What Is Collateral Estoppel?

Collateral estoppel [CE] is a lot like the double jeopardy laws in a criminal statute. Just like a person cannot be tried for the same charges after they have been found to be innocent, a party cannot litigate the same issue once a judgment on that issue has been determined. This typically comes up when litigation of multiple issues is in place and some of those issues have already been previously decided at some point in time.

What Is a Problem With the CE Process?

The primary issue with collateral estoppel is that it can apply even when one of the parties involved wasn't a participant in the original legal action. Example One: Company A files a lawsuit against Companies B and C for a specific reason. The judge in the case rules against Company A because it is believed that Companies B and C were acting within the scope of the law. Company A later discovers that Company D is acting in a similar fashion as Companies B and C were previously. Because of the judges ruling and the principle of CE, Company A cannot bring litigation to Company D. The same is true should someone try to litigate the same case, but name two different defendants in the case at two separate times. Example Two: Joe Smith files for litigation because he believes a $1 million painting from his deceased father should be in escrow. Defendant A claims that the painting was actually a gift. In a court action, it is ruled that the painting is a gift and that Joe Smith has no control over it as escrow. Joe Smith then files a lawsuit against Defendant B, who is the company that is holding the painting. The lawsuit states they have no right to withhold property. Because the case was effectively decided in the first court action, Defendant B can use CE as an effective defense.

When Should Collateral Estoppel Be Used?

CE doesn't have to be a defensive tactic. It can also be an offensive tactic in order to obtain a final judgment. The only issue that arises when collateral estoppel is being used in such a way is that the other party may not have had a fair and full opportunity to litigate the issue. There are instances when a state court may rule on a case, but another case may be brought before a federal court on the same issue to get another ruling. There are some ethical issues when CE is used offensively. It's often seen as a way of testing how strong a defendant's case might be. If the determination is that a case is relatively weak, then new parties can sue the defendant based on the results of the previous outcomes. The double jeopardy clause in criminal proceedings actually arose from CE principles. The Supreme Court has even applied these principles in the limitation of crime prosecution if the events happen simultaneously. The end goal is simple: to find fair justice for all parties. By using these principles, it becomes more likely that a fair outcome can be achieved.

Posted on Jan 05, 2015


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