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Parklane Hosiery Co. v. Shore

Supreme Court of the United States

October 30, 1978, Argued ; January 9, 1979, Decided

No. 77-1305

Opinion

 [*324]  [***557]  [**648]    MR. JUSTICE STEWART delivered the opinion of the Court.

This case presents the question whether a party who has had issues  [***558]  of fact adjudicated adversely to it in an equitable action may be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a new party.

The respondent brought this stockholder's class action against the petitioners in a Federal District Court. The complaint alleged that the petitioners, Parklane Hosiery Co., Inc. (Parklane), and 13 of its officers, directors, and stockholders, had issued a materially false and misleading proxy statement in connection with a merger. 2 The proxy statement, according to the complaint, had violated §§ 14 (a), 10 (b), and 20 (a) of the Securities Exchange Act of 1934, 48 Stat. 895, 891, 899, as amended, 15 U. S. C. §§ 78n (a), 78j (b), and 78t (a), as well as various [****6]  rules and regulations promulgated by the Securities and Exchange Commission (SEC). The complaint sought damages, rescission of the merger, and recovery of costs.

Before this action came to trial, the SEC filed suit against the same defendants in the Federal District Court, alleging that the proxy statement that had been issued by Parklane was materially false and misleading in essentially the same respects as those that had been alleged in the respondent's complaint.  Injunctive relief was requested.  After a 4-day  [*325]  trial, the District [****7]  Court found that the proxy statement was materially false and misleading in the respects alleged, and entered a declaratory judgment to that effect. SEC v. Parklane Hosiery Co., 422 F.Supp. 477. The Court of Appeals for the Second Circuit affirmed this judgment. 558 F.2d 1083.

 The respondent in the present case then moved for partial summary judgment against the petitioners, asserting that the petitioners were collaterally estopped from relitigating the issues that had been resolved against them in the action brought by the SEC. 3 [****9]  The District Court denied the motion on the ground that such an application of collateral estoppel would deny the petitioners their Seventh Amendment right to a jury trial. The Court of Appeals for the Second Circuit reversed, holding that a party who has had issues of fact determined against him after a full and fair opportunity to litigate in a nonjury trial is collaterally estopped from obtaining a subsequent jury trial of these same issues of fact. 565 F.2d 815. The appellate court concluded that "the Seventh Amendment [****8]  preserves  [***559]  the right to jury trial only with respect to issues of fact, [and] once those issues have been fully and fairly adjudicated in a prior proceeding, nothing remains for trial, either  [**649]  with or without a jury." Id., at 819. Because of an intercircuit conflict, 4 we granted certiorari. 435 U.S. 1006.

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439 U.S. 322 *; 99 S. Ct. 645 **; 58 L. Ed. 2d 552 ***; 1979 U.S. LEXIS 50 ****; Fed. Sec. L. Rep. (CCH) P96,713; 26 Fed. R. Serv. 2d (Callaghan) 669

PARKLANE HOSIERY CO., INC., ET AL. v. SHORE

Prior History:  [****1]  CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.

Disposition:  565 F.2d 815, affirmed.

CORE TERMS

collateral estoppel, jury trial, right to a jury trial, common law, the Seventh Amendment, offensive, relitigating, litigated, mutuality, cases, parties, of the Seventh Amendment, estoppel, juries, civil case, first action, equitable, unfair, trial by jury, misleading, lawsuit, Rights, materially false, proxy statement, right to trial, offensive use, preserved, equitable claim, common-law, damages

Evidence, Burdens of Proof, General Overview, Securities Law, Postoffering & Secondary Distributions, Proxies, Civil Procedure, Preclusion of Judgments, Estoppel, Collateral Estoppel, Judgments, Res Judicata, Constitutional Law, Fundamental Rights, Procedural Due Process, Scope of Protection, Parties, Joinder of Parties, Bill of Rights, Trial by Jury in Civil Actions, Bankruptcy Law, Procedural Matters, Jurisdiction, Jury Trials, Right to Jury Trial, Actions in Equity, Governments, Courts, Authority to Adjudicate, Trials, Province of Court & Jury, Right to Jury Trial