In subsequent litigation, what governs the preclusive effect of a prior federal diversity judgment—the controlling law for preclusion?

In subsequent litigation, what governs the preclusive effect of a prior federal diversity judgment—the controlling law for preclusion?

• A. The law of the forum state
• B. Federal common law governing preclusion
• C. The law of the state where the prior judgment was rendered
• D. The U.S. Constitution governs preclusion

Answer: (B)

Preclusion for a federal diversity judgment is governed by federal common law governing preclusion. Federal courts developed and apply their own rules for res judicata and collateral estoppel to federal judgments, ensuring uniform nationwide treatment across different courts and jurisdictions. While 28 U.S.C. § 1738 requires giving full faith and credit to state judgments, that statute does not make state preclusion rules govern how a federal judgment itself is treated; federal common law controls the preclusion effect of a federal court’s judgment. Semtek v. Lockheed Martin clarified that, for subsequent litigation, the applicable rule is federal preclusion law rather than the law of the state where the prior judgment was rendered, to avoid inconsistent outcomes.

Preclusion for a federal diversity judgment is governed by federal common law governing preclusion. Federal courts developed and apply their own rules for res judicata and collateral estoppel to federal judgments, ensuring uniform nationwide treatment across different courts and jurisdictions. While 28 U.S.C. § 1738 requires giving full faith and credit to state judgments, that statute does not make state preclusion rules govern how a federal judgment itself is treated; federal common law controls the preclusion effect of a federal court’s judgment. Semtek v. Lockheed Martin clarified that, for subsequent litigation, the applicable rule is federal preclusion law rather than the law of the state where the prior judgment was rendered, to avoid inconsistent outcomes.