Daredevil, Inc. v. ZTE Corp., No. 19-3769 (8th Cir. 2021)
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Daredevil filed suit against ZTE for breach of contract, fraud, and unjust enrichment. After the case went to arbitration in Florida, Daredevil sought to add ZTE Corp., the parent company of ZTE USA, to its arbitration claims. The arbitrator rejected the request to add ZTE Corp., ruling that Daredevil's claims against ZTE Corp. were outside the scope of arbitration. Daredevil then filed this suit against ZTE Corp., alleging breach of contract, fraud, unjust enrichment, and tortious interference with contract. The arbitrator ultimately denied each of Daredevil's claims against ZTE USA. The arbitration award was confirmed by the United States District Court for the Middle District of Florida and affirmed by the Eleventh Circuit Court of Appeals. Daredevil subsequently reopened this case in the Eastern District of Missouri against ZTE Corp.
The Eighth Circuit affirmed the district court's decision to apply Florida law, holding that Daredevil's claims met the requirements for claim preclusion and were therefore barred. The court explained that Daredevil's current and previous claims share identity of the parties and identity of the cause of action, and Daredevil does not dispute that Florida's other two requirements are satisfied. In this case, privity exists between ZTE Corp. and ZTE USA where ZTE Corp. and ZTE USA are parent and subsidiary. Furthermore, Daredevil's current claims are so closely related to its arbitration claims and thus the identity-of-cause-of-action requirement has been met. Accordingly, Daredevil's claims against ZTE Corp. are barred by the decision in its prior arbitration against ZTE USA.
Court Description: [Smith, Author, with Kelly and Erickson, Circuit Judges] Civil case - Civil Procedure. The Missouri district court properly concluded Florida law applied to the issue of claim preclusion as the arbitration award used as the basis for claim preclusion was granted in Florida and confirmed by a federal district court, sitting in diversity, in Florida; the Missouri district court correctly determined that under Florida law plaintiff's claims for breach of contract, recission and unjust enrichment against ZTE Corp. were precluded by the Florida arbitration award; ZTE Corp. and ZTE USA are parent and subsidiary, and, as such, are in privity for purposes of the identity-of-the-parties requirement of Florida claims-preclusion law; further the claims in this Missouri case are closely related to the arbitration claims and Florida's identity-of-causes-of-action requirement for claims preclusion was also met.
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