Appeal from the United States District Court
for the Southern District of Ohio at Cincinnati.
No. 1:18-cv-00075—Timothy S. Black, District Judge.
Argued: October 17, 2019
Decided and Filed: February 10, 2020
Before: MOORE, McKEAGUE, and GRIFFIN, Circuit Judges.
KAREN NELSON MOORE, Circuit Judge. In February 2018, Quality Associates, Inc.
(“QAI”) sued Procter & Gamble Distributing LLC (“P&G”) in Ohio federal court for breaking a
contract with it in a racially discriminatory manner. See 42 U.S.C. § 1981. But the problem was,
P&G had already sued QAI in Ohio state court over the same contractual dispute underlying
QAI’s § 1981 claim, and that litigation was still ongoing. So P&G moved to dismiss QAI’s
federal suit, arguing that its § 1981 claim was a compulsory counterclaim to the state litigation,
see Ohio Civ. R. 13(A), and thus needed to be brought in that proceeding. The district court
agreed and accordingly dismissed QAI’s suit. We conclude, however, that a federal court cannot
enforce a state compulsory-counterclaim rule against a federal litigant while the relevant state
litigation is still pending. For this reason, we REVERSE the district court’s judgment and
REMAND for further proceedings consistent with this opinion.