General Atomic Co. v. Felter

Background

A company (General Atomic Co.) and a uranium supplier (United Nuclear Corp.) were entangled in multiple lawsuits after a sharp rise in uranium prices halted deliveries. Utilities and the companies filed suits in several federal courts, and General Atomic tried to bring claims and third-party complaints in federal cases and arbitration. A New Mexico state court issued a broad order stopping General Atomic from filing or prosecuting any federal suits or arbitration actions that involved United Nuclear.

Reasoning

The central question was whether a state court could block a party from starting or pursuing in-person lawsuits in federal court. The Court relied on Donovan v. Dallas and the Supremacy Clause. It explained that Congress grants the right to litigate in federal court and that state courts lack power to abridge that right by enjoining federal in-person suits. The Court found the New Mexico ruling conflicted with Donovan and reversed, emphasizing that federal courts can police harassment themselves.

Real world impact

The decision lets companies pursue federal procedural options, like impleading a third party or invoking federal arbitration rules, even when a state court seeks to bar such steps. The ruling invalidates the state court order and sends the case back to state court for further action consistent with this decision. This is not a final decision on the underlying contract disputes; it resolves only the limits on state-court power to block federal filings.

Dissents or concurrances

Justice Rehnquist dissented, arguing that historic equitable powers let state courts prevent duplicative or harassing lawsuits and that Donovan’s rule should be reconsidered; Justice Blackmun would have heard full argument.