Also known as: direct estoppels · issue preclusion
Written by attorneys — see sources below.
An issue-preclusion doctrine that bars relitigation of a matter actually and necessarily decided in a prior judgment when the current action rests on the same cause of action as the earlier suit.
State prosecutors charged Delilah Duran with robbery after a jury acquitted her on the ground that another person committed the act. The acquittal rested on the ultimate factual issue of identity even though the first jury lacked some later-discovered evidence. Direct estoppel prevents the state from prosecuting Duran again on the same robbery charge.
The SEC obtained a judgment against Duffy Construction for violating securities laws on a particular offering. A private investor who purchased the same securities then sued Duffy Construction for damages arising from that identical offering. Direct estoppel allows the investor to rely on the prior finding of violation because the second suit rests on the same cause of action.
Harbor Consortium financed and directed an earlier suit by a carrier challenging a port fee schedule. After the carrier lost, Harbor Consortium filed its own action seeking a refund of the identical fees under the same calculation methodology. Direct estoppel precludes Harbor Consortium from relitigating the validity of the fee schedule.
Markman sued Westview Instruments on two patent claims arising from the same instrument. After Markman elected to sever the claims and lost the first, he attempted to relitigate the identical infringement issue in the second action on the same patent. Direct estoppel bars the second suit because both actions share the same cause of action.
Markman owns United States Reissue Patent No. 33,054 for his Inventory Control and Reporting System for Drycleaning Stores. The patent describes a system that can monitor and report the status, location, and movement of clothing in a dry-cleaning establishment. The Markman system consists of a keyboard and data processor to generate written records for each transaction, including a bar code readable by optical detectors operated by employees, who log the progress of clothing through the dry-cleaning process. Respondent Westview's product also includes a keyboard and processor, and it lists charges for the dry-cleaning services on bar-coded tickets that can be read by portable optical detectors. Markman brought an infringement suit against Westview and Althon Enterprises, an operator of dry-cleaning establishments using Westview’s products. Part of the dispute hinged upon the meaning of the word inventory, a term found in Markman’s independent claim 1, which states that Markman’s product can maintain an inventory total and detect and localize spurious additions to inventory. The case was tried before a jury, which heard, among others, a witness produced by Markman who testified about the meaning of the claim language. After the jury compared the patent to Westview’s device, it found an infringement of Markman’s independent claim 1 and dependent claim 10. The District Court for the Eastern District of Pennsylvania granted Westview’s deferred motion for judgment as a matter of law. One of its reasons was that the term inventory in Markman’s patent encompasses both cash inventory and the actual physical inventory of articles of clothing. The court directed a verdict on the ground that Westview’s device does not have the means to maintain an inventory total. Markman appealed to the United States Court of Appeals for the Federal Circuit, which affirmed the district court’s judgment. Markman sought review, and the Supreme Court granted certiorari.
View caseA former employee obtained an injunction against General Motors in one state court. Baker, who had directed the employee's litigation and held a direct financial interest in the outcome, later filed a separate action in another state seeking the same relief against General Motors on the identical employment contract. Direct estoppel prevents Baker from relitigating the contract issue.
Ronald Elwell worked as an engineering analyst for General Motors Corporation from 1959 until 1989. For fifteen years he was assigned to the Engineering Analysis Group studying the performance of GM vehicles in product liability litigation, particularly those involving fires. He assisted GM lawyers in defending such suits. Beginning in 1987 the Elwell-GM employment relationship soured. GM and Elwell first negotiated an agreement under which Elwell would retire after serving as a GM consultant for two years. When the time came for Elwell to retire, however, disagreement again surfaced and continued into 1991. A month later Elwell sued GM in a Michigan County Court alleging wrongful discharge and related tort and contract claims. GM counterclaimed that Elwell had breached fiduciary duties by disclosing privileged and confidential information and misappropriating documents. Following a hearing, the Michigan trial court on November 22, 1991, enjoined Elwell from consulting or discussing with or disclosing to any person any of General Motors Corporation's trade secrets, confidential information or matters of attorney-client work product relating in any manner to the subject matter of any products liability litigation whether already filed or to be filed in the future which Ronald Elwell received, had knowledge of, or was entrusted with during his employments with General Motors Corporation. In August 1992 the parties settled for an undisclosed sum. They jointly submitted a stipulated permanent injunction that the Michigan court entered without further hearing. The injunction comprehensively enjoined Elwell from testifying, without the prior written consent of General Motors Corporation, either upon deposition or at trial, as an expert witness, or as a witness of any kind, and from consulting with attorneys or their agents in any litigation already filed, or to be filed in the future, involving General Motors Corporation as an owner, seller, manufacturer and/or designer of the product(s) in issue. The separate settlement agreement stated that court-ordered testimony would in no way form a basis for an action in violation of the Permanent Injunction or this Agreement. In February 1990 Beverly Garner died when the engine of her 1985 Chevrolet S-10 Blazer caught fire after a Missouri highway collision. Her sons Kenneth and Steven Baker filed a wrongful-death product liability suit against GM in Missouri state court in September 1991. They alleged a defective fuel pump caused the post-collision fire. GM removed the case to federal court on diversity grounds. GM defended on the merits that the fuel pump was not faulty and that impact injuries alone caused the death. The Bakers sought to depose Elwell and call him at trial. GM objected on the basis of the Michigan injunction. After in camera review of the injunction and settlement agreement the Missouri federal district court permitted Elwell's deposition and trial testimony. The court relied on alternative grounds that Missouri public policy favored disclosure of relevant nonprivileged information and that the injunction was modifiable. At trial Elwell testified in support of the Bakers' fuel-pump defect claim. He identified a 1973 internal GM memorandum concerning fuel-fed engine fire risks. The jury returned an $11.3 million verdict for the Bakers. The district court entered judgment on the verdict. The Eighth Circuit reversed. It held that Elwell's testimony should not have been admitted because the Michigan injunction controlled. Missouri's public policy favoring full faith and credit outweighed any disclosure policy. The Supreme Court granted certiorari to decide whether the full faith and credit requirement stops the Bakers from obtaining Elwell's testimony in their Missouri action.
View caseMinton sued his former attorneys for malpractice arising from a patent case that had been dismissed. After losing on the malpractice claim in federal court, Minton filed a second action in state court alleging the identical theory of negligent claim drafting on the same patent. Direct estoppel bars the state-court action because both suits rest on the same cause of action.
In the early 1990s, Vernon Minton developed a computer program and telecommunications network known as the Texas Computer Exchange Network, or TEXCEN, designed to facilitate securities trading. In March 1995, he leased the system to R. M. Stark & Co., a securities brokerage. A little over a year later, Minton applied for a patent for an interactive securities trading system based substantially on TEXCEN, and the U.S. Patent and Trademark Office issued the patent in January 2000. Minton, represented by Jerry Gunn and the other petitioners, filed a patent infringement suit in Federal District Court against the National Association of Securities Dealers, Inc. and the NASDAQ Stock Market, Inc. NASD and NASDAQ moved for summary judgment on the ground that the patent was invalid under the on-sale bar because Minton had leased TEXCEN more than one year prior to filing his application. The District Court granted the motion and declared the patent invalid in 2002. Minton then filed a motion for reconsideration arguing for the first time that the lease fell within the experimental-use exception, but the District Court denied the motion. Minton appealed to the U.S. Court of Appeals for the Federal Circuit, which affirmed on the ground that the experimental-use argument had been waived. Minton then brought this legal malpractice action in Texas state court against Gunn and the other lawyers. The defendants defended on the ground that the lease to Stark was not for an experimental use, and the trial court granted summary judgment after finding less than a scintilla of proof on that point. On appeal, Minton argued for the first time that the Texas court lacked subject matter jurisdiction because the malpractice claim arose under federal patent law. A divided panel of the Court of Appeals of Texas rejected the jurisdictional argument and affirmed on the merits. The Supreme Court of Texas reversed. The U.S. Supreme Court granted certiorari.
View caseDirect estoppel applies when the prior judgment and the present suit rest on the same cause of action. Collateral estoppel applies when the prior judgment rests on a different claim.
Subsequent suits on claims already decided are usually extinguished entirely by claim preclusion, leaving few occasions for direct estoppel to operate.
Yes. The doctrine applies only when the issue was actually and necessarily determined by a court of competent jurisdiction in the prior action on the same claim.
No. Direct estoppel requires that both actions rest on the identical cause of action. A different cause of action triggers collateral estoppel analysis instead.
…and Procedure § 2522, pp. 244-246 (2d ed. 1995). See also Parklane Hosiery Co. v. Shore , 439 U. S. 322, 335-337 (1979) (issue preclusion absent mutuality of parties does not violate Seventh Amendment, although common law as it existed in 1791 permitted issue preclusion only when there was mutuality). : The…