Taylor v. Sturgell and Issue Preclusion/Res Judicata

The Supreme Court unanimously vacated the decision of the DC Circuit Court and remanded this for a trial on only one "test" of the "six-test" res judicata/nonparty preclusion doctrine in order to determine if the FAA and Fairchild could claim that Taylor should have no access under the Freedom of Information Act to plans for the making of a 1935 airplane made by Fairchild's predecessor. In order to understand this sentence, you can either read my detailed description of the case (here), or follow closely what is below. Let me first lay out some facts of the case.

Relevant Facts

"Greg Herrick, an antique aircraft enthusiast seeking to restore a vintage airplane manufactured by the Fairchild Engine and Airplane Corporation (FEAC), filed a Freedom of Information Act (FOIA) request asking the Federal Aviation Administration (FAA) for copies of technical documents related to the airplane. The FAA denied his request based on FOIA's exemption for trade secrets, see 5 U.S.C. § 552(b)(4). Herrick took an administrative appeal, but when respondent Fairchild, FEAC's successor, objected to the documents' release, the FAA adhered to its original decision. Herrick then filed an unsuccessful FOIA lawsuit to secure the documents. Less than a month after that suit was resolved, petitioner Taylor, Herrick's friend and an antique aircraft enthusiast himself, made a FOIA request for the same documents Herrick had unsuccessfully sued to obtain. When the FAA failed to respond, Taylor filed suit in the U.S. District Court for the District of Columbia. Holding the suit barred by claim preclusion, the District Court granted summary judgment to the FAA and to Fairchild, as intervenor in Taylor's action. The court acknowledged that Taylor was not a party to Herrick's suit, but held that a nonparty may be bound by a judgment if she was “virtually represented” by a party. The D.C. Circuit affirmed, announcing a five-factor test for “virtual representation.” The first two factors of the D.C. Circuit's test-“identity of interests” and “adequate representation”-are necessary but not sufficient for virtual representation. In addition, at least one of three other factors must be established: “a close relationship between the present party and his putative representative,” “substantial participation by the present party in the first case,” or “tactical maneuvering on the part of the present party to avoid preclusion by the prior judgment.” The D.C. Circuit acknowledged the absence of any indication that Taylor participated in, or even had notice of, Herrick's suit. It nonetheless found the “identity of interests,” “adequate representation,” and “close relationship” factors satisfied because the two men sought release of the same documents, were “close associates,” had discussed working together to restore Herrick's plane, and had used the same lawyer to pursue their suits. Because these conditions sufficed to establish virtual representation, the court left open the question whether Taylor had engaged in tactical maneuvering to avoid preclusion."

The Court's Legal Argument

The Court, first of all, rejected the DC Circuit's attempt to invoke a doctrine of "virtual representation."

"The theory of preclusion by “virtual representation” is disapproved. The preclusive effects of a judgment in a federal-question case decided by a federal court should instead be determined according to the established grounds for nonparty preclusion."

But if this theory is no longer operative, what does it say about the traditional theory of nonparty preclusion? Well, it survives as a doctrine of federal common law. Yet, if this doctrine is extended by such doctrines as "virtual representation," it would run up against the "deep-rooted historical tradition that everyone should have his own day in court." The Court then spelled out that the rule against nonparty preclusion is subject to six categories of exceptions:

"The rule against nonparty preclusion is subject to exceptions, grouped for present purposes into six categories. First, “[a] person who agrees to be bound by the determination of issues in an action between others is bound in accordance with the [agreement's] terms.” Restatement (Second) of Judgments § 40. Second, nonparty preclusion may be based on a pre-existing substantive legal relationship between the person to be bound and a party to the judgment, e.g., assignee and assignor . Third, “in certain limited circumstances,” a nonparty may be bound by a judgment because she was “ ‘adequately represented by someone with the same interests who [wa]s a party’ ” to the suit. Richards, 517 U.S., at 798, 116 S.Ct. 1761. Fourth, a nonparty is bound by a judgment if she “assume[d] control” over the litigation in which that judgment was rendered. Montana v. United States, 440 U.S. 147, 154, 99 S.Ct. 970, 59 L.Ed.2d 210. Fifth, a party bound by a judgment may not avoid its preclusive force by relitigating through a proxy. Preclusion is thus in order when a person who did not participate in litigation later brings suit as the designated representative or agent of a person who was a party to the prior adjudication. Sixth, a special statutory scheme otherwise consistent with due process- e.g., bankruptcy proceedings-may “expressly foreclos[e] successive litigation by nonlitigants.” Martin v. Wilks, 490 U.S. 755, 762, n. 2, 109 S.Ct. 2180, 104 L.Ed.2d 835."

Thus, the Court reaffirmed the rule against party/issue preclusion, with the six exceptions just specified. While the Court disagreed with the DC Circuit on allowing a "virtual representation" doctrine, it also felt that Fairchild and the FAA had improperly asked the Court to eliminate all principles for the doctrine--and just work on a case-by-case method.

"Fairchild and the FAA ask this Court to abandon altogether the attempt to delineate discrete grounds and clear rules for nonparty preclusion. Instead, they contend, only an equitable and heavily fact-driven inquiry can account for all of the situations in which nonparty preclusion is appropriate. This argument is rejected. First, respondents' balancing test is at odds with the constrained approach advanced by this Court's decisions, which have endeavored to delineate discrete, limited exceptions to the fundamental rule that a litigant is not bound by a judgment to which she was not a party, see, e.g., Richards, 517 U.S., at 798-799, 116 S.Ct. 1761. Second, a party's representation of a nonparty is “adequate” for preclusion purposes only if, at a minimum: (1) the interests of the nonparty and her representative are aligned, see Hansberry, 311 U.S., at 43, 61 S.Ct. 115, and (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the nonparty's interests, see Richards, 517 U.S., at 801-802, 116 S.Ct. 1761. Adequate representation may also require (3) notice of the original suit to the persons alleged to have been represented. See id., at 801, 116 S.Ct. 1761. In the class-action context, these limitations are implemented by Federal Rule of Civil Procedure 23's procedural safeguards. But an expansive virtual representation doctrine would recognize a common-law kind of class action shorn of these protections. Third, a diffuse balancing approach to nonparty preclusion would likely complicate the task of district courts faced in the first instance with preclusion questions."

The Remand

The only issue remaining for the Court was to figure out whether the decision of the DC Circuit (to preclude Taylor from bringing the case) could be justified based on one of the six established grounds for nonparty preclusion. The Court explained:

"With one exception, those grounds plainly have no application here. Respondents argue that Taylor's suit is a collusive attempt to relitigate Herrick's claim. That argument justifies a remand to allow the courts below the opportunity to determine whether the fifth ground for nonparty preclusion-preclusion because a nonparty to earlier litigation has brought suit as an agent of a party bound by the prior adjudication-applies to Taylor's suit. But courts should be cautious about finding preclusion on the basis of agency. A mere whiff of “tactical maneuvering” will not suffice; instead, principles of agency law indicate that preclusion is appropriate only if the putative agent's conduct of the suit is subject to the control of the party who is bound by the prior adjudication. Finally, the Court rejects Fairchild's suggestion that Taylor must bear the burden of proving he is not acting as Herrick's agent. Claim preclusion is an affirmative defense for the defendant to plead and prove."

Thus, the case needs to be remanded for a trial on this one issue. The Court's cautionary note in this paragraph indicates the guidance it wants to give to the district court--don't be too hasty to conclude that nonparty preclusion applies. Thus, this case has more life to it--and lawyers stay employed.

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