Opinion ID: 460028
Heading Depth: 2
Heading Rank: 1

Heading: Res Judicata/Collateral Estoppel

Text: 39 Initially, the controversy over the Commission's reversal of its own policy, after that policy had been upheld by a federal court of appeals and the Supreme Court had declined to review it, presents this court with a substantial question in the area of preclusion. Clark-Cowlitz claims that the Commission's abrupt about-face on the municipal preference issue constitutes an attempt to relitigate a decided question, in stark violation of the closely-related principles of res judicata and collateral estoppel. Clark-Cowlitz never specifies which of the two doctrines it considers violated, but refers instead in each instance to both. The other parties seem to share the petitioner's uncertainty. Confusion as to whether the problem involved is one of res judicata (claim preclusion) or collateral estoppel (issue preclusion) is the understandable result of the unusual circumstances of this case and the ambiguities in the doctrines themselves. 40 The gist of petitioner's argument is that the legal question of whether the municipal preference applies to relicensing proceedings in which the original licensee is a party was exhaustively litigated and definitively resolved in Bountiful. Indeed, Clark-Cowlitz contends, the resolution of the meaning of the municipal preference was the sole purpose of the Bountiful proceeding. To permit relitigation of that issue now would be to render Bountiful a nullity and to imply that the Eleventh Circuit's opinion had been advisory and, hence, unconstitutional. 41 The Commission's rebuttal is not very persuasive. Its argument boils down to an assertion that application of preclusion here would freeze the development of the law and an admonition that the doctrine should not be applied rigidly and woodenly. The Commission's ally, Intervenor Public Utility Commissioner of Oregon, is bolder: he declares outright--in underscored letters--that the Eleventh Circuit's decision affirming the Commission's Opinion 88 [Bountiful] was an unconstitutional advisory opinion issued in the absence of any actual controversy. The decision therefore had no legal effect. Brief of Intervenor Public Utility Commissioner of Oregon at 7 (emphasis in the original). 42 We reject the harsh allegations of unconstitutional conduct by the Eleventh Circuit. Wholly apart from the dubious propriety of a sister circuit construing a decision in such a fashion, and the Commission's implying misconduct by the Eleventh Circuit for upholding the Commission's decision, the facts do not bear out the charge. There was a definite case and a very lively controversy at the time the Eleventh Circuit acted on the Bountiful matter. The issue was handled as a declaratory matter because all parties recognized the issue as one which would arise in essentially identical form in several pending and a large number of impending cases. The City of Bountiful and others recognized that the viability of their hydropower applications turned upon the applicability of municipal preference. All agreed that in the interests of clarity, consistency, judicial economy, efficiency and the avoidance of needless expense, the question should be separated and resolved in one consolidated proceeding rather than separately litigated in each and every one of the cases in which it was certain to arise. The sole and entire purpose of the Bountiful proceeding was to resolve the municipal preference issue. The Commission, Clark-Cowlitz and Pacific Power, as well as numerous other intervenors, took part in the Bountiful proceeding and litigated energetically. After extensive briefing and a full day of oral argument, the Commission ruled unanimously that the municipal preference unambiguously applied to all relicensings, including those involving incumbent licensees. The private utilities immediately petitioned for review. 43 When presented with the case, the Eleventh Circuit recognized that the declaratory format raised a threshold question of case or controversy. See Alabama Power, 685 F.2d at 1314. Although all parties to the appeal urged the Eleventh Circuit to reach the merits, id., the court recognized its obligation to explore the threshold jurisdictional question and refrain from acting if such action would violate Article III. Only after consideration and discussion did the court conclude that the dispute did present an actual case or controversy. Id. at 1315. 44 The court noted that the judiciary is reluctant to apply declaratory judgments to administrative determinations 'unless these arise in the context of a controversy ripe for judicial resolution.'  Id. (quoting Abbott Laboratories v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967)). After devoting several paragraphs to discussing the pertinent Supreme Court precedents, the court found that the issue presented was purely legal, and that the challenged agency action [would] have a direct and immediate impact on the petitioners, the states, and all potential applicants, as well as the workload of the Commission. Id. It further found that the resolution of this issue now will foster effective enforcement and administration by the agency. Id. The Eleventh Circuit thus concluded that it had jurisdiction. 45 On the merits, the court found the Commission's interpretation reasonable; however, it did not uphold the Commission's interpretation because it was one reasonable interpretation among many. Rather, the court applied a much stricter standard of review to the agency decision and held that the other interpretation being urged was clearly wrong. The court stated categorically that the interpretation suggested by private power interests changes the statute's entire preference structure, and would make the statutes application confusing and sporadic. Id. at 1316. The court concluded that the proffered interpretation would effectively render the preference a nullity because the public sector would then be preferred only when a project was so unsuccessful that the incumbent had no desire to renew. Id. Thus, the court continued, states and municipalities realistically would have no preference at all because a preference to a losing project is worthless. Id. The private utilities requested rehearing en banc. The request was unanimously denied. 46 Thus, the Eleventh Circuit squarely addressed and squarely rejected the argument currently being made by the Commission. More important, as detailed in some length above, the Supreme Court was informed of the Commission's changed stance and of the Solicitor General's opinion that under traditional res judicata principles, if this Court denies certiorari ..., [the parties] may be bound by the Commission's order in any future relicensing proceeding, and responded by denying certiorari. 47 It was in the aftermath of the Eleventh Circuit's ruling that the ALJ held a hearing on the competing applications to operate Merwin and, applying the Bountiful precedent, concluded that the license should go to Clark-Cowlitz. Having failed to secure the Supreme Court's cooperation in its dramatic policy reversal, the Commission apparently decided to pursue another tack--one already hinted at in the transcript of FERC's closed meeting--a backdoor reversal in Merwin. 48 Thus, without formal notice to the affected parties, and without any briefing or argument, summary reversal of Bountiful was announced by the Commission as one of its reasons for reversing the ALJ's determination. Despite the substantial resources and energy invested by all parties in pursuing the Bountiful litigation, the Commission claims that it was in no way bound by the result of that litigation and could reverse the case and reject the statutory interpretation it embodied at will. Clark-Cowlitz contends rightly that at least as to the parties that actually participated in the Bountiful decision relitigation is barred. 49 Res judicata and its fraternal twin collateral estoppel are venerable common law doctrines. They have been the subject of numerous cases and much commentary. There is a consensus that both doctrines are firmly fixed in the firmament of federal jurisprudence. See Faucett Associates, Inc. v. AT & T, 744 F.2d 118, 125 (D.C.Cir.1984), and cases cited therein. There is also consensus that they advance the same interests: protection of litigants from the vexation and expense of repetitious litigation, protection of the courts from the burden of unnecessary litigation, promotion of respect for the judicial process and confidence in the conclusiveness of judicial decision-making, avoidance of disconcertingly inconsistent results, and securing the peace and repose of society. See, e.g., United States v. Mendoza, 464 U.S. 154, 157-59, 104 S.Ct. 568, 571, 78 L.Ed.2d 379 (1984); Allen v. McCurry, 449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980); Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 649, 58 L.Ed.2d 552 (1979); Faucett, at 124; Otherson v. Department of Justice, 711 F.2d 267, 271, 273 (D.C.Cir.1983); Segal v. AT & T, 606 F.2d 842, 846 (9th Cir.1979). The principle is simply that later courts should honor the first actual decision of a matter that has been actually litigated. 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure Sec. 4416 at 136 (1981). 50 At the practical level of definition and application, however, agreement stops and confusion sets in. A survey of relevant informed opinion reveals little agreement as to how the doctrines should be defined, how they differ from each other, or how the two may be reliably differentiated in any but the most commonplace situations. 51 Res judicata is sometimes used as a generic term encompassing the whole field of preclusion with collateral estoppel a mere subset, see, e.g., 4 K. Davis, Administrative Law Treatise Secs. 21:1-21:9 (2d ed. 1983), sometimes to mean a more narrow, specific type of preclusion, and sometimes to refer to both, see, e.g., Allen v. McCurry, 449 U.S. at 94 n. 5, 101 S.Ct. at 415 n. 5 (with the narrower meaning distinguished as pure res judicata); Kaspar Wire Works, Inc. v. Leco Engineering and Machine, Inc., 575 F.2d 530, 534-40 (5th Cir.1978). 52 Under res judicata, the Supreme Court has said, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Allen v. McCurry, 449 U.S. at 94, 101 S.Ct. at 414. Under collateral estoppel, by contrast, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case. Id. (emphasis added). Res judicata, it is commonly said, prevents a party from relitigating the same cause of action against the parties to a prior decision. Mendoza, 464 U.S. at 163, 104 S.Ct. at 574. 53 Collateral estoppel is typically said to foreclose[ ] litigation only of those issues of fact or law that were actually litigated and necessarily decided by a valid and final judgment between the parties, whether on the same or a different claim. Segal v. AT & T at 845 (emphasis added, citations omitted). 54 In an effort to organize and simplify this body of law, the Restatement (Second) of Judgments introduced and urged the adoption of the terms claim preclusion and issue preclusion. Unfortunately this did little to dispel the confusion because the two new terms are invariably defined in terms of the old. See, e.g., Otherson, 711 F.2d at 273. All the old problems are thus incorporated by reference into the new terms. Further [t]he distinction between an issue and a claim is often one of degree and emphasis in applying a deeper principle that an original misadventure cannot be retrieved for a second chance. 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 4402 at 10. The problem was never really one of difficult terminology but rather one of inadequately delineated concepts. What generally travels under the name of res judicata is a preclusion problem where the alignment of parties, facts, and allegations is exceedingly close; collateral estoppel is generally applied when the alignment is less tight--when the same legal issues arise in connection with a different subject matter or different parties. 55 Although if pressed, we would designate the present situation as one involving res judicata, we think the choice of label is of little import. Under any of the tests commonly applied under either rubric, the issue which the Commission seeks to relitigate is one which is and ought to be closed. The facts of this case, the procedure adopted by the Commission, and the flouting of a decision on a statutory interpretation question decided by a court of competent jurisdiction all make this case a model for the application of preclusion principles. 56 FERC has cited to us the Supreme Court's relatively recent collateral estoppel decisions United States v. Mendoza, 464 U.S. 154, 104 S.Ct. 568, 78 L.Ed.2d 379 (1984), and United States v. Stauffer Chemical Co., 464 U.S. 165, 104 S.Ct. 575, 78 L.Ed.2d 388 (1984). We find nothing in either of those decisions that supports the Commission's position. In Mendoza, the plaintiff sought to offensively estop the government with a district court decision that the government had failed to appeal. Noting the enormous volume of government litigation and the impossibility of the government's appealing every adverse judgment, the Court found that offensive collateral estoppel by a non-party should not be permitted against the government. The court noted, however, that of course, the government may not now undo the consequences of its decision not to appeal the District Court judgment in the [prior district court] case. As to the litigants involved in the prior case, it is bound by that judgment under the principles of res judicata. Mendoza, 464 U.S. at 162, 104 S.Ct. at 573. The Mendoza court effectively responded to the Commission's asserted fears that the development of the law will be frozen. The Court stated: 57 The concerns underlying our disapproval of collateral estoppel against the government are for the most part inapplicable where mutuality is present.... The application of an estoppel when the Government is litigating the same issue with the same party avoids the problem of freezing the development of the law because the Government is still free to litigate that issue in the future with some other party. And where the parties are the same, estopping the Government spares a party that has already prevailed once from having to relitigate. 58 Mendoza, 464 U.S. at 163-64, 104 S.Ct. at 574. Indeed, where the parties are the same, the Court was willing to allow estoppel of the government even as to separable causes of action. Thus, in United States v. Stauffer Chemical Co., 464 U.S. 165, 104 S.Ct. 575, 78 L.Ed.2d 388 (1984), Stauffer was permitted to use a judgment won against the government with respect to one plant in litigation involving a second plant even though the two plants were located in different jurisdictions, and certain other factual details were different. The court found that estoppel was available to preclude relitigation of the same issue already litigated against the same party in another case involving virtually identical facts. Id. at 169, 104 S.Ct. at 578 (emphasis added). The court noted that the doctrine of collateral estoppel can apply to preclude relitigation of both issues of law and issues of fact if those issues were conclusively determined in a prior action. Id. 59 The Court, moreover, all but did away with the unmixed questions of law exception to the application of preclusion doctrine. The Court stated that [a]dmittedly the purpose underlying the exception for 'unmixed questions of law' in successive actions on unrelated claims is far from clear and was frank to admit uncertainty as to its application. Id. at 172, 171, 104 S.Ct. at 579. The Court explained that the test for the exception seems to be whether an 'issue of fact' or an 'issue of law' is sought to be relitigated and then whether the 'issue of law' arises in a successive case that is so unrelated to the prior case that relitigation of the issue is warranted. Stauffer Chemical Co., 464 U.S. at 171, 104 S.Ct. at 579 (emphasis added). The Court went on to observe that 60 [w]hen the claims in two separate actions between the same parties are the same or closely related ... it is not ordinarily necessary to characterize an issue as one of fact or of law for purposes of issue preclusion.... In such a case, it is unfair to the winning party and an unnecessary burden on the courts to allow repeated litigation of the same issue in what is essentially the same controversy, even if the issue is regarded as one of 'law.'  61 Stauffer Chemical Co., 464 U.S. at 171, 104 S.Ct. at 579 (quoting Restatement (Second) of Judgment Sec. 28, Comment b (1982)). 62 We think it amply evident that every consideration of equity, judicial economy, and consistency militates in favor of a finding of preclusion here. The parties all devoted enormous resources to litigating the municipal preference question energetically in Bountiful. They would have been far less likely to do so if they thought that the decision there was one that could be changed by the Commission at whim. The Commission itself represented to the Eleventh Circuit that its conclusion was entirely independent of and could not possibly be influenced by the facts of any particular relicensing case. The Solicitor General, in presenting his brief on behalf of the Commission to the Supreme Court, indicated that he and the agency believed that a denial of certiorari would give the Eleventh Circuit's decision binding effect as to the present parties. All the parties to this suit were parties to Bountiful, little time has passed and no material change in circumstances has occurred. The facts are not merely virtually the same. They are identical. It was precisely the municipal preference issue presented here that Clark-Cowlitz and Pacific Power were interested in when they intervened in Bountiful. We think it amply evident that as to the parties to Bountiful, FERC was not entitled to relitigate the municipal preference question. 63 We find disturbing, moreover, the Commission's suggestion that it is free to reinterpret statutes in any way it pleases without regard for precedent, and equally disturbing the hint that the Commission does not think itself in anyway bound by the actions of prior Commissions, let alone court decisions affirming those actions. Although we traditionally give agencies considerable latitude, agencies must use their interpretative discretion with some measure of constancy and reason. See American Trucking Associations, Inc. v. Atchison, T. & S.F.R. Co., 387 U.S. 397, 416, 87 S.Ct. 1608, 1618, 18 L.Ed.2d 847 (1967). Accordingly, we find FERC's contentions without merit, and conclude that the relitigation of this issue was barred by the doctrine of preclusion. 64 Our concurring colleague is correct in asserting that saying that the Commission's new interpretation is unreasonable is different from saying that the Commission is precluded from asserting it. However, we continue to believe that the Commission is precluded from successfully asserting its new interpretation in this case with these parties. That the Eleventh Circuit deferred to the agency's statutory interpretation does not mean that the court did not also interpret the statute. The Eleventh Circuit specifically held, after an independent consideration of the statute and its legislative history, that the Commission's interpretation was correct. And we are required by the principles of res judicata to hold FERC bound by that interpretation.