Issue preclusion is the idea that parties are not allowed to relitigate issues. Think of issues as a claim within a lawsuit, instead of the lawsuit itself. For instance, if there is a previous litigation finding negligence related to a certain fact, then the court is not going to reexamine whether negligence occurred in a second litigation.
The main difference between claim and issue preclusion is that the focus is narrower for the latter. Instead of focusing on the claim as a whole, the focus is simply an issue, whether an issue of law or fact.
There are two main types of issue preclusion, defensive and offensive. Defensive use of the doctrine occurs when a defendant is trying to fend off liability because the plaintiff lost concerning the same issue to a previous party. See Blonder-Tongue Laboratories v. University of Illinois Foundation, 402 U.S. 313 (1971). Offensive liability is when a plaintiff seeks to use a previous finding for their advantage by arguing that the issue was previously decided in their favor.
Parklane Hosiery Co. v. Shore
439 U.S. 322 (1979).
Shore is the plaintiff. Parklane had recently lost an argument against the SEC and Shore wished the court to prevent Parklane from arguing the same issue. Shore won on that question and Parklane appealed.
Question
Whether a new plaintiff can stop a defendant from relitigating issues in which the defendant previously lost against a former plaintiff.
Rule
Offensive issue preclusion should be allowed but limited according to the discretion of the trial judge. Things the trial judge should consider include:
- Whether the plaintiff could easily have joined in on the earlier litigation (avoid the “wait-and-see” incentive)
- If the application of the doctrine is unfair to the defendant
- Any other good reason the judge thinks will fit.
Holding
The offensive application can apply, affirmed.
Facts
Parklane had made a proxy statement to their stockholders which ultimately turned out to be fraudulent. As a result of this statement, the SEC sued Parklane. At the same time, Shore, a stockholder, also sued Parklane. Parklane’s litigation with the SEC concluded before the litigation with Shore. There, the jury found that the proxy statement was fraudulent and a misrepresentation. Upon seeing this ruling, Shore made a motion for partial summary judgment saying that Parklane would not be allowed to relitigate the misrepresentation because of the finding found during the previous litigation with the SEC.
Analysis
Although the court is reluctant to give free application of the doctrine when used offensively, they are willing to apply it. So, unless there is a reason not to apply the doctrine, the defendant should be stopped from presenting the argument again.
Here, there is no reason to relitigate the issue. The plaintiff could not have easily joined the earlier litigation because it is hard to join the SEC as a party. Additionally, this situation does not present an unfair application to the defendant. Because the defendant was litigating against the SEC, everything mattered. Consequently, the defendant would have litigated everything fully and vigorously.
State Farm Fire & Casualty Co. v. Century Home Components
Issue preclusion only apples when all the previous rulings regarding the same issue have the same outcome. Otherwise, the doctrine is not available.
For example, say there are several plaintiffs from the same event (fire in a storage unit). All of these plaintiffs sue separately.
If:
- Plaintiff 1 – wins
- Plaintiff 2 – loses
- Plaintiff 3 – asks for preclusion based on the finding from plaintiff 1’s case.
Then:
- Plaintiff 3 – will not have preclusion because there was an inconsistent ruling between plaintiff 1 and 2.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
