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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 93-7613
CYCLES, LTD.,
Plaintiff-Appellant,
versus
NAVISTAR FINANCIAL CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of Mississippi
(October 27, 1994)
Before JOHNSON, HIGGINBOTHAM, and DAVIS, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
Cycles challenges the district court's decision to reverse its
original ruling in Cycles' favor. We are persuaded that although
the district court had the power to revise its original decision,
it wrongly believed itself bound by the contrary findings of a
later court. We vacate and remand.
Cycles leased certain truck trailers to W.J. Digby. In August
1980, their deal collapsed, Digby refused to return the trailers to
Cycles, and a complicated chain of lawsuits followed. First,
Cycles sued Digby for conversion (Digby I). The Southern District
of Mississippi ruled for Cycles, finding that the lease agreement
required Digby to return the trailers to Cycles.
Second, Cycles sued Navistar in the Southern District of
Mississippi. In this second suit, the present action, Cycles
claims that three years after Digby's conversion of Cycles'
trailers, Navistar also converted Cycles' trailers. Navistar had
financed Cycles' original purchase of the trailers and held Cycles'
installment payment note and certificates of title for the
trailers. In early 1983, Navistar transferred the certificates of
title to Digby in exchange for full payment of the installment
payment note.
At first, the district court agreed that Navistar converted
the trailers by transferring the certificates to Digby. It held
that delivering the certificates of title to Digby put the trailers
further out of Cycles' reach, and Navistar at least should have
known at the time that the trailers belonged to Cycles, not to
Digby. As the district court then saw it, Navistar's action both
aided Digby's conversion, and itself converted property. The court
on June 30, 1989, filed a "Final Judgment" and awarded damages to
Cycles. Navistar filed post-judgment motions to amend the findings
of fact and conclusions of law under Rule 52(b) and to alter or
amend the judgment under Rule 59(e).
Cycles, however, could not persuade the court to cement this
judgment into a final, appealable order. Instead of resolving the
post-judgment motions, the court waited four years for the
resolution of a third suit: Digby II.
Digby II grew out of the demise of Digby I. In 1989, we
vacated Digby I for lack of jurisdiction over Digby. See Cycles,
2
Ltd. v. W. J. Digby, Inc., 889 F.2d 612 (5th Cir. 1989). Cycles
then filed Digby II, an action against Digby in federal district
court for the Eastern District of Arkansas. The Arkansas federal
court ruled for Digby. It determined that Cycles had agreed to
Digby's disposition of the trailers and that Digby had a qualified
right of refusal to return them to Cycles.
The court below then revised its original opinion and entered
judgment for Navistar, explaining that principles of res judicata
and collateral estoppel compelled it to reverse its original
judgment for Cycles and to render judgment for Navistar. Cycles
appeals this ruling.
The district court's concern with the Arkansas judgment is
understandable. The premise of its original opinion finding
Navistar liable was that Digby's possession of the trailers was
tortious. From that premise, it originally concluded that
Navistar's later delivery of the trailers' certificates of title to
Digby was also tortious, since it aided Digby's wrongful possession
of the trailers and made it harder for Cycles to get the trailers
back.
In short, the Arkansas judgment denied the premise of the
Mississippi court's conclusion. The Arkansas court ruled that
Digby did not convert Cycles' property. If Digby did not,
Navistar's transfer of the certificates to Digby could not. The
two acts of claimed conversion were separate, but logically
dependent.
3
In reviewing its original opinion on Navistar's motions, the
district court did not rest its decision on the persuasive force of
the Arkansas court's reasoning. Rather, it revised its original
opinion, persuaded that the Arkansas judgment compelled it to do
so.
This was error. The Arkansas judgment had no preclusive
effect upon decisions already reached after full litigation, like
the original ruling. Judgments are final for purposes of issue
preclusion when fully litigated, even if not yet appealable. See
Chemetron Corp. v. Business Funds, Inc., 682 F.2d 1149, 1191 (5th
Cir. 1982) (holding that a fully litigated, if non-final, decision
enjoys issue-preclusive effect); vacated and remanded on other
grounds, 460 U.S. 1007 (1983); reinstated on remand as to this
ground, 718 F.2d 725, 728 (5th Cir. 1983); reh'g en banc ordered,
id. at 730 (vacating opinion for rehearing en banc, which never
occurred because parties settled); see also 18 Charles A. Wright &
Arthur R. Miller, Federal Practice and Procedure § 4434, at 321
(1981) (surveying leading cases that consider non-appealable
judgments to be final for purposes of issue preclusion); 1B James
W. Moore et al., Moore's Federal Practice ¶ 0.416[3.-1] (2d ed.
1993) (endorsing rule that pendency of post-trial motions to change
the judgment or set it aside does not suspend issue-preclusive
effect of the judgment); Restatement (Second) of Judgments § 13
cmt. f (1982) (pendency of motions to set aside a judgment
otherwise final for collateral estoppel purposes or to grant a new
trial does not suspend issue-preclusive effect of the judgment).
4
Such fully litigated judgments, strong enough to preclude later
inconsistent judgments, are a fortiori strong enough to withstand
preclusion by inconsistent later judgments.
Case law supports our conclusion that a court is not compelled
to revise its fully litigated decision by later inconsistent
decisions of other courts. In American Postal Workers Union v.
United States Postal Serv., 736 F.2d 317, 319 (6th Cir. 1984)
(APWU), the Sixth Circuit found no preclusion in a similar case.
There, an action by a Columbus, Ohio local union survived the
Postal Service's motion to dismiss. Later, another local union
filed a similar suit in Dallas, Texas. A federal district court in
Dallas granted the Postal Service's motion to dismiss, and we
affirmed. Armed with our decision, the Postal Service moved for
summary judgment in the Ohio court, arguing that the preclusive
force of its Dallas victory compelled the Ohio district court to
revise its original ruling on the motion to dismiss. The Ohio
district court agreed and granted summary judgment for the Postal
Service.
The Sixth Circuit disagreed. In dicta, the court stated that
the preclusive force of the Dallas decision did not compel the Ohio
court to revise its prior opinion. Id. The Dallas decision would
preclude contrary determinations in all subsequent cases, but not
issues already decided. Id. The fact that the Ohio ruling was not
final for purposes of appeal made no difference. The Sixth Circuit
acknowledged that even though the Ohio court's ruling was not yet
appealable, it had preclusive force. Indeed, the Sixth Circuit
5
noted that the ruling "should have been given preclusive effect in
the Dallas case." Id.
In this respect, APWU differs from this case. In APWU, the
first decision should have precluded the second. Because two
plaintiffs were bringing separate actions against the same
defendant, the first plaintiff's victory in Ohio could have enjoyed
issue-preclusive effect in the second case in Dallas. See Parklane
Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979) (permitting use of
non-mutual offensive collateral estoppel). Here, by contrast, the
first decision could not have precluded the second. One plaintiff,
Cycles, had been pursuing two actions against two defendants:
first Navistar, then Digby. Cycles could not have used its victory
against Navistar to win the case against Digby, since in the prior
case Digby neither had a chance to contest its liability nor was in
privity with a party that did. See, e.g., Blonder-Tongue Lab.,
Inc. v. University. of Illinois Found., 402 U.S. 313, 329-30 (1971)
(it is a violation of due process to preclude litigants who did not
appear in prior action from relitigating issue of prior action).
Yet the mark of a decision's maturity for the purposes of
issue preclusion is whether the decision was fully litigated. If
the first decision had the power to preclude relitigation of the
same issues, for our purposes it does not matter if a later case
ignores the opinion's preclusive power, as in APWU, or if no later
case had the opportunity to consider its preclusive power, as here.
In either event, the fully litigated opinion stands unaffected by
a later inconsistent judgment.
6
We and the other circuits have similarly ruled that the
preclusive reach of decisions does not extend to prior decisions.
See, e.g., Freeman United Coal Mining. Co. v. Office of Workers'
Compensation Program, 20 F.3d 289, 294 (7th Cir. 1994) (subsequent
decision has no collateral estoppel effect on prior judgment
because, inter alia, the opportunity to economize judicial
resources is already lost by the time a second opinion is
rendered); Howell v. Thomas, 566 F.2d 469, 469-70 (5th Cir.) (per
curiam), cert. denied, 439 U.S. 826 (1978) (subsequent proceeding
cannot collaterally estop prior proceeding); Flood v. Harrington,
532 F.2d 1248, 1250 (9th Cir. 1976) (subsequent case does not
control outcome of prior case); see also 18 Wright & Miller, supra,
§ 4404, at 31 (where subsequent case conflicts with prior case on
"a matter of issue preclusion, it is very unlikely that the first
judgment should be set aside").
Navistar's proposed rule would unfairly force plaintiffs like
Cycles, who must pursue defendants in separate jurisdictions, to
play for all or nothing, recovering only with an uninterrupted
stream of victories. If, like Cycles, they won one fully litigated
judgment against one defendant but lost a second case to a second
defendant, they would lose everything. The second adverse judgment
would undo their prior, fully litigated victory. Our rejection of
this backward reach lies with the longstanding rule that plaintiffs
who lose against one defendant are collaterally estopped from
prevailing on the same issue in future cases against other
7
defendants. See Blonder-Tongue, 402 U.S. at 328-29 (permitting use
of non-mutual defensive collateral estoppel).
We are persuaded that the district court's original decision
was final for purposes of issue preclusion, and the district court
erred in concluding that it was bound by the later decision of the
Arkansas federal court to reverse its original ruling. We vacate
the decision below and remand to the district court for decision of
Navistar's post-judgment motions to amend the original findings of
fact and conclusions of law and to alter or amend the original
judgment, free of any binding effect of the ruling by the Arkansas
court.
VACATED and REMANDED.
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