Opinion ID: 2639670
Heading Depth: 2
Heading Rank: 2

Heading: Federal and state issue preclusion

Text: In this case, the district court granted Harrah's summary judgment motion as to all plaintiffs, based on issue preclusion. This court reviews a district court's grant of summary judgment de novo. Wood v. Safeway, Inc., 121 Nev. 724, 729, 121 P.3d 1026, 1029 (2005). Summary judgment is proper when, viewing the evidence in the light most favorable to the nonmoving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Id. Issue preclusion is a proper basis for summary judgment. Kahn v. Morse & Mowbray, 121 Nev. 464, 474, 117 P.3d 227, 234 (2005). Although whether issue preclusion applies is a mixed question of law and fact, legal issues predominate, and therefore, this court reviews de novo the availability of issue preclusion. University & Cmty. Coll. Sys. v. Sutton, 120 Nev. 972, 984, 103 P.3d 8, 16 (2004). Both federal and state law attempts to restrict the application of issue preclusion to parties whose due process rights have been met, such that it is fair to apply a prior decision in a separate case to their claims. Federal law does this by generally prohibiting the application of issue preclusion to those who were not parties in the prior litigation, but allowing its application if the party's interests were adequately represented in the prior litigation. Taylor v. Sturgell, 553 U.S. ___, ___, 128 S.Ct. 2161, 2171-72, 171 L.Ed.2d 155 (2008). Nevada ensures due process by limiting the application of issue preclusion to those who were a party in the prior case or who were in privity with a party in the prior case. Paradise Palms v. Paradise Homes, 89 Nev. 27, 30-31, 505 P.2d 596, 598-99 (1973). Although both federal and state doctrines of issue preclusion seek to protect parties' due process rights, the terminology and analyses differ. Therefore, we separately discuss the preclusive effect of the prior federal and state decisions.
To establish the preclusive effect of a previous federal decision, a party must demonstrate that the issue he seeks to preclude is (1) identical to the one alleged in the prior litigation, (2) has been actually litigated in the prior litigation, and (3) that the resolution of the issue was a critical and necessary part of the earlier judgment. Clark v. Bear Stearns & Co., Inc., 966 F.2d 1318, 1320 (9th Cir.1992); Taylor, 553 U.S. at ___, 128 S.Ct. at 2179-80 (noting that the party asserting issue preclusion bears the burden of establishing the elements). Preclusion is generally prohibited in cases where a party is seeking to assert a judgment against a person who was not a party in the prior case. Taylor, 553 U.S. at ___, 128 S.Ct. at 2171. However, there are exceptions where issue preclusion may be applied to nonparties, one of which is adequate representation. Id. at ___, 128 S.Ct. at 2172. Adequate representation only exists when a nonparty was `adequately represented by someone with the same interests who [wa]s a party' to the suit. Id. (quoting Richards v. Jefferson County, 517 U.S. 793, 798, 116 S.Ct. 1761, 135 L.Ed.2d 76 (1996)). In the instant case, appellants were nonparties in the federal cases relied upon by the district court to apply issue preclusion. Adequate representation is the only exception to the general rule prohibiting the application of issue preclusion to nonparties that is at issue in this case. Id. Adequate representation is a narrow exception to the general rule prohibiting the application of issue preclusion to nonparties. Recently, in Taylor v. Sturgell , the United States Supreme Court clarified the law regarding the circumstances in which issue preclusion applies to persons who were nonparties to the prior case and specifically addressed adequate representation. Id. at ___, 128 S.Ct. at 2171-73. The Court noted that the adequate representation exception only applies if (1) the interests of the nonparty and her representative are aligned, and (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty. Id. at ___, 128 S.Ct. at 2176 (internal citations omitted). In addition, the Court indicated that it sometimes also requires that (3) the nonparty had notice of the original suit. Id.
In Nevada, issue preclusion requires that (1) an issue be identical, (2) the initial ruling was final and on the merits, (3) the party against whom the judgment is asserted was a party or in privity with a party in the prior case, and (4) the issue was actually and necessarily litigated. Five Star Capital Corp. v. Ruby, 124 Nev. ___, ___, 194 P.3d 709, 713 (2008). Issue preclusion is based upon the sound public policy of limiting litigation by preventing a party who had one full and fair opportunity to litigate an issue from again drawing it into controversy. Thompson v. City of North Las Vegas, 108 Nev. 435, 439-40, 833 P.2d 1132, 1134-35 (1992). This doctrine ends litigation and lends stability to judgments, thus inspiring confidence in the judicial system. Willerton v. Bassham, 111 Nev. 10, 19, 889 P.2d 823, 828 (1995). The party seeking to assert a judgment against another has the burden of proving the preclusive effect of the judgment. Bennett v. Fidelity & Deposit Co., 98 Nev. 449, 452, 652 P.2d 1178, 1180 (1982). Issue preclusion can only be used against a party whose due process rights have been met by virtue of that party having been a party or in privity with a party in the prior litigation. Paradise Palms, 89 Nev. at 30-31, 505 P.2d at 598-99. To be in privity, the person must have acquired an interest in the subject matter affected by the judgment through ... one of the parties, as by inheritance, succession, or purchase. Id. at 31, 505 P.2d at 599; accord Restatement (Second) of Judgments § 41(1) (1982) (enumerating representatives to include: trustees of an interest to which the person is a beneficiary, someone who the person invested with authority to represent him, a fiduciary to the person, an official or agency legally authorized to represent the person's interests, and a class representative in a certified class action).
In determining that issue preclusion barred appellants' claims, the district court employed the federal virtual representation analysis under Irwin v. Mascott, 370 F.3d 924 (9th Cir.2004), which was the law at the time of the district court's decision. Appellants argue that Nevada issue preclusion law governs this case and that the district court erred because appellants are not in privity with any of the plaintiffs in the prior cases. Alternatively, appellants argue that should this court apply the federal adequate representation analysis, appellants were not adequately represented by the plaintiffs in the prior cases. On the other hand, Harrah's argues that this court should apply only the federal adequate representation analysis and that prior plaintiffs did adequately represent appellants, such that the district court properly determined that issue preclusion bars appellants' claims. We agree with appellants that issue preclusion does not bar their claims. However, our analysis departs from that of both parties and the district court. Our analysis differs from that of the district court in two respects. First, the district court erred in applying federal issue preclusion to both state and federal decisions. To determine the preclusive effect of a federal decision, we apply federal law. Clark v. Columbia/HCA Info. Servs., 117 Nev. 468, 481, 25 P.3d 215, 224 (2001). To determine the issue preclusive effect of a state decision, we apply Nevada issue preclusion law. Clark v. Clark, 80 Nev. 52, 57, 389 P.2d 69, 72 (1964). Second, we are applying different law in analyzing the preclusive effect of prior federal decisions because federal issue preclusion law has changed since the district court entered its order. The district court entered its order regarding issue preclusion in 2007. In 2008, the United States Supreme Court issued an opinion in Taylor, 553 U.S. ___, 128 S.Ct. 2161, which clarified federal issue preclusion law. When the United States Supreme Court applies a rule of law to the parties before it, every court must then give retroactive effect to that decision. Harper v. Virginia Dept. of Taxation, 509 U.S. 86, 89, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993). Therefore, although Taylor was not decided until 2008, it states the rule of law regarding federal issue preclusion and is the law we must apply in deciding this appeal.