Document: 439 U.S. 322 99 S.Ct. 645 58 L.Ed.2d 552 PARKLANE HOSIERY COMPANY, INC., et al., Petitioners,v.Leo M. SHORE. No. 77-1305. Argued Oct. 30, 1978. Decided Jan. 9, 1979. Syllabus Respondent brought this stockholder's class action in the District Court for damages and other relief against petitioners, a corporation, its officers, directors, stockholders, who allegedly had issued materially false misleading proxy statement violation of federal securities laws Securities Exchange Commission (SEC) regulations. Before came to trial SEC sued same defendants alleging that was essentially respects as respondent claimed. The after nonjury entered declaratory judgment SEC, Appeals affirmed. case then moved partial summary asserting they were collaterally estopped from relitigating issues been resolved them suit. denied motion on ground such an application collateral estoppel would deny petitioners their Seventh Amendment right jury trial. reversed. Held : 1. Petitioners, "full fair" opportunity litigate claims action, are question whether misleading. Pp. 648-652. (a) mutuality doctrine, under which neither party could use prior unless both parties bound by judgment, no longer applies. See Blonder-Tongue Laboratories, Inc. v. University Illinois Foundation, 402 313, 91 1434, 28 788. 648-650. (b) offensive (when, here, plaintiff seeks foreclose defendant litigating issue has previously litigated unsuccessfully with another party) does not promote judicial economy manner is promoted defensive (when prevent claim lost defendant), may also be unfair various ways. Therefore, general rule should cases where easily have joined earlier or defendant, judge exercise his discretion allow estoppel. 650-652. (c) In case, however, will reward private previous since probably injunctive SEC. Nor there any unfairness every incentive fully vigorously suit; inconsistent decision; respondent's procedural opportunities available unavailable kind might likely cause different result. 651-652. 2. violate petitioners' 652-655. An equitable determination can collateral-estoppel effect subsequent legal without violating Amendment. Katchen Landy, 382 323, 86 467, 15 391. 652-653. Petitioners' contention scope must determined reference common law it existed 1791, at time permitted only parties, merit, many devices developed 1791 diminished civil jury's historic domain found See, e. g., Galloway United States, 319 372, 388-393, 63 1077, 87 L.Ed. 1458. 653-654. 565 F.2d 815, Jack B. Levitt, New York City, petitioners. Samuel K. Rosen, respondent. Mr. Justice STEWART delivered opinion Court. 1 This presents fact adjudicated adversely before new party. 2 Federal complaint alleged Parklane Hosiery Co., (Parklane), 13 connection merger.1 statement, according complaint, violated §§ 14(a), 10(b), 20(a) Act 1934, 48 Stat. 895, 891, 899, amended, U.S.C. 78n(a), 78j(b), 78t(a), well rules regulations promulgated (SEC). sought damages, rescission merger, recovery costs. 3 trial, filed suit Court, those complaint. Injunctive requested. After 4-day alleged, effect. 422 F.Supp. 477. Second Circuit affirmed judgment. 558 1083. 4 present SEC.2 reversed, holding him full fair obtaining these fact. 815. appellate court concluded "the preserves respect fact, [and] once fairly proceeding, nothing remains either jury." Id., 819. Because inter-circuit conflict,3 we granted certiorari. 435 1006, 98 1875, 56 387. 5 * threshold considered whether, quite apart Amendment, precluded facts proceeding Specifically, determine litigant nevertheless "offensively" proceeding.4 6 Collateral estoppel, like related doctrine res judicata,5 dual purpose protecting litigants burden identical privy promoting preventing needless litigation. 328-329, 1442-1443, Until relatively recently, limited parties. Under judg ment judgment.6 Based premise somehow when he himself so bound,7 requirement provided relitigate 7 By failing recognize obvious difference position between never one lost, criticized almost inception.8 Recognizing validity criticism, supra, abandoned requirement, least patentee patent lawsuit already declared invalid.9 "broader question" "whether tenable afford more than resolution issue." U.S., 328, S.Ct., 1442. strongly suggested negative answer question: 8 "In because principle, forced complete defense merits arguable misallocation resources. To extent second win asserting, contradiction, fairly, but unsuccessfully, suit, defendant's money diverted alternative uses—productive otherwise—to relitigation decided issue. And, still assuming correctly first reason concerned about plaintiff's allocation Permitting repeated litigation long supply unrelated holds out reflects aura gaming table 'a lack discipline disinterestedness part lower courts, hardly worthy wise basis fashioning procedure.' Kerotest Mfg. Co. C-O-Two 342 180, 185, 72 219, 222, 96 200 (1952). Although judges, nor adversary system performs perfectly all cases, determining whom asserted most significant safeguard." 329, 1443.10 B 9 involved estoppel—a defendant. contrast, involves seeking estop plaintiff. situations, action. Nevertheless, several reasons advanced why two situations treated differently.11 10 First, does. Defensive precludes merely "switching adversaries." Bernhard Bank America Nat. Trust & Savings Assn., 19 Cal.2d, 813, 122 P.2d, 895.12 Thus gives strong join potential if possible. Offensive hand, creates precisely opposite incentive. Since able rely wins, adopt "wait see" attitude, hope result favorable E. Nevarov Caldwell, 161 Cal.App.2d 762, 767-768, 327 P.2d 111, 115; Reardon Allen, 88 N.J.Super. 560, 571-572, 213 A.2d 26, 32. increase rather decrease total amount litigation, plaintiffs everything gain lose intervening action.13 11 A argument If small nominal little defend vigorously, particularly future suits foreseeable. Evergreens Nunan, 141 927, 929 (CA2); cf. Berner British Commonwealth Pac. Airlines, 346 532 (CA2) (application did appeal adverse awarding $35,000 later over $7 million). Allowing relied upon itself judgments favor defendant.14 Still situation apply affords readily result.15 C 12 We preferable approach dealing problems courts preclude grant broad applied.16 where, discussed above reasons, none circumstances justify reluctance present. collateralestoppel here even desired.17 Similarly, applying case. light serious allegations made SEC's foreseeability typically follow successful Government vigorously.18 Second, decision. Finally, result.19 14 conclude, therefore, considerations refusal received contemporary leads inescapably conclusion II notwithstanding trial.20 16 "[T]he thrust [Seventh] preserve 1791." Curtis Loether, 415 189, 193, 94 1005, 1007, 39 260. At law, entitled chancellor equity. Hopkins Lee, Wheat. 109; Smith Kernochen, How. 198, 217-218, 666; Brady Daly, 175 148, 158-159, 20 62, 66, 44 Shapiro Coquillette, Fetish Jury Trial Civil Cases: Comment Rachal Hill, 85 Harv.L.Rev. 442, 448-458 (1971).21 17 Recognition major Court's decision Beacon Theatres, Westover, 359 500, 79 948, 988. certain arrangements antitrust laws, asked injunction instituting challenge arrangements. counterclaimed treble requesting claims. upheld denial request, stating: 18 be, believed, 'to limit petitioner's try bearing damage suit,' clearances 'operate way judicata conclude thereto claim.' " 504, 953. It thus clear Theatres thought judge, foreclosed avoid result, held sequence "that . must, wherever possible, exercised trial." 510, 956.22 Both enunciated prudential confirmed bankruptcy court, sitting statutory equity, empowered adjudicate claims, though factual equity triable first. stated: 21 "Both Dairy Queen proceed resolve results dispositive claim." 339, 478. 22 Landy recognized 23 Despite support history recent decisional proposition argue contend cannot constitutionally applied absent. 24 persuasive reason, meaning depend findings equally deprived questions proceeding. further factfinding function perform, Cf. Ex parte Peterson, 253 300, 310, 40 543, 547, 64 919 ("No jury, except far determined"). 25 interpreted rigid advocated On contrary, 1086-1088, 1458 (directed verdict Amendment); Gasoline Products Champlin Refining 283 494, 497-498, 51 513-514, 75 1188 (retrial practice setting aside part); Fidelity Deposit 187 315, 319-321, 120, 121-122, 47 194 (summary Amendment).23 26 instructive. There directed argued procedure unconstitutional rejecting claim, said: 27 "The bind exact incidents details tied common-law pleading specific evidence prevailing. 'the law' prevalent, including relating regulated role crystalized fixed immutable system. logical conclusion, think, decisions support, designed basic institution fundamental elements, great mass forms details, varying widely among jurisdictions." 390, 392, 1087 (footnote omitted). 29 areas defining function, evolved 1791. rationale developments repugnant simply exist if, held, forecloses dictates 1791.24 30 Affirmed. 31 REHNQUIST, dissenting. 32 admittedly difficult outraged treatment accorded judiciary demand lawsuit. Outrage emotion impossible generate corporate fraud exception. But nagging sense treated, engendered imprimatur placed "heads I win, tails you lose" theory dispelled antiseptic analysis Nation Constitution today, guaranteeing included provisions. sentiment obscure dilute our obligation enforce Bill Rights repealed repeal 33 jurisprudence. Today, reduces valued right, Blackstone praised glory English law," mere "neutral" factor name reform denies vast number defendants, heretofore, enjoyed trials. Over 35 years ago, Black lamented "gradual process erosion hundred fifty slowly worn away portion essential guarantee Amendment." 397, 1090, (1943) (dissenting opinion). Regrettably, erosive continues apace today's decision.1 34 provides: Suits value controversy shall exceed twenty dollars, preserved, tried otherwise reexamined law." 36 amply documented scholars,2 serve useful attempt repeat written subject. Nonetheless, turns which, perhaps provision Constitution, historical adopted. Colgrove Battin, 413 149, 152, 93 2448, 2450, 37 522 (1973). therefore appropriate pause review, albeit briefly, preceding attending adoption guide ascertaining hand. easy forget, now removed events, esteem colonists deprivation hands important grievances leading break England. Sources Documents Illustrating American Revolution 1764-1788 Formation (S. Morison 2d ed. 1929); R. Pound, Development Constitutional Guarantees Liberty 69-72 (1957); C. Ubbelohde, Vice-Admiralty Courts 208-211 (1960). extensive vice-admiralty colonial administrators eliminate colonists' listed acts denounced Declaration Independence.3 And war broken out, newly formed States restored prominence; expressly guaranteed state constitutions others statute practice.4 Indeed, "[t]he universally secured ." L. Levy, Legacy Suppression: Freedom Speech Press Early History 281 (1960).5 38 One justly wonder mention into emerged Philadelphia Convention 1787. Article III, § 2, cl. 3, provides Crimes, Cases Impeachment, Jury." omission clause protective trying, however. Messrs. Pinckney Gerry proposed provide securing efforts failed.6 Several failure. Federalists juries varied much too draft constitutional language accommodate practices. 153, 2450.7 Whatever omission, delegates left Philadelphia, plans attack failed contain courts. Rutland, George Mason (1961); Wolfram 662. virtually absence bill rights principal focus Anti-Federalists' featured prominently arguments. Parsons Bedford, Pet. 433, 445, 732 (1830). Their pleas struck responsive chord populace, price exacted approval appending list recommended amendments, chief cases.8 Responding pressures generated during ratification debates, Congress session 1789 amend adding following language: man man, best people, ought remain inviolate." Annals Cong. (1789). That provision, altered what became legislatures effective Virginia December 15, 1791.9 foregoing sketch meant suggest oppose trials seem ignore. founders bulwark tyranny corruption, safeguard precious whim sovereign, or, added, judiciary.10 Those passionately do familiar device continued; concerns led passages Independence animated belief lead efficient administration. laymen sovereign's judges represent layman's sense, "passional elements nature," keep administration accord wishes feelings community. O. Holmes, Collected Legal Papers 237 (1920). favored believed reach reach.11 values underlie mind should, obviously not, 41 requires "preserved." demands preservation uniformly content judged standards. 260 (1974); 155-156, 2451-2452; Ross Bernhard, 396 531, 533, 90 733, 735, 729 (1970); Capital Traction Hof, 174 1, 8-9, 580, 583, 43 873 (1899); Pet., 446. Thus, Baltimore Carolina Line Redman, 295 654, 657, 55 890, 1636 (1935), stated preserved amendment adopted." Dimick Schiedt, 293 474, 476, 296, 297, 603 held: order ascertain resort established 1791."12 impaneled particular desires. 42 sure, substance incidental effects Walker Mexico S. P. 165 593, 596, 421, 422, 837 (1897). aim amendment, distinguished matters form procedure, retain distinction province 891. Accord, 156-157, at, 2452-2453; 498, 513, 514, (1931); 309, 546, prevailing." 1087. say tie imply, nominally "procedural" change implemented, regardless impact functions jury. For sanction creation greater degree direct contravention Neely Martin Eby Constr. 386 317, 322, 1072, 1076, (1967); 395, 1089; 487, 301; 309-310, 546. deal qua efficiency accuracy fairer save invasion allowed effectively permit nearly matter how drastic diminution functions, always denominated "procedural reform." guarantees prove burdensome some instances; surely governors who, stead, substituted court. But, provisions Rights, onerous nature protection license contracting '[m]aintenance fact-finding body importance occupies firm place jurisprudence seeming curtailment scrutinized utmost care.' 486, 301, quoted 501, 951, 988 (1959). 45 Judged principles, think Neither doubts alleged. to, privity with, until 1971 abrogated circumstances. 788.14 judge-made however salutary, cannot, consistent contract material fashion instant trial: eliminates entirely contravenes 46 responds, "a [in parties] equity," "petitioners present." Ante, 652, 654. tantamount saying receive instead chooses bring party's "preserved" incursions government judiciary. Whether believes instance necessary, repetitive irrelevant. view "rigid," commands rigidity. hold rewrite thinks inappropriate. No doubt parallel reforms" instituted area criminal jurisprudence, accomplish sort expedition calendars conservation resources extension motions prosecution close evidence, presumably countless hours judges' jurors' time. scarcely doubted, though, survive scrutiny Sixth Just principle separation powers incorporated Framers dispatch business government, facilitate prompt accurate lawsuits. essence lies insistence permanently attached sovereign participate along necessitated Amendment's prosecutions. Thiel Southern Pacific 328 217, 220, 66 984, 1181 (1946). Relying (1902), seems permissible set forth invade authorized permissible. actions today constitute infringement ever sanctioned. Galloway, modern challenge, similar Beauchamp Borret, Peake 170 Eng.Rep. 110 (N.P.1792); Coupey Henley, Esp. 540, 542, 448, 449 (C.P.1797).15 alter demurrer substantially practice. Pawling Cranch 221-222, 601 (1808).16 descendants antecedents. They done cumbersome procedure. Montgomery Ward Duncan, 311 243, 250, 61 147 (1940). while apparently part,17 retrial "distinct separable" impair 514. 49 development nonmutual substantial departure completely deprives contested am unwilling accept presumption extinguishment justified incident detail." Sutherland observed dissimilar case: "[T]his very special charged duty construing upholding Constitution; discharge duty, alert see doubtful precedent extended analogy weaken subvert conceives land." 485, 300. 50 Even accepting, arguendo, majority's nonetheless holds: estoppel." 651. 52 my view, "unfair" lawsuit.18 believe factors militate 53 runs counter policy favoring trials, majority holds, Threatres, (1959), exemplifies policy. defenses presented single "only imperative circumstances, flexible procedures Rules anticipate, through claims." 510-511, 957.19 Jacob York, 315 752, 752-753, 62 854, 1166 (1942), feature protected sacred citizen, statute, jealously guarded courts." Simler Conner, 372 221, 83 609, 610, 691 (1963); Byrd Blue Ridge Rural Electric Cooperative, Inc., 356 525, 537-539, 78 893, 900-901, 953 (1958) (strong diversity practice). Today's mean large enjoy adverted cited unmanageable resulted cases. "imperative circumstances" requiring wholesale abrogation trials.21 54 obtained adopted Restatement (Second) Judgments, disapproves action.22 accepts "where result." Differences discovery examples 651 n. 15. opportunit[y]" presence factfinder basically neutral, unlike, example, necessity defending inconvenient forum." 652 (emphasis added). As evident brief discussion country, drafted debated period, indeed astounded learn "neutral," whereas availability discovery, unmentioned controlling. peers mercy suspect anyone litigates 1970's amazed hear supposed cite authority curious proposition. debated, accused being factors.23 Contrary supposition, make difference, have, least, 157, 2453, [is] assure issues, (1931) Electrical 537, 900, conceded tribunal tries enforcement parcel making up personal-injury outcome affected immunity 1010; Duncan Louisiana, 391 145, 156, 1444, 1451, 491 (1968). Jurors community values; "very inexperience asset secures fresh perception each avoiding stereotypes said infect eye." H. Kalven Zeisel, (1966). 57 ultimate irony significantly conserving best. absolutely frustrate cavalierly disputed questions. apt example minimal savings accomplished admits, misleading, injured misstatements any, sustained 648 event. saved trying insubstantial.24 just probable coercing agree consent orders settlements agency actions. event, compelling added powerful club administrative agencies' arsenals them. amended stockholders disclose: (1) president financially benefit company's going private; (2) ongoing negotiations financial Parklane; (3) appraisal stock based insufficient information accurate. demonstrating solicitation show damages. Mills Auto-Lite 375, 386-390, 616, 622-624, 593. contained information, prima facie remaining contested. conflict taken Fifth 59. context, occurs judicata, bars involving privies actually necessary 1B J. Moore, Practice ¶ 0.405[1], pp. 622-624 (2d 1974); Lawlor National Screen Serv. Corp., 349 326, 865, 867, 1122; Commissioner Internal Revenue Sunnen, 333 591, 597, 68 715, 719, 92 898; Cromwell County Sac, 351, 352-353, 681. Bigelow Old Dominion Copper 225 127, 641, 642, 1009 ("It elementary mutual"); Buckeye Powder I. DuPont de Nemours 248 55, 63, 38, 39, 123; Judgments (1942). due binding heard. 1443, 788; Hansberry U. 32, 40, 115, 117, 22. criticism summarized 322-327, 1439-1442. Traynor unanimous California Supreme Cal.2d 807, 812, 892, point succinctly: "No satisfactory rationalization mutuality. comprehend." Triplett Lowell, 297 638, 645, 80 949, invalidity bar explicitly overruled emphasized wasteful staggering expense typical length. 334, 348, 1445, 1452. infringer find cheaper pay royalties invalid holder validity. 338, 1447. Various commentators expressed reservations regarding Currie, Mutuality Estoppel: Limits Doctrine, Stan.L.Rev. Semmel, Estoppel, Joinder Parties, Colum.L.Rev. 1457 (1968); Note, Impacts Assertion Estoppel Nonparty, Geo.Wash.L.Rev. 1010 (1967). Professor Currie tempered reservations. Procedure: Tempest Brews, Calif.L.Rev. (1965). original won. 88(3) (Tent. Draft Apr. 1975) "could effected joinder adversary." Currie's railroad collision injures passengers separate railroad. wins suits, 26. argues automatically recover. Stan.L.Rev., 304. 88(4), supra. If, forum unable engage scale call witnesses, unwarranted. differences sometimes allowing lost. problem acute chosen id., 88(2) d. 88, recognizes distinct trend weight intrinsic 'offensive' 'defensive' preclusion, although stronger showing adequate required former latter." Reporter's 99. Everest Management 475 1236, 1240 ("[T]he complicating additional outweighs advantage disposition issues"). Moreover, consolidation prohibited statute. 78u(g). appealed Circuit, aware respondent, commenced filing true, course, brought—a Part opinion. forum. authors article sources "indicates late eighteenth early nineteenth centuries, determinations force possible viewed concern. warranted, stand way." Harv.L.Rev., 455-456. 68, j Queen, Wood, 369 469, 82 894, 44, Meeker Ambassador Oil 375 160, 84 273, 261, ordinarily reliance 603, misplaced. awarded "no involve "re-examination" whole performed. reaching went state: "Were [question redetermination subject estoppel] event that, pendency throughout non-jury effort protect plaintiffs, expedite Judge Duffy, pursuant Rule 39(b), (c), F.R.Civ.P., advisory F.2d, 821-822. (Footnote omitted.) mistaken suggestions. delayed complicated stay 1934 unhindered improper, me decide approve impaired. (1973); (1830); Henderson, Background 289 (1966) (hereinafter Henderson); Wolfram, Minn.L.Rev. 639 (1973) Wolfram). Wonson, Fed.Cas. 745 (No. 16,750) (CC Mass.1812) (Story, C.J.). states: "For depriving us benefits earlier, October 14, 1774, Continental unanimously respective colonies England, especially inestimable privilege vicinage, course Journals 69 (1904). Holdsworth methods strengthen effective, disliked, given jurisdiction reorganized admiralty vice-admiralty. acquit him." W. Holdsworth, Law While dealt chiefly offenses, law. 654 47. Ga.Const., Art. LXI (1777), State Constitutions Colonial Charters, Other Organic Laws 785 (F. Thorpe 1909) Thorpe); Md.Const., III (1776), 1686-1687; Mass.Const., XV (1780), 1891-1892; N.H.Const., XX (1784), 2456; N.J.Const., XXII 2598; N.Y.Const., XLI 2637; N.C.Const., XIV 2788; Pa.Const., XI 3083; S.C.Const., (1778), 3257; Va.Const., 3814. 655. When 1787 Northwest Ordinance governance territories west Appalachians, 960-961. proposal add III: "And usual cases." Farrand, Records 1787, p. 628 (1911). debate 153-155, 8, 2451 8. objection Gorham Massachusetts constitution Juries States." 628. Commentators failure convention include guarantee. Henderson 294-295; true omitting members wanted go home."); 660-666. 298; 667-703. Virginia's typical: "That, controversies respecting property, ancient greatest [ought] inviolable." Elliot, Debates 658 1836). Judiciary September 24, 1789, passed within six months organization day Amendments First Congress, right. 77. Thomas Jefferson "I consider [trial jury] anchor yet imagined principles constitution." Writings 71 (Washington 1861). 671. written: antifederalists arguing short, inexpensive, decorous productive produce. inconveniences accepted instances, ability disregard substantive reach. misguided tinkerers devices; were, day, libertarians avowed general, debtors particular, grave danger sit 671-672. suggests Schiedt relevant 23. disagree. intimation differently second. applies 218, 666 (1849); 109, 113-114, 218 (1821); F. Buller, Introduction Relative Trials Nisi Prius *232 (7th 1817); T. Peake, Compendium Evidence 1806). is, facts, Abandonment development. Sav. generally seminal adopting approach, 1942. 302-303 ("In England 1790 phrase verdict' common. Further, commonplace instruct 'that recover,' "); Scott, Reform Procedure, 669, 686 (1918) (cases therein). demur, admit truth adduced inference drawn therefrom, admitted inferences. Slocum Life Ins. 228 364, 388, 523, 532, 879 (1913); Gibson Hunter, H.Bl. 187, 126 499 (N.P.1793); 304-305; 683-684. Lord Mansfield, correct erroneous 'FOR FORM'S SAKE, WE MUST SET ASIDE THE WHOLE VERDICT. .' EDIe East India W.Bl. 295, 298 (K.B.1761), SEC." 655 24. 261 (1963) (per curiam ), yielded Meeker, demanded first, plaintiffs. claim. 308 875, 884 (CA10 1962). Plaintiffs appealed, Tenth reversed (1962), unlike retry totally fails explain inconsistency. extend areas, antitrust, labor, employment discrimination, consumer protection, like, sue violations commit statutorily created "administrative specialized equity." 195, 1009, Atlas Roofing Occupational Safety Health Review Comm'n, 430 97 1261, 464 (1977); (1966); NLRB Jones Laughlin Steel 301 615, 81 893 (1937). 88(2), d 1975). Citing 59 (CA5 1970), cert. denied, 403 904, 2203, 680 (1971), Note actions, sufficient preclusion warrant carry party." Restatement, 100. Hearings Recording Deliberations Subcommittee Investigate Administration Security Senate Committee Judiciary, 84th Cong., 1st Sess., 63-81 (1955) (thorough arguments pro con bibliography); (bibliography); Redish, Right Trial: Study Irrationality Rational Decision Making, 70 Nw.U.L.Rev. 502-508 (1975) (discussion juries). Much delay attributed selection, voir dire, charge. Kalven, Buchholz, Delay None delaying avoided

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