Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc. (18-1086)

argument 18-1086

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

Supreme Court of the United States 1h 1m 6 speakers 8 chapters transcribed 8 days ago official recording ↗

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What is the Supreme Court’s main argument for reversing the Second Circuit’s preclusion test?

John G. Roberts 0:00

We'll hear argument first this morning, Case 18-1086, Lucky Brand Dungarees v. Marcel Fashions Group. Ms. Sendali.

Alina Saldanha 0:10

Mr. Chief Justice, and may it please the Court. This Court should reverse the Second Circuit because it erred in holding that a defense never previously litigated to judgment can be barred in a case involving new claims. This Court rejected that idea over 100 years ago in Cromwell v. Davis, and as this Court unanimously made clear more recently in Taylor v. Sturgill, the preclusive effect of a judgment is determined by two doctrines— issue preclusion, which forecloses relitigation of issues actually litigated and resolved, and claim preclusion, which forecloses successive litigation of the very same claim. Applying these long-established principles, the proper rule is a defendant is free to argue any previously unresolved offense it may have to new claims.

Alina Saldanha 1:00

This rule is right for three reasons. First, it follows from this Court's precedent, including Cromwell, Davis, and Taylor. Second, the rule is easy to administer as courts and litigants are accustomed to applying these bedrock principles of issue and claim preclusion. Third, it's fair and protects due process interests. To be clear, we are not arguing that defenses may never be barred under existing law. Issue preclusion could bar a previously resolved defense. And previously unresolved offenses cannot be raised in the context of a judgment enforcement action or as a claim in an action collaterally attacking a prior judgment. But none of these circumstances are present here. As the Second Circuit held in the first appeal on this case, Marcel 1, Marcel is pursuing new claims as it seeks relief for alleged subsequent infringement.

Alina Saldanha 1:56

Thus, this Court should reverse as the Second Circuit's novel test precluded a never-resolved offense and an action asserting new claims in conflict with settled and sensible principles of claim and issue preclusion. Moreover, the Second Circuit's new test is a bad idea. Before we get

Elena Kagan 2:17

to that, Ms. Sandali, could you explain — why you abandoned the release defense in the first action. You did raise it, and then you dropped it, and it's a bit of a mystery why you did.

Alina Saldanha 2:39

We don't know exactly why it was abandoned, but the most logical answer is that it would not have been dispositive. The amount of controversy, the compensatory damages in that case was only $20,000, and we know that the release would not have applied to use of Get Lucky, which is what the primary thrust of what the case was about. So it may not have been worth it from a cost-benefit analysis to renew a release to defense that would not have been dispositive of the issues before the Court.

Elena Kagan 3:14

How would it have — it seems strange when that release said, lucky you can't use, get lucky, but you're continuing to use it. The release said that. You can't use get lucky. On the other hand, we won't go after you for lucky brand. In the first case, as you just said, concentrated on get lucky. The release seemed to me to be no use at all to lucky as far as get lucky is concerned because it agrees that it would stop using get lucky.

Alina Saldanha 3:53

That's exactly our point, Your Honor. Because the release would not have been helpful with regard to get lucky, it wasn't going to be dispositive of the case, and therefore it may have not been worth the cost of briefing it again. Again, the compensatory damages were $20,000 if it wasn't going to end the whole case, because the release would have only applied to a narrow subset of the trademarks that they were accusing us of using before the Court.

Samuel A. Alito 4:27

I take it from your introductory remarks that you do not agree with the restatement rule that although the failure to raise a defense in a prior action generally does not preclude the raising of the defense in a subsequent action, there is an exception where prevailing on the defense in the second action is would nullify the initial judgment or impair rights established in the initial action. Do you reject that rule?

Alina Saldanha 4:57

No, Your Honor. And that's a key point.