Gurumurthy Kalyanaram Reports on Collateral Estoppel And Materiality of The Finding

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In many lawsuits, the plaintiffs have to contend with and the Courts have to

decide on Collateral Estoppel. Many substantive lawsuits are quite often dismissed

on Collateral Estoppel and/or Res Judicata. One of the elements of Collateral

Estoppel is materiality of the finding in the lower court/proceeding. Gurumurthy

Kalyanaram discusses and reports how materiality is one of the necessary

conditions for collateral estoppel.

A long line of decisions (after many lawsuits) by the U.S. Supreme Court,

U.S. Court of Appeals (Second Circuit), and New York Court of Appeals, have

held that, where a decision-maker makes a finding, the finding is not collateral

estoppel in a subsequent proceeding unless the finding was material and decisive to

the decision, even if it was raised and litigated, particularly where the decision-

maker himself explicitly states that the issue was “immaterial” to his decision, and

that if there is any uncertainty at all, collateral estoppel shall not apply.

U.S. Supreme Court Decisions

Partmar Corp. v. Paramount Pictures Theatres Corp., 347 U.S. 89, 100

(1954) (“if this finding were not material to the principal action, the doctrine of

collateral estoppel would not apply”).

U.S. Court of Appeals (Second Circuit) Decisions

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Proctor, supra, at 414 (“necessary”); Kotler, supraat *5 (“material in the first

action”); McGuinn, supra, at *2 (“necessarily decided and material”); Beechwood

Restorative Care Ctr. v. Leeds, 436 F.3d 147, 152-153 (2d Cir. 2006) (“necessarily

decided and decisive”); BBS Norwalk, supra, at 677 (“decisive”); Louis Ender,

Inc. v. General Foods Corp., 467 F.2d 327, 330 (2d Cir. 1972) (court’s finding as

to fraud not collateral estoppel because was“not material to its decision”), cert.

denied, 410 U.S. 930 (1973); Smith v. Mosier, 169 F. 430, 446 (2d Cir. 1909) (no

preclusion if it was “immaterial or unessential to the determination of the real issue

in the prior action, even if put in issue, tried. and decided”).

New York Court of Appeals Decisions

Silberstein v. Silberstein, 218 N.Y. 525, 528 (1916) (“judgment does not

work an estoppel as to unessential facts, even though put in issue by the pleadings

and directly decided”); Stokes v. Stokes, 172 N.Y. 327, 341 (1902) (“It is well

settled . . . although a decree in express terms purports to affirm a particular fact, or

rule of law, yet if such fact or rule of law was immaterial to the issue, and the

controversy did not turn upon it, the decree will not conclude the parties thereto”);

House v. Lockwood, 137 N.Y. 259, 268 (1893) (“A judgment does not operate as

an estoppel in a subsequent action between the parties as to immaterial or

unessential facts, even though put in issue by the pleadings and directly decided”);

Liddle, Robinson & Shoemaker v. Shoemaker, 768 N.Y.S.2d 183, 187 (1st Dept.

2003) (no collateral estoppel where court said it was not material to its

determination); White v. Frize, 827 N.Y.S.2d 302, 304 (3d Dep’t 2006) (same).

Burden of proof in these lawsuits generally rests with the party that is

moving for Collateral Estoppel consideration.

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