Sunday, November 29, 2015

Parklane v. Shore case brief

Parklane v. Shore case brief
1979 SCOTUS 

Facts: Plaintiff brought a class action in fed district court for issuing a materially false and misleading proxy statement in connection with a merger. Plaintiff sought damages. Before it came to trial, SEC filed suit against same defendants in district court alleging that the statements were false and misleading in the same respect as was alleged in the immediate case. District court found that it was and entered a judgment which was affirmed. Plaintiff moved for summary judgment saying that they are collaterally estopped from relitigating the issues that were already resolved and it was denied because of 7th amendment problems. (Plaintiff moved offensively to stop the company from relitigating the issue and to win a quick judgment) Appeals ct reversed.
Reasoning: This is a question of a judgment being used offensively to prevent a defendant from relitigating issues resolved in the earlier proceeding. In both offensive and defensive use situations, the party against whom estoppel is asserted has litigated and lost in earlier action however the two actions should be treated differently. Court sees the offensive use of collateral estoppel should be treated differently because it will likely increase instead of decrease the total amount of litigation. Basically, they say that it is a wait and see attitude mostly since plaintiff is not bound in action they just wait until someone actually does win and they have everything to gain by not joining in in the first action. 
It is also disadvantageous to defendants, if the first suit has small damages, he will have little incentive to defendant vigorously and will lose the subsequent suit. Plus a few other reasons. SCOTUS decided not to preclude offensive use of estoppel, but just allow the trial court to decide where to apply it. The general rule states that where a plaintiff could easily have joined in earlier action, offensive estoppel is unfair. 

The court decided that none of the factors are present and it must be affirmed, the defendant cannot litigate issues again.  He lost the first time and it is fair to keep him from relitigating it here. 

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