Claim Preclusion (Res Judicata) (1).

Res Judicata is an Rule 8(c) defense with the following three elements: A prior suit that proceeded to a final judgment on the merits o EXCEPTIONS: Judgment is one of dismissal for lack of j, for improper venue, or for nonjoinder or misjoinder of parties When P agrees to or elects a nonsuit (voluntary dismissal) without prejudice or the court directs that the P be non suited (or the action be otherwise dismissed) without prejudice When by statute or rule the judgment does not act as a bar to another action on the same claim The present suit arises out the same claim as the prior suit; and o Same claim: arising out of all or any part of the same transaction/occurrence, or series of connected transactions/occurrences Determine T&O by: Whether the facts are related in time, space, origin or motivation Whether they form a convenient trial unit The parties in both suits are the same or in privity o EXCEPTIONS to the rule that non parties cannot be precluded (1) Second Plaintiff agreed to be bound by the first decision (2) Pre-existing legal relationship (not spousal) exists between the 1st and 2nd plaintiff very high privity requirement Successor in interest Preceding and proceeding owners of property Assignee and assignor Bailee and bailor (3) If a non party may be bound if she was adequately represented bys someone in the with same interests who was a party to the suit (limited circumstances and applicability) (4) Second Plaintiff assumed substantial control in the first suit (5) Cannot re-litigate through a Proxy relationship when a non party later brings suit as the designated representative or agent of a person who was a party to the prior adjudication (5) Special statutory scheme o VIRTUAL REPRESENTATON NOT AN EXCEPTION

Car Carriers Inc. v. Ford Motor Company : The Seventh Circuit affirmed the decision and held that the district court properly applied the same transaction test to dismiss appellants' federal claims because the RICO and Sherman Act claims arose out of the same cause of action. FACTS: Car Carriers, brought an action alleging a violation of the Sherman Act. This action was dismissed with prejudice. Car Carriers then brought another action

under the RICO Act and the Interstate Commerce Act utilizing the same basic fact situation. The district court dismissed the second action as barred by res judicata because the claims were based on the same factual situation as the earlier dismissed action RES JUDICATA: Under res judicata, a final judgment on the merits bars further claims by parties or their privies based on the same cause of action o Under this test, a cause of action consists of a single core of operative facts which give rise to a remedy. This same transaction test is decidedly factoriented. Once a transaction has caused injury, all claims arising from that transaction must be brought in one suit or be lost. Thus, a mere change in the legal theory does not create a new cause of action. Therefore, prior litigation acts as a bar not only to those issues which were raised and decided in the earlier litigation but also to those issues which could have been raised in that litigation Heacock v. Heacock: The Supreme Judicial Court reversed, holding that the divorce judge did not resolve any issues relating to defendant's assault and that plaintiff's tort action was not based on the same underlying claim as the divorce. FACTS: Defendant husband caused plaintiff wife to sustain serious physical injuries prior to the time of the parties' pending divorce. The wife filed a tort action seeking damages for personal injuries. Following the final divorce decree, husband filed a motion to dismiss under Mass. R. Civ. P. 12(b)(5) arguing that the case was precluded by a prior divorce judgment entered in probate court in which the wife presented evidence of the assault and injuries to support her claim for divorce. The superior court judge dismissed the plaintiff's tort action on the basis of issue preclusion, collateral estoppel, and res judicata, didnt choose one. [Dont do this!] REASONING: The purpose of the tort action was to redress a legal wrong in damages, while that of the divorce action was to sever a marital relationship between the parties. The court held that maintenance of plaintiff's tort claim would not subject defendant and the courts to the type of piecemeal litigation that the doctrine of claim preclusion sought to prevent

Taylor v. Sturgill : The Supreme Court rejected of the theory of preclusion by "virtual representation." The preclusive effects of a judgment in a federalquestion case decided by a federal court should instead be determined according to the established grounds for nonparty preclusion SIX exceptions (see above) FACTS: Herrick filed a Freedom of Information Act (FOIA) request asking the FAA for copies of technical documents related to an airplane. The FAA denied his request based on FOIA's exemption for trade secrets. Herrick then filed an unsuccessful FOIA lawsuit to secure the documents. Then, petitioner Taylor, Herrick's friend and an antique aircraft enthusiast himself, made a FOIA request for the same documents Herrick had unsuccessfully sued to obtain. When the FAA failed to respond, Taylor filed suit in District Court. Holding the suit barred by claim preclusion, the District

Court granted summary judgment to the FAA. The court acknowledged that Taylor was not a party to Herrick's suit, but held that a nonparty may be bound by a judgment if she was "virtually represented" by a party. The D. C. Circuit affirmed, announcing a five-factor test for "virtual representation." It found the "identity of interests," "adequate representation," and "close relationship" factors satisfied because the two men sought release of the same documents, were "close associates," had discussed working together to restore Herrick's plane, and had used the same lawyer to pursue their suits. REASONING: Extending the preclusive effect of a judgment to a nonparty runs up against the "deep-rooted historic tradition that everyone should have his own day in court." Indicating the strength of that tradition, the Court noted the often repeated general rule that "one is not bound by a judgment in personam in a litigation in which he is not designated a party or to which he has not been made a party by service of process Issue Preclusion (Collateral Estoppel)

(1). Overview/Tips: Issue Preclusion is needed b/c issues already litigated may come up again in later litigation based on separate events Once an issue has been adjudicated between adverse parties, that IDENTICAL issue cannot be re-litigated in another lawsuit between the same parties Sometimes an issue in the second suit will arise from a later transaction (and thus not barred by RJ) it will be barred by issue preclusion since the issue was previously litigated and decided between the two parties Collateral estoppel only bars issues there litigated and decided in prior actions, it does not affect claims or defense that could have been raised but were not Remember with a general verdict dealing with two or more issues, it is unclear which issues that the jury decided upon if you are not able to demonstrate that the issue at hand is the issue that was actually decided/final or necessary/essential to judgment, issue preclusion will not bar litigation of that issue. o Even if an issue was litigated and decided/final, the court will not deny issue preclusion unless it was the essential element of that case. Procedurally: move for partial summary judgment under Rule 56 based on issue prelusion, argue that Xs defense/claim is barred because it was litigated and lost/won and satisfies the 4 elements o To prevail on this motion, need to establish that the claim was tried in another suit, by submitting pleadings, judges instructions, jurys verdict slip etc. Burden of Proof Cannot be precluded by a decision that required a lower burden of proof

(2). Elements that Must be Satisfied for Issue Preclusion (Collateral Estoppel) Issue must be Actually LITIGATED and determined (holt v. holt) o Actual litigation does not require discovery, evidentiary hearing, briefs and a hearing, briefs and a hearing decided by a judge was sufficient to constitute actual litigation (jarosz v. palmer)

Issue must be Valid and FINAL judgment Issue must be ESSENTIAL to the judgment o In order to have preclusive effect, a ruling must have a bearing on the outcome of the case Issue must CONCLUSIVE in a subsequent action between the parties.

SANE (same, actually litigated, necessary litigated)

Hoult v. Hoult: The First Circuit affirmed the dismissal because the rape charges were the central issue in the first action and could not be re-litigated. FACTS: A jury awarded damages to daughter in an action she brought against her father for assault, battery, intentional infliction of emotional distress, and breach of fiduciary duty, alleging that appellant sexually abused, raped, and threatened her for 12 years when she was a child. The father then brought a defamation action against his daughter after she repeated her charges of rape to several professional associations. The trial court dismissed the action on the ground that the father was barred by the doctrine of collateral estoppel from re-litigating the issue of whether or not he had raped his daughter. The father appealed REASONING: An issue may be actually decided for collateral estoppel purposes even if it is not explicitly decided, for it may have constituted, logically or practically, a necessary component of the decision reached. Confronted with a general verdict in the earlier case, courts commonly ask whether a finding was "necessary" to the judgment, and answer the question by looking primarily to the instructions and the result. But a finding is "necessary" if it was central to the route that led the factfinder to the judgment reached, even if the result "could have been achieved by a different, shorter and more efficient route." And in deciding whether the jury did make and rest centrally upon a finding not expressly made, it is proper to consider not only what was "logically" but also what was "practically" a "necessary component of the decision reached." Jarosz v. Palmer: (1) Issue was not precluded b/c the finding was not essential to the judgment and judgment refers to the final determination on the merits of the proceeding (2) A hearing decided by a judge is sufficient to constitute actual litigation FACTS: Jarosz appealed an order dismissing his claims on issue preclusion grounds against who he considered to be his former lawyer. The appeals court determined that the requirements for issue preclusion had not been met and reversed the superior court's order dismissing the case. The parties appealed. REASONING: o Essentialness The appeals court concluded correctly that the issue of the lawyers' attorney-client relationship with a client was actually litigated in a prior case. The issue was briefed by the parties, and after a hearing the judge determined the issue. The nature of the attorney-client relationship was clearly not essential to a determination on the

merits of the client's underlying claim. Therefore, the issue was not essential to the judgment, and issue preclusion did not apply Actual Litigation o An evidentiary hearing or trial is not required before issue preclusion can apply. o The appropriate question is whether the issue was subject to an adversary presentation and consequent judgment that was not a product of the parties' consent. o Proceeding have a preclusive effect where a court has before it the relevant documents and read and heard the litigants' opposing views on what meaning and effect should be afforded to those document

(3). Non Mutual Offensive Issue Preclusion (CE) P1 D1 (deft loses on Issue A) P2 D1 (new plaintiff invokes collateral estoppel to establish Issue A in her suit against D) Non mutual offensive preclusion involves a new plaintiff who seeks to borrow a finding from a prior action to impose liability on a party who was a defendant in the prior action Parklane Hoisery v. Shore : Litigant who is not a party to a prior judgement may use the judgment offensively to prevent a defendant from re-litigating issues resolved in the earlier proceeding - UNLESS the application of NMOIP would be unfair to D, court has broad discretion (see below for test of cautionary factors) o If after considering all the circumstances, including the cautionary factors if the court is convinced that the issue was fully adjudicated it should allow NMOIP o BUT if the court is doubtful that party being estopped had a fill bite of the apple in the first action, it should deny estoppel FACTS: 1st Case: SEC v. Parklane where SEC claimed and Court held that PH had issued a false and misleading proxy statement 2nd Case: Plaintiffs in class action (P2) against Parklane, based on the same proxy statement, invoked collateral estoppel against Parklane on the question of whether the statement was false and misleading o Since Parklane had litigated and lost that issue in the SEC suit, P2s argued that it had its day in court on the issue and should be barred from relitigating it. P2s use of estoppel was offensive b/c they sought to use it to establish the defendants liability in a new action. It was non mutual b/c they were not the parties in the action when it was first litigated. CAUTIONARY FACTORS TO DETERMINE IF NMOIP SHOULD BE ALLOWED: (1.) Are they a WAIT AND SEE PLAINTIFF? Did they purposely hold back from joining the initial action, ALTHOUGH THEY COULD HAVE JOINED IT EASILY? (2.) Did the Defendant have the INCENTIVE to litigate vigorously and fully in the first action? They may not if the stakes were small or the forum inconvenient.

(3.) Are there any PROCEDURAL OPPORTUNITIES available in the second action that were not available in the first that would likely cause a different result? (4.) Was the decision INCONSISTENT with a prior decision? One or more prior inconsistent judgments on the issue may suggest it would be unfair to give conclusive effect to any of them Full Faith and Credit

The working rule is that a court in one system will give the same res judicata effect to a judgment that it would be given in the court that rendered it. o State Court State Court o The Full Faith and Credit Clause of the Constitution mandates that a court in State B accord a judgment rendered in State A the same preclusive effect the judgment would have in State A State Court Federal Court o 28 U.S.C. 1378 imposes the same full faith and credit obligation on federal courts with regard to judgments of any state court. Federal Court o Where the judgment was entered in a federal question case ( 1331), it is accoWhere the judgment was entered in a diversity case ( 1332), Semtek International v. Lockheed Martin mandates that federal common law incorporate the preclusion rules that would be applied by the state courts in the state in which the judgment was rendere the preclusive effect that federal common law provides This is in order to avoid forum-shopping and inequitable administration of justice problems underlying the Erie doctrine