Gargallo v. Merrill Lynch, Pierce, Fenner & Smith
United States Court of Appeals for the Sixth Circuit
918 F.2d 658 (6th Cir. 1990)
Merrill Lynch (defendant) sued Gargallo (plaintiff) in Ohio state court to collect margin-account debt; Gargallo counterclaimed alleging negligence, misrepresentation, and federal securities law violations, but the state court dismissed his counterclaims with prejudice for discovery noncompliance. Gargallo then refiled the federal securities claims in federal district court, which dismissed the suit on res judicata grounds based on the earlier state dismissal, and Gargallo appealed.
Whether a federal district court must give claim-preclusive effect to a state court judgment regarding federal law claims that fall within the exclusive subject-matter jurisdiction of the federal courts.