The opinion of the court was delivered by: Hon. Gonzalo P. Curiel United States District Judge
This case arises out of a business dispute between father and son. (SAC, ECF No. 44) In essence, plaintiff Albert Sanchez, Sr. ("Plaintiff" or "Sanchez, Sr.") alleges his son, Albert Sanchez, Jr. ("Sanchez, Jr.") stole his business, which consists of the sale and distribution of a dietary supplement called Poly-MVA. (SAC ¶¶ 12-13, ECF No. 44 at 3.)
In this action, Sanchez, Sr. seeks recovery for Sanchez, Jr.'s allegedly wrongful sale and distribution of goods marked with the alleged trademark: "POLY-MVATM". (See SAC, ECF No. 44.) In a parallel state court action, Sanchez Sr. sought recovery for Sanchez, Jr.'s allegedly wrongful sale and distribution of "POLY-MVATM".*fn1 (See State Ct. TAC, ECF No. 130-1.) In both actions, Sanchez, Sr. claims the allegedly wrongful conduct began in 2002 and continues through the present. (See State Ct. TAC ¶¶ 19, 89, ECF No. 130-1 at 5, 20; SAC ¶ 12, ECF No. 44 at 3.) The difference between the two actions is only the legal theory advanced: here, Sanchez, Sr. proceeds under various trademark and unfair competition laws, while in the parallel action, Sanchez, Sr. proceeded under the common-law theories of conversion and interference with business relations.
While this case was filed first in time, the parallel action proceeded first to trial. After presenting nearly three weeks of evidence, Sanchez, Sr. and his co-plaintiff concluded their case-in-chief. Sanchez, Jr. and his co-defendants moved for a non-suit on several claims, and the state court granted the motion as to, among other claims, Sanchez, Sr.'s conversion and interference claims. The state court found, in essence, that Sanchez, Sr. consented to the wrongs alleged in his conversion and interference claims. Final judgment in the parallel action has not been entered.
This Court, concerned about the potential res judicata effect that the parallel action might have on this action, ordered the parties to file briefing on the issue of whether the state court proceedings would have any preclusive effect on these proceedings. The parties have submitted multiple briefs, along with supporting documentation, on the issue. (ECF Nos. 125, 126, 130, 131, 132, 133.) Having considered the parties' submissions, and having heard oral argument on two occasions, (ECF Nos. 128, 135), the Court concludes that -- but for there being no final judgment -- the state court proceedings would have a preclusive effect on the claims asserted before this Court. Accordingly, for the reasons that follow, the Court will STAY this action pending resolution of the parallel state-court action.
"[F]ederal courts must give the same full faith and credit to a state court order as state courts would give the order." Southeast Res. Recovery Facility Auth. v. Montenay Int'l Corp., 973 F.2d 711, 713 (9th Cir. 1992).
Under California law, the doctrine of res judicata gives certain conclusive effect to a former judgment in subsequent litigation involving the same controversy. The doctrine has a double aspect. In its primary aspect, commonly known as claim preclusion, it operates as a bar to the maintenance of a second suit between the same parties on the same cause of action. In its secondary aspect, commonly known as collateral estoppel, the prior judgment . . . operates in a second suit . . . based on a different cause of action . . . as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determined in the first action. The prerequisite elements for applying the doctrine to either an entire cause of action or one or more issues are the same: (1) A claim or issue raised in the present action is identical to a claim or issue  litigated in a prior proceeding;  the prior proceeding resulted in a final judgment on the merits; and  the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding.
Boeken, 48 Cal. 4th at 797-98 (internal citations and quotations omitted).
"To determine whether two proceedings involve identical causes of action for purposes of claim preclusion, California courts have consistently applied the primary rights theory." Boeken, 48 Cal. 4th at 797 (internal quotations omitted). "Under this theory, a cause of action arises out of an antecedent primary right and corresponding duty and the delict or breach of such primary right and duty by the person on whom the duty rests." Id. (internal quotations omitted). "Of these elements, the primary right and duty and the delict or wrong combined constitute the cause of action in the legal sense of the term." Id. at 797-98 (internal quotations omitted). As, for purposes of applying the doctrine of res judicata, "the cause of action is the right to obtain redress for a harm suffered, regardless of the specific remedy sought or the legal theory (common law or statutory) advanced." Id. at 798. In other words, "one injury gives rise to only one claim for relief." Id. Thus, "under the primary rights theory, the determinative factor is the harm suffered," and "[w]hen two actions involving the same parties seek compensation for the same harm, they generally involve the same primary right. Id.
In Boeken, the plaintiff, a smoker's widow, sued Philip Morris for loss of consortium. The plaintiff voluntarily dismissed her loss of consortium claim with prejudice and then attempted to bring a second lawsuit for statutory wrongful death. The California Supreme Court first found the plaintiff's dismissal of her loss of consortium claim with prejudice was an adjudication on the merits. Then, in concluding that the statutory wrongful death claim was res judicata, the court found the primary right at issue was the right not to be wrongfully deprived of spousal companionship, and the corresponding duty was the duty not to wrongfully deprive a person of spousal companionship -- both together constituting the cause of action. In reaching this conclusion, the court observed that "the relevant point for [its] purposes [was] what plaintiff alleged [in her first complaint], because that allegation indicates what primary right was adjudicated as a consequence of the dismissal with prejudice."
In Balasubramanian v. San Diego Community College District, the California Court of Appeal addressed whether a final judgment in a federal employment discrimination suit barred a subsequent state suit based on the employer's alleged failure to comply with its own procedures. 80 Cal. App. 4th 977, 991-92 (2000). The court observed "[t]he determinative factor in applying the primary right theory was the harm [the plaintiff] suffered," and that "[i]n both the federal and state actions, the harm she alleged was having been rejected for the position of assistant professor." That is, "both actions involved the primary right to be employed by [the defendant]." Accordingly, the court concluded the prior federal judgment barred the subsequent state court action.
Here, the Court must decide whether the "cause of action" decided in the state-court action is the same "cause of action" before this Court. To do so, the Court must, as set ...