So what happens when a nonparty...deemed in privity (ordinarily bound) moves to intervene in a proceeding to be an actual party...but is denied (ordinarily not bound)?...The answer presently depends upon which federal circuit is answering the question.
Washington, D.C. (PRWEB) May 10, 2017
The results of a federal lawsuit are binding upon the parties named in the lawsuit and those in “privity,” an amorphous concept that has come to mean, in some circuits, those nonparties who are in close enough alignment to be considered bound. At the same time, the federal rules provide for a nonparty to intervene in an action. The U.S. Supreme Court has earlier held that when a nonparty timely moves to intervene in a proceeding and is denied, the nonparty cannot be bound by the results of that lawsuit. So what happens when a nonparty who is deemed in privity (ordinarily bound) moves to intervene in a proceeding to be an "actual" party in order to protect individual claims, but is denied (ordinarily not bound)?
That is the question presented in a new petition for certiorari to be distributed for conference this month in the U.S. Supreme Court in the matter of Escamilla v. M2 Technology, Inc., No. 16-1213 (U.S.). The petition is available for viewing or download at this link. The answer presently depends upon which federal circuit is answering the question.
In UAW Local 283 v. Scofield, 382 U.S. 205 (1965), in an opinion delivered by then-Chief Justice Warren, by a 9-0 decision, the Supreme Court held that, “under technical res judicata rules,” a nonparty who moves to intervene in a proceeding and is denied cannot be later bound by a decision therein. In the present action, however, the U.S. Court of Appeals for the Fifth Circuit carved an exception to the Supreme Court's rule in order to preclude a nonparty deemed to be in privity—even if the nonparty had timely sought to intervene to be an actual party, and had been denied. The petition argues that the Fifth Circuit’s exception to the Supreme Court’s rule violates constitutional due process, and creates a conflict with decisions of the Supreme Court and of other circuits. In Smith v. Bayer, 564 U.S. 299 (2011), the Supreme Court noted that it had “repeatedly ‘emphasize[d] the fundamental nature of the general rule’ that only parties can be bound by prior judgments,” citing Taylor v. Sturgell, 553 U.S. 880 (2008).
A second question presented in the petition is whether the Supreme Court’s intervening precedent in B&B Hardware, Inc. v. Hargis Industries, Inc., 135 S. Ct. 1293 (2015) changed the applicable legal standard in the Fifth Circuit for the issues of likelihood of confusion and issue preclusion from a trademark board judgment, and thus presented an exception to the application of preclusion in any event. The present case is a trademark infringement action concerning marks and usages materially the same as those for which the trademark board had already issued a final judgment sustaining allegations of likelihood of confusion. At an interlocutory stage, trademark commentators noted the U.S. Supreme Court surprisingly denied certiorari in 2015 (see article here). The petition argues that, now that final judgment has been reached, the matter is ripe for the Court to review on a writ of certiorari.
The petitioner is represented by Richard C. King Jr. and Mary Ellen King of King Law Group in Austin, Texas.