Case:

Grumman v. Data General Corp (N.D. Cal 1988)

Facts:

Grumman allegedly copied one of DG’s valuable computer programs (ADEX) without authorization.  DG sued Grumman in MA Dist Ct. for copyright infringement.

-Grumman moved for dismissal of the case, which was denied. Grumman then sued DG in CA state court under CA’s equivalent of the Sherman Antitrust act.

-DG removed to CA Dist Ct and move dimiss the action because it is a compulsory counterclaim to the suit that was filed in MA, under 13(a) or in the alternative transfer to MA under 1404 for the convenience of the parties and witnesses.

-Grumman since amended its complaint to add two new defedants and allegations unrelated to the ADEX matter.

Issue:

Whether the Grumman suit should have been brought as a compulsory counterclaim in the orginal MA suit by DG.

Holding:

Yes

Rationale:

13(a) is concerned with the danger of inconsistent adjudication and judicial economy.

-Courts have applied a “logical relationship” test to determine if two actions are sufficiently identical  for the second to be a compulsory counterclaim to the first

-          the test in the 9^th Cir is “whether the essential facts of the various claims are so logically connected that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit”.

-          Requires similar facts, NOT similar legal arguments.

Refuses to apply 6^th Cir Mead Rule to 13(a) because 6^th Cir accords weight to legal issues, and 9^th Cir only looks to factual similarities.

-          also more factual overlapping here than in Mead.

Grumman argues that presence of other defendants takes this out of 13(a).

-          court holds that because AMI Δ is not indispensable the case can go forward in MA, even though that court does not have PJ over AMI.

Grumman argues that because DG wil have to defend two indentical antitrust lawsuits, there is no reason to make Grumman go to MA to litigate its antitrust claim.

-          wrong. It would save considerable judicial effort if Grumman were to litigate in MA while the CA court consolidates the two new cases and what remains of this action  (Grumman v. AMI) and stays the CA proceedings pending the outcome in MA.

-          The MA decision is not res judicata, but can help the CA court in making its decision.

Case:

Guedry v. Marino (E.D. LA 1995)

Facts:

Δ, Marino, the newly elected Sherriff was being sued by 7 Π’s, deputy sherriffs he had terminated for various reasons.

-They all alleged 1^st and 14^th amendment violations by Marino in failing to renew their commission’s as deputies.

-          allege that they were terminated because they spoke out against Marino in election process, or refused to support him.  All except Π Wilson, who maintains she was terminated in retaliation of a worker’s comp claim she brought.

-Δ wants cases severed under FRCP 20 & 21, or 42(b), because it will promote judicial economy.

-Π’s say the cases were properly joined and severing claims will cause delay and predjudice.

Issue:

Whether the claims should be severed?

Holding:

No

Rationale:

Purpose of 20(a) is promote trial convenience and expedite final determination of disputes, thereby preventing multiple lawsuits.  Joinder of claims, parties and remedies is strongly encouraged by the FRCP.

Permissive joinder : two requisites

-          (1) a right to relief must be asserted by, or against, each Π or Δ  relating to or arising out of the same transaction or occurrence, or serires of transactions or occurences; and

-          (2) some question of law or fact common to all the parties must arise in the action

All the Π’s claims arise out of separate factual cirumstances but all of the Π’s allegations revolve around claims of termination after alleged violations of 1^st amendment rights, except Wilson.

-          alleged discriminatory activity directly affecting each of them, includes common legal and factual questions.

Wilson’s claim does not arise out of same set of 1^st amendment facts, but wilson does make a claim for racial discrimination, like 3 of the other Π’s.

-          Thus wilson’s claims arise out of similar transactions or occurences and involve similar questions of fact and law such that joinder is proper.

-          Potential jury confusion can be remedied by instruction by the court.

Δ also argues reasons exist to sever each plaintiff’s case under 42(b) –

-          To order a separate trial under 42(b): the issue to be tried must be so distinct and separate from the others that a trial of it alone may be had without injustice.

-          Even if bifurcation might some how promote judicial ecnonomy, courts should not order separate trials when bifurcation would result in unncessary delay, additional expense, or some other form of predjudice.

Case:

Broussard v. Columbia Gulf Transmission (5^th Cir 1968)

Facts:

Two of the Broussards granted a right of way and easment to Δ.  Π’s are suing to have it removed and want damages.

-Δ moved to dismiss for lack of SMJ. The Δ and one of the Πs were both residents of TX.  Mrs. Heber, the non-diverse Π, requested the court to dimiss her as a party to the suit.

-Δ requested the court to vacate the ex-parte order dismissing Mrs. Hebert, and declare her an indispensable party. The court vacated the order, holding Mrs. Heber indispensable, and granted the Δ’s motion to dismiss for lack of SMJ.

Issue:

Whether Mrs. Hebert is a necessary and indispensable party?

Holding:

Yes

Rationale:

If the circuit court reversed this would not finalize litigation, but likely start other litigations.  If the Cir Cout reversed, and the Π’s were awarded damages in the lower court, the Π’s might sue to avoid having to give any of the damages to Mrs. Hebert.

-Mrs. Hebert might sue to receive  a portion of the damages.  IF they lose altogether, she might initiate a whole new suit on her own.

Multiplicity of suits is bad, and dismissal does not predjudice the Π’s because they can file in state court, which is more than enough competent to hear a case on state land law.

In analyzing Rule 19 the court made critical evaluations of two controlling factors: (1) the inability of the federal dist ct to finalize litigation or to effectively adjudicate the rights of all concerned parties, and (2) the availability of adequate relief in the Louisiana state court system.

Case:

Hansberry v. Lee (1940)

Facts:

Π’s are african americans occupying land in Chicago.  The Δ’s are racist fuckers who allegedly entered into a decree with 500 landowners to not sell or lease land to blacks, which would become effective if 95% of the landowners signed the decree.

-Π’s state that they are not bound by the decree from Burke and it is not res judicata because they were not a party to the action and only 54% of the landowners signed the decree.

-Π’s state that denial of their suit is contrary to the 14^th amendment.

Issue:

Whether the Π’s suit is res judicata, and barred or if denial of the suit was a violation of the 14^th amendment.

Holding:

Π’s not barred from bringing their suit

Rationale:

Generally one is not bound by a judgement 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.  A judgment rendered in such circumstances is not entitled to full faith and credit.

-Members of a class not present as parties to the litigation may be bound by the judgment where they are in fact adequately represented by partie who are present, or where they actually participate in the conduct of the litigation in which members fo the clas are present as parties.

-The Π’s in Burke sought to compel performance of the agreement in behalf of themselves and all others similarly situated.  In seeking to enforce the agreement the Π’s in that suit were not representing the petitioners here whose substantial interest is in resisting performance.

Case:

Eisin v. Carlisle & Jacquelin (1974)

Facts:

Δ did odd lot brokering and handled 99% for the “Exchange”. Sued by the Π for setting compensation at an excessive level.  The Π only has $70 at stake, so to proceed this has to be a class action.  With so little at stake this is a “negative value suit”.

Issue:

Whether this could proceed as a class action?

Holding:

NO

Rationale:

Dist ct shifted 90% of the cost of noticing the 2.2M indentifiable class members to the Δ, because upon inquiry by the court it appeared that Π was likely to prevail on the merits.

23(c)(2) requires invidual notice, and the Π is responsible for all costs associated with his case.  Nothing in rule 23 suggests that notice requirements can be tailored to fit the pocketbooks of particular plaintiffs.

Preliminary determination of the merit of the Δ’s case might result in substantial predjudice to the Δ.

Case:

Castano v. American Tobacco

Facts:

Π’s filed the largest class action ever including 9 causes of action and  trying to certify as a class all nicotine dependent persons dead or alive and their relatives, estates, represetnatives, and signficant others since 1943.

Issue:

Whether the class should be certified?

Holding:

No

Rationale:

Immature tort – not been tried on an individual level to determine and establish causes of action and representative damages.

-          cannot be certified without a prior track record of trials.

No way to resolve the choice of law issues that come up where the Π’s are from serveral states, and the causes of action are state law based.

-Each individual person has a different set of facts that might warrant granting or denying them damages.  The case has huge manageability problems.

-          also not a negative value suit, where the only way to really challenge would be through a class action.  Each person likely has significant damages claims that making pursuing the case individually worthwhile.

The common issues do not predominate b/c of the many variations in state laws applicable to each claim, and a class action was not a superior format for handling such a case.

1.     the issue was a novel one(smoking is addictive)

2.     each claim was large enough to sue on individually

·         Class actions are typically appropriate where the individual claims are too small to bring by themselves.

3.     severe manageability problems

·         difficult choice of law problems

·         Erie problems

·         notice to millions of class members

4.     lack of a judicial crisis

·         the claim is novel, and many P’s may choose not to bring individual claims

What factors does a court look at in deciding to allow certification in a product liability action where the suit relates to people who are exposed to a faulty product at different times and circumstances:

1.     state by state law variations

2.     centrality of a single issue

·         where one issue is central to the case, the court is most likely to allow class status

3.     Size of the typical claim:             

·         The larger the individual claim, the less likely the court is to allow class status

4.     The novelty of the claim:

·         when the plaintiff’s claim is novel, certification is unlikely

5.     Where the action binds class members who have not yet suffered physical injuries, certification is unlikely to be found fair to those class members

where there is reason to believe that the D’s will be insolvent before the last claimant has recovered certification is more likely.

Case:

Amchem v. Windsor

Facts:

P’s filed a class action on behalf of all persons who had been exposed occupationally or through occupational exposure of a spouse or household member to asbestos or products containing asbestos attributable to one of many D’s.  All of the P’s alleged that they had been exposed to asbestos, and more than half of them claimed to have already suffered various injuries as a result of the exposure. The rest had not yet suffered any effects due to exposure. There were no subclasses of plaintiffs, all of the named plaintiffs were designated as representatives of the class as a whole. The complaint was filed, an answer was presented raising 11 affirmative defenses, and a proposed settlement was made, all on the same day.

The settlement set out the details of the agreement to compensate members of the class of future plaintiffs. Only four categories of compensable disease were identified, and certain kinds of claims were excluded from compensation. The district court certified the class, but the court of appeals vacated the certification, saying that the requirements of Rule 23 had not been met. In addition, the plaintiffs who had no injuries yet had no standing to sue

Issue:

Whether FRCP had been met.

Holding:

No

Rationale:

The holding of the appeals court is affirmed, no certification of the class. Settlement of a class action suit is relevant to the analysis as to whether the class meets the criteria set forth in Rule 23, but it is not the sole determinative factor. Also, the certification fails here for lack of predominance and lack of adequate representation by the named plaintiffs.

·         The federal courts lack the authority to substitute a determination that a proposed settlement is fair for the criteria set forth for certification in Rule 23.

·         Some factors of rule 23, such as the possibilty of management problems of the class action, do not need to be considered in cases where a settlement is proposed, but other factors designed to protect unnamed class members should be given extra attention in settlement cases.

Predominance analysis:

·         23(b)(3) predominance inquiry tests whether the proposed classes are sufficiently cohesive as to warrant adjudication by representation

·         23(b)(3) factors to consider when performing the predominance analysis:

1.     the interest of the members of the class in individually controlling the prosectution or defense of separate actions

2.     the extent and nature of any litigation concerning the controversy already commenced by or against members of the class

3.     the desirability or undesirability of concentrating the litigation of the claims in the particular forum

4.     the difficulties likely to be encountered in the management of a class action

·         in the present case, each plaintiff, b/c the claims involve personal injury and death has a significant interest in individually controlling the prosecution of his case.

·         here the individual damage claims are significant, so there is less need for a class action, as opposed to a situtation where the individual recoveries are so small that individual plaintiffs would be unlikely to bring suit.

·         while the fact that class members were all exposed to asbestos products supplied by the defendants would be enough to satisfy the commonality requirement of 23(a), it is not enough to satisfy the predominance requirement of 23(b)(3).

·         class members were exposed to asbestos for different amounts of time, in different ways, and over different periods.

·         some may have no physical injury, while others will get cancer

·         different medical expenses will result b/c the montoring and treatment will be different in each case

analysis of 23(a)(4): the requirement that the named parties adequately represent the interests of the class:

·         cases say that a class representative must be part of the class and possess the same interest and suffer the same injury as the class members

·         here, the named parties have diverse medical conditions associated with the exposure to asbestos. Some are currently injured, while others have merely been exposed.

·         currently injured P’s would want immediate payment

·         exposure only P’s would want a large, inflation adjusted fund for future injuries

·         there is no assurance that the class m

·         Where differences among members of a class are such that subclasses must be established, a court cannot approve a settlement without creating subclasses

·         the problems here with representation cannot be solved by using subclasses, b/c the P’s who are asymptomatic don’t even know whether they will get sick. They can’t be representatives for the whole class of people who have been exposed.

Analysis of the noticce requirement of Rule 23

·         Ct won’t decide this issue, but says that it would be hard to provide notice to all who have been exposed to asbestos including family members, b/c it is almost impossible to know who these people are.

·         These people would have a difficult time deciding whether or not to join the class if they don’t know whether they will get sick

Case:

Rush v. City of Maple Heights (Ohio St. 1958)

Facts:

Π sued and won damages for damage to her motorcycle from a bumpy city street.  She later sued for personal injuries from the same accident.

-The city stated that the second action was res judicata and she was barred from bringing the action.

Issue:

Whether the Π can bring a suit for property damage and a separate suit for personal injury when they arise from the same facts?

Holding:

No

Rationale:

Majority rule: multiple damages from a single tort should be raised in the same suit.  This is necessary to preven the multiplicity of suits. 

-The minority english rule does not conform with modern practice.

-where a person suffers both personal injuries and property damage as a result of the same wrongful act, only a single cause of action arises, the different injuries occasioned thereby being separate items of damage from such act.

Case:

Herendeen v. Champion International (2^nd Cir 1975)

Facts:

Herendeed is a former employee of Δ Nationwide (Champion), who voluntarily resigned his positionas a paper salesman, and took new employment with a competitor

-Π alleged, in state court,  that Δ fraudulently induced him to leave by promising him he would receive all of his employee benefits, he never received a new contract however, and brought suit.

-The case was dismissed because Π was relying on an unenforceable oral agreement.

-After the state court action was dismissed Π filed in federal court in diversity claiming that he is entitled, pursuant to the plan’s eligibility rules to receive benefits, now that he is no longer an employee.

-          he is seeking 100K for the wrongful loss of benefits due him under the plan, and 785K in punitive damages.

-          The complaint was dismissed on the grounds of res judicata.

Issue:

Whether the Π’s state court action is substantially the same as the Fed Ct action, and thus the state action is res judicata on the fed ct issues

Holding:

No

Rationale:

The court use three criteria for determining whether causes of action are the same for the purposes of res judicata

-          (1) whether a different judgment in the second action would impair or destroy rights or interests established by the judgement entered in the forst action

-          (2) whether the same evidenceis necessary to maintain the second cause of action as was required by the first, and

-          (3) whether the essential facts and issues in the second were present in the first.

Π’s state court action was grounded upon and sought damages for an alleged fraudulent breach of contract, and enforcement was barred by the statute of frauds.

-          in the second suit the Π is stating a differen wrongful act by the Δ – ie the Δ has misapplied the plan regulations and he has been wrongfully denied pre-existing pension benefits.

Court finds that holding for the Π in the fed ct action will not undermine the decision by the state court that the Δ is under no obligation to to contract with the Π in connection with his resignation

-          appellants inability to establish the existence of a new K with Champion in in no way dispositive of his alleged vested rights in the Plan, which were built up over 15 years of employment.

In the state suit the Π could have joined the present cause of action along with his claim that the Δ’s fraudulently misled him, but he was not required to do so.

Case:

Federated Dept Stores v. Moitie (1981)

Facts:

Moitie is one of seven plaintiffs who sued several department stores in an antitrust action alleging that the stores engaged in price fixing.

-All of the suits were separate, but assigned to one federal judge. All of the suits were dismissed b/c P’s didn’t allege that they had incurred an injury to their business or property.

-5 plaintiffs appealed their decisions, but Moitie and Brown had the same lawyer, who decided to refile the actions in state court rather than appeal the decision of the fed ct.

-The D’s (federated) moved to remove the case to fed ct, where they were dismissed because of res judicata(same parties, same alleged offenses, etc) Moitie and Brown appealed this decision, and while this appeal was pending the S.Ct. reversed the prior law which had caused the initial cases to be dismissed.

-The other 5 litigants then won their appeals, because of the law reversal while their appeals were pending.

Issue:

Whether the Π’s dismissal based on res judicata should be dismissed, because if they would have appealed they would have won?

Holding:

No. They should have appealed not refiled. 

Rationale:

A judgment merely voidable because based upon an erroneous iew of the law is not open to collateral attack, but can be corrected only by a direct review and not by bringing another action upon the same cause of action.

-The 9^th Cir conceded that strict application of the doctrine of res judicata would have required that the case be dismissed.

-Π’s seek to be the windfall beneficiaries of an appellate reversal procured by other independent parties who have no interet in respondents case.

-Simple justice is achieved when a complex body of law developed over a period of years is evenhandly applied.

-public policy dictates that there be an end to the litigation and that those who have contested an issue shall be bound by the result of the contest and that matters once tried shall be considered forever settled as between the parties

-The court says that while the result is unfair, the injury here is caused by P’s lawyer. He could have appealed like the other P’s but chose not to.

Case:

Mitchell v. Federal Intermediate Credit Bank (So. Carolina 1932)

Facts:

Mitchell filed a state action against FICB while a federal action was pending against him, intiated by FICB.

-His defense in the federal action is the same as the cause of action he alleges in the state action.

-To obtain favorable loan rates he agreed to sell his potato crop through a cooperative and assign his proceeds to the bank as security for two $9000 notes executed in favor of the bank. His crops netted, not less than 18K.

-Mitchell won the federal action. In the state action the trial judge ruled that the final judgement in the federal action was res judicata as to the causes of action being raised in the state action.

-Π appealed to the SC S CT.

Issue:

Whether the judgement in the federal action was res judicata as to the state action?

Holding:

Yes.

Rationale:

The transaction out of which the case at bar  arises is the same transaction that was pleaded as a defense to the federal action.

-A recovery for one part will bar a subsequent action for the whole, the residue, or another part.

-If a Δ, having a demand against Π, pleads it as a set off or counterclaim in the action, he must make the most of his opportunity and exhibit his whole damage, for the judgement in the action will prevent him from afterward using the same matter, or any part of it as a separate cause of action against the former Π.

-one cannot use the same defense first as a shield and then as a sword.

Case:

Costello v. US (1961)

Facts:

Π became a naturalized citizen in 1925, and it was revoked in 1959, because it was allegedly procured by concealment of a material fact or by willful misrepresentation.  He allegedly swore he was in “real estate”, but turns out he was a bootlegger.

Earlier complaint against the Π was dismissed because there was an evidence problem. The 2^nd Cir reversed that dismissal, stating the govt should be allowed to show that its evidence was admissible.  The S Ct reversed the 2^nd Cir.

-          on remand the dist ct entered a dismissal but did not indicate whether it was with or without predjudice.

The Govt subsequently refiled by providing the appropriate type of evidence, “affidavit of good cause and complaint”

-The Π states that the dismissal should be construed as dismissed with predjudice because according to him, rule 41(b) provides that where the order does not otherwise specify a dismissal will operate as an ajudication on the merits, and effectively be with predjudice.

Issue:

Whether the govt should be allowed to refile?

Holding:

Yes.

Rationale:

A dismissal for failure to file the affidavit of good cause is a dismissal for “lack of jurisdiction” within the meaning of the exception under rule 41(b).

-A common law dismissal on a ground not going to the merits was not ordinarily a bar to a subsequent action on the same claim.

-          if the the first suit was dismissed for defect of pleadings, or parties, or a misconception of the form of proceeding, or want of jurisdiction or was disposed of on any ground which did not go to the merits of the action, the judgment will prove no bar to another suit.

The failure of the govt to file the affidavit of good cause in a denaturalization proceeding does not present a situation calling for the application of the policy making dismissals operative as adjudications on the merits.

-          the Δ is not put to the necessity of preparing a defense because the failure of the govt to file the affidavit with the complaint requires dimissal of the proceeding.

Case:

Little v. Blue Goose Motor Coach 178 NE 496 ( Ill. 1931) –Pre-FRCP

Facts:

Dead Π collided with Δ’s bus.  Δ sued for damage to the bus, and ended up winning with a finding of negligence on the part of the Π.

-However, before the first case was decided the Π sued the Δ in a different court.

-Δ claimed the issue of negligence was already decided, and could not be litigated in the 2^nd case because of the potential of inconsistent findings.

-The ct rejected the Δ’s arguments and entered judgment for the Π for 5K.

-App ct reversed stating that Π could not maintain an action arising from the same transaction where he had already been found negligent in a previous case.

Issue:

Whether the issue of negligence is precluded from being litigated in the 2^nd case?

Holding:

Yes

Rationale:

Negligence was determined by the court in the first action, against the Π, and is forever settled.

-applies to the widow of the Π because negligence determination is conclusive to all person in privity with original Π and Δ.

-App court is affirmed.

Case:

Kaufman v. Eli Lilly & Co.  482 N.E.2d 63 (NY 1985)

Facts:

15 actions were filed against the Δ.  The Bichler case was tried and the other 14 were left pending the disposition of that case.

-Π developed cervical cancer at 18 from mother’s use of DES while pregnant.

-Sued 9 of 147 makers of DES on theory of concerted liablity because drug makers had obtained approval without adequate testing.

-The Bichler action was nearly identical.  Π developed cervical cancer at 17, Π’s were born within 7 months of each other.  Bichler’s mom took DES in 1953 and Kaufman’s mom took DES in 1954.

The Bichler jury decided 6 issues.  Kaufman moved for partial summary judgment precluding Lilly from relitigating the six issues decided by Bichler.  Partial SJ was granted.

-The App Ct affirmed the summary judgment, and granted Lilly leave to appeal to this court on a certified question.

Issue:

What collateral estoppel effect is given to the jury findings in Bichler?

Holding:

Jury finding #7 may be relitigated.

Rationale:

There were 7 Jury findings, but in Bichler’s motion for SJ she deleted #2 dealing with proximate cause.  This leaves 6.

-The Ct affirmed the App Ct with a modification.  The court said that Lilly can relitigate #7 which asked whether “[the] Δ and other drug manufacturers act[ed] in concert with each other in testing and marketing DES for use in treating accidents of pregnancy.”

-          the court allowed this to be relitigated because the concerted action liability found in Bichler was based on an unresolved question of law which should not be given preclusive effect in the Kaufman litigation.

Collateral Estoppel: precludes a party from relitigating an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point.

Two requirement for CE to be invoked:

-          (1) the identical issue necessarily must have been decided in the prior action and be decisive of the present action, and

-          (2) the party to be precluded from relitigating the issue must have had a full and fair opportunity to contest the prior determination.

Burdens for establishing the requirements:  the party seeking to benefit of CE has the burden of demonstrating the identity of the issues in the present litigation and the prior determination, whereas the party attempting to defeat its application has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior action.

In Bichler Lilly challenged the concerted action of liablity on two different grounds,but did not raise these objections in the trial court. The court never passed on these issues, and only held that the jury’s findings were based on legally sufficient evidence.

-          Important because CE effect will only be given to matters actually litigated and determined in a prior action.

-          Because Lilly did not challenge the appropriatenes of the concerted action theory in Bichler, it was not actually litigated.

-          Not litigated so they can litigate it in Kaufman

The issue of proximate cause was specifically deleted from the Bichler interrogatories by the Π’s motion and Lilly will have the opportunity to demonstrate that Π’s injuries were not caused by her mother’s ingestion of DES due to minor differences between the Π’s or circumstances surrounding their mother’s ingestion of DES.

Case:

General Foods v. Mass. Dept of Pub. Health (1^st Cir. 1981).

Facts:

Π, GF and Rich Sea Pak (RSP) filed and action alleging the unconstitutionality of the Mass open date food labeling regulation..

-Δ, MDPH moved to dismiss the complaint because the matter was res judicata.  They contend the judgment in Grocery Mfr’s of America (GMA) precluded the claims made in the complaint.

-The court granted the MDPH motion to dismiss, and the Π appealed.

The GMA litigation challenged the Mass statutes with the American Frozen Food Institute (AFFI). Neither GF or RSP were nominal parties to this litigation, but GF and Rich Products (RP), a RSP stockholder are members of the GMA and AFFI.

-          the MDPH was the Δ in the litigation.

-          Although not a party both GF and RP contributed money towards the litigation by GMA against the MDPH.

-          RSP is not a member of GMA or AFFI and did not contribute to the GMA litigation.

Issue:

Whether either GF or RSP are precluded from bringing their claim

Holding:

GF is precluded. RSP is not.

Rationale:

What persons are bound by a valid judgment is determined, subject to constitutional law, by local law of the state where the judgment was rendered.  We conclude that GF is bound by the Mass judgment in the GMA litigation if, but only if, Mass would bind them.

-          The 5^th and 14^th Amendments protect a non party from being bound by an in personam judgment unless in the underlying litigation he had directly or vicariously a full and fair opportunity to present evidence and argument.

-          The Mass courts recognize that a person who is not a party to an action but who expressly or impliedly gives a party authority to represent him may be bound by the rule of res judicata as though he were a party.

GF contributed $2500 towards the GMA litigation, which challenged regulations that did not affect the trade association, but only its members.

-          a member of a trade association who finances an action which it brings on behalf of its members impliedly authorizes the trade association to represent him in that action.

-          GF became bound by the Mass state judgment unless it can prove that the trade associations were so inadequate in their representation that GF did  not get a full and fair consideration of its claim. 

The failure of a representative to invoke all possible legal theories or to develop all possible resources of proof does not make his representation legall ineffective.

-          the same reasoning supports a conclusion that RP is bound by the GMA judgment.

RSP is not bound by the judgment.  RSP and RP are related with similar interests, but because RSP is controlled by RP, it was not privvy to the action and had no control over the actions of RP.

-          the reversal of the SJ does not preclude the MDPH from arguing various other theories that would prevent RSP from litigating. Ie – whether RP and RSP are so similar as to disregard their separate corporate entities, whether RSP authorized RP to represent it in the litigation, or whether in other ways RSP had an opportunity vicariously to present evidence and arugument in the GMA litigation, or whether RP is using RSP as an agent for evading the Mass judgment.

Case:

Bernhard v. Bank of America 122 P.2d 892 (CA 1942)

Facts:

Sather, and elderly woman authorized Mr. Cook and Dr. Zeiler to make drafts against her bank account in Los Angeles.  Mr. Cook opened an account at his San Dimas bank in the name  of “Clara Sather by Charles O Cook”. Several checks were drawn from the LA account and deposited in the San Dimas account to meet Sather’s expenses.

-Sather transferred the entire balance of her LA account to the San Dimas account..

-Cook withdrew the entire balance from that account and opened a new account in the same bank in his and his wife’s name.

-He then withdrew the money from that account and deposited it in a LA bank in an account that was in the name of himself and his wife.

-Sather died, when Cook finally filed an accounting, he failed to mention the withdrawals and deposits of Sather’s bank account. 

-The beneficiaries under Sather’s will objected and the court settled the account, and declared that the decedent during her lifetime had made a gift to Cook.

-Bernhard was appointed adminstratrix of the estate and instituted this action against Bank of America, sucessor to the San Dimas bank, seeking to recover the deposit because Sather never authorized the account that Cook set up in the San Dimas bank.

-Δ pleaded that the money was paid to Cook with the consent of sather, and that this is res judicata by virtue of the probate court’s finding that the money was a gift to Cook.

Issue:

Whether res judicata bars the Π from bringing this action?

Holding:

Yes

Rationale:

Π contends that res judicata does not apply because the Δ was not a party to the previous action nor in privity with a party to the action.

Privity: only parties to the former judgment or their privies may take advantage of or be bound by it – a party is one who is directly interested in the subject matter and had a right to make defense, or to control the proceeding, and to appeal from the judgment

Mutual Estoppel: the estoppel is mutual if the one taking advantage of the earlier adjudication would have been bound by it, had it gone against him.

-many courts have abandoned the requirement of mutual estoppel and confined the requirement of privity to the party against whom the plea of res judicata is asserted.

In determining the validity of a plea of res judicata three questions are pertinent:

-          (1) Was the issue decided in the prior adjudication identical with the one presented int eh action in question?

-          (2) Was there a final judgment on the merits?

-          (3) Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?

The Δ in this case is not precluded by lack of privity or mutuality  of estoppel from asserting the plea of res judicata against the Π.

-The only determination that needs to be made is whether the Π in the present action was a party or in privity with a party to the earlier proceeding.

-          the Π as adminstratrix of the estate representes the very same persons and interests that were represented in the earlier hearing on the executor’s account.

Where a party though appearing in two suits in different capacities is in fact litigating the same right, the judgment in one estops him in the other.

Case:

Parklane Hosiery v. Shore  (1979)

Facts:

Shore brought a stockholders action against Parklane for issuing a materially false and misleading proxy statement in connection with a merger.  They were seeking damages, recission of the merger, and recovery of costs.

-Before this action came to trial the SEC alleged the same facts and obtained injunctive relief after the District court found that the proxy statement was materially false and misleading.  The 2^nd Cir affirmed.

-Shore moved for partial summary judgment to preven parklane from relitigating the issues that were decided in the SEC action.

-          The Dist Ct denied the motion on the ground that such an application of Collateral Estoppel (CE) would deny Parklane’s 7^th amendment right to a jury trial.

-          The 2^nd Cir reversed stating that “a party who has had issues of fact determined  against him after a full and fair opportunity to litigate in a nonjury trial is collaterally estopped from obtaining a subsequent jury trial of the same issues”

Issue:

Whether  a litigant who was not a party to a prior judgment may nevertheless use that judgment “offensively” to prevent a defendant from relitigating issues resolved in the earlier proceeding.

Holding:

Yes.

Rationale:

Until recently collateral estoppel was limited by the doctrine of mutuality, whichh stated that neither party could use a prior judgment as an estoppel against the  other unless both parties were bound by the judgment

-          Mutuality requirement provided a party who had litigated and lost in a previous action an opportunity to relitigate the identical issues with new parties.

Blonder Tongue involved a defensive use of collateral estoppel where a Π was estopped from asserting a claim that the Π had previously litigated and lost against another Δ.

-          this case involves offensive use of CE where a Π is seeking to estop a Δ from relitigating the issues which the Δ previously litigated and lost against another Π.

Arguments against Offensive CE – Π’s might adopt the wait and see attitude in the hopes that an action by a different plaintiff will result in a favorable judgment he can now use to collaterally estop the Δ from relititgating

-          also may be unfair to Δ’s, especially if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the Δ.

The preferable approach is not to bar use of offensive CE, but to grant trial courts broad discretion in applying it.

General Rule: in cases where a Π could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of Offensive CE (OCE)would be unfair to a Δ, the trial judge should not allow the use of OCE.

However, none of the circumstances that might justify reluctance  to allow use of OCE are present in this case.

-          OCE will not reward a private Π who could have joined in the previous action, since Shore probably could not have joined in the SEC action, even had he wanted to.

-          In light of the seriousness of the SEC allegations as well as the foreseeablity of subsequent suits that typically follow a successful Government judgment, Parklane had every incentive to litigate the SEC lawsuit fully and vigorously.

-          The judgment in the SEC action was not inconsistent with any previous decision

-          Shore will not have any procedural advantages that were unavailable in the first action of a kind that might be likely to cause a different result.

Parklane is collaterally estopped from relitigating the question of whether the proxy statement was materially false and misleading.

7^th Amendment Issue

Beacon Theatres – if an issue common both to legal and equitable claims was first determined by a judge, relitigation of the issue before a jury might be foreclosed by res judicata or collateral estoppel.

-          A litigant who has lost because of adverse factual findings in an equity action is equally deprived of a jury trial whether he is estopped from relitigating the factual issues against the same party or a new party

The law of CE forecloses the petitioners from relitigating the factual issues determined against them in the SEC action, nothing in the 7^th amendment dictates a different result, even though because of lack of mutuality there would have been no collateral estoppel in 1791

Case:

Allen v. McCurry (1980)

Facts:

Two cops tried to buy heroin from McCurry, the Δ. The Δ shot them, seriously wounding the police officers.

-Δ eventually surrendered. The cops entered the house and seized drugs and other contraband that lay in plain view, as well as additional contraband found in dresser drawers and on the porch

-The trial judge excluded the evidence that was seized from the dresser drawers and on the porch.  The evidence in plain view was admitted. The Δ was convicted of heroin possesion and attempted murder.

-Δ subsequently filed a §1983 action for 1M in damages against the police officers, alleging a conspiracy to violate his 4^th amend rights, an unconstitutional search and seizure of his house, and an assault on him by unknow police officers after he had been arrested.

-          The dist court granted summary judgment, holding that collateral estoppel prevented the Δ from relitigating the search and seizure issue that had been decided against him in the state courts

Issue:

Whether §1983 provides an exception to §1738, so as to allow him to relitigate the search and seizure issue

Holding:

No

Rationale:

Congress has specifically required all federal courts to give preclusive effect to state court judgments whenever the courts of the state from which the judgments emerged would do so.

-§1983 stems from the Civil Rights Act of 1871. In 1871 res judicata (RJ) and collateral estoppel (CE) could certainly have applied in federal suits following state court litigation between the same parties or their privies, and nothing in the language of §1983 expresses any congressional intent to contravene the common law rules of preclusion or to repeal the express statutory reqiurements of the predecessor.

-          1983 creates a new federal cause of action, and says nothing about the preclusive effect of state court judgments.

Congress intended a federal remedy creating an exception to the application of RJ or CE in three circumstances:

-          (1) where state substantive law was facially unconstitutional

-          (2) where state procedural law was inadequate to allow full litigation of a constitutional claim

-          (3) where state procedural law, although adequate in theory, was inadequate in practice.

Federal courts could step in where the state courts were unable or unwilling to protect federal rights.

-No reason to believe that congress intended to provide a person claiming a federal right an unrestricted opportunity to relitigate an issue already decided in state court simply because the issue arose in a state proceeding in which he would rather not have been engaged at all.

Dissent:

In Montana the court pronounced three major factors to be considered in determining whether CE serves as a barrier in the federal court:

-          whether the issues presented…(1) are in substance the same…(2) whether controlling facts or legal principles have changed significantly since the state court judgment; and (3) whether other special circumstances warrant exception to the normal rules of preclusion.

The majority states that CE should turn on only one “general limitation”… the concept of CE cannot apply when the party against whom the earlier decision is asserted did not have a full and fair opportunity to litigate that issue in the earlier case.

A trial court, faced with the decision whether to exclude relevant evidence, confronts insitutional pressures that may cause it to give a different shape to the fourth amendment right from what would result in civil litigation of a damages claim.

Case:

Maresse v. American Academy of Orthopaedic Surgeons (1985)

Facts:

Dr.s were denied membership in the Acadamy without a hearing or statement of reasons. The Drs filed suit under Illinois associational rights law. The Ill app ct ultimately held that the Dr in the first case failed to state a cause of action, and the case was dismissed.

-In 1980 Π’s filed a federal antitrust action against the Academy based on the same events underlying their unsuccessful state court actions.

-Δ filed a motion to dismiss arguing that claim preclusion barred the federal antitrust claim because the earlier state action was dismissed with predjudice.

-The dist ct denied the motion on the grounds that the state courts lack jurisdiction over federal antitrust claims, and therefore a state court jusgment cannot have preclusive effect on the federal claim.

-The 7^th cir reversed the dist ct and held that claim preclusion barred the federal suit

Issue:

Whether a state court judgment may have preclusive  effect on a federal antitrust claim that could not have been raised in the state proceeding.

Holding:

No

Rationale:

It has long been held that §1738 does not allow federal courts to employ their own rules of RJ and CE in determining the effect of state judgments.

-Our decisions indicate that a state court judgment may, in some circumstances, have preclusive effect in a subsequent action within the exclusive jurisdiction of the federal courts.

Kremer indicates that §1738 requires a federal court to look first to state preclusion law in determining the preclusive effects of a state judgment.

-          an exception to §1738 will not be recognized unless a later statute contains an express or implied repeal.

-          The basic approach adopted in Kremer applies in a lawsuit involving a claim within the exclusive jurisdiction of federal courts.

A state court will not have occasion to address whether a state judgment has issue or claim preclusive effect in a later action that can be brought only in federal court

-          a federal court may rely on state preclusion principles to determine the extent to which an earlier state judgment bars subsequent litigation.

If state preclusion law includes the requirement of prior jurisdictional compentency, which is generally true, a state judgment will not have claim preclusive effect on a cause of action withint he exclusive jurisdiction of the federal courts.

-The issue whether there is an exception to §1738 arises only if state law indicates that litigation of a particular claim or issue should be barred in the subsequent federal proceeding

-          unless application of Ill preclusion law suggests, contrary to the usual view, that petioners federal antitrust claim is somehow barred, there will be no need to decide if there is an exception to §1738.

-          The 7^th Cir opinions express the view that §1738 allows a federal court to give a state court judgment greater preclusive effec than the state courts themselves would give to it.

We are unwilling to create a special exception to §1738 for federal antitrust claims that would give state court judgments greater preclusive effect that would the court of the state rendering the judgment.

-          we reject a judicially created exception to §1738 that effectively holds as a matter of federal law that a Π can bring state law claims initially in state court only at the cost of forgoing subsequent federal antitrust claims.

-          The court of appeals should have first referred to Ill law to determine the preclusive effect of the state judgment.  ONLY, if the state law indicates that a particular claim or issue would be barred, is it necessary to determine if an exception to §1738 should apply.

Dissent:

Ill Jurisdictional compentency statute could be interpreted to require that the antitrust issues be raised at the state level.

-          if state law is simply indeterminate, the concerns of comity and federalism underlying §1738 do not come into play.

-          If a state statute is indentical in all material respects with a federal statute within exclusive federal jurisdiction, a party’s ability to assert a claim under the state statute in a prior state court action mightbe said to have provided, in effect, a full and fair opportunity to litigate his rights under the federal statute.