Parklane Hosiery Co. v. Shore
439 U.S. 322, 99 S. Ct. 645, 58 L. Ed. 2d 552 (1979)

  • Shore owned some Parklane stock. He sued Parklane in a shareholder lawsuit (aka a stockholder class action lawsuit), claiming that Parklane and its officers had made false statements with regards to a merger.
    • Making false statements was a Security and Exchange Commission (SEC) violation.
  • Before Shore’s lawsuit could get to trial, Parklane and the officers were sued by the SEC for the same issue.
  • The Trial Court in that case found Parklane guilty of making false statements.
    • Since this suit involved the sovereign, and involved an injunction, the suit was considered an equity court action and there was no jury trial.
    • The verdict was affirmed by the Appellate Court.
  • Shore made a motion for partial summary judgment, claiming that since Parklane had been found liable for the exact same issue (making false statements), they were collaterally estopped from arguing that they didn’t make false statements in Shore’s lawsuit.
    • Parklane argued that since the suit against the SEC did not involve a jury trial, but the suit against Shore would normally require a jury trial under the 7th Amendment, their rights of due process were being violated.
      • The 7th Amendment only gives a right to jury trial to decide factual matters that are at issue. If a factual matter is not at issue, then there is no right to a jury trial.
        • For example, if an issue has been admitted to in a pleading, then it is no longer at issue.
        • Also, under Rule 56, as a matter of law, there is nothing to be decided on that issue, so there is partial summary judgment.
  • The Trial Court found for Parklane, Shore appealed.
    • The Trial Court agreed that since the shareholder suit was considered a law claim and would be handled in a law court, there was a right to a jury trial, so Parklane had a right to retry the facts of the case in front of a jury.
  • The Appellate Court reversed. Parklane appealed.
    • The Appellate Court found that a party who has had an issue of fact determined against them after a full and fair opportunity to litigate in a nonjury trial is collaterally estopped from obtaining a subsequent jury trial on that same issue of fact.
  • The US Supreme Court affirmed and found partial summary judgment for Shore.
    • The US Supreme Court found that a litigant who was not party to a prior judgment (Shore) may nevertheless use that judgment “offensively” to prevent a defendant from relitigating issues resolved in the earlier proceeding.
      • In general, under the mutuality doctrine, neither party could use a prior judgment as an estoppel against the other unless both parties were bound by the judgment.
      • However, the Court felt that the mutuality doctrine failed to recognize the obvious difference between a party who has never litigated an issue and one who has litigated and lost.
    • The Court felt it was no longer tenable to afford a litigant more than one full and fair opportunity for judicial resolution of the same issue.
      • See Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation (402 U.S. 313 (1971)).
  • The US Supreme Court said that the use of offensive collateral estoppel is an issue that should be left up to the Trial Courts. While the courts should not preclude the issue of collateral estoppel, they are free to use or not use it when it seems appropriate.
    • The general rule is that in cases where a plaintiff could easily have joined in the earlier action or where the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.
      • In this case, Shore could not have joined an action by the SEC, and the use of estoppel was not unfair to Parklane, so it should be allowed.