Parklane Hosiery Co. v. Shore
439 U.S. 322, 99 S. Ct. 645, 58 L. Ed. 2d 552 (1979)
Shore owned some Parklane
stock. He sued Parklane in a shareholder lawsuit (aka a stockholder
class action lawsuit), claiming that Parklane and its officers had made
false statements with regards to a merger.
Making false statements was
a Security and Exchange Commission (SEC) violation.
Before Shore's lawsuit could
get to trial, Parklane and the officers were sued by the SEC for the same
The Trial Court in that case
found Parklane guilty of making false statements.
Since this suit involved the
sovereign, and involved an injunction, the suit was considered an equity
court action and there was no jury
The verdict was affirmed by
the Appellate Court.
Shore made a motion for partial
summary judgment, claiming that since
Parklane had been found liable for the exact same issue (making false statements), they were collaterally
estopped from arguing that they didn't make false statements
in Shore's lawsuit.
Parklane argued that since
the suit against the SEC did not involve a jury trial, but the suit
against Shore would normally require a jury trial under the 7th
Amendment, their rights of due
process were being violated.
Amendment only gives a right to
jury trial to decide factual matters that are at issue. If a factual
matter is not at issue, then there is no right to a jury trial.
For example, if an issue
has been admitted to in a pleading, then it is no longer at issue.
Also, under Rule 56, as a matter of law, there is nothing to be
decided on that issue, so there is partial summary judgment.
The Trial Court found for
Parklane, Shore appealed.
The Trial Court agreed that
since the shareholder suit was considered a law claim and would be
handled in a law court, there was
a right to a jury trial, so Parklane had a right to retry the facts of
the case in front of a jury.
The Appellate Court reversed. Parklane appealed.
The Appellate Court found
that a party who has had an issue of fact determined against them after a
full and fair opportunity to litigate in a nonjury trial is collaterally
estopped from obtaining a subsequent
jury trial on that same issue of fact.
The US Supreme Court affirmed
and found partial summary judgment
The US Supreme Court found
that a litigant who was not party to a prior judgment (Shore) may
nevertheless use that judgment "offensively" to prevent a
defendant from relitigating issues resolved in the earlier proceeding.
In general, under the mutuality
doctrine, neither party could use a
prior judgment as an estoppel
against the other unless both parties were bound by the judgment.
However, the Court felt
that the mutuality doctrine
failed to recognize the obvious difference between a party who has never
litigated an issue and one who has litigated and lost.
The Court felt it was no
longer tenable to afford a litigant more than one full and fair
opportunity for judicial resolution of the same issue.
Laboratories, Inc. v. University of Illinois Foundation (402 U.S. 313 (1971)).
The US Supreme Court said that
the use of offensive collateral estoppel is an issue that should be left up to the Trial Courts. While
the courts should not preclude the issue of collateral estoppel, they are free to use or not use it when it
The general rule is that in
cases where a plaintiff could easily have joined in the earlier action or
where the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow
the use of offensive collateral estoppel.
In this case, Shore could
not have joined an action by the SEC, and the use of estoppel was not unfair to Parklane, so it should be