- 18 -
Collateral estoppel does not apply against respondent in
this case. Collateral estoppel may be invoked against parties
and their privies to the prior judgment, but respondent was not a
party to the arbitration or a privy of Mr. Dunne, Mr. Marcus, or
FRC. While petitioners correctly point out that the Supreme
Court held in Parklane Hosiery Co. v. Shore, supra at 332-333,
that collateral estoppel can apply where a party to the second
proceeding was not a party to the first proceeding, they
misunderstand the scope of that rule. The U.S. Supreme Court
approved the use of collateral estoppel, whether mutual or
nonmutual, in cases where the party against whom collateral
estoppel is asserted has litigated and lost in the prior
proceeding. Id. at 329. Therefore, even assuming respondent
could have asserted that collateral estoppel applied against
petitioners in this case if all of the other conditions had been
satisfied, the reverse is not true.
Furthermore, neither the tax consequences of the settlement
agreement nor Mr. Dunne’s shareholder status were issues in the
arbitration. The arbitration merely dealt with the terms of the
settlement agreement, and the settlement agreement contained no
terms relating to the settlement agreement’s tax consequences
except that it provided that Mr. Dunne would have no shareholder
rights after the settlement date. Because petitioners are
arguing that Mr. Dunne ceased to be a shareholder of FRC for
Page: Previous 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
Last modified: March 27, 2008