Wed., Nov. 28

if a final valid judgment on the merits then… if judgment is for P, P’s claim is merged in the judgment (no new causes of action about the claim allowed) if judgment is for D, P’s claim is extinguished (no new causes of action about the claim allowed) also defendant preclusion

scope of a claim

transactional test

Rest. (2d) of Judgments § 24. Dimensions Of “Claim” For Purposes Of Merger Or Bar—General Rule Concerning “Splitting” (1) When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger or bar the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. (2) What factual grouping constitutes a “transaction”, and what groupings constitute a “series”, are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.

privity

guardian/ward trustee/beneficiary executor/decedent

successor in interest

water from river flowing from D’s property down to P’s is flooding P’s property P sues D to get D to build a dam P wins X, who knew about the suit but did not intervene, sues D to get D to take down the dam because water backing up from the dam is going on X’s property

exceptions to claim preclusion

§ 26 Exceptions to the General Rule Concerning Splitting (1) When any of the following circumstances exists, the general rule of § 24 does not apply to extinguish the claim, and part or all of the claim subsists as a possible basis for a second action by the plaintiff against the defendant:

(a) The parties have agreed in terms or in effect that the plaintiff may split his claim, or the defendant has acquiesced therein

(b) The court in the first action has expressly reserved the plaintiff's right to maintain the second action

(c) The plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy or form of relief in the first action because of the limitations on the subject matter jurisdiction of the courts or restrictions on their authority to entertain multiple theories or demands for multiple remedies or forms of relief in a single action, and the plaintiff desires in the second action to rely on that theory or to seek that remedy or form of relief

(d) The judgment in the first action was plainly inconsistent with the fair and equitable implementation of a statutory or constitutional scheme, or it is the sense of the scheme that the plaintiff should be permitted to split his claim

(e) For reasons of substantive policy in a case involving a continuing or recurrent wrong, the plaintiff is given an option to sue once for the total harm, both past and prospective, or to sue from time to time for the damages incurred to the date of suit, and chooses the latter course

(f) It is clearly and convincingly shown that the policies favoring preclusion of a second action are overcome for an extraordinary reason, such as the apparent invalidity of a continuing restraint or condition having a vital relation to personal liberty or the failure of the prior litigation to yield a coherent disposition of the controversy.

issue preclusion

if in an earlier case an issue was - actually litigated and decided - litigated fairly and fully - and essential to the decision then the earlier determination of the issue precludes relitigation of the same issue by someone who was a party (or in privity with a party) in the earlier litigation

P, D and X are in an accident P sues D for negligence D determined to be not negligent and so D wins X sues D for negligence in connection with same accident

what does it take for an issue to be actually litigated and decided?

admissions? default judgment? summary judgment?

what is the “same” issue…?

- P sues D for breach of a contract to buy 10 shares of the C Corp - P sues D for breach of a contract to buy 10 shares of the C Corp. every month for 2 years - D introduces the defense of fraud, on the ground that at the time they entered into the contract P lied to D about the C Corp.’s oil assets - D loses on that issue; judgment for P - subsequently D breaches the contract again - P sues D and D introduces two defenses: statute of frauds (the contract was not in writing) fraud (at the time that they entered into the contract, P lied to D about the C Corp.’s coal assets) - is D issue precluded?

essentiality requirement

Cambria v. Jeffrey (Mass. 1940)

- P sues D for interest on note - D alleges no execution of note and release of obligation to pay interest - P wins - P then sues for principal - D brings up no execution of note - Is D issue precluded?

- P sues D for interest on note - D alleges no execution of note and release of obligation to pay interest - D wins on both grounds - P then sues for principal - D brings up no execution of note - Is P issue precluded?

- P sues D for interest on note - D alleges no execution of note and release of obligation to pay interest - D wins on both grounds - P then sues for subsequent interest - D alleges no execution of note and release of obligation to pay interest - Is P issue precluded?

- P and D contract for D to deliver coal to P monthly - D breaches - P sues D in California - D argues that the contract is invalid, D loses on issue - D breaches again - P sues D in Nevada - D argues that the contract is invalid (P fails to mention issue preclusion), D wins on issue - D breaches again - P sues D in California - Which determination has issue preclusive effect?

exceptions to issue preclusion

  Restatement (Second) of Judgments §28 Although an issue is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, relitigation of the issue in a subsequent action between the parties is not precluded in the following circumstances:

(1) The party against whom preclusion is sought could not, as a matter of law, have obtained review of the judgment in the initial action; or (2) The issue is one of law and (a) the two actions involve claims that are substantially unrelated, or (b) a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws; or (3) A new determination of the issue is warranted by differences in the quality or extensiveness of the procedures followed in the two courts or by factors relating to the allocation of jurisdiction between them; or...

(4) The party against whom preclusion is sought had a significantly heavier burden of persuasion with respect to the issue in the initial action than in the subsequent action; the burden has shifted to his adversary; or the adversary has a significantly heavier burden than he had in the first action; or (5) There is a clear and convincing need for a new determination of the issue (a) because of the potential adverse impact of the determination on the public interest or the interests of persons not themselves parties in the initial action, (b) because it was not sufficiently foreseeable at the time of the initial action that the issue would arise in the context of a subsequent action, or (c) because the party sought to be precluded, as a result of the conduct of his adversary or other special circumstances, did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action.

- D is acquitted of battery in connection with resisting arrest - gov’t sues D civilly for battery to officer - is gov’t issue precluded?

- imagine D is convicted of battery in connection with resisting arrest - gov’t sues D civilly for battery for damages to officer - is D issue precluded?

- in Illinois, the plaintiff suing for negligence has burden of production and persuasion concerning his own lack of contributory negligence - P sues D for negligence and loses on ground that he could not satisfy the burden concerning his own lack of contributory negligence - subsequently X (another person in the accident) sues P for negligence - can X issue preclude P from relitigating his negligence in the accident?

(4) The party against whom preclusion is sought had a significantly heavier burden of persuasion with respect to the issue in the initial action than in the subsequent action; the burden has shifted to his adversary; or the adversary has a significantly heavier burden than he had in the first action;

- P sues D to recover for property damage in small claims ct with a jurisdictional maximum of $500 and which operates informally without pleadings, counsel, or rules of evidence - there is no possibility of appeal - D is found negligent - in a subsequent action by D against P brought in NY state court for $10,000 for personal injuries arising out of the same accident, is D issue precluded concerning his own negligence?

(3) A new determination of the issue is warranted by differences in the quality or extensiveness of the procedures followed in the two courts or by factors relating to the allocation of jurisdiction between them;

(1) The party against whom preclusion is sought could not, as a matter of law, have obtained review of the judgment in the initial action;

(5) There is a clear and convincing need for a new determination of the issue ...(b) because it was not sufficiently foreseeable at the time of the initial action that the issue would arise in the context of a subsequent action, or (c) because the party sought to be precluded, as a result of the conduct of his adversary or other special circumstances, did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action.

African-Americans as a class sue to have a park desegregated African-Americans as a class sue to have a park desegregated. It is before Brown and they lose. After Brown, they sue to have the park desegregated again. Issue precluded?

(5) There is a clear and convincing need for a new determination of the issue (a) because of the potential adverse impact of the determination on the public interest or the interests of persons not themselves parties in the initial action

- P sues D for negligence - P was also negligent - It is held that P is barred due to contributory negligence (the doctrine of comparative fault is rejected) - P and D get into another accident - P sues D for negligence - P was also negligent - Is P precluded to relitigate whether P is barred by contributory negligence or comparative fault applies?

(2) The issue is one of law and (a) the two actions involve claims that are substantially unrelated

- Business A sues gov’t - the S. D. N. Y - Business A sues gov’t - the S.D.N.Y. determines that the widgets it imports do not have to have an import duty - Business B sues gov’t - the N.D. Ca. determines that the same type of widgets have an import duty - subsequently the gov't sues A in the D. Del. to make it pay an import duty going forward. Is the government issue precluded?

(2) The issue is one of law and (2) The issue is one of law and... (b) a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws; or

US v. Moser (U.S. 1924) - a federal court determined that Moser (who was a cadet the Naval Academy during the Civil War) “served in the Civil War” for the purposes of pension benefits - Jasper then sued on the same question and lost by reference to another relevant statute - U.S. refuses to give Moser his benefits and he sues - is U.S. issue precluded?

issue preclusion used to require mutuality

- P, D, and X got into an accident - P sues D for negligence - it is determined that P was contributorily negligent - P then sues X for negligence - can X issue preclude P concerning his contributory negligence?

assume… - it had been determined that P was not contributorily negligent - P then sues X for negligence - P clearly cannot issue preclude X from relitigating P’s contributory negligence - SO, under mutuality rule, X cannot issue preclude P concerning his contributory negligence

Ohio Georgia still have the mutuality requirement except…

- P sues employee for battery as a result of a scuffle when the employee tried to stop P from shoplifting - employee wins - P then sues the employer on a theory of respondeat superior - what happens if the employer cannot take advantage of nonmutual issue preclusion and so P could win against the employer?

Virginia (and some other states)… allow only defensive nonmutual issue preclusion

defensive - defendant in second suit was not a party in first suit and uses nonmutual issue preclusion as a shield

Blonder-Tongue Labs (US 1971) Univ Blonder-Tongue Labs (US 1971) Univ. of Illinois Foundation first sues Winegard Co. concerning patent infringement - U. of Ill. lost (patent invalid) - U. of Ill. then sues B-T concerning infringement of same patent

accident involving A, B, and C A sues B for negligence and wins (B is found negligent) B then sues C for negligence in connection with the same accident C offers the defense of B’s contributory negligence – B precluded from relitigating his negligence

federal and some states also allow offensive nonmutual issue preclusion under certain circumstances plaintiff in second suit was not a party in first suit and uses issue preclusion as a sword

accident involving A, B, and C A sues B for negligence A wins (B is found negligent) C then sues B for negligence in connection with the same accident – if offensive nonmutual issue preclusion is allowed, then B is precluded from litigating own negligence

accident involving A, B, and C A sues B for negligence B wins (A is found contributorily negligent) C then sues A for negligence in connection with the same accident – if offensive nonmutual issue preclusion is allowed, then A is precluded from litigating own negligence

Parklane Hosiery v. Shore (U.S. 1979)

Amendment VII In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law.

Since a plaintiff will be able to rely on a previous judgment against a defendant but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to adopt a "wait and see" attitude, in the hope that the first action by another plaintiff will result in a favorable judgment. Thus offensive use of collateral estoppel will likely increase rather than decrease the total amount of litigation, since potential plaintiffs will have everything to gain and nothing to lose by not intervening in the first action.

accident involving A, B, and C A sues B for negligence A wins (B is found negligent) C then sues B for negligence in connection with the same accident – if offensive nonmutual issue preclusion is allowed, then B is precluded from litigating own negligence

A second argument against offensive use of collateral estoppel is that it may be unfair to a defendant. If a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously, particularly if future suits are not foreseeable. Allowing offensive collateral estoppel may also be unfair to a defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant. Still another situation where it might be unfair to apply offensive estoppel is where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result. 

P1 sues D Corp for damages from defective product – loses (product not defective) P2 sues D Corp for damages from defective product – loses (product not defective) P3 sues D Corp for damages from defective product – loses (product not defective) P4 sues D Corp for damages from defective product – wins (product defective) P5-1000 take advantage of offensive nonmutual issue preclusion against D Corp…?

DISTINGUISH. P sues D for negligence. P wins (D is negligent) DISTINGUISH! P sues D for negligence. P wins (D is negligent). X knew about the suit but refused to intervene. X sues D for negligence in connection with the same accident. X may not be able to issue preclude D concerning D’s negligence. P sues D to put up a dam. X’s property will be flooded, but he refuses to intervene in the suit. P wins. X may be precluded to sue D to take down dam.