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January 14, 1993


The opinion of the court was delivered by: LORETTA A. PRESKA


 Defendants Kable News Company, Inc. ("Kable"), Daniel Friedman and Alfred W. Holpp, Jr. have moved for an order granting summary judgment pursuant to Federal Rules of Civil Procedure 56(b) on the ground that the claims asserted in the second amended complaint are barred by the doctrine of res judicata. Because the dismissal with prejudice of the parallel state court action is res judicata as to this action, Kable's motion for summary judgment is granted.


 Plaintiff Official Publications, Inc. ("Official") publishes various magazines for distribution and sale both domestically and abroad. Defendant Kable is a national distributor of magazines. Defendants Daniel Friedman and Alfred W. Holpp, Jr. are Kable's principal officers.

 From 1961 to 1983, Official and Kable had a contractual relationship whereby Kable brought magazines from Official and then sold these magazines to wholesalers at a discounted price. The distribution agreements specified the discount to be given to certain wholesalers based on labor costs in the wholesaler's region. Each month, Kable sent Official a statement which indicated the lump sum of discounts that Kable granted wholesalers.

 Official alleged in its seconded amended complaint that, among other things, the defendants defrauded it by granting excess and unauthorized discounts to certain wholesalers and then charging such discounts to Official's account, thereby reducing Official's profits. Second Amended Complaint PP 18, 19. Official further alleged that it first became aware of this practice in 1984 when Kable altered its billing statements to specify the discounts and allowances given by Kable to each individual wholesaler rather than showing only the total of all discounts granted. Id.

 On August 4, 1988, Judge Edelstein granted the defendants' motion to dismiss on the basis that: (1) diversity jurisdiction did not exist; and (2) Official had not stated a viable cause of action. Official Publications, Inc. v. Kable News Co., Inc., 692 F. Supp. 239 (S.D.N.Y. 1988), rev'd, 844 F.2d 664 (2d Cir. 1989). Judge Edelstein also denied Official leave to amend its complaint further. Id. at 247. Official appealed that decision.

 In December 1988, subsequent to Judge Edelstein's decision and prior to the decision of the Second Circuit, Official commenced an action against Kable (but not Messrs. Friedman and Holpp) in the Supreme Court of the State of New York, New York County (the "Official Action"). That action was "predicated on many of the same allegations alleged in the Complaint filed in this Court." Affirmation of Barry I. Fredericks, Esq. in Opposition to Defendant's Motion for Summary Judgment ("Fredericks Affirmation") P 4. *fn1" According to Fredericks, the Official Action "was commenced prior to the determination by the Second Circuit to avoid any problem with regard to the running of the Statute of Limitations . . . ." Id. P 4

 Within a few days of the commencement of the Official Action, Kable commenced an action against Mr. Fredericks (Official's attorney) and H. Lawrence Herbert (the former principal of Official) in the Supreme Court of the State of New York alleging that Messrs. Fredericks and Herbert violated section 71 of the New York State Civil Rights Law (the "Kable Action"). The Kable Action alleged that the Official Action was commenced without the knowledge and consent of the then-present owners of Official. *fn2"

 In August 1989, the Second Circuit issued its opinion which, inter alia, granted Official leave to replead its RICO claims. Official Publications, Inc. v. Kable News Co., 884 F.2d 664. According to Mr. Fredericks, in light of the decision of the Second Circuit and the dispute as to the ability of Herbert to pursue the Official Action, Herbert agreed to dismiss the Official Action. Fredericks Affirmation P 10. At the same time, Kable agreed to dismiss the Kable Action. Fredericks Affirmation P 10. Both actions were "dismissed with prejudice." Affidavit of I. Michael Bayda, Esq. dated May 21, 1992 P 8; Official Publications, Inc. v. Kable News Company, Inc., Index No. 11348/90 (N.Y. Sup. Ct. July 20, 1990).

 In February, 1990, Official filed its second amended complaint. Kable then answered and moved for summary judgment on the grounds that no material issue of fact existed and that as a matter of law defendants were entitled to judgment because the discounts granted had been authorized by Official. Defendants' second motion for summary judgment was denied. In May, 1992, Kable again moved for summary judgment based on the dismissal of the Official Action with prejudice.


 A party seeking summary judgment must demonstrate that "there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c); Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 107 S. Ct. 1570, 94 L. Ed. 2d 762 (1987); Exxon Corp. v. Central Gulf Lines, Inc., 780 F. Supp. 191 (S.D.N.Y. 1991). The moving party bears the initial burden of demonstrating the absence of a material issue of fact. Exxon v. Central Gulf Lines, Inc., 780 F. Supp. 191. Once the moving party has met this burden, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). The Court must consider "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 243, 106 S. Ct. 2505, 2506, 91 L. Ed. 2d 202 (1986). In the instant action, there is no dispute as to the facts presented, and for the reasons set forth below, as a matter of law, summary judgment must be granted to the defendants.

 The rationale for res judicata is "to promote judicial efficiency and certainty in legal relations and [to] bar[] repetitive litigation on the same cause of action." Cahill v. Arthur Andersen & Co., 659 F. Supp. 1115, 1120 (S.D.N.Y. 1986), aff'd, 822 F.2d 14 (2d Cir. 1987). As stated by Justice Douglas:

 The general rule of res judicata applies to repetitious suits involving the same cause of action. It rests upon considerations of economy of judicial time and public policy favoring the establishment of certainty in legal relations. The rule provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties are thereafter bound 'not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.' The judgment puts an end to the cause of action, which cannot again be brought into litigation between the parties upon any ground whatever, absent fraud or some other factor invalidating the judgment.

 Ananconda-Ericsson Inc. v. Hessen (In re Teltronics Services, Inc.) 762 F.2d 185, 190 (2d Cir. 1985), quoting, Commissioner v. Sunnen, 333 U.S. 591, 597, 92 L. Ed. 898, 68 S. Ct. 715 (1948) (citations omitted). Thus, it does not appear that the sequence of court filings controls the application of res judicata. Rather, where parallel actions are commenced, res judicata will attach to the action in which a judgment is first entered.

 In this Circuit, "a stipulation dismissing an action with prejudice can have the preclusive effect of res judicata." Samuels v. Northern Telecom, Inc., 942 F.2d 834, 836 (2d Cir. 1991). A dismissal with prejudice serves as an adjudication on the merits and bars subsequent suits by the plaintiff on the same causes of action. Nemaizer v. Baker, 793 F.2d 58, 60 (2d Cir. 1986); Cahill v. Arthur Andersen & Co., 659 F. Supp. at 1120. Not only is the plaintiff barred as to matters actually litigated in the prior action but as to all relevant issues which could ...

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