439 U.S. 322 (1979)
Parklane Hosiery Company, Inc., and eleven of its officers and directors issued a proxy statement in connection with a merger between Parklane and another corporation.1 Leo Shore, a stockholder of Parklane, filed a class action on behalf of stockholders in the United States District Court for the Eastern District of New York against Parklane and the individual defendants.2 The complaint alleged that the proxy statement was false and misleading in violation of sections 14(a), 10(b), and 20(a) of the Securities Exchange Act of 1934 and related SEC rules.3 The complaint sought damages for the class, rescission of the merger, and recovery of costs.4
Before Shore’s action came to trial, the Securities and Exchange Commission filed a separate suit against the same defendants in the United States District Court for the Southern District of New York.5 The SEC complaint alleged 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. After a four-day 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.6 The court permanently enjoined the defendants from further violations of the securities laws and ordered them to offer rescission to shareholders who had tendered shares.7 The defendants did not appeal this judgment.8
Shore then moved for partial summary judgment in the Eastern District of New York action, asserting that the defendants were collaterally estopped from relitigating the issues resolved against them in the SEC action.9 The District Court denied the motion on the ground that application of collateral estoppel would deny the defendants their Seventh Amendment right to a jury trial.10 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.11 Because of an intercircuit conflict with the Fifth Circuit’s decision in Rachal v. Hill, the Supreme Court granted certiorari.12
Whether a party who has had issues of fact determined against him after an equitable action brought by the Government may be collaterally estopped from relitigating the same issues in a subsequent action for damages brought by a private plaintiff?13
Collateral estoppel, like the related doctrine of res judicata, 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.14 The mutuality requirement has been abandoned, permitting nonmutual use when the party against whom estoppel is asserted had a full and fair opportunity to litigate the issue in the prior action.15
Yes. Leo Shore filed a stockholder's class action in the United States District Court for the Eastern District of New York against Parklane Hosiery Company, Inc., and eleven of its officers and directors alleging that they had issued a false and misleading proxy statement in connection with a merger.16 Before Shore's action came to trial, the Securities and Exchange Commission filed a separate suit against the same defendants in the Southern District of New York alleging that the proxy statement was materially false and misleading in essentially the same respects.17 After a four-day trial the District Court found the proxy statement materially false and misleading, entered a declaratory judgment, and granted injunctive relief; the defendants did not appeal.18
Shore then moved for partial summary judgment asserting collateral estoppel.19 The issues presented in both actions are identical, the SEC judgment was final on the merits, and the petitioners were parties to the prior adjudication.20
A party who has had issues of fact determined against him after an equitable action brought by the Government may be collaterally estopped from relitigating the same issues in a subsequent action for damages brought by a private plaintiff.21
Whether the doctrine of collateral estoppel can be applied offensively subject to the trial court’s broad discretion?22
The preferable approach for dealing with the problems of offensive use of collateral estoppel is not to preclude it entirely, but to allow it where the application of the doctrine will not result in unfairness to the defendant, granting trial courts broad discretion to determine when it should be applied.23
Yes. The Restatement (Second) of Judgments supports permitting offensive collateral estoppel subject to the trial court's discretion after considering factors such as whether the party asserting estoppel could have joined the prior action, whether the prior action was litigated with full vigor, and whether the prior judgment is inconsistent with any other judgment.24 In this case the respondent filed his action before the SEC brought suit, the petitioners had every incentive to litigate the SEC action fully and vigorously, and the judgment was not inconsistent with any previous decision.25
The doctrine of collateral estoppel can be applied offensively subject to the trial court’s broad discretion.26
Whether there will be unfairness in applying offensive collateral estoppel against the petitioners in this case?27
Offensive collateral estoppel may be unfair to a defendant if the defendant had little incentive to defend vigorously in the first action, if the judgment relied upon is inconsistent with previous judgments, or if the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result.28
No. The petitioners had every incentive to litigate the SEC lawsuit fully and vigorously because the action was brought by the SEC which has formidable resources, the petitioners were represented by able counsel, the action involved a four-day trial, and subsequent private suits were foreseeable.29 The judgment in the SEC action was not inconsistent with any decision in a previous action, and there are no procedural opportunities available to the petitioners in the present action that were unavailable in the SEC action of a kind likely to cause a different result.30
There will be no unfairness in applying offensive collateral estoppel against the petitioners in this case.31
Whether the petitioners received a full and fair opportunity to litigate their claims in the SEC action?32
A party may be estopped from relitigating an issue only if that party had a full and fair opportunity to litigate the issue in the prior action; the requirement of a full and fair opportunity is a most significant safeguard.33
Yes. The petitioners were represented by able counsel and had every opportunity to present their case during the four-day trial in the SEC action.34 They had every reason to defend the action vigorously because of the serious allegations and the foreseeability of subsequent private suits.35 The petitioners did not appeal the adverse judgment, confirming that they received a full and fair opportunity.36
The petitioners received a full and fair opportunity to litigate their claims in the SEC action.37
Whether the use of offensive collateral estoppel in this case violates the petitioners' Seventh Amendment right to a jury trial?38
The Seventh Amendment preserves the right to jury trial as it existed in 1791, yet an equitable determination can have collateral-estoppel effect in a subsequent legal action without violating the Amendment because the law of collateral estoppel has evolved since 1791 and these developments are not repugnant to the Amendment when the party against whom estoppel is asserted had a full and fair opportunity to litigate.39
No. Although at common law mutuality of parties was required for collateral estoppel, the evolution of the doctrine does not violate the Seventh Amendment because the petitioners had a full and fair opportunity to litigate the issues in the prior equitable proceeding and there is no further factfinding function for the jury to perform.40 The presence or absence of a jury as factfinder is basically neutral and does not alter the result when the common factual issues have already been resolved.41
The use of offensive collateral estoppel in this case does not violate the petitioners' Seventh Amendment right to a jury trial.42
Related opinions on this issue
Joined by The Chief Justice
Justice Rehnquist dissented. He argued that the right of trial by jury in civil cases at common law is fundamental to our history and jurisprudence and was held in such esteem by the colonists that its deprivation was one of the grievances leading to the break with England.43 At common law 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, and the development of nonmutual estoppel cannot contract in any material fashion the right to a jury trial that a defendant would have enjoyed in 1791.44
The use of offensive collateral estoppel here completely deprives petitioners of their right to have a jury determine contested issues of fact, which is a substantial departure from the common law.45 Even accepting that there is no constitutional violation, it is unfair to apply offensive collateral estoppel where the party was not entitled to a jury trial in the first action because juries bring common sense and community values that can lead to a different result, and the strong federal policy favoring jury trials should prevail absent imperative circumstances.46