author: Justice Powell

text:
    NATIONAL GERIMEDICAL HOSPITAL AND GERONTOLOGY CENTER v. BLUE CROSS OF KANSAS CITY et al.
    No. 80-802.
    Argued April 29, 1981 —
    Decided June 15, 1981

      Powell, J., delivered the opinion for a unanimous Court.

      Erwin N. Griswold argued the cause for petitioner. With him on the briefs were Joe Sims and James M. Beck.

      Joshua F. Greenberg argued the cause for respondents. With him on the brief were Abraham Ribicoff, Richard M. Steuer, Harry P. Thomson, Jr., Jennifer A. Gille, John C. Noonan, and Max O. Bagley.

      Solicitor General McCree argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Acting Assistant Attorney General Favretto, Dep

      uty Solicitor General Wallace, Stephen M. Shapiro, Barry Grossman, and Andrea Limmer.

         Carl Weissburg and J. Mark Waxman filed a brief for the Federation of American Hospitals as amicus curiae urging reversal.

   Justice Powell

delivered the opinion of the Court.

The petitioner in this case, National Gerimedical Hospital and Gerontology Center (National Gerimedical) filed an antitrust suit against respondents, Blue Cross of Kansas City (Blue Cross) and the national Blue Cross Association, challenging the refusal of Blue Cross to accept petitioner as a participating member provider under its health insurance plan. The issue presented here is whether this refusal by Blue Cross is immunized from antitrust scrutiny because it was intended to aid implementation of the plans of the “health systems agency” designated for the Kansas City area under the National Health Planning and Resources Development Act of 1974.

Petitioner National Gerimedical is a private, acute-care community hospital opened in 1978 in the Kansas City, Mo., metropolitan area. Prior to the completion of construction, petitioner sought to enter into a participating hospital agreement with Blue Cross, a nonprofit provider of individual and group health-care reimbursement plans in Missouri and Kansas. Under such an agreement, participating hospitals receive direct reimbursement of the full costs of covered services rendered to individual Blue Cross subscribers. When subscribers receive care in hospitals that are not participating members, Blue Cross pays only 80% of the cost, and these payments are made to the subscriber, rather than directly to the hospital.

Blue Cross refused to enter into a participating hospital agreement with petitioner on the basis of its official policy barring participation by any new hospital that could not show that it was meeting “a clearly evident need for health care services in its defined service area.” In determining that petitioner had not satisfied this requirement, Blue Cross relied on petitioner’s failure to obtain approval for construction from the local “health systems agency” or “HSA” — the Mid-America Health Systems Agency (MAHSA). This agency is a private, nonprofit corporation, federally funded under the National Health Planning and Resources Development Act of 1974 (NHPRDA), 88 Stat. 2229, as amended, 42 U. S. C. § 300Z (1976 ed. and Supp. IV). Its major function is health planning for the Kansas City metropolitan area.

In conducting its planning functions, MAHSA had determined that there was a surplus of hospital beds in the area and had announced that it would not approve any addition of acute-care beds in area hospitals. As a result of this announced policy, petitioner did not seek MAHSA approval of its construction, leading to the refusal of participating hospital status by Blue Cross.

Claiming that this refusal by Blue Cross put it at a competitive disadvantage, petitioner filed suit in the United States District Court for the Western District of Missouri against Blue Cross and the national Blue Cross Association. It claimed violations of §§ 1 and 2 of the Sherman Act, 15 U. S. C. §§ 1, 2, alleging a wrongful refusal to deal and a conspiracy between Blue Cross and MAHSA. As relief, petitioner sought treble damages and an injunction to prevent future violations.

Respondents moved to dismiss the complaint on the ground that the NHPRDA had impliedly repealed the antitrust laws as applied to the conduct in question. The District Court treated this motion as one for summary judgment, and granted judgment for respondents. 479 F. Supp. 1012 (1979). It reasoned that if private parties seeking to effectuate the planning objectives of an HSA could be subjected to antitrust liability, accomplishment of the goals of the NHPRDA would be frustrated. Id., at 1021. Having found a “clear repugnancy,” id., at 1024, between this Act and the antitrust laws, the court relied largely on legislative history for the view that “Congress intended that action taken pursuant to the Act and clearly within the scope of the Act would be exempt from application of the antitrust laws,” ibid.

The United States Court of Appeals for the Eighth Circuit affirmed, essentially adopting the reasoning of the District Court. 628 F. 2d 1050 (1980). The Court of Appeals agreed with the District Court’s “finding of clear repugnancy between the Act and the antitrust laws, as the Act and regulatory scheme clearly call for the action which has now become the basis of an antitrust claim.” Id., at 1055-1056. It then quoted in full the District Court’s argument for the view that Congress intended repeal of the antitrust laws in this context.

We granted a writ of certiorari to review this important question. 449 U. S. 1123 (1981).

II

Our decision in this case requires careful attention to the structure and goals of the NHPRDA, as well as a review of this Court’s decisions in the area of implied repeals of the antitrust laws. We begin with a description of the complex scheme of regulatory and planning agencies established by the NHPRDA in order to assess the legal significance of that Act with respect to the antitrust claim brought here.

MAHSA, the health systems agency whose refusal to approve new hospital construction in the Kansas City area prompted Blue Cross not to accept petitioner as a participating hospital, is but one part of a larger statutory scheme. The NHPRDA, 42 U. S. C. § 300k et seq., created federal, state, and local bodies that coordinate their activities in the area of health planning and policy. Building on existing planning and development statutes, Congress sought in 1974 to create a statutory scheme that would assist in preventing overinvestment in and maldistribution of health facilities. See 1974 Senate Report, at 39.

HSA’s such as MAHSA are concerned with health planning in a particular metropolitan area. See generally H. R. Rep. No. 93-1382, pp. 40-41 (1974). Each is a nonprofit private corporation, public regional planning body, or single unit of local government, serving a particular “health service area.” 42 U. S. C. § 3001-1 (b) (1). The statute requires that a majority of HSA board members be consumers of health care and that at least 40% be health-care “providers.” § 3001-1 (b) (3) (C). The “primary responsibility” of each HSA is “effective health planning for its health service area and the promotion of the development within the area of health services, manpower, and facilities which meet identified needs, reduce documented inefficiencies, and implement the health plans of the agency.” §3001-2 (a). As originally enacted, the Act established four general goals: “improving the health of residents,” “increasing the accessibility . . . , acceptability, continuity, and quality of . . . health services,” “restraining increases in the cost of . . . health services,” and “'preventing unnecessary duplication of health resources.” §3001-2 (a). To accomplish these goals, the Act requires each HSA to formulate a “detailed statement of goals” called a “health systems plan,” § 3001-2 (b)(2), an “annual implementation plan” describing the objectives that will achieve the goals of the general plan, § 3001-2 (b) (3), and “specific plans and projects for achieving the objectives established in the” annual implementation plan, § 300Z-2 (b) (4). Each HSA is instructed to “seek, to the extent practicable, to implement [its plans] with the assistance of individuals and public and private entities in its health service area.” § 3001-2 (c) (1). In addition, it may provide “technical assistance” to individuals and public and private entities for the development of necessary projects and programs, §3001-2 (c)(2), and should use grants and contracts to encourage these projects and programs, § 3001-2 (c) (3). The agencies do not possess regulatory authority over healthcare providers.

At the state level, the Act created two separate bodies. The first, a State Health Planning and Development Agency, is a state agency created by agreement between a Governor and the Federal Government. See § 300m. It is intended to perform certain crucial functions that cannot be undertaken by local HSA’s:

“Specifically, the integration and synthesis of areawide health plans into a Statewide health plan, the establishment of priorities within the State, and the performance of regulatory functions are most appropriately carried out at the State level. The latter function can appropriately be carried out only by an agency of State government.” 1974 Senate Report, at 52.

Each state agency must be governed by a “State Program,” which the Secretary of Health and Human Services may approve only if it meets guidelines set out in 42 U. S. C. §§ 300m-l, 300m-2. Included in these guidelines is the requirement that each State establish a “certificate of need” program under which all new institutional health facilities must seek state approval prior to construction. § 300m-2 (a)(4)(A). This procedure is “the basic component in an overall effort to control the unnecessary capital expenditures which contribute so greatly to the total national health bill.” S. Rep. No. 96-96, p. 5 (1979) (hereinafter 1979 Senate Report).

The State Health Planning and Development Agency is advised by a Statewide Health Coordinating Council, composed in part of representatives of local HSA’s. This council is empowered to review the plans of HSA’s, review and revise state plans, and ihake recommendations with respect to applications for federal funds from HSA’s and States. 42 U. S. C. § 300m-3 (c).

In addition to various review functions, the Federal Government plays a separate role in this statutory scheme. The NHPRDA requires the Secretary of Health and Human Services to issue guidelines concerning the appropriate supply, distribution, and organization of health resources. § 300k-l ; see 42 CFR § 121.1 et seq. (1980). Finally, the Act created a National Council on Health Planning and Development to advise the Secretary on these guidelines and on the general administration of the Act. 42 U. S. C. § 300k-3.

This elaborate planning structure was intended by Congress to remedy perceived deficiencies in the performance of the health-care industry as it existed prior to 1974. The problems addressed fall into two categories. First, there was concern that marketplace forces in this industry failed to produce efficient investment in facilities and to minimize the costs of health care. In addition, Congress sought to reduce the maldistribution of health-care facilities.

In 1979, Congress amended the NHPRDA substantially in the Health Planning and Resources Development Amendments of 1979, Pub. L. 96-79, 93 Stat. 592. A purpose of these Amendments was to “[d]irect that special consideration be given throughout the planning process to the importance of maintaining and improving competition in the health industry.” 1979 Senate Report, at 3. Toward this end, Congress added a number of provisions requiring promotion of competition at the local, state, and federal levels. 42 U. S. C. §§ 300k-2 (b), 3001-2 (a) (5) (1976 ed., Supp. IV); 42 U. S. C. §§ 300n-1 (c)(11), (12) (1976 ed., Supp. IV). See generally H. R. Conf. Rep. No. 96-420, p. 58 (1979). In so doing, however, Congress recognized a distinction between areas where competition could serve a useful purpose and those where some other allocation of resources remained necessary.

III

National Gerimedical contends that the denial by Blue Cross of participating hospital status violated the antitrust laws. Blue Cross defends on the ground that it acted pursuant to the local HSA plan and only intended to further the purposes of the NHPRDA. It argues that, despite the absence of any reference to the antitrust laws in the NHPRDA, the creation of the planning structure summarized above implied a repeal of those laws, as applied to this conduct.

On a number of occasions, this Court has faced similar claims of antitrust immunity in the context of various regulated industries. The general principles applicable to such claims are well established. The antitrust laws represent a “fundamental national economic policy.” Carnation Co. v. Pacific Westbound Conference, 383 U. S. 213, 218 (1966); see Lafayette v. Louisiana Power & Light Co., 435 U. S. 389, 398-399 (1978). “Implied antitrust immunity is not favored, and can be justified only by a convincing showing of clear repugnancy between the antitrust laws and the regulatory system.” United States v. National Association of Securities Dealers, 422 U. S. 694, 719-720 (1975); see Gordon v. New York Stock Exchange, 422 U. S. 659, 682 (1975); United States v. Philadelphia National Bank, 374 U. S. 321, 350-351 (1963). “Repeal is to be regarded as implied only if necessary to make the [subsequent law] work, and even then only to the minimum extent necessary. This is the guiding principle to reconciliation of the two statutory schemes.” Silver v. New York Stock Exchange, 373 U. S. 341, 357 (1963).

To be sure, where Congress did intend to repeal the antitrust laws, that intent governs, United States v. National Association of Securities Dealers, supra; Gordon v. New York Stock Exchange, supra, but this intent must be clear. Even when an industry is regulated substantially, this does not necessarily evidence an intent to repeal the antitrust laws with respect to every action taken within the industry. E. g., Otter Tail Power Co. v. United States, 410 U. S. 366, 372-375 (1973); United States v. Radio Corp. of America, 358 U. S. 334, 346 (1959). Intent to repeal the antitrust laws is much clearer when a regulatory agency has been empowered to authorize or require the type of conduct under antitrust challenge. E. g., United States v. National Association of Securities Dealers, supra, at 730-734; Gordon v. New York Stock Exchange, supra, at 689-690.

In the present case, we must apply these precedents to an industry with a regulatory structure quite different from those considered previously. The action challenged here was neither compelled nor approved by any governmental, regulatory body. Instead, it was a spontaneous response to the finding of an advisory planning body, the local HSA, that there was a surplus of acute-care hospital beds in the Kansas City area. Indeed, when respondents refused to enter into the agreement with petitioner, the regulatory aspects of the NHPRDA — controlled by the state health planning agencies — were not in place in Missouri. There simply was no regulation of this hospital construction, as Missouri had not established any state regulatory agency with authority to review hospital construction.

As a result, the claim of implied antitrust immunity in this case is weaker than in previous cases. It cannot be argued that application of the antitrust laws to the conduct of Blue Cross would frustrate a particular provision of the NHPRDA or create a conflict with the orders of any regulatory body. The record discloses no formal request from MAHSA to Blue Cross to refrain from accepting petitioner as a new participating hospital. Even if such a request had been made, it could not have been more than the advice of a private planning body — albeit a planning body created and funded by the Federal Government. This fact is crucial, because antitrust repeals are especially disfavored where the antitrust implications of a business decision have not been considered by a governmental entity. United States v. Radio Corp. of America, supra, at 339, 346; cf. Otter Tail, supra, at 374 (“When . . . relationships are governed in the first instance by business judgment and not regulatory coercion, courts must be hesitant to conclude that Congress intended to override the fundamental national policies embodied in the antitrust laws”).

Respondents rely on the fact that a major function of an HSA is planning in order to eliminate unnecessary duplication of hospital services, 42 U. S. C. § 300Z-2 (a) (4) (1976 ed., Supp. IV), and point to statutory language requiring each HSA to “seek, to the extent practicable, to implement its [health plans] with the assistance of individuals and public and private entities in its health service area,” § 3001-2 (c)(1). Here, respondents argue, the HSA found that petitioner was duplicating hospital facilities unnecessarily, and Blue Cross merely sought to aid in the “implementation” of that finding.

We are unpersuaded, however, that the provisions cited by respondents are sufficient to create a “clear repugnancy” between the NHPRDA and the antitrust laws, at least on the facts of this case. See n. 18, infra. Nothing in the NHPRDA requires Blue Cross to take an action that, in essence, sought to enforce the advisory decision of MAHSA. HSA’s themselves are required to seek private cooperation only “to the extent practicable.” 42 U. S. C. § 3001-2 (c)(1). And there is no reason to believe that Congress specifically contemplated such “enforcement” by private insurance providers, let alone relied on such actions to put “teeth” into the noncompulsory local planning process. Congress expected HSA planning to be implemented mainly through persuasion and cooperation. If an HSA recommendation could be used to justify antitrust immunity for such an act of private enforcement, this effectively would give that recommendation greater force than Congress intended.

As there is no direct conflict between the requirements of the NHPRDA and the Sherman Act with respect to the conduct at issue here, respondents’ only remaining argument must be that the NHPRDA immunizes all private conduct undertaken in response to the health planning process. Arguably, the fundamental assumption of Congress, particularly in 1974 when it passed the original Act, was that competition was not a relevant consideration in the health-care industry. If so, although that industry is not regulated in any comprehensive fashion, it might be concluded that Congress intended “pervasive” cooperation and planning without the interference of antitrust suits.

This argument has some force, in light of the prominence Congress gave to the view that “the health care industry does not respond to classic marketplace forces.” 1974 Senate Report, at 39. Perhaps it makes little sense in such a context to entertain antitrust suits intended to promote or protect free competition. It is clear, however, that respondents have failed to make the showing necessary for an exemption of all actions of health-care providers taken in response to planning recommendations. In other industrial contexts, we have refused such a blanket exemption, despite a clear congressional finding that some substitution of regulation for competition was necessary. Carnation Co. v. Pacific Westbound Conference, 383 U. S., at 217-219 (maritime industry); Otter Tail, 410 U. S., at 373-374 (electric power industry). These holdings are based on the guiding principle that, where possible, “the proper approach ... is an analysis which reconciles the operation of both statutory schemes with one another rather than holding one completely ousted.” Silver, 373 U. S., at 357. There is no indication that Congress intended a different result with respect to the health-care industry. One manifestation of this is the fact that in the 1979 Amendments Congress did not alter the basic planning structure, even as it made plain its intent that “competition and consumer choice” are to be favored wherever they “can constructively serve ... to advance the purposes of quality assurance, cost effectiveness, and access.” 42 U. S. C. § 300k-2 (a) (17) (1976 ed., Supp. IV).

We hold, therefore, that the NHPRDA is not so incompatible with antitrust concerns as to create a “pervasive” repeal of the antitrust laws as applied to every action taken in response to the health-care planning process. Moreover, as discussed above, there was no specific conflict between the Act and the antitrust laws in this case. Although respondents may well have acted here with only the highest of motives in seeking to implement the plans of the local HSA, they cannot defeat petitioner’s antitrust claim by the assertion of immunity from the requirements of the Sherman Act. As a result, the judgment below must be reversed and the case remanded.

It is so ordered.

       As a Missouri hospital, petitioner has been licensed by the Missouri Division of Health since September 1977. It also has been certified as a Medicare provider by the Department of Health and Human Services.

       All other acute-care hospitals in the Blue Cross service area are participating members.

       On January 1, 1976, Blue Cross issued a summary of “Prerequisites” by which it would be guided in deciding whether to accept new participating hospitals. App. 141a. These included the following:
      “The hospital must meet a clearly evident need for health care services in its defined service area. Health care institutions and institutional services shall be approved, and/or if required by law, certified as necessary, by the designated planning agency or areawide health planning agency respectively; or, when effective, by the designated State Agency as provided for in Public Law 93-641, the ‘National Health Planning and Resources Development Act of 1974.’ ” Id., at 146a.
      Blue Cross added that it retained the final discretion in deciding whether to accept a new hospital, and then included a warning to those contemplating new construction:
      “Because lack of knowledge by any applicant of this requirement shall not be considered sufficient reason for waiving it, community groups contemplating construction of new hospitals are urged to consult with Blue Cross, if they expect to apply for participation in the hospital service plan, at some time well in advance of actual construction.” Ibid.

       See n. 3, supra. In a newsletter issued on July 21, 1976, Blue Cross announced that “[a]U projects not reviewed and approved by these Health Systems Agencies will not be reimbursable by Blue Cross of Kansas City.” App. 147a.

       MAHSA was not named as a defendant. Petitioner also included claims under Missouri's antitrust laws.

       Respondents also argued, unsuccessfully, that their conduct was immune from antitrust attack under the McCarran-Ferguson Act, 15 U. S. C. § 1011 et seq., that their prepaid medical plans are not part of “trade or commerce” within the meaning of the Sherman Act, and that the allegations of conspiracy were insufficient. These claims are not before this Court.

       See generally S. Rep. No. 93-1285, pp. 4-39 (1974) (hereinafter 1974 Senate Report). In 1972, for example, Congress passed §1122 of the Social Security Act, 42 U. S. C. § 1320a-l, which authorizes the Secretary of Health and Human Services to enter into agreements with willing States, under which a state agency would be designated as the appropriate body for approving capital expenditures in the health-care area. Under § 1122, federal reimbursements under programs including Medicare and Medicaid do not include the capital expenses of hospitals that have not received agency approval.
      In 1976, Missouri chose not to renew its agreement with the Federal Government under § 1122, thus eliminating the previous state program for approval of hospital construction. Brief for Respondents 6, n. 6.

       The Health Planning and Resources Development Amendments of 1979 (1979 Amendments), Pub. L. 96-79, § 103 (c), 93 Stat. 595, added another goal, “preserving and improving . . . competition in the health service area.” 42 U. S. C. § 300Z-2 (a)(5) (1976 ed., Supp. IV).

       The Act provides for reductions in various federal grants to States that do not participate in the planning process. 42 U. S. C. § 300m (d).

       As the 1974 Senate Report put it:
      “The need for strengthened and coordinated planning for personal health services is growing more apparent each day. In the view of the Committee the health care industry does not respond to classic marketplace forces. The highly technical nature of medical services together with the growth of third party reimbursement mechanisms act to attenuate the usual forces influencing the behavior of consumers with respect to personal health services. . . .
      “Investment in costly health care resources, such as hospital beds, coronary care units or radio-isotope treatment centers is frequently made without regard to the existence of similar facilities or equipment already operating in an area. Investment in costly facilities and equipment not only results in capital accumulation, but establishes an ongoing demand for payment to support those services. . . .
      “A recently published study indicates that by 1975, over 67,000 unneeded hospital beds will be in operation throughout the United States.
      “Hospital beds, though unused, contribute substantial additional costs to the health care industry.” 1974 Senate Report, at 39.

       The 1974 Senate Report stated:
      “Widespread access and distribution problems exist with respect to medical facilities and services. In many urban areas, hospitals, clinics and other medical care institutions and services are crowded into relatively tiny sectors, while large areas go poorly served or completely unserved. Many rural communities are completely without a physician or any other type of health care service, while adjacent urban areas are oversupplied.” Ibid.

       The Committee also sought to reduce the threat of domination of HSA decisionmaking by providers with a personal stake in the existing health-care system. 1979 Senate Report, at 57-59. See also Rosenblatt, Health Care Reform and Administrative Law: A Structural Approach, 88 Yale L. J. 243, 304-330 (1978) (describing problems of establishing consumer representation in HSA’s).

       In a new subsection, 42 U. S. C. § 300k-2 (b) (1) (1976 ed., Supp. IV), Congress made the finding that “the effect of competition on decisions of providers respecting the supply of health services and facilities is diminished,” causing “duplication and excess supply of certain health services and facilities.” It added that where “competition appropriately allocates supply consistent with health systems plans and State health plans,” planning agencies should “give priority ... to actions which would strengthen the effect of competition on the supply of such services.” § 300k-2 (b) (3). But, for “health services, such as inpatient health services and other institutional health services, for which competition does not or will not appropriately allocate supply,” agencies should “take actions ... to allocate the supply of such services.” § 300k-3 (b) (2).

       Significantly, the MAHSA health systems plan only called on insurers to create incentives to hold down the costs of care in existing institutions, and made no mention of a role for insurers in restraining unneeded hospital construction. The plan calls on the “reimbursement system [to] promote appropriate utilization of hospital services, provide positive incentives for efficient institutions, actively encourage utilization of less costly but equal quality alternatives to inpatient care, and develop uniform reimbursement programs.” App. 67a. But it then asserts that “[c]apital investment in institutions [shall] be controlled by an appropriate review agency.” Ibid.

       See n. 7, supra. If it had done so, this case probably would not have arisen. The state agency would have conditioned all hospital construction on issuance of a “certificate of need.” See supra, at 385-386. Parties pursuing hospital construction without a certificate of need would now be subject to legal penalties. 42 U. S. C. § 300m-2 (a) (4) (A) (1976 ed., Supp. IV).
      Missouri subsequently has established a state agency and enacted “certificate of need” legislation. Mo. Rev. Stat. § 197.300 et seq. (Supp. 1980).

       Congress knew how to give an HSA policy greater legal effect. Under 42 U. S. C. § 3001-2 (e) (1976 ed., Supp. IV), HSA approval — subject to review by the Secretary — is required for expenditures of funds under certain federal programs.

       As noted supra, at 387-388, in 1979 competition was given a more prominent place in the thinking of Congress.

       Nevertheless, because Congress has remained convinced that competition does not operate effectively in some parts of the health-care industry, e. g., 42 U. S. C. §300k-2 (b) (1976 ed., Supp. IV), we emphasize that our holding does not foreclose future claims of antitrust immunity in other factual contexts. Although favoring a reversal in this case, the United States as amicus curiae asserts that “there are some activities that must, by implication, be immune from antitrust attack if HSAs and State Agencies are to exercise their authorized powers.” Brief for United States as Amicus Curiae 16, n. 11. Where, for example, an HSA has expressly advocated a form of cost-saving cooperation among providers, it may be that antitrust immunity is “necessary to make the [NHPRDA] work.” Silver v. New York Stock Exchange, 373 U. S. 341, 357 (1963). See 124 Cong. Rec. 34932 (1978) (Rep. Rogers) (“The intent of Congress was that HSA’s and providers who voluntarily work with them in carrying out the HSA’s statutory mandate should not be subject to the antitrust laws. If they were, Public Law 93-641 simply could not be implemented”). Such a ease would differ substantially from the present one, where the conduct at issue is not cooperation among providers, but an insurer’s refusal to deal with a provider that failed to heed the advice of an HSA.

       This holding does not, of course, suggest anything about the merits of the antitrust claim in this case. These matters remain to be litigated on remand, where the court should give attention to the particular economic context in which the alleged conspiracy and “refusal to deal” took place.


source: Caselaw Access Project

author: Justice Rehnquist Justice Blackmun, Justice Brennan,

license: Public Domain

text:
    FEDERATED DEPARTMENT STORES, INC., et al. v. MOITIE et al.
    No. 79-1517.
    Argued March 30, 1981 —
    Decided June 15, 1981

      Rehnquist, J., delivered the opinion of the Court, in which Burger, C. J., and Stewart, White, Powell, and Stevens, JJ., joined. Black-mun, J., filed an opinion concurring in the judgment, in which Marshall, J., joined, post, p. 402. Brennan, J., filed a dissenting opinion, post, p. 404.

      Jerome I. Chapman argued the cause for petitioners. With him on the briefs were Abe Krash, Paul Fitting, Charles O. Miller, Eugene H. Gordon, John C. Grosz, Bernard Persky, and John Curran Ladd.

      J err old N. Off stein argued the cause and filed a brief for respondents.
   Justice Rehnquist

delivered the opinion of the Court.

The only question presented in this case is whether the Court of Appeals for the Ninth Circuit validly created an exception to the doctrine of res judicata. The court held that res judicata does not bar relitigation of an unappealed adverse judgment where, as here, other plaintiffs in similar actions against common defendants successfully appeal the judgments against them. We disagree with the view taken by the Court of Appeals for the Ninth Circuit and reverse.

I

In 1976 the United States brought an antitrust action against petitioners, owners of various department stores, alleging that they had violated § 1 of the Sherman Act, 15 U. S. C. § 1, by agreeing to fix the retail price of women’s clothing sold in northern California. Seven parallel civil actions were subsequently filed by private plaintiffs seeking treble damages on behalf of proposed classes of retail purchasers, including that of respondent Moitie in state court (Moitie I) and respondent Brown {Brown I) in the United States District Court for the Northern District of California. Each of these complaints tracked almost verbatim the allegations of the Government’s complaint, though the Moitie I complaint referred solely to state law. All of the actions originally filed in the District Court were assigned to a single federal judge, and the Moitie I case was removed there on the basis of diversity of citizenship and federal-question jurisdiction. The District Court dismissed all of the actions “in their entirety” on the ground that plaintiffs had not alleged an “injury” to their “business or property” within the meaning of § 4 of the Clayton Act, 15 U. S. C. § 15. Weinberg v. Federated Department Stores, 426 F. Supp. 880 (1977).

Plaintiffs in five of the suits appealed that judgment to the Court of Appeals for the Ninth Circuit. The single counsel representing Moitie and Brown, however, chose not to appeal and instead refiled the two actions in state court, Moitie II and Brown II. Although the complaints purported to raise only state-law claims, they made allegations similar to those made in the prior complaints, including that of the Government. Petitioners removed these new actions to the District Court for the Northern District of California and moved to have them dismissed on the ground of res judi-cata. In a decision rendered July 8, 1977, the District Court first denied respondents’ motion to remand. It held that the complaints, though artfully couched in terms of state law, were “in many respects identical” with the prior complaints, and were thus properly removed to federal court because they raised “essentially federal law” claims. The court then concluded that because Moitie II and Brown II involved the “same parties, the same alleged offenses, and the same time periods” as Moitie I and Brown I, the doctrine of res judi-cata required that they be dismissed. This time, Moitie and Brown appealed.

Pending that appeal, this Court on June 11, 1979, decided Reiter v. Sonotone Corp., 442 U. S. 330, holding that retail purchasers can suffer an “injury” to their “business or property” as those terms are used in § 4 of the Clayton Act. On June 25, 1979, the Court of Appeals for the Ninth Circuit reversed and remanded the five cases which had been decided with Moitie I and Brown I, the cases that had been appealed, for further proceedings in light of Reiter.

When Moitie II and Brown II finally came before the Court of Appeals for the Ninth Circuit, the court reversed the decision of the District Court dismissing the cases. 611 F. 2d 1267. Though the court recognized that a “strict application of the doctrine of res judicata would preclude our review of the instant decision,” id., at 1269, it refused to apply the doctrine to the facts of this case. It observed that the other five litigants in the Weinberg cases had successfully appealed the decision against them. It then asserted that “non-appealing parties may benefit from a reversal when their position is closely interwoven with that of appealing parties,” ibid., and concluded that “[b]ecause the instant dismissal rested on a case that has been effectively overruled,” the doctrine of res judicata must give way to “public policy” and “simple justice.” Id., at 1269-1270. We granted certiorari, 449 U. S. 991 (1980), to consider the validity of the Court of Appeals’ novel exception to the doctrine of res judicata.

II

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 (1948); Cromwell v. County of Sac, 94 U. S. 351, 352-353 (1877). Nor are the res judicata consequences of a final, unappealed judgment on the merits altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case. Angel v. Bullington, 330 U. S. 183, 187 (1947); Chicot County Drainage District v. Baxter State Bank, 308 U. S. 371 (1940); Wilson’s Executor v. Deen, 121 U. S. 525, 534 (1887). As this Court explained in Baltimore S.S. Co. v. Phillips, 274 U. S. 316, 325 (1927), an “erroneous conclusion” reached by the court in the first suit does not deprive the defendants in the second action “of their right to rely upon the plea of res judicata. ... A judgment merely voidable because based upon an erroneous view of the law is not open to collateral attack, but can be corrected only by a direct review and not by bringing another action upon the same cause [of action].” We have observed that “[t]he indulgence of a contrary view would result in creating elements of uncertainty and confusion and in undermining the conclusive character of judgments, consequences which it was the very purpose of the doctrine of res judicata to avert.” Reed v. Allen, 286 U. S. 191, 201 (1932).

In this case, the Court of Appeals conceded that the “strict application of the doctrine of res judicata” required that Brown II be dismissed. By that, the court presumably meant that the “technical elements” of res judicata had been satisfied, namely, that the decision in Brown I was a final judgment on the merits and involved the same claims and the same parties as Brown II. The court, however, declined to dismiss Brown II because, in its view, it would be unfair to bar respondents from relitigating a claim so “closely interwoven” with that of the successfully appealing parties. We believe that such an unprecedented departure from accepted principles of res judicata is unwarranted. Indeed, the decision below is all but foreclosed by our prior case law.

In Reed v. Allen, supra, this Court addressed the issue presented here. The case involved a dispute over the rights to property left in a will. A won an interpleader action for rents derived from the property and, while an appeal was pending, brought an ejectment action against the rival claimant B. On the basis of the decree in the interpleader suit A won the ejectment action. B did not appeal this judgment, but prevailed on his earlier appeal from the interpleader decree and was awarded the rents which had been collected. When B sought to bring an ejectment action against A, the latter pleaded res judicata, based on his previous successful ejectment action. This Court held that res judicata was available as a defense and that the property belonged to A:

“The judgment in the ejectment action was final and not open to assault collaterally, but subject to impeachment only through some form of direct attack. The appellate court was limited to a review of the interpleader decree; and it is hardly necessary to say that jurisdiction to review one judgment gives an appellate court no power to reverse or modify another and independent judgment. If respondent, in addition to appealing from the [interpleader] decree, had appealed from the [ejectment] judgment, the appellate court, having both cases before it, might have afforded a remedy. . . . But this course respondent neglected to follow.” Id., at 198.

This Court’s rigorous application of res judicata in Reed, to the point of leaving one party in possession and the other party entitled to the rents, makes clear that this Court recognizes no general equitable doctrine, such as that suggested by the Court of Appeals, which countenances an exception to the finality of a party’s failure to appeal merely because his rights are “closely interwoven” with those of «another party. Indeed, this case presents even more compelling reasons to apply the doctrine of res judicata than did Reed. Respondents here seek to be the windfall beneficiaries of an appellate reversal procured by other independent parties, who have no interest in respondents’ case, not a reversal in interrelated cases procured, as in Reed, by the same affected party. Moreover, in contrast to Reed, where it was unclear why no appeal was taken, it is apparent that respondents here made a calculated choice to forgo their appeals. See also Ackermann v. United States, 340 U. S. 193, 198 (1950) (holding that petitioners were not entitled to relief under Federal Rule of Civil Procedure 60 (b) when they made a “free, calculated, deliberate choic[e]” not to appeal).

The Court of Appeals also rested its opinion in part on what it viewed as “simple justice.” But we do not see the grave injustice which would be done by the application of accepted principles of res judicata. “Simple justice” is achieved when a complex body of law developed over a period of years is evenhandedly applied. The doctrine of res judi-cata serves vital public interests beyond any individual judge’s ad hoc determination of the equities in a particular case. There is simply “no principle of law or equity which sanctions the rejection by a federal court of the salutary principle of res judicata.” Heiser v. Woodruff, 327 U. S. 726, 733 (1946). The Court of Appeals’ reliance on “public policy” is similarly misplaced. This Court has long recognized that “[p]ublic policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties.” Baldwin v. Traveling Men’s Assn., 283 U. S. 522, 525 (1931). We have stressed that “[the] doctrine of res judicata is not a mere matter of practice or procedure inherited from a more technical time than ours. It is a rule of fundamental and substantial justice, of public policy and of private peace,’ which should be cordially regarded and enforced by the courts . . . .” Hart Steel Co. v. Railroad Supply Co., 244 U. S. 294, 299 (1917). The language used by this Court half a century ago is even more compelling in view of today’s crowded dockets:

“The predicament in which respondent finds himself is of his own making .... [W]e cannot be expected, for his sole relief, to upset the general and well-established doctrine of res judicata, conceived in the light of the maxim that the interest of the state requires that there be an end to litigation — a maxim which comports with common sense as well as public policy. And the mischief which would follow the establishment of precedent for so disregarding this salutary doctrine against prolonging strife would be greater than the benefit which would result from relieving some case of individual hardship.” Reed v. Allen, 286 U. S., at 198-199.

Respondents make no serious effort to defend the decision of the Court of Appeals. They do not ask that the decision below be affirmed. Instead, they conclude that the “the writ of certiorari should be dismissed as improvidently granted.” Brief for Respondents 31. In the alternative, they argue that “the district court’s dismissal on grounds of res judicata should be reversed, and the district court directed to grant respondent’s motion to remand to the California state court.” Ibid. In their view, Brown I cannot be considered res judicata as to their state-law claims, since Brown I raised only federal-law claims and Brown II raised additional state-law claims not decided in Brown I, such as unfair competition, fraud, and restitution.

It is unnecessary for this Court to reach that issue. It is enough for our decision here that Brown I is res judicata as to respondents’ federal-law claims. Accordingly, the judgment of the Court of Appeals is reversed, and the cause is remanded for proceedings consistent with this opinion.

It is so ordered.

Justice Blackmun,

with whom Justice Marshall joins,

concurring in the judgment.

While I agree with the result reached in this case, I write separately to state my views on two points.

First, I, for one, would not close the door upon the possibility that there are cases in which the doctrine of res judi-cata must give way to what the Court of Appeals referred to as “overriding concerns of public policy and simple justice.” 611 F. 2d 1267, 1269 (CA9 1980). Professor Moore has noted: “Just as res judicata is occasionally qualified by an overriding, competing principle of public policy, so occasionally it needs an equitable tempering.” 1B J. Moore & T. Currier, Moore’s Federal Practice ¶ 0.405 [12], p. 791 (1980) (footnote omitted). See also Reed v. Allen, 286 U. S. 191, 209 (1932) (Cardozo, J., joined by Brandéis and Stone, JJ., dissenting) (“A system of procedure is perverted from its proper function when it multiplies impediments to justice without the warrant of clear necessity”). But this case is clearly not one in which equity requires that the doctrine give way. Unlike the nonappealing party in Reed, respondents were not “caught in a mesh of procedural complexities.” Ibid. Instead, they made a deliberate tactical decision not to appeal. Nor would public policy be served by making an exception to the doctrine in this case; to the contrary, there is a special need for strict application of res judicata in complex multiple party actions of this sort so as to discourage “break-away” litigation. Cf. Reiter v. Sonotone Corp., 442 U. S. 330, 345 (1979). Finally, this is not a case “where the rights of appealing and non-appealing parties are so interwoven or dependent on each other as to require a reversal of the whole judgment when a part thereof is reversed.” See Ford Motor Credit Co. v. Uresti, 581 S. W. 2d 298, 300 (Tex. Civ. App. 1979)

Second, and in contrast, I would flatly hold that Brown I is res judicata as to respondents’ state-law claims. Like the District Court, the Court of Appeals found that those state-law claims were simply disguised federal claims; since respondents have not cross-petitioned from that judgment, their argument that this case should be remanded to state court should be itself barred by res judicata. More important, even if the state and federal claims are distinct, respondents’ failure to allege the state claims in Brown I manifestly bars their allegation in Brown II. The dismissal of Brown I is res judicata not only as to all claims respondents actually raised, but also as to all claims that could have been raised. See Commissioner v. Sunnen, 333 U. S. 591, 597 (1948); Restatement (Second) of Judgments §61.1 (Tent. Draft No. 5, Mar. 10, 1978). Since there is no reason to believe that it was clear at the outset of this litigation that the District Court would have declined to exercise pendent jurisdiction over state claims, respondents were obligated to plead those claims if they wished to preserve them. See id., § 61.1, Comment e. Because they did not do so, I would hold the claims barred.

Justice Brennan,

dissenting.

In its eagerness to correct the decision of the Court of Appeals for the Ninth Circuit, the Court today disregards statutory restrictions on federal-court jurisdiction, and, in the process, confuses rather than clarifies long-established principles of res judicata. I therefore respectfully dissent.

I

Respondent Floyd R. Brown filed this class action (Brown II) against petitioners in California state court. The complaint stated four state-law causes of action: (1) fraud and deceit, (2) unfair business practices, (3) civil conspiracy, and (4) restitution. Plaintiffs’ Complaint, ¶¶ 11-14, App. 99-101. It alleged “not less than $600” damages per class member, and in addition sought “appropriate multiple damages,” exemplary and punitive damages, interest from date of injury, attorney’s fees and costs, and other relief. Id., at 101-102. All four of the causes of action rested wholly on California statutory or common law; none rested in any fashion on federal law.

Nonetheless, petitioners removed the suit to the United States District Court for the Northern District of California, where respondent Brown filed a motion to remand on the ground that his action raised no federal question within the meaning of 28 U. S. C. § 1441 (b). Respondent’s motion was denied by the District Court, which stated that “[f]rom start to finish, plaintiffs have essentially alleged violations by defendants of federal antitrust laws.” App. 192. The court reasoned that “[a]rtful pleading” by plaintiffs cannot “convert their essentially federal law claims into state law claims,” and held that respondent’s complaint was properly removed “because [it] concerned federal questions which could have been originally brought in Federal District Court without satisfying any minimum amount in controversy.” Ibid. The court then dismissed the action, holding that, under the doctrine of res judicata, Brown II was barred by the adverse decision in an earlier suit in federal court (Brown I) involving “the same parties, the same alleged offenses, and the same time periods.” Ibid.

The Court of Appeals affirmed the District Court’s decision not to remand, stating that “[t]he court below correctly held that the claims presented were federal in nature.” 611 F. 2d 1267, 1268 (CA9 1980) (memorandum on denial of reconsideration). However, the Court of Appeals reversed the District Court’s order of dismissal, and remanded for trial.

II

The provision authorizing removal of actions from state to federal courts on the basis of a federal question is found in 28 ü. S. C. § 1441 (b):

“Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties.”

Removability depends solely upon the nature of the plaintiff’s complaint: an action may be removed to federal court only if a “right or immunity created by the Constitution or laws of the United States [constitutes] an element, and an essential one, of the plaintiff’s cause of action.” Gully v. First National Bank in Meridian, 299 U. S. 109, 112 (1936). An action arising under state law may not be removed solely because a federal right or immunity is raised as a defense. Tennessee v. Union & Planters’ Bank, 152 U. S. 454 (1894).

An important corollary is that “the party who brings a suit is master to decide what law he will rely upon and therefore does determine whether he will bring a 'suit arising under’ the . . . law[s] of the United States” by the allegations in his complaint. The Fair v. Kohler Die & Specialty Co., 228 U. S. 22, 25 (1913); accord, Great Northern R. Co. v. Alexander, 246 U. S. 276, 282 (1918). Where the plaintiff’s claim might be brought under either federal or state law, the plaintiff is normally free to ignore the federal question and rest his claim solely on the state ground. If he does so, the defendant has no general right of removal. Jones v. General Tire & Rubber Co., 541 F. 2d 660, 664-665 (CA7 1976); La Chemise Lacoste v. Alligator Co., 506 F. 2d 339, 346 (CA3 1974), cert. denied, 421 U. S. 937 (1975); Warner Bros. Records, Inc. v. R. A. Ridges Distributing Co., 475 F. 2d 262, 264 (CA10 1973); Coditron Corp. v. AFA Protective Systems, Inc., 392 F. Supp. 158, 160 (SDNY 1975).

This corollary is well grounded in principles of federalism. So long as States retain authority to legislate in subject areas in which Congress has legislated without pre-empting the field, and so long as state courts remain the preferred forum for interpretation and enforcement of state law, plaintiffs must be permitted to proceed in state court under state law. It would do violence to state autonomy were defendants able to remove state claims to federal court merely because the plaintiff could have asserted a federal claim based on the same set of facts underlying his state claim. As this Court stated in Shamrock Oil & Gas Corp. v. Sheets, 313 U. S. 100, 108-109 (1941):

“The power reserved to the states under the Constitution to provide for the determination of controversies in their courts, may be restricted only by the action of Congress in conformity to the Judiciary Articles of the Constitution. ‘Due regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined.’ ” (Quoting Healy v. Ratta, 292 U. S. 263, 270 (1934).)

The general rule that a plaintiff basing his claim solely on state law thereby avoids removal applies only where state substantive law has not been pre-empted by federal law.

“[W]here the plaintiff has a right to relief either under federal law or under state law as an independent source of that right, the federal court on removal proceedings may not generally look beyond the face of the initial pleading in the state action to determine whether a federal question is presented. In certain areas, however, this either-or option is no longer available, for Congress has deemed that federal substantive law should altogether preempt and supplant state law. In such a case, where Congress has explicitly said that the exclusive source of a plaintiff's right to relief is to be federal law, it would be unacceptable to permit that very plaintiff, by the artful manipulation of the terms of a complaint, to defeat a clearly enunciated congressional objective.” Hearst Corp. v. Shopping Center Network, Inc., 307 F. Supp. 551, 556 (SDNY 1969) (emphasis in original) (citation omitted).

The federal court must therefore scrutinize the complaint in the removed case to determine whether the action, though ostensibly grounded solely on state law, is actually grounded on a claim in which federal law is the exclusive authority. See Sheeran v. General Electric Co., 593 F. 2d 93, 96 (CA9), cert. denied, 444 U. S. 868 (1979); North American Phillips Corp. v. Emery Air Freight Corp., 579 F. 2d 229, 233-234 (CA2 1978); New York v. Local 144, Hotel Nursing Home and Allied Health Services Union, 410 F. Supp. 225, 226-229 (SDNY 1976).

This lawsuit concerns the area of antitrust in which federal laws have not displaced state law. See generally Mosk, State Antitrust Enforcement and Coordination with Federal Enforcement, 21 A. B. A. Antitrust Section 358, 361-368 (1962). Thus, respondent Brown had the option of proceeding under state or federal law, or both. So far as is apparent from the complaint, which was carefully limited to four California state-law causes of action, this case arises wholly without reference to federal law. Under settled principles of federal jurisdiction, therefore, respondent’s lawsuit should not have been removed to federal court. See Gully v. First National Bank in Meridian, 299 U. S., at 113.

The Court today nonetheless sustains removal of this action on the ground that “at least some of the claims had a sufficient federal character to support removal.” Ante, at 397, n. 2. I do not understand what the Court means by this. Which of the claims are federal in character? Why are the claims federal in character? In my view, they are all predicated solely on California law. Certainly, none of them purports to state a claim under the federal antitrust laws, and the mere fact that plaintiffs might have chosen to proceed under the Clayton Act surely does not suffice to transmute their state claims into federal claims.

The Court relies on what it calls a “factual finding” by the District Court, with which the Court of Appeals agreed, that “respondents had attempted to avoid removal jurisdiction by ‘artful [ly]’ casting their ‘essentially federal law claims’ as state-law claims.” Ibid. But this amounts to no more than a pejorative characterization of respondents’ decision to proceed under state rather than federal law. “Artful” or not, respondents’ complaints were not based on any claim of a federal right or immunity, and were not, therefore, removable.

III

Even assuming that this Court and the lower federal courts have jurisdiction to decide this case, however, I dissent from the Court’s disposition of the res judicata issue. Having reached out to assume jurisdiction, the Court inexplicably recoils from deciding the case. The Court finds it “unnecessary” to reach the question of the res judicata effect of Brown I on respondents’ “state-law claims.” Ante, at 402 (emphasis in original). “It is enough for our decision here,” the Court says, “that Brown I is res judicata as to respondents’ federal-law claims.” Ibid. But respondents raised only state-law claims; respondents did not raise any federal-law claims. Thus, if the Court fails to decide the disposition of respondents’ state-law claims, it decides nothing. And in doing so, the Court introduces the possibility — heretofore foreclosed by our decisions — that unarticulated theories of recovery may survive an unconditional dismissal of the lawsuit.

Like Justice Blackmun, I would hold that the dismissal of Brown I is res judicata not only as to every matter that was actually litigated, but also as to every ground or theory of recovery that might also have been presented. See ante, p. 402 (opinion concurring in judgment); 1B J. Moore & T. Currier, Moore’s Federal Practice ¶ 0.410 [2], p. 1163 (1980). An unqualified dismissal on the merits of a substantial federal antitrust claim precludes relitigation of the same claim on a state-law theory. Woods Exploration & Producing Co. v. Aluminum Co. of America, 438 F. 2d 1286, 1312-1315 (CA5 1971), cert. denied, 404 U. S. 1047 (1972); Ford Motor Co. v. Superior Court, 35 Cal. App. 3d 676, 680, 110 Cal. Rptr. 59, 61-62 (1973); see Restatement (Second) of Judgments § 61.1, Reporter’s Note to Illustration 10, Comment e, pp. 178-179 (Tent. Draft No. 5, Mar. 10, 1978). The Court’s failure to acknowledge this basic principle can only create doubts and confusion where none were before, and may encourage litigants to split their causes of action, state from federal, in the hope that they might win a second day in court.

I therefore respectfully dissent, and would vacate the judgment of the Court of Appeals with instructions to remand to the District Court with instructions to remand to state court.

       Petitioners have filed a supplemental memorandum with the Court indicating that Moitie II has been voluntarily dismissed, leaving Brown II as the subject of the petition.

       The Court of Appeals also affirmed the District Court’s conclusion that Brown II was properly removed to federal court, reasoning that the claims presented were “federal in nature.” We agree that at least some of the claims had a sufficient federal character to support removal. As one treatise puts it, courts “will not permit plaintiff to use artful pleading to close off defendant’s right to a federal forum . . . [and] occasionally the removal court will seek to determine whether the real nature of the claim is federal, regardless of plaintiff’s characterization.” 14 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3722, pp. 564-566 (1976) (citing cases) (footnote omitted). The District Court applied that settled principle to the facts of this case. After “an extensive review and analysis of the origins and substance of” the two Brown complaints, it found, and the Court of Appeals expressly agreed, that repondents had attempted to avoid removal jurisdiction by “artful [ly] ” casting their “essentially federal law claims” as state-law claims. We will not question here that factual finding. See Prospect Dairy, Inc. v. Dellwood Dairy Co., 237 F. Supp. 176 (NDNY 1964); In re Wiring Device Antitrust Litigation, 498 F. Supp. 79 (EDNY 1980); Three J Farms, Inc. v. Alton Box Board Co., 1979-1 Trade Cases ¶62,423 (SC 1978), rev’d on other grounds, 609 F. 2d 112 (CA4 1979), cert. denied, 445 U. S. 911 (1980).

       The dismissal for failure to state a claim under Federal Rule of Civil Procedure 12 (b) (6) is a “judgment on the merits.” See Angel v. Bullington, 330 U. S. 183, 190 (1947); Bell v. Hood, 327 U. S. 678 (1946).

         The decision below also conflicts with those of other Courts of Appeals holding that an adverse judgment from which no appeal has been taken is res judicata and bars any future action on the same claim, even if an authoritative contrary judicial decision on the legal issues involved is subsequently rendered in another case. E. g., National Association of Broadcasters v. FCC, 180 U. S. App. D. C. 259, 265, 554 F. 2d 1118, 1124 (1976) (“It is the generally accepted rule in civil cases that where less than all of the several co-parties appeal from an adverse judgment, a reversal as to the parties appealing does not necessitate or justify a reversal as to the parties not appealing”); Clouatre v. Houston Fire & Cas. Co., 229 F. 2d 596, 597-598 (CA5 1956); Appleton Toy & Furniture Co. v. Lehman Co., 165 F. 2d 801, 802 (CA7 1948); Ripperger v. A. C. Allyn & Co., 113 F. 2d 332, 333 (CA2), cert. denied, 311 U. S. 695 (1940).

       The Court of Appeals’ reliance, 611 F. 2d 1267, 1269 (CA9 1980), on Uresti; Kvenild v. Taylor, 594 P. 2d 972 (Wyo. 1979); and In re Estate of McDill, 14 Cal. 3d 831, 537 P. 2d 874 (1975), appears to me to be clearly misplaced. Unlike those cases, this is not one in which the appealing and nonappealing parties made competing claims to a single piece of property, see McDill, or in which reversal only as to the appealing party would have unjustly left the nonappealing party liable, see Kvenild, or without recourse on his cross-claim, see Uresti.

       Since the action by respondent Moitie has been voluntarily dismissed, the only remaining issues concern the claims of respondent Brown.

       As the District Court acknowledged, Brown II could not be removed on the basis of diversity of citizenship, because the amount in controversy did not exceed $10,000. App. 190. The court correctly noted, however, that the action could have been removed without regard to the amount in controversy, if it could have been brought as an original action in federal court without meeting any minimum amount in controversy. Ibid. Actions under the Clayton Act, 15 U. S. C. § 15, may be brought in federal court without regard to amount in controversy. See also Pub. L. 96-486, §§ 2 (a), 4, 94 Stat. 2369-2370, 28 U. S. C. § 1331 (1976 ed., Supp. IV), and note following § 1331 (repeal of minimum amount in controversy for federal-question cases pending as of date of enactment).

       In this context, it is often said that a plaintiff may not “fraudulently” defeat removal by manipulation of the complaint. See, e. g., Sheeran v. General Electric Co., 593 F. 2d, at 96; Jones v. General Tire & Rubber Co., 541 F. 2d 660, 664-665 (CA7 1976); see also Great Northern R. Co. v. Alexander, 246 U. S. 276, 281, 282 (1918). Where, however, both state and federal laws would support a claim, it makes little sense to suggest that the plaintiff acts “fraudulently” if he chooses to proceed under state law in state court rather than under federal law in federal court. See Romick v. Bekins Van & Storage Co., 197 F. 2d 369, 371 (CA5 1952).

       Indeed, the Court admits that the additional claims in Brown II, not included in Brown I, such as unfair competition, fraud, and restitution, are “state-law claims.” Ante, at 402.

       The District Court did not consider this conclusion a “factual finding.” It was included in a section of the District Court opinion devoted to legal analysis, not in the section entitled “Facts.” Compare App. 187-190 with id., at 190-192. In any event, a court’s conclusion concerning the legal character of a complaint can hardly be considered a “factual finding.”

       The decisions cited by the Court in support of its approach, all from District Courts, are inapplicable. In re Wiring Device Antitrust Litigation, 498 F. Supp. 79 (EDNY 1980), and Three J Farms, Inc. v. Alton Box Board Co., 1979-1 Trade Cases ¶ 62,423, p. 76,550 (SC 1978), rev’d on other grounds, 609 F. 2d 112 (CA4 1979), cert. denied, 445 U. S. 911 (1980), were cases in which the State itself had confined application of the state antitrust laws to purely intrastate commerce, thus leaving federal law the sole basis for suit. Similarly, Prospect Dairy, Inc. v. Dellwood Dairy Co., 237 F. Supp. 176 (NDNY 1964), concerned a claim of an unfair labor practice, which is governed exclusively by federal law. See 29 U. S. C. § 187; Teamsters v. Morton, 377 U. S. 252 (1964).
      Admittedly, some courts have not strictly observed the restrictions on removal jurisdiction. See, e. g., In re Carter, 618 F. 2d 1093, 1101 (CA5 1980), cert. denied sub nom. Sheet Metal Workers v. Carter, 450 U. S. 949 (1981). 14 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure §3722, pp. 564-566 (1976), reports that "occasionally the removal court will seek to determine whether the real nature of the claim is federal, regardless of plaintiff’s characterization.” (Footnote omitted.) Perusal of the cited decisions, however, reveals that most of them correctly confine this practice to areas of the law pre-empted by federal substantive law.

       See Brown v. Felsen, 442 U. S. 127, 131 (1979); United States v. Munsingwear, Inc., 340 U. S. 36, 38 (1950); Commissioner v. Sunnen, 333 U. S. 591, 597 (1948); Chicot County Drainage District v. Baxter State Bank, 308 U. S. 371, 378 (1940); Cromwell v. County of Sac, 94 U. S. 351, 352-353 (1877).