OCTOBER TERM, 1995
Syllabus
certiorari to the united states court of appeals for the ninth circuit
No. 94-1809. Argued November 27, 1995—Decided February 27, 1996
A tender offer resulting in petitioner Matsushita Electric Industrial Co.'s acquisition of MCA, Inc., a Delaware corporation, precipitated two lawsuits on behalf of MCA's stockholders. While the first, a Delaware class action based purely on state-law claims, was pending, the second suit was filed in a California federal court, alleging that Matsushita's tender offer violated certain Securities and Exchange Commission Rules promulgated under the Securities Exchange Act of 1934 (Exchange Act). Section 27 of that Act confers exclusive jurisdiction upon the federal courts in such suits. Matsushita prevailed in the federal case, and while that judgment was on appeal, the parties to the state action reached a settlement, agreeing, inter alia, that class members who did not opt out of the class would waive all claims in connection with the tender offer, including those asserted in the California federal action. The Chancery Court approved the agreement, and the Delaware Supreme Court affirmed. Respondents are members of both the state and federal classes who did not opt out of the settlement class. In the instant case, the Ninth Circuit found that the Delaware judgment was not a bar to further prosecution of the federal action under the Full Faith and Credit Act, 28 U. S. C. § 1738, and fashioned a test limiting the preclusive force of a state-court settlement judgment to those claims that could "have been extinguished by the issue preclusive effect of an adjudication of the state claims."
Held: The Delaware settlement judgment is entitled to full faith and credit, notwithstanding the fact that it released claims within the exclusive jurisdiction of the federal courts. Pp. 373-387. (a) Section 1738—which directs federal courts to treat a state-court judgment with the same respect that it would receive in the rendering State's courts—is generally applicable in cases in which the state-court judgment incorporates a class-action settlement releasing claims solely within the federal courts' jurisdiction. The judgment of a state court in a class action is plainly the product of a "judicial proceeding" within the meaning of § 1738, and the fact that the judgment might bar litigation of exclusively federal claims does not necessarily make § 1738 inap-
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