Gannon v. American Home Products, Inc., 211 N.J. 454 (2012). This case presented the issue of whether a judgment against these personal injury plaintiffs in their federal court suit against the United States government for allegedly negligently permitting the marketing of an unsafe oral polio vaccine (a judgment that concluded that the vaccine was not unsafe) collaterally estopped them from suing the alleged manufacturers of that vaccine in state court. As part of that analysis, the Court was required to determine whether federal law or state law collateral estoppel principles apply when a federal ruling is the basis for a collateral estoppel argument in state court. Finally, the Court addressed whether certain equitable exceptions to collateral estoppel that are provided by the Restatement (Second) of Judgments were applicable.
By a 5-1 vote, the Court held that plaintiffs were collaterally estopped, reversing the contrary ruling of the Appellate Division and reinstating a summary judgment that the Law Division had granted to defendants. Justice Hoens wrote the majority opinion. Judge Wefing was the dissenter.
Justice Hoens concluded that federal collateral estoppel law was applicable. “[I]n general, the binding effect of a judgment is determined by the law of the jurisdiction that rendered it.” Though “the essential elements of the federal and state court tests [for collateral estoppel] are quite similar,” applying federal law means that, when evaluating the collateral estoppel effect of federal judgments, state courts “are not permitted to adopt a broader test as they might be inclined to think appropriate when evaluating state law principles.”
The federal test for collateral estoppel looks at whether “(1) the identical issue was decided in a prior adjudication; (2) there was a final judgment on the merits; (3) the party against whom the bar is asserted was a party or in privity with a party to the prior adjudication; and (4) the party against whom the bar is asserted had a full and fair opportunity to litigate the issue in question.” Plaintiffs challenged only the fourth element. The Court concluded, however, that plaintiffs had had a full and fair opportunity in federal court. Indeed, after the district court had entered its judgment against plaintiffs, plaintiffs appealed to the Third Circuit. One of their arguments on that appeal was that they had not had sufficient opportunity to make their case below. The Third Circuit rebuffed that contention.
Justice Hoens then turned to the issue of whether equitable considerations drawn from the Restatement could prevent collateral estoppel. The Court noted that, in appropriate situations, equitable considerations can prevent the application of collateral estoppel. But “[c]ourts applying the equitable considerations identified in the Restatement must be careful in their performance of that task. They must not regard those considerations to be a license to substitute generalized concerns about the imposition of collateral estoppel when the clearly established elements [for collateral estoppel] have been met.” Here, those elements had been met, and the Appellate Division erred in refusing to apply collateral estoppel based on equitable considerations.
In addition to this important discussion about collateral estoppel, the majority opinion contains one nugget of pure appellate law. One of plaintiff’s arguments relied, in part, on the fact that the Supreme Court had, in a particular case on which plaintiffs relied, vacated certification as improperly granted. Justice Hoens rejected plaintiff’s contention, stating that “a decision of this Court to vacate certification as improvidently granted is not the functional equivalent of an affirmance of an appellate court’s decision by this Court, nor could it under any analysis operate to overrule sub silentio a prior substantive decision of this Court.” That principle is in accord with the settled rule that a denial of certification in the first instance does not constitute a judgment on the merits or an affirmance of the decision below as to which certification was unsuccessfully sought. A grant of certification, followed by its vacation as improvidently granted, is effectively the same as a denial of certification, and the effect of each of those events should be, and is, the same.