Matsushita Elec. Industrial Co. v. Epstein

516 U.S. 367 (1996)


Matsushita (D) purchased MCA, and two primary sets of lawsuits were filed on behalf of MCA shareholders both of which were class action suits. The federal actions alleged a breach of federal securities laws and a second groups of actions that were filed in Delaware State court alleged breaches of various state law fiduciary responsibilities of directors. The federal district court granted summary judgment to Ds in the federal case. While that was on appeal, the parties to the Delaware actions negotiated a global release of all claims involving the purchase. The Delaware court approved the settlement as fair, and that adjudication included that assessment by the court that the settlement of the federal issues was fair as well. The order and final judgment was issued, and D then asserted the settlement of the Delaware actions as a bar under 28 U.S.C. Section 1738 to the federal action. The Ninth Circuit ruled that the adjudication of the state claims could have had no preclusive effect on issues in the federal case and because of exclusive federal jurisdiction; Delaware courts cannot adjudicate federal claims.