Common law doctrines of res judicata and collateral estoppel

Preclusion in State Court

U.S. Constitution, Art. IV, Sec. 1

Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State.

This means state courts must give prior judgment from another state the same preclusive effect as in the state where it was rendered.


1st suit in VA state court. 2nd suit in NC state court.

Preclusion in Federal Court

Preclusive effect of prior state court judgment on subsequent federal action

28 U.S.C. § 1738

The records and judicial proceedings of any court of any … State … shall have the same full faith and credit in every court within the United States … as they have by law or usage in the courts of such State … from which they are taken.

This has same practical effect as full faith and credit clause


1st suit in VA state court. 2nd suit in NC federal court.

Preclusive effect of prior federal court judgment in a diversity action on subsequent state court action

Semtek International, Inc. v. Lockheed Martin Corp. (US 2001)

Procedural History

1st suit in VA federal court, deciding state-law claims under diversity jurisdiction. 2nd suit in NC federal court.

Claim v. Issue Preclusion:

Claim Preclusion (res judicata)

Effect of prior litigation on claims not litigated in the prior action

Issue Preclusion (collateral estoppel)

Effect of prior litigation on issues litigated and decided in the prior action



Claim Preclusion


A valid and final judgment precludes the parties to the prior action from asserting the same claim(s) in a subsequent action.

See Restatement (2d) of Judgments § 17

Requirements of Prior Judgment

A valid, final judgment, on the merits, between the same parties.


A judgment is valid if court had subject matter jurisdiction over claim(s) and personal jurisdiction over defendant(s).


A judgment is final when there is nothing left for the trial court to decide.

Some courts treat judgment as final even if an appeal is pending.

On the Merits

Judgments on the Merits
Dismissals not on the merits

Federated Dept. Stores, Inc. v. Moitie (US 1981)

Procedural History
Holding & Analysis

Same parties

Specifically, the party against whom claim preclusion is asserted must have been a claimant (i.e. either the plaintiff or a defendant who asserted a counterclaim or crossclaim) in the prior action

Freeman v. Lester Coggins Trucking (5th Cir. 1985)

Taylor v. Sturgell (US 2008)

Court rejects “virtual representation” theory where plaintiff in second action was not legal representative of, nor in privity with, plaintiff in first action

Claims Precluded By Prior Judgment

Where the requirements are satisfied, the prior judgment precludes all claims arising out of the same transaction, or series of transactions, out of which the claim(s) decided in the prior action arose.

Restatement (2d) of Judgments § 24(2)

What factual grouping constitutes a “transaction”, and what groupings constitute a “series”, are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.

The Restatement’s transactional test is functionally equivalent to “same transaction or occurrence” standard for joinder and “CNOF” standard for supplemental jurisdiction.

Merger & Bar

These terms simply describe the application of claim preclusion depending on which party prevailed in the prior action. In either case, the practical effect is the same: All claims arising out of the same transaction as those decided in the prior action are precluded in any subsequent action.


Where the prior judgment was in favor of the plaintiff, any previously unasserted claims arising out of the same transaction are said to “merge” into the judgment.


Where the prior judgment was in favor of the defendant, any previously unasserted claims arising out of the same transaction are said to be “barred” by the prior judgment.

Rush v. City of Maple Heights (Ohio 1958)

Holding & Analysis

Jones v. Morris Plan Bank of Portsmouth (Va. 1937)

Procedural History
Analysis & Holding

Application to Counterclaims

If defendant asserted no counterclaim in prior action, claim preclusion does not apply (because the defendant was not a claimant).

If a defendant asserted a counterclaim (whether compulsory or permissive) in the prior action, claim preclusion would apply to any unasserted claims arising from the same transaction/occurrence.


Denise is employed by Plastico. Denise’s employment contract with Plastico includes a provision that, in the event Denise leaves her job and goes to work for one of Plastico’s competitor, she may not solicit business from any of Plastico’s customers. Denise is fired and then goes to work for Universal Plastics, a competitor of Plastico.

Plastico sues Denise, alleging that she has solicited business from Plastico’s customers. Denise asserts a counterclaim against Plastico, alleging that she was fired in breach of her employment contract.^[Even though both claims are based on the same employment contract, Denise’s counterclaim would most likely be permissive, because Plastico’s firing of Denise, and Denise’s alleged solicitation of Plastico’s customers, are separate and independent occurrences.] The case ends with a valid, final judgment on the merits of both Plastico’s claim and Denise’s counterclaim.

Denise then brings a suit against Plastico for employment discrimination, alleging that she was fired based on her gender. The claim is barred by the judgment in the first suit, because it arises out of the same occurrence as Denise’s counterclaim in the prior suit.


Where the court (or other tribunal) issuing the prior judgment had (a) limited subject matter jurisdiction, or (b) limited remedial power, that judgment will not preclude:

Nestor v. Pratt & Whitney (2d Cir. 2006)

Procedural History

Issue Preclusion

“A judgment in favor of either the plaintiff or the defendant is conclusive, in a subsequent action between them on the same or a different claim, with respect to any issue actually litigated and determined if its determination was essential to that judgment.”

See Restatement (2d) of Judgments § 17(3)


Valid and Final Judgment

Note that, unlike claim preclusion, issue preclusion may apply even if the prior judgment was not on the merits.

Same Issue

Issue preclusion may apply to issue of fact or law.

O’Neal v. Remington Arms Co., LLC (D.S.D. 2014)


Cromwell v. County of Sac (US 1876)

Facts and Procedural History
Holding & Analysis

Actually Litigated

An issue is regarded as actually litigated when the parties contest and put on evidence regarding the issue.

Necessary to the Judgment

Rios v. Davis (Texas Ct. of Civil Appeals 1963)

Facts & Procedural History

Alternate Sufficient Grounds

National Satellite Sports, Inc. v. Elliadis, Inc. (6th Cir. 2001)



Issue preclusion only applies against parties to the prior action.

But someone who was not a party to the prior action (“new party”) may be able to assert issue preclusion against someone who was a party to the prior action (“repeat party”).

Defensive Non-Mutual Issue Preclusion

New party asserts issue preclusion as defense to claim by repeat party.

Offensive Non-Mutual Issue Preclusion

New party asserts issue preclusion in support of claim against repeat party.

Defensive Non-Mutual Issue Preclusion

Bernhard v. Bank of America (Cal. 1942)

Procedural History
Analysis & Holding

Blonder-Tongue Labs v. Univ. of Illinois Foundation (US 1971)

Procedural History

Offensive Non-Mutual Issue Preclusion

Parklane Hosiery Co. v. Shore (US 1979)

Procedural History
Holding & Analysis


Action 1: Truck Driver sues Company for unpaid overtime wages.

Action 2: Plaintiff sues Company for injuries resulting from a collision with truck operated by Driver

If Driver wins first suit:

Court may allow Plaintiff in second suit to assert non-mutual offensive issue preclusion against company on issue of Driver’s employee status.

If Company wins first suit:

Even assuming judgment in favor of Company was based on a finding that Driver was not an employee, issue preclusion will not apply against Plaintiff in second action.