Parklane Hosiery Co. v. Shore
Citation: 439 U.S. 322 (U.S. Supreme Court, 1979)
Facts
The SEC brought an action against Parklane Hosiery and obtained a judgment that the company had issued a materially false and misleading proxy statement. Shore, a shareholder, then brought a private damages class action and sought to use offensive non-mutual collateral estoppel to preclude Parklane from relitigating the issue of the false proxy statement. Parklane argued this would deprive it of its Seventh Amendment right to a jury trial.
Issue
Whether a plaintiff may use offensive non-mutual collateral estoppel to prevent a defendant from relitigating issues the defendant already litigated and lost in prior litigation brought by a different plaintiff.
Holding
The Supreme Court held that federal courts may, in their discretion, permit offensive non-mutual collateral estoppel. The Court also held that using preclusion based on an earlier bench trial does not violate the Seventh Amendment right to jury trial in the later proceeding.
Rule
Offensive non-mutual collateral estoppel is permissible but subject to judicial discretion. Courts should deny its use where: (1) the plaintiff could easily have joined the prior action, (2) the defendant had little incentive to vigorously defend the prior action, (3) the prior judgment was inconsistent with other judgments, or (4) the defendant lacked procedural opportunities available in the later proceeding.
Significance
Parklane Hosiery is the key case on offensive non-mutual collateral estoppel, establishing that the doctrine is permitted but discretionary in federal courts. Paired with Blonder-Tongue on defensive collateral estoppel, it represents the modern liberalization of preclusion doctrine away from the strict mutuality requirement.