Opta Corporation, et al. v. Daewoo Electronics America, Inc..

Semtek International Inc. v. Lockheed Martin Corp. held that the “claim-preclusive effect of a dismissal by a federal court sitting in diversity” is “the law that would be applied by state courts in the State in which the federal diversity court sits”—except when “the state law is incompatible with federal interests.” 531 U.S. 497, 508-509 (2001). Influenced by values of federalism, including uniformity, Semtek adopted a federal common law rule akin to the Full Faith and Credit Act, which “directs all courts to treat a state court judgment with the same respect that it would receive in the courts of the rendering state.” Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 373 (1996). Full Faith and Credit permits a state “to determine the extraterritorial effect of its judgment [only] indirectly by prescribing the effect of its judgments within the State.” Thomas v. Washington Gas Light Co., 448 U.S. 261, 270 (1980). Here, the Ninth Circuit found New Jersey’s “entire controversy doctrine” to entail a different preclusive effect depending on the character of the applying court. A split appellate panel refused to apply the same preclusion rule that a New Jersey state court would, but instead applied “the New Jersey state court’s law as the Ninth Circuit.” App. 24. The question presented is: Whether the judgment of a federal diversity court is presumptively treated with “the same respect that it would receive in the [state] courts” of the district where it is located.