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Raytheon Co. v. Alliant Techsystems, Inc.

United States District Court, Ninth Circuit

January 2, 2014

RAYTHEON COMPANY, Plaintiff/Counter-Defendant,
v.
ALLIANT TECHSYSTEMS, INC., Defendant/Counterclaimant.

ORDER

CINDY K. JORGENSON, District Judge.

Pending before the Court is the Motion to Remand (Doc. 11) filed by Plaintiff/Counter-Defendant Raytheon Company ("Raytheon"). A response has been filed by Defendant/Counterclaimant Alliant Techsystems, Inc. ("Alliant") and a reply has been filed by Raytheon. Although requested by Raytheon, the Court declines to set this matter for oral argument. LRCiv 7.2(f).

Procedural History

On July 30, 2013, Raytheon filed a Complaint in the Pima County Superior Court alleging claims of breach of contract and breach of express warranty against Alliant. Raytheon contemporaneously filed a Motion to Designate as Complex Case. Raytheon asserts the case would involve a large documentary record, substantial fact and expert deposition testimony, complicated legal and factual issues, and damages in excess of $110 million.

On July 31, 2013, Alliant filed a Complaint in the District Court for the Eastern District of Virginia ("the Virginia Court"), alleging claims for declaratory relief and breaches of contract. On September 17, 2013, that court issued an order finding the court lacked subject matter jurisdiction, finding dismissal appropriate because a first-filed Arizona proceeding had been initiated by Raytheon, and dismissing the matter. See E.D.Va. Case No. 1:13-cv-00919-LO-IDD, Doc. 20.

On August 29, 2013, Alliant filed an Answer and removed the action to this Court. See Docs. 1 and 4. On September 19, 2013, Alliant filed a First Amended Answer and Counterclaims. On October 9, 2013, Alliant filed a redlined copy of its First Amended Answer and Counterclaims.

On September 27, 2013, Raytheon filed the pending Motion to Remand (Doc. 11). A response (Doc. 15) and a reply (Doc. 16) have been filed.

Removal/Remand

State court actions that originally could have been filed in federal court may be removed to federal court. 28 U.S.C. § 1441(a); Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). The removal statutes are to be strictly construed. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941). Federal courts will decline jurisdiction if there is any doubt as to the propriety of removal. Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction over a case that has been removed to federal court, the case must be remanded. See 28 U.S.C. § 1447(c). Moreover, a district court is under a duty to examine, on its own motion, whether a removed case should be remanded to state court; the court need not wait for a motion to remand. In re MacNeil Bros. Co., 259 F.2d 386, 388 (1st Cir. 1958), see also Kattalla Co. v. Rones, 186 F. 30 (9th Cir. 1911) (district court may, on its own motion, decline to exercise jurisdiction over removed action).

Federal Question - Res Judicata

Raytheon asserts that the Virginia Court's determination that there was no federal subject matter jurisdiction over the parties' dispute is res judicata and forecloses Alliant's attempt to establish federal removal jurisdiction in this case. Comer v. Murphy Oil USA, Inc., 718 F.3d 460, 469 (5th Cir. 2013) (citations omitted) ("Although a jurisdictional ruling is technically not an adjudication on the merits, [i]t has long been the rule that principles of res judicata apply to jurisdictional determinations - both subject matter and personal, '" and a litigant "cannot command a second consideration of the same jurisdictional claims."). Alliant points out, however, that the Virginia Court did not determine there was no federal subject matter jurisdiction over the parties' dispute, but that there was no subject matter jurisdiction over Alliant's complaint. Further, Alliant asserts neither the claims nor the issues are identical and no preclusive effect should be given to the decision of the Virginia Court.

The doctrine of res judicata includes two types of preclusion: claim preclusion and issue preclusion. In accordance with Ninth Circuit case law, this Court will use the terms "claim preclusion" and "issue preclusion", rather than res judicata and collateral estoppel. Robi v. Five Platters, Inc., 838 F.2d 318, 322 n. 2 (9th Cir. 1988). Claim preclusion "prohibits the parties or their privies from relitigating issues that were or could have been raised' in an action resulting in [a] final judgment on the merits[.]" Herb Reed Enterprises, LLC v. Florida, ___ F.3d ___, 2013 WL 6224288 (9th Cir. 2013) (citation omitted); see also Minjares v. State, 223 Ariz. 54, 219 P.3d 264 (App. 2009) ("Under the doctrine of claim preclusion, a final judgment binds the parties and their privies when a former judgment on the merits was rendered by a court of competent jurisdiction and the matter now in issue between the same parties or their privities was, or might have been determined in the former action. '" Minjares v. State, 223 Ariz. 54, 58, 219 P.3d 264, 268 (App. 2009) (citation omitted, emphasis in original). A judgment on the merits was not rendered by the Virginia Court; the Court finds, therefore, that claim preclusion does not apply in this case.

Issue preclusion bars the "relitigation of all issues that were litigated in a prior proceeding, even if the second proceeding is an action on a claim different from the one asserted in the first action." Shaw v. California Dept. of Alcoholic Bev. Control, 788 F.2d 600, 605 (9th Cir. 1986). It requires "(1) the issue at stake was identical in both proceedings; (2) the issue was actually litigated and decided in the prior proceedings; (3) there was a full and fair opportunity to litigate the issue; and (4) the issue was necessary to decide the merits." Oyeniran v. Holder, 672 F.3d 800, 806 (9th Cir. 2012). In this case, the Virginia Court stated that, "even if there were a basis for federal question jurisdiction over [Alliant's] complaint, this Court would dismiss this action in favor of the first-filed Arizona proceedings initiated by Raytheon. Those now-federal proceedings commenced first, and under these circumstances the first or prior action is permitted to proceed to the exclusion of another ...


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