Parsons Steel, Inc. v. First Ala. Bank - 474 U.S. 518, 106 S. Ct. 768 (1986)

Rule:

Under the Full Faith and Credit Act, 28 U.S.C.S. § 1738, a federal court must give the same preclusive effect to a state-court judgment as another court of that state would give. 28 U.S.C.S. § 1738 does not allow federal courts to employ their own rules of res judicata in determining the effect of state judgments. Rather, it goes beyond the common law and commands a federal court to accept the rules chosen by the state from which the judgment is taken. The Full Faith and Credit Act thus allows the states to determine, subject to the requirements of the statute and the Due Process Clause, the preclusive effect of judgments in their own courts.

Facts:

Petitioner company brought an action against the respondent bank in state court for fraudulent inducement. The company then brought an action against the bank in federal court for violations of the Bank Holding Company Act amendments, 12 U.S.C.S. § 1971 et seq. The federal court rendered a judgment notwithstanding the verdict for the bank. The state court refused to dismiss the case on res judicata grounds and rendered judgment for the company. The bank sought an injunction in federal district court against enforcement of the state judgment. The district granted a permanent injunction. The United States Court of Appeals for the Eleventh Circuit affirmed the district court's order. The company sought certiorari.

Issue:

Did the Full Faith and Credit Act bar the federal court from enjoining the state action? 

Answer:

Yes.

Conclusion:

 The U.S. Supreme Court granted certiorari to review the propriety of the injunction. The Court held that the Anti-Injunction Act, 28 U.S.C.S. § 2283, did contain an exception to the prohibition against federal courts enjoining state court proceedings in those circumstances when the federal court was protecting its own judgments. However, the Court held that the Full Faith and Credit Act, 28 U.S.C.S. § 1738, superseded the Anti-Injunction Act, and when the state court had reviewed and rejected the res judicata argument, the federal court had no authority to enjoin the state court's judgment based on its own opinion that res judicata did apply.