Civil Procedure

Res Judicata

The doctrine of res judicata prevents a litigant from getting yet another day in court after the first lawsuit is concluded by giving a different reason than he gave in the first for recovery of damages for the same invasion of his right.  The rule provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are bound "not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose."  A final judgment on the merits bars further claims by the same parties based on the same cause of action.

Res judicata prevents a plaintiff from suing on a claim that already has been decided and also prevents a defendant from raising any new defense to defeat the enforcement of an earlier judgment.  It also precludes relitigation of any issue, regardless of whether the second action is on the same claim as the first one, if that particular issue actually was contested and decided in the first action.  (Friedenthal § 14.1)  Former adjudication is an analogue of the criminal law concept of double jeopardy.

Terminology

Res judicata = A general term referring to all of the ways in which one judgment will have a binding effect on another.

Claim preclusion (true res judicata) = A valid and final judgment on a claim precludes a second action on that claim or any part of it.  Claim preclusion is divided into two areas, bar and merger.

In res judicata the second or subsequent suit involves the same claim or cause of action.  In collateral estoppel the second or subsequent suit involves a different claim or cause of action.  In res judicata the first  judgment is conclusive not only on all matters which actually were litigated, but on all matters which could have been litigated.  In collateral estoppel the judgment is conclusive only in regard to issues that actually were litigated.

A judgment in a prior suit between the same parties is final not only as to all matters that were in fact offered and received to sustain or defeat the claim but also as to all matters that might have been offered for that purpose.  A party may not litigate a claim and then, upon an unsuccessful disposition, revive the same cause of action with a new theory.

 

Four Factors Are Considered in Determining the Validity of a Plea of Claim Preclusion:

1)  Was the claim decided in the prior suit the same claim being presented in the action in question?

2)  Was there a final judgment on the merits?

3)  Was the party against whom the plea was asserted a party or in privity with a party to the prior suit?

4)  Was the party against whom the plea was asserted given a fair opportunity to be heard on the issue? 

The Requirement of a Final Judgment

Judgment "On the Merits"

The requirement that a judgment, to be res judicata, must be rendered "on the merits" guarantees to every plaintiff the right once to be heard on the substance of his claim.  Ordinarily, the doctrine may be invoked only after a judgment has been rendered which reaches and determines "the real or substantial grounds of action or defense as distinguished from matters of practice, procedure, jurisdiction or form."  One of the exceptions to this rule is found in FRCP 41(b).  It provides that an involuntary dismissal for failure to prosecute, or for failure to comply with the Rules or any order of the court, shall operate as an "adjudication upon the merits," although the substantive issues of the case are never reached.  This exception does not apply in the case of a dismissal for lack of jurisdiction or improper venue.

The policy behind Rule 41(b) is to bar subsequent action only in situations in which the defendant must incur the inconvenience of preparing to meet the merits because there is no initial bar to the Court's reaching them.

The res judicata consequences of a final, unappealed judgment on the merits are not altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case.  An erroneous conclusion reached by the court in the first suit does not deprive the defendants in the second action of their right to rely upon the plea of res judicata.   (Federated Dept. Stores v. Moitie, 452 U.S. 394 (1981)

I.e., a judgment need not be right to preclude further litigation, it need only be final and on the merits.

Identity of Parties

The general rule is that a judgment has no binding effect upon anyone who was not a party to the action.  A stranger cannot take advantage of a judgment, nor can it be enforced against him.  Consequently, the rules of res judicata and collateral estoppel do not apply unless the parties in the subsequent suit are identical with the parties in the first suit.

For res judicata to apply, both suits must involve the same parties or their privies and also the same cause of action.  If the subsequent suit involves different parties, those parties cannot be bound by the prior judgment.  Collateral estoppel arises from a different cause of action and prevents parties or their privies from relitigating facts and issues in second  suit that were fully litigated in the first suit.  The plea of collateral estoppel can be asserted only against a party in the subsequent suit who was also a party or in privity with a party in the prior suit.

A person in privity with another is a person so identified in interest with another that he represents the same legal right.  Privity means one whose interest has been legally represented at the time.  Collateral estoppel is not a defense against a litigant who was not a party to the action and judgment claimed to have created an estoppel.

Issue Preclusion

"Actually Litigated & Determined"

To protect the integrity of the prior judgment by precluding the possibility of opposite results by two different juries on the same set of facts, the doctrine of issue preclusion allows the judgment in the prior action to operate as an estoppel as to those facts or questions actually litigated and determined in the prior action.  In order to determine what facts were actually litigated in the prior case, the following test is applied:  Where a judgment may have been based upon either or any of two or more distinct facts, a party desiring to plead the judgment as issue preclusion or a finding upon the particular fact involved in a subsequent suit must show that it went upon that fact, or else the question will be open to a new contention.  The estoppel of a judgment is only presumptively conclusive, when it appears that the judgment could not have been rendered without deciding the particular matter brought in question.

Collateral estoppel applies only to issues that have actually been determined in the first action and not to those which might have been determined but were not.  When a case may have been decided on more than one ground but it is impossible to ascertain which ground or grounds were actually decided, none of the grounds are collateral estoppel in a subsequent action.

In any lawsuit between two parties who have engaged in previous litigation, the first question will be whether this is the same claim.  Only if one answers that question in the negative does the second question arise:  are there then issues that the first case precludes from relitigation?

 

Prerequisites for Collateral Estoppel  

(1)  The issue in the second case must be the same as the issue in the first. 

(2) The issue must have been actually litigated. 

(3)  The issue must have been actually decided. 

(4)  The issue must have been necessary to the court's judgment.  (Friedenthal, sec. 14.11)

Mutuality of Preclusion

Under traditional issue preclusion principles, a party may be estopped from relitigating an issue that he had litigated in a prior suit and lost.  The general rule was that estoppel must be mutual, i.e., the only parties who could invoke collateral estoppel were those who were involved in the suit in which the issue was initially decided.   I.e., parties are bound, nonparties are not.  (Wright, sec. 100A)

Non-Mutuality - Defensive Use

Bernhard v. Bank of America  19 Cal.2d 807, 122 P.2d 892 (1942) is the case thought to be the turning point that brought about the demise of mutuality. (Wright, sec.100A) In Bernhard, Mrs. Bernhard claimed that certain funds held by Cook, the executor of an estate, belonged to the estate. Cook claimed they were a gift to him from the decedent, which he need not include in the assets of the estate. Bernhard challenged Cook's claim in a probate proceeding during the course of the settlement of the estate, and the court held the funds were a gift to Cook.  Bernhard then sued the bank that had been holding the funds and paid them to Cook, alleging again that the funds were assets of the estate that should have been paid to the estate rather than to Cook.  The bank pleaded collateral estoppel, arguing that Bernhard had already adjudicated the right to the funds in the probate proceeding, had lost, and should be precluded from relitigating the issue against the bank.  The court concluded that it was not  improper to allow a new party to take advantage of findings in an earlier suit to estop a party who had litigated the issue in the prior action.  Bernhard had been a party to the first action and had a full and fair opportunity to litigate the issue there.  The court saw no reason to allow her to relitigate the same issue by simply switching defendants.  Bernhard holds that collateral estoppel runs against anyone who has fully and fairly litigated an issue in an earlier action.

Non-Mutuality - Offensive Use

The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where, for other reasons the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.  (Parklane Hosiery Co v. Shore, 439 U.S. 322 (1979)

A nonparty may assert collateral estoppel offensively against someone who was a defendant in a prior action.  Under Parklane the court must evaluate on a case by case basis whether it is necessary to allow what appears to be duplicative litigation to ensure the reliability and fairness of a judgment.  No precise rules can be formulated.  The Parklane standard is applicable only to the federal courts.  (Friedenthal, ยง14.14)  "Offensive" use of issue preclusion involves a plaintiff who is seeking to prevent a defendant from relitigating issues that the defendant had previously litigated and lost against another plaintiff.

In Blonder-Tongue  Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313 (1971) the University of Illinois Foundation sued the  defendant for infringing a patent but lost on the ground that its patent was invalid.  It then brought a subsequent suit against another defendant for infringement of the same patent.  The Supreme Court reversed its long standing rule allowing such relitigation and  approved the use of nonmutual collateral estoppel against the Foundation on the issue of the validity of the patent.  The Court noted the unfairness and waste of judicial resources that flows from allowing repeated litigation of the same issue as long as plaintiff is able to locate new defendants to sue.  Note that preclusion is only appropriate if the precluded party had a full and fair opportunity to litigate the issue in the first action.

Nonmutual collateral estoppel cannot be used against the federal government.  (United States v. Mendoza, 464 U.S. 154 (1984)

Full Faith & Credit Doctrine

Full faith and credit requires that judicial proceedings shall have the same full faith and credit in every court within the U.S. as they have by law or usage in the courts of such state from which they are taken.  It requires every state to give a judgment at least the res judicata effect which the judgment would be accorded in the state which rendered it.  (Durfee v. Duke, 375 U.S. 106 (1963)

Law of the Case

This doctrine involves successive stages of the same lawsuit.  However, the doctrine is fundamentally the same as res judicata, an issue which has been litigated and decided in one stage of a case should not be relitigated in a later stage.

Law of the case, like issue preclusion, bars a litigant from repeating the same argument that was previously rejected.  It refers to the principle that issues once decided in a case that recur in later stages of the same case are not to be redetermined.  This doctrine limits relitigation in successive stages of a single suit.  E.g., it will apply when an issue in the case is decided by the trial court and appealed.  If the appellate court reverses and rules on the law to be applied, those findings will be binding on the trial court when the action is remanded for a new trial.  (Friedenthal, sec. 14.1)

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