These two doctrines stop parties relitigating what has already been decided. Res judicata, or claim preclusion, bars a second suit on the same claim between the same parties once a court has entered a final judgment on the merits. Collateral estoppel, or issue preclusion, is narrower and sharper: it bars relitigation of a particular issue that was actually litigated and decided, even in a different claim.
Rule
- Claim preclusion. A valid final judgment on the merits, the same claim or transaction, and the same parties or those in privity with them.
- Same claim. Most courts use a transactional test, so everything arising from the same transaction or occurrence had to be brought in the first suit.
- Issue preclusion. The issue must be identical, actually litigated, actually determined, and essential to the judgment.
- Who is bound. Only a party to the first case, or someone in privity, can be bound. Due process protects a stranger to the judgment.
- Mutuality. The old rule required both sides to be bound. Modern courts allow a new party to use a prior finding defensively, and offensively with the court's permission where it would be fair.
Leading cases
- Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation: a defendant may use a prior adverse finding against a plaintiff who has already litigated and lost that issue.
- Parklane Hosiery Co. v. Shore: offensive nonmutual issue preclusion is permitted, subject to the trial court's discretion and fairness factors such as whether the plaintiff could easily have joined the first suit.
- Semtek International Inc. v. Lockheed Martin Corp.: the preclusive effect of a federal diversity judgment is governed by federal common law, which normally adopts the law of the state in which the federal court sits.
Where students go wrong
The first mistake is using the labels loosely. Claim preclusion blocks the whole suit. Issue preclusion blocks one finding. Saying which one you mean is half the answer.
The second is missing the essential to the judgment requirement. A finding the first court made in passing, or an alternative ground it did not need, often will not preclude anything.
The third is binding a stranger. Someone who was not a party and had no relationship of privity cannot be bound by a judgment, however well the issue was litigated.
FAQ
What counts as a judgment on the merits?
A judgment after trial or on summary judgment does. So, in most systems, does a dismissal for failure to state a claim. A dismissal for lack of jurisdiction or improper venue does not.
Does a settlement have preclusive effect?
A consent judgment usually precludes a second suit on the same claim, but because nothing was actually litigated it generally does not preclude issues.
What is privity?
A relationship close enough that one person's day in court fairly counts as another's, such as a successor in interest, a represented class member, or someone who controlled the earlier litigation.
Related terms
Working through this in your own casebook takes longer than reading it here. Syllume starts from your syllabus and turns each assigned case into a brief you can study from.