Parklane Hosiery Co. v. Shore

In Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979), the Supreme Court identified several reasons (hereinafter "Parklane factors") why courts should treat offensive and defensive nonmutual collateral estoppel differently. First, as a matter of judicial economy, defensive collateral estoppel incentivizes plaintiffs to join in the first action, whereas offensive collateral estoppel does not. Id. at 329-30. "Since a plaintiff will be able to rely on a previous judgment against a defendant but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to adopt a 'wait and see' attitude, in the hope that the first action by another plaintiff will result in a favorable judgment." Id. at 330. Second, offensive nonmutual collateral estoppel may be unfair to the defendant for several reasons: (1) "if a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously, particularly if future suits are not foreseeable;" (2) "the judgment relied upon as a basis for the estoppel may be inconsistent with one or more previous judgments in favor of the defendant;" (3) "the second action may afford the defendant procedural opportunities unavailable in the first action that could readily cause a different result." Id. at 330-31. The Supreme Court concluded: The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel. Id. at 331.