Petitioners sued Respondent, alleging the new occupation tax was unconstitutional under federal and state law. Respondent moved for summary judgment, arguing the lawsuit was barred by res judicata because it had already been litigated and lost by other, similar parties.
For a prior lawsuit to have binding effect on absent parties, the absent parties must be given notice of the lawsuit and the present parties must represent the absent parties in a way that ensures full and fair consideration of the common issue.
Jason Richards and Fannie Hill (Petitioners) sued Jefferson County (Respondent) in federal court challenging the validity of a new occupation tax. The suit was dismissed in federal court, and Petitioners brought the same suit in state court, arguing the tax violated state and federal law. Respondent moved for summary judgment, arguing that the case was barred by res judicata because Birmingham, the city’s finance director, and three county taxpayers had already litigated and lost a suit regarding the validity of the occupation tax.
Can a party be bound by the judgment of a previous suit when the party was not adequately notified or represented by the prior proceeding?
No, the party cannot be barred by res judicata from litigating the same claim.
The Court first determined that the Petitioners were not notified of the prior proceeding. The Court then determined that the Petitioners were not adequately represented by the taxpayers in the prior lawsuit because the taxpayers in the prior lawsuit were not litigating on behalf of the interests of all relevant taxpayers. Thus, the interests of the Petitioners were not considered or protected.