LOKEN, Circuit Judge.
In 2004 and 2005, appellants, citizens of New York, sued the appellee pharmaceutical companies in New York state court claiming that appellees' hormone replacement therapy drugs caused appellants to develop breast cancer. After substantial discovery, appellees moved for summary judgment on the ground that the claims were time-barred under the three-year New York statute of limitations. Appellants argued the claims were not time-barred for many reasons. They also filed these diversity actions asserting the same claims in the District of Minnesota, a State with a six-year statute of limitations, and moved the New York court to dismiss their New York claims without prejudice.
In a lengthy opinion, the New York court denied dismissal without prejudice and dismissed the claims as time-barred. Applying New York law, the court granted appellees summary judgment after discussing and rejecting appellants' contrary assertions, namely, that an extended accrual statute applied, that appellees' fraud and deception warranted equitable estoppel, that the limitations period was extended by class action tolling, and that appellants' fraud claims were not time-barred under New York law. Addressing the motions to dismiss without prejudice, the court noted that appellants had filed actions in Minnesota and that grant of the motions would "allow them to avail themselves of Minnesota's six year statute of limitations and get around New York's obviously shorter three year statute." It denied the motions because, "under the circumstances presented it is truly difficult for this court to fathom anything more prejudicial to defendants than being deprived of their right to judgment on the merits dismissing these clearly time-barred actions."
The district court
This appeal raises a single issue— whether dismissal of appellants' actions as time-barred under New York law precludes assertion of the same claims in a
In Semtek International Inc. v. Lockheed Martin Corp., 531 U.S. 497, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001), the Supreme Court rejected contrary theories and held that the preclusive effect of a federal court judgment dismissing a diversity action as time-barred was a matter of federal common law. The Court then adopted, "as the federally prescribed rule of decision, the law that would be applied by state courts in the State in which the federal diversity court sits." Id. at 508, 121 S.Ct. 1021. The Supreme Court noted that—
531 U.S. at 504, 121 S.Ct. 1021. It would "violate the federalism principle" of Erie R. Co. v. Tompkins, 304 U.S. 64, 78-80, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), if federal courts sitting in States adhering to this "traditional rule" nonetheless gave claim-preclusive effect to time-bar dismissals in diversity cases. Id. The Court remanded the case to a Maryland state court to determine the preclusive effect that the prior dismissal by a federal court in California would be given under California law.
By contrast, the preclusive effect of a prior state court judgment is determined by the Constitution's Full Faith and Credit Clause, Article IV, § 1, as implemented by the federal Full Faith and Credit Statute, 28 U.S.C. § 1738. "It is now settled," the Supreme Court has explained, "that a federal court must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered." Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984). Thus, under the Full Faith and Credit Statute, the rule of decision is the same as the rule adopted in Semtek: the issue of preclusive effect turns on the law of the State where the prior judgment issued—here, New York— as the New York courts would apply it. See Marrese v. Am. Acad. of Orth. Surgeons, 470 U.S. 373, 385, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985) ("the concerns of comity reflected in § 1738 generally allow States to determine the preclusive scope of their own courts' judgments"); Hanig v. City of Winner, S.D., 527 F.3d 674, 676 (8th Cir.2008). It is a rule of federal law but not, as in Semtek, a rule of federal common law. "By the Constitutional provision for full faith and credit, the local doctrines of res judicata, speaking generally, become a part of national jurisprudence, and therefore federal questions cognizable here." Riley v. New York Trust Co., 315 U.S. 343, 349, 62 S.Ct. 608, 86 L.Ed. 885 (1942).
In New York, as in most States, the doctrine of claim preclusion bars successive litigation of claims arising out of the same transaction or series of transactions if "(i) there is a judgment on the merits rendered by a court of competent jurisdiction, and (ii) the party against whom the doctrine is invoked was a party to the previous action, or in privity with a party who was." People ex rel. Spitzer v.
New York law is far from silent on this issue. The leading modern case is Smith v. Russell Sage College, 54 N.Y.2d 185, 445 N.Y.S.2d 68, 429 N.E.2d 746 (1981). In the first suit, plaintiff sued his former employer for breach of an oral contract and tortious misrepresentation. The trial court dismissed the contract claims as barred by the Statute of Frauds and the tort claims as time-barred. Rather than appeal, plaintiff filed a new action alleging additional fraud that "first came to light while the earlier action was pending." Id., 445 N.Y.S.2d 68, 429 N.E.2d at 748. The New York Court of Appeals held that the new fraud claim was part of the same transaction and therefore precluded. In rejecting the contention that claim preclusion did not apply because the prior judgment was not "on the merits," the Court explained, in language anticipating the later discussion in Semtek:
Id., 445 N.Y.S.2d 68, 429 N.E.2d at 750 (citations and quotations omitted). "It is pertinent," the Court added, "that the Restatement, 2d, [of Judgments] has completely abandoned the term `on the merits.'" Id. at n. 3.
Russell Sage has been cited in at least a dozen published decisions of the New York intermediate appellate courts for the proposition that a "dismissal on statute of limitations grounds is considered a dismissal on the merits for claim preclusion purposes and bars a second action." Karmel v. Delfino, 293 A.D.2d 473, 740 N.Y.S.2d 373, 374 (2002); see, e.g., Simmons v. N.Y.C. Health & Hosp. Corp., 71 A.D.3d 410, 894 N.Y.S.2d 750 (2010); Komlosi v. City of N.Y., 3 A.D.3d 343, 769 N.Y.S.2d 890 (2004); Cold Spring Harbor Area Civic Ass'n v. Bd. of Zoning Appeals, 305 A.D.2d 444, 762 N.Y.S.2d 392 (2003); Marinelli Assocs. v. Helmsley-Noyes Co., Inc., 265 A.D.2d 1, 705 N.Y.S.2d 571 (2000). These decisions include dismissals of subsequent claims brought in a different jurisdiction, as appellants seek to do here. Mchawi v. State Univ. of N.Y., Empire State Coll., 248 A.D.2d 111, 669 N.Y.S.2d 545, 545-46 (1998) (federal court's statute-of-limitations dismissal precludes similar, non-time-barred claims in state court).
To overcome this potent evidence that New York does not follow the "traditional rule" cited in Semtek, appellants argue that Russell Sage was effectively overruled by Tanges v. Heidelberg North America, Inc., 93 N.Y.2d 48, 687 N.Y.S.2d 604, 710 N.E.2d 250 (1999). Tanges answered a question certified by the Second Circuit: whether a Connecticut statute of limitations barred the plaintiff's products liability
Id., 687 N.Y.S.2d 604, 710 N.E.2d at 253 (citations and quotations omitted). Appellants argue that Semtek and Tanges, read together, demonstrate that New York law does not preclude these claims in Minnesota federal court.
We see nothing in the Tanges opinion suggesting that the Court of Appeals was overruling Russell Sage. Tanges did not cite Russell Sage or refer to claim preclusion because no prior judgment was at issue. Tanges raised only a choice-of-law question, and the Court applied New York's basic choice-of-law principle: statutes of limitation are "generally considered procedural." 687 N.Y.S.2d 604, 710 N.E.2d at 253. Russell Sage had recognized that principle, but with the caveat that, for claim-preclusion purposes, a limitations period "may also be said to be substantive." 445 N.Y.S.2d 68, 429 N.E.2d at 750. This context-based differentiation is not surprising.
We are more than a little troubled that a panel of the Second Circuit relied on Tanges in concluding that "New York law does not depart from the traditional rule" recognized in Semtek. Cloverleaf Realty of N.Y., Inc. v. Town of Wawayanda, 572 F.3d 93, 95 (2d Cir.2009). Without citing the Full Faith and Credit Statute, Cloverleaf held that a prior state court judgment did not preclude a federal court action asserting the same claim under 42 U.S.C. § 1983. It declined to follow earlier Second Circuit decisions applying Russell Sage as "no longer appropriate" after Tanges given Russell Sage's "ambiguity."
Having carefully reviewed this complex landscape, we return to the holding in Russell Sage—because the first case was fully litigated all the way to summary judgment, the prior dismissal on statute of limitations grounds was "at least sufficiently close to the merits for claim preclusion purposes to bar a second action." That is what the New York court concluded in denying appellants' motions to dismiss without prejudice—appellees had a "right to judgment on the merits." The district court found this procedural history "decisive." Plaintiffs logically chose to bring their claims in New York where they reside and the claims arose. As in Russell Sage, they fully litigated those claims up to summary judgment, "and New York law does not provide them with the proverbial second bite at the apple merely by switching jurisdictions." This narrow, case-specific approach is consistent with Russell Sage and with other critics of the categorical traditional rule:
Restatement (Second) of Conflict of Laws § 142 cmt. g (1988 Revision). These cases are a paradigmatic example of egregious forum shopping.
On this record, we have no difficulty concluding that, under New York claim preclusion law as articulated in Russell Sage and the many New York appellate decisions applying Russell Sage, the prior grant of summary judgment dismissing appellants' New York claims as time-barred precluded the assertion of the same claims in these federal diversity actions in Minnesota. Therefore, the district court properly applied the Full Faith and Credit Statute in these cases, even if the New York Court of Appeals declines in the future to apply statute-of-limitations claim preclusion to more sympathetic plaintiffs, such as the plaintiff in Joseph.
The judgments of the district court are affirmed.