Flaum, Circuit Judge. The appellants–Mark A.Ramsden, Raelynn Ramsden, and Milton R. Ramsden,individually and d/b/a Ramsden Dairy(collectively “the Ramsdens”)–challenge adecision by the district court to enjoin a statecourt proceeding which the appellee, AgriBank,alleged was threatening its prior, favorablefederal court judgment. For the reasons statedherein, we hold that the district court abusedits discretion in enjoining the state courtproceedings, and we therefore reverse. Background The Ramsdens originally brought an action inthe Circuit Court for Portage County, Wisconsin,against Credit Services of North CentralWisconsin ACA, AgriBank, and Thomas E. Hass,AgriBank’s employee, alleging tortious conduct inthe sale of certain agricultural property. Thestate court dismissed the action against Hass,whereupon the Ramsdens dismissed the complaintwithout prejudice against the remainingdefendants and appealed Hass’s dismissal to thestate court of appeals. While the appeal was pending, the Ramsdensfiled a second action against AgriBank in theCircuit Court for St. Croix County, Wisconsin,alleging misrepresentation and other tortiousacts in the sale of the property. AgriBankremoved the case to the United States DistrictCourt for the Western District of Wisconsin. In federal court, the Ramsdens amended theircomplaint, alleging that they and their cattlewere poisoned by benzene contamination in thewater on the farm that AgriBank had sold them.Following extensive discovery, AgriBank moved forsummary judgment, arguing that the Ramsdenslacked evidence sufficient to show that anybenzene contamination caused the alleged healthinjuries. The court, applying Daubert v. MerrellDow Pharmaceuticals, 509 U.S. 579 (1993), to theRamsdens’ proposed expert testimony, concludedthat the testimony lacked scientific reliabilityand validity and was therefore inadmissible.Accordingly, the court granted defendantAgriBank’s motion for summary judgment. TheRamsdens appealed the judgment to this Court, butthey dismissed the appeal voluntarily in exchangefor a waiver by AgriBank of recovery of itscosts. While the Ramsdens’ appeal was pending, however,the Wisconsin Court of Appeals reversed the trialcourt’s dismissal of Hass from the state courtaction and remanded the case to the trial court,where it was pursued by the Ramsdens. Accordingto AgriBank, all of the Ramsden’s allegationsagainst Hass in that state court suit concernactions taken by Hass in the scope of hisemployment with AgriBank, and all of theallegations were the subject of the federal courtsuit against AgriBank. In March 1999, Hass movedfor summary judgment in the state court, arguingclaim and issue preclusion based on the summaryjudgment granted to AgriBank in federal districtcourt. The state court denied the motion, findingthat, although the elements were present forclaim preclusion, considerations of equity andfairness barred application of claim preclusionto the state court action. The court found thatunder Wisconsin evidentiary law, which is lessstringent than the federal Daubert requirements,the Ramsdens’ expert would have been allowed totestify. Because of the significant differencesin evidentiary rules, because defendant AgriBankhad removed the case to federal court, andbecause the court could not find that theRamsdens were engaged in vexatious litigation,the state court concluded that it would be unfairto bar the Ramsdens’ claim. The state courtreached similar conclusions with respect to issuepreclusion. At that point, counsel for AgriBank (the samecounsel that represented Hass in the stateaction) went back to federal court to seek aninjunction against the state court permanentlyenjoining it from further addressing any issuesbetween the Ramsdens and Hass or AgriBank arisingfrom the purchase of the farm property. AgriBankalso sought an injunction against the Ramsdens toprohibit them from bringing any further actionsagainst AgriBank or its employees arising fromthe purchase. The district court granted theinjunctions, and the Ramsdens now appeal. Discussion The Anti-Injunction Act generally prohibitsfederal courts from enjoining state courtproceedings. 28 U.S.C. sec. 2283. The Act isdesigned to prevent friction between state andfederal courts and to protect state courtproceedings from federal interference. SeeAmalgamated Clothing Workers of America v.Richman Bros., 348 U.S. 511, 514-16 (1955); seealso Vendo Co. v. Lektro-Vend Corp., 433 U.S.623, 630 (1977) (plurality opinion) (“The Act’spurpose is to forestall the inevitable frictionbetween the state and federal courts that ensuesfrom the injunction of state judicial proceedingsby a federal court.”). By its own terms, the Anti-Injunction Act’sprohibition is sweeping and provides for onlythree types of exceptions: “A court of the UnitedStates may not grant an injunction to stayproceedings in a State court except as expresslyauthorized by Act of Congress, or where necessaryin aid of its jurisdiction, or to protect oreffectuate its judgments.” 28 U.S.C. sec. 2283.These exceptions are narrow ones. See Chick KamChoo v. Exxon Corp., 486 U.S. 140, 146 (1988);Atlantic Coast Line R.R. Co. v. Brotherhood ofLocomotive Engineers, 398 U.S. 281, 287 (1970).This case involves the third exception–the”relitigation exception”–which allows a partywith a favorable federal judgment to protect thatjudgment by enjoining repetitive state courtproceedings instead of relying on a claim orissue preclusion defense. See Samuel C. Ennis &Co. v. Woodmar Realty Co., 542 F.2d 45, 49 (7thCir. 1976); 17 Moore’s Federal Practice,121.08[1]. “[A]llowing an unsuccessful litigantto harass other participants in the federal case[through relitigation in state court] flouts andmay be said to ‘seriously impair the federalcourt’s . . . authority to decide that case.’”Samuel C. Ennis & Co., 542 F.2d at 50 (quotingAtlantic Coast Line R.R. Co., 398 U.S. at 295).Therefore, under certain circumstances a federalcourt may enjoin state proceedings that attemptto readjudicate previously-decided matters.Rutledge v. Scott Chotin, Inc., 972 F.2d 820, 825(7th Cir. 1992). In this case, the district court concluded thatthe Act permitted the issuance of an injunctionif AgriBank could prove that it had establishedall the elements of claim or issue preclusion.See Harper Plastics, Inc. v. Amoco ChemicalsCorp., 657 F.2d 939, 946-47 (7th Cir. 1981)(holding that the relitigation exception to theAnti-Injunction Act permits federal courts toenjoin state court relitigation of mattersfinally adjudicated in federal court). Afterfinding that the elements of claim preclusionwere satisfied, the court enjoined the Ramsden’sstate court proceedings against Hass.Because the relitigation exception bears on thedelicate relationship between state and federalcourts, strict timing requirements cabin itsinvocation. In Parsons Steel, Inc. v. FirstAlabama Bank, 474 U.S. 518, 524-25 (1986), theSupreme Court held that once a litigant raises aclaim preclusion defense and the state courtrules on it, that state court determination bindsthe federal courts. It reached this conclusionafter noting that the Full Faith and Credit Act,28 U.S.C. sec. 1738, under which a federal courtmust give the same preclusive effect to a statecourt judgment that another court of that statewould give, embodies Congress’ legislativecommitment to federalism and comity in the areaof judgment recognition. 474 U.S. at 535; seealso Kremer v. Chemical Construction Corp., 456U.S. 461, 481-82 (1982) (“It has long beenestablished that sec. 1738 does not allow federalcourts to employ their own rules of res judicatain determining the effect of state judgments.Rather, it goes beyond the common law andcommands a federal court to accept the ruleschosen by the State from which the judgment istaken.”). The Parsons Steel Court went on to holdthat “the Anti-Injunction Act and the Full Faithand Credit Act can be construed consistently,simply by limiting the relitigation exception ofthe Anti-Injunction Act to those situations inwhich the state court has not yet ruled on themerits of the res judicata issue.” 474 U.S. at524. It further explained that “the Full Faithand Credit Act requires that federal courts givethe state-court judgment, and particularly thestate court’s resolution of the res judicataissue, the same preclusive effect it would havehad in another court of the same State.” Id. at525. In other words, a federal court consideringenjoining a state court proceeding, where thestate court has ruled on the res judicata issue,must first, as a threshold matter, look to thatstate’s law of judgments to determine whetheranother court of that state would view the resjudicata ruling as final and binding. If so, thenthe federal court is bound by that ruling aswell. In this case, we agree with the district courtthat under Wisconsin law the state court’s denialof summary judgment on the res judicata issuewould not be regarded as sufficiently “final” towarrant preclusive effect in another Wisconsincourt, and it would therefore not warrant thefull preclusive effect in federal court demandedby the Full Faith and Credit Act. See Wis. Stat.sec. 808.03(1) (“A final judgment or final orderis a judgment, order or disposition that disposesthe entire matter in litigation as to one or moreof the parties . . . .”); Heaton v. Larsen, 294N.W.2d 15, 24 (Wis. 1980). Accordingly, thedistrict court was not statutorily barred by theFull Faith and Credit Act–as it intersects withthe Anti-Injunction Act–from calling intoquestion the state court’s resolution of the resjudicata issue. But just because a federal court has thestatutory power to enjoin a state courtproceeding does not mean that it should exercisethat authority. In other words, that the statecourt has not reached final judgment on apreviously litigated claim is an essential butnot necessarily sufficient condition of federalcourt intervention pursuant to the relitigationexception of the Anti-Injunction Act. When a federal court is asked to enjoin statecourt proceedings, the mere fact that the casefalls within one of sec. 2283′s exceptions doesnot “qualify in any way the principles of equity,comity, and federalism that must restrain afederal court when asked to enjoin a state courtproceeding.” Mitchum v. Foster, 407 U.S. 225, 243(1972). A litigant must still show equitableentitlement to an injunction. See Kerr-McGeeChemical Corp. v. Hartigan, 816 F.2d 1177, 1182(7th Cir. 1987). Moreover, the Supreme Court hasinstructed that “[a]ny doubts as to the proprietyof a federal injunction against state courtproceedings should be resolved in favor ofpermitting the state courts to proceed in anorderly fashion to finally determine thecontroversy. The explicit wording of sec. 2283itself implies as much, and the fundamentalprinciple of a dual system of courts leadsinevitably to that conclusion.” Atlantic CoastLine R.R. Co., 398 U.S. at 297. Assuming that thethreshold test of finality mandated by ParsonsSteel is satisfied, how far do these principlesextend in limiting federal courts’ power tointervene once a state court has alreadyadjudicated the merits of the preclusion issue? Different jurisdictions have adopted competingapproaches for cases in which the state court hasnot yet reached final judgment, but in which thestate court has ruled on the res judicatadefense. On remand from the Supreme Court andflowing back up from the district court, theEleventh Circuit considered in the Parsons Steelcase whether the Alabama state court’s denial ofa motion for summary judgment on res judicatagrounds bound the federal court considering aninjunction. First Alabama Bank of Montgomery v.Parsons Steel, Inc., 825 F.2d 1475 (11th Cir.1987). The Eleventh Circuit held that, underAlabama law, the denial of summary judgment wasnot a final adjudication of the preclusion issue,and it went on to hold, therefore, that thedistrict court was not precluded from enjoiningthe state court proceedings. Id. at 1480-86; seealso Battle v. Liberty Nat’l Life Ins. Co., 877F.2d 877, 882 (11th Cir. 1989) (“Because [adenial of a motion for summary judgment] is nota final order, it would not be given preclusiveeffect in state court and need not be accordedthat deference in federal court.”). In Amalgamated Sugar Co. v. NL Industries,Inc., 825 F.2d 634 (2d Cir. 1987), the SecondCircuit held that a district court properlyenjoined state court relitigation of a claim byshareholders where a federal court previouslyentered a judgment in favor of a corporation. Inthat case, the state court had not yet ruled onthe merits of the res judicata defense raised bythe corporation, but indicated that it wouldconsider those merits only in the context of afull trial on the underlying claim. The SecondCircuit held that the district court couldproperly enjoin the state court proceedingsbecause the state court had not entered a priorfinal judgment on the merits, but had merelydenied the corporation’s summary judgment motionwithout prejudice. Id. at 642. Under thosecircumstances, the Second Circuit did not need toconfront the scenario before us, where the statecourt had not reached final judgment but hadclearly adjudicated and expressly rejected themerits of the res judicata defense. The SecondCircuit did, however, go on to note in dicta that”[the corporation] acted properly in moving forsummary judgment on res judicata grounds in theNew Jersey court prior to seeking injunctiverelief in the district court, thereby attemptingto avoid invoking the more intrusive remedy ofinjunctive relief.” Id. In Kaempfer v. Brown, 684 F.Supp. 319 (D.D.C.1988), the District of Columbia District Courtenjoined the defendants from pursuing a claim inDistrict of Columbia courts where a federaldistrict court’s earlier judgment involvedidentical tort claims. At that time, the Districtof Columbia Superior Court had summarily deniedthe injunctive plaintiff’s motion to dismiss onres judicata and other grounds, but the districtcourt “[could not] say with the slightest degreeof confidence that the Superior Court [had]decided the issue of res judicata.” Id. at 323.The district court interpreted Parsons Steel asholding that the Full Faith and Credit Act barsa federal court from enjoining a state action inorder to protect a prior federal judgment once astate court has expressly rejected a preclusiondefense. Id. We believe that a rule that restricts a federalcourt’s discretion to enjoin state courtproceedings once the state court expressly andunambiguously decides a res judicata defense,whether or not there has been a final judgment onthe entire claim in state court, best reconcilesthe conflicting concerns identified in ParsonsSteel. Any federal injunction to bar purportedrelitigation balances efficiency advantages offinality against respect for state courts andtheir decisions. Once a state court considers ares judicata defense and rules that a priorfederal judgment does not actually bar a claim,the affront of federal court interventionstripping the state court of power to continue isgreatly magnified. After such a ruling, theinterests in preventing possible relitigation aretherefore generally outweighed by the heightenedcomity concerns except in the most extraordinarycircumstances.
[FOOTNOTE 1] The standards governing abstention under theYounger doctrine are instructive in this regard,as those standards have evolved in light ofheightened comity concerns surrounding federalinjunctions of state criminal proceedings andother state proceedings involving important stateinterests. In Younger v. Harris, 401 U.S. 37(1971), a plaintiff sought a federal injunctionagainst a state criminal prosecution on thegrounds that the prosecution violated federalconstitutional rights. The district court orderedinjunctive relief and the Supreme Court reversed,concluding that the injunction was “a violationof the national policy forbidding federal courtsto stay or enjoin pending state court proceedingsexcept under special circumstances.” Id. at 41.”[The] underlying reason,” the Court explained,”for restraining courts of equity frominterfering with criminal prosecutions isreinforced by an even more vital consideration,the notion of ‘comity,’ that is, a proper respectfor state functions . . . .” Id. at 44; see alsoTrust & Investment Advisers, Inc. v. Hogsett, 43F.3d 290, 294-95 (7th Cir. 1994) (explaining thatthe Younger doctrine “has since been expandedbeyond criminal prosecutions to various civilproceedings in state court implicating importantstate interests”). To accommodate this interest,the Court held that a litigant in the Youngercontext must make a “showing of bad faith,harassment, or . . . other unusual circumstancethat would call for equitable relief.” Id. at54.
[FOOTNOTE 2] In this case, the district court gaveinadequate weight to these heightened comityconcerns. Unhappy with the state court’s handlingof the res judicata defense, AgriBank went tofederal court for another look at the issue.Having determined that res judicata should havebarred the state court suit, the district courtfound no comity considerations that weighedagainst AgriBank’s costs and inconvenience ofcontinued state court proceedings. Instead, thedistrict court concluded that the balance ofharms and the public’s interest in finalityweighed in AgriBank’s favor after noting onlythat “[t]he obvious prospect of relitigationsuffices to show that defendant will sufferirreparable harm if an injunction does not issueto stop the state court proceeding.” The courttherefore enjoined further proceedings in statecourt on the matter, and we regard this as anabuse of discretion. Just as the Younger Courtrejected the plaintiff’s plea for injunctiverelief because the injury he faced was “solely’that incidental to every criminal proceedingbrought lawfully and in good faith,’” 401 U.S.at 49 (citations omitted), here AgriBank soughtinjunctive relief in the face of furtherlitigation expenses which, though costly, areincidental to defense of every lawsuit. While theexpenses and uncertainty of litigation maysometimes be sufficient to warrant an injunctionpursuant to sec. 2283 prior to a clear andexpress state court ruling on the preclusiondefense, see, e.g., Harper Plastics, Inc. v.Amoco Chemicals Corp., 657 F.2d 939 (7th Cir.1981), they are insufficient when weighed againstthe added, countervailing comity interests thatarise after that point. Under this approach, AgriBank was not strippedof a remedy if it believed that the state courtwrongly decided the res judicata issue. IfAgriBank had demonstrated extraordinarycircumstances it might have been entitled to afederal injunction. As it stands, though,AgriBank would still have an opportunity toappeal the state trial court’s decision upthrough the state appeals process.
[FOOTNOTE 3] As theSupreme Court went on to explain in ParsonsSteel: Even if the state court mistakenly rejectedrespondents’ claim of res judicata, this does notjustify the highly intrusive remedy of a federalcourt injunction against the enforcement of thestate-court judgment. . . . Challenges to thecorrectness of a state court’s determination asto the conclusive effect of a federal judgmentmust be pursued by way of appeal through thestate-court system and certiorari from thisCourt. 474 U.S. at 525; see also Amalgamated ClothingWorkers v. Richman Bros., 348 U.S. 511, 518(1955) (“The prohibition of sec. 2283 is butcontinuing evidence of confidence in the statecourts, reinforced by a desire to avoid directconflicts between state and federal courts.”).While a federal injunction of state courtproceedings might, in some cases, be cost-effective, “inefficient simultaneous litigationin state and federal courts on the same issue” is”one of the costs of our dual court system.” Id.at 524-25. Conclusion For the reasons stated herein, we VACATE thedecision of the district court granting theinjunction and REMAND the case for furtherproceedings consistent with this opinion. :::FOOTNOTES:::
FN1 An express and unambiguous rejection of a resjudicata defense would arguably increase thelikelihood that further state court proceedingswould undermine a prior federal court judgment,and therefore counsel in favor of a federalinjunction. However, this concern will almostalways be outweighed by the heightened comityinterests that arise once the state court hasadjudicated this issue and, as explained later inthis opinion, is best addressed through stateappellate channels. Drawing a line at the point at whicha state court decides the resjudicata issue might also arguably createincentives for litigants with a prior, favorablefederal court judgment to rush back to federalcourt for an injunction rather than relying onthe res judicata defense in state court at all.Aside from the fact that Parsons Steel alreadycreates incentives to obtain a federal injunctionbefore the state court reaches final judgment, webelieve that it is necessary to restrict districtcourt discretion in this way to prevent therelitigation exception of the Anti-Injunction Actfrom simply being turned into a vehicle forseeking appellate review of a state courtdecision in federal court. See Atlantic CoastLine R.R. Co., 398 U.S. at 293.
FN2 In considering the types of “unusualcircumstances” that satisfy this standard, theCourt also noted that “even irreparable injury isinsufficient unless it is ‘both great and immediate.’”Id. at 46 (citing Fenner v. Boykin, 271 U.S. 240,243 (1926)).
FN3 Although a denial of a motion for summaryjudgment is not appealable as a final decision,under Wisconsin law a litigant may petition forleave to appeal a non-final order under certaincircumstances. See Wis. Stat. sec. 808.03(2).
Ramsden v. AgriBank, FCB In the United States Court of Appeals For the Seventh Circuit No. 99-3617 Mark A. Ramsden, Raelynn Ramsden, and Milton R. Ramsden, individually and d/b/a Ramsden Dairy,Plaintiffs-Appellants, v. AgriBank, FCB,Defendant-Appellee. Appeal from the United States District Court for the Western District of Wisconsin. No. 98 C 221–Barbara B. Crabb, Judge. Argued February 23, 2000–Decided June 2, 2000 Before Flaum, Kanne, and Diane P. Wood, Circuit Judges.
