Civil
Procedure Class Notes
Yesterday,
we continued to look at preclusion from the standpoint of claim preclusion. We’ll finish claim preclusion today.
Say
the city of
Later,
Frier decides that he wants to sue the city for his § 1983 claim. Can he do that? No…but why?
What rule tells us so? One thing
that the Federal Rules do is they have elements of preclusion embedded in
them. Rule 13(a), which
is the compulsory counterclaim rule, says you have to state all your
counterclaims during the first suit: you gotta use ‘em or lose ‘em. The second suit would be barred, but not
under the common law rules of preclusion.
Rather, this Federal Rule would bar the claim. This rule, in turn, is anchored in a
transactional test of claim preclusion.
This
is a variation of…
Martino v. McDonald’s System, Inc.
What’s
going on? Who owns what? Somebody owns a McDonald’s. Martino does.
He has a franchise. What gets him
into this litigation in the first place?
When they got the franchise, they agreed not to compete by taking an
interest in another fast food franchise.
Martino doesn’t take an interest in another franchise, but his son does
buy a Burger Chef. McDonald’s says: You
can’t do that! You’re violating our
franchise agreement.
McDonald’s
sues Martino on the franchise agreement, which is a breach of contract
claim. What happens to that suit? They settle it and they have the court put in
a consent judgment. Martino sells the
franchise back to McDonald’s.
What’s
the second lawsuit that comes a couple of years later? Martino sues McDonald’s in antitrust, saying:
You can’t stop us from owning multiple burger places! That’s not fair under
The
first lawsuit settled by consent decree.
But when? When in the
procedure? Had Martino answered the
first lawsuit? Had Martino answered, his
antitrust claim would have been a compulsive counterclaim in the answer. But since he never filed a pleading,
technically the counterclaim rule can’t apply.
We can’t force him to do something he hasn’t had to do yet.
If
Martino had answered, and then we got the consent decree, the answer
would have been easy. Rule 13(a) would
correctly prohibit the second lawsuit because the antitrust claim would have
been a compulsory counterclaim coming out of the same “transaction or occurrence”. To avoid this result, Martino should have
filed his counterclaim at the time of his answer. This is all part of the efficiency mechanism
of the Federal Rules. It’s a “use ‘em or
lose ‘em” philosophy.
This
doesn’t help in this case, and so the court falls back on the common law
compulsory counterclaim. What the heck
is that? It’s some bastardized version
of claim preclusion AKA res judicata.
Sort out the terminology is difficult and troubling! The idea of a common law compulsory
counterclaim is bizarre. What
they’re saying is that there are common law rules that append onto the Federal
Rules of Civil Procedure that you have to follow as well.
What
is the court trying to say? The court
says that a judgment on the merits is an absolute bar to relitigation. Is the consent decree a judgment on the
merits? It’s a settlement. Is that a decision on the merits? A settlement wouldn’t be, but a court-ordered
consent decree is a judgment on the merits. We’ve cleared that threshold, but there’s
another requirement. A cause of action
includes your defenses.
What
if you have both a defense and a counterclaim? The law says that if you have both, it
precludes the defense but doesn’t preclude you from relying on those facts
later on.
The
court says you can’t nullify rights established by the prior action.
Yeazell
says that this is a load of crap. His
explanation isn’t much better, according to Fairman. Yeazell says that this ruling protects the consistency
of judgments.
First,
there was a divorce. Edlean sued Woodey
for divorce.
They’ve
got marital property. Edlean gets Slaugh
house in the divorce suit.
The
sons get mad and they bring their suit!
They sue their own mother. They
sue for their interest in Slaugh house.
What’s
the issue? Is this suit precluded? Usually, we’d say obviously not. If Frier can bring his suit yet Frier’s wife’s
suit is protected, then it seems that the sons’ suit isn’t precluded…but for
the doctrine of the sons’ privity.
Is
this issue preclusion or is it claim preclusion? What’s the claim in the first suit? It’s a suit for divorce. What’s the second lawsuit for? It’s for the property. The property is an element of the divorce
action because the court has to figure out what to do with it.
There
are issue preclusive things that may have come out of the first lawsuit, but
for the privity issue, we should look at this as a claim preclusion issue. The court gets it all confused, though!
The
sons were not parties to the divorce suit.
In fact, could they have been parties to the divorce suit? No!
This doctrine says we’ll bar certain people from filing more lawsuits
even though they weren’t actually parties to the previous suit.
We’re
left with this privity idea. Basically,
privity is the idea of a relationship between parties such that there is an
identity of legal interests: like property owners and successive owners are in privity
with one another. Trustees and
beneficiaries can stand in the same relationship, as well as executors and
heirs. The executor acts on the behalf
of the heirs; trustees act on behalf of the beneficiaries. Thus, there is an identity of legal
interests.
The
court says that there must be a strong legal relationship to bind someone to
somebody’s else’s judgment. The majority
finds that the second suit isn’t barred because they’re not in privity. So what happens to poor Edlean? She won the previous suit, but she could lose
her property interest now!
As
a matter of lawyering, what should her lawyer have done when you knew this dispute
was percolating in the background? You
want to file a suit to “quiet title”.
You get everyone who has claim to a property in one place and hash it
out. Do that first, and then that will
have an issue preclusive effect on the subsequent divorce suit.