## Facts

- Owners of the Seattle Totems (a Western Hockey League team) entered into agreements with Northwest Sports Enterprises, Ltd., owner of the Vancouver Canucks NHL franchise.
- The agreements required (i) sale of 55% of Totems shares to Northwest, (ii) reimbursement by the owners of 44.44% of Northwest’s Totems operating expenditures, and (iii) repurchase of Northwest’s shares if the NHL later granted the Totems an NHL franchise.
- The agreements were executed in Vancouver, British Columbia, and included a clause providing they would be interpreted under British Columbia law.
- The Totems owners later sued the NHL, Northwest, and others in federal court for antitrust violations, alleging unlawful monopolization of professional ice hockey in North America.
- As part of the federal antitrust case, the owners sought a declaration that the agreements with Northwest were illegal, void, and unenforceable.
- Roughly 27 months after the federal case began, Northwest filed a separate breach-of-contract action in the Supreme Court of British Columbia seeking damages under the same agreements.
- The Totems owners moved in federal court to enjoin the Canadian action, arguing the contract claim was a compulsory counterclaim in the federal case under Federal Rule of Civil Procedure 13(a).
- The district court issued an antisuit injunction barring Northwest from prosecuting the Canadian suit, and Northwest took an interlocutory appeal.

## Issues

1. Whether the compulsory-counterclaim characterization of Northwest’s breach-of-contract claim is governed by Federal Rule of Civil Procedure 13(a) or by Canadian law via the agreements’ British Columbia choice-of-law clause.
2. Whether the district court properly enjoined Northwest from prosecuting the Canadian action on the ground that it involved a compulsory counterclaim that had to be asserted in the pending federal case.

## Decision

- The Ninth Circuit affirmed the antisuit injunction.
- The compulsory-counterclaim question was governed by Federal Rule of Civil Procedure 13(a), not Canadian law or the contractual choice-of-law clause.
- Northwest’s breach-of-contract claim arose from the same transaction or occurrence as the federal claims challenging the agreements’ validity and enforceability, making it a compulsory counterclaim under Rule 13(a).
- Enjoining the Canadian action was proper to protect the federal court’s jurisdiction and to prevent duplicative litigation and inconsistent results.

## Legal Principles

- Whether a claim is a compulsory counterclaim in federal court is a procedural matter controlled by Federal Rule of Civil Procedure 13(a).
- A contractual choice-of-law clause governing interpretation of an agreement does not displace the Federal Rules of Civil Procedure as to pleading requirements in federal litigation.
- A breach-of-contract claim based on agreements whose validity and enforceability are being attacked in a pending federal action can arise out of the same transaction or occurrence for Rule 13(a) purposes.
- A federal court may enjoin a party from pursuing foreign litigation when necessary to protect its jurisdiction and to avoid parallel proceedings that could yield inconsistent judgments and defeat compulsory-counterclaim rules.

## Conclusion

The Ninth Circuit held that Rule 13(a) required Northwest to assert its contract claim as a counterclaim in the pending federal antitrust case and affirmed an antisuit injunction preventing Northwest from pursuing a parallel breach-of-contract action in Canadian court.


Seattle Totems Hockey Club, Inc. v. Nat’l Hockey League, 652 F.2d 852 (9th Cir. 1981)