In the case of Borel v.
Fibreboard Paper Prod. Corp. (493
F.2d 1076 (5th Cir. 1974)), Borel sued six manufacturers of
asbestos and won.
Hardy came along and sued the
same six defendants, plus 13 more asbestos makers.
The Trial Court found that the
judgment in Borel meant that there was issue preclusion on a number of important issues related to
liability.
Such as the defendant's
breech of duty to warn workers about the dangers of asbestos.
Issue preclusion (aka collateral estoppel) means that the asbestos manufacturers could
no longer argue that they did not breech a duty. The issue was already decided.
The Trial Court found that issue
preclusion applied to all the
defendants because they shared an "identity of interests"
sufficient to constitute privity.
In order to establish issue
preclusion, it not only has to be
the same issue that had been argued before, but it has to be the same
litigants. You can't use issue preclusion if you are suing someone who wasn't a party
to the first lawsuit. A new case with the same plaintiffs and
defendants is said to have "privity."
Of course, there are some
exceptions (see below)...
The 13 new asbestos makers
appealed.
They argued that they were
not party to the Borel case and therefore they never had "their day
in court" and should not be bound by issue preclusion from arguing that they did not breech a duty.
They argued that since there
were new defendants in this case, there was no privity.
The Appellate Court reversed.
The Appellate Court felt
that the Trial Court had stretched the concept of privity too far.
The Court found
that non-parties to lawsuits can be bound by privity, but certain things have to happen for the
non-party to be considered "sufficiently close":
A non-party that has
succeeded to a party's interested in property is bound by prior
judgments.
A non-party who controlled
the original suit is bound by the resulting judgment.
A non-party whose interests
were adequately represented by a party in the original suit is bound by
the resulting judgment.
See Restatement 2nd
of Judgments §§ 30, 31, 34, 39-41.
Since the 13 new defendants
didn't meet any of the standards for being "sufficiently close"
to the parties in Borel, they were not bound by issue preclusion.
Just being in the same
industry isn't a good enough reason toe establish privity.
