Thursday, May 14, 2020
Today the Supreme Court issued a unanimous decision in Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc. The Court rejects the application of what Justice Sotomayor’s opinion describes as “so-called ‘defense preclusion,’” which would preclude a party from invoking a defense in a later lawsuit because of its failure to invoke that defense in an earlier lawsuit. This case arises from “protracted litigation” between Lucky Brand and Marcel over alleged infringement of Marcel’s “Get Lucky” trademark:
In the latest lawsuit between the two, Lucky Brand asserted a defense against Marcel that it had not pressed fully in a preceding suit between the parties. This Court is asked to determine whether Lucky Brand’s failure to litigate the defense in the earlier suit barred Lucky Brand from invoking it in the later suit. Because the parties agree that, at a minimum, the preclusion of such a defense in this context requires that the two suits share the same claim to relief—and because we find that the two suits here did not—Lucky Brand was not barred from raising its defense in the later action.
Justice Sotomayor notes that the Supreme Court “has never explicitly recognized ‘defense preclusion’ as a standalone category of res judicata, unmoored from the two guideposts of issue preclusion and claim preclusion. Instead, our case law indicates that any such preclusion of defenses must, at a minimum, satisfy the strictures of issue preclusion or claim preclusion.” Given that the defense asserted in the later case had not been actually litigated in the earlier lawsuit, issue preclusion could not apply. So any application of defense preclusion must at least satisfy claim preclusion’s general requirement that the two lawsuits share a “common nucleus of operative facts.” That wasn’t the case here: “At bottom, Marcel’s 2011 Action challenged different conduct—and raised different claims—from the 2005 Action. Under those circumstances, Marcel cannot preclude Lucky Brand from raising new defenses.”
In footnote 2, Justice Sotomayor leaves open the question of whether claim preclusion can ever be applied to defenses:
There may be good reasons to question any application of claim preclusion to defenses. It has been noted that in suits involving successive claims against the same defendant, courts often “assum[e] that the defendant may raise defenses in the second action that were not raised in the first, even though they were equally available and relevant in both actions.” Wright & Miller §4414. This is because “[v]arious considerations, other than actual merits, may govern” whether to bring a defense, “such as the smallness of the amount or the value of the property in controversy, the difficulty of obtaining the necessary evidence, the expense of the litigation, and [a party’s] own situation.” Cromwell v. County of Sac, 94 U. S. 351, 356 (1877). Here, however, this Court need not determine when (if ever) applying claim preclusion to defenses may be appropriate, because a necessary predicate—identity of claims—is lacking.