U.S. Supreme Court Parklane Hosiery Co., Inc. v. Shore, 439
U.S. 322 (1979) Parklane Hosiery Co., Inc. v.
Shore No. 77-1305 Argued October 30,
1978 Decided January 9,
1979 439
U.S. 322 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND
CIRCUIT Syllabus Respondent brought this stockholder's class action in the
District Court for damages and other relief against petitioners, a
corporation, its officers, directors, and stockholders, who
allegedly had issued a materially false and misleading proxy
statement in violation of the federal securities laws and
Securities and Exchange Commission (SEC) regulations. Before the
action came to trial, the SEC sued the same defendants in the
District Court alleging that the proxy statement was materially
false and misleading in essentially the same respects as respondent
had claimed. The District Court, after a nonjury trial, entered a
declaratory judgment for the SEC, and the Court of Appeals
affirmed. Respondent in this case then moved for partial summary
judgment against petitioners, asserting that they were collaterally
estopped from relitigating the issues that had been resolved
against them in the SEC suit. The District Court denied the motion
on the ground that such an application of collateral estoppel would
deny petitioners their Seventh Amendment right to a jury trial. The
Court of Appeals reversed. Held: 1. Petitioners, who had a "full and fair" opportunity to
litigate their claims in the SEC action, are collaterally estopped
from relitigating the question of whether the proxy statement was
materially false and misleading. Pp. 439 U. S.
326 -333.

															(a) The mutuality doctrine, under which neither party could use
a prior judgment against the other unless both parties were bound
by the same judgment, no longer applies. See Blonder-Tongue
Laboratories, Inc. v. University of Illinois Foundation, 402 U. S. 313 . Pp. 402 U. S.
326 -328.

															(b) The offensive use of collateral estoppel (when, as here, the
plaintiff seeks to foreclose the defendant from litigating an issue
that the defendant has previously litigated unsuccessfully in an
action with another party) does not promote judicial economy in the
same manner that is promoted by defensive use (when a defendant
seeks to prevent a plaintiff from asserting a claim that the
plaintiff has previously litigated and lost against another
defendant), and such offensive use may also be unfair to a
defendant in various ways. Therefore, the general rule should be
that, in cases where a plaintiff could easily have joined in
the Page 439 U. S. 323 earlier action, or where the application of offensive estoppel
would be unfair to a defendant, a trial judge, in the exercise of
his discretion, should not allow the use of offensive collateral
estoppel. Pp. 439 U. S.
329 -331.

															(c) In this case, however, the application of offensive
collateral estoppel will not reward a private plaintiff who could
have joined in the previous action, since the respondent probably
could not have joined in the injunctive action brought by the SEC.
Nor is there any unfairness to petitioners in such application
here, since petitioners had every incentive fully and vigorously to
litigate the SEC suit; the judgment in the SEC action was not
inconsistent with any prior decision; and in the respondent's
action there will be no procedural opportunities available to the
petitioners that were unavailable in the SEC action of a kind that
might be likely to cause a different result. Pp. 439 U. S.
331 -333.

															2. The use of collateral estoppel in this case would not violate
petitioners' Seventh Amendment right to a jury trial. Pp. 439 U. S.
333 -337.

															(a) An equitable determination can have collateral estoppel
effect in a subsequent legal action without violating the Seventh
Amendment. Katchen v. Landy, 382 U.
S. 323 . Pp. 439 U. S.
333 -335.

															(b) Petitioners' contention that, since the scope of the Seventh
Amendment must be determined by reference to the common law as it
existed in 1791, at which time collateral estoppel was permitted
only where there was mutuality of parties, is without merit, for
many procedural devices developed since 1791 that have diminished
the civil jury's historic domain have been found not to violate the
Seventh Amendment. See, e.g., Galloway v. United States, 319 U. S. 372 , 319 U. S.
388 -393. Pp. 439 U. S.
335 -337.

															565 F.2d 815, affirmed.

															STEWART, J., delivered the opinion of the Court, in which
BURGER, C.J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, POWELL, and
STEVENS, JJ., joined. REHNQUIST, J., filed a dissenting opinion, post, p. 439 U. S.
337 . Page 439 U. S. 324 MR. JUSTICE STEWART delivered the opinion of the Court.

															This case presents the question whether a party who has had
issues of fact adjudicated adverse to it in an equitable action may
be collaterally estopped from relitigating the same issues before a
jury in a subsequent legal action brought against it by a new
party.

															The respondent brought this stockholder's class action against
the petitioners in a Federal District Court. The complaint alleged
that the petitioners, Parklane Hosiery Co., Inc. (Parklane), and 13
of its officers, directors, and stockholders, had issued a
materially false and misleading proxy statement in connection with
a merger. [ Footnote 1 ] The
proxy statement, according to the complaint, had violated §§ 14(a),
10(b), and 20(a) of the Securities Exchange Act of 1934, 48 Stat.
895, 891, 899, as amended, 15 U.S.C. §§ 78n(a), 78j(b), and 78t(a),
as well as various rules and regulations promulgated by the
Securities and Exchange Commission (SEC). The complaint sought
damages, rescission of the merger, and recovery of costs.

															Before this action came to trial, the SEC filed suit against the
same defendants in the Federal District Court, alleging that the
proxy statement that had been issued by Parklane was materially
false and misleading in essentially the same respects as those that
had been alleged in the respondent's complaint. Injunctive relief
was requested. After a 4-day Page 439 U. S. 325 trial, the District Court found that the proxy statement was
materially false and misleading in the respects alleged, and
entered a declaratory judgment to that effect. SEC v. Parklane
Hosiery Co., 422 F.
Supp. 477 . The Court of Appeals for the Second Circuit affirmed
this judgment. 558 F.2d 1083.

															The respondent in the present case then moved for partial
summary judgment against the petitioners, asserting that the
petitioners were collaterally estopped from relitigating the issues
that had been resolved against them in the action brought by the
SEC. [ Footnote 2 ] The District
Court denied the motion on the ground that such an application of
collateral estoppel would deny the petitioners their Seventh
Amendment right to a jury trial. The Court of Appeals for the
Second Circuit reversed, holding that a party who has had issues of
fact determined against him after a full and fair opportunity to
litigate in a nonjury trial is collaterally estopped from obtaining
a subsequent jury trial of these same issues of fact. 565 F.2d 815.
The appellate court concluded that

															"the Seventh Amendment preserves the right to jury trial only
with respect to issues of fact, [and] once those issues have been
fully and fairly adjudicated in a prior proceeding, nothing remains
for trial, either with or without a jury." Id. at 819. Because of an inter-circuit conflict,
[ Footnote 3 ] we granted
certiorari. 435 U.S. 1006. Page 439 U. S. 326 I The threshold question to be considered is whether, quite apart
from the right to a jury trial under the Seventh Amendment, the
petitioners can be precluded from relitigating facts resolved
adversely to them in a prior equitable proceeding with another
party under the general law of collateral estoppel. Specifically,
we must determine whether a litigant who was not a party to a prior
judgment may nevertheless use that judgment "offensively" to
prevent a defendant from relitigating issues resolved in the
earlier proceeding. [ Footnote
4 ] A Collateral estoppel, like the related doctrine of res
judicata, [ Footnote 5 ] has
the dual purpose of protecting litigants from the burden of
relitigating an identical issue with the same party or his privy
and of promoting judicial economy by preventing needless
litigation. Blonder-Tongue Laboratories, Inc. v. University of
Illinois Foundation, 402 U. S. 313 , 402 U. S.
328 -329. Until relatively recently, however, the scope
of collateral estoppel was limited by the doctrine of mutuality of
parties. Under this mutuality doctrine, neither party could use a
prior judgment Page 439 U. S. 327 as an estoppel against the other unless both parties were bound
by the judgment. [ Footnote 6 ]
Based on the premise that it is somehow unfair to allow a party to
use prior judgment when he himself would not be so bound, [ Footnote 7 ] the mutuality requirement
provided a party who had litigated and lost in a previous action an
opportunity to relitigate identical issues with new parties.

															By failing to recognize the obvious difference in position
between a party who has never litigated an issue and one who has
fully litigated and lost, the mutuality requirement was criticized
almost from its inception. [ Footnote 8 ] Recognizing the validity of this criticism,
the Court in Blonder-Tongue Laboratories, Inc. v. University of
Illinois Foundation, supra, abandoned the mutuality
requirement, at least in cases where a patentee seeks to relitigate
the validity of a patent after a federal court in a previous
lawsuit has already declared it invalid. [ Footnote 9 ] The Page 439 U. S. 328 "broader question" before the Court, however, was "whether it is
any longer tenable to afford a litigant more than one full and fair
opportunity for judicial resolution of the same issue." 402 U.S. at 402 U. S. 328 .
The Court strongly suggested a negative answer to that
question:

															"In any lawsuit where a defendant, because of the mutuality
principle, is forced to present a complete defense on the merits to
a claim which the plaintiff has fully litigated and lost in a prior
action, there is an arguable misallocation of resources. To the
extent the defendant in the second suit may not win by asserting,
without contradiction, that the plaintiff had fully and fairly, but
unsuccessfully, litigated the same claim in the prior suit, the
defendant's time and money are diverted from alternative uses --
productive or otherwise to relitigation of a decided issue. And,
still assuming that the issue was resolved correctly in the first
suit, there is reason to be concerned about the plaintiff's
allocation of resources. Permitting repeated litigation of the same
issue as long as the supply of unrelated defendants holds out
reflects either the aura of the gaming table or 'a lack of
discipline and of disinterestedness on the part of the lower
courts, hardly a worthy or wise basis for fashioning rules of
procedure.' Kerotest Mfg. Co. v. C-O-Two Co., 342 U. S.
180 , 342 U. S. 185 (1952).
Although neither judges, the parties, nor the adversary system
performs perfectly in all cases, the requirement of determining
whether the party against whom an estoppel is asserted had a full
and fair opportunity to litigate is a most significant
safeguard." Id. at 402 U. S. 329 .
[ Footnote 10 ] Page 439 U. S. 329 B The Blonder-Tongue case involved defensive use of
collateral estoppel -- a plaintiff was estopped from asserting a
claim that the plaintiff had previously litigated and lost against
another defendant. The present case, by contrast, involves
offensive use of collateral estoppel -- a plaintiff is seeking to
estop a defendant from relitigating the issues which the defendant
previously litigated and lost against another plaintiff. In both
the offensive and defensive use situations, the party against whom
estoppel is asserted has litigated and lost in an earlier action.
Nevertheless, several reasons have been advanced why the two
situations should be treated differently. [ Footnote 11 ]

															First, offensive use of collateral estoppel does not promote
judicial economy in the same manner as defensive use does.
Defensive use of collateral estoppel precludes a plaintiff from
relitigating identical issues by merely "switching adversaries." Bernhard v. Bank of America Nat. Trust Savings Assn., 19
Cal. 2d at 813, 122 P.2d at 895. [ Footnote 12 ] Thus, defensive collateral estoppel gives a
plaintiff a strong incentive to join Page 439 U. S. 330 all potential defendants in the first action if possible.
Offensive use of collateral estoppel, on the other hand, creates
precisely the opposite incentive. 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. E.g., Nevarov v.
Caldwell, 161 Cal. App.
2d 762 , 767-76, 327 P.2d 111, 115; Reardon v. Allen, 88 N.J.Super. 560, 571-572, 213 A.2d 26 , 32. Thus, offensive use of collateral estoppel
will likely increase, rather than decrease, the total amount of
litigation, since potential plaintiffs will have everything to gain
and nothing to lose by not intervening in the first action.
[ Footnote 13 ]

															A second argument against offensive use of collateral estoppel
is that it may be unfair to a defendant. 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. The Evergreens v. Nunan, 141 F.2d
927, 929 (CA2); cf. Berner v. British Commonwealth Pac.
Airlines, 346 F.2d 532 (CA2) (application of offensive
collateral estoppel denied where defendant did not appeal an
adverse judgment awarding damages of $35,000 and defendant was
later sued for over $7 million). Allowing offensive collateral
estoppel may also be unfair to a defendant if the judgment relied
upon as a basis for the estoppel is itself inconsistent with one or
more previous judgments in favor of the defendant. [ Footnote 14 ] Still another situation where
it might be Page 439 U. S. 331 unfair to apply offensive estoppel is where the second action
affords the defendant procedural opportunities unavailable in the
first action that could readily cause a different result. [ Footnote 15 ] C We have concluded that the preferable approach for dealing with
these problems in the federal courts is not to preclude the use of
offensive collateral estoppel, but to grant trial courts broad
discretion to determine when it should be applied. [ Footnote 16 ] 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.

															In the present case, however, none of the circumstances that
might justify reluctance to allow the offensive use of collateral
estoppel is present. The application of offensive collateral Page 439 U. S. 332 estoppel will not here reward a private plaintiff who could have
joined in the previous action, since the respondent probably could
not have joined in the injunctive action brought by the SEC even
had he so desired. [ Footnote
17 ] Similarly, there is no unfairness to the petitioners in
applying offensive collateral estoppel in this case. First, in
light of the serious allegations made in the SEC's complaint
against the petitioners, as well as the foreseeability of
subsequent private suits that typically follow a successful
Government judgment, the petitioners had every incentive to
litigate the SEC lawsuit fully and vigorously. [ Footnote 18 ] Second, the judgment in the
SEC action was not inconsistent with any previous decision.
Finally, there will in the respondent's action be no procedural
opportunities available to the petitioners that were unavailable in
the first action of a kind that might be likely to cause a
different result. [ Footnote
19 ]

															We conclude, therefore, that none of the considerations that
would justify a refusal to allow the use of offensive collateral
estoppel is present in this case. Since the petitioners received a
"full and fair" opportunity to litigate their claims in the Page 439 U. S. 333 SEC action, the contemporary law of collateral estoppel leads
inescapably to the conclusion that the petitioners are collaterally
estopped from relitigating the question of whether the proxy
statement was materially false and misleading.

															The question that remains is whether, notwithstanding the law of
collateral estoppel, the use of offensive collateral estoppel in
this case would violate the petitioners' Seventh Amendment right to
a jury trial. [ Footnote
20 ] A "[T]he thrust of the [Seventh] Amendment was to preserve the
right to jury trial as it existed in 1791." Curtis v.
Loether, 415 U. S. 189 , 415 U. S. 193 .
At common law, a litigant was not entitled to have a jury determine
issues that had been previously adjudicated by a chancellor in
equity. Hopkins v.
Lee , 6 Wheat. 109; Smith v.
Kernochen , 7 How.198, 48 U. S.
217 -218; Brady v. Daly, 175 U.
S. 148 , 175 U. S.
158 -159; Shapiro & Coquillette, The Fetish of Jury
Trial in Civil Cases: A Comment on Rachal v. Hill, 85
Harv.L.Rev. 442, 448-458 (1971). [ Footnote 21 ]

															Recognition that an equitable determination could have
collateral estoppel effect in a subsequent legal action was the
major premise of this Court's decision in Beacon Theatres, Inc.
v. Westover, 359 U. S. 500 . In
that case, the plaintiff sought a declaratory judgment that certain
arrangements between it Page 439 U. S. 334 and the defendant were not in violation of the antitrust laws,
and asked for an injunction to prevent the defendant from
instituting an antitrust action to challenge the arrangements. The
defendant denied the allegations and counterclaimed for treble
damages under the antitrust laws, requesting a trial by jury of the
issues common to both the legal and equitable claims. The Court of
Appeals upheld denial of the request, but this Court reversed,
stating:

															"[T]he effect of the action of the District Court could be, as
the Court of Appeals believed, 'to limit the petitioner's
opportunity fully to try to a jury every issue which has a bearing
upon its treble damage suit,' for determination of the issue of
clearances by the judge might 'operate either by way of res
judicata or collateral estoppel so as to conclude both parties
with respect thereto at the subsequent trial of the treble damage
claim.'" Id. at 359 U. S.
504 .

															It is thus clear that the Court in the Beacon Theatres case thought that, if an issue common to both legal and equitable
claims was first determined by a judge, relitigation of the issue
before a jury might be foreclosed by res judicata or
collateral estoppel. To avoid this result, the Court held that,
when legal and equitable claims are joined in the same action, the
trial judge has only limited discretion in determining the sequence
of trial, and "that discretion . . . must, wherever possible, be
exercised to preserve jury trial." Id. at 359 U. S. 510 .
[ Footnote 22 ]

															Both the premise of Beacon Theatres and the fact that
it enunciated no more than a general prudential rule were confirmed
by this Court's decision in Katchen v. Landy, 382 U.
S. 323 . In that case, the Court held that a bankruptcy
court, sitting as a statutory court of equity, is empowered to
adjudicate Page 439 U. S. 335 equitable claims prior to legal claims, even though the factual
issues decided in the equity action would have been triable by a
jury under the Seventh Amendment if the legal claims had been
adjudicated first. The Court stated:

															"Both Beacon Theatres and Dairy Queen recognize that there might be situations in which the Court could
proceed to resolve the equitable claim first, even though the
results might be dispositive of the issues involved in the legal
claim." Id. at 382 U. S. 339 .
Thus, the Court in Katchen v. Landy recognized that an
equitable determination can have collateral estoppel effect in
subsequent legal action and that this estoppel does not violate the
Seventh Amendment. B Despite the strong support to be found both in history and in
the recent decisional law of this Court for the proposition that an
equitable determination can have collateral estoppel effect in a
subsequent legal action, the petitioners argue that application of
collateral estoppel in this case would nevertheless violate their
Seventh Amendment right to a jury trial. The petitioners contend
that, since the scope of the Amendment must be determined by
reference to the common law as it existed in 1791, and since the
common law permitted collateral estoppel only where there was
mutuality of parties, collateral estoppel cannot constitutionally
be applied when such mutuality is absent.

															The petitioners have advanced no persuasive reason, however, why
the meaning of the Seventh Amendment should depend on whether or
not mutuality of parties is present. A litigant who has lost
because of adverse factual findings in an equity action is equally
deprived of a jury trial whether he is estopped from relitigating
the factual issues against the same party or a new party. In either
case, the party against whom estoppel is asserted has litigated
questions of fact, and has had the facts determined against him in
an earlier proceeding. Page 439 U. S. 336 In either case, there is no further factfinding function for the
jury to perform, since the common factual issues have been resolved
in the previous action. Cf. Ex parte Peterson, 253 U. S. 300 , 253 U. S. 310 ("No one is entitled in a civil case to trial by jury unless and
except so far as there are issues of fact to be determined").

															The Seventh Amendment has never been interpreted in the rigid
manner advocated by the petitioners. On the contrary, many
procedural devices developed since 1791 that have diminished the
civil jury's historic domain have been found not to be inconsistent
with the Seventh Amendment. See Galloway v. United States, 319 U. S. 372 , 319 U. S.
388 -393 (directed verdict does not violate the Seventh
Amendment); Gasoline Products Co. v. Champlin Refining
Co., 283 U. S. 494 , 283 U. S.
497 -498 (retrial limited to question of damages does not
violate the Seventh Amendment even though there was no practice at
common law for setting aside a verdict in part); Fidelity &
Deposit Co. v. United States, 187 U.
S. 315 , 187 U. S.
319 -321 (summary judgment does not violate the Seventh
Amendment). [ Footnote
23 ]

															The Galloway case is particularly instructive. There
the party against whom a directed verdict had been entered argued
that the procedure was unconstitutional under the Seventh
Amendment. In rejecting this claim, the Court said:

															"The Amendment did not bind the federal courts to the exact
procedural incidents or details of jury trial according Page 439 U. S. 337 to the common law in 1791, any more than it tied them to the
common law system of pleading or the specific rules of evidence
then prevailing. Nor were 'the rules of the common law' then
prevalent, including those relating to the procedure by which the
judge regulated the jury's role on questions of fact, crystallized
in a fixed and immutable system. . . ."

															"The more logical conclusion, we think, and the one which both
history and the previous decisions here support, is that the
Amendment was designed to preserve the basic institution of jury
trial in only its most fundamental elements, not the great mass of
procedural forms and details, varying even then so widely among
common law jurisdictions."

															319 U.S. at 319 U. S. 390 , 319 U. S. 392 (footnote omitted).

															The law of collateral estoppel, like the law in other procedural
areas defining the scope of the jury's function, has evolved since
1791. Under the rationale of the Galloway case, these
developments are not repugnant to the Seventh Amendment simply for
the reason that they did not exist in 1791. Thus, if, as we have
held, the law of collateral estoppel forecloses the petitioners
from relitigating the factual issues determined against them in the
SEC action, nothing in the Seventh Amendment dictates a different
result, even though, because of lack of mutuality, there would have
been no collateral estoppel in 1791. [ Footnote 24 ]

															The judgment of the Court of Appeals is Affirmed. [ Footnote 1 ]

															The amended complaint alleged that the proxy statement that had
been issued to the stockholders was false and misleading because it
failed to disclose: (1) that the president of Parklane would
financially benefit as a result of the company's going private; (2)
certain ongoing negotiations that could have resulted in financial
benefit to Parklane; and (3) that the appraisal of the fair value
of Parklane stock was based on insufficient information to be
accurate.

															[ Footnote 2 ]

															A private plaintiff in an action under the proxy rules is not
entitled to relief simply by demonstrating that the proxy
solicitation was materially false and misleading. The plaintiff
must also show that he was injured and prove damages. Mills v.
Electric Auto-Lite Co., 396 U. S. 375 , 396 U. S.
386 -390. Since the SEC action was limited to a
determination of whether the proxy statement contained materially
false and misleading information, the respondent conceded that he
would still have to prove these other elements of his prima
facie case in the private action. The petitioners' right to a
jury trial on those remaining issues is not contested.

															[ Footnote 3 ]

															The position of the Court of Appeals for the Second Circuit is
in conflict with that taken by the Court of Appeals for the Fifth
Circuit in Rachal v. Hill, 435 F.2d 59.

															[ Footnote 4 ]

															In this context, offensive use of collateral estoppel occurs
when the plaintiff seeks to foreclose the defendant from litigating
an issue the defendant has previously litigated unsuccessfully in
an action with another party. Defensive use occurs when a defendant
seeks to prevent a plaintiff from asserting a claim the plaintiff
has previously litigated and lost against another defendant.

															[ Footnote 5 ]

															Under the doctrine of res judicata, a judgment on the
merits in a prior suit bars a second suit involving the same
parties or their privies based on the same cause of action. Under
the doctrine of collateral estoppel, on the other hand, the second
action is upon a different cause of action, and the judgment in the
prior suit precludes relitigation of issues actually litigated and
necessary to the outcome of the first action. 1B J. Moore, Federal
Practice � 0.405[1], pp. 622-624 (2d ed.1974); e.g., Lawlor v.
National Screen Serv. Corp., 349 U. S. 322 , 349 U. S. 326 ; Commissioner v. Sunnen, 333 U. S. 591 , 333 U. S. 597 ; Cromwell v. County of Sac, 94 U. S.
351 , 94 U. S.
352 -353.

															[ Footnote 6 ] E.g., Bigelow v. Old Dominion Copper Co., 225 U.
S. 111 , 225 U. S. 127 ("It is a principle of general elementary law that estoppel of a
judgment must be mutual"); Buckeye Powder Co. v. E. I. DuPont
de Nemours Powder Co., 248 U. S. 55 , 248 U. S. 63 ;
Restatement of Judgments § 93 (1942).

															[ Footnote 7 ]

															It is a violation of due process for a judgment to be binding on
a litigant who was not a party or a privy and therefore has never
had an opportunity to be heard. Blonder-Tongue Laboratories,
Inc. v. University of Illinois Foundation, 402 U.
S. 313 , 402 U. S. 329 ; Hansberry v. Lee, 311 U. S. 32 , 311 U. S.
40 .

															[ Footnote 8 ]

															This criticism was summarized in the Court's opinion in Blonder-Tongue Laboratories, Inc. v. University of Illinois
Foundation, supra at 402 U. S.
332 -327. The opinion of Justice Traynor for a unanimous
California Supreme Court in Bernhard v. Bank of America Nat.
Trust & Savings Assn., 19 Cal. 2d
807 , 812, 122 P.2d 892, 895, made the point succinctly:

															"No satisfactory rationalization has been advanced for the
requirement of mutuality. Just why a party who was not bound by a
previous action should be precluded from asserting it as res
judicata against a party who was bound by it is difficult to
comprehend."

															[ Footnote 9 ]

															In Triplett v. Lowell, 297 U.
S. 638 , the Court had held that a determination of
patent invalidity in a prior action did not bar a plaintiff from
relitigating the validity of a patent in a subsequent action
against a different defendant. This holding of the Triplett case was explicitly overruled in the Blonder-Tongue case.

															[ Footnote 10 ]

															The Court also emphasized that relitigation of issues previously
adjudicated is particularly wasteful in patent cases because of
their staggering expense and typical length. 402 U.S. at 402 U. S. 334 , 402 U. S. 348 .
Under the doctrine of mutuality of parties, an alleged infringer
might find it cheaper to pay royalties than to challenge a patent
that had been declared invalid in a prior suit, since the holder of
the patent is entitled to a statutory presumption of validity. Id. at 402 U. S.
338 .

															[ Footnote 11 ]

															Various commentators have expressed reservations regarding the
application of offensive collateral estoppel. Currie, Mutuality of
Estoppel: Limits of the Bernhard Doctrine, 9 Stan.L.Rev. 281
(1957); Semmel, Collateral Estoppel, Mutuality and Joinder of
Parties, 68 Colum.L.Rev. 1457 (1968); Note, The Impacts of
Defensive and Offensive Assertion of Collateral Estoppel by a
Nonparty, 35 Geo.Wash.L.Rev. 1010 (1967). Professor Currie later
tempered his reservations. Civil Procedure: The Tempest Brews, 53
Calif.L.Rev. 25 (1965).

															[ Footnote 12 ]

															Under the mutuality requirement, a plaintiff could accomplish
this result since he would not have been bound by the judgment had
the original defendant won.

															[ Footnote 13 ]

															The Restatement (Second) of Judgments § 88(3) (Tent.Draft No. 2,
Apr. 15, 1975) provides that application of collateral estoppel may
be denied if the party asserting it "could have effected joinder in
the first action between himself and his present adversary."

															[ Footnote 14 ]

															In Professor Currie's familiar example, a railroad collision
injures 50 passengers all of whom bring separate actions against
the railroad. After the railroad wins the first 25 suits, plaintiff
wins in suit 26. Professor Currie argues that offensive use of
collateral estoppel should not be applied so as to allow plaintiffs
27 through 50 automatically to recover. Currie, supra, 9
Stan.L.Rev. at 304. See Restatement (Second) of Judgments
§ 88(4), supra. [ Footnote 15 ]

															If, for example, the defendant in the first action was forced to
defend in an inconvenient forum, and therefore was unable to engage
in full scale discovery or call witnesses, application of offensive
collateral estoppel may be unwarranted. Indeed, differences in
available procedures may sometimes justify not allowing a prior
judgment to have estoppel effect in a subsequent action even
between the same parties, or where defensive estoppel is asserted
against a plaintiff who has litigated and lost. The problem of
unfairness is particularly acute in cases of offensive estoppel,
however, because the defendant against whom estoppel is asserted
typically will not have chosen the forum in the first action. See id. § 88(2) and Comment d.

															[ Footnote 16 ]

															This is essentially the approach of id., § 88, which
recognizes that

															"the distinct trend, if not the clear weight of recent
authority, is to the effect that there is no intrinsic difference
between 'offensive,' as distinct from 'defensive,' issue
preclusion, although a stronger showing that the prior opportunity
to litigate was adequate may be required in the former situation
than the latter." Id., Reporter's Note, at 99.

															[ Footnote 17 ] SEC v. Everest Management Corp., 475 F.2d 1236, 1240
(CA2) ("[T]he complicating effect of the additional issues and the
additional parties outweighs any advantage of a single disposition
of the common issues"). Moreover, consolidation of a private action
with one brought by the SEC without its consent is prohibited by
statute. 15 U.S.C. § 78u(g).

															[ Footnote 18 ]

															After a day trial in which the petitioners had every opportunity
to present evidence and call witnesses, the District Court held for
the SEC. The petitioners then appealed to the Court of Appeals for
the Second Circuit, which affirmed the judgment against them.
Moreover, the petitioners were already aware of the action brought
by the respondent, since it had commenced before the filing of the
SEC action.

															[ Footnote 19 ]

															It is true, of course, that the petitioners in the present
action would be entitled to a jury trial of the issues bearing on
whether the proxy statement was materially false and misleading had
the SEC action never been brought -- a matter to be discussed in 439 U. S. But
the presence or absence of a jury as factfinder is basically
neutral, quite unlike, for example, the necessity of defending the
first lawsuit in an inconvenient forum.

															[ Footnote 20 ]

															The Seventh Amendment provides: "In Suits at common law, where
the value in controversy shall exceed twenty dollars, the right to
jury trial shall be preserved. . . ."

															[ Footnote 21 ]

															The authors of this article conclude that the historical
sources

															"indicates that in the late eighteenth and early nineteenth
centuries, determinations in equity were thought to have as much
force as determinations at law, and that the possible impact on
jury trial rights was not viewed with concern. . . . If collateral
estoppel is otherwise warranted, the jury trial question should not
stand in the way."

															85 Harv.L.Rev. at 455-456. This common law rule is adopted in
the Restatement of Judgments § 68, Comment j (1942).

															[ Footnote 22 ]

															Similarly, in both Dairy Queen, Inc. v. Wood, 369 U. S. 469 , and Meeker v. Ambassador Oil Corp., 375 U.
S. 160 , the Court held that legal claims should
ordinarily be tried before equitable claims to preserve the right
to a jury trial.

															[ Footnote 23 ]

															The petitioners' reliance on Dimick v. Schiedt, 293 U. S. 474 , is
misplaced. In the Dimick case, the Court held that an
increase by the trial judge of the amount of money damages awarded
by the jury violated the second clause of the Seventh Amendment,
which provides that "no fact tried by a jury, shall be otherwise
reexamined in any Court of the United States, than according to the
rules of the common law." Collateral estoppel does not involve the
"reexamination" of any fact decided by a jury. On the contrary, the
whole premise of collateral estoppel is that, once an issue has
been resolved in a prior proceeding, there is no further
factfinding function to be performed.

															[ Footnote 24 ]

															In reaching this conclusion, the Court of Appeals went on to
state:

															"Were there any doubt about the [question whether the
petitioners were entitled to a jury redetermination of the issues
otherwise subject to collateral estoppel], it should in any event
be resolved against the defendants in this case for the reason
that, although they were fully aware of the pendency of the present
suit throughout the non-jury trial of the SEC case, they made no
effort to protect their right to a jury trial of the damage claims
asserted by plaintiffs, either by seeking to expedite trial of the
present action or by requesting Judge Duffy, in the exercise of his
discretion pursuant to Rule 39(b), (G), F.R.Civ.P., to order that
the issues in the SEC case be tried by a jury or before an advisory
jury."

															565 F.2d at 821-822. (Footnote omitted.)

															The Court of Appeals was mistaken in these suggestions. The
petitioners did not have a right to a jury trial in the equitable
injunctive action brought by the SEC. Moreover, an advisory jury,
which might have only delayed and complicated that proceeding,
would not, in any event, have been a Seventh Amendment jury. And
the petitioners were not in a position to expedite the private
action and stay the SEC action. The Securities Exchange Act of 1934
provides for prompt enforcement actions by the SEC unhindered by
parallel private actions. 15 U.S.C. § 78u(g).

															MR. JUSTICE REHNQUIST, dissenting.

															It is admittedly difficult to be outraged about the treatment
accorded by the federal judiciary to petitioners' demand for a jury
trial in this lawsuit. Outrage is an emotion all but Page 439 U. S. 338 impossible to generate with respect to a corporate defendant in
a securities fraud action, and this case is no exception. But the
nagging sense of unfairness as to the way petitioners have been
treated, engendered by the imprimatur placed by the Court of
Appeals on respondent's "heads I win, tails you lose" theory of
this litigation, is not dispelled by this Court's antiseptic
analysis of the issues in the case. It may be that, if this Nation
were to adopt a new Constitution today, the Seventh Amendment
guaranteeing the right of jury trial in civil cases in federal
courts would not be included among its provisions. But any present
sentiment to that effect cannot obscure or dilute our obligation to
enforce the Seventh Amendment, which was included in the Bill of
Rights in 1791 and which has not since been repealed in the only
manner provided by the Constitution for repeal of its
provisions.

															The right of trial by jury in civil cases at common law is
fundamental to our history and jurisprudence. Today, however, the
Court reduces this valued right, which Blackstone praised as "the
glory of the English law," to a mere "neutral" Page 439 U. S. 339 factor and, in the name of procedural reform, denies the right
of jury trial to defendants in a vast number of cases in which
defendants heretofore have enjoyed jury trials. Over 35 years ago,
Mr. Justice Black lamented the

															"gradual process of judicial erosion which in one-hundred-fifty
years has slowly worn away a major portion of the essential
guarantee of the Seventh Amendment." Galloway v. United States, 319 U.
S. 372 , 319 U. S. 397 (1943) (dissenting opinion). Regrettably, the erosive process
continues apace with today's decision. [ Footnote 2/1 ] I The Seventh Amendment provides:

															"In Suits at common law, where the value in controversy shall
exceed twenty dollars, the right of trial by jury shall be
preserved, and no fact tried by a jury, shall be otherwise
reexamined in any Court of the United States, than according to the
rules of the common law."

															The history of the Seventh Amendment has been amply documented
by this Court and by legal scholars, [ Footnote 2/2 ] and it would serve no useful purpose to
attempt here to repeat all that has been written on the subject.
Nonetheless, the decision of this case turns on the scope and
effect of the Seventh Amendment, which, perhaps more than with any
other provision of the Constitution, are determined by reference to
the historical Page 439 U. S. 340 setting in which the Amendment was adopted. See Colgrove v.
Battin, 413 U. S. 149 , 413 U. S. 152 (1973). It therefore is appropriate to pause to review, albeit
briefly, the circumstances preceding and attending the adoption of
the Seventh Amendment as a guide in ascertaining its application to
the case at hand. A It is perhaps easy to forget, now more than 200 years removed
from the events, that the right of trial by jury was held in such
esteem by the colonists that its deprivation at the hands of the
English was one of the important grievances leading to the break
with England. See Sources and Documents Illustrating the
American Revolution 1764-1788 and the Formation of the Federal
Constitution 94 (S. Morison 2d ed.1929); R. Pound, The Development
of Constitutional Guarantees of Liberty 69-72 (1957); C. Ubbelohde,
The Vice-Admiralty Courts and the American Revolution 208-211
(1960). The extensive use of vice-admiralty courts by colonial
administrators to eliminate the colonists' right of jury trial was
listed among the specific offensive English acts denounced in the
Declaration of Independence. [ Footnote
2/3 ] And after Page 439 U. S. 341 war had broken out, all of the 13 newly formed States restored
the institution of civil jury trial to its prior prominence; 10
expressly guaranteed the right in their state constitutions, and
the 3 others recognized it by statute or by common practice.
[ Footnote 2/4 ] Indeed, "[t]he right
to trial by jury was probably the only one universally secured by
the first American state constitutions. . . ." L. Levy, Legacy of
Suppression: Freedom of Speech and Press in Early American History
281 (1960). [ Footnote 2/5 ]

															One might justly wonder, then, why no mention of the right of
jury trial in civil cases should have found its way into the
Constitution that emerged from the Philadelphia Convention in 1787.
Article III, § 2, cl. 3, merely provides that "The Trial of all
Crimes, except in Cases of Impeachment, shall be by Jury." The
omission of a clause protective of the civil jury right was not for
lack of trying, however. Messrs. Pinckney and Gerry proposed to
provide a clause securing the right of jury trial in civil cases,
but their efforts failed. [ Footnote
2/6 ] Several reasons Page 439 U. S. 342 have been advanced for this failure. The Federalists argued that
the practice of civil juries among the several States varied so
much that it was too difficult to draft constitutional language to
accommodate the different state practices. See Colgrove v.
Battin, supra, at 413 U. S. 153 .
[ Footnote 2/7 ] Whatever the reason
for the omission, however, it is clear that, even before the
delegates had left Philadelphia, plans were under way to attack the
proposed Constitution on the ground that it failed to contain a
guarantee of civil jury trial in the new federal courts. See R. Rutland, George Mason 91 (1961); Wolfram 662.

															The virtually complete absence of a bill of rights in the
proposed Constitution was the principal focus of the
Anti-Federalists' attack on the Constitution, and the lack of a
provision for civil juries featured prominently in their arguments. See Parsons v.
Bedford , 3 Pet. 433, 28 U. S. 445 (1830). Their pleas struck a responsive chord in the populace, and
the price exacted in many States for approval of the Constitution
was the appending of a list of recommended amendments, chief among
them a clause securing the right of jury trial in civil cases.
[ Footnote 2/8 ] Responding to the
pressures for a civil jury Page 439 U. S. 343 guarantee generated during the ratification debates, the first
Congress under the new Constitution at its first session in 1789
proposed to amend the Constitution by adding the following
language:

															"In suits at common law, between man and man, the trial by jury,
as one of the best securities to the rights of the people, ought to
remain inviolate."

															1 Annals of Cong. 435 (1789). That provision, altered in
language to what became the Seventh Amendment, was proposed by the
Congress in 1789 to the legislatures of the several States and
became effective with its ratification by Virginia on December 15,
1791. [ Footnote 2/9 ]

															The foregoing sketch is meant to suggest what many of those who
oppose the use of juries in civil trials seem to ignore. The
founders of our Nation considered the right of trial by jury in
civil cases an important bulwark against tyranny and corruption, a
safeguard too precious to be left to the whim of the sovereign, or,
it might be added, to that of the judiciary. [ Footnote 2/10 ] Those who passionately advocated
the right to a civil jury trial did not do so because they
considered the jury a familiar procedural device that should be
continued; the concerns for the institution of jury trial that led
to the passages of the Declaration of Independence and to the
Seventh Amendment were not animated by a belief that use of juries
would lead to more efficient judicial administration. Trial by a
jury of laymen, rather than by the sovereign's judges, Page 439 U. S. 344 was important to the founders because juries represent the
layman's common sense, the "passionate elements in our nature," and
thus keep the administration of law in accord with the wishes and
feelings of the community. O. Holmes, Collected Legal Papers 237
(1920). Those who favored juries believed that a jury would reach a
result that a judge either could not or would not reach. [ Footnote 2/11 ] It is with these values
that underlie the Seventh Amendment in mind that the Court should,
but obviously does not, approach the decision of this case. B The Seventh Amendment requires that the right of trial by jury
be "preserved." Because the Seventh Amendment demands preservation
of the jury trial right, our cases have uniformly held that the
content of the right must be judged by historical standards. E.g., Curtis v. Loether, 415 U. S. 189 , 415 U. S. 193 (1974); Colgrove v. Battin, 413 U.S. at 413 U. S.
155 -156; Ross v. Bernhard, 396 U.
S. 531 , 396 U. S. 533 (1970); Capital Traction Co. v. Hof, 174 U. S.
1 , 174 U. S. 8 -9
(1899); Parsons v. Bedford, supra at 28 U. S. 446 .
Thus, in Baltimore & Carolina Line v. Redman, 295 U. S. 654 , 295 U. S. 657 (1935), the Court stated that "[t]he right of trial by jury thus
preserved is the right which existed under the English common law
when the Amendment was adopted." Page 439 U. S. 345 And in Dimick v. Shiedt, 293 U.
S. 474 , 293 U. S. 476 (1935), the Court held:

															"In order to ascertain the scope and meaning of the Seventh
Amendment, resort must be had to the appropriate rules of the
common law established at the time of the adoption of that
constitutional provision in 1791. [ Footnote 2/12 ]"

															If a jury would have been impaneled in a particular kind of case
in 1791, then the Seventh Amendment requires a jury trial today, if
either party so desires.

															To be sure, it is the substance of the right of jury trial that
is preserved, not the incidental or collateral effects of common
law practice in 1791. Walker v. New Mexico & S. P. R.
Co., 165 U. S. 593 , 165 U. S. 596 (1897).

															"The aim of the Amendment, as this Court has held, is to
preserve the substance of the common law right of trial by jury, as
distinguished from mere matters of form or procedure, and
particularly to retain the common law distinction between the
province of the court and that of the jury. . . ." Baltimore & Carolina Line v. Redman, supra, at 295 U. S. 657 . Accord, Colgrove v. Battin, supra, at 413 U. S.
156 -157; Gasoline Products Co. v. Champlin Refining
Co., 283 U. S. 494 , 283 U. S. 498 (1931); Ex parte Peterson, 253 U.
S. 300 , 253 U. S. 309 (1920).

															"The Amendment did not bind the federal courts to the exact
procedural incidents or details of jury trial according to the
common law of 1791, any more than it tied them to the common law
system of pleading or the specific rules of evidence then
prevailing." Galloway v. United States, 319 U.S. at 319 U. S.
390 .

															To say that the Seventh Amendment does not tie federal courts to
the exact procedure of the common law in 1791 does Page 439 U. S. 346 not imply, however, that any nominally "procedural" change can
be implemented regardless of its impact on the functions of the
jury. For to sanction creation of procedural devices which limit
the province of the jury to a greater degree than permitted at
common law in 1791 is in direct contravention of the Seventh
Amendment. See Neely v. Martin K. Eby Constr. Co., 386 U. S. 317 , 386 U. S. 322 (1967); Galloway v. United States, supra at 319 U. S. 395 ; Dimick v. Schiedt, supra at 293 U. S. 487 ; Ex parte Peterson, supra at 253 U. S.
309 -310. And since we deal here not with the common law qua common law, but with the Constitution, no amount of
argument that the device provides for more efficiency or more
accuracy or is fairer will save it if the degree of invasion of the
jury's province is greater than allowed in 1791. To rule otherwise
would effectively permit judicial repeal of the Seventh Amendment,
because nearly any change in the province of the jury, no matter
how drastic the diminution of its functions, can always be
denominated "procedural reform."

															The guarantees of the Seventh Amendment will prove burdensome in
some instances; the civil jury surely was a burden to the English
governors who, in its stead, substituted the vice-admiralty court.
But, as with other provisions of the Bill of Rights, the onerous
nature of the protection is no license for contracting the rights
secured by the Amendment. Because

															"'[m]aintenance of the jury as a factfinding body is of such
importance and occupies so firm a place in our history and
jurisprudence . . . any seeming curtailment of the right to a jury
trial should be scrutinized with the utmost care.'" Dimick v. Schiedt, supra at 293 U. S. 486 ,
quoted in Beacon Theatres, Inc. v. Westover, 359 U.
S. 500 , 359 U. S. 501 (1959). C Judged by the foregoing principles, I think it is clear that
petitioners were denied their Seventh Amendment right to a Page 439 U. S. 347 jury trial in this case. Neither respondent nor the Court doubts
that, at common law as it existed in 1791, petitioners would have
been entitled in the private action to have a jury determine
whether the proxy statement was false and misleading in the
respects alleged. The reason is that, at common law in 1791,
collateral estoppel was permitted only where the parties in the
first action were identical to, or in privity with, the parties to
the subsequent action. [ Footnote
2/13 ] It was not until 1971 that the doctrine of mutuality was
abrogated by this Court in certain limited circumstances. Blonder-Tongue Laboratories, Inc. v. University of Illinois
Foundation, 402 U. S. 313 .
[ Footnote 2/14 ] But developments
in the judge-made doctrine of collateral estoppel, however
salutary, cannot, consistent with the Seventh Amendment, contract
in any material fashion the right to a jury trial that a defendant
would have enjoyed in 1791. In the instant case, resort to the
doctrine of collateral estoppel does more than merely contract the
right to a jury trial: it eliminates the right entirely, and
therefore contravenes the Seventh Amendment.

															The Court responds, however, that, at common law,

															"a litigant was not entitled to have a jury [in a subsequent
action at law between the same parties] determine issues that had
been previously adjudicated by a chancellor in equity,"

															and that

															"petitioners have advanced no persuasive reason . . . why the
meaning of the Seventh Amendment should depend on Page 439 U. S. 348 whether or not mutuality of parties is present." Ante at 439 U. S. 333 , 439 U. S. 335 .
But that is tantamount to saying that, since a party would not be
entitled to a jury trial if he brought an equitable action, there
is no persuasive reason why he should receive a jury trial on
virtually the same issues if, instead, he chooses to bring his
lawsuit in the nature of a legal action. The persuasive reason is
that the Seventh Amendment requires that a party's right to jury
trial which existed at common law be "preserved" from incursions by
the government or the judiciary. Whether this Court believes that
use of a jury trial in a particular instance is necessary, or fair,
or repetitive, is simply irrelevant. If that view is "rigid," it is
the Constitution which commands that rigidity. To hold otherwise is
to rewrite the Seventh Amendment so that a party is guaranteed a
jury trial in civil cases unless this Court thinks that a jury
trial would be inappropriate.

															No doubt parallel "procedural reforms" could be instituted in
the area of criminal jurisprudence, which would accomplish much the
same sort of expedition of court calendars and conservation of
judicial resources as would the extension of collateral estoppel in
civil litigation. Government motions for summary judgment, or for a
directed verdict in favor of the prosecution at the close of the
evidence, would presumably save countless hours of judges' and
jurors' time. It can scarcely be doubted, though, that such
"procedural reforms" would not survive constitutional scrutiny
under the jury trial guarantee of the Sixth Amendment. Just as the
principle of separation of powers was not incorporated by the
Framers into the Constitution in order to promote efficiency or
dispatch in the business of government, the right to a jury trial
was not guaranteed in order to facilitate prompt and accurate
decision of lawsuits. The essence of that right lies in its
insistence that a body of laymen not permanently attached to the
sovereign participate along with the judge in the factfinding Page 439 U. S. 349 necessitated by a lawsuit. And that essence is as much a part of
the Seventh Amendment's guarantee in civil cases as it is of the
Sixth Amendment's guarantee in criminal prosecutions. Cf. Thiel
v. Southern Pacific Co., 328 U. S. 217 , 328 U. S. 220 (1946).

															Relying on Galloway v. United States, Gasoline Products Co.
v. Champlin Refining Co., and Fidelity & Deposit Co.
v. United States, 187 U. S. 315 (1902), the Court seems to suggest that the offensive use of
collateral estoppel in this case is permissible under the limited
principle set forth above that a mere procedural change that does
not invade the province of the jury and a defendant's right thereto
to a greater extent than authorized by the common law is
permissible. But the Court's actions today constitute a far greater
infringement of the defendant's rights than it ever before has
sanctioned. In Galloway, the Court upheld the modern form
of directed verdict against a Seventh Amendment challenge, but it
is clear that a similar form of directed verdict existed at common
law in 1791. E.g., Beauchamp v. Barret, Peake 148, 170
Eng.Rep. 110 (N.P. 1792); Coupey v. Heley, 2 Esp. 540,
542, 170 Eng.Rep. 448, 449 (C. P. 1797). [ Footnote 2/15 ] The modern form did not materially alter
the function of the jury. Similarly, the modern device of summary
judgment was found not to violate the Seventh Amendment because, in
1791, a demurrer to the evidence, a procedural device substantially
similar to summary judgment, was a common practice. E.g., 8 U. S. United
States, 4 Cranch 219, 8 U. S. 221 -222 (1808). [ Footnote 2/16 ] Page 439 U. S. 350 The procedural devices of summary judgment and directed verdict
are direct descendants of their common law antecedents. They
accomplish nothing more than could have been done at common law,
albeit by a more cumbersome procedure. See also Montgomery Ward
& Co. v. Duncan, 311 U. S. 243 , 311 U. S. 250 (1940). And while at common law there apparently was no practice of
setting aside a verdict in part, [ Footnote 2/17 ] the Court in Gasoline Products permitted a partial retrial of "distinct and separable" issues
because the change in procedure would not impair the substance of
the right to jury trial. 283 U.S. at 283 U. S. 498 .
The parties in Gasoline Products still enjoyed the right
to have a jury determine all issues of fact.

															By contrast, the development of nonmutual estoppel is a
substantial departure from the common law, and its use in this case
completely deprives petitioners of their right to have a jury
determine contested issues of fact. I am simply unwilling to accept
the Court's presumption that the complete extinguishment of
petitioners' right to trial by jury can be justified as a mere
change in "procedural incident or detail." Over 40 years ago, Mr.
Justice Sutherland observed in a not dissimilar case:

															"[T]his court, in a very special sense, is charged with the duty
of construing and upholding the Constitution; and, in the discharge
of that important duty, it ever must be alert to see that a
doubtful precedent be not extended by mere analogy to a different
case if the result will be to weaken or subvert what it conceives
to be a principle of the fundamental law of the land." Dimick v. Schiedt, 293 U.S. at 293 U. S.
485 . Page 439 U. S. 351 II Even accepting, arguendo, the majority's position that
there is no violation of the Seventh Amendment here, I nonetheless
would not sanction the use of collateral estoppel in this case. The
Court today holds:

															"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." Ante at 439 U. S. 331 .
In my view, it is "unfair" to apply offensive collateral estoppel
where the party who is sought to be estopped has not had an
opportunity to have the facts of his case determined by a jury.
Since, in this case, petitioners were not entitled to a jury trial
in the Securities and Exchange Commission (SEC) lawsuit, [ Footnote 2/18 ] I would not estop them
from relitigating the issues determined in the SEC suit before a
jury in the private action. I believe that several factors militate
in favor of this result.

															First, the use of offensive collateral estoppel in this case
runs counter to the strong federal policy favoring jury trials,
even if it does not, as the majority holds, violate the Seventh
Amendment. The Court's decision in Beacon Theatres, Inc. v.
Westover, 359 U. S. 500 (1969), exemplifies that policy. In Beacon Theatres, the
Court held that, where both equitable and legal claims or defenses
are presented in a single case,

															"only under the most imperative circumstances, circumstances
which, in view of the flexible procedures of the Federal Rules, we
cannot now anticipate, can the right to a jury trial of legal
issues be lost through prior determination of equitable claims.
" Page 439 U. S. 352 Id. at 359 U. S.
510 -511. [ Footnote
2/19 ] And in Jacob v. New York, 315 U.
S. 752 , 315 U. S. 752 -753
(1942), the Court stated:

															"The right of jury trial in civil cases at common law is a basic
and fundamental feature of our system of federal jurisprudence
which is protected by the Seventh Amendment. A right so fundamental
and sacred to the citizen, whether guaranteed by the Constitution
or provided by statute, should be jealously guarded by the
courts." Accord, Simler v. Conner, 372 U.
S. 221 , 372 U. S. 222 (1963); Byrd v. Blue Ridge Rural Electric Cooperative,
Inc., 356 U. S. 525 , 356 U. S.
537 -539 (1958) (strong federal policy in favor of juries
requires jury trials in diversity cases, regardless of state
practice). Today's decision will mean that, in a large number of
private cases, defendants will no longer enjoy the right to jury
trial. [ Footnote 2/20 ] Neither
the Court nor respondent has adverted or cited to any unmanageable
problems that have resulted Page 439 U. S. 353 from according defendants jury trials in such cases. I simply
see no "imperative circumstances" requiring this wholesale
abrogation of jury trials. [ Footnote
2/21 ]

															Second, I believe that the opportunity for a jury trial in the
second action could easily lead to a different result from that
obtained in the first action before the court, and therefore that
it is unfair to estop petitioners from relitigating the issues
before a jury. This is the position adopted in the Restatement
(Second) of Judgments, which disapproves of the application of
offensive collateral estoppel where the defendant has an
opportunity for a jury trial in the second lawsuit that was not
available in the first action. [ Footnote 2/22 ] The Court accepts the proposition that
it is unfair to apply offensive collateral estoppel "where the
second action affords the defendant procedural opportunities
unavailable in the first action that could readily cause a
different result." Ante at 439 U. S. 331 .
Differences in discovery opportunities between the two actions are
cited as examples of situations where it would be unfair to permit
offensive collateral estoppel. Ante at 439 U. S. 331 n. 15. But, in the Court's view, the fact that petitioners would
have been entitled to a jury trial in the present action is not
such a "procedural opportunit[y]," because

															"the presence or absence of a jury as factfinder is basically neutral, quite unlike, for example, the Page 439 U. S. 354 necessity of defending the first lawsuit in an inconvenient
forum." Ante at 439 U. S. 332 n. 19 (emphasis added).

															As is evident from the prior brief discussion of the development
of the civil jury trial guarantee in this country, those who
drafted the Declaration of Independence and debated so passionately
the proposed Constitution during the ratification period, would
indeed be astounded to learn that the presence or absence of a jury
is merely "neutral," whereas the availability of discovery, a
device unmentioned in the Constitution, may be controlling. It is
precisely because the Framers believed that they might receive a
different result at the hands of a jury of their peers than at the
mercy of the sovereign's judges, that the Seventh Amendment was
adopted. And I suspect that anyone who litigates cases before
juries in the 1970's would be equally amazed to hear of the
supposed lack of distinction between trial by court and trial by
jury. The Court can cite no authority in support of this curious
proposition. The merits of civil juries have been long debated, but
I suspect that juries have never been accused of being merely
"neutral" factors. [ Footnote
2/23 ]

															Contrary to the majority's supposition, juries can make a
difference, and our cases have, before today at least, recognized
this obvious fact. Thus, in Colgrove v. Battin, 413 U.S.
at 413 U. S. 157 ,
we stated that

															"the purpose of the jury trial in . . . civil cases [is] to
assure a fair and equitable resolution of factual issues, Gasoline Products Co. v. Champlin Co., 283 U. S.
494 , 283 U. S. 498 (1931). . .
."

															And in Byrd v. Blue Ridge Page 439 U. S. 355 Rural Electrical Cooperative, supra at 356 U. S. 537 ,
the Court conceded that

															"the nature of the tribunal which tries issues may be important
in the enforcement of the parcel of rights making up a cause of
action or defense. . . . It may well be that, in the instant
personal injury case, the outcome would be substantially affected
by whether the issue of immunity is decided by a judge or a
jury." See Curtis v. Loether, 415 U.S. at 415 U. S. 198 ; cf. Duncan v. Louisiana, 391 U. S. 145 , 391 U. S. 156 (1968). Jurors bring to a case their common sense and community
values; their "very inexperience is an asset, because it secures a
fresh perception of each trial, avoiding the stereotypes said to
infect the judicial eye." H. Kalven & H. Zeisel, The American
Jury 8 (1966).

															The ultimate irony of today's decision is that its potential for
significantly conserving the resources of either the litigants or
the judiciary is doubtful, at best. That being the case, I see
absolutely no reason to frustrate so cavalierly the important
federal policy favoring jury decisions of disputed fact questions.
The instant case is an apt example of the minimal savings that will
be accomplished by the Court's decision. As the Court admits, even
if petitioners are collaterally estopped from relitigating whether
the proxy was materially false and misleading, they are still
entitled to have a jury determine whether respondent was injured by
the alleged misstatements and the amount of damages, if any,
sustained by respondent. Ante at 439 U. S. 325 n. 2. Thus, a jury must be impaneled in this case in any event. The
time saved by not trying the issue of whether the proxy was
materially false and misleading before the jury is likely to be
insubstantial. [ Footnote 2/24 ] It
is just as probable that today's decision will have the result of
coercing defendants to agree to consent orders or settlements Page 439 U. S. 356 in agency enforcement actions in order to preserve their right
to jury trial in the private actions. In that event, the Court, for
no compelling reason, will have simply added a powerful club to the
administrative agencies' arsenals that even Congress was unwilling
to provide them.

															[ Footnote 2/1 ]

															Because I believe that the use of offensive collateral estoppel
in this particular case was improper, it is not necessary for me to
decide whether I would approve its use in circumstances where the
defendant's right to a jury trial was not impaired.

															[ Footnote 2/2 ] See, e.g., Colgrove v. Battin, 413 U.
S. 149 (1973); Capital Traction Co. v. Hof, 174 U. S. 1 (1899); Parsons v.
Bedford , 3 Pet. 433 (1830); Henderson, The
Background of the Seventh Amendment, 80 Harv.L.Rev. 289 (1966)
(hereinafter Henderson); Wolfram, The Constitutional History of the
Seventh Amendment, 57 Minn.L.Rev. 639 (1973) (hereinafter Wolfram). See also United States v. Wonson, 28 F. Cas. 745 (No.
16,750) (CC Mass. 1812) (Story, C.J.).

															[ Footnote 2/3 ]

															The Declaration of Independence states: "For depriving us in
many cases, of the benefits of Trial by Jury." Just two years
earlier, in the Declaration of Rights adopted October 14, 1774, the
first Continental Congress had unanimously resolved that

															"the respective colonies are entitled to the common law of
England, and more especially to the great and inestimable privilege
of being tried by their peers of the vicinage, according to the
course of that law."

															1 Journals of the Continental Congress 69 (1904).

															Holdsworth has written that, of all the new methods adopted to
strengthen the administration of the British laws,

															"the most effective, and therefore the most disliked, was the
extension given to the jurisdiction of the reorganized courts of
admiralty and vice-admiralty. It was the most effective because it
deprived the defendant of the right to be tried by a jury which was
almost certain to acquit him."

															11 W. Holdsworth, A History of English Law 110 (1966). While the
vice-admiralty courts dealt chiefly with criminal offenses, their
jurisdiction also was extended to many areas of the civil law.
Wolfram 654 n. 47.

															[ Footnote 2/4 ]

															Ga.Const., Art. LXI (1777), in 2 The Federal and State
Constitutions Colonial Charters, and Other Organic Laws 785 (F.
Thorpe ed.1909) (hereinafter Thorpe); Md.Const., Art. III (1776),
in 3 Thorpe 1686-1687; Mass.Const., Art. XV (1780), in 3 Thorpe
1891-1892; N.H.Const., Art. XX (1784), in 4 Thorpe 2456;
N.J.Const., Art. XXII (1776), in 5 Thorpe 2598; N.Y.Const., Art.
XLI (1777), in 5 Thorpe 2637; N.C.Const., Declaration of Rights,
Art. XIV (1776), in 5 Thorpe 2788; Pa.Const., Declaration of
Rights, Art. XI (1776), in 5 Thorpe 3083; S.C.Const., Art. XLI
(1778), in 6 Thorpe 3257; Va.Const., Bill of Rights, § 11 (1776),
in 7 Thorpe 3814. See Wolfram 655.

															[ Footnote 2/5 ]

															When Congress, in 1787, adopted the Northwest Ordinance for
governance of the territories west of the Appalachians, it included
a guarantee of trial by jury in civil cases. 2 Thorpe 960-961.

															[ Footnote 2/6 ]

															The proposal was to add the following language to Art. III: "And
a trial by jury shall be preserved as usual in civil cases." 2 M.
Farrand, The Records of the Federal Convention of 1787, p. 628
(1911). The debate regarding this proposal is quoted in Colgrove v. Battin, supra at 413 U. S.
153 -155, n. 8.

															[ Footnote 2/7 ]

															The objection of Mr. Gorham of Massachusetts was that "[t]he
constitution of Juries is different in different States, and the
trial itself is usual in different cases in different States." 2 M.
Farrand, supra at 628. Commentators have suggested several
additional reasons for the failure of the convention to include a
civil jury guarantee. See Henderson 294-295; ("[T]he true
reason for omitting a similar provision for civil juries was, at
least in part, that the convention members simply wanted to go
home"); Wolfram 660-666.

															[ Footnote 2/8 ] See Henderson 298; Wolfram 667-703. Virginia's
recommended jury trial amendment is typical:

															"That, in controversies respecting property, and in suits
between man and man, the ancient trial by jury is one of the
greatest securities to the rights of the people, and [ought] to
remain sacred and inviolable."

															3 J. Elliot, Debates on the Federal Constitution 658 (2d ed.
1836).

															[ Footnote 2/9 ]

															The Judiciary Act of September 24, 1789, which was passed within
six months of the organization of the new government and on the day
before the first 10 Amendments were proposed to the legislatures of
the States by the First Congress, provided for a civil jury trial
right. 1 Stat. 77.

															[ Footnote 2/10 ]

															Thomas Jefferson stated: "I consider [trial by jury] as the only
anchor yet imagined by man by which a government can be held to the
principles of its constitution." 3 The Writings of Thomas Jefferson
71 (Washington ed. 1861).

															[ Footnote 2/11 ]

															Wolfram 671. Professor Wolfram has written:

															"[T]he anti-federalists were not arguing for the institution of
civil jury trial in the belief that jury trials were short,
inexpensive, decorous and productive of the same decisions that
judges sitting without juries would produce. The inconveniences of
jury trial were accepted precisely because, in important instances,
through its ability to disregard substantive rules of law, the jury
would reach a result that the judge either could not or would not
reach. Those who favored the civil jury were not misguided
tinkerers with procedural devices; they were, for the day,
libertarians who avowed that important areas of protection for
litigants in general, and for debtors in particular, would be
placed in grave danger unless it were required that juries sit in
civil cases." Id. at 671-672.

															[ Footnote 2/12 ]

															The majority suggests that Dimick v. Schiedt is not
relevant to the decision in this case because it dealt with the
second clause of the Seventh Amendment. Ante at 439 U. S. 336 n. 23. I disagree. There is no intimation in that opinion that the
first clause should be treated any differently from the second. The Dimick Court's respect for the guarantees of the Seventh
Amendment applies as much to the first clause as to the second.

															[ Footnote 2/13 ] See Smith v.
Kernochen , 7 How.198, 48 U. S. 218 (1849); Hopkins v.
Lee , 6 Wheat. 109, 19 U. S.
113 -114 (1821); F. Buller, An Introduction to the Law
Relative to Trials at Nisi Prius *232 (7th ed. 1817); T. Peake, A
Compendium of the Law of Evidence 38 (2d ed. 1806).

															[ Footnote 2/14 ]

															The Court's decision in Blonder-Tongue Laboratories, Inc. v.
University of Illinois Foundation is, on its facts, limited to
the defensive use of collateral estoppel in patent cases.
Abandonment of mutuality is a recent development. The case of Bernhard v. Bank of America Nat. Trust & Sav.
Assn., 19 Cal. 2d
807 , 122 P.2d 892, generally considered the seminal case
adopting the new approach, was not decided until 1942.

															[ Footnote 2/15 ] See Henderson 302-303 ("In the England of 1790, the
phrase to direct a verdict' was common. Further, it was
commonplace to instruct the jury `that the plaintiff was entitled
to recover,' or `the plaintiff must have a verdict'"); Scott, Trial
by Jury and the Reform of Civil Procedure, 31 Harv.L.Rev. 669, 686
(1918) (cases cited therein). [ Footnote 2/16 ]

															To demur, a party would admit the truth of all the facts adduced
against him and every adverse inference that could be drawn
therefrom, and the court would determine which party should receive
judgment on the basis of these admitted facts and inferences. See Slocum v. New York Life Ins. Co., 228 U.
S. 364 , 228 U. S. 388 (1913); Gibson v. Hunter, 2 H.Bl. 187, 126 Eng.Rep. 499
(N.P. 1793); Henderson 3305; Scott, supra, 439
U.S. 322 fn2/15|>n. 15, at 683-684.

															[ Footnote 2/17 ]

															The Court in Gasoline Products quoted Lord Mansfield,
who stated that, when a verdict is correct as to one issue but
erroneous as to another " for form's sake, we must set aside the
whole verdict. . . .'" Edie v. East India Co., 1 W. Bl.
295, 298 (K.B. 1761), quoted 283 U.S. at 283 U. S.
498 . [ Footnote 2/18 ]

															I agree with the Court that "petitioners did not have a right to
a jury trial in the equitable injunctive action brought by the
SEC." Ante at 439 U. S. 338 n. 24.

															[ Footnote 2/19 ] Meeker v. Ambassador Oil Corp., 375 U.
S. 160 (1963) (per curiam), is a case where the doctrine
of collateral estoppel yielded to the right to a jury trial. In Meeker, plaintiffs asserted both equitable and legal
claims, which presented common issues, and demanded a jury trial.
The trial court tried the equitable claim first, and decided that
claim, and the common issues, adversely to plaintiffs. As a result,
it held that plaintiffs were precluded from relitigating those same
issues before a jury on their legal claim. 308 F.2d 875, 884 (CA10
1962). Plaintiffs appealed, alleging a denial of their right to a
jury trial, but the Tenth Circuit affirmed the trial court. This
Court reversed the Court of Appeals on the basis of Beacon
Theatres, Inc. v. Westover, 359 U. S. 500 (1959), and Dairy Queen, Inc. v. Wood, 369 U.
S. 469 (1962), even though, unlike those cases, the
equitable action in Meeker already had been tried and the
common issues determined by the court. Thus, even though the
plaintiffs in Meeker had received a "full and fair"
opportunity to try the common issues in the prior equitable action,
they nonetheless were given the opportunity to retry those issues
before a jury. Today's decision is totally inconsistent with Meeker, and the Court fails to explain this
inconsistency.

															[ Footnote 2/20 ]

															The Court's decision today may well extend to other areas, such
as antitrust, labor, employment discrimination, consumer
protection, and the like, where a private plaintiff may sue for
damages based on the same or similar violations that are the
subject of government actions.

															[ Footnote 2/21 ]

															This is not to say that Congress cannot commit enforcement of
statutorily created rights to an "administrative process or
specialized court of equity." Curtis v. Loether, 415 U. S. 189 , 415 U. S. 195 (1974); see Atlas Roofing Co., Inc. v. Occupational Safety
& Health Review Comm'n, 430 U. S. 442 (1977); Katchen v. Landy, 382 U.
S. 323 (1966); NLRB v. Jones & Laughlin Steel
Corp., 301 U. S. 1 (1937).

															[ Footnote 2/22 ]

															Restatement (Second) of Judgments § 88(2), Comment d (Tent. Draft No. 2, Apr. 15, 1975). Citing Rachal v. Hill, 435 F.2d 59 (CA5 1970), cert. denied, 403 U.S. 904 (1971),
the Reporter's Note states:

															"The differences between the procedures available in the first
and second actions, while not sufficient to deny issue preclusion
between the same parties, may warrant a refusal to carry over
preclusion to an action involving another party."

															Restatement, supra at 100.

															[ Footnote 2/23 ] See, e.g., Hearings on Recording of Jury Deliberations
before the Subcommittee to Investigate the Administration of the
Internal Security Act and Other Internal Security Laws of the
Senate Committee on the Judiciary, 84th Cong., 1st Sess., 63-81
(1955) (thorough summary of arguments pro and con on jury trials
and an extensive bibliography); H. Kalven & H. Zeisel, The
American Jury 4 n. 2 (1966) (bibliography); Redish, Seventh
Amendment Right to Jury Trial: A Study in the Irrationality of
Rational Decision Making, 70 Nw.U.L.Rev. 486, 502-508 (1975)
(discussion of arguments for and against juries).

															[ Footnote 2/24 ]

															Much of the delay in jury trials is attributed to the jury
selection, voir dire, and the charge. See H.
Zeisel, H. Kalven, & B. Buchholz, Delay in the Court 79 (1959).
None of these delaying factors will be avoided by today's
decision.

Summary:
In Parklane Hosiery Co., Inc. v. Shore, the Supreme Court considered the application of collateral estoppel, a legal principle that prevents relitigation of issues that have already been decided in a previous court case. The case specifically addressed the "offensive" use of collateral estoppel, where a plaintiff seeks to prevent a defendant from litigating an issue they previously lost against another party.

The Court held that while mutuality (requiring both parties to be bound by the same judgment) is no longer required for collateral estoppel, offensive use of collateral estoppel should be applied cautiously by trial judges. In cases where a plaintiff could have easily joined the previous action or where its use would be unfair to the defendant, offensive collateral estoppel should not be allowed.

In this case, the Court found that the defendants had a full and fair opportunity to litigate their claims in the previous SEC action and were collaterally estopped from relitigating the issue of whether their proxy statement was materially false and misleading. However, Justice Rehnquist, in his dissent, argued that the decision was inconsistent with previous case law and raised concerns about the potential extension of this ruling to other areas of law, such as antitrust and labor disputes.