Parklane Hosiery Co. v. Shore - 439 U.S. 322 (1979)

Parklane Hosiery Co. v. Shore

439 U.S. 322 (1979)

I. Issue

Whether a party who has had issues of fact adjudicated adversely to it in an equitable action may be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a new party.

II. Fact

The respondent brought this stockholder's class action against the petitioners in a Federal District Court.  The complaint alleged that the petitioners, Parklane Hosiery Co., et al. had issued a materially false and misleading proxy statement in connection with a merger.  Before this action came to trial, the SEC filed suit against the same Ds in the Federal District Court, alleging that the proxy statement that had been issued by Parklane was materially false and misleading in essentially the same respects as those that had been alleged in the respondent's complaint.  The District Court found that the proxy statement was materially false and misleading in the respects alleged.  The court of Appeals for the Second Circuit affirmed this judgment.

The respondent in the present case then moved for partial summary judgment against the petitioners, asserting that the petitioners were collaterally estopped from litigating the issues that had been resolved against them in the action brought by the SEC.

III. Reasoning

In cases where a P could easily have joined in the earlier action or where the application of offensive estoppel would be unfair to a D, trial judge should not allow the use of offensive collateral estoppel.  In the present case, the application of offensive collateral estoppel will not reward a private P who could have joined in the previous action, since the respondent probably could not have joined in the injunctive action brought by the SEC.  Also, there is no unfairness to the petitioners in applying offensive collateral estoppel in this case.  None of the considerations that would justify a refusal to allow the use of offensive collateral estoppel is present in this case.  Furthermore, if the law of collateral estoppel forecloses the petitioners from relitigating the factual issues determined against them in the SEC action, nothing in the Seventh Amendment dictates a different result   The Seventh Amendment is not a bar to successful assertion of issue preclusion.

IV. Holding

A party who has had issues of fact adjudicated adversely to it in an equitable action my be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a new party.