Fourth Circuit Holds that State Law of Res Judicata Should Have Been Applied in Federal Diversity Case

Per Q. Intern. Courier, Inc. v. Smoak, 441 F.3d 214 (4th Cir. Mar. 20, 2006):

In this case, the first action--which was based on diversity jurisdiction--was adjudicated in the federal district court sitting in Virginia. Under Semtek, [Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001)] the preclusive effect, if any, of the first action on the second action should have been decided under the res judicata law of the state of Virginia--the law of the state where the federal district court sat in the first action. Thus, we hold that the district court erred by applying the federal law of res judicata rather than the Virginia state law of res judicata.