Questions on Matsushita

Consider first a situation not involving a class action and not involving a settlement agreement. Instead P sues D in state court on a state law cause of action, the action comes to judgment and P subsequently sues D in federal court concerning a federal cause of action for which federal courts have exclusive federal subject matter jurisdiction. P's subsequent federal cause of action concerns the same transaction as the earlier state court suit:

1) What are the general arguments for allowing claim preclusion here? What are the general arguments for refusing claim preclusion? What are the general arguments for allowing issue preclusion here? What are the general arguments for refusing issue preclusion?

2) According to the SCt in Matsushita and Marrese, it is clear that if, under state law, the federal action would not be precluded (because it was not within the subject matter jurisdiction of the state court), then the federal court may not preclude the action. But how likely is it that there is going to be any meaningful state law on the matter? If there isn't any meaningful state law, what should the assumed position be? Should one assume that states will adhere to the rule that claim preclusion does not apply to foreclose a claim beyond the jurisdiction of the court rendering judgment?

3) Furthermore, even if one assumes that under state law the federal action would not be precluded, why can't federal courts give greater preclusive effect to a state court judgment than the state would? Why is that contrary to full faith and credit?

4)  According to the SCt in Matsushita and Marrese, it is clear that if, under state law, the federal action would be precluded (even though it was not within the subject matter jurisdiction of the state court), then the federal court must preclude the action unless the federal statute giving the federal courts exclusive federal subject matter jurisdiction for the federal action impliedly repealed federal courts' obligations under section 1738 to give full faith and credit to state court judgments. How easy is it for implied repeal to be found?

Now consider Matsushita, which involved the settlement of a state law class action in state court.

5) Why isn't this case really about contract law, rather than full faith and credit? After all, isn't the real issue whether the settlement contract covered the federal securities law claims? Does that make questions of exclusive federal subject matter jurisdiction irrelevant?

6) Why are there special worries about the power of the class representatives in the state law action to release the federal securities law claims? Consider what Wright & Miller, Federal Practice and Procedure 4470.1 have to say on the matter:

It is clear that an individual plaintiff should be able to settle a state-court action on terms that are intended to, and do, preclude relitigation in any court of all claims, including those arising in exclusive federal jurisdiction. It is equally clear that a stranger could not release the exclusive federal jurisdiction claims—or for that matter, any claims—of others by a private agreement made without authorization and without litigation. Neither can a stranger simply advance the claims of others in litigation. The only means by which the Delaware plaintiffs could assert power to release the claims of others was by way of a class action. Yet a Delaware state court could not adjudicate a class claim arising under the Securities Exchange Act of 1934. How, then, can a plaintiff who lacks capacity to release the claims of others, and a state court that lacks jurisdiction to adjudicate the claims of others, agree to defeat the claims of others by certifying a class action and approving its settlement?