## Facts

- Data General Corporation (DG) owned a copyright in a computer program called ADEX, used in connection with DG computer systems.
- DG first sued Grumman Systems Support Corporation (Grumman) in the United States District Court for the District of Massachusetts (the “Massachusetts action”), alleging Grumman copied and used ADEX without authorization and asserting copyright infringement and related claims.
- After DG filed the Massachusetts action, Grumman sued DG in California state court, asserting a California antitrust cause of action (including Cartwright Act theories) based on DG’s conduct relating to ADEX and competition in the DG service/maintenance market.
- DG removed the California case to the United States District Court for the Northern District of California (the case reported at 125 F.R.D. 160).
- After removal, Grumman amended its California complaint to add two additional defendants and to add allegations and claims that extended beyond the ADEX-related conduct.
- In the Massachusetts action, DG sought a preliminary injunction. Grumman opposed and argued that DG’s conduct related to ADEX violated antitrust laws, raising issues that overlapped with the California antitrust suit.
- DG moved in the Northern District of California to dismiss, stay, or transfer the California action, arguing that the California antitrust claims tied to ADEX were compulsory counterclaims that had to be raised in the earlier-filed Massachusetts action under Federal Rule of Civil Procedure 13(a).

## Issues

1. Whether Grumman’s California antitrust claims against DG, based on DG’s conduct relating to ADEX, arose out of the same “transaction or occurrence” as DG’s Massachusetts copyright infringement claims such that the antitrust claims were compulsory counterclaims under Federal Rule of Civil Procedure 13(a).
2. Whether Grumman could avoid Rule 13(a)’s compulsory-counterclaim requirement by amending the California complaint to add additional defendants and additional allegations not limited to ADEX.
3. If the ADEX-related antitrust claims were compulsory counterclaims, what procedural remedy (dismissal, stay, or transfer) was proper to prevent parallel litigation of the overlapping dispute.

## Decision

- The court held that Grumman’s California antitrust claims against DG, to the extent based on DG’s conduct relating to ADEX, were compulsory counterclaims to DG’s earlier-filed Massachusetts copyright infringement action under Rule 13(a).
- Applying the “logical relationship” test, the court found substantial overlap between the ADEX-centered antitrust allegations and the copyright issues being litigated in Massachusetts, including Grumman’s contention (raised as part of its defense to injunctive relief) that DG’s ADEX-related conduct was anticompetitive.
- The court rejected Grumman’s attempt to avoid Rule 13(a) by broadening the California case with additional parties and additional non-ADEX allegations; the ADEX-based dispute with DG remained part of the same core controversy already pending in Massachusetts.
- The court granted DG’s motion in substance by preventing the ADEX-based antitrust claims from proceeding as a separate, later-filed California action and directed that those claims be pursued, if at all, in the Massachusetts action as counterclaims.

## Legal Principles

- Federal Rule of Civil Procedure 13(a) requires a party to plead as a counterclaim any claim it has against an opposing party that arises out of the same transaction or occurrence as the opposing party’s claim, when the claim can be adjudicated without adding parties beyond the court’s jurisdiction.
- Courts apply a “logical relationship” test to determine whether claims arise out of the same transaction or occurrence; claims are compulsory when they share common operative facts such that separate suits would duplicate proof and risk inconsistent results.
- Antitrust claims may be compulsory counterclaims to an earlier intellectual-property infringement suit when the antitrust theory rests on the same conduct and factual setting as the infringement dispute (here, DG’s control and asserted rights concerning ADEX in the service market).
- A party cannot evade Rule 13(a) by filing a second action in a different forum and then adding new defendants or additional allegations; the compulsory-counterclaim analysis focuses on whether the claim against the original opposing party arises from the same core set of facts.

## Conclusion

Because Grumman’s California antitrust claims against DG were based on DG’s conduct relating to the ADEX program—the same subject matter central to DG’s earlier Massachusetts copyright infringement suit—the Northern District of California treated the ADEX-based antitrust claims as compulsory counterclaims under Rule 13(a) and barred them from going forward as a separate, parallel California action.


Grumman Systems Support Corp. v. Data General Corp., 125 F.R.D. 160 (1988)