1. Non-mutual collateral estoppel against non-litigant. Sally pays her rent 1 day late. Landlord invokes a penalty clause of her lease and sues Sally for a $100 penalty for late payment. The court holds that the penalty clause is valid. Landlord later sues Bobby for paying his rent a day late. Bobby argues that the penalty clause is invalid as against public policy; the Landlord counters that the issue of the clause’s validity was settled in the suit against Sally. Is Landlord correct?
Discussion: No. The issue preclusion (or “collateral estoppel”) asserted here would be “non-mutual” because it is not between former parties or their privies. Although non-mutual collateral estoppel (“NMCE”) is sometimes permitted, Due Process prevents its use against a person who themselves (or their privy) never litigated the issue in the prior suit. Here, Bobby was not a party or privy to the prior suit. Due process prevents the assertion of NMCE against him. See box D of the non-mutual issue preclusion scenarios chart.
2. Defensive non-mutual collateral estoppel. Sally pays her rent 1 day late. Landlord invokes a penalty clause of her lease and sues Sally for a $1 million penalty for late payment. After the parties vigorously litigate the issue of the penalty’s validity, the court holds that the penalty clause is invalid as against public policy. Landlord later sues Bobby for paying his rent a day late. Bobby argues that the penalty clause was shown to be invalid in the first suit. The Landlord counters that non-mutual estoppel cannot be used against him. Is Bobby correct?
Discussion: Possibly yes. NMCE (which is permitted by some but not all courts) probably can be used here because it’s being asserted against a party (Landlord) who litigated and lost on that issue in the prior suit. Landlord is estopped (prevented) from relitigating that issue here so long as he had a full and fair opportunity to litigate in the prior suit. See the discussion of Blonder-Tongue in the casebook and in Parklane. See box A of the non-mutual issue preclusion scenarios chart.
3. Offensive non-mutual collateral estoppel. Paul sues D for products liability involving a computer keyboard that is alleged to cause carpal tunnel syndrome. In a special verdict, the jury finds that D is liable under a strict liability theory and awards P his sought-for damages of $100,000 for his specific injuries, which included an expensive surgery, pain and suffering, and lost wages. Penny then sues D in the same court for products liability involving the same computer keyboard for her injuries, which involved some physical therapy and lost work time, totaling around $10,000. Penny argues that liability and damages are established by offensive non-mutual collateral estoppel. Is she correct?
Discussion. Possibly yes in part. If permitted by the relevant court, offensive NMCE might be used here. Parklane held that NMCE could be used offensively and listed a number of factors for courts to consider. Did Penny sit and wait to see if D would lose; if she did and could have easily joined the suit, that cuts against offensive NMCE. The court also listed unfairness factors: 1) did D have little incentive to litigate in the first suit (not here, because the damages alleged in suit 1 were high); 2) were there differing procedures that made it harder for D to defend in the first suit (here, same court so none); and 3) prior inconsistent judgments (here, none). See Parklane. (Note that the unfairness factors could be relevant to analyzing the defensive NMCE scenario as well.) So offensive NMCE is probably ok here. See the top-row “Offensive NMCE” block of the NMCE handout. However, the preclusive effect would be limited only to the issue of strict liability and not to damages. Penny would still have to prove her own damages as they were not established in the first suit. See box B of the non-mutual issue preclusion scenarios chart.
Posted Apr. 17, 2015