Thursday, June 12, 2008

Taylor v. Sturgell

In Taylor, the Supreme Court rejected the virtual-representation doctrine in the preclusion context and remanded for the lower court to determine whether plaintiff's suit was barred under established preclusion principles.

Taylor was the plaintiff in the second of two similar suits seeking injunctions under the Freedom of Information Act against the Federal Aviation Administration.  The first suit was brought by an individual named Herrick, who lost on the merits.  About one month after Herrick's judgment became final, Taylor requested the same information under the Act and requested an injunction when the FAA denied his request.  Taylor raised some arguments Herrick failed to make. 

Taylor and Herrick knew each other, and the lower courts held that their relationship rose to the level of "virtual representation."   They were friends and both antique airplane enthusiasts.  Taylor was the President of Antique Aircraft Association; Herrick was a member.  Taylor hired Herrick's lawyer.   While Taylor was not a party to the first suit, the lower court held that the final judgment on the merits against Herrick was claim preclusive of Taylor's suit because Herrick "virtually represented" Taylor.   

Before Taylor, the Supreme Court had never considered the virtual-representation doctrine by name, and the lower courts were split on its existence and definition.  Some lower courts had rejected it; some had accepted it, though in different multi-factor variations. Today, the Supreme Court rejected the doctrine by name--and in principle to the extent it precluded suits beyond the established grounds for nonparty preclusion. 

Typically, neither claim nor issue preclusion operates to preclude a person from litigating a claim or issue unless that person was a party to the proceeding that generated the preclusive judgment.  For issue preclusion, a party is not barred unless he has litigated and lost.  For claim preclusion, the bar against claim splitting only applies to a party to a judgment on the merits.  Due process and common-law preclusion principles generally give a person one day in court -- not two, and not zero.

In Taylor, writing for a unanimous Court, Justice Ginsburg does essentially three things.  She:  (1) lists the six established exceptions that can justify precluding a nonparty; (2) rejects virtual representation as a seventh category; and (3) remands the case to see if Taylor's suit fits one of the established categories (the 5th).

First, the Court notes the six established exceptions to precluding nonparties:

  1. A nonparty may agree to be bound to a judgment;
  2. A nonparty may be in privity with a party--in other words, there may be an existing substantive legal relationship between the two persons that justifies binding the nonparty to the party's judmgent;
  3. A nonparty may be adequately represented by a party acting in a representative capacity.  Adequate representation requires that the party and representative have aligned interests and EITHER (a) the representative capacity was understood; or (b) the deciding court took care to protect the interests of the nonparty.
  4. A nonparty may assume control over litigation to which he is not a formal party;
  5. If a party is bound by a judgment, the party may not use a representative or an agent to relitigate an adverse judgment.
  6. A special statutory scheme may foreclose successive litigation (this scheme, like any exception to nonparty preclusion, must satisfy the Due Process Clause).

Second, the Court examined its precedents and policy arguments, ultimately concluding that it need not and should not recognize virtual representation as a seventh exception.

Finally, the Court remanded so the lower courts could evaluate whether the fifth exception applied--that is, whether Taylor was acting as Herrick's "undisclosed agent" for relitigating.  The lower courts, understandably, were concerned about "tactical manuevering," which was one of the factors in the virtual-representation test.  But the Court instructed, on remand, that a "whiff of tactical maneuvering will not suffice; instead, principles of agency law are suggestive.  They indicate that preclusion is appropriate only if the putative agent's conduct of the suit is subject to the control of the party who is bound by the prior adjudication."   And because claim preclusion is an affirmative defense, the defendant must prove the existence of the agency relationship.

Justice Ginsburg's opinion strikes a sensible balance.  While wait-and-see games aren't efficient, there are disincentives to playing a Taylor game.  If the related suits are brought in the same jurisdiction, stare decisis operates like preclusion.  Offensive collateral estoppel (even if this weren't the government) is not available to game players.  The rules generally don't require compulsory joinder of plaintiffs, and the sustained efforts of the lower courts to use virtual representation to fill gaps had yielded tests that hardly promoted efficiency.  --RR

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