Plaintiffs bring a class action suit against a company that already faced litigation from the SEC. Plaintiffs attempt to use the unfavorable SEC judgement against defendants in their civil action
Plaintiffs bring a class action suit against a company that already faced litigation from the SEC. Plaintiffs attempt to use the unfavorable SEC judgement against defendants in their civil action
Shore representing a class of plaintiffs who are shareholders of Defendant Parklane brought suit alleging a violation of securities law for issuing misleading and false statements. While the suit was awaiting trial the SEC sued Parklane alleging the same violations of securities law. After a nonjury trial the district court entered judgement in favor of the SEC finding that Parklane did violate securities laws in issuing misleading and false statements. The Second Circuit Court of Appeals affirmed. Plaintiff Shore then moved for partial summary judgement arguing that Defendant Parklane was collaterally estopped from relitigating the issue of whether their statement was misleading and false because the SEC suit determined that it was. The district court denied the motion holding that allowing it would violate Parklane’s Seventh Amendment right to a jury trial.
Can a litigant that was not a party to the prior judgement use that judgement in offensive collateral estoppel?
Yes, a litigant that was not a party to the prior judgement can use that judgement in offensive collateral estoppel. The decision of the court of appeals is affirmed.
Justice Justice Rehnquist dissenting
Collateral estoppel cannot abridge the right of the Seventh Amendment and should not have been allowed in this case. Defendant Parklane was not entitled to a jury trial in the SEC action and a jury may reach a different result. The costs saved by collateral estoppel do not justify the diminishing of the right to a jury trial.