Claim Preclusion

1. Claim Preclusion April 7

2. Distinguishing Claim & Issue Preclusion • Claim preclusion deals with whether you can file a second suit based on the same claim filed in an earlier lawsuit; issue preclusion deals with whether you can re-litigate an issue that was litigated in an earlier case. Claim & issue preclusion governed by the common law (not the FRCP)

3. New terms – old concepts • Claim preclusion = • Issue preclusion = collateral estoppel

4. Elements of Claim Preclusion • What are three things the party seeking claim preclusion must show?

5. Note • Claim preclusion applies even if a final judgment was based on erroneous law or application of the law. If a judgment is erroneous, what is the remedy?

6. Limits the power of the Master • Claim preclusion is very important b/c it is a limit to the concept that the plaintiff is “master of her complaint”. Why? How does claim preclusion affect a plaintiff in drafting her complaint?

7. Study Hint • In dealing with a claim preclusion issue make sure you separate the claims into “Case one” and “Case two” and make sure you understand what the claims were in each case as well as the outcome of the earlier case.

8. Car Carriers • What were the claims in case one; • What was the underlying basis of those claims • What happened in case one (the outcome) • Why did the court rule as it did in case one

9. Car Carriers • What are the claims in case two • What is the underlying basis of the claims • What is the issue the court must decide

10. Query • If claim preclusion applies, does it bar ONLY those claims that you actually brought? • What is the policy underlying claim preclusion?

11. 2 main approaches to Claim Preclusion • What are the two main approaches to a claim preclusion analysis? • What approach does the Car Carriers’ court use in analyzing whether it is the same claim?

12. Same t/a or occurrence • How do you determine if a second claim arises out of the same t/a or occurrence as the first claim?

13. Car Carriers • Final Issue: How did the court deal with the plaintiffs’ argument that they “now know facts we didn’t know then - thus we shouldn’t be precluded from bringing case 2”

14. Same parties or in privity • Easy issue - same parties, - where do you look to see if they are the same parties ?

15. Gonzales • Who are the plaintiffs and what are the facts of case one? • Who are the plaintiffs and what are the facts of case two?

16. Gonzalez • Were the claims in case one and case two the same claims even though different plaintiffs having different lots that were sold to them? (Make the court’s argument and make the counter-argument)

17. Gonzalez • Was there a final judgment on the merits?

18. Constitutional Issue • Why do we have the claim preclusion requirement that it must be the same parties or their privies? What constitutional right is implicated in claim preclusion?

19. Gonzalez • Plaintiffs argue dicta in a supreme court case should be read to say can’t apply claim preclusion to non-party in any circumstance - what does court say here?

20. Gonzalez • What are the two tests for when someone is in privity?

21. What is substantial control? • Hypo: A doctor is sued. Her insurance company handles the defense. Regardless of what the doctor wants, the insurance company decides whether to accept settlement and other key issues - is insurance company in subst’l control? Why/why not?

22. Substantial control? • What if parent pays for the attorney representing her 18 year old child, but lets child call the shots of litigation - is that substantial control? • What if parent pays for atty and helps atty find witnesses and evidence but atty ultimately decides what evid to use and what witnesses to call – substantial control? • What if parent pays, helps find witnesses and evid and retains right to fire atty if she unhappy w/atty’s decisions – substantial control?

23. Standard • To determine if subst’l control, look at all the facts/circumstances to see if there is a "reasonable inference of a nonparty’s potential or actual involvement as a decision maker in the earlier litigation."

24. Query – for the subst’l control test to apply: • Do you have to simply have the power to be in control or do you have to EXERCISE that power?

25. Gonzalez • How does the court apply the substantial control test to the facts of this case?

26. Virtual Representation • What factors does court consider in looking at whether there was virtual representation?

27. Gonzalez • Argue for both sides using the virtual representation factors. • How does the court apply the virtual representation factors to this case?

28. LAST CRITERIA • What is a final judgment

29. Final judgment explored What is meant by judgment “ON THE MERITS”? Why require a judgment on the merits?

30. What is a final judgment on the merits? • Verdict • JMOL • Summary Judgment • Dismissal for lack of smj • Dismissal for lack of pj • Dismissal for improper venue • Dismissal for failure to join a necessary party?

31. Thorny issues • Is a 12b6 with prejudice a decision on the merits? • Is an involuntary dismissal a judgment on the merits? • (see next slide for analysis)

32. Two views “on the merits” • Modern view: Any judgment against the CLAIMANT except for ones based on: lack of jurisdiction, improper venue or nonjoinder is on the merits. Most courts interpret “jurisdiction” as including failure to satisfy a precondition of the suit (e.g. failure to exhaust admin. remedies warranting a dismissal = not on merits dismissal) • Older view: (minority) If the dismissal did not reach the merits of the dispute, then it does not have a preclusive effect.

33. Practice Pointer • To make sure that a dismissal does not have preclusive effect - get the court to note that the dismissal is WITHOUT PREJUDICE. If the order does not say “w/out prejudice”, fed courts and most state courts act as if it was w/prejudice & will consider it a dismissal on the merits!!