The Path So Far: What’s the “same claim?” Who are the “same parties?”

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  “Same Claims:
  
  • 
    Claims and defenses that could have been raised are barred by former adjudication even if not previously litigated (Frier, Martino)
    
    • 
      Same transaction /occurrence (majority rule)
      
      • 
        Same cause of action (minority rule)
        
    • 
      Converts 18(a) from “may join” into “must join.”
      
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  “Same Parties”
  
  • 
    Generally, separate individuals have separate claims even when they do arise from same t/o as prior litigation (Searle):
    
  • 
    Exception: is person “so identified with another that he represents the same legal right?” Searle. (“privity”; “virtual representation”)
    
    • 
      Examples: joint ownership, successive ownership of property, administrator of estate/deceased, trustee/beneficiary, heirs/executor, control of prior litigation, express agreements to be bound, instances of “procedural representation”
      
  • 
    Due process marks outer boundaries of preclusion: can’t bar one who’s not had opportunity to litigate claim.
    

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  Trial & judgment? Yes.
  
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  Directed verdict? Yes.
  
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  Summary judgment? Yes.
  
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  Dismissal after 12(b)(6) motion? Yes.
  
  • 
    Plaintiff has probably had an opportunity to amend
    
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  Dismissal for failure to prosecute? Yes.
  
  • 
    Court hasn’t dealt with the merits at all
    
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  Dismissal on Rule 12(b)(1) or (2) motion? No.
  
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  Dismissal for discovery violation. See Gargallo. Yes.
  
• 
  
  

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  If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it. Unless the dismissal order states otherwise, a dismissal under this section (b) and any dismissal not under this rule – except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19 – operates as an adjudication upon the merits.
  
• 
  Why these exceptions?
  
  • 
    Court shouldn’t have even heard lawsuit in the first place…plaintiff has not had an opportunity to develop its lawsuit
    

#1: Broker v. Client (state court)

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  Claim for unpaid margin loans
  
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  Counterclaim for federal securities fraud
  
  • 
    Counterclaims dismissed “with prejudice” for failure to comply with discovery orders
    

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  Federal securities claims
  
  • 
    District court: precluded
    
  • 
    6th Circuit: not precluded--why? Because the state court did not have jurisdiction to begin with over the federal claim
    

Changing the facts…

Suppose that in the state court (case #1), G’s counterclaim had been for state common law fraud, not federal securities fraud, and it were dismissed under the same circumstances (for failure to comply with discovery).

• 
  What would happen if he filed the second case in state court?
  
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  What if in federal court?
  
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  Why?
  

REVIEW: When ML received Gargallo’s complaint, how did it respond, and how did it tee up the preclusion issue?

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  Rule 8--res judicata (a.k.a. claim preclusion) is an affirmative defense
  
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  Bring in your answer
  
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  Must prove to the court on motion for SJ that:
  
  • 
    Final judgment
    
  • 
    Judgment on the merits
    
  • 
    Same claims
    
  • 
    Same parties
    
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  Court will want evidence from the previous lawsuit (complaint, court’s order)
  

4/25: Issue Preclusion

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  When….
  
  • 
    An issue of fact or law is
    
  • 
    Actually litigated and determined by
    
  • 
    A valid and final judgment, and
    
  • 
    The determination is essential to the judgment …
    
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  … the determination is conclusive in a subsequent action between the parties*, whether on the same or different claims.
  
  • 
    *Issue preclusion can be non-mutual
    
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  Example: P & D have a car accident. One issue in case 1 is whether defendant needs to wear glasses while driving. Verdict is that he does. In a second accident and subsequent lawsuit, plaintiff can say that defendant needs to where glasses (don’t have to re-litigate)
  
• 
  Issue preclusion is narrower than claim preclusion; like a scalpel
  

Joe’s “citizenship”

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  Joe, enrolled at State College, is involved in three legal proceedings:
  
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    Joe v. College: is Joe a “citizen” of State entitled to lower tuition rate?
    
    • 
      Will need to be defined at trial: “here for a year with intent to remain”
      
  • 
    Joe v. X: is Joe a “citizen” of State who can invoke federal diversity jurisdiction?
    
    • 
      Don’t have to be here a year (as long as you move here with intent to stay)
      
  • 
    Joe v. Registrar of voters: is Joe a “citizen” of State who can vote in upcoming state primary elections?
    
    • 
      Must have been living in the state for 30 days
      
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  Suppose Joe wins first case?
  
  • 
    What implications for other proceedings?
    
  • 
    Not the same issue for purposes of issue preclusion
    

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  #1 US v. Defendant (criminal charge: theft of gov’t property)
  
  • 
    Acquittal
    
  • 
    It was determined that he was not guilty beyond a reasonable doubt
    
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  #2 US v. Defendant (civil: conversion of same assets)
  
  • 
    Preclusion?
    
  • 
    Government will say that it’s not the same issue because all that is required in civil case is preponderance of the evidence
    
• 
  ****************************
  
• 
  #1 US v. Defendant (civil: conversion)
  
  • 
    Judgment for plaintiff
    
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  #2 US v. Defendant (criminal: theft)
  
  • 
    Preclusion?
    

“Same Issue” in Issue Preclusion

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  Proposition: an “issue” consists of:
  
  • 
    The legal and factual proposition (e.g., negligence, breach, theft, etc)
    
    • 
      The same term—e.g., “citizenship” – can differ according to the context
      
  • 
    The procedural setting in which that proposition is decided (e.g. burdens of proof)
    

“Actually litigated and determined”

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  First lawsuit: husband and wife sued IL Central…wife sues for compensation for injuries, and husband sought damages for loss of wife’s consortium
  
• 
  Second lawsuit: husband sues for his own personal injuries
  

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  Why is he not barred by claim preclusion? He is asserting a different cause of action
  
  • 
    Applying the minority rule (not using “same transaction or occurrence” test
    
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  #2: Jessie v. RR
  
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  –Personal Injuries
  
  • 
    What effect does RR think the first judgment should have?
    
    • 
      Husband was the driver and the jury didn’t award him anything in the first because he was contributorily negligent
      
  • 
    What effect does Jessie think the first judgment should have?
    
    • 
      Wants the railroad to be estopped from denying negligence
      
    • 
      Jury could have found against Jessie because he had failed his burden of proving compensable damages for his loss of consortium claim
      
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  What if railroad had failed to raise contributory negligence in the first action? Would it be precluded from doing so now?
  
  • 
    No. Actual litigation generally required!
    
  • 
    But see In re Sammy Daily (p. 699)
    

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  What if we know why Jessie Parks lost?
  
  • 
    Bench trial: judge rules that Jessie was contributorily negligent and that he failed to prove damages for loss of consortium.
    
  • 
    Second suit: Jessie v. RR
    
    • 
      RR asserts Jessie’s contributory negligence as a defense.
      
    • 
      Precluded? Depends….
      

What if a judgment rests on several grounds?

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  Restatement of Judgments I
  
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  All litigated and decided issues precluded from re-litigation.
  
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  What theory? Efficiency, finality, confidence in first judgment
  

• 
  Restatement of Judgments II
  
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  No issues precluded if judgment rests on alternative grounds
  
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  Ex.: Hypo above (if Jessie wasn’t found to be contributorily negligent but that he had failed to prove damages)
  
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  Theory? What we worry about that if there are multiple issues, the party didn’t fight as hard on one of the issues
  

1. 
   Suppose a federal lawsuit is dismissed for lack of subject matter jurisdiction and then refiled in state court?
   
   1. 
      Not precluded
      
2. 
   What if a federal lawsuit is dismissed for lack of personal jurisdiction and then refiled in state court?
   
   1. 
      Plaintiff will be precluded form arguing PJ in state court
      
3. 
   What if federal court dismisses on both grounds and then case is refiled in state court?
   
   1. 
      No issue preclusion under newer restatement because we have alternative grounds because neither decision was essential to judgment
      
   2. 
      We would make him relitigate the issue of PJ
      
4. 
   What if plaintiff had appealed (3)…
   
   1. 
      And appellate court affirms on SMJ but does not discuss PJ
      
      1. 
         Re-litigate PJ in second lawsuit
         
   2. 
      And appellate court affirms on PJ but does not discuss SMJ?
      
      1. 
         Briefing on issue of PJ and an appellate court has affirmed on PJ…that is enough to rely on first lawsuit’s finding
         
   3. 
      And appellate court affirms on both grounds?
      
      1. 
         Restatement says it’s a close call
         

• 
  #1: SEC v. Parklane
  
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    Proxy statement was false and misleading
    
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  #2: Shareholders v. Parklane
  
  • 
    Want to say they same thing
    
  • 
    Says that proxy statement determination is precluded because there is already a statement from the court saying its false and misleading
    
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  Question before the court: whether a litigant who was not a party to a prior judgment may nevertheless use that judgment “offensively” to prevent a defendant from re-litigating issue resolved in the earlier proceeding
  
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  What does Parklane court say?
  
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    Trial courts have “broad discretion” to permit offensive nonmutual issue preclusion. But…
    
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      “The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow [it].”
      

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  #1: Bertha v. RR
  
  • 
    Bertha wins: RR negligent
    
  • 
    NB: Jessie not a party to the suit.
    
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  #2: Jessie v. RR
  
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    Suit for negligent injuries.
    
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  REVIEW: Can RR argue claim preclusion based on husband’s failure to join? No.
  
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  Can Jessie argue issue preclusion on negligence? Yes.
  
  • 
    Problem with issue preclusion: Jessie could have joined in originally (however, in Parklane because shareholders could not have joined in SEC lawsuit)
    

#1: Bertha v. RR

–Bertha wins: RR negligent
#2: Jessie v. RR

–RR’s negligence precluded

V.

Parklane:

#1: SEC v. Parklane

–Ruled: proxy misleading
#2 Shore v. Parklane

–Issue: Proxy misleading?

–Precluded
Another Variation:

#1. Bertha v. RR

–Negligent injury

–RR wins: not negligent

–Can RR preclude Jessie from litigating its negligence as a result of #1? No

–Why? Just because it was not negligent against Bertha, doesn’t mean it wasn’t negligent against Jessie (Jessie hasn’t had his day in court)
Why do we allow this?

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  To ensure that we don’t have inconsistent judgments
  
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  Couldn’t have joined in the 1^st lawsuit
  
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  Parklane had a strong incentive to fight as hard as they could against the first lawsuit with the SEC
  

• 
  The Opportunity Principle Again:
  
  • 
    Has party to be burdened with preclusion had adequate opportunity and incentive to litigate that issue?
    
    • 
      If so (and if other conditions for preclusion met)--preclusion appropriate.
      
    • 
      If not--no preclusion
      

Mr. and Mrs. Rush, riding on a motorcycle are thrown off when the cycle hits a pothole.

#1: Mrs. Rush, the owner of the cycle, sues the city in municipal court, which has an abbreviated system of discovery and has a $5000 jurisdictional limit, for $1000 in damages to the cycle

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  City loses
  

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  Issue: can Rush preclude city on issue of negligence?
  
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  City won’t have tried really hard to defend itself from the first lawsuit
  

Issue Preclusion Summary

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  Parklane (and similar state cases) opened door to non-mutual issue preclusion
  
  • 
    Under proper conditions, party who had litigated issue, could be burdened with determination of that issue in later case involving a new party.
    
    • 
      Broad discretion for district court as long as application is not “unfair” to defendant.
      
    • 
      See exceptions in Notes 2 and 3 (page 708) and Restatement Section 29 (page 714).
      
• 
  How should that principle apply in a case with multiple parties? Century Home Components
  

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  An issue of fact or law
  
  • 
    Same definition and procedural setting???
    
  • 
    If the question is something different than what was answered in the first…there will not be issue preclusion
    
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  Actually litigated and determined;
  
  • 
    With jury verdict we may not know what was decided (Illinois Central Railroad v. Parks because it was a general verdict)
    
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  Valid and final judgment;
  
  • 
    For purposes of this class, this is assumed
    
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  Determination is essential to the judgment
  
  • 
    With alternative findings (by judge or special verdict), we don’t know if determination was essential.
    
    • 
      If a trial judge gives alternative findings, neither are precluded in next lawsuit
      
    • 
      Effect of Appellate Review: this changes the above & we will apply issue preclusion
      
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  Non-mutual issue preclusion permitted. (Parklane)
  
  • 
    Broad discretion for district court as long as application is not “unfair” to defendant.
    
  • 
    How far does non-mutual issue preclusion go???
    

Fire in strip mall; several suits.

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  #1. NWBell v. CHC:
  
  • 
    CHC wins; reversed on appeal.
    
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  #2: Sylwester v. CHC: CHC wins
  
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  #3 Hesse v. CHC: P wins
  
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  #4 NWBell v. CHC (retrial) P wins
  
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  #5 State Farm v. CHC: preclusion on negligence and causation because they have these determinations against this defendant?
  
• 
  Suppose the first case had resulted in a plaintiff’s verdict that was not reversed.
  
  • 
    Would it have been appropriate to apply issue preclusion to the second suit?
    
  • 
    If so, does that make the result in CHC a result of chance--that the first case was a defense verdict?
    
• 
  Multiple plaintiff anomaly: if we had a situation where defendant wins 25 times and then the plaintiff wins the 26^th? We shouldn’t allow case #27 rely on #26.
  
  • 
    If we rely on case #1, aren’t we worried that THAT is the an anomaly
    
  • 
    This is not the way the courts wentnon-mutual issue preclusion
    
• 
  Court says no preclusion (not going to allow a new plaintiff to argue non-mutual issue preclusion when defendant has one
  

• 
  What if Constance McMillen had simply filed a normal lawsuit? She needed immediate help because she wanted to go the prom
  
• 
  Preliminary Injunction elements:
  

1. 
   Substantial likelihood of success on the merits
   
2. 
   Irreparable injury
   
3. 
   Balancing the equities
   
4. 
   Public interest
   
   1. 
      This is the factor she failed on
      

PRACTICE EXAM:

• 
  Best answer would sight paragraph in mock complaint