Opinion ID: 163762
Heading Depth: 4
Heading Rank: 1

Heading: issues

Text: According to the doctrine of issue preclusion, when “an issue of ultimate fact has been once determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit.” United States v. Botefuhr, 309 F.3d 1263, 1282 (10th Cir. 2002) (quotation and citation omitted). The defendants here have the burden of establishing issue preclusion, In re King, 103 F.3d 17, 19 (5th Cir. 1997), and four elements must be shown: “(1) the issue previously decided is identical with the one presented in the action in question, (2) the prior action has been fully adjudicated on the merits, (3) the party against whom the doctrine is invoked was a party, or in privity with a party, - 17 - to the prior adjudication, and (4) the party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action.” Botefuhr, 309 F.3d at 1282 (quoting Dodge v. Cotter Corp., 203 F.3d 1190, 1197 (10th Cir. 2000)). The defendants argue that issue preclusion bars the plaintiffs from litigating issues of the materiality or the accuracy of the statements made in Kinder-Morgan’s 1997 10-K and 10-Q filings. They contend that our decision in the case of McDonald v. Kinder-Morgan, Inc., 287 F.3d 992 (10th Cir. 2002), decided these issues. Although the plaintiffs in McDonald were different from the plaintiffs here, we need not decide if the two sets of plaintiffs are in privity because we conclude, in any event, that the defendants’ argument fails because the critical factual issue—whether Kinder-Morgan’s statements about the Bushton plant in its 1997 10-Q and 10-K filings were accurate—was not adjudicated on the merits in McDonald. In Botefuhr, we held that “[i]n the issue preclusion context, the underlying issue must have been adjudicated on the merits.” Botefuhr, 309 F.3d at 1282. We explained: A judgment is not conclusive in a subsequent action as to issues which might have been but were not litigated and determined in the prior action. .... An issue is not actually litigated if the defendant might have interposed it as an affirmative defense but failed to do so; nor is it - 18 - actually litigated if it is raised by a material allegation of a party’s pleading but is admitted (explicitly or by virtue of a failure to deny) in a responsive pleading; nor is it actually litigated if it is raised in an allegation by one party and is admitted by the other before evidence on the issue is adduced at trial . . . . Id. at 1282 (quoting Restatement (Second) of Judgments § 27 cmt. e at 256-57 (1982)). The factual accuracy of Kinder-Morgan’s statement made about the Bushton plant in the 1997 third quarter 10-Q and 10-K was not litigated in McDonald. McDonald was admittedly a securities fraud case against KinderMorgan, but it was filed by different plaintiffs who relied on a different theory of fraud. The plaintiffs in that case conceded for the purposes of their litigation the factual accuracy of the statements in the 10-Q and 10-K about the Bushton Plant and Kinder-Morgan’s earnings and they attempted to predicate liability only upon the alleged failure of Kinder-Morgan to disclose future risks to future earnings because of the “keep whole” provisions in some of the Bushton contracts. McDonald, 287 F.3d at 994, 996–97, 998. The concession by the plaintiffs in McDonald means that the issue of the factual accuracy of the Bushton statement and Kinder-Morgan earnings for the historical periods covered in the financial reports was never litigated and, because these are the issues in this case, issue preclusion should not apply. Botefuhr, 309 F.3d at 1282. - 19 -