Collateral Estoppel - Mutuality

Mutuality

Traditionally, collateral estoppel applied only where there was mutuality of parties, meaning that both the party seeking to employ collateral estoppel and the party against whom collateral estoppel is sought were parties to the prior action.

Most courts in the United States have now abandoned mutuality as a requirement for collateral estoppel in most circumstances. A 1942 case caused mutuality to cease being a necessary factor in US applications of CE. Bernhard claimed that certain assets held by the executor of a decedent's estate were part of that estate, while the executor claimed they had been gifted to him by the decedent. In a court action it was decided that the assets were gifts to the executor and not assets in escrow, upon which Bernhard sued the bank that had been holding the assets and who had disbursed them to the executor, alleging again that the assets were property of the estate and should have been handled as estate matter. The bank successfully used CE as defense, arguing that Bernhard had already adjudicated the right to those funds and had lost. The court concluded that it was proper for a new party to take advantage of findings in a previous suit to bar action by a party of that suit. Since Bernhard had a full and fair opportunity to litigate the issue in her first suit, the court did not allow her to retry the same issue by merely switching defendants. The precedent of Bernhard holds that CE may be used as defense against any party who has fully and fairly litigated an issue in a previous action.

In the absence of mutuality, courts are more hesitant to apply collateral estoppel in an offensive setting than in a defensive one. In other words, courts are more hesitant to apply collateral estoppel to a defendant from a previous action if the defendant is sued by a new plaintiff for the same issue.