Martino v. McDonald’s System, Inc.

598 F.2d 1079 (7th Cir.), cert. denied, 444 U.S. 966 (1979)

Yeazell, pp. 811-816


Facts: Martino had a McDonald’s franchise.  In getting that franchise, he signed a contract that said no one in his family would have a stake in another fast-food chain.  Then he financed a Burger Chef for his son in Iowa.  McDonald’s sued him for breaking that contract, and they basically settled by having McDonald’s buy back the franchise.  Then Martino sued McDonald’s, claiming that enforcement of the franchise agreement violated the Sherman Antitrust Act.  McDonald’s argued that this claim should be barred either because it was a compulsory counterclaim under Rule 13(a), or because it is barred by the doctrine of claim preclusion.  The district court found that the claim was barred for both reasons and they entered summary judgment.  Martino appealed.


Issue: Does the prior judgment against Martino preclude him from the current suit?


Rule: Once a judgment has been rendered on a claim, all possible issues related to that claim are considered settled even if they weren’t brought up in the first suit.


Analysis: The court says that Martino is right in saying that Rule 13(a) has no effect because Martino never filed a pleading.  However, the court says that McDonald’s is right to say that Martino’s new claim is precluded.  If Martino wanted to bring up antitrust as a defense in the first suit, he had to “use it or lose it” at that point and he can’t bring it up now.


Conclusion: The trial court’s judgment is affirmed.


Notes and Problems



a.      No court ever ruled on whether the antitrust argument was valid.

b.     The claim was barred because Martino should have brought it up in the first suit.


a.      If a counterclaim is compulsory, it’s basically “use it or lose it”.  If you fail to make a counterclaim at the appropriate time, we won’t let you further tax the resources of the courts by making that claim later.

b.     Rule 13(a) didn’t apply because Martino never filed any pleadings.  The first suit ended in a consent decree, which means (I think) it never went to trial per se.


a.      Okay.

b.     Right, because you can’t open a counterclaim when doing so would “nullify rights established by the prior action”.

c.     Well, that’s the title of this subsection of the chapter, so…yep.

4.     Well, it’s not only up to the parties.  The parties might really want to tax the resources of the courts a lot and contract such that they go over the same issues over and over and over.  But that would be highly inefficient and would have negative effects on all the other litigants in all the other cases.  So we’re not going to let the parties contract this way.


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