Revisiting Claim and Issue Preclusion in Washington

• Publication year: 2021

REVISITING CLAIM AND ISSUE PRECLUSION IN WASHINGTON

Kathleen M. McGinnis(fn*)

Abstract: When it comes to the law of claim and issue preclusion, Washington courts and practitioners encounter rules and precedent that tend to be unnecessarily complicated, overly broad, and even-in some instances-simply wrong. Three decades ago, Professor Philip Trautman urged Washington courts to clarify and modernize the doctrine. A fresh look at the topic suggests that while courts have been receptive to the professor's advice, the goal of a clear and usable body of preclusion law will require more work. Specifically, Washington courts should address three problems. First, they should simplify the test for claim preclusion, eliminating redundant and confusing elements to make the test more consistent with prevailing modern rules. Instead of clinging to a four-element test that includes a four-factor subtest, the courts should simply examine identity of parties and claims, and should use a transactional test to determine claim-identity. Second, Washington courts should abandon the discredited doctrine of virtual representation, which has bound nonparties to the results of actions in which they either testified or had an advisory role. This use of nonparty preclusion violates litigants' due process rights, and wastes resources by encouraging litigants to argue the theory even though it is rarely a successful defense. While it might be defensible to preclude nonparties when the earlier action involved an assertion of public rights, courts should proceed with caution, and ensure that Washington's current rule applies only in the most limited circumstances. Third, Washington courts need to consider Full Faith and Credit principles in every case that involves a judgment from another state or federal court. Ignoring these principles has led courts to apply the wrong preclusion law to judgments of other courts, a practice that harms litigants and undermines the legitimacy of the courts' decisions.

INTRODUCTION .................................................................................. 76

I. THE ARTICLE ................................................................................ 78

A. Claim Preclusion .................................................................... 81

1. Identity of Subject Matter .............................................. 81

2. Identity of Claim or Cause of Action ............................. 82

3. Identity of Persons and Parties ....................................... 84

4. Identity of Quality of Persons ........................................ 85

5. Final Judgment on the Merits ......................................... 85

6. Character of the Tribunal ............................................... 87

B. Issue Preclusion ...................................................................... 88

1. Identical Issue ................................................................ 88

2. Final Judgment ............................................................... 89

3. Persons Bound ............................................................... 90

4. Doing Justice .................................................................. 91

II. PROFESSOR TRAUTMAN'S ARTICLE IN THE COURTS ....... 93

A. Pragmatic Approach to Preclusion Law ................................. 93

B. Claim Preclusion's Overly Complex Test .............................. 98

1. Identical Subject Matter ................................................. 99

2. "Quality of the Persons" Test ....................................... 105

3. Testing Identity of Claim or Cause of Action .............. 109

III. EMERGING PROBLEMS IN WASHINGTON PRECLUSION LAW .............................................................................................. 111

A. Nonparty Preclusion ............................................................. 111

1. The Supreme Court's Due-Process-Based Rejection of Virtual Representation ............................................. 113

2. Nonparty Preclusion in Washington ............................ 116

a. Virtual Representation ........................................... 117

b. Nonparty Preclusion in Public Law Cases ............ 124

3. Why We Should Care About Nonparty Preclusion ...... 126

a. The Resource Conservation Problem ..................... 126

b. The Due Process Problem ...................................... 127

c. The Forced Intervention Problem .......................... 129

4. An Exception for Cases of Public Concern? ................ 131

B. Full Faith and Credit Problems in Washington Courts ........ 138

CONCLUSION .................................................................................... 144

INTRODUCTION

Thirty years ago, the Washington Law Review published Claim and Issue Preclusion in Civil Litigation in Washington ,(fn1) an article by prolific scholar(fn2) and esteemed teacher(fn3) Philip A. Trautman. Professor Trautman chose to address this "age-old topic" in order to report on development of the doctrine in Washington State courts and then to "suggest what may be forthcoming."(fn4) At its core, the article called for doctrinal clarity and a pragmatic approach to preclusion law-a position that would require courts to provide more guidance, and, ideally, to simplify some of the complex, multi-level tests they used for claim and issue preclusion. Washington practitioners and judges immediately turned to Professor Trautman's commentary on the subject, and, even more notable, continue to rely on it well into the twenty-first century.(fn5) Although the article appears to have been a valuable reference-a sort of preclusion primer-for practitioners and courts in Washington, the courts have not fully responded to the specific changes that Professor Trautman advocated. Some of those problems remain unresolved. Moreover, other problems in Washington's claim and issue preclusion doctrine have developed and become more significant since Professor Trautman's canonical work was published.

This Article identifies three important problems that have remained unresolved or emerged since Professor Trautman's article, and recommends ways Washington law should change to improve efficiency and clarity-both central values behind preclusion law-and to conform to the due process standards the United States Supreme Court has imposed on the federal law of preclusion. Solving these problems in Washington's preclusion doctrine will require action by the Washington State Supreme Court. Instead of dealing with preclusion law mainly as a sidebar in cases that involve important substantive conflicts, the court should grant review in cases that present opportunities to focus on procedure and clarify the law.

First, the Washington State Supreme Court should restructure the four-element identity test for claim preclusion, which currently requires courts to address eight analytic steps. The Court should pare its identity test down to the two elements that actually matter: precluding relitigation of identical claims between identical parties, or those in privity. The Court should also evaluate identity of claims by using the simpler "transactional nucleus of facts" test, instead of the four factors Washington courts use now. A streamlined approach to claim preclusion would simplify the analysis required of practitioners and courts alike, making litigation more efficient and outcomes more predictable.

Second, the Court should abandon the discredited doctrine of virtual representation, which permits issue preclusion to bind some litigants who were not parties to the original action. Rejecting the doctrine would protect litigants' legitimate expectations of a day in court that they control, and would satisfy due process concerns. The United States Supreme Court recognizes several categories of nonparty preclusion. If the Washington State Supreme Court elects to go beyond those recognized exceptions, it should do so only in cases that involve serial litigation over a public rather than private right, and patently adequate representation in the first proceeding. Before taking that step, however, the Court should examine how existing joinder mechanisms could help parties avoid repetitive litigation over matters of public concern. This would allow Washington courts to avoid controversial decisions on the scope of nonparty preclusion.

Third, the Court should insist that every Washington court engage in the proper analysis and give appropriate full faith and credit to judgments from federal courts and other state courts.

Part I of this Article will describe Professor Trautman's article, place it in context, and highlight his recommendations to Washington courts. Part II will address how those courts have used Professor Trautman's article.(fn6) The Article will conclude in Part III by analyzing some problematic areas of preclusion law that have developed since Professor Trautman's examination thirty years ago.

I. THE ARTICLE

If citations to an article can represent influence,(fn7) it is easy to say that Professor Trautman's article helped shape the development of preclusion law in Washington. At least seventy-eight judicial decisions, including sixty-one Washington appellate court opinions, have cited the article in the past three decades, beginning shortly after publication(fn8) and...