Opinion ID: 570048
Heading Depth: 2
Heading Rank: 3

Heading: vouching and adequate representation

Text: 23 The fumigators also contend that it was unfair to use collateral estoppel against them because they were vouched in to an arbitration despite having no duty to indemnify or defend Universal. Even if they were properly vouched in, the fumigators say that their interests were not adequately represented in the arbitration and therefore the district court's application of collateral estoppel was improper. We reverse the judgment for the reason that Universal could not have represented the fumigators' interests in the arbitration. 24 Vouching is a common-law device whereby a defendant notifies the vouchee, a nonparty alleged indemnitor, 25 (a) of the pendency of the suit against him; (b) that if liability is found, the defendant will look to the vouchee for indemnity; (c) that the notice constitutes a formal tender of the right to defend the action; and (d) that if the vouchee refuses to defend, it will be bound in any subsequent litigation between them to the factual determinations necessary to the original judgment. 26 Humble Oil, 444 F.2d at 735. Vouching helps to avoid duplicative litigation and the risk of inconsistent results in adjudicating indemnification claims. See SCAC Transport, 845 F.2d at 1162 (explaining utility of vouching). Vouching is reserved primarily for cases in which the vouchee cannot be impleaded because the vouchee is not subject to personal jurisdiction. Humble Oil, 444 F.2d at 735 n. 15; 18 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4452 at 445-46. An alleged indemnitor who is vouched in to a court proceeding may be subject to having the prior determination used against the vouchee in the subsequent indemnification action even if the vouchee does not appear and defend in the first action. Wisconsin Barge Line Inc. v. The Barge Chem 300, 546 F.2d 1125, 1128 (5th Cir.1977); Odd Bergs Tankrederi A/S v. S/T Gulfspray, 650 F.2d 652, 654 (5th Cir.1981). 27 Generally, once the alleged indemnitor is vouched in, the vouchee must choose either to appear and defend or to decline the tender, though the vouchee must make this choice without the benefit of an authoritative determination of the primary defendant's right of indemnification. If the vouchee declines, the vouchee loses certain prerogatives in any subsequent indemnification action brought by the primary defendant, and results of the primary lawsuit may be binding in the subsequent action. For example, the alleged indemnitor may not contest the validity of the primary defendant's liability to the injured party. He may contest only whether notice was sufficient, whether he has a duty to indemnify, and whether the prior judgment was obtained by fraud or collusion. See generally Comment, Due Process Constraints on Vouching as a Device to Bind Non-Parties, 14 Colum.J.L. & Soc.Probs. 189, 192 (1978) (describing typical mechanics of common-law vouching); Wright, Miller & Cooper, supra, at 440-41 (same). 28 This court recognizes vouching as a valid procedural device. Odd Bergs, 650 F.2d at 654; Wisconsin Barge, 546 F.2d at 1128. In this case, vouching procedure gave the alleged indemnitors adequate notice and the opportunity to be heard in the primary action. In light of what we have said about issue preclusion from arbitration, we find no reason to apply a different rule when the alleged indemnitor is vouched in to an arbitration as opposed to a court proceeding, assuming that a district court is convinced that the arbitration fully and fairly litigated the issues to be precluded. 29 But there is a potential problem with applying collateral estoppel against a party who was vouched in but did not appear to defend. The district court thought that the defendant in the primary action, who vouches in his putative indemnitor, has no duty whatsoever to defend the interests of the indemnitor in order to obtain the benefit of subsequent preclusion as to issues relevant to the indemnitor's liability. 4 In some cases, therefore, those issues will not be fully and fairly litigated. Other authorities express similar concerns because, inter alia, a conflict of interest between the indemnitor and the indemnitee could interfere with full and fair litigation of issues.