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To have an issue-preclusive effect in a later judicial action in California, an arbitration must have been conducted with certain procedural safeguards: Whether collateral estoppel is fair and consistent with public policy in a particular case depends in part upon the character of the forum that first decided the issue later sought to be foreclosed. In this regard, courts consider the judicial nature of the prior forum, such as its legal formality, the scope of its jurisdiction, and its procedural safeguards, particularly including the opportunity for judicial review of adverse rulings.
A writer developed a script for a program called "Final Edition," and the optionees sought to secure a television broadcast commitment from a network. The network acquired the broadcast rights to the show, and agreed to give the optionees credit as co-producers if a show was developed based on the property. Ultimately defendant network developed a series based on the same premises, called "Early Edition," but at the tentative credit stage failed to give the writer credit as a participating writer. The writer sought review by the Writers Guild of America (WGA), which denied him relief. The optionees subsequently sued to enforce their agreement with the network. The district court ruled that the optionees were collaterally precluded from raising the issue of credit that had been decided in the WGA proceeding, although they had not been parties to that action. The optionees appealed.
Were the optionees collaterally precluded from raising the issue of credit that had been decided in the WGA proceeding?
The appellate court noted that under California law, a party must demonstrate that the prior determination was adjudicatory in nature before that determination can have collateral estoppel effect. Moreover, an advocate must show that: (1) the issue decided in the prior proceeding was identical to that presented in plaintiffs' action; (2) the issue was actually litigated in the prior proceeding; (3) the issue was necessarily decided in the prior proceeding; (4) there was a final judgment on the merits in the prior proceeding; and (5) the plaintiffs were a party or in privity with a party to the prior proceeding. The court further held that an arbitration must have been conducted with certain procedural safeguards in order to have an issue-preclusive effect in a later judicial action in California. In this case, the court found that there were that insufficient procedural safeguards and formalities in the WGA proceeding to bind the non-participating parties. Thus, the appellate court reversed the decision of the district court.