Res Judicata and Collateral Estoppel
The doctrines of res judicata and collateral estoppel often come into play when a subsequent case, similar to a case already adjudicated, is filed. The rationale behind the doctrines is that an issue or cause of action fully litigated should not be litigated again. Res judicata is often referred to as "claim preclusion". Collateral estoppel is often referred to as "issue preclusion".
Res judicata is raised when a party thinks that a particular claim was already, or could have been, litigated and therefore, should not be litigated again. When addressing a res judicata argument, a court will usually look at three factors. First, the court will consider whether there was previous litigation in which identical claims were raised, or in which identical claims could have been raised. The second factor to be considered is that the parties must be the same parties as those who litigated the original action. The third factor is that the original action must have received final judgment on the merits.
The first factor to consider is whether there was previous litigation in which identical claims were raised, or in which identical claims could have been raised. For example:
Andy brings a cause of action against Mike for injuries Andy sustained when he slipped and fell in Mike’s apartment. The one count complaint sounds in negligence. The case goes to trial and a jury determines that Mike was not negligent. A year later, Andy brings a cause of action against Mike for injuries Andy sustained while a passenger in Mike’s car when they were involved in a motor vehicle collision. Mike cannot employ the doctrine of res judicata because, even though they are the same parties and the first action was adjudicated on the merits, the two actions are completely unrelated. Although Andy could have raised the claim against Mike in the first action, the second action is not barred by res judicata. If, however, Andy files a cause of action a year later against Mike for the emotional distress Andy suffered at the time of the slip and fall, the court is likely to bar the claim because Andy should have raised the emotional distress claim in the first case, as it was based on the same incident. Even though the claims are not identical because Andy will have to prove different elements for each claim, they are so closely related that res judicata applies.
Most courts use a "transaction or occurrence" test to determine whether claims could have been raised in previous litigation; i.e., if the 2 claims are based on the same transaction or occurrence, they must be brought in the same action.
The second factor to consider is whether the parties in the second action are the same parties that litigated the first action. This can be established either by showing that the parties litigating this action are identical to the parties who litigated the first action or by at least showing that the parties in the second action were in privity with the parties in the first action. For example:
Josh brings an action against Barry for negligence, for injuries Josh sustained when he was a passenger in Barry’s car when it was involved in an automobile accident. The action is adjudicated on the merits and Barry is found to be not liable. Mary, who was also a passenger in Barry’s car with Josh when it was involved in the accident, files a different suit against Barry for negligence for injuries she sustained during the same accident. Barry asserts the doctrine of res judicata. Even though the two separate actions arise from the same accident and are against the same defendant, because the plaintiffs differ, the doctrine of res judicata does not apply.
However, for res judicata to apply, the parties do not have to be exactly identical. If a party to the second action is in privity with a party in the first action, res judicata may apply. Privity means that the second party is connected or shares the same interests as the first party. There are many ways in which a party can be in privity with another party. For example, the second party may have succeeded to an interest that the first party had (such as if the second party bought the company that was the plaintiff in the first case). If the second party somehow controlled the litigation in which the first party was involved, or where the second party and the first party are involved in an agent-principal relationship, the doctrine may also apply. This often occurs in insurance and employment cases. If the first party either did or could have adequately represented the second party’s interests, then res judicata may apply. For example:
EXAMPLE (1): Brower, Inc. and Macrosoft, Inc. are software manufacturing companies. Brower, Inc. sues Macrosoft, Inc., claiming antitrust violations on Macrosoft's part. Macrosoft prevails in the action. Later, Browser is acquired by Jetscape, Inc., another computer software company. Jetscape sues Macrosoft for antitrust violations for the same allegedly illegal actions that were the subject of the first claim. Res judicata will apply to bar Jetscape's action.
EXAMPLE (2): Victim is involved in an auto accident when her car is struck by a Malmart, Inc. truck that is driven by Reckless. Victim sues Reckless and recovers an award of $100,000. Subsequently, Victim sues Malmart, trying to hold Malmart liable for the accident as well because Reckless was a Malmart employee performing his employment duties when he got into the accident with victim. Since Reckless and Malmart shared the same interests in the case (Malmart was responsible for Reckless' conduct), res judicata would bar the action against Malmart because the same action had been litigated in the Victim v. Reckless case.
The third factor to consider is whether the original action was judged on the merits of the case and whether that judgment was a final judgment. Final judgment does not occur when the case is settled by the parties on their own, or where the judge decides a motion or makes some other determination that does not resolve the case based on the facts and evidence of the case. This means that the final judgment must concern the actual facts giving rise to the claim. Dismissal of a case because the court does not have subject matter jurisdiction, because the service of process was improper, because the venue was improper or because a necessary party has not been joined, for example, are not judgments on the merits. Grants of these types of motions to dismiss really have nothing to do with the facts, except that the litigation is precluded by a technicality. As such, subsequent litigation as to whether the defendant is liable would not be barred.
The doctrine of res judicata is not usually raised by motion. Under the federal rules, it must be raised by affirmative defense. In most situations, if a defendant does not raise the defense of res judicata, it is waived. See Rotec Industries, Inc. v. Mitsubishi Corp., 348 F.3d 1116, 1119 (9th Cir. 2003):
“Claim preclusion is an affirmative defense which may be deemed waived if not raised in the pleadings. Moreover, the failure of the defendant to object to the prosecution of dual proceedings while both proceedings are pending also constitutes waiver.”
Collateral estoppel arises when the claim (cause of action) at the bar has not been litigated, but the exact issue that is now before the court has been raised and litigated in an earlier action or proceeding. Collateral estoppel is a bit different than res judicata, although the rationale is the same – it is a tool to prevent re-litigation of issues already litigated. See U.S. v. Wells, 347 F.3d 280, 285 (8th Cir. 2003):
“The collateral estoppel doctrine provides that ‘when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit.’
The requirements that must be satisfied before the doctrine of collateral estoppel is applied are similar to those for res judicata, but there are differences. First, the issues in the first and second litigation must be identical and must have been before a court. Second, the issue must have been actually litigated. Third, a final judgment must have been rendered, ultimately deciding the issue in question.
The first factor is that the issues in the previous and subsequent litigation must be identical. Using the transaction or occurrence test would be too broad for collateral estoppel in most cases. Rather, the court will require that the issues be identical or very similar. When considering the doctrine of collateral estoppel, it is important to note that the subject matter of the subsequent litigation does not need to be the same as the subject matter of the previous litigation for the doctrine to apply. As long as the issue was already litigated, collateral estoppel can apply.
The second factor is whether the issue was actually litigated during the first case. Unlike with res judicata, if the issue could have been raised, but wasn’t, the defendant will not be collaterally estopped from raising the issue in subsequent litigation.
The third factor is that the issue must have necessarily been decided on the merits. There are two requirements for this factor. First, the issue must be implicated in the judgment. If an issue is raised in the previous litigation, but the issue is not decided or has no connection to the judgment, then the issue cannot be the target of collateral estoppel. Along these lines is a jury’s finding that is not one of the reasons for the judgment. For example, if the plaintiff brought a negligence action with a two count complaint, with both counts sounding in negligence, but the jury simply finds that the defendant was negligent, the doctrine of collateral estoppel probably cannot be invoked, since it is not clear which issue was the subject of the final adjudication. Second, like res judicata, the issue must have been decided on the merits and not based on a technicality.
In most cases, the identity of the parties, or those in privity to the original parties, must be the same as in the first action. Some courts, however, will not impose such a requirement.
See Brockman v. Wyoming Dept. of Family Services, 342 F.3d 1159, 1166 (10th Cir. 2003).