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When Does Offensive Non-Mutual Collateral Estoppel Apply in MDLs?


At this time’s publish is for process geeks, particularly those that litigate MDLs.

Offensive non-mutual collateral estoppel prevents a defendant from relitigating a problem that it misplaced in earlier litigation in opposition to a distinct plaintiff.

The difficulty is when offensive non-mutual collateral estoppel applies to a case that was a part of an MDL. Extra particularly, the problem is which state’s legislation determines whether or not offensive non-mutual collateral estoppel applies in a selected case.

Earlier than we focus on a current case that gives a doubtful (albeit useful within the occasion) reply to that query, a number of phrases on a number of the the explanation why offensive non-mutual collateral estoppel is a nasty concept, particularly from a protection perspective.

Offensive non-mutual collateral estoppel dangers perpetuating an inaccurate consequence by stopping relitigation of points already determined in opposition to a defendant. If the defendant loses the primary case to achieve last judgment, the doctrine offers disproportionate, preclusive weight to the choice of a lone decide or jury, irrespective of how incorrect that call.

The truth that an hostile judgment within the first case to achieve last judgment can cripple an organization’s protection in subsequent instances has two hostile penalties other than the hazard of perpetuating error. First, it offers the plaintiff great leverage in settlement negotiations. Second, it induces defendants to spend far more litigating a case than could be warranted by the quantity nominally in dispute.

As a result of it could cripple an organization’s protection, offensive non-mutual collateral estoppel could be consequence determinative. Thus, the query whether or not it applies in a selected case is a crucial query when it arises. It’s particularly vital in MDLs (and different coordinated proceedings) given the bigger variety of follow-on instances through which the doctrine may theoretically be invoked.

The impetus for right this moment’s publish is Dalbotten v. C. R. Bard, Inc., 2022 WL 2910125 (D. Mont. 2022), a case that had been a part of the G2 IVC filter MDL within the District of Arizona however was then despatched to the District of Montana for additional proceedings. Asserting a failure-to-warn declare beneath Montana legislation, the plaintiff moved for abstract judgment, arguing that the defendant was precluded from litigating the adequacy of its warning as a result of a jury in a bell-weather case tried by the MDL court docket within the District of Arizona beneath Georgia legislation had beforehand discovered the warning insufficient. For causes it doesn’t adequately clarify, the Dalbotten court docket concluded that Arizona legislation ruled whether or not offensive non-mutual collateral estoppel utilized. That was good for the defendant, as a result of Arizona doesn’t acknowledge the doctrine, however critical choice-of-law questions linger.

Because the Dalbotten court docket acknowledged, the Supreme Court docket has held that in variety instances a district court docket evaluating the applicability of offensive non-mutual collateral estoppel ought to observe “‘the legislation that might be utilized by state courts within the State through which the federal variety court docket sits.’” 2022 WL 2910125, at *2 (quoting Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508 (2001)).

Given this rule, one would assume that the District of Montana would have utilized Montana legislation when deciding whether or not the doctrine utilized in Dalbotten. However as an alternative it utilized Arizona legislation.

Why? In keeping with the court docket:

It’s undisputed that this matter is a federal variety case and a federal district court docket sitting in Arizona rendered the prior judgment at situation. Due to this fact, it ought to be slightly easy that Arizona legislation applies to the preclusion willpower.

2022 WL 2910125, at *2. However that conclusion doesn’t observe from—and, certainly, appears opposite to—the rule {that a} federal court docket sitting in variety applies the legislation of the state through which it sits.

The Dalbotten court docket didn’t clarify the relevance of the truth that the prior judgment had been rendered in Arizona, the place the MDL court docket was positioned. And it’s laborious to see the relevance. MDLs are a transitory procedural mechanism that ought to not have an effect on substantive rights.

That mentioned, the plaintiff’s arguments in favor of making use of offensive non-mutual collateral estoppel have been even much less persuasive than the court docket’s motive for not making use of the doctrine. The plaintiff argued that Arizona acknowledges the doctrine and that even when it didn’t the query is ruled by federal legislation. Neither assertion is appropriate. Arizona doesn’t acknowledge the doctrine, and the Supreme Court docket has squarely held that state legislation governs the query in variety instances.

So, we’re left to ponder what legislation controls software of offensive non-mutual collateral estoppel in a case that had been a part of an MDL. Is it the legislation of the state the place the MDL was positioned, and the place maybe a bell-weather trial was held? Is it the legislation of the state whose substantive legislation governs the case? Is it the legislation of the state the place the case is being heard?

Supreme Court docket precedent means that the query is managed by the legislation of the state the place the case is being heard. One may additionally think about arguments in favor of making use of the legislation of the state whose substantive legislation governs the case.

Dalbotten, nevertheless, utilized the legislation of Arizona, which is neither the state the place the case is being heard nor the state whose substantive legislation governs. Dalbotten didn’t say whether or not it did so as a result of that’s the place the MDL was positioned or as a result of that’s the place the bell-weather trial was held. If it utilized Arizona legislation as a result of that’s the place the MDL was positioned, the court docket, with out evaluation, adopted an MDL-specific rule. If it utilized Arizona legislation as a result of that’s the place the purportedly preclusive judgment was rendered, the court docket, with out evaluation, prioritized the place the sooner judgment was rendered over the place the following case is being heard.

In Dalbotten, it in all probability didn’t matter whether or not the court docket utilized Arizona or Montana legislation. Because the court docket held, Arizona doesn’t acknowledge offensive non-mutual collateral estoppel. And a reasonably diligent search of Montana precedent and federal instances making use of Montana legislation revealed no case recognizing the doctrine, which is probably going why the plaintiff didn’t argue for software of Montana legislation.

Even when immaterial to the end result in Dalbotten, it could be good to have larger readability on which legislation controls software of offensive non-mutual collateral estoppel. At minimal, MDL practitioners ought to concentrate on Dalbotten. If the legislation of the state the place the MDL is positioned governs subsequent software of the doctrine, practitioners must take that under consideration in deciding the place MDLs are greatest positioned.

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