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SC delivered a UNANIMOUS decision rejecting concepts of Defense Preclusion under the principle of Res Judicata. Either issue preclusion must exist or claim preclusion must exist in order for Res Judicata to be invoked. This applies to affirmative defenses as well as any claims that a plaintiff may advance. In this case, defendant was not barred from an affirmative defense merely because it was mentioned in prior litigation because it had not been fully litigated - it was wrapped in a settlement agreement.
TAGS:Claim Preclusion,
In both a motion to dismiss the counterclaims and an answer to them, Lucky Brand argued that the counterclaims were barred by the settlement agreement, but it did not invoke that defense later in the proceedings... After protracted litigation, LuckyBrand moved to dismiss, arguing for the first time since early in the 2005 Action-that Marcel had released its claims in the settlement agreement. Marcel countered that Lucky Brand could not invoke therelease defense because it could have pursued that defense in the 2005 Action but did not.
This case asks whether so-called defense preclusion is a validapplication of res judicata: a term comprising the doctrine of issue preclusion, which precludes a party from relitigating an issue actually decided in a prior action and necessary to the judgment, and the doctrine of claim preclusion, which prevents parties from raising issues thatcould have been raised and decided in a prior action. Any preclusionof defenses must, at a minimum, satisfy the strictures of issue preclusion or claim preclusion.
In 2001-the first round-Marcel sued Lucky Brand, alleging that Lucky Brands use of the phrase Get Lucky in advertisements infringed Marcels trademark. In 2003, the parties signed a settlement agreement. As part of the deal, Lucky Brand agreed to stop using the phrase Get Lucky.App. 191. In exchange, Marcel agreed to release any claims regarding Lucky Brands use of its own trademarks. Id., at 191-192.
The Second Circuit vacated and remanded, concluding that a doctrine it termed defense preclusion prohibited Lucky Brand from raising the release defense in the 2011 Action. 898 F. 3d 232 (2018). Noting that a different category of preclusion-issue preclusion-may be wielded against a defendant, see Parklane Hosiery Co. v. Shore, 439
U. S. 322 (1979), the court reasoned that the same should be true of claim preclusion: A defendant should be precluded from raising an unlitigated defense that it shouldhave raised earlier.
The panel then held that defense preclusion bars a party from raising a defense where: (i) aprevious action involved an adjudication on the merits; (ii) the previous action involved the same parties; (iii) the defense was either asserted or could have been asserted, in the prior action; and (iv) the district court, in its discretion, concludes that preclusion of the defense is appropriate. 898 F. 3d, at 241.
This case asks whether so-called defense preclusion is a valid application of res judicata: a term that now comprises two distinct doctrines regarding the preclusive effect of prior litigation. 18 C. Wright, A. Miller, & E. Cooper, Fed- eral Practice and Procedure §4402 (3d ed. 2016) (Wright & Miller).
The first is issue preclusion (sometimes called collateral estoppel), which precludes a party from relitigating an issue actually decided in a prior case and necessary to the judgment. Allen v. McCurry, 449 U. S. 90, 94 (1980); see Parklane Hosiery, 439 U. S., at 326, n. 5.
The second doctrine is claim preclusion (sometimes itself called res judicata). Unlike issue preclusion, claim preclu- sion prevents parties from raising issues that could have been raised and decided in a prior action-even if they were not actually litigated.
Suits involve the same claim (or cause of action) when they aris[e] from the same transaction, United States v. Tohono Oodham Nation, 563 U. S. 307, 316 (2011) (quoting Kremer v. Chemical Constr. Corp., 456 U. S. 461, 482, n. 22 (1982)), or involve a common nucleus of operative facts, Restatement (Second) of Judgments §24, Comment b, p. 199 (1982) (Restatement (Second)).
Claim preclusion generally does not bar claims that are predicated on events that post date the filing of the initial complaint. Whole Womans Health v. Hellerstedt, 579 U. S. ___, ___ (2016) (slip op., at 12) (internal quotation marks omitted); Lawlor v. National Screen Service Corp., 349 U. S. 322, 327-328 (1955) (holding that two suits were not based on the same cause of action, because [t]he conduct presently complained of was all subsequent to the prior judgment and it cannot be given the effect of extinguishing claims which did not even then exist and which could not possibly have been sued upon in the previous case).
This is for good reason: Events that occur after the plaintiff files suit often give rise to new [m]aterial operative facts thatin themselves, or taken in conjunction with the antecedentfacts, create a new claim to relief. Restatement (Second) §24, Comment f, at 203; 18 J. Moore, D. Coquillette, G. Joseph, G. Vairo, & C. Varner, Federal Practice §131.22[1], p. 131-55, n. 1 (3d ed. 2019) (citing cases where [n]ew factscreate[d a] new claim).
This principle takes on particular force in the trademark context, where the enforceability of a mark and likelihood of confusion between marks often turns on extrinsic facts that change over time.
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