Case No. 18-1086 | 2d Cir.
Preview by Michael Fischer, Online Editor
Lucky Brand Dungarees and Marcel Fashion group are two competitors within the apparel industry who each own various trademarks using the term “Lucky.” In 2001, Marcel sued Lucky Brand alleging that it violated its “Get Lucky” trademark and the two parties eventually settled their dispute with the understanding that Lucky Brand would no longer use the “Get Lucky” mark while Marcel agreed to release certain claims against Lucky Brand. Litigation between the parties arose again in 2005 and Lucky Brand filed a motion to dismiss, arguing that the release from the 2001 settlement agreement covered Marcel’s claims against Lucky Brand. The court denied the motion as premature, the case eventually went to trial, and the jury found in favor of Marcel, which resulted in an injunction against future use of the “Get Lucky” mark. Lucky Brand did not appeal the decision.
Marcel again filed suit in 2011 alleging that Lucky Brand’s ongoing use of certain trademarks violated the 2005 injunction. Following a reversal by the Second Circuit of the district court’s grant of summary judgement against Marcel, Lucky Brand moved to dismiss Marcel’s amended complaint by arguing again that their claims were barred by the 2001 release. In ruling in favor of Lucky Brand, the district court rejected Marcel’s argument that res judicata principles precluded Lucky Brand from offering the release defense. On appeal, the Second Circuit reversed, finding that res judicata principles apply to defenses and that since Lucky Brand could have adjudicated the release claim during the 2005 litigation, it was precluded from raising the release defense again. Lucky Brand appealed to the Supreme Court, which granted certiorari on June 28, 2019. The issue before the Court is whether federal preclusion principles can prohibit a defendant, who is facing a new claim, from raising defenses that were not actually litigated and resolved in any prior case between the parties.
Petitioner asserts that because the new suit involves different conduct, a different theory of liability, and a different period of time, the claims in the current action are not the same as the claims in the 2005 action. Reply Brief at 4, Lucky Brand Dungarees, Inc. v. Marcel Fashion Grp., Inc., No. 18-1086 (U.S. filed Dec. 12, 2019). Furthermore, Petitioner argues that Marcel may not argue otherwise because judicial estoppel precludes a party from relying on an argument in one phase of litigation that contradicts a previous argument on which they prevailed in a previous phase. Id. at 9. Additionally, Petitioner contends that the Court has previously held that res judicata does not bar a claim that could have been litigated and decided in previous cases because only issue preclusion applies in cases concerning a different cause of action, and issues are only precluded when the same matter actually at issue was already resolved in the previous case. Id. at 12–16 (citing Davis v. Brown, 94 U.S. 423 (1877)).
Respondent counters that res judicata principles bar defendants who lose in a lawsuit from raising in a subsequent lawsuit involving the same cause of action a defense that was available in the first suit. Brief for Respondent at 20–21, Lucky Brand, No. 18-1086 (U.S. filed Nov. 12, 2019). Respondent reasons that the prevention of repetitive litigation and finality interests underlying res judicata principles counsel against allowing defendants to raise the same defenses in subsequent litigation. Id. at 22. To that end, Respondent argues, many state and federal courts have recognized that res judicata principles apply to relitigation of all arguments offered to support or defeat a claim in prior litigation. Id. at 25–26. Respondent therefore argues that Davis does not apply because res judicata has evolved over time and that the Second Circuit correctly applied defense preclusion given that the two cases concern a common nucleus of operative facts and because its application was manifestly fair. Id. at 37–38, 42, 47–48.