Matsushita Elec. Industrial Co. (Matsushita) (defendant) acquired an entertainment company. Two lawsuits were subsequently filed by shareholders, including Epstein (plaintiffs) in state court in Delaware and federal court in California on differing bases. The federal suit alleged breach of federal securities laws and was dismissed in favor of Matsushita, but plaintiffs appealed. The state suit alleged breaches of fiduciary duty and was settled allowing a fair value for all claims. The Ninth Circuit Court of Appeals held that the adjudication of state claims in Delaware had no preclusive effect on the issues in federal court on the basis of exclusivity of jurisdiction. The United States Supreme Court granted certiorari.