Collateral estoppel

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Collateral estoppel (CE), known in modern terminology as issue preclusion, is a common law estoppel doctrine that prevents a person from relitigating an issue. One summary is that, "once a court has decided an issue of fact or law necessary to its judgment, that decision ... preclude[s] relitigation of the issue in a suit on a different cause of action involving a party to the first case". [1] The rationale behind issue preclusion is the prevention of legal harassment and the prevention of overuse or abuse of judicial resources. [2]

Contents

Issue

Parties may be estopped from litigating determinations on issues made in prior actions. The determination may be an issue of fact or an issue of law. Preclusion requires that the issue decided was decided as part of a valid final judgment. In the United States, valid final judgments of state courts are given preclusive effect in other state and federal courts under the Full Faith and Credit Clause of the U.S. Constitution.

Valid final judgments must be issued by courts with appropriate personal and subject matter jurisdiction. It is notable, however, that an error does not make a decision invalid. Reversible errors must be appealed. The legal defense (CE) applies even if an erroneous judgment, or erroneous use of legal principles, occurred in the first action. An incorrect conclusion of the court in the first suit does not cause defendant to forsake the protection of res judicata (and by extension, of CE). [3] A judgment need not be correct to preclude further litigation; it is sufficient that it be final, and that it have been decided on the merits of the case.

Collateral estoppel does not prevent an appeal of a decision, or a party from asking the judge for re-argument or a revised decision. In federal court, judgments on appeal are given preclusive effect. [4] However, if the decision is vacated, the preclusive effect of the judgment fails.

Due process concerns

Collateral estoppel cases raise constitutional due process problems, particularly when it is applied to a party that did not participate in the original suit. Due process mandates that collateral estoppel not be applied to a party that has not litigated the issue in dispute, unless that party is in legal privity to a party that litigated it. In other words, every disputant is entitled to a day in court and cannot ordinarily be bound by the negative result of another disputant's suit, even if that other disputant had exactly the same legal and factual arguments.

Due process concerns also can arise even when a party did have a day in court to dispute an issue. For example, a defendant may have not effectively litigated an issue decided against the defendant in an earlier suit because the damages were too small, so it may be unjust to bar the defendant from relitigating the issue in a trial for much greater damages. As another example, suppose that a defendant did effectively litigate an issue to a favorable conclusion in nine cases, but to an unfavorable result in a tenth case. In this situation, note that the defendant did not have the opportunity to use the nine judgments in its favor as collateral estoppel against subsequent plaintiffs, because that would violate their right to a day in court. As suggested by the U.S. Supreme Court in Parklane Hosiery Co, Inc. v. Shore, [5] to allow a subsequent plaintiff to use the tenth, negative judgment as collateral estoppel against the defendant may seem unjust.

Mutuality

Historically, collateral estoppel applied only where there was mutuality of parties, meaning that both the party seeking to employ collateral estoppel and the party against whom collateral estoppel is sought were parties to the prior action.

Most courts in the United States have now abandoned mutuality as a requirement for collateral estoppel in most circumstances. The California Supreme Court case of Bernhard v. Bank of America, [6] authored by justice Roger J. Traynor, began a movement away from the application of mutuality in collateral estoppel. Bernhard claimed that certain assets held by the executor Cook of a decedent's estate were part of that estate, while the executor claimed they had been gifted to him by the decedent. In a previous court action it was decided that the assets were gifts to the executor and not assets in escrow, upon which Bernhard sued the bank that had been holding the assets and that had disbursed them to the executor, alleging again that the assets were property of the estate and should have been handled as estate matter. [6] The bank successfully used CE as defense, arguing that Bernhard had already adjudicated the right to those funds and had lost. The court concluded that it was proper for a new party to take advantage of findings in a previous suit to bar action by a party of that suit. Since Bernhard had a full and fair opportunity to litigate the issue in her first suit, the court did not allow her to retry the same issue by merely switching defendants. The precedent of Bernhard holds that collateral estoppel may be used as defense against any party who has fully and fairly litigated an issue in a previous action. [7]

In the absence of mutuality, courts are more hesitant to apply collateral estoppel in an offensive setting than in a defensive one. In other words, courts are more hesitant to apply collateral estoppel to a defendant from a previous action if the defendant is sued by a new plaintiff for the same issue.

Strategy

Collateral estoppel may be used either defensively or offensively; mutually or non-mutually:

Collateral estoppel may be avoided as a defense if the claimant did not have a full and fair opportunity to litigate the issue decided by a state court, which means he may file suit in federal court to challenge the adequacy of state procedures. Note that in this case the plaintiff's suit would be against the state, not against the other party from the prior lawsuit. [9]

In the U.S., the doctrine of offensive non-mutual collateral estoppel does not extend to the U.S. government; it is limited to private litigants. [10]

Rationale

Collateral estoppel is an efficiency rule that is meant to save judicial resources by avoiding the relitigation of issues of fact that have already been litigated. The rule is also intended to protect defendants from the inequity of having to defend the same issue repeatedly.

But note that the use of offensive non-mutual collateral estoppel may work against the goal of judicial economy. The offensive use encourages potential plaintiffs to sit and "test the waters" to see the strength of the defendant's case. If the defendant's case is weak, there is great incentive for new parties to sue and claim that the defendant is estopped based on the prior adverse ruling.

Collateral estoppel is closely related to the concept of claim preclusion, which prevents parties relitigating the same cause of action after it has been decided by a judge or jury. Res judicata (literally - that which has been decided) can be used as the term for both concepts, or purely as a synonym for claim preclusion. Under the doctrine of res judicata, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, the second action is upon a different cause of action and the judgment in the prior suit precludes relitigation of issues litigated and necessary to the outcome of the first action.

Res judicata may be used as a defense in a second suit which involves the same claim as a prior suit, and is conclusive on all matters which were litigated as well as all matters which could have been litigated in the prior suit. In collateral estoppel the judgment is conclusive only regarding the issues which were litigated. In order for CE to apply, four factors must be met:

See also direct estoppel.

Criminal law

Although issue preclusion emerged from civil law, in the United States it has applied to federal criminal law since United States v. Oppenheimer [11] in 1916. In 1970 in Ashe v. Swenson , [12] the United States Supreme Court applied it to double jeopardy to limit prosecution for crimes committed at the same time.

Related Research Articles

A lawsuit is a proceeding by a party or parties against another in the civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used in reference to a civil action brought by a plaintiff demands a legal or equitable remedy from a court. The defendant is required to respond to the plaintiff's complaint. If the plaintiff is successful, judgment is in the plaintiff's favor, and a variety of court orders may be issued to enforce a right, award damages, or impose a temporary or permanent injunction to prevent an act or compel an act. A declaratory judgment may be issued to prevent future legal disputes.

An affirmative defense to a civil lawsuit or criminal charge is a fact or set of facts other than those alleged by the plaintiff or prosecutor which, if proven by the defendant, defeats or mitigates the legal consequences of the defendant's otherwise unlawful conduct. In civil lawsuits, affirmative defenses include the statute of limitations, the statute of frauds, waiver, and other affirmative defenses such as, in the United States, those listed in Rule 8 (c) of the Federal Rules of Civil Procedure. In criminal prosecutions, examples of affirmative defenses are self defense, insanity, entrapment and the statute of limitations.

Estoppel Preventive judicial device in common law

Estoppel is a judicial device in common law legal systems whereby a court may prevent or "estop" a person from making assertions or from going back on his or her word; the person being sanctioned is "estopped". Estoppel may prevent someone from bringing a particular claim. Legal doctrines of estoppel are based in both common law and equity. It is also a concept in international law.

<i>Res judicata</i> Claim preclusion in law

Res judicata (RJ) or res iudicata, also known as claim preclusion, is the Latin term for "a matter decided" and refers to either of two concepts in both civil law and common law legal systems: a case in which there has been a final judgment and that is no longer subject to appeal; and the legal doctrine meant to bar relitigation of a claim between the same parties.

The Federal Rules of Civil Procedure govern civil procedure in United States district courts. The FRCP are promulgated by the United States Supreme Court pursuant to the Rules Enabling Act, and then the United States Congress has seven months to veto the rules promulgated or they become part of the FRCP. The Court's modifications to the rules are usually based upon recommendations from the Judicial Conference of the United States, the federal judiciary's internal policy-making body.

Where two or more persons are liable in respect of the same liability, in most common law legal systems they may either be:

In law, the enforcement of foreign judgments is the recognition and enforcement in one jurisdiction of judgments rendered in another ("foreign") jurisdiction. Foreign judgments may be recognized based on bilateral or multilateral treaties or understandings, or unilaterally without an express international agreement.

Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005), is a United States Supreme Court case in which the Court clarified the Rooker-Feldman doctrine and its relation to preclusion and concurrent jurisdiction.

2005 term per curiam opinions of the Supreme Court of the United States

The Supreme Court of the United States handed down sixteen per curiam opinions during its 2005 term, which lasted from October 3, 2005, until October 1, 2006.

Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102 (1968), is a United States Supreme Court decision which clarified the meaning and application of Rule 19 of the Federal Rules of Civil Procedure. In a unanimous decision, the Court reversed the judgment of the United States Court of Appeals for the Third Circuit and held that an automobile owner's interest in a suit against his insurer did not make him an "indispensable party" to that suit under Rule 19. The Court also made clear that Supreme Court precedent predating the enactment of the Federal Rules of Civil Procedure did not create any substantive right in non-parties to be joined in case, as the Court of Appeals had apparently thought.

The doctrine of direct estoppel prevents a party to a litigation from relitigating an issue that was decided against that party in that litigation, under certain circumstances. Specifically, direct estoppel applies where the issue was decided as part of a larger claim which was finally decided, and stops the issue from being redecided in another claim of the same lawsuit. Contrast collateral estoppel, which stops a claim from being redecided in another lawsuit.

Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), is a U.S. Supreme Court case that limited access to federal court for plaintiffs alleging uncompensated takings of private property under the Fifth Amendment. In June 2019, this case was overruled in part by the Court's decision in Knick v. Township of Scott, Pennsylvania.

Ashe v. Swenson, 397 U.S. 436 (1970), was a decision by the United States Supreme Court, which held that "when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit." The Double Jeopardy Clause prevents a state from relitigating a question already decided in favor of a defendant at a previous trial. Here, the guarantee against double jeopardy enforceable through the Fifth Amendment provided that where the defendant was acquitted of robbing one victim, the government could not prosecute the criminal defendant in a second trial for a different victim in the same robbery.

Extrinsic fraud is fraud that induces one not to present a case in court or deprives one of the opportunity to be heard or is not involved in the actual issues. More broadly, it is defined as:

fraudulent acts which keep a person from obtaining information about his/her rights to enforce a contract or getting evidence to defend against a lawsuit. This could include destroying evidence or misleading an ignorant person about the right to sue. Extrinsic fraud is distinguished from intrinsic fraud, which is the fraud that is the subject of a lawsuit.

Commissioner v. Sunnen, 333 U.S. 591 (1948), was a case decided by the Supreme Court of the United States in 1948 in which the Court outlined the scope of collateral estoppel or estoppel by judgment in determinations of federal tax liability. This was important because a single controversial circumstance may have a bearing on income tax liability for several years. Res judicata, as part of the doctrine of judicial finality, protects a taxpayer's tax liability for a given year once the taxpayer wins a judgment in court. The judgment is controlling not only controlling with regard to the issues litigated but also with any issues that could have been raised if they would have affected the determination of tax liability for the year. However, of course, a single controversial circumstance may have a bearing on income tax liability for several years, and if a judgment fixes liability for one of the years, res judiciary forecloses the reopening of only that year's liability. But the related doctrine of collateral estoppel prevents relitigation of issues that were in fact raised and decided in the earlier litigation, even when they arise in a new cause of action, such as a dispute as to liability for a later year.

Chick Kam Choo v. Exxon Corp., 486 U.S. 140 (1988), was a United States Supreme Court case in which the Court held that a federal court's dismissal of a civil action on the ground that it should be heard in a foreign court, under the doctrine of forum non conveniens, does not preclude the plaintiff from filing the same action in a state court that applies different forum non conveniens rules.

<i>Johnson v Gore Wood & Co</i>

Johnson v Gore Wood & Co[2000] UKHL 65 is a leading UK company law decision of the House of Lords concerning (1) abuse of process relating to litigating issues which have already been determined in prior litigation or by way of settlement, (2) estoppel by convention, and (3) reflective loss of a shareholder with respect to damage which was done to the company in which he holds shares.

United States v. Dentsply Int'l, Inc., was a 2005 Third Circuit antitrust decision in the United States finding that Dentsply, a monopolist manufacturer-supplier of dental supplies, used its exclusive dealing policy to keep rival firms' sales "below the critical level necessary for any rival to pose a real threat to Dentsply's market share,".

Blonder-Tongue Labs., Inc. v. University of Ill. Foundation, 402 U.S. 313 (1971), is a decision of the United States Supreme Court holding that a final judgment in an infringement suit against a first defendant that a patent is invalid bars the patentee from relitigating the same patent against other defendants. In so ruling, the Supreme Court overruled its 1936 decision in Triplett v. Lowell, which had required mutuality of estoppel to bar such preclusion, and held that the better view was to prevent relitigating if the plaintiff had had a full and fair opportunity to litigate the issue in question.

<i>Port of Melbourne Authority v Anshun</i>

Port of Melbourne Authority v Anshun Pty Ltd is a decision of the High Court of Australia.

References

  1. ↑ See fn. 16, "San Remo Hotel, L.P. v. City and County of San Francisco, Cal., 545 U.S. 323 (2005)". Google Scholar. Google. Retrieved 12 December 2017.
  2. ↑ Larson, Aaron (3 November 2017). "Issue Preclusion and Claim Preclusion: How Prior Litigation Can Block Your Claim". ExpertLaw.com. Retrieved 12 December 2017.
  3. ↑ "Federated Department Stores, Inc. v. Moitie, 452 US 394, 101 S. Ct. 2424, 69 L. Ed. 2d 103 (1981)". Google Scholar. Google. Retrieved 12 December 2017.
  4. ↑ Wright et al., Federal Practice and Procedure, § 4433).
  5. 1 2 "Parklane Hosiery Co. v. Shore, 439 US 322, 99 S. Ct. 645, 58 L. Ed. 2d 552 (1979)". Google Scholar. Google. Retrieved 12 December 2017.
  6. 1 2 "Bernhard v. Bank of America 19 Cal.2d 807, 122 P.2d 892 (1942)". Google Scholar. Google. Retrieved 12 December 2017.
  7. ↑ Nonkes, Steven P. (6 September 2009). "Reducing the Unfair Effects of Nonmutual Issue Preclusion Through Damage Limits". Cornell Law Review. 94 (6). Retrieved 12 December 2017.
  8. ↑ Conley, Ann (2015). "Promoting Finality: Using Offensive, Nonmutual Collateral Estoppel in Employment Arbitration". University of California, Irvine Law Review. 5: 656. Retrieved 12 December 2017.
  9. ↑ "Allen v. McCurry, 449 U.S. 90, 94 (1980)". Google Scholar. Google. Retrieved 1 May 2017.
  10. ↑ "United States v. Mendoza, 464 US 154, 104 S. Ct. 568, 78 L. Ed. 2d 379 (1984)". Google Scholar. Google. Retrieved 12 December 2017.
  11. ↑ "United States v. Oppenheimer, 242 U.S. 85, 37 S.Ct. 68, 61 L.Ed. 161 (1916)". Google Scholar. Google. Retrieved 12 December 2017.
  12. ↑ "Ashe v. Swenson, 397 U.S. 436, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1970)". Google Scholar. Google. Retrieved 12 December 2017.
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