Shore v. Parklane Hosiery Co.

565 F.2d 815 (2d Cir. 1977)

 

RULE:

Since U.S. Const. amend. VII preserves the right to a jury trial only with respect to issues of fact, once those issues have been fully and fairly adjudicated in a prior proceeding, nothing remains for trial, either with or without a jury. The party seeking the retrial has already exercised his right to be heard on the issues and to cross-examine witnesses with respect to them. The interests of finality, certainty and economy of judicial resources then come into play to preclude his relitigating the same issue a second or third time, with the possibility of inconsistent findings, absent some showing of fundamental unfairness in the prior proceeding or some unusual circumstances, such as fraud, that would render inappropriate the application of the doctrine of collateral estoppel.

 

FACTS:

Plaintiff, a class of stockholders, sought damages against defendants, a corporation and its corporate officers and directors, alleging that defendants issued a false proxy statement in violation of §§ 10(b), 13(a), 14(a) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C.S. §§ 78j(b), 78m(a) and 78n(a). In a prior action, the Securities and Exchange Commission (SEC) asserted essentially the same allegations against defendant corporation and corporate president, and the district court found in SEC’s favor. Based on the SEC action, plaintiff filed a motion for summary judgment on the basis of collateral estoppel. The trial court denied the motion, holding that defendants had a right to relitigate the issues before a jury. On plaintiff’s appeal, the appellate court reversed and remanded the trial court’s order denying summary judgment.

ISSUE:

Could defendants, who had issues of fact determined against them in a nonjury trial, obtain, in a different suit filed by another person, a jury trial of the same issues of fact arising out of the same transaction?

ANSWER:

No.

CONCLUSION:

Defendants, a corporation and its corporate officers and directors, were collaterally estopped from relitigating issues of fact that had already been determined in the prior SEC action against defendants. The right to a jury trial was preserved only with respect to issues of fact and did not preclude the application of collateral estoppel.

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