NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print
goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 18–1086
_________________
LUCKY BRAND DUNGAREES, INC., et al.,
PETITIONERS
v. MARCEL FASHIONS GROUP, INC.
on writ of certiorari to the united states
court of appeals for the second circuit
[May 14, 2020]
Justice Sotomayor delivered the opinion of the
Court.
This case arises from protracted litigation
between petitioners Lucky Brand Dungarees, Inc., and others
(collectively Lucky Brand) and respondent Marcel Fashions Group,
Inc. (Marcel). In the latest lawsuit between the two, Lucky Brand
asserted a defense against Marcel that it had not pressed fully in
a preceding suit between the parties. This Court is asked to
determine whether Lucky Brand’s failure to litigate the defense in
the earlier suit barred Lucky Brand from invoking it in the later
suit. Because the parties agree that, at a minimum, the preclusion
of such a defense in this context requires that the two suits share
the same claim to relief—and because we find that the two suits
here did not—Lucky Brand was not barred from raising its defense in
the later action.
I
Marcel and Lucky Brand both sell jeans and
other apparel. Both entities also use the word “Lucky” as part of
their marks on clothing. In 1986, Marcel received a federal
trademark registration for “Get Lucky”; a few years later, in 1990,
Lucky Brand began selling apparel using the registered trademark
“Lucky Brand” and other marks that include the word “Lucky.” 779
F.3d 102, 105 (CA2 2015).
Three categories of marks are at issue in this
case: Marcel’s “Get Lucky” mark; Lucky Brand’s “Lucky Brand” mark;
and various other marks owned by Lucky Brand that contain the word
“Lucky.” These trademarks have led to nearly 20 years of litigation
between the two companies, proceeding in three rounds.
A
In 2001—the first round—Marcel sued Lucky
Brand, alleging that Lucky Brand’s use of the phrase “Get Lucky” in
advertisements infringed Marcel’s trademark. In 2003, the parties
signed a settlement agreement. As part of the deal, Lucky Brand
agreed to stop using the phrase “Get Lucky.” App. 191. In exchange,
Marcel agreed to release any claims regarding Lucky Brand’s use of
its own trademarks.
Id., at 191–192.
B
The ink was barely dry on the settlement
agreement when, in 2005, the parties began a second round of
litigation (2005 Action). Lucky Brand filed suit, alleging that
Marcel and its licensee violated its trademarks by copying its
designs and logos in a new clothing line. As relevant here, Marcel
filed several counterclaims that all turned, in large part, on
Lucky Brand’s alleged continued use of “Get Lucky”: One batch of
allegations asserted that Lucky Brand had continued to use Marcel’s
“Get Lucky” mark in violation of the settlement agreement, while
others alleged that Lucky Brand’s use of the phrase “Get Lucky” and
“Lucky Brand” together was “confusingly similar to”—and thus
infringed––Marcel’s “Get Lucky” mark. Defendants’ Answer,
Affirmative Defenses, and Counterclaims to Plaintiffs’ Complaint in
No. 1:05–cv–06757 (SDNY), Doc. 40–2, p. 39; see
id., at
34–41. None of Marcel’s counterclaims alleged that Lucky Brand’s
use of its own marks alone—
i.e., independent of any alleged
use of “Get Lucky”—infringed Marcel’s “Get Lucky” mark.
Lucky Brand moved to dismiss the counterclaims,
alleging that they were barred by the release provision of the
settlement agreement. After the District Court denied the motion
without prejudice, Lucky Brand noted the release defense once more
in its answer to Marcel’s counterclaims. But as the 2005 Action
proceeded, Lucky Brand never again invoked the release defense.
The 2005 Action concluded in two phases. First,
as a sanction for misconduct during discovery, the District Court
concluded that Lucky Brand violated the settlement agreement by
continuing to use “Get Lucky” and permanently enjoined Lucky Brand
from copying or imitating Marcel’s “Get Lucky” mark. Order Granting
Partial Summary Judgment and Injunction in No. 1:05–cv–06757, Doc.
183; see also App. 203–204. The injunction did not enjoin, or even
mention, Lucky Brand’s use of any other marks or phrases containing
the word “Lucky.” Order Granting Partial Summary Judgment and
Injunction, Doc. 183. The case then proceeded to trial. The jury
found against Lucky Brand on Marcel’s remaining counterclaims—those
that alleged infringement from Lucky Brand’s continued use of the
“Get Lucky” catchphrase alongside its own marks. See Brief for
Respondent 52.
C
In April 2011, the third round of litigation
began: Marcel filed an action against Lucky Brand (2011 Action),
maintaining that Lucky Brand continued to infringe Marcel’s “Get
Lucky” mark and, in so doing, contravened the judgment issued in
the 2005 Action.
This complaint did not reprise Marcel’s earlier
allegation (in the 2005 Action) that Lucky Brand continued to use
the “Get Lucky” phrase. Marcel argued only that Lucky Brand’s
continued, post-2010 use of Lucky Brand’s own marks—some of which
used the word “Lucky”—infringed Marcel’s “Get Lucky” mark in a
manner that (according to Marcel) was previously found
infringing.[
1] Marcel requested
that the District Court enjoin Lucky Brand from using any of Lucky
Brand’s marks containing the word “Lucky.”
The District Court granted Lucky Brand summary
judgment, concluding that Marcel’s claims in the 2011 Action were
essentially the same as its counterclaims in the 2005 Action.
But the Court of Appeals for the Second Circuit
disagreed. 779 F.3d 102. The court concluded that Marcel’s claims
in the 2011 Action were distinct from those it had asserted in the
2005 Action, because the claims at issue in the 2005 Action were
“for earlier infringements.”
Id., at 110. As the court
noted, “[w]inning a judgment . . . does not deprive the
plaintiff of the right to sue” for the defendant’s “subsequent
similar violations.”
Id., at 107.
The Second Circuit further rejected Marcel’s
request to hold Lucky Brand in contempt for violating the
injunction issued in the 2005 Action. The court noted that the
conduct at issue in the 2011 Action was Lucky Brand’s use of its
own marks—not the use of the phrase “Get Lucky.” By contrast, the
2005 injunction prohibited Lucky Brand from using the “Get Lucky”
mark—not Lucky Brand’s own marks that happened to contain the word
“Lucky.”
Id., at 111. Moreover, the court reasoned that the
jury in the 2005 Action had been “free to find infringement of
Marcel’s ‘Get Lucky’ mark based solely on Lucky Brand’s use of [the
phrase] ‘Get Lucky.’ ”
Id., at 112. The court vacated
and remanded for further proceedings.
On remand to the District Court, Lucky Brand
moved to dismiss, arguing—for the first time since its motion to
dismiss and answer in the 2005 Action—that Marcel had released its
claims by entering the settlement agreement. Marcel countered that
Lucky Brand was precluded from invoking the release defense,
because it could have pursued the defense fully in the 2005 Action
but had neglected to do so. The District Court granted Lucky
Brand’s motion to dismiss, holding that it could assert its release
defense and that the settlement agreement indeed barred Marcel’s
claims.
The Second Circuit vacated and remanded,
concluding that a doctrine it termed “defense preclusion”
prohibited Lucky Brand from raising the release defense in the 2011
Action. 898 F.3d 232 (2018). Noting that a different category of
preclusion—issue preclusion—may be wielded against a defendant, see
Parklane Hosiery Co. v.
Shore,
439 U.S.
322 (1979), the court reasoned that the same should be true of
claim preclusion: A defendant should be precluded from raising an
unlitigated defense that it should have raised earlier. The panel
then held that “defense preclusion” bars a party from raising a
defense where: “(i) a previous action involved an adjudication on
the merits”; “(ii) the previous action involved the same parties”;
“(iii) the defense was either asserted or could have been asserted,
in the prior action”; and “(iv) the district court, in its
discretion, concludes that preclusion of the defense is
appropriate.” 898 F. 3d, at 241. Finding each factor satisfied
in this case, the panel vacated the District Court’s judgment. We
granted certiorari, 588 U. S. ___ (2019), to resolve
differences among the Circuits regarding when, if ever, claim
preclusion applies to defenses raised in a later suit. Compare 898
F. 3d, at 241, with
Hallco Mfg. Co. v.
Foster,
256 F.3d 1290, 1297–1298 (CA Fed. 2001);
McKinnon v.
Blue Cross and Blue Shield of Alabama, 935 F.2d 1187, 1192
(CA11 1991).
II
A
This case asks whether so-called “defense
preclusion” is a valid application of res judicata: a term that now
comprises two distinct doctrines regarding the preclusive effect of
prior litigation. 18 C. Wright, H. Miller, & E. Cooper, Federal
Practice and Procedure §4402 (3d ed. 2016) (Wright & Miller).
The first is issue preclusion (sometimes called collateral
estoppel), which precludes a party from relitigating an issue
actually decided in a prior case and necessary to the judgment.
Allen v.
McCurry,
449 U.S.
90, 94 (1980); see
Parklane Hosiery, 439 U. S., at
326, n. 5.
The second doctrine is claim preclusion
(sometimes itself called res judicata). Unlike issue preclusion,
claim preclusion prevents parties from raising issues that could
have been raised and decided in a prior action—even if they were
not actually litigated. If a later suit advances the same claim as
an earlier suit between the same parties, the earlier suit’s
judgment “prevents litigation of all grounds for, or defenses to,
recovery that were previously available to the parties, regardless
of whether they were asserted or determined in the prior
proceeding.”
Brown v.
Felsen,
442
U.S. 127, 131 (1979); see also Wright & Miller §4407. Suits
involve the same claim (or “cause of action”) when they
“ ‘aris[e] from the same transaction,’ ”
United
States v.
Tohono O’odham Nation,
563
U.S. 307, 316 (2011) (quoting
Kremer v.
Chemical
Constr. Corp.,
456 U.S.
461, 482, n. 22 (1982)), or involve a “common nucleus of
operative facts,” Restatement (Second) of Judgments §24, Comment
b, p. 199 (1982) (Restatement (Second)).
Put another way, claim preclusion “describes the
rules formerly known as ‘merger’ and ‘bar.’ ”
Taylor v.
Sturgell,
553 U.S.
880, 892, n. 5 (2008). “If the plaintiff wins, the entire
claim is merged in the judgment; the plaintiff cannot bring a
second independent action for additional relief, and the defendant
cannot avoid the judgment by offering new defenses.” Wright &
Miller §4406. But “[i]f the second lawsuit involves a new claim or
cause of action, the parties may raise assertions or defenses that
were omitted from the first lawsuit even though they were equally
relevant to the first cause of action.”
Ibid.
As the Second Circuit itself seemed to
recognize, see 898 F. 3d, at 236–237, this Court has never
explicitly recognized “defense preclusion” as a standalone category
of res judicata, unmoored from the two guideposts of issue
preclusion and claim preclusion. Instead, our case law indicates
that any such preclusion of defenses must, at a minimum, satisfy
the strictures of issue preclusion or claim preclusion. See,
e.g.,
Davis v.
Brown,
94 U.S.
423, 428 (1877) (holding that where two lawsuits involved
different claims, preclusion operates “only upon the matter
actually at issue and determined in the original action”).[
2] The parties thus agree that where,
as here, issue preclusion does not apply, a defense can be barred
only if the “causes of action are the same” in the two suits—that
is, where they share a “ ‘common nucleus of operative
fact[s].’ ” Brief for Respondent 2, 27, 31, 50; accord, Reply
Brief 3.
B
Put simply, the two suits here were grounded
on different conduct, involving different marks, occurring at
different times. They thus did not share a “common nucleus of
operative facts.” Restatement (Second) §24, Comment
b, at
199.
To start, claims to relief may be the same for
the purposes of claim preclusion if, among other things, “ ‘a
different judgment in the second action would impair or destroy
rights or interests established by the judgment entered in the
first action.’ ” Wright & Miller §4407. Here, however, the
2011 Action did not imperil the judgment of the 2005 Action because
the lawsuits involved both different conduct and different
trademarks.
In the 2005 Action, Marcel alleged that Lucky
Brand infringed Marcel’s “Get Lucky” mark both by directly
imitating its “Get Lucky” mark and by using the “Get Lucky” slogan
alongside Lucky Brand’s other marks in a way that created consumer
confusion. Brief for Respondent 52. Marcel appears to admit, thus,
that its claims in the 2005 Action depended on Lucky Brand’s
alleged use of “Get Lucky.”
Id., at 9–10 (“Marcel’s
reverse-confusion theory [in the 2005 Action] depended, in part, on
Lucky’s continued imitation of the GET LUCKY mark”).
By contrast, the 2011 Action did not involve any
alleged use of the “Get Lucky” phrase. Indeed, Lucky Brand had been
enjoined in the 2005 Action from using “Get Lucky,” and in the 2011
Action, Lucky Brand was found not to have violated that injunction.
779 F. 3d, at 111–112. The parties thus do not argue that
Lucky Brand continued to use “Get Lucky” after the 2005 Action
concluded, and at oral argument, counsel for Marcel appeared to
confirm that Marcel’s claims in the 2011 Action did not allege that
Lucky Brand continued to use “Get Lucky.” Tr. of Oral Arg. 46.
Instead, Marcel alleged in the 2011 Action that Lucky Brand
committed infringement by using Lucky Brand’s own marks containing
the word “Lucky”—not the “Get Lucky” mark itself. Plainly, then,
the 2011 Action challenged different conduct, involving different
marks.
Not only that, but the complained-of conduct in
the 2011 Action occurred after the conclusion of the 2005 Action.
Claim preclusion generally “does not bar claims that are predicated
on events that postdate the filing of the initial complaint.”
Whole Woman’s Health v.
Hellerstedt, 579 U. S.
___, ___ (2016) (slip op., at 12) (internal quotation marks
omitted);
Lawlor v.
National Screen Service Corp.,
349 U.S.
322, 327–328 (1955) (holding that two suits were not “based on
the same cause of action,” because “[t]he conduct presently
complained of was all subsequent to” the prior judgment and it
“cannot be given the effect of extinguishing claims which did not
even then exist and which could not possibly have been sued upon in
the previous case”). This is for good reason: Events that occur
after the plaintiff files suit often give rise to new “[m]aterial
operative facts” that “in themselves, or taken in conjunction with
the antecedent facts,” create a new claim to relief. Restatement
(Second) §24, Comment
f, at 203; 18 J. Moore, D.
Coquillette, G. Joseph, G. Vairo, & C. Varner, Federal Practice
§131.22[1], p. 131–55, n. 1 (3d ed. 2019) (citing cases where
“[n]ew facts create[d a] new claim”).
This principle takes on particular force in the
trademark context, where the enforceability of a mark and
likelihood of confusion between marks often turns on extrinsic
facts that change over time. As Lucky Brand points out, liability
for trademark infringement turns on marketplace realities that can
change dramatically from year to year. Brief for Petitioners 42–45.
It is no surprise, then, that the Second Circuit held that Marcel’s
2011 Action claims were not barred by the 2005 Action. By the same
token, the 2005 Action could not bar Lucky Brand’s 2011
defenses.
At bottom, the 2011 Action involved different
marks, different legal theories, and different conduct—occurring at
different times. Because the two suits thus lacked a “common
nucleus of operative facts,” claim preclusion did not and could not
bar Lucky Brand from asserting its settlement agreement defense in
the 2011 Action.
III
Resisting this conclusion, Marcel points to
treatises and this Court’s cases, arguing that they support a
version of “defense preclusion” doctrine that extends to the facts
of this case. Brief for Respondent 24–26. But these authorities do
no such thing. As an initial matter, regardless of what those
authorities might imply about “defense preclusion,” none of them
describe scenarios applicable here. Moreover, we doubt that these
authorities stand for anything more than that traditional claim- or
issue
-preclusion principles may bar defenses raised in a
subsequent suit—principles that, as explained above, do not bar
Lucky Brand’s release defense here.
Take, for example, cases that involve either
judgment enforcement or a collateral attack on a prior judgment.
Id., at 26–35. In the former scenario, a party takes action
to enforce a prior judgment already issued against another; in the
latter, a party seeks to avoid the effect of a prior judgment by
bringing a suit to undo it. If, in either situation, a different
outcome in the second action “would nullify the initial judgment or
would impair rights established in the initial action,” preclusion
principles would be at play. Restatement (Second) §22(b), at 185;
Wright & Miller §4414. In both scenarios, courts simply apply
claim preclusion or issue preclusion to prohibit a claim or defense
that would
attack a previously decided claim.[
3] But these principles do not preclude
defendants from asserting defenses to new claims, which is
precisely what Marcel would have us do here.
In any event, judgment-enforcement and
collateral-attack scenarios are far afield from the circumstances
of this case. Lucky Brand’s defense in the 2011 Action did not
threaten the judgment issued in the 2005 Action or, as Marcel
argues, “achieve the same practical result” that the
above-mentioned principles seek to avoid. Brief for Respondent
31–32. Indeed, while the judgment in the 2005 Action plainly
prohibited Lucky Brand from using “Get Lucky,” it did not do the
same with respect to Lucky Brand’s continued, standalone use of its
own marks containing the word “Lucky”—the only conduct at issue in
the 2011 Action. Put simply, Lucky Brand’s defense to new claims in
the 2011 Action did not risk impairing the 2005 judgment.
Nor do cases like
Beloit v.
Morgan, 7 Wall. 619 (1869), aid Marcel. See Brief for
Respondent 32–33. To be sure,
Beloit held that a defendant
in a second suit over bonds “of the same issue” was precluded from
raising a defense it had not raised in the first suit. 7 Wall., at
620. But the Court there explained that the judgment in the first
suit “established conclusively the original validity of the
securities described in the bill, and the liability of the town to
pay them.”
Id., at 623. In other words, by challenging the
validity of all bonds of the same issue, the defense in the second
suit would have threatened the validity of the judgment in the
first suit. The same cannot be said of the defense raised in the
2011 Action vis-à-vis the judgment in the 2005 Action.
* * *
At bottom, Marcel’s 2011 Action challenged
different conduct—and raised different claims—from the 2005 Action.
Under those circumstances, Marcel cannot preclude Lucky Brand from
raising new defenses. The judgment of the Second Circuit is
therefore reversed, and the case is remanded for proceedings
consistent with this opinion.
It is so ordered.
