Lucky Brand Dungarees, Inc. V. Marcel Fashions Group, Inc.

Whether, when a plaintiff asserts new claims, federal preclusion principles can bar a defendant from raising defenses that were not actually litigated and resolved in any prior case between the parties.

Petitioners and Respondents have been in serial litigation for almost two decades relating to claims of trademark infringement.  In this matter, Respondents sued Petitioners for violating an injunction from a prior litigated claim.  The district court dismissed, concluding Respondents had released their claims through a prior litigated settlement agreement that resolved substantially comparable issues. Respondents appealed, arguing the injunction referred only to infringement that occurred before the settlement. Petitioners contend the release is broader, to include future claims for any trademark registered prior to the agreement.  The Second Circuit vacated and remanded, concluding that res judicata bars Petitioners under the defense preclusion principle from raising a defense of release in the instant claim. Petitioner points out that the Supreme Court, along with the Federal, Eleventh, and Ninth Circuits, has consistently held that where a prior case between the same parties involves different claims from those already fully litigated and adjudicated, the defendant may raise defenses not previously litigated, reasoning that claim preclusion does not bar such defenses if the second claim arose from different transactions and occurrences then those previously litigated. Further, issue preclusion does not bar claims never litigated. Petitioner argues that the decision below is “inconsistent with the federal rules of civil procedure” and “fundamentally unfair to defendants.” Petitioner asserts that the circuit split should be resolved.