Opinion ID: 3009823
Heading Depth: 2
Heading Rank: 1

Heading: introduction

Text: 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 9 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). 10 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 11