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16. Is the court likely to grant the man's motion?
All the requirements for offensive non-mutual collateral estoppel are satisfied. The man files a motion to collaterally estop the stockbroker from re-litigating the factual issues decided against him in the previous case.
Later, a man brought suit against the stockbroker to recover for the financial harm suffered from the very same fraud in violation of the federal securities laws. The man's lawsuit was an action at law to which the Seventh Amendment right to a jury trial attached. The man sought to preclude the stockbroker from re-litigating the issues of fact that were the basis of the judgment entered against the stockbroker in the previous suit and identical to issues also presented by the man's claim. The stockbroker argued that, under the Seventh Amendment, he has a right to a jury trial on those factual issues.
A federal government agency sued a stockbroker in federal district court for fraud in violation of the federal securities laws. The suit was tried by a judge rather than a jury. It resulted in judgment against the stockbroker and the imposition of a fine.
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Federal Rule of Civil Procedure (FRCP) 38(a) provides that the right to a trial by jury as declared in the Seventh Amendment is preserved by the party who demands it. However, a party who wishes for a jury trial on a particular issue must file a demand within 14 days after the service of the last pleading directed to that issue.
A litigant in a second lawsuit does not automatically benefit from issue preclusion, also known as collateral estoppel. A party who was not present in the first litigation may, under certain circumstances, be deprived of the benefit of issue preclusion in the second lawsuit.
Traditionally, a party not bound by an earlier judgment (because this party was not a party to the earlier lawsuit) could not use that judgment to bind his adversary who had been a party to the former lawsuit. This rule was known as the doctrine of mutuality.
However, most courts no longer recognize the general principle of mutuality because it is no longer the general rule that a non-party to the first lawsuit cannot benefit from a judgment made against his adversary in that prior lawsuit. In Parklane Hoisery Co. v. Shore, 439 U.S. 322 (1979), the U.S. Supreme Court allowed offensive non-mutual collateral estoppel, meaning a party not present in the first lawsuit who is seeking to bind their adversary to a final judgment on an issue from an earlier case against a party who was present in the earlier case.
In Parklane, the Court held that a case-by-case analysis was necessary to determine whether offensive non-mutual collateral estoppel is available. The factors for this analysis are:
alignment in the first suit: whether the party sought to be bound (the defendant in the second suit) was a plaintiff or defendant in the first suit;incentive to litigate: whether the person to be estopped had a reasonable incentive to litigate the issue fully in the first suit;discouraging breakaway suits: whether the party seeking to use offensive non-mutual collateral estoppel in the second action could have been joined in the first action and «sat out» that first action in order to derive a tactical advantage;multiple plaintiff anomaly: If there are numerous potential plaintiffs waiting in the wings, a court would be less likely to permit offensive estoppel;whether there are procedural opportunities available to a party in the second action that were not present in the first, which might make a difference in the outcome.whether the issue is one of law or fact; ANDwhether the defendant in the second action is the government (in which case the offensive non-mutual use of collateral estoppel will hardly ever be allowed).Courts balance these factors on a case-by-case basis to determine whether a party that was not present in the first lawsuit will be permitted to use offensive non-mutual estoppel to bind their opponent to an earlier final judgment on a specific issue.
A is correct. The court should grant the man's motion to collaterally estop the stockbroker from re-litigating the factual issues that were decided against the stockbroker in the first case against the government. This is because, when all the requirements for offensive non-mutual collateral estoppel have been met, there is no further fact-finding function for the jury to perform. Therefore, denying the stockbroker a jury trial on those previously litigated issues would not violate the stockbroker's Seventh Amendment right to a jury trial.
B is incorrect. The U.S. Supreme Court has held the Seventh Amendment applicable to statutory claims that did not exist when the Seventh Amendment was added. See, e.g., Curtis v. Loether, 415 U.S. 189 (1974) (holding that the Seventh Amendment entitled either party to a jury trial in a federal court action for damages under the Civil Rights Act of 1968).
C is incorrect. As Parklane demonstrates, federal courts do accept the doctrine of offensive non-mutual collateral estoppel, but will apply it only in the court's discretion, when a variety of factors are satisfied.
D is incorrect. Whether the initial fact-findings were made by a judge rather than by a jury is not outcome-determinative here. The U.S. Supreme Court has assumed that a judge's finding from a prior equitable action would bind the later litigation of the same issues. Thus, this answer is incorrect because it is contrary to Supreme Court precedent. See Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979).