Opinion ID: 3009823
Heading Depth: 3
Heading Rank: 1

Heading: Substantial Relationship

Text: 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. 23 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 , since an action for indemnification accrues at the time of the indemnitee’s payment despite a shorter contractual time limitations period applying to 0 Burlington’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 . 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. 24 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 25 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. 26 113 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 27 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 28