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MARRESE v. AMERICAN ACADEMY OF ORTH. SURGEONS

August 17, 1981

R. ANTHONY MARRESE, M.D., ET AL., PLAINTIFFS,
v.
AMERICAN ACADEMY OF ORTHOPAEDIC SURGEONS, DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

  On August 13, 1981 our Court of Appeals dismissed the appeal
of defendant American Academy of Orthopaedic Surgeons
("Academy") from this Court's order denying Academy's motion
for a preliminary injunction seeking to bar discovery by
plaintiffs R. Anthony Marrese and Michael R. Treister ("Drs.
Marrese and Treister"). In note 1 of its unpublished order in
No. 81-1570 (7th Cir. Aug. 13, 1981) the Court invited
reconsideration of the prior order of this Court, 496 F. Supp. 236
 (N.D.Ill. 1980), which had been made a principal part of
the oral argument on the aborted appeal:
  1 In its motion to dismiss, the Academy argued,
  inter alia, that this suit was barred by the
  doctrine of res judicata because of previous
  litigation brought by plaintiffs against the
  Academy in the Circuit Court of Cook County,
  Illinois. See Treister v. Academy of Orthopaedic
  Surgeons, 78 Ill.App.3d 746 [33 Ill.Dec. 501]
  396 N.E.2d 1225 (1st Dist. 1979), leave to appeal
  denied, 79 Ill.2d 630. The district court held
  plaintiffs' antitrust claims were not barred by res
  judicata because they could not have been raised in
  state court. The propriety of this ruling is not
  before this Court. However, we presume that the
  motion to dismiss will be renewed and reconsidered
  in light of the Supreme Court's recent decision in
  Federated Department Stores, Inc. v. Moitie, ___
  U.S. ___, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981).

This Court has sua sponte accepted the Court of Appeals' invitation as a directive. However it does not view Federated as calling for a different conclusion from that previously reached on the res judicata issue — and with all respect to the Court of Appeals' suggestion, this Court does not believe its adherence to its original position is simply a matter of "coming out the same door it went in."

Part I of the Federated opinion, its statement of facts ___ U.S. at ___ - ___, 101 S.Ct. at 2426-2427, demonstrates graphically why that case presents the opposite side of the coin from this one, and why res judicata was properly applied there and does not apply here. We focus on Brown I and Brown II, the subject of the Supreme Court's decision.*fn1

Brown I was a federal antitrust action that "tracked almost verbatim the allegations of the Government's [Sherman Act] complaint" (___ U.S. at ___, 101 S.Ct. at 2426). Once the District Court for the Northern District of California had thus acquired jurisdiction of the parties it had the power to consider not only the federal antitrust action but also any essentially identical state claims that Brown may have had against Federated and its co-defendants. That being so the District Court's dismissal of Brown's action "in its entirety" on the merits, when it became final, foreclosed all claims that Brown had asserted or might have asserted before the federal court. As Justice Rehnquist put it for the Court in Federated, ___ U.S. at, ___, 101 S.Ct. at 2427:

  There is little to be added to the doctrine of
  res judicata as developed in the case law of this
  Court. A final judgment on the merits of an
  action precludes the parties or their privies
  from relitigating issues that were or could have
  been raised in that action. Commissioner v. Sunnen,
  333 U.S. 591, 597 [68 S.Ct. 715, 92 L.Ed. 898]
  (1948); Cromwell v. County of Sac, 94 U.S. 351,
  352-353 [24 L.Ed. 195] (1877).

It was therefore fitting and proper for the Supreme Court to reverse the Court of Appeals, which had "conceded that the `strict application of the doctrine of res judicata' required that Brown II be dismissed" but nonetheless out of equitable considerations had sought to create an unwarranted and "unprecedented departure from accepted principles of res judicata" (id.).

But as this Court pointed out in its earlier opinion in this case, Drs. Marrese's and Treister's federal antitrust issues against Academy — which this Court is called on to adjudicate in this action — are not, as the Supreme Court put it in Federated, "issues that were or could have been raised in that action" — the state court action presented to the first forum that ruled on disputes between the parties. Had Drs. Marrese and Treister sought to insert their federal antitrust claim into their state court complaint they could not have done so, for "jurisdiction of federal antitrust suits is exclusively in the federal courts." Kurek v. Pleasure Driveway & Park District of Peoria, 583 F.2d 378, 379 (7th Cir. 1978). Therefore when the Illinois state courts dismissed Drs. Marrese's and Treister's lawsuits for failure to state a cause of action under Illinois law:

    (1) They could not have been deciding that Drs.
  Marrese and Treister had failed to state a cause
  of action under the federal antitrust laws.
  Accordingly issue preclusion — collateral estoppel
  — does not bar the federal claim before this
  Court.
    (2) They could not be deemed to have foreclosed
  a claim that Drs. Marrese and Treister by
  definition could not have asserted before then.
  Accordingly the doctrine of res judicata does not
  bar the federal claim before this Court.

For that reason the powerful logic of Judge Learned Hand in the seminal case of Lyons v. Westinghouse Electric Corp., 222 F.2d 184, 188-89 (2d Cir. 1955), which is an integral part of the "accepted principles of res judicata" to which the Supreme Court twice referred in Federated (___ U.S. at ___, 101 S.Ct. at 2427), retains its full force. Its inexorable logic and that of the other authorities (including the Restatement (Second) of the Law of Judgments) cited in this Court's earlier opinion (496 F. Supp. at 238-39) teach that res judicata does not bar the present action, and nothing in the Federated opinion teaches otherwise.

If Academy has other authority to advance in support of its position, not already submitted in its first presentation of the issues to this Court, the Court will welcome the opportunity to consider such authority. If not, it ...


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