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Lucky Brand Dungarees, Inc. v. Marcel Fashions Grp.

No Defense Preclusion for Cases Involving Different Claims, Different Conduct

Lucky Brand Dungarees, Inc. v. Marcel Fashions Grp., ___ U.S. ___, 2020 WL 2477020 (May 14, 2020) (Opinion by SOTOMAYOR, J.) (2d Cir.: Winter, WALKER, Pooler) (S.D.N.Y.: Swain) (5 of 5 stars)

Supreme Court reverses judgment that had applied defense preclusion against Lucky. The opinion describes two litigations between these parties, and how Lucky attempted to raise in the latter case a defense (claiming that a prior settlement released Marcel’s claims against it) that Lucky initially raised but did not materially pursue in the former case. The opinion reasons that res judicata might bar such a defense in certain circumstances, but only where the preclusion, “at a minimum, satisfies the strictures of issue preclusion or claim preclusion” (Op. at 7)—i.e., defense preclusion is not a separate doctrine. There was no contention here that issue preclusion might apply, because the issue was not actually raised/decided in the former action.

The opinion holds that claim preclusion does not apply either because the two suits did not share a common nucleus of operative fact. It describes how the two litigations “involved both different conduct and different trademarks.” It emphasizes, “Lucky Brand’s defense in the 2001 Action did not threaten the judgment issued in the 2005 Action,” and describes how preclusion thus would not make sense. Op. at 11. Beloit, 7 Wall. 619 (1869), is not contradictory because there the precluded “defense in the second suit would have threatened the validity of the judgment in the first suit.” Op. at 11–12.

KEYWORDS: DEFENSE PRECLUSION; CLAIM PRECLUSION; ISSUE PRECLUSION; CIVIL PROCEDURE; RES JUDICATA