Advanced Civil Procedure 2

8/17/2019 Advanced Civil Procedure 2

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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 inthe first action. (riedenthal ! #.$ ormer adjudication is an analogue of the criminal law

concept of double jeopardy.

TerminologyRes judicata % A general term referring to all of the ways in which one judgment will have a

binding effect on another.&laim preclusion (true res judicata$ % A valid and final judgment on a claim precludes a second

action on that claim or any part of it. &laim preclusion is divided into two areas, bar and merger.

In res judicata the second or subse'uent suit involves the same claim or cause of action. Incollateral estoppel the second or subse'uent 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 unsuccessfuldisposition, revive the same cause of action with a new theory.

our actors Are &onsidered in etermining the )alidity of a

*lea of &laim *reclusion+$ as the claim decided in the prior suit the same claim being

presented in the action in 'uestion-$ as there a final judgment on the merits-

/$ as the party against whom the plea was asserted a party or in

privity with a party to the prior suit-

#$ as the party against whom the plea was asserted given a fairopportunity to be heard on the issue-

The Re'uirement of a inal 0udgment

0udgment "1n the 2erits"

The re'uirement 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. 1rdinarily, the

doctrine may be invo3ed only after a judgment has been rendered which reaches and determines

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"the real or substantial grounds of action or defense as distinguished from matters of practice,

procedure, jurisdiction or form." 1ne of the e4ceptions to this rule is found in R&* #(b$. It

provides that an involuntary dismissal for failure to prosecute, or for failure to comply with theRules 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 e4ception does not apply in the case of a

dismissal for lac3 of jurisdiction or improper venue.

The policy behind Rule #(b$ is to bar subse'uent 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 &ourt5s reaching them.

The res judicata conse'uences 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 subse'uentlyoverruled 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.

(ederated ept. 6tores v. 2oitie, #7 8.6. /9# (9:$

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

Identity of *arties

The general rule is that a judgment has no binding effect upon anyone who was not a party to theaction. A stranger cannot ta3e advantage of a judgment, nor can it be enforced against him.

&onse'uently, the rules of res judicata and collateral estoppel do not apply unless the parties in

the subse'uent suit are identical with the parties in the first suit.

or res judicata to apply, both suits must involve the same parties or their privies and also thesame cause of action. If the subse'uent suit involves different parties, those parties cannot be

bound by the prior judgment. &ollateral estoppel arises from a different cause of action and

prevents parties or their privies from relitigating facts and issues in second suit that were fullylitigated in the first suit. The plea of collateral estoppel can be asserted only against a party in

the subse'uent 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 herepresents the same legal right. *rivity means one whose interest has been legally represented at

the time. &ollateral 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 *reclusion

"Actually ;itigated < etermined"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 'uestions actually litigated anddetermined in the prior action. In order to determine what facts were actually litigated in the

prior case, the following test is applied+ here 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 subse'uent suit must show that it went upon that

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fact, or else the 'uestion 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 'uestion.

&ollateral 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. hen a case may have beendecided 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 subse'uent action.

In any lawsuit between two parties who have engaged in previous litigation, the first 'uestion

will be whether this is the same claim. 1nly if one answers that 'uestion in the negative does the

second 'uestion arise+ are there then issues that the first case precludes from relitigation-

*rere'uisites for &ollateral =stoppel($ The issue in the second case must be the same as the issue in the

first.

($ The issue must have been actually litigated.(/$ The issue must have been actually decided.

(#$ The issue must have been necessary to the court5s judgment.

(riedenthal, sec. #.$

2utuality of *reclusion

8nder 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 invo3e 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. (right,

sec. >>A$

?on@2utuality @ efensive 8se

ernhard v. an3 of America 9 &al.d :>B, *.d :9 (9#$ is the case thought to be the

turning point that brought about the demise of mutuality. (right, sec.>>A$ In ernhard, 2rs.ernhard claimed that certain funds held by &oo3, the e4ecutor of an estate, belonged to the

estate. &oo3 claimed they were a gift to him from the decedent, which he need not include in the

assets of the estate. ernhard challenged &oo35s claim in a probate proceeding during the courseof the settlement of the estate, and the court held the funds were a gift to &oo3. ernhard then

sued the ban3 that had been holding the funds and paid them to &oo3, alleging again that the

funds were assets of the estate that should have been paid to the estate rather than to &oo3. The

ban3 pleaded collateral estoppel, arguing that ernhard had already adjudicated the right to the

funds in the probate proceeding, had lost, and should be precluded from relitigating the issueagainst the ban3. The court concluded that it was not improper to allow a new party to ta3e

advantage of findings in an earlier suit to estop a party who had litigated the issue in the prioraction. ernhard 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. ernhard holds that collateral estoppel runs against anyone who has fullyand fairly litigated an issue in an earlier action.

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?on@2utuality @ 1ffensive 8se

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 adefendant, a trial judge should not allow the use of offensive collateral estoppel. (*ar3lane

Cosiery &o v. 6hore, #/9 8.6. / (9B9$

A nonparty may assert collateral estoppel offensively against someone who was a defendant in a

prior action. 8nder *ar3lane 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 fairnessof a judgment. ?o precise rules can be formulated. The *ar3lane standard is applicable only to

the federal courts. "1ffensive" use of issue preclusion involves a plaintiff who is see3ing to

prevent a defendant from relitigating issues that the defendant had previously litigated and lost

against another plaintiff.

In londer@Tongue ;aboratories, Inc. v. 8niversity of Illinois oundation, #> 8.6. // (9B$

the 8niversity of Illinois oundation sued the defendant for infringing a patent but lost on the

ground that its patent was invalid. It then brought a subse'uent suit against another defendantfor infringement of the same patent. The 6upreme &ourt reversed its long standing rule allowing

such relitigation and approved the use of nonmutual collateral estoppel against the oundationon the issue of the validity of the patent. The &ourt 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. ?ote that preclusion is only appropriate if the precluded party had a full and fair opportunity to litigate the issue in the first action.

?onmutual collateral estoppel cannot be used against the federal government. (8nited 6tates v.

2endoDa, #E# 8.6. 7# (9:#$

ull aith < &redit octrine

ull faith and credit re'uires that judicial proceedings shall have the same full faith and credit inevery court within the 8.6. as they have by law or usage in the courts of such state from which

they are ta3en. It re'uires every state to give a judgment at least the res judicata effect which the

judgment would be accorded in the state which rendered it. (urfee v. u3e, /B7 8.6. >E(9E/$

;aw of the &ase

This doctrine involves successive stages of the same lawsuit. Cowever, the doctrine isfundamentally 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.

;aw of the case, li3e 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. =.g., it will apply when an issue in the case is decided by the trial courtand 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. (riedenthal, sec.

#.$

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Nature of the Problem

1nce you have determined which court or courts have the proper jurisdiction to decide a case,

the ne4t 'uestion one is faced with is what law should the court apply- 6tate courts apply statelaw. In federal 'uestion cases both federal and state courts apply federal law. ut in diversity

cases$ a case that could have been brought in a state court but is being brought in federal court

due solely to the citiDenship of the parties, what law will a federal court apply- ederal or state-*rior to 9/:, Swift v. Tyson , # 8.6. (E *et.$ , > ;.=d. :E7 (:#$ held that federal courts

were free to apply the law so as to reach a result they thought was justice regardless of state

common law. Cowever that changed with the decision in Erie R.R. v. Tompkins, /># 8.6. E#, 7:6.&t. :B, : ;.=d. :: (9/:$.

In Erie, the plaintiff was wal3ing alongside railroad trac3s when his right arm was severed by an

object protruding from defendant5s train. The accident occurred in *ennsylvania. *laintiff (now presumably 3nown as "lefty"$ filed a lawsuit in federal court in ?ew For3 where it was felt the

laws were more favorable to plaintiffs. The issue was what level of duty is owed to a trespasser.

If *ennsylvania law applied then only "wanton negligence" created liability. If "federal common

law" applied the plaintiff could recover if the railroad was guilty of "ordinary" negligence. Theissue that confronted the 6upreme &ourt was the meaning of the phrase "the laws of the several

states." If it meant case law (judicial decisions$ as well as statutes, then *ennsylvania lawwould apply and plaintiff would lose. If not, then "federal common law" will apply and plaintiff

could presumably recover.

Erie held that federal courts in diversity actions apply the substantive law of the state in which

they sit. ";aw" includes common law as well as statutory law. In diversity actions federal courts

must treat the decisions of the state courts in the jurisdiction in which they sit as a source of law.

I.e., a federal court in a diversity case must apply the same law that the state court would apply.There is no longer a "federal common law," a federal court must apply the common law of the

state. The rule of Erie serves the purposes of discouraging forum shopping and avoiding the

unfair administration of laws (i.e., avoiding the potential for state and federal courts sitting in thesame state reaching different outcomes based on the same facts.$

Evolution of the Erie DoctrineThe Erie doctrine has evolved over the years. Cere are the turning points in its evolution.

Guaranty Trust Co. v. ork , /E 8.6. 99, E7 6.&t #E#, :9 ;.=d. >B9 (9#7$ mar3s the

emergence of the "outcome determinative test," which was an attempt to prevent federal courtsfrom reaching a result at variance with the result that would obtain in a state court in a

comparable case. (riedenthal ! #./$ A state law which is normally regarded as "procedural"

should be applied by a federal court in a diversity case if it would, or could, vitally affect theoutcome of the case. Guaranty Trust redefined the Erie doctrine. The intent of Erie was to

insure that where a federal court is e4ercising jurisdiction solely because of diversity, the

outcome of the litigation in federal court should be substantially the same as it would be if triedin 6tate court. (right, ! 77$ In Guaranty Trust the issue was whether a federal court in a

diversity case must apply the state statute of limitations, which would have barred the suit in

state court. Goal is to avoid reaching a different result in federal court than would otherwise be

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had in state court. If applying federal law would mean a different outcome, state law controls

therefore state statute of limitations applies.

In !yr" v. !lue Ri"#e , /7E 8.6. 77, B: 6.&t :9/, ;.=d. d 97/ (97:$ the 'uestion was

whether the issue of employee or independent contractor is to be decided by the judge or the

jury. The court held that the mere possibility that a federal practice may alter the outcome of adiversity case is not conclusive in deciding whether to apply federal or state law. &ourt must

weigh (determine whether either one is of some importance$ the policies behind the federal and

state rules then determine whether there is a substantial possibility that different results would beobtained because federal practice is used. (riedenthal ! #./$ In !yr" the state practice was

found to reflect a wea3 state policy, not bound up with the underlying statute, of preferring a

judge5s determination of the employment issue. hen balanced against the strong federal policy

embodied in the Bth Amendment guarantee of a jury trial, and the fact that there was nosubstantial possibility that different results would be obtained by utiliDing a jury, the federal

practice was preferred. (riedenthal ! #./$

In $anna v. Plumer , /:> 8.6. #E>, :7 6.&t. /E, # ;.=d. d : (9E7$, the issue was whetherfederal rules on service of process should yield to state rules. $anna announces a two@part test.

irst, the court in'uires whether a federal rule actually governs the practice under consideration.If the answer is yes, then the court must determine whether a conflict between the federal rule

and state law e4ists, or whether the federal rule is "narrower" in its coverage (i.e., does not cover

the issue in 'uestion$ than the state statute. If there is a direct conflict between state practice anda federal rule, then the court must determine whether the federal rule is a valid e4ercise of the

rule ma3ing power granted to the 6upreme &ourt by &ongress. (riedenthal ! #.#$ (?o federal

rule of civil procedure has ever been found to be an invalid e4ercise of the rule ma3ing power.$

$anna Two%Part Test Simplifie"

($ If there is a valid ederal Rule on the subject, the rule is to be

applied.($ In the absence of a federal rule on the point the court is to consider

the problem in light of the twin aims of the Erie rule, (a$ discourage

forum shopping and (b$ avoid ine'uitable administration of laws.(ifferent results between state and federal courts.$ (right ! 79$
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Advanced Civil Procedure 2