Third Circuit Examines Split Regarding Preclusive Effect Of Alternative Findings

The doctrine of collateral estoppel holds that a ruling on a particular issue has preclusive effect and may not be re-litigated in a later proceeding where the identical issue was actually adjudicated, there was a full and fair opportunity to litigate the issue, and the determination by the adjudicator was necessary to the decision in the case. However, courts are split over whether this doctrine applies to a ruling based on alternative findings because of the difficulty in concluding that any one alternative finding was any more “necessary to the decision” than the others.

In Jean Alexander Cosmetics, Inc. v. L’Oreal USA, Inc., No. 05-4321, 2006 WL 2337267 (3d Cir. Aug. 14, 2006), the Third Circuit observed that the First Restatement of Judgments adopted the view that any alternative findings should be given equally preclusive effect, but 40 years later the Second Restatement reached the opposite conclusion, refusing to give preclusive effect to alternative findings that were each independently sufficient to support the judgment. The federal courts of appeal have split behind those two positions, with the majority following the First Restatement.

The Third Circuit rejected the Second Restatement position and sided with the Second, Seventh, Ninth and Eleventh Circuits.