once approval of a transaction between persons engaged in the aeronautics field has been granted.
In Newmark v. RKO General, Inc. (S.D.N.Y.),
“ ‘The principle to be derived from our decisions is that federal regulation of a field of commerce should not be deemed preemptive of state regulatory power in the absence of persuasive reasons — either that the nature of the regulated subjеct matter permits no other conclusion, or that the Congress has unmistakeably so ordained.’ Florida Lime and Avocado Growers, Inc, v. Paul,373 U.S. 132 , 142,83 S.Ct. 1210 , 1217,10 L.Ed.2d 248 (1963).”
Applying these principles to the instant case, I find no conflict between federal aeronautics policy and the laws of Delaware, nor does the present action create an undue burden on commerce. The policy behind the Federal Aviation Act is primarily to centralize power in the public interest so as to frame rules for the safе and efficient use of the nation’s aeronautics facilities, Airline Pilots Association, International v. Quesada (C.A.2),
There being no conflict, in my opinion, between federal policy as to the operation of aeronautic companies and state law having to do with corporate fiduciary duty, the present suit must, in my opinion, be allowed to proceed, Southeastern Aviation, Inc. v. Hurd,
In other words, the surveillance of transactions between the present corporate litigants by the Civil Aeronautics Board, according to the Supreme Court in the federal case here in issue, was carried on in the public interest rather than in the interest of corporate creditors and stockholders, the Supreme Court stating that: “ * * * the control which
CAB
is authorized to grant or to deny under § 408 involves an appraisal of the impact of that control in terms of monopoly and ■ competition * * * ”, a routine area of examination for a federal regulatory agency. See Colonial Airlines, Inc. v. Janas (C.A.2),
*123
On the other hand, private grievances, such as charges of breach of fiduciary duty, are clearly beyond the jurisdiction of a federal administrative agency and do not, in my opinion, bar state action based on equitable doctrines of corporate fiduciary duty, Otis & Company v. Pennsylvania R. Company, suрra. See also McFaddin Express, Inc. v. Adley Corp. (C.A.2),
Next, the holding in Pan American World Airways, Inc. v. United States, supra, does not require that immunity be extended to the present suit. Here the question is whether or not the Federal Aviation Act preempts state law governing plaintiff’s equitable rights, and the inquiry herein as to such rights has been carried on in light of possible conflict between such rights and the announced federal legislative purpose. Having found no conflict between plaintiff’s state claims and the result reached by thе federal agency here involved and its affirmed findings, defendants’ motion to dismiss this action, which is based on fiduciary principles, on the theory of immunity from suit by reason of the provisions of the Federal Aviation Act, is denied.
Turning finally to the motions of the additional defendants to dismiss the counterclaims of the defendant Hughes Tool Company, which have to do with the third party defendants’ alleged abuse of their rights in providing financing for plaintiff under the voting trust, I conclude that such counterclaims are clearly barred by the doctrinе of res judicata and that such motions must be granted. The active parties in this litigation are substantially the same as in the New York action, and the defendant Howard R. Hughes, who has not appeared in either action, is admittedly in privity with his wholly-owned Hughes Tool Company. The claims asserted by Hughes Tool Company against the additional defendants are the same here as were advanced in New York. The lack of merit in such claims was found in the decision of the Court of Appeals (C.A. 2),
On notice, an appropriate order in conformity with the foregoing may be submitted.
Notes
. This section purports to immunize a person affected by Civil Aeronautics Board orders under pertinent sections of the same act not only from federal anti-trust restraints but from “ * * * all other restraints or prohibitions made by, or imposed under, authority of law, insofar as may be necessary to enablе such person to do anything authorized, approved or required by such order.”
. The decision in the Woods case was based on a theory that the federal district court had pendent jurisdiction to entertain a state antitrust claim on the authority of United Mine Workers of America v. Gibbs,
. Thе same result is suggested by the Restatement of Judgments § 65 as follows :
“(2) Where a judgment is rendered in favor of the defendant because the plaintiff seeks a form of remedy which is not available to him, the plaintiff is not precluded from subsequently maintaining an action in which he seeks an available remedy.” See also Scott, Collateral Estoppel by Judgment, 56 Harv.L. Rev. 1, 25.
. “Nothing contained in this chapter shall in any way abridge or alter the remedies now existing at common law or by statute, but the provisions of this chapter are in addition to such remedies.”