Collateral Estoppel: What Is It?

Collateral Estoppel is a doctrine that states that if an issue has already been litigated, it cannot be litigated again. This means that a criminal or civil case cannot be taken to court twice. It also limits what criminal cases can then be heard in civil court and vice versa. Collateral estoppel is intended to protect people from being tried for the same issue twice, as long the result was a valid, final judgment.

A second litigation would be defined as one that is trying the same substantive legal issue, even if it's being tried in a different venue at a different time.

Collateral estoppel is also known as issue preclusion and estoppel by record. This is because there are a few different types of collateral estoppel, each of which bars a different action in court. Collateral estoppel stops a party from asking a court to make a new decision on something that has been already decided in a previous lawsuit with the same parties.

The purpose of collateral estoppel is to promote consistent rulings in cases with identical facts. Collateral estoppel also comes into play when related cases are tried separately.

Collateral estoppel is a subgenre of res judicata. Res judicata is the doctrine that a claim that has already been litigated or could have been litigated cannot be litigated again. If the claim has been heard in court or was settled out of court but could have been taken to court, res judicata says that it cannot be taken to court again.

Both collateral estoppel and res judicata are what are commonly known as affirmative defenses. An affirmative defense is a defense that says that even if all of the facts in the complaint are correct, the defendant is still not liable for a different reason. Affirmative action defenses include:

  • Collateral estoppel
  • Res judicata
  • Laches
  • Statutes of limitation

Collateral estoppel and res judicata come into play most often when a similar and subsequent case is filed that's similar to a case that was already adjudicated. The rationale behind collateral estoppel and res judicata is that something that has been fully adjudicated should not be adjudicated again.

Collateral estoppel is also referred to as issue preclusion.

Why Is Collateral Estoppel Important?

Collateral estoppel is important to protect criminal defendants from being sued for the same crime twice. Collateral estoppel is also important to protect the efficiency of courts from constant relitigation of cases that have already been decided upon.

Collateral estoppel is also important because it holds that how the facts are determined and litigated between the parties are conclusive and binding in case of any future litigation. Meaning, the ruling is binding and can be reviewed as truth by a future judge or jury in a different case.

Where Did Collateral Estoppel Come From?

Collateral estoppel is common law codified by Ashe v. Swenson. In this trial, the court decided that the Fifth Amendment's protection from double jeopardy in federal courts extended to state courts. This was established in the Due Process Clause of the Fourteenth Amendment as established in Benton v. Maryland. This all relies upon the Full Faith and Credit Clause in the Constitution.

Defense Against Collateral Estoppel

If the claimant didn't have a "full and fair opportunity to litigate" on the case, he can file a federal lawsuit to challenge the adequacy of the procedures and to lift collateral estoppel.

Because collateral estoppel is an affirmative defense, it must be raised by the party seeking to use it.

Two Types of Collateral Estoppel

There are two types of collateral estoppel, mutual and non-mutual. If both parties request collateral estoppel against the other, this is known as mutual collateral estoppel.

Non-mutual collateral estoppel is when one party claims collateral estoppel against the other, but the other part doesn't request collateral estoppel. There are two types of non-mutual collateral estoppel: defensive and offensive. Non-mutual collateral estoppel may be claimed by either party: the defendant or plaintiff.

1. Non-mutual, Defensive Collateral Estoppel

This type of collateral estoppel is when a defendant seeks to prevent a plaintiff from relitigating a case that the plaintiff has unsuccessfully litigated before against a different defendant. 

2. Non-mutual, Offensive Collateral Estoppel

This type of collateral estoppel is when a plaintiff seeks to prevent a defendant from relitigating a case that the defendant has unsuccessfully litigated before against a different plaintiff.

Non-mutual, offensive collateral estoppel isn't recommended by the U.S. Supreme Court when:

  1. The plaintiff in the second litigation could have joined the first lawsuit.

  2. The offensive collateral estoppel would be unfair to the defendant.

These recommendations aren't applied the same way in all jurisdictions. Local laws must be consulted the case of non-mutual, offensive collateral estoppel.

Garrity and Collateral Estoppel

An important case when it comes to collateral estoppel is that of Garrity. Garrity was a plumber whose company was charged with deceptive trade practices by the Consumer Protection Division of the Attorney General's Office or CPD. The case ended when the CPD issued a Final Order that accepted the court's ruling that Garrity's company had "engaged in a longstanding and disturbing pattern of conduct involving deception and deceit."

In conclusion, Garrity was convicted of 7,070 violations of the Consumer Protection Act and charged $707,900 in civil penalties and $65,129.54 in assessed costs.

After this case was finished, The Maryland State Board of Plumbing brought its own complaint against Garrity. Though Garrity objected, the Final Order from the case with the CPD was admitted and incorporated into this case. Garrity's lawyer argued that the Maryland State Board of Plumbing should have to prove independently that Garrity violated the law.

The Maryland State Board of Plumbing counterargued that Garrity was collaterally estopped from relitigating facts that had already been determined during the case with the CPD in the Final Order. It was concluded by the Board that they could use the CPD's Final Order. They concluded that Garrity was in violation of the Maryland Plumbing Act. Garrity's master plumber license was revoked and he was fined $75,000.

Garrity requested judicial review on the grounds that this was an inappropriate use of offensive non-mutual collateral estoppel. The Circuit Court of Baltimore City upheld the ruling and so did the Court of Special Appeals. This was the first time that offensive use of non-mutual collateral estoppel was approved.

The Court of Special Appeals cited Parklane and Rourke. They said, in "civil actions between private, non-governmental parties, courts have noted two general concerns that could limit the application of this doctrine," i.e. "judicial economy and fairness." Judicial economy and fairness are intended to save litigants the burden of expense from unnecessary litigation and re-litigating issues that have been previously decided.

The opinion was authored by Chief Judge Barbera and who went on to state, if "an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim."

The Court of Special Appeals also said that "[i]n light of these twin concerns," the Court "has never rejected offensive nonmutual collateral estoppel as a doctrine, but merely found it inappropriate to the specific facts before it."

The requirement for mutuality or that the parties in the two cases of litigation must be the same has been somewhat relaxed recently. As long as the other elements of collateral estoppel have been met, it's ok if the parties aren't the same.

This has given rise to what's called "non-mutual" collateral estoppel. Non-mutual collateral estoppel can be used defensively and offensively. Defensive non-mutual collateral estoppel is when a defendant seeks to prevent a plaintiff from relitigating an issue that has been unsuccessfully litigated by the plaintiff in the past against a different party. Offensive non-mutual collateral estoppel is when a plaintiff seeks to prevent a defendant from relitigating an issue that the defendant has unsuccessfully litigated before against a different party.

The use of offensive non-mutual collateral estoppel was first examined in Parklane Hosiery Co., Inc. v. Shore by the U.S. Supreme Court.

In Parklane Hosiery Co., Inc. v. Shore, Leo Shore sued Parklane Hosiery Co. and 13 other defendants. While this case was pending, those same defendants were sued by the SEC for the same allegations made by Shore. The SEC won its case. The judgment in SEC's favor was confirmed upon appeal.

Shore moved for a partial summary judgment in his case on the grounds of offensive non-mutual collateral estoppel. The motion was denied by the district court. The conclusion was that collateral estoppel applied in that manner would deny Seventh Amendment rights or right to a jury trial to the defendant. This decision was reversed by the Court of Appeals and so went to the Supreme Court.

Requirements of Collateral Estoppel

Collateral estoppel is not useful in every case; there are a few requirements that should be assessed first. Those requirements include:

  • Collateral estoppel is subject to issues or findings of fact, not conclusions of law.
  • This means that when collateral estoppel is claimed, the issue must be identical to the issue already litigated against.
  • That issue must have been fully litigated at the time.
  • The court must have decided upon the issue.
  • The decision on the issue must have been integral to the outcome of the case.

This final requirement assures that the issue was fully examined and litigated. This means that if the issue was relitigated, it's unlikely that the result would be any different. 

This also means that if an issue has been decided upon by the parties, outside of court, collateral estoppel won't apply. This is because the issues were not fairly or fully litigated, which are requirements of collateral estoppel.

In California, to apply collateral estoppel, there are four criteria that must be met.

  1. The previous conviction must have been a serious offense. This is so that the court is certain that the defendant was motivated to fully litigate.
  2. The trial must have been full and fair so there's no doubt in its validity.
  3. The issue in the prior conviction must have been decided at a criminal trial.
  4. The party whom collateral estoppel is asserted against must have been a party in the previous trial.

Limitations of Collateral Estoppel

There are some limitations in how collateral estoppel can be applied and when.

If an issue is raised in one case that is outside the jurisdiction of that court, collateral estoppel is limited in how it can be applied. That issue could be heard or relitigated in a court that has jurisdiction over that issue.

Collateral estoppel is also limited if there are changes in the law between the first and second litigation. If the modification in the law changes the operative facts that might change the ruling in the case, the case can be relitigated. This denial of collateral estoppel helps to enforce the Equal Protection of Law against luck.

Criminal and Civil Rulings With Collateral Estoppel

There are differences in how local jurisdictions apply or don't apply collateral estoppel.

A major question with collateral estoppel is whether to enforce collateral estoppel with a criminal conviction if the party is also involved in a civil lawsuit. In the past, collateral estoppel was not enforced because the plaintiff in the civil case wasn't the same plaintiff as in the criminal case.

This trend is changing. Many states now enforce collateral estoppel when a criminal case is decided. Acquittal of a crime is not given collateral estoppel in a civil proceeding as the plaintiff has been found innocent and therefore cannot offer evidence against the defendant. 

A famous example of this is the O.J. Simpson trial. In this case, Simpson was acquitted of murder in the criminal trial. Because of collateral estoppel being in effect, Simpson couldn't use his acquittal as a defense in the civil trials brought against him after the murder trial.

Additionally, the evidence required in a criminal and civil case is different. This difference in required evidence makes it unfair to allow a defendant who has been acquitted to bind the opponent in the civil matter because the requirement of proof is not as high.

In a criminal conviction, the standard of evidence is "beyond a reasonable doubt." In a civil conviction, the standard of evidence is "preponderance of evidence."

Three Factors in Res Judicata

Collateral estoppel is a subcategory of res judicata. When deciding whether the raising of res judicata is legitimate or not, a court will examine three factors. Those factors include:

  1. Was there a previous case or could there have been a previous case in which these exact claims could have been raised?
  2. Are the parties the same as those that litigated the issue before?
  3. Did the original action receive final judgment? 

Let's examine these three factors in depth to better understand res judicata.

Identical Claims in Previous Action

The test used by the majority of courts to decide if this factor is met is known as the "transaction or occurrence" test. If the claims are based on the same transaction or occurrence, they must be brought in the same case.

For example: Josh falls and injures himself at Barry's house. Josh sues and loses. The jury decides that Josh's injuries are not due to Barry's negligence. A year later, Josh and Barry are in a car accident and Josh is injured. Josh sues Barry. Barry cannot use res judicata as a defense because the injuries are from two separate occurrences, therefore passing the occurrence test.

On the other hand, if Josh had brought a suit against Barry for the emotional distress from his fall at Barry's house, this wouldn't be allowed under res judicata. The emotional distress claim should have been brought in the first case as it was from the same incident.

The Same Parties

The second factor that must be met for res judicata to apply is whether or not the parties are the same in each litigation case. This applies if the parties are identical in the second case as they were in the first case, or if the parties in the second case were in privity with the parties in the first case. 

For example: Andy, Mike, and Mary are in a car accident. Andy sues Mike for negligence. Then, Mary sues Mike for negligence. Because the parties are different and not in privity with each other, the cases cannot be protected by res judicata. Even though the suits are from the same occurrence, because the parties differ, res judicata doesn't apply.

An important aspect to consider and define here is privity. Privity means that the differing parties in the first suit and second suit share interests. Shared interests in the realm of privity can be defined in many different ways.

Final Judgment

The final factor that must be considered when deciding upon res judicata is whether or not the original case was judged on the merits of the case and was given a final judgment. 

If a case is settled out of court or by the parties on their own, it hasn't received a final judgment. As well, if the judge makes a decision upon a motion or in another way that doesn't concern the facts of the case, that's not a final judgment. Res judicata would be barred in both of these cases.

As well, res judicata would be barred if a case is dismissed on the grounds that the court doesn't have jurisdiction over the subject matter because the process was improper because the venue was improper, or if the necessary party hasn't joined. 

It's also important to know that if res judicata isn't raised by the defense, it is generally considered to be waived.

Differences Between Res Judicata and Collateral Estoppel

There is a subtle difference between res judicata and collateral estoppel. Collateral estoppel is when a claim or cause of action is not been brought to court but the exact issue has been brought to court and litigated before. 

The requirements that must be met for res judicata and collateral estoppel are also slightly different. 

Issues Must Be The Same

For collateral estoppel, the issues brought in the first and second case must be the same or nearly identical. Collateral estoppel can apply as long as the issues are the same, the subject matter doesn't have to be the same.

Already Been Litigated

Secondly, the issue must have already been litigated. Collateral estoppel doesn't apply if the litigation could have been brought but wasn't. This is different from res judicata, which would apply here.

Final Judgment

Lastly, a final judgment must have already been made. There are two requirements to look at within this section. Collateral estoppel cannot apply if the issue was raised in previous litigation but has no connection to the judgment or is not decided upon. As well, similarly to res judicata, the issue must have been decided upon facts, not a technicality.

In most collateral estoppel cases, the identity of the parties or those in privity with the parties in the original litigation must be the same. Not all courts will apply this requirement.

Important Aspects of Collateral Estoppel

There are a few very important aspects to collateral estoppel that should be reviewed in depth. As well, there were two cases in 2013 that deepened the knowledge that we have on collateral estoppel.

Rainero v. Archon Corp.

This case decided in November 2013 decided that collateral estoppel would protect a shareholder from a corporation seeking to dispute the correct redemption price for preferred shares from earlier lawsuits. 

Fresh Prepared Foods, Inc. v. Farm Ridge Foods LLC

This case was decided in September 2013 and found that collateral estoppel was in effect when a defendant attempted to say it was the proper owner of trademarked property that it had objected to selling in an earlier bankruptcy case to which the plaintiff wasn't a party.

Both of these cases upheld collateral estoppel. The parties were able to rely on the earlier litigation and avoid the expense of new litigation and possibly less advantageous results.

Mutual or Non-mutual

The majority of districts don't require a party asserting collateral estoppel to have been a party in an earlier lawsuit in which the dispute was already litigated. Some districts have resisted this trend.

Non-mutual collateral estoppel is allowed as long as the four requirements are met:

  1. Full and fair opportunity to litigate an identical issue in prior action.
  2. The issue was litigated in prior action.
  3. The judgment was final.
  4. The party was a party or in privity with a party in the prior action.

It's important when considering collateral estoppel to investigate previous lawsuits of an opponent, especially if it's possible that they've had to face the same issue with a different opponent.

Collateral estoppel can save time and money and serve as a shortcut to a favorable result.

On the other hand, some jurisdictions require mutuality. If this is the case, both parties both parties must be bound by prior judgment or neither may use it in later litigation. An individual who was not named in the prior lawsuit might still be considered a party when it comes to collateral estoppel. 

Privity Requirement in Collateral Estoppel

Privity in reference to collateral estoppel means that one party has a close relationship with another party. Privity is important in collateral estoppel cases for a few reasons.

If a party that is in privity with a party that cannot relitigate because of collateral estoppel tries to litigate, they will not be able to.

Privity is defined as, "interests of one party are so identified with the interests of another that representation by one party is representation of the other's legal right."

Courts also consider "fundamental fairness" when determining privity. 

Finality Requirement in Collateral Estoppel

One of the requirements for collateral estoppel to apply is that the ruling was final.

This means that if a previously litigated case was decided out of court and not by a judge, the ruling was never final. Some jurisdictions say that collateral estoppel doesn't apply if a case is settled, even if the issue was adjudicated in court.

More commonly though, as long as the resolution was sufficiently "firm" and even if the case was settled before liability was determined, collateral estoppel can be enforced. As well, some cases that are decided in a motion can also enforce collateral estoppel.

This is why it is so important to review all previous litigation and motions before filing a new lawsuit to make sure collateral estoppel isn't in effect.

Collateral Estoppel and Worker's Compensation

Collateral estoppel can be used to stop secondary litigation.

For example, a plaintiff who files a worker's compensation lawsuit and a products liability lawsuit. If the plaintiff loses the worker's compensation lawsuit, the defendant can move to dismiss the products liability case on the grounds of collateral estoppel.

Frequently Asked Questions

  • What is collateral estoppel?

Collateral estoppel according to Black's Law Dictionary is, "binding effect of a judgment as to matters actually litigated and determined in one action on later controversies between the parties involving a different claim from that on which the original judgment was based." 

  • Is collateral estoppel the same thing as res judicata?

No. Collateral estoppel is a sub-category of res judicata and functions in a very similar way but is slightly different. 

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