#10923 - Outline Complex Litigation - Complex Litigation

Complex Litigation

1. Preclusion

   1. Claim Preclusion (Res Judicata)

      1. The doctrine of res judicata dictates that a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Stephenson (CB 140).

         1. Res judicata ordinarily applies if the earlier decision was (1) a final judgment on the merits, (2) by a court of competent jurisdiction, (3) in a case involving the same parties or their privies, and (4) involving the same cause of action. Stephenson (CB 140).

         2. “Under the doctrine of claim preclusion, a final judgment forecloses successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit.” Taylor (CB 15-16).

         3. Claim preclusion applies ONLY between parties.

      2. Res judicata generally applies to bind absent class members except where to do so would violate due process. Stephenson (CB 14).

         1. Due process requires (1) adequate representation “at all times” throughout the litigation, (2) notice “reasonably calculated . . . to apprise interested parties of the pendency of the action,” and (3) an opportunity to opt out. Stephenson (citing Shutts) (CB 141).

         2. In Stephenson, the court held that because the plaintiffs were inadequately represented in the prior Agent Orange litigation, they were not proper parties to the settlement and were not bound by it. Accordingly, the court held that the plaintiffs were not precluded from asserting their claims alleging injury due to Agent Orange exposure, even though they fell within the definition of the class in the prior Agent Orange litigation. (CB 141).

      3. Restatement (Second) of Judgments § 17 (CB 4)

         1. “A valid and final personal judgment is conclusive between the parties, except on appeal or other direct review, to the following extent:

            1. (1) If the judgment is in favor of the plaintiff, the claim is extinguished and merged in the judgment and a new claim may arise on the judgment;

            2. (2) If the judgment is in favor of the defendant, the claim is extinguished and the judgment bars a subsequent action on that claim . . . .”

      4. Restatement (Second) of Judgments § 24 (CB 4)

         1. “(1) When a valid and final judgment rendered in an action extinguishes the plaintiff’s claim pursuant to the rules of merger or bar, the claims extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose.

            1. Claim preclusion prevents the splitting up of a single dispute into separate lawsuits by extinguishing “all rights . . . to remedies.” Restatement (Second) of Judgments § 24

         2. (2) What factual grouping constitutes a ‘transaction’ and what groupings constitutes a ‘series,’ are to be determined pragmatically, giving weight to such considerations as [1] whether the facts are related in time, space, origin, or motivation, [2] whether they form a convenient trial unit, and [3] whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.”

   2. Issue Preclusion (Collateral Estoppel)

      1. In general, issue preclusion prevents a party from relitigating an issue that has already been litigated and determined.

         1. Issue preclusion bars litigation of only those issues that were actually raised, litigated, and determined in a previous suit.

         2. “Issue preclusion . . . bars successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment, even if the issue recurs in the context of a different claim.” Taylor (CB 16).

      2. General Rule

         1. Restatement (Second) of Judgments § 27 (CB 6)

            1. “When an issue of fact or law is [1] actually litigated and [2] determined by a valid and final judgment, and [3] the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.”

      3. Mutuality Requirement

         1. Courts used to require mutuality. Parklane Hosiery (CB 7); see also Restatement (Second) of Judgments § 27.

         2. Under the mutuality doctrine, neither party could use a prior judgment as an estoppel against the other unless both parties were bound by the judgment. Parklane Hosiery (CB 7).

         3. Defensive Non-Mutual Collateral Estoppel (Modern Rule)

            1. Defensive use of Non-Mutual Collateral Estoppel occurs when a defendant seeks to prevent a plaintiff from asserting a claim the plaintiff has previously litigated and lost against another defendant. Parklane Hosiery n.4 (CB 7).

            2. In Blonder-Tongue Labs, the Court abandoned the mutuality requirement with respect to Defensive Non-Mutual Collateral Estoppel.

         4. Offensive Non-Mutual Collateral Estoppel (Modern Rule)

            1. Offensive use of Non-Mutual Collateral Estoppel occurs when the plaintiff seeks to foreclose the defendant from litigating an issue the defendant has previously litigated unsuccessfully in an action with another party. Parklane Hosiery n.4 (CB 7).

            2. The general rule is that “in cases [1] where a plaintiff could easily have joined in the earlier action or [2] where . . . 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 (CB 9).

               1. The use of offensive collateral estoppel may be unfair to the defendant where (1) “the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant” or (2) “where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result.” Parklane Hosiery (CB 9).

            3. In Parklane Hosiery, the Court held that the use of Offensive Non-Mutual Collateral Estoppel was permissible because (1) the plaintiff probably could not have joined the prior SEC action even if he wanted to; (2) because of the serious allegations in the SEC Complaint, the defendants had every incentive to litigate the SEC lawsuit fully and vigorously; (3) the judgment in the SEC action was not inconsistent with any previous decision; and (4) there were no procedural opportunities, available to the defendants in the subsequent action that were not available in the first action, that could readily have caused a different result.

   3. Preclusion of Non-Parties

      1. General Rule:

         1. “[O]ne is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process.” Taylor (quoting Hansberry) (CB 16).

            1. “A person who was not a party to a suit generally has not had a “full and fair opportunity to litigate” the claims and issues in that suit. Taylor (CB 16).

      2. Exceptions:

         1. (1) A person who agrees to be bound by the determination of issues in an action between others is bound in accordance with the terms of his agreement. Taylor (CB 16).

            1. If separate actions involving the same transaction are brought by different plaintiffs against the same defendant, all the parties to all the actions may agree that the question of the defendant’s liability will be definitely determined, one way or the other, in a “test case.” Taylor (CB 16)

         2. (2) Nonparty preclusion may be justified based on a variety of preexisting substantive legal relationships between the person to be bound and a party to the judgment. Taylor (CB 16).

            1. Qualifying relationships include, but are not limited to, preceding and succeeding owners of property, bailee and bailor, and assignee and assignor. Taylor (CB 16).

         3. (3) In certain limited circumstances, a nonparty may be bound by a judgment because she was adequately represented by someone with the same interests who was a party to the suit. Taylor (CB 16).

            1. Representative suits with preclusive effect on nonparties include properly conducted class actions and suits brought by trustees, guardians, and other fiduciaries. Taylor (CB 16-17).

            2. “In a class action, . . . a person not named as a party may be bound by a judgment on the merits of the action, if she was adequately represented by a party who actively participated in the litigation.” Taylor (CB 12).

               1. A party’s representation of a nonparty is adequate for preclusion purposes only if, at a minimum, (1) the interests of the nonparty and her representative are aligned, (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty, and (3) [courts sometimes require] notice of the original suit to the persons alleged to have been represented, see Richards. Taylor (CB 19).

                  1. In the class action context, these limitations are implemented by the procedural safeguards contained in the Rule 23. Taylor (CB 19).

         4. (4) A nonparty is bound by a judgment if she assumed control over the litigation in which that judgment was rendered. Taylor (CB 17).

            1. Because such a person has had the opportunity to present proofs and argument, he has already had his day in court even though he was not a formal party to the litigation. Taylor (CB 17).

         5. (5) Preclusion is in order when a person who did not participate in a litigation later brings suit as the designated representative of a person who was a party to the prior litigation. Taylor (CB 17).

            1. Preclusion is appropriate when a nonparty later brings suit as an agent for a party who is bound by a judgment. Taylor (CB 17).

            2. A party bound by a judgment may not avoid its preclusive force by relitigating through a...