Claim Preclusion vs Issue Preclusion

I'm actually surprised I haven't posted on the topic, but better late than never. This is actually quite a complex area of law; it's also tested often enough that it's worth knowing well:

First, res judicata (claim preclusion). Under this doctrine, once a final judgment on the merits has been rendered on a particular cause of action, plaintiff is barred from trying the same cause of action in a later lawsuit. 

Claim preclusion involves two doctrines: merger and bar. Assume first that plaintiff wins case 1. In that instance, the first suit merges and defendant is prevented from bringing a second suit on that same claim against the same plaintiff. If the plaintiff instead loses case 1, plaintiff is barred from bringing a second suit on that same claim against the same defendant.

An essential component of the analysis above is to determine what is meant by "the same claim." Modern courts apply a transactional test is determining this.  Namely, when a valid and final judgment rendered in an action extinguishes the plaintiff's claim (by either merger or bar) the claim extinguished includes all rights of the plaintiff with respect to all or any part of the transaction or series of transactions out of which the action arose. It's a bit tough to apply, for sure. 

One helpful tip to note is that where two suits involve a single physical accident, the court will almost always treat both damages and personal injuries from that accident as arising out of the same transaction (in other words as a single claim for purposes of claim preclusion). 

One other point worth noting is that where one person (call that person "x") is vicariously liable for the conduct of another person (call that person "y") and if y is sued, merger or bar will often apply to x as much as it'll apply to y. In other words, if y wins the suit, not only will the injured person be barred from suing y again on that same claim, but the injured person will likely be barred from suing x on that same claim as well. There are exceptions to this rule, but it does often apply.

Collateral estoppel (issue preclusion) is similar to claim preclusion, but far from identical. Issue preclusion applies to prevent relitigation of an issue that was actually litigated and was essential to a prior judgment. In other words, collateral estoppel is focused on the issues involved in a claim whereas res judicata is focused on the claim itself. With issue preclusion, once a final judgment has been rendered for plaintiff or defendant, that judgment is conclusive in a subsequent action on a different cause of action as to issues actually litigated and essential to that prior judgment.

There's a concept seen in issue preclusion (and possibly in claim preclusion, though the MBE has traditionally tested this with issue preclusion) called the mutuality principle. Traditionally, a party to the second lawsuit who was not a party to the first lawsuit was prevented from gaining the benefit of preclusion. However, modern courts aren't so certain. Some courts apply what's called "non-mutual issue preclusion" and those that do would allow a party to the second lawsuit who was not a party to the first lawsuit to benefit from preclusion (often issue preclusion).