1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-18-1995

Burlington v Hyundai

Precedential or Non-Precedential:

Docket 94-5550

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Recommended Citation

"Burlington v Hyundai" (1995). 1995 Decisions. Paper 227.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

____________________ 

NO. 94-5550 

____________________ 

BURLINGTON NORTHERN RAILROAD COMPANY 

 Appellee

v. 

HYUNDAI MERCHANT MARINE CO., LTD. 

 Appellant

_______________________________ 

On Appeal From the United States District Court 

For the District of New Jersey 

(D.C. Civ. No. 93-cv-01478) 

_______________________________ 

Argued: March 7, 1995 

Before: BECKER, SCIRICA, and WOOD, Circuit Judges.0

(Filed August 18, 1995) 

 BRUCE G. PAULSEN, ESQUIRE (ARGUED) 

 S. NINA GELLERT, ESQUIRE 

 Nourse & Bowles 

 One Exchange Plaza 

 55 Broadway 

 New York, New York 10006 

 Attorneys for Appellant

 BARRY N. GUTTERMAN, ESQUIRE (ARGUED) 

 WILLIAM D. BIERMAN, ESQUIRE 

 Barry N. Gutterman & Associates 

 52 Vanderbilt Avenue 

 New York, New York 10017 

 

0Honorable Harlington S. Wood, Jr., United States Circuit Judge 

for the Seventh Circuit, sitting by designation. 
2 

 Attorneys for Appellee

_________________________ 

OPINION OF THE COURT 

_________________________ 

BECKER, Circuit Judge.

 This appeal concerns the timeliness of a maritime 

indemnity claim under the Carmack Amendment to the Interstate 

Commerce Act, 49 U.S.C. § 11707, though its ultimate disposition 

turns on the application of an "unmixed questions of law" 

exception to the doctrine of issue preclusion. The case arises 

from a shipment of furnace equipment by Tongil Co., Ltd. from 

Milwaukee, Wisconsin to Pusan, South Korea that arrived in 

damaged condition. The goods were carried by rail from Milwaukee 

to Seattle by plaintiff Burlington Northern Railroad Company 

("Burlington"), and thence by sea to Pusan by defendant Hyundai 

Merchant Marine Co. ("Hyundai"). The damage apparently occurred 

while the cargo was in the possession of Burlington, but Tongil 

sued Hyundai for the damage. The case settled and approximately 

one month following the settlement, Hyundai sought indemnity from 

Burlington, which refused to pay because notice of the claim was 

not given within nine months following the delivery of the 

shipment as required in a Burlington circular, adopted as part of 

the contract of carriage. 

 Burlington brought a declaratory judgment action in 

district court. The court granted summary judgment for 

Burlington, and Hyundai brought this appeal. Although the legal 

question implicated by the timeliness issue is an interesting and 
3 

important one, this appeal turns not on that issue but on the 

doctrine of issue preclusion, for Hyundai’s principal argument on 

appeal is that, in holding the notice of the claim untimely, the 

district court erred by failing to give issue preclusive effect 

to a decision by the District Court for the Western District of 

Washington in Atlantic Mutual v. OOCL, 1992 U.S. Dist LEXIS 13284 

(W.D. Wash 1992). That case involved an indemnity claim brought 

against Burlington by a different ocean carrier for damage 

sustained to a shipment of Samsonite luggage from Taiwan to 

Denver via Seattle. The Atlantic Mutual court concluded that a 

time limit contained in a Burlington circular (adopted as part of 

the contract of carriage) did not foreclose the action in 

indemnity since such claims do not accrue and time limitations 

therefore cannot commence until liability is determined or a 

cognizable loss is incurred. If this general rule for indemnity 

claims were applied in the present action, Hyundai’s claim would 

have been timely presented. 

 The district court in this case rejected Hyundai’s 

argument and refused to apply the doctrine of issue preclusion to 

the issue resolved in Atlantic Mutual, relying on an exception 

for "unmixed questions of law," the scope of which is a question 

of first impression in this circuit. While the continued 

viability of this exception has been called into question by the 

Supreme Court’s decision in United States v. Stauffer Chemical 

Co., 464 U.S. 165, 104 S. Ct. 575 (1984), we conclude that such 

an exception for questions of law continues to apply, and that it 

is satisfied only so long as the issue involved is one of law and
4 

either (1) the two actions involve claims that are substantially 

unrelated or (2) a new determination of the legal issue is 

warranted in order to take account of an intervening change in 

the applicable legal context or otherwise to avoid inequitable 

administration of the laws. See RESTATEMENT (SECOND) OF JUDGMENTS § 28 

(1982). 

 Because the Atlantic Mutual action and this case are 

not substantially unrelated and since a new determination of the 

legal issue involved is not warranted, we conclude that the 

district court erred by relying on this exception to the 

otherwise applicable doctrine of issue preclusion. Accordingly, 

we will reverse the order of the district court granting summary 

judgment to Burlington, and direct the district court on remand 

to grant issue preclusive effect to the decision of the district 

court in Atlantic Mutual.

0

I. FACTS AND PROCEDURAL HISTORY

A. The Tongil Action

 Hyundai’s indemnity claim originates in an action 

brought by Tongil in the District Court for the Central District 

 

0 Given our conclusion that the district court erred in failing 

to give preclusive effect to the Atlantic Mutual decision, we 

need not address the correctness of the district court’s 

resolution of the merits, i.e. its holding that the provision in 

the Burlington circular (adopted as part of the contract of 

carriage), providing an absolute time limit for the filing of 

claims, is not subject to the general common law rule of accrual 

in indemnity actions, which provides that a cause of action in 

indemnity does not accrue -- and thus that a statute of 

limitations does not begin to run -- until such time that 

liability is determined or a cognizable loss is suffered. 
5 

of California for damages sustained to a cargo of furnace 

equipment shipped aboard M/V Hyundai Innovator in 1986 from 

Seattle, Washington to Pusan, South Korea. See Tongil Co. v. 

Vessel Hyundai Innovator, Case No. 88-04895 (C.D. Ca. 1988). The 

cargo had originally been shipped from Milwaukee to Seattle via 

Burlington railcar. On August 10, 1988, Tongil filed suit 

against Hyundai for the damages sustained to the shipment. On 

December 15, 1988, in response, Hyundai gave Burlington notice of 

its indemnity claim, but Burlington denied Hyundai’s claim as not 

having been filed within the nine month time limitation 

prescribed in its circular and adopted as part of the contract of 

carriage. In particular, Burlington relied on Item 12 of its 

Rules Memorandum 2-C, which provides: 

As a condition precedent to recovery, any 

claim for loss or damage to lading shall be 

filed with BN [Burlington Northern] within 

nine (9) months of the date of delivery of 

the shipment, or within nine (9) months of a 

reasonable time for delivery in the event of 

non-delivery. Claim shall be supported with 

a copy of the shipping order, invoice, 

inspection report, or other proof of loss, 

and, if possible, the paid freight bill. 

App. at 107. 

 In the underlying action by Tongil against Hyundai, to 

which Burlington was not a party, the District Court for the 

Central District of California concluded, following a bench 

trial, that the cargo was in fact damaged while in the possession 

of Burlington; yet the court awarded Tongil $114,870.64 in 

damages, interests, and costs against Hyundai. Hyundai appealed 

the judgment to the Ninth Circuit Court of Appeals, which 
6 

reversed. See Tongil Co. v. Vessel Hyundai Innovator, 968 F.2d 

999 (9th Cir. 1992). Following the appeal, Hyundai settled the 

action with Tongil for $10,000 and then on January 26, 1993, 

requested indemnity of this amount together with legal expenses 

and costs totaling $104,079.49, which Burlington again denied. 

B. The Atlantic Mutual Action

 While Burlington was relying on Item 2-C of its Rules 

Memorandum to deny Hyundai’s indemnity claim, it was defending 

another indemnity action in the District Court for the Western 

District of Washington brought by Orient Overseas Container Line 

("OOCL"). See Atlantic Mutual v. OOCL, 1992 U.S. Dist LEXIS 

13284 (W.D. Wash. 1992). Like Hyundai’s claim, the viability of 

OOCL’s claim in the Atlantic Mutual action turned on the question 

whether the general rule for indemnity accrual -- that an 

indemnity claim "does not accrue until the indemnitee’s liability 

is determined by judgment or payment," id. at *9-10, and, 

therefore, that a statute of limitations on an indemnity claim 

cannot begin to run until such time -- should apply despite Item 

2-C of Burlington’s Rules Memorandum, which provided that the 

time limitation should be measured from the date of delivery. 

Atlantic Mutual had filed suit against OOCL to recover payments 

that Atlantic Mutual had made as an insurer to Samsonite Pacific, 

Ltd. ("Samsonite") for damages to a shipment of luggage en route 

from Taiwan to Denver via Seattle. In response, OOCL had filed a 

third party claim against Burlington for indemnity for its 

liability to Atlantic Mutual. 
7 

 Burlington’s denial of OOCL’s indemnity claim was based 

solely on its contention that the claim was time barred since 

OOCL had failed to bring suit within the time period specified in 

Burlington Rules Memorandum 2-C. This provision provided that 

"all suits against BN [Burlington Northern] shall be commenced no 

later than 1 year after the date of delivery." Id. at *5. OOCL, 

which notified Burlington of its claim more than one year after 

delivery, contended that this contractual limitations period did 

not alter the general rule governing actions in indemnity. The 

Washington district court agreed with OOCL and concluded that its 

"cross-claim for indemnification is not barred by the limitations 

period in Burlington Northern’s Rules Memorandum 2-C." Id. at 

*12. In reaching this conclusion, the court relied on the 

opinion of the Ninth Circuit in States S.S. Co. v. American 

Smelting & Refining Co., 339 F.2d 66, 70 (9th Cir. 1964), cert. 

denied 380 U.S. 964 (1965), which it read as concluding that an 

"indemnity claim . . . does not accrue until the indemnitee has 

made actual payment." Atlantic Mutual at *12; see also id.

("[A]n action for indemnification accrues at the time of the 

indemnitee’s payment despite a shorter contractual time 

limitations period applying to claims between the parties."). 

C. The Hyundai Action 

 Following the decision in Atlantic Mutual, Burlington, 

having already denied Hyundai’s claim for indemnity in connection 

with the shipment of furnace equipment on several occasions, 

instituted this action on April 1, 1993, in the District Court 

for the District of New Jersey, seeking a declaratory judgment 
8 

that Hyundai had no timely claim against Burlington. In 

response, Hyundai filed a counterclaim seeking the $104,079.49 

from Burlington in indemnity, and moved to transfer both actions 

to either the Central District of California or the Western 

District of Washington pursuant to 28 U.S.C. § 1404(a), given 

that none of the facts in the present case or the underlying 

action occurred in New Jersey and that neither of the parties is 

incorporated or has a principal place of business in New Jersey. 

 Burlington responded by moving for summary judgment on 

its declaratory judgment action. Hyundai opposed this motion on 

the grounds that (1) Burlington was estopped from relitigating 

the issues decided in Atlantic Mutual and (2) that, on the 

merits, Hyundai’s indemnity claim was timely presented. The 

district court rejected both of these arguments, granted 

Burlington’s request for summary judgment in the declaratory 

judgment action, dismissed Hyundai’s counterclaim, and denied as 

moot Hyundai’s motion to transfer the case. In rejecting 

Hyundai’s estoppel argument, the district court held: "The Court 

interprets the Atlantic Mutual decision as involving a pure 

question of law, decided under the law of another Circuit, and 

therefore will not accord it issue-preclusive effect." Dist Op. 

at 8. This appeal followed. 

 Since the district court’s decision to grant summary 

judgment rested on a legal determination of when issue preclusion 

should apply to "unmixed questions of law," our review is 

plenary. In reviewing the district court’s decision, we apply 

federal common law principles of issue preclusion since we are 
9 

examining the issue preclusive effect of a prior federal court 

action. See NLRB v. Yellow Freight Sys., Inc., 930 F.2d 316, 320 

(3d Cir. 1991); Hicks v. Quaker Oats Co., 662 F.2d 1158, 1166 

(5th Cir. 1981). 

II. ISSUE PRECLUSION 

A. Introduction 

 The doctrine of issue preclusion,0 which is at issue in 

this action, derives from the simple principle that "later courts 

should honor the first actual decision of a matter that has been 

actually litigated." 18 CHARLES A. WRIGHT ET. AL., FEDERAL PRACTICE AND 

PROCEDURE § 4416 (1981) [hereinafter WRIGHT & MILLER].0 This 

 

0 The doctrine describing the effect of former adjudications on 

subsequent actions has a number of aspects, and is referred to by 

a variety of terms, including res judicata, merger, bar, and 

collateral and direct estoppel. See 18 CHARLES A. WRIGHT ET. AL., 

FEDERAL PRACTICE AND PROCEDURE § 4402 (1981) (tracing the varying 

terminology employed in this area). Throughout this opinion we 

use the phrases "issue preclusion" and "collateral estoppel" 

interchangeably to refer to the rule, applicable to this action, 

providing preclusive effect to a fact, question, or right 

determined in a prior case. 

0 Nearly a century ago, the first Justice Harlan eloquently set 

forth the rationales supporting the application of issue 

preclusion as follows: 

 The general principle announced in 

numerous cases is that a right, question, or 

fact distinctly put in issue, and directly 

determined by a court of competent 

jurisdiction, as a ground of recovery, cannot 

be disputed in a subsequent suit between the 

same parties or their privies; and, even if 

the second suit is for a different cause of 

action, the right, question, or fact once so 

determined must, as between the same parties 

or their privies, be taken as conclusively 

established, so long as the judgment in the 

first suit remains unmodified. This general 

rule is demanded by the very object for which 

civil courts have been established, which is 
10 

doctrine ensures that "once an issue is actually and necessarily 

determined by a court of competent jurisdiction, that 

determination is conclusive in subsequent suits based on a 

different cause of action involving a party to the prior 

litigation," Montana v. United States, 440 U.S. 147, 153, 99 S. 

Ct. 970, 973 (1979). The prerequisites for the application of 

issue preclusion are satisfied when: “(1) the issue sought to be 

precluded [is] the same as that involved in the prior action; (2) 

that issue was actually litigated; (3) it was determined by a 

final and valid judgment; and (4) the determination [was] 

essential to the prior judgment.” In re Graham, 973 F.2d 1089, 

1097 (3d Cir. 1992) (quoting In re Braen, 900 F.2d 621, 628-29 

n.5 (3d Cir. 1979), cert. denied 111 S. Ct. 782 (1991)). 

 Complete identity of parties in the two suits is not 

required for the application of issue preclusion. Here Hyundai, 

which was not a party to the first suit (the Atlantic Mutual

action), attempts to use issue preclusion offensively against 

Burlington, which was a party in the first action. Such an 

 

to secure the peace and repose of society by 

the settlement of matters capable of judicial 

determination. Its enforcement is essential 

to the maintenance of social order; for the 

aid of judicial tribunals would not be 

invoked for the vindication of rights of 

person and property if, as between parties 

and their privies, conclusiveness did not 

attend the judgments of such tribunals in 

respect of all matters properly put in issue 

and actually determined by them. 

Southern Pacific R.R. v. United States, 168 U.S. 1, 48-49, 18 S. 

Ct. 18, 27 (1897). 
11 

application of issue preclusion is referred to as offensive0 nonmutual0 collateral estoppel, which has been recognized as proper 

by the Supreme Court in Parklane Hosiery Co. v. Shore, 439 U.S. 

322, 326, 99 S. Ct. 645, 649 (1979).0 The Court in Parklane

concluded that "a litigant who was not a party to a prior 

judgment may nevertheless use that judgment ‘offensively’ to 

prevent a defendant from relitigating issues resolved in the 

earlier proceeding," id. at 326, 99 S. Ct. at 649, subject to an 

overriding fairness determination by the trial judge.0

 

0 The offensive use of collateral estoppel "occurs when the 

plaintiff seeks to foreclose the defendant from relitigating an 

issue the defendant has previously litigated unsuccessfully in an 

action with another party," while, in contrast, defensive use 

"occurs when a defendant seeks to prevent a plaintiff from 

asserting a claim the plaintiff has previously litigated and lost 

against another defendant." Parklane Hosiery Co. v. Shore, 439 

U.S. 322, 326 n.4, 99 S. Ct. 645, 649 n.4 (1979). Because the 

indemnity claimant, Hyundai, seeks to prevent Burlington from 

relitigating an issue that Burlington lost against a prior 

claimant, OOCL, in a prior action, this case involves the 

application of offensive collateral estoppel. The fact that 

Burlington preemptively brought this action for declaratory 

judgment, seeking to avoid indemnity liability, does not alter 

the structural essence of the case. 

0 It is non-mutual because OOCL and not Hyundai was the 

plaintiff in the prior action. In Parklane Hosiery Co. v. Shore, 

439 U.S. 322, 326-28, 99 S. Ct. 645, 651-52 (1979), the Supreme 

Court disavowed a requirement of mutuality for issue preclusion 

to bar a party from relitigating an issue. 

0 Previously, in Blonder-Tongue Laboratories, Inc. v. University 

of Illinois Foundation, 402 U.S. 313, 328-29, 91 S. Ct. 1434, 

1442-43 (1971), the Supreme Court recognized defensive non-mutual 

collateral estoppel, precluding a patentee from relitigating the 

validity of a patent because a federal court in a previous 

lawsuit had already declared the patent invalid. 

0 In reaching this conclusion, however, the Parklane Court 

recognized that two reasons, not implicated in the present 

action, counseled against the application of offensive, as 

opposed to defensive, non-mutual issue preclusion. First, its 

availability could create an incentive for potential plaintiffs 

"to adopt a `wait and see' attitude, in the hope that the first 
12 

B. The Exception for Unmixed Questions of Law

 In this action, the parties did not dispute (with one 

exception detailed in the margin) that all of the primary 

requirements for application of non-mutual offensive collateral 

 

action will result in a favorable judgment," since such 

plaintiffs "will be able to rely on a previous judgment against a 

defendant but will not be bound by that judgment if the defendant 

wins." Id. at 330, 99 S. Ct. at 651. Second, offensive use of 

collateral estoppel may be "unfair to a defendant," to the extent 

that: (1) the defendant may have been sued in the first action 

for "small or nominal damages" for which "he may have [had] 

little incentive to defend vigorously, particularly if future 

suits [were] not foreseeable"; (2) the "judgment relied upon for 

a basis for the estoppel is itself inconsistent with one or more 

previous judgments in favor of the defendant"; or (3) "the second 

action affords the defendant procedural opportunities [e.g. 

discovery procedures] unavailable in the first action that could 

readily cause a different result." Id. at 330, 99 S. Ct. at 651. 

Acknowledging these concerns the Parklane Court nevertheless 

allowed trial courts to determine in proper cases that non-mutual 

offensive collateral estoppel should be applied. The Court 

stated that the "general rule" is "that in cases where a 

plaintiff could easily have joined in the earlier action or 

where, either for the reasons discussed above or for other 

reasons, the application of offensive estoppel would be unfair to 

a defendant, a trial judge should not allow the use of offensive 

collateral estoppel." Id. at 331, 99 S. Ct. at 651-52. 

 Following Parklane, the Court in United States v. 

Mendoza, 464 U.S. 154, 104 S. Ct. 568 (1984), limited the 

application of offensive non-mutual collateral estoppel by 

concluding that it could not be applied against the federal 

government. The Court reasoned that such a policy "would 

substantially thwart the development of important questions of 

law by freezing the first final decision rendered on a particular 

legal issue." Id. at 160, 104 S. Ct. at 572. The Court 

explained that "[a]llowing one final adjudication would deprive 

this Court of the benefit it receives from permitting several 

courts of appeals to explore a difficult question before this 

court grants certiorari." Id. "Indeed," the Court observed, "if 

nonmutual estoppel were routinely applied against the Government, 

this Court would have to revise its practice of waiting for a 

conflict to develop before granting the Government’s petitions 

for certiorari." Id.
13 

estoppel were satisfied0 and the sole basis of the district 

court’s decision not to apply issue preclusion in this action was 

based on an exception for "unmixed question[s] of law." In this 

appeal, Hyundai contends that the district court erred in 

 

0 Burlington submits that the Atlantic Mutual decision, which 

denied Burlington’s request for summary judgment, was not final 

since it was "not appealable," and hence it cannot be granted 

preclusive effect. The district court did not reach this 

contention, choosing instead to rely on the exception for unmixed 

questions of law. We reject Burlington’s argument. 

 As we recognized in In re Brown, 951 F.2d 564, 569 (3d 

Cir. 1991), the concept of finality for purposes of "collateral 

estoppel does not require the entry of a judgment final in the 

sense of being appealable." Instead, "the doctrine of collateral 

estoppel applies whenever an action is sufficiently firm to be 

accorded conclusive effect." Id. (internal quotation marks 

omitted). We concluded there that "[t]he wisest course [was] to 

regard the prior decision of the issue as final for the purpose 

of issue preclusion without awaiting the end judgment." Id. 

Brown held that "[i]n determining whether the resolution was 

sufficiently firm, the second court should consider whether the 

parties were fully heard, whether a reasoned opinion was filed, 

and whether that decision could have been, or actually was, 

appealed." Id. (We admitted, however, that "[f]inality ‘may 

mean little more than that the litigation of a particular issue 

has reached such a stage that a court sees no really good reason 

for permitting it to be litigated again.’" Id. (quoting Dyndul 

v. Dyndul, 620 F.2d 409, 412 n.8 (3d Cir. 1980)).) 

 This finality requirement is satisfied in this case. 

Burlington "w[as] represented by counsel (in this case two 

separate firms), . . . [t]he issues were genuinely contested, and 

the court gave no indication that the summary judgment was 

tentative or likely to be changed." See Brown, 951 F.2d at 569. 

Moreover, the Atlantic Mutual court did not summarily deny 

Burlington’s summary judgment motion on (for example) grounds 

that there were material factual disputes; rather, it ruled in a 

reasoned opinion that Burlington’s timeliness defense was 

unsuccessful as a matter of law. Under all these circumstances, 

the fact that the decision was not actually appealable is of 

little consequence in this action. See Dyndul, 620 F.2d at 412 

("‘[F]inality’ for purposes of issue preclusion is a more 

‘pliant’ concept than it would be in other contexts."). 

Accordingly, we conclude that the denial of summary judgment in 

Atlantic Mutual is sufficiently final to be given issue 

preclusive effect in this action. 
14 

applying this exception, and in refusing to grant issue 

preclusive effect to the decision of the United States District 

Court for the Western District of Washington in Atlantic Mutual. 

The viability and/or proper scope of the exception for "unmixed 

questions of law" is an issue of first impression in this 

Circuit. 

 The Restatement (Second) of Judgments defines the 

exception for "unmixed questions of law" as follows: 

 § 28. Exceptions to the General Rule 

of Issue Preclusion 

Although an issue is actually litigated and 

determined by a valid and final judgment, and 

the determination is essential to the 

judgment, relitigation of the issue in the 

subsequent action between the parties is not 

precluded in the following circumstances: 

(2) The issue is one of law and (a) 

the two actions involve claims that 

are substantially unrelated, or (2) 

a new determination is warranted in 

order to take account of an 

intervening change in the 

applicable legal context or 

otherwise to avoid inequitable 

administration of the laws. 

RESTATEMENT (SECOND) OF JUDGMENTS § 28(2) (1982).0

 

0 A leading treatise suggests a similar framework for 

determining whether the exception for "unmixed questions of law" 

should apply. See 18 WRIGHT & MILLER, supra, § 4425, at 253-54 

("Preclusion should not apply if there has been either a change 

in the facts or the governing rules."). This framework proceeds 

as follows: First, the treatise suggests that preclusion should 

not apply unless "[i]dentity of the issue is established by 

showing that the same general legal rules govern both cases and 

that the facts of both cases are indistinguishable as measured by 

those rules." Id. (footnotes omitted). Second, it states that 

"[p]reclusion also may be defeated by showing either that special 

reasons make it inappropriate in a particular legal setting, or 
15 

 This exception to the doctrine of issue preclusion has 

its roots in a statement made by the Supreme Court over seventy 

years ago in United States v. Moser, 266 U.S. 236, 45 S. Ct. 66 

(1924). Moser was a retired Navy captain, who successfully 

contended, in an initial case before the U.S. Court of Claims, 

that time spent as a Naval Academy cadet during the Civil War 

qualified as "serv[ice] during the civil war", entitling him to a 

pension enhancement under an applicable pension statute. Moser, 

266 U.S. at 240, 45 S. Ct. at 66. In a later case, which did not 

involve Moser, the Court of Claims changed its interpretation of 

the pension statute and concluded that service as a naval cadet 

did not qualify as "serv[ice] during the war" under the statute. 

Id. Notwithstanding this change in the law, in subsequent 

actions brought by Moser for later installments of his enhanced 

pension benefits, the Court of Claims relied on, inter alia, the 

doctrine of issue preclusion to permit Moser to continue to 

receive the enhanced pension benefits. The government appealed, 

and the Supreme Court affirmed the application of issue 

preclusion. 

 In Moser, the Court addressed, and rejected, the 

contention that issue preclusion should not apply on the ground 

that a pure question of law was involved: 

The contention of the Government seems to be 

that the doctrine of res judicata does not 

apply to questions of law; and, in a sense, 

that is true. It does not apply to unmixed 

 

that there has been a substantial change in the legal climate 

that suggests a new understanding of the governing legal rules 

which may require a different application." Id. (footnotes 

omitted). 
16 

questions of law. Where, for example, a 

court in deciding a case has enunciated a 

rule of law, the parties in a subsequent 

action upon a different demand are not 

estopped from insisting that the law is 

otherwise, merely because the parties are the 

same in both cases. But a fact, question or 

right distinctly adjudged in the original 

action cannot be disputed in a subsequent 

action, even though the determination was 

reached upon an erroneous view or by an 

erroneous application of the law. That would 

be to affirm the principle in respect of the 

thing adjudged but, at the same time, deny it 

all efficacy by sustaining a challenge to the 

grounds upon which the judgment was based. 

 

Id. at 242, 45 S. Ct. at 67. Thus the Court concluded that 

"[t]he question expressly and definitely presented in this suit 

is the same as that definitely and actually litigated and 

adjudged in favor of the claimant in the three preceding suits, 

viz: whether he occupied the status of an officer who had served 

during the civil war." Id. at 242, 45 S. Ct. at 67. For this 

reason, the Court concluded issue preclusion was proper. 

 The Supreme Court next addressed the possible 

application of this exception some fifty-five years later in 

Montana v. United States, 440 U.S. 147, 99 S. Ct. 970 (1979), a 

case of mutual defensive collateral estoppel which involved 

successive Supremacy Clause challenges to Montana’s imposition of 

a one percent gross receipts tax on public, but not private, 

construction projects. In the initial action, a public 

contractor, financed by the federal government, litigated the 

constitutionality of the tax in state court. The Montana Supreme 

Court unanimously upheld the tax. Instead of seeking certiorari, 
17 

the government, acting on its own behalf, brought a similar 

challenge in the federal district court in Montana, and that case 

reached the Supreme Court. 

 The Supreme Court determined that, under these 

circumstances, mutuality of parties existed since the government, 

which directed the litigation on behalf of the public contractor 

in the first action, was, for all practical purposes, the party 

in the first action. The Court affirmed the defensive use of 

mutual collateral estoppel against the federal government since 

the issue sought to be litigated was identical to the issue 

already litigated in the state court action and no change in 

controlling facts or legal principles had occurred. Id. at 155-

62, 99 S. Ct. at 974-78. The Court rejected the contention that 

issue preclusion should not apply under an exception for "unmixed 

question of law": 

Of possible relevance is the exception which 

obtains for "unmixed questions of law" in 

successive actions involving substantially 

unrelated claims. . . . 

 . . . . 

 . . . [W]hen issues of law arise in 

successive actions involving unrelated 

subject matter, preclusion may be 

inappropriate. This exception is of 

particular importance in constitutional 

adjudication. Unreflective invocation of 

collateral estoppel against parties with an 

ongoing interest in constitutional issues 

could freeze doctrine in areas of the law 

where responsiveness to changing patterns of 

conduct or social mores is critical. To be 

sure, the scope of the Moser exception may be 

difficult to delineate, particularly where 

there is partial congruence in the subject 

matter of successive disputes. But the 

instant case poses no such conceptual 

difficulties. Rather, as the preceding 
18 

discussion indicates, the legal "demands" of 

this litigation are closely aligned in time 

and subject matter to those in [the previous 

litigation]. 

Id. at 162-63, 99 S. Ct. at 978 (citations omitted). 

 The Supreme Court most recently addressed the proper 

scope of this exception in United States v. Stauffer Chemical 

Co., 464 U.S. 165, 104 S. Ct. 575 (1984), which involved 

successive actions brought by the EPA against Stauffer in 

response to the company’s refusal to submit to inspections by 

private contractors hired by the EPA. At issue was whether 

private contractors were "authorized representatives" under 

§ 114(a)(2) of the Clean Air Act. In the initial action, which 

involved an attempt by the EPA to inspect Stauffer's Wyoming 

plant, the Tenth Circuit held for Stauffer, concluding that 

private contractors were not "authorized representatives" under 

the statute. The identical question then arose with regard to an 

EPA inspection of Stauffer's Tennessee plant, leading the Sixth 

Circuit to conclude, inter alia, that the federal government was 

estopped from relitigating the question whether private 

contractors constituted authorized representatives under the 

Clean Air Act. 

 The government appealed and the Supreme Court affirmed, 

concluding "that the doctrine of mutual defensive collateral 

estoppel is applicable against the Government to preclude 

relitigation of the same issue already litigated against the same 

party in another case involving virtually identical facts." Id.

at 169, 104 S. Ct. at 578. In so doing it rejected the 
19 

government’s reliance on an exception for "unmixed questions of 

law" and expressed serious doubt regarding the proper scope of 

the exception: 

While our discussion in Montana indicates 

that the exception is generally recognized, 

we are frank to admit uncertainty as to its 

application. The exception seems to require 

a determination as to whether an "issue of 

fact" or an "issue of law" is sought to be 

relitigated and then a determination as to 

whether the "issue of law" arises in a 

successive case that is so unrelated to the 

prior case that relitigation of the issue is 

warranted. Yet we agree that, for the 

purpose of determining when to apply an 

estoppel, when the claims in two separate 

actions between the same parties are the same 

or are closely related it is not ordinarily 

necessary to characterize an issue as one of 

fact or of law for purposes of issue 

preclusion. In such a case, it is unfair to 

the winning party and an unnecessary burden 

on the courts to allow repeated litigation of 

the same issue in what is essentially the 

same controversy, even if the issue is 

regarded as one of "law." 

Id. at 171, 104 S. Ct. at 579 (internal quotation marks and 

citations omitted). The Court further explained that “[a]n 

exception which requires a rigid determination of whether an 

issue is one of fact, law, or mixed fact and law, as a practical 

matter, would often be impossible to apply because the journey 

from a pure question of fact to a pure question of law is one of 

subtle gradations rather than one marked by a rigid divide.” Id.

at 171 n.4, 104 S. Ct. at 579 n.4. 

 Hyundai contends that given these statements, the 

Stauffer Court effectively overruled the issue preclusion 

exception for "unmixed questions of law." We disagree. Despite 
20 

its diffidence and ruminations, we do not believe that the 

Court’s decision in Stauffer overruled the exception for unmixed 

questions of law as set forth in the Restatement and by Wright & 

Miller. See 18 WRIGHT & MILLER, supra, § 4425, at 198 (1994 Supp.) 

("The approach suggested in the main volume is supported by the 

result reached in United States v. Stauffer Chem. Co." (footnote 

omitted)).0

 In Stauffer, the Court found the prerequisites for the 

exception for unmixed questions of law unsatisfied. The Court 

determined that neither of the two elements justifying 

application of the exception to issue preclusion for unmixed 

questions of law were present: "The Government does not argue 

that the § 114(a)(2) issues in Stauffer I and Stauffer II are 

dissimilar nor that controlling law or facts have changed since 

Stauffer I." Stauffer, 464 U.S. at 170, 104 S. Ct. at 578. In 

 

0 With regard to Stauffer, Wright and Miller have acknowledged 

that 

it remains unclear just where the Court’s 

opinion will lead. It is confessed that 

there is no clear sense of the purposes that 

may limit preclusion as to matters of law. 

No attempt is made to work through the 

different policies that may apply in 

different settings, so as to push preclusion 

closer to abstract issues of law or to 

confine it closer to commingled issues of law 

and common fact. The result might be a broad 

expansion of preclusion. The reasons for 

caution are sufficiently strong, however, to 

rely on the opinion as a possibly appropriate 

response to the specific case without reading 

it as establishing a new general policy. 

18 WRIGHT & MILLER, supra, § 4425, at 198 (1994 Supp.). 
21 

particular, the Court analogized to its decision in Montana, 

where it "determined that the exception was inapplicable because 

of the close alignment of time and subject matter between the 

[two actions],"0 id. at 172, 104 S. Ct. at 579. The Court 

reasoned in Stauffer that "[a]ny factual differences between the 

two cases [the prior and instant adjudications], such as the 

difference in the location of the plants and the difference in 

the private contracting firms involved, are of no legal 

significance whatever in resolving the issue presented in both 

cases." Id. at 172, 104 S. Ct. at 579. 

 Admitting that "the purpose underlying the exception 

for ‘unmixed questions of law’ in successive actions on unrelated 

claims is far from clear," id., the Court concluded: "whatever 

its purpose or extent, we think that there is no reason to apply 

it here . . ., [and doing so] would substantially frustrate the 

doctrine's purpose of protecting litigants from burdensome 

relitigation and of promoting judicial economy." Id. Moreover, 

the Court rejected the government’s argument that "two cases 

presenting the same legal issue must arise from the very same 

 

0 In particular, the court reasoned: 

Both Stauffer I and Stauffer II arose as a 

result of EPA's overview inspection program 

for supervising state efforts to enforce 

national air quality standards. In both 

cases private contractors, in addition to EPA 

and state employees, tried to inspect plants 

owned by respondent. The inspections 

occurred just over two weeks apart, and in 

each case, Stauffer refused to allow the 

private contractors to enter its plant. 

Id. at 579. 
22 

facts or transaction before an estoppel can be applied." Id. at 

172 n.5, 104 S. Ct. at 579 n.5. "Whatever applicability that 

interpretation may have in the tax context, see Commissioner v. 

Sunnen, 333 U.S. 591, 601-602 (1948) (refusing to apply an 

estoppel when two tax cases presenting the same issue arose from 

‘separable facts’), [the Court] reject[ed] its general 

applicability outside of that context." Id.0

 In sum, the Stauffer opinion is consistent with the 

approach codified in the Restatement. See Clark-Cowlitz Joint 

Operating Agency v. F.E.R.C., 775 F.2d 366, 375 (D.C. Cir. 1985) 

(recognizing after the Court’s decision in Stauffer that "the 

test for the exception seems to be . . . whether ‘the issue of 

law arises in a successive case that is so unrelated to the prior 

case that relitigation of the issue is warranted.’" (quoting

Stauffer, 464 U.S. at 171, 104 S. Ct. at 579)); see also 18 WRIGHT 

 

0 Justice White concurred in the judgment in Stauffer to stress 

the fact that at the time of Stauffer II, the Sixth Circuit had 

not yet ruled on the substantive issue whether private 

contractors were "authorized representatives" under the Clean Air 

Act. According to Justice White, preclusion would not have been 

appropriate had the Sixth Circuit already clearly resolved the 

legal issue in question: 

Extending preclusion to circuits that have 

adopted a contrary rule on the merits would 

be acceptable were it supported by any 

affirmative policy. It is not. Judicial 

economy is not served for the simple reason 

that no litigation is prevented; the prior 

litigant is subject to one black-letter rule 

rather than another. 

Stauffer, 464 U.S. at 178, 104 S. Ct. at 582. 
23 

& MILLER, supra, § 4425, at 199 (Supp. 1994) ("The reasons for 

caution are sufficiently strong . . . to rely on the opinion 

[Stauffer] as a possibly appropriate response to the specific 

case without reading it as establishing a new general policy."). 

In sum, the exception continues to apply following Stauffer. 

C. Application of the Unmixed Questions of Law Doctrine

 The exception to the application of issue preclusion 

for unmixed questions of law is satisfied, as we have explained, 

only when the previously determined issue is one of law, and

either (1) "the two actions involve claims that are substantially 

unrelated" or (2) "a new determination is warranted in order to 

take account of an intervening change in the applicable legal 

context or otherwise to avoid inequitable administration of the 

laws." RESTATEMENT (SECOND) OF JUDGMENTS § 28(2). We take up the two 

facets of the exception in turn. 

1. Substantial Relationship

 In determining whether two cases involve claims that 

are "substantially unrelated," we must assess whether the two 

cases involve the same application of law. A party cannot 

satisfy the “substantially unrelated claim” test where "the same 

general legal rules govern both cases and . . . the facts of both 

cases are indistinguishable as measured by those rules." 18 

WRIGHT & MILLER, supra, § 4425, at 253-54 (footnotes omitted). As 

the Supreme Court recognized in Stauffer, issue preclusion does 

not require that the "two cases presenting the same legal issue 

must arise from the very same facts or transaction before an 

estoppel can be applied." Stauffer, 464 U.S. at 172 n.5, 104 S. 
24 

Ct. at 579 n.5. In fact, estoppel will be applied unless "the 

‘issue of law’ arises in a successive case that is so unrelated

to the prior case that relitigation of the issue is warranted." 

Id. (emphasis added). 

 The Atlantic Mutual case, like this one, involved the 

denial of an indemnity claim by Burlington based solely on a 

Burlington contention that the claim was time barred because the 

claimant, in that case OOCL, had failed to provide notice of its 

claim within a time period specified in Burlington Rules 

Memorandum 2-C. And, like the provision in this action, the 

provision in Atlantic Mutual measured the limitations period from 

the date of delivery.0 Like Hyundai’s claim here, the viability 

of OOCL’s claim in the Atlantic Mutual action turned on the 

question whether the general rule for indemnity accrual and the 

concomitant commencement of limitations periods should apply 

regardless of a contractually defined period. As we have stated, 

the Atlantic Mutual court, relying on Ninth Circuit precedent, 

concluded that a "[]claim for indemnification is not barred by 

the limitations period in Burlington Northern’s Rules Memorandum 

2-C," Atlantic Mutual at *12, since "an action for 

indemnification accrues at the time of the indemnitee’s payment 

despite a shorter contractual time limitations period applying to 

 

0Burlington’s clause in Atlantic Mutual provided that "all suits 

against BN [Burlington Northern] shall be commenced no later than 

1 year after the date of delivery." Atlantic Mutual at *5. In 

this case, the limitations clause specified that "any claim for 

loss or damage to lading shall be filed with BN [Burlington 

Northern] within nine (9) months of the date of delivery of the 

shipment." App. at 107. 
25 

claims between the parties," id. (citing States S.S. Co. v. 

American Smelting & Refining Co., 339 F.2d at 70 (9th Cir. 

1964)). 

 In our view, the issue of law arising in this action is 

not "so unrelated" to the decision of the court in Atlantic 

Mutual "that relitigation of the issue is warranted." Stauffer, 

464 U.S. at 171, 104 S. Ct. at 579. Indeed, the issue and its 

application are identical. Hyundai, like OOCL, seeks to recover 

in indemnity from Burlington on the grounds that a limitations 

period prohibiting shipment damage claims presented beyond a 

specified time cannot start running until the time that liability 

is determined or a cognizable loss is incurred, since actions in 

indemnity do not accrue until such time. If this rule for the 

accrual of actions in indemnity were applied in the present 

action Hyundai’s claim would have been timely presented, like 

OOCL’s claim against Burlington in the Atlantic Mutual action. 

 While, as Burlington points out, the contractual 

limitations provision in this case provides for a shorter period 

of time (nine months as opposed to one year), and applies to the 

presentation of "claims" as compared to the filing of "suits," 

these distinctions are of no legal significance to the issue 

decided in Atlantic Mutual and presented here. In both cases 

Burlington denied the indemnity claims on the grounds that they 

were untimely because the contract term limited liability to a 

period of time (commencing at the date of delivery) that had 

already run. Similarly, in both actions, the indemnity claimant 

sought recovery notwithstanding such provision on the grounds 
26 

that any time limit for indemnity claims must commence when 

liability is determined or a cognizable loss is incurred. In 

sum, given these relevant similarities, we cannot conclude that 

the issue of law arising in this action is so unrelated to the 

Atlantic Mutual case that relitigation of the issue is 

warranted.0

2. Intervening Change and Inequitable Administration

 When two actions involve claims that are not 

"substantially unrelated," issue preclusion still does not apply 

to an issue of law if a new determination of the legal issue is 

warranted "in order to take account of an intervening change in 

the applicable legal context or otherwise to avoid inequitable 

administration of the laws." See Haitian Ctrs. Council, Inc. v. 

McNary, 969 F.2d 1350, 1356 (2d Cir. 1992) (quoting RESTATEMENT 

(SECOND) OF JUDGMENTS § 28(2) (internal quotation marks omitted)), 

rev'd on other grounds sub. nom. Sale v. Haitian Ctrs. Council, 

 

0 This conclusion accords with the decision of the Fifth Circuit 

Court of Appeals in Hicks v. Quaker Oats Co., 662 F.2d 1158, 1167 

n.4 (5th Cir. 1981), which reasoned that non-mutual offensive 

collateral estoppel should apply "‘if the question is one of the 

legal effect of a document identical in all relevant respects to 

another document whose effect was adjudicated in a prior 

action.’" Id. at 1167 n.4 (quoting RESTATEMENT (SECOND) OF JUDGMENTS

§ 68, Reporter’s Note cmt. c at 18-19 (Tent. Draft No. 4, Apr. 

15, 1977)). The Hicks decision involved successive actions by 

former employees of Quaker Oats for benefits under a special 

retirement program. At issue in both actions was whether a 

letter from a member of Quaker Oats management announcing the 

terms for a special new retirement plan was enforceable as a 

binding bilateral contract. While the court ultimately ruled 

that the first decision should not be given collateral estoppel 

effect because the initial decision was based on an alternative 

ground, the court first rejected the argument "that estoppel 

should not apply because the erroneous holding of contractual 

liability is a pure question of law." Hicks, 662 F.2d at 1166. 
27 

113 S. Ct. 2549 (1993); see also Haitian Ctrs., 969 F.2d at 1356 

("‘Relitigation of an issue of public importance should not be 

precluded when there has been an intervening change in the 

applicable legal context.’" (quoting Kania v. Fordham, 702 F.2d 

475, 476 n. 2 (4th Cir. 1983) (internal quotation marks 

omitted)); Montana, 440 U.S. at 163, 99 S. Ct. at 978 

("Unreflective invocation of collateral estoppel . . . could 

freeze doctrine in areas of the law where responsiveness to 

changing patterns of conduct or social mores is critical."). No 

such concerns are present in this case. 

 Burlington does not point to, and we are unaware of, 

any intervening change in the applicable legal context which 

would warrant new consideration of the issue decided against 

Burlington in Atlantic Mutual. Moreover, application of issue 

preclusion in this case would not constitute an inequitable 

administration of the laws. Burlington was aware of Hyundai’s 

claim at the time of the Atlantic Mutual litigation, and it had a 

full and fair opportunity to litigate the legal issue in the U.S. 

District Court for the Western District of Washington. 

 We also believe that application of issue preclusion is 

particularly appropriate in this case, given that reconsideration 

of the issue already addressed in Atlantic Mutual would reward 

Burlington’s attempt to forum shop. See Fulani v. Bensten, 862 

F. Supp. 1140, 1151 (S.D.N.Y. 1994) ("To rule otherwise would 

encourage the parties to forum shop, thereby undermining the 

purpose of collateral estoppel in promoting the finality of 

judgments."). By instituting this action for declaratory 
28 

judgment in New Jersey, Burlington seeks to avoid the result that 

would have been reached in a court within the Ninth Circuit, 

where this case would more properly have been brought since the 

facts and parties to this action have virtually no connection to 

New Jersey.0 

 Having already litigated and lost this issue within the 

Ninth Circuit in Atlantic Mutual, Burlington now attempts to 

institute another action raising the same issue within another 

federal circuit in the hopes that this court would reach a 

conclusion different from that previously reached. But, as we 

have stated, "once an issue is actually and necessarily 

determined by a court of competent jurisdiction, that 

determination is conclusive in subsequent suits based on a 

different cause of action involving a party to the prior 

litigation." Montana, 440 U.S. at 153, 99 S. Ct. at 973. 

Accordingly, Burlington cannot now relitigate this issue that it 

already contested and lost in Atlantic Mutual. Issue preclusion 

applies.0

 

0 None of the facts underlying this action occurred in New 

Jersey and neither of the parties are incorporated or have a 

principal place of business in New Jersey. The underlying case 

involves indemnity for a damage claim originating from a shipment 

traveling from Milwaukee, Wisconsin, to Pusan, South Korea via 

Seattle, Washington, and the litigation from which the indemnity 

claim arose was within the Ninth Circuit. See Tongil Co. v. 

Vessel Hyundai Innovator, 968 F.2d 999 (9th Cir. 1992). 

0 As mentioned, supra note 12, Justice White concurred in 

Stauffer so as to stress the fact that issue preclusion should 

not be applied within a Circuit where the Court of Appeals had 

already clearly ruled on the substantive legal issue. We need 

not address this concern, since this court has yet to directly 

opine on the substantive issue implicated by this case -- whether 

a contract provision can, consistent with COGSA and its 
29 

III. CONCLUSION

 For the foregoing reasons, we will reverse the order of 

the district court granting summary judgment to Burlington, and 

remand the case with the direction to grant issue preclusive 

effect to the applicable legal issue resolved by the District 

Court for the Western District of Washington in the Atlantic 

Mutual litigation. 

 

amendments, override the general common law rule governing 

accrual of claims and running of statute of limitations in 

indemnity actions. See National Post Office Mail Handlers v. 

American Postal Workers Union, 907 F.2d 190, 194 (D.C. Cir. 1990) 

("The doctrine of issue preclusion counsels us against reaching 

the merits in this case, . . . regardless of whether we would 

reject or accept our sister circuit’s position.").