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A party to arbitration that fails to bring claims arising out of the same subject matter as the claims arbitrated cannot later bring those related claims to a court for adjudication, according to a federal court in Delaware.
In Digene Corp. v. Ventana Medical Systems, Inc., No. 01-752-MPT, 2007 WL 1697027 (D. Del. June 12, 2007), co-defendant Beckman moved to dismiss further court action against it by Digene, alleging that Digene's claims arose out of the same patent rights that were to be fully arbitrated, and that Digene's failure to do so during arbitration barred the claims brought to court.
The Court agreed with Beckman and granted the motion, finding Digene's court claims to be precluded. The Court noted that it engaged in a similar analysis as to whether the claims arose out of the same cause of action in determining which claims were arbitrable under the parties' agreement before compelling arbitration, based "on the factual underpinnings of the claim[s]…." The Court found this "factual underpinnings" analysis to be similar to that required to decide the issue of claim preclusion, and held that the court claims were so precluded.
The Court observed that Digene's behavior during arbitration suggested it understood the claims at issue arose out of the same cause of action as those arbitrated, since Digene had originally submitted all the claims to arbitration, before later withdrawing some. The Court held that "Digene's back and forth approach of submitting issues to arbitration evidences that it intended and knew that arbitration was the forum where its dispute in the instant matter with Beckman was to be decided…." Also, the Court found that "Digene's conduct [during arbitration] further proves that an essential similarity exists between the underlying facts giving rise to the various legal claims raised in its lawsuit and initially presented in arbitration."
Digene maintained that New York claim preclusion law was controlling under a choice of law provision, but the argument was soundly rejected. The Court observed that the claims arose out of federal patent law, that "federal common law governs claim preclusive effect [for] a federal court," that precedent "recognized that res judicata operates to bar claims in federal court as a result of the binding effect of prior findings during arbitration," and that, even if New York law were applied, precedent indicated "there is no significant difference between New York preclusive law and federal preclusive law."
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