The case of Semtek International Incorporated v. Lockheed Martin Corporation revolved around the issue of claim preclusion, or res judicata, in federal and state courts. Lockheed Martin sued Semtek for breach of contract in a federal court applying California law and won a dismissal due to statute limitations. Subsequently, Semtek filed the same suit in Maryland state court where the limitation period had not expired yet. The question was whether the initial dismissal barred re-litigation under principles of claim preclusion. The U.S Supreme Court held that while federal common law governs the claim-preclusive effect of a dismissal by a federal court sitting in diversity (a situation when parties involved are from different states), it does not necessarily incorporate the rules applied by lower-state courts but rather takes into account both interests: avoiding duplicative litigation and respecting jurisdictional lines between state and federal courts. Therefore, since California's laws would have allowed refiling this type of dismissed lawsuit within its own borders or elsewhere with longer statutes-of-limitations periods like Maryland’s, so too must Federal Courts allow such actions after similar dismissals.

In the dissenting opinion for SEMTEK INTERNATIONAL INCORPORATED v. LOCKHEED MARTIN CORPORATION, Justice Scalia disagreed with the majority's interpretation of Rule 41(b) and its application to state courts. He argued that federal common law should not be applied in this case as it would undermine the principles of federalism by allowing a federal court's dismissal to have preclusive effect on state courts. Instead, he believed that California law should govern whether or not Semtek could bring its claim again in a California court after being dismissed from a Maryland court. According to him, applying Federal Rule 41(b) was inappropriate because it is procedural and does not dictate substantive rights; therefore, it cannot determine if claims are extinguished upon dismissal without prejudice. In his view, only state laws can decide such matters when cases are refiled within their jurisdiction.