USCA1 Opinion

February 8, 1993
UNITED STATES COURT OF APPEALS
For The First Circuit
____________________
No. 92-1164
DIVERSIFIED FOODS, INC., et al.,
Plaintiffs-Appellants,
v.
THE FIRST NATIONAL BANK OF BOSTON, et al.,
Defendants-Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
___________________
____________________
Before
Torruella and Boudin, Circuit Judges,
______________
and Keeton,* District Judge.
______________
____________________

Richard E. Poulos with whom John S. Campbell, Poulos, Campbell

_________________
_________________ ________________
Zendzian, P.A., Daniel G. Lilley and John A. McArdle were on brief

_____________
________________
_______________
appellants.
William J. Kayatta, Jr., with whom Peter W. Culley, Catherine
______________________
_______________ __________
Connors and Pierce, Atwood, Scribner, Allen, Smith & Lancaster were
_______
__________________________________________________
brief for appellees.
____________________
February 8, 1993
____________________
__________________
* of the District of Massachusetts, sitting by designation.

BOUDIN, Circuit Judge.

_____________
dismissed
12 U.S.C.
judicata.
________

In this

case the district court

a suit brought under the Bank Holding Company Act,

1972, on

the ground that

it was barred

by res
___

The prior litigation, held to bar the new federal

action, was a state-court suit brought by the same plaintiffs

against
latter.

the same

The disappointed

several grounds
In full

defendants

and decided

in

plaintiffs now appeal,

that res judicata does not

_____________

agreement with

favor of

the district

court,

the

urging on

properly apply.
we affirm

its

decision.
The procedural history
intertwined but a
Diversified

engaged in
goods.

brief summary will suffice

Foods, Inc.,

England Sales,

Inc.

financing

various borrowing
Boston

and

its

borrowers'

form of wholesale

subsidiary

banks").

view,

at the outset.

were

distribution of

they entered

into

National Bank

Casco

Northern

The arrangements,

contained

New

borrowers"),

their activities,

Maine

complex and

operating subsidiary

arrangements with First

(collectively, "the
the

and its

(collectively, "the

a specialized

In

of the two cases is

terms

of
Bank

at least in

restricting

their

ability to obtain alternative sources of financing.

During 1988, the borrowers

first sought to expand their

business and then suffered large losses.

reversal

of fortune to the

adequate credit under

They attribute this

failure of the

banks to provide

the borrowing arrangements.

Claiming

-2-2-

multimillion

dollar

damages, the

borrowers

on

August 21,

1989, brought suit against the banks in Maine Superior Court,

asserting various

state-law tort

and contract claims.

The

complaint, as later amended in 1990, included the charge that

the

banks violated

imposing

an

implied covenant

"unreasonable restrictions

so

of
as

good faith
to prevent

[borrowers] from obtaining alternative financing."

by
the

Discovery

in the state case proceeded during 1989 and 1990.

On

September

14,

1990,

while

the

state

case

proceeding, the borrowers brought the present action

the

banks based

Holding
claims

anti-tying

Company Act, 12 U.S.C.

were

through
the

on the

based,

appears,

1972(1).
on

discovery in the state case.

new claims

different

it

provisions of

were

asserted in

court because at that

view (contrary to two

was

against
the Bank

The new federal

information

obtained

The borrowers say that

separate action

in

time the borrowers held the

circuit decisions) that federal courts

have exclusive jurisdiction over claims under section 1972.1

____________________
1Two weeks before filing the federal complaint, the
borrowers moved to amend their state complaint to charge that
the banks had breached their
duty of good faith
by
"unreasonable, illegal, and anticompetitive" restrictions on
alternative financing.
Shortly after the federal complaint
was filed, the banks opposed the state amendment.
When the
borrowers responded that the federal claims were not being
asserted in the state case, the state court allowed the
amendment,
striking
the
words
"illegal"
and
"anticompetitive."
-3-3-

When the banks answered the federal complaint on October

24, 1990, they included
borrowers
having

"have improperly

previously filed

arising

as a defense the assertion

out

of

transactions."

the

split

their causes

in another court
same

that the

of

action,

another complaint

transaction

or

series

of

Thereafter, the banks resisted the borrowers'

efforts in January

1991 to introduce

the state claims

into

the federal action by amendment

of the federal complaint

to delay the state proceedings.

The banks

or

did agree to have

discovery in either case treated as if taken in both.

On

April 18,

summary

judgment in

affirmed on
Bank, 605
____
summary

A.2d 609
judgment in

judicata,
________
January
reopen

appeal.

and
9,

the

1992.

1991,

the Maine

favor of

Superior Court

the banks,

a decision

Diversified Foods, Inc.

______________________
(Me. 1992).
the

The

district
A belated

attempt

moved for

on grounds

court granted

later

v. First Nat'l
___________

banks then

federal action

granted

the

by the

of res
___

motion

on

borrowers to

the state case to add the federal claims was rejected

by

the state

appeal.

Id.
__

court, and
The

this action

was also

affirmed on

borrowers then pursued this appeal in

the

federal case.
In

this court

the borrowers

first argue

that federal

courts have exclusive jurisdiction over claims under the Bank

Holding Company Act's anti-tying provisions.
argue,

res judicata
____________

cannot properly

Therefore, they

derive from

the state

-4-4-

court

judgment

federal

claims

whether

the

because they
in their

several

tribunals
claims.

have

follow

is mistaken.

other courts
concurrent

not

state case.

conclusion would

sound, for the premise

and

could

that

have included
We need

if

uniformly

not decide

the premise

We follow

were

two circuits

hold that

jurisdiction over

the

section

state
1972

Cuervo Resources, Inc. v. Claydesta Nat'l Bank, 876

______________________
____________________

F.2d 436 (5th

Cir. 1989);

F.2d 814 (11th Cir. 1985).2

Lane v. Central Bank, N.A.,

____
__________________

756

The
injured

Bank
by a

Holding

Company

violation

district court

of the

so

civil

as a

claims

Congress

to

the

1972

that

may sue

United States," admittedly

there is a

jurisdiction,

provides

of section

reference to state courts.

settled that

Act

12 U.S.C.

1975.

courts

matter

of course

contrary

or

may

"in

entertain federal

"absent

disabling

(1981).

Here

jurisdiction

Mobil Oil Corp.,

_______________
there

and the

is

no

453

explicit

subject

matter is

now

of concurrent

provision by

incompatibility"

between the federal claim and state court jurisdiction.

Offshore Co. v.
____________

any

making no

But it is

presumption in favor

that state

anyone

U.S. 473,
bar

to

Gulf
____
477-78

state-court

hardly beyond

the

____________________
2Several state courts have reached the same conclusion.
See United Central Bank, N.A. v. Kruse, 439 N.W.2d 849 (Iowa
___ ________________________
_____
1989); Waite v. Banctexas-Houston, N.A., 792 S.W.2d 538 (Tex.
_______________________________
Ct. App. 1990).
-5-5-

competence of state

courts, which routinely consider

claims

under their own antitrust laws.

Of course,
ways,

the resemblance

providing the

borrowers' best argument

federal jurisdiction.
section

of the

to antitrust law

Section 1972 is a

Clayton

Act, 15

qualifications courts use Clayton

section

1972.

1978).

jurisdiction, see
___
(by judicial

claims may be

blunter version of

U.S.C.

14,

and with

Act precedents in applying

In empowering federal

hear Clayton Act cases, Congress made

settled

for exclusive

E.g., Swerdloff v. Miami Nat'l Bank, 584 F.2d

___
_________
________________

54, 58-59 (5th Cir.

court

cuts both

15

no reference to state-

U.S.C.

15,

construction)

asserted only in

courts to

and it

that federal

federal court.

is

well

antitrust
Blumenstock
___________

Bros. Advertising Agency v. Curtis Pub. Co., 252

_________________________
_______________

U.S. 436,

440

gloss

(1920).

The

borrowers urge

that

the same

be

applied to the Bank Holding Company Act.

Exclusive

federal-court

claims, although

a firmly

reasoning that the

matters.
antitrust

Like

jurisdiction

rooted rule,

Supreme Court

no longer

baseball's judicial

laws, see
___

Flood
_____

is

v. Kuhn,
____

over

the product

of

applies in

new

"exemption"
407

message of

Tafflin v.
_______

Levitt, 493
______

from

U.S. 258,

(1972), the result persists but is not extended.

clear

antitrust

the

283-84

This is the

U.S. 455,

459-60

(1990), where

the Supreme

Court affirmed the

concurrent jurisdiction over

state courts'

civil RICO claims

and rejected

-6-6-

the

same Clayton Act analogy offered here.

statute uses

jurisdictional

Indeed, the RICO

language quite

similar to

Bank Holding Company Act, compare 18 U.S.C.

_______
U.S.C.
same

1975,
session.

and was passed

Tafflin
_______

by the same

offers the

the

1964(c) with 12
____
Congress in

coup de grace
______________

the

to

the

application of

res
___

borrowers' argument for exclusive jurisdiction.3

Once

that

issue is

removed,

the

judicata is straightforward in the present case.

________
of that doctrine
merger

of concern

many years

as

(if the plaintiff had won the first case) and bar (if

the plaintiff had lost),

preclusion"
Jasper

here, known for

The branch

in the

Corp., 666

has lately been rechristened "claim

modern
F.2d

functional style.

714, 717

(1st

See Roy
___ ___

Cir. 1981).

v.
More

____________
important,

the doctrine

has

evolved

uniformly in all jurisdictions,

transaction" test,

Maine,

whose

earlier

judicata, employs
________

the traditional inquiry

action" in the two cases is

judgment

this test,

not

to employ a functional "same

as an overlay to

whether the "cause of

subtly, although

is

invoked

the same.

here

which is therefore

as

res
___

binding on

____________________
3We give little weight to occasional references by
Congress, in the legislative history of section 1972, to
suits in "federal" courts.
See, e.g., 2 One-Bank Holding
___
___
________________
Company Legislation of 1970:
Hearings Before the Senate
_____________________________
____________________________
Comm. on Banking and Currency, 91st. Cong., 2d Sess. 966
_______________________________
(1970) (statement of Sen. Bennett) (referring to "the process
of
suit through the Federal courts . . .").
These
references, if any intent is attributable to them, appear to
reflect the natural assumption that Bank Holding Company Act
claims would usually be litigated in federal forums.
-7-7-

us.

See Migra v. Warren City School Dist. Bd. of Educ., 465

___ _____
_____________________________________

U.S. 75, 85 (1984).

In Currier v. Cyr,
_______
___
Supreme

Judicial Court

deciding whether new

570 A.2d 1205 (Me. 1990),

summarized

the rule

the Maine

it follows

claims are barred because

in

they were or

"might have been" litigated in the prior case:

Maine has accepted what is known as a
"transactional test" of cause of action,
which defines "the measure of a cause of
action as the aggregate of connected
operative facts that can
be handled
together conveniently for purposes of
trial."
Id. at 1208 (quoting
__
(Me. 1988)).
same in
prior

Gurski v. Culpovich, 540 A.2d

______
_________

Accordingly, so

both cases and a

long as the

final judgment was

764, 766

parties are

the

entered in the

action, "a subsequent suit that arises out of the same

________

operative facts shall be barred even

________________

though the second suit

relies

upon a legal theory

not advanced in

the first case,

seeks

different relief than

that sought in

the first case,

and involves [different] evidence

. .

. ."

Id.
__

(emphasis

added).
In the present case

the borrowers' federal claims under

section 1972 unquestionably arise

out of "the same operative

facts" as the state claims earlier asserted by the borrowers.

They themselves, in an unsuccessful
claims
told

to the

federal case

the district court that

attempt to add the state

based on

pendant jurisdiction,

"[t]he facts forming the basis

-8-8-

for the state claims are the same facts which

of the pending [federal] action . . . ."
two

complaints

shows

substantially overlap.
in

the federal

that

A comparison of the
factual

allegations

Further, the central tying allegation

complaint--that

borrowers' access

the

form the basis

the

banks

to alternative sources of

restricted

the

credit--was one

of the express claims in the state action.

In this
effort

court, the

to distinguish

transactions test for

needs

no

further

arguments in
aside,

are

the

two complaints

res judicata, and

____________
discussion.

The

resisting res judicata,

____________
variants

substance that

the federal case

on a

single

the banks themselves

actions separate,

the

borrowers make only

a half-hearted
under the

Maine

we think the

point

borrowers'

central

exclusive jurisdiction
theme.

They argue

strove to keep

resisted the assertion of

in

the two

state claims in

and vice versa, and now use the judgment in

suit first decided to prevent litigation of the other on

the

merits.

This effort

to resist consolidation,

borrowers, should estop the

say the

banks from invoking res judicata

____________

or should be treated as a waiver of the defense.

We accept arguendo the
________

borrowers' version of events,

although it is unclear whether the banks followed a conscious

strategy or merely opposed seriatim the successive demands of
an

opponent.

gravamen

But in

of

the

either event
charge--the

we do
banks'

not see

how the

resistance

to

-9-9-

consolidation of the federal

an estoppel
said

of the banks.

anything untrue.

and state claims--gives rise to

The banks are not alleged to have

Their

position throughout

has

been

consistent.

There is not even a valid charge of concealment

or surprise:

the banks' answer in the federal case gave fair

warning

of the

splitting
state

risk of

res judicata
____________

defense, expressly

referring

by asserting
to

the

a claim

borrowers'

suit "arising out of the same transaction or series of

transactions."
As for waiver, it may be
with

assumed that Maine, consistent

general law on the subject, would disallow res judicata

____________

if the

"parties have agreed

plaintiff
acquiesced

may

split

claim,

or

effect that the

the

defendant

has

Calderon Rosado
_______________

v. General Electric
_________________

Circuit Breakers, Inc., 805 F.2d 1085,

______________________

1087 (1st Cir. 1986)

(quoting

therein."

his

in terms or in

Restatement (Second) of Judgments

___________________________________

Indeed, in Thompson
________

v. Gaudette,
________

(1952), the Maine Supreme

148 Me. 288,

26(1)(a)).4
92 A.2d

Judicial Court said that the

342
rule

against splitting a cause of action will be waived unless the

defendant

asserts it "at the earliest opportunity."

92 A.2d

at 348 (quoting Mayfield v. Kovac, 41 Ohio App. 310, 181 N.E.

________
_____
____________________
4In

Calderon Rosado this court rejected on waiver

________________
grounds a res judicata defense in a federal action.
The
_____________
defendant had earlier agreed to the plaintiff's voluntary
dismissal "with prejudice" of a wrongful discharge claim
under Puerto Rican law brought in a local court, "seemingly
acceding to plaintiff's desire to litigate in federal court"
under a federal statute. 805 F.2d at 1086.
-10-10-

28, 30 (1931)).

In our case, the banks at the outset pleaded

claim-splitting in their answer and maintained

that position

throughout the case.

Courts
defense

could, we suppose, disallow the claim preclusion

wherever two

suits

are brought

and the

defendant

thereafter resists their consolidation.

But when a plaintiff

has

the same

chosen

relating

to bring

two lawsuits

to the same operative facts, it

the defendant should not

proper

in

is hard to see why

be able to resist consolidation

grounds, such as undue

unjustified, the plaintiff

within the lawsuit.

time frame

delay.

If

the resistance is

may normally litigate

In fact, the borrowers here

add the federal claims to

that issue
did seek to

the state action; but they

only after summary judgment was

_____

on

did so

granted on the state claims.

Not surprisingly, the Maine

Supreme Judicial Court said that

this effort came too late.

Diversified Foods, Inc., 605 A.2d

______________________

at 616.5
Finally, the borrowers suggest that, estoppel and waiver
issues to one side, it would be inequitable to permit the res
___
judicata
________

defense.

separate federal

They argue that their decision to bring a

suit, instead of adding

the federal claims

____________________
5The borrowers were only slightly more diligent in
seeking to add the state claims to the federal case. In late
January 1991, they moved to amend the federal complaint to
assert the state claims and to stay the state action.
This
occurred, however, after the close of state discovery and on
the eve of the banks' deadline for filing summary judgment
motions.
-11-11-

to the

state case, was

based on

a good

exclusive federal-court jurisdiction

Res
judicata
______________

is

considerations

judge-made

of policy,

equitable adjustments.

prevented that
doctrine

and doubtless

See generally 18
___ _________

Arthur R.

Miller & Edward

Procedure
_________

4415 (1981).

H. Cooper,

belief in

exclusive federal

But

in

faith belief

that

course.

resting

there is

on

room for

Charles A. Wright,

Federal Practice and

_____________________
this case

the mistaken

jurisdiction was formed

in the

face of two circuit decisions to the contrary.

Thus,
judicata

the

case for

is very weak.

an

equitable

departure from

res
___

True, the banks played an aggressive

________
hand, but litigation is inherently
borrowers
actions

created

their own

separately,

precedents

case

Supreme

Judicial

by

Further, the

bringing the

two

concurrent-jurisdiction

Then, in

the teeth

of the

banks' claim splitting defense, the

failed to assert

until after that

the

point.

warning furnished by the

borrowers

dilemma

ignoring

directly in

aggressive.

the federal claims

case had been

Court,

we

resurrecting claims that the

see

no

lost.

in the state

Like

equitable

the Maine
basis

for

borrowers themselves allowed to

expire.
Affirmed.
________

-12-12-