May a court bar a party's claim on the theory that the party received "virtual representation" in a prior suit by a different party, despite the fact that the present party shared no legal relationship with the prior party and received no notice of the prior suit?
Brent Taylor, executive director of the Antique Aircraft Association ("AAA") filed a Freedom of Information Act ("FOIA") request with the Federal Aviation Administration ("FAA") to obtain plans and specifications for a vintage aircraft. After the FAA denied Taylor's request on trade-secret grounds, he sued to compel disclosure of the information. The D.C. Circuit affirmed the district court's finding that Taylor's claim was barred because he had been "virtually represented" in a prior action by Greg Herrick, a fellow AAA member whose prior FOIA request for the same records the Tenth Circuit found to have been properly denied due to trade-secret protections. Taylor asserts that preclusion of his claim on the "virtual representation" theory violated his due process rights because he had no legal relationship with Herrick and received no notice of the prior suit. The FAA counters that preclusion was appropriate because Herrick had adequately represented Taylor's interests in the earlier action. The decision in this case will clarify the circumstances under which courts may bar claims under the "virtual representation" theory and may influence plaintiffs' litigation strategies, broaden defendants' exposure to duplicative suits, and limit the availability of FOIA requests of certain members of the public.
Questions as Framed for the Court by the Parties
Can a party be precluded from bringing a claim, under a theory of "virtual representation," and thereby denied the due process right to a day in court, when the party had no legal relationship with any party to the previous litigation and did not receive notice of that litigation?
Under the Freedom of Information Act ("FOIA"), any person has the right to obtain records from a federal agency. See Brief for Petitioner at 1; 5 U.S.C. § 552(a)(3). However, FOIA includes exemptions under which the requested agency can deny record requests, which are subject to judicial review under FOIA. See Brief for Petitioner at 1; 5 U.S.C. §§ 552(b), (a)(4)(B). In August 2002, Petitioner Brent Taylor made a FOIA request to the Federal Aviation Administration ("FAA"). Brief for Petitioner at 2. As the executive director of the Antique Aircraft Association ("AAA"), Taylor was seeking records on the Fairchild F-45, a 1930s vintage airplane. Id. After receiving no response for three months, Taylor filed an administrative appeal based the FAA's apparent denial of his request. Id.
Before Taylor's request, Greg Herrick, another member of the AAA, had made a similar request for Fairchild F-45 records. Brief for Petitioner at 2. The case was litigated to the U.S. Court of Appeals for the Tenth Circuit, which decided that the F-45 records were protected as trade secrets based on the Fairchild Corporation's ("Fairchild") current refusal to disseminate the records publicly. See Herrick v. Garvey, 298 F.3d 1184, 1194 (10th Cir. 2002). Following the Tenth Circuit's decision, Taylor brought this current action in the U.S. District Court for the District of Columbia. Brief for Petitioner at 3. Taylor employed Attorney Michael J. Pangia, the same attorney who represented Herrick. Id.
The FAA eventually denied Taylor's records request based on the trade-secrets exemption and subsequently denied Taylor's appeal. Brief for Petitioner at 3. Fairchild intervened in the case, and together with the FAA, moved for summary judgment. Id. at 4. Fairchild and the FAA contended that the Tenth Circuit's final judgment in Herrick v. Garvey precluded Taylor from arguing the current case. Id. The District Court found that Herrick was Taylor's "virtual representative," such that Taylor's complaint had already been adjudicated. Id. Without finding evidence of a prior relationship between Herrick and Taylor, or that Taylor knew about Herrick's litigation while it was pending, the District Court granted the summary judgment motion. Id.
The U.S. Court of Appeals for the District of Columbia Circuit affirmed, employing a five-factor test to determine virtual representation. Brief for Petitioner at 4-5. On January 11, 2008, the U.S. Supreme Court granted certiorari. Taylor v. Blakey, 490 F.3d 965 (D.C. Cir. 2007), cert. granted, 76 U.S.L.W. 3371 (U.S. Jan. 11, 2008) (No. 07-371).
Res Judicata and Due Process
The doctrine of res judicata, also known as claim preclusion, makes a final judgment on the merits binding upon all parties to the action or any party in privity to the parties to the action, such that they cannot bring a second suit based on the same cause of action. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5 (1979). A party is considered to be in privity to a prior party when the party to the prior litigation represented the same legal right applied to the same subject matter. See Jefferson School v. Subversive Activities Control Bd., 331 F.2d 76, 83 (D.C. Cir. 1963). Res judicata prevents the parties or their privies from relitigating both the issues that were raised and the issues that could have been raised in the prior litigation. Allen v. McCurry, 449 U.S. 90, 94 (1980).
A person that a court deems neither a party nor a privy is considered a "stranger" to the litigation, and is therefore not bound by a judgment in the litigation. See Richards v. Jefferson County, 571 U.S. 793, 798 (1996). The Due Process Clause protects this principle by incorporating the right to be heard in judicial proceedings. Id. at 797. A non-party is not bound by another party's judgment, even if a prior judgment decided an identical issue against their position, because this preclusion would prevent the non-party from having an opportunity to be heard. Parklane, 439 U.S. at 322, 327 n. 7.
The D.C. Circuit's Five-Factor Test of Virtual Representation
Courts recognize limited exceptions that bind non-parties to prior judgments when their interests are "adequately represented." Martin v. Wilks, 490 U.S. 755, 762 n. 2 (1989). Courts have applied the adequate representation test to class action cases and "representative" cases in which a non-party controls a party's litigation of the case. Id. Recently, some federal circuit courts of appeal have crafted a third exception, "virtual representation," as a form of adequate representation. Brief for Petitioner at 11. Under the "virtual representation" form of privity, a non-party whose interests were "adequately represented" in a prior litigation by a second party ("lead party") is barred from raising the same claim, as the court will deem the lead party to be a proxy of the nonparty. Taylor v. Blakey, 490 F.3d 965, 970 (C.A.D.C. 2007).
The D.C. Circuit, adopting the virtual representation theory, found that privity encompasses a broad scope of relationships between litigants. Taylor, 490 F.3d at 970. The D.C. Circuit enumerated a five-factor test for determining if a virtual representation exists between the two parties. Id. at 971-72. First, the two threshold conditions of identity of interests and adequate representation must be satisfied. Id. at 971. Additionally, there must be a showing of one of the following three factors: a close relationship between parties, substantial participation in the first case by the present party, or tactical maneuvering by the present party to avoid the preclusive effects of the prior judgment. Id. at 972.
Establishment of Privity: The Legal Relationship Test v. Factual Inquiry
Taylor believes that because any virtual representation test must incorporate a legal relationship between the parties, the D.C. Circuit's test is impermissibly broad. See Brief for Petitioner at 9. The U.S. Supreme Court has held that for a non-party to be deemed a privy, a non-party and lead party must share a special representational relationship that (i) makes the lead party understand his suit to be for the non-party's behalf, and that (ii) ensures that the reviewing court protects the absent party's interests. See Richards, 517 U.S. at 802. Taylor argues that this special relationship must be a legal relationship, because the lead party must have the authority to represent the non-party and must be accountable to the non-party. Brief for Petitioner at 14. Taylor explains that this legal relationship must exist during the prior suit's pendency. Id. Thus, Taylor argues that even though he and Herrick were acquainted, they lacked any legal relationship and thus were strangers for res judicata purposes. Id. at 13-14.
The FAA responds that there is no wooden formula for determining privity through virtual representation. Respondents' Brief in Opposition ("Brief in Opposition") at 6. Rather, virtual representation is a "functional inquiry" that depends on the facts and circumstances of the case. Id. The existence of a legal relationship, they urge, is only one factor that the circuits consider in the virtual representation analysis. Id. at 6-7.
The FAA points to various case law from the Fourth and Sixth Circuits, which have precluded cases even though no legal representation existed. Brief in Opposition at 7-8. In Eddy v. Waffle House, Inc., 482 F.3d 674, 680 (4th Cir. 2007), the Fourth Circuit precluded the claims of parties with a close personal relationship, represented by the same attorney, and trying to vindicate the same rights. In Saylor v. United States, 315 F.3d 664, 668 (6th Cir. 2003), the Sixth Circuit found that a non-party was adequately represented in an earlier claim by similarly-situated plaintiffs, such that privity was established between them despite the absence of legal ties. The FAA concludes that Herrick and Taylor, although having no legal relationship, were close associates that collaborated with the same attorney to bring successive lawsuits on the same manner, and therefore res judicata bars Taylor's present claim. Brief in Opposition at 7-8, 11.
The Validity of the Virtual Representation Test
Taylor rejects the D.C. Circuit's virtual representation test because it does not take into account whether parties are legally accountable to each other. Brief for Petitioner at 19. Without the legal relationship requirement, Taylor argues, the four enumerated factors are excessively broad. Id. at 19. The D.C. Circuit established the threshold factors-identity of interests and adequate representation-by reasoning that because Taylor hired Herrick's lawyer, Taylor believed the attorney had adequately represented Taylor's similar interest in the Herrick suit. Id. at 20 n.3. Taylor responds that this finding is unpersuasive in the absence of legal ties between Taylor and Herrick. Id. As Taylor see is, without legal accountability to Taylor, Herrick had no incentive to adequately represent Taylor's interests in the original suit. See Id.
Taylor also argues that without a legal representation requirement, the other factors of the D.C. Circuit's virtual representation test are over-inclusive or meaningless. Taylor argues that the finding of privity through a close, non-legal relationship does not reflect whether the lead party had any duty to represent the non-party in the prior litigation. Brief for Petitioner at 22. Additionally, Taylor argues that a party cannot be said to be "tactically maneuvering" to avoid claim preclusion absent a legal relationship that would bind them to the subsequent decision. Id. Taylor also refutes the substantial participation factor, proclaiming that legal accountability is the critical factor in determining whether the non-party's interests are being adequately represented. Id. at 27.
Finally, Taylor argues that without a legal relationship, notice is necessary to bind a non-party to a previous judgment. Brief for Petitioner at 33. Notice is a fundamental element of due process, apprising interested parties of the existence of the law suit, which in turn gives them an opportunity to present objections. See Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). Taylor interprets Richards, 517 U.S. 793, as allowing virtual representation to cure a lack of notice, but only if the noticed party holds a legal relationship with the non-party. Brief for Petitioner at 34. In a class action or a representative context, notice can be imputed among parties in a legal relationship to each other. Id. at 35. Otherwise, notice to a party is insufficient to protect a non-party. Id.
The FAA responds that the First Circuit has determined that constructive notice is sufficient to uphold due process rights. Brief in Opposition at 9. Under the constructive notice theory, the Court may imply notice from the close relationship between Herrick and Taylor, an affiliation that suggests that Taylor reasonably should have known about Herrick's suit. See id. However, Taylor replies that his relationship with Herrick, which entailed being in the same club and pursuing the same hobbies, did not give rise to the authority to receive notice of Herrick's claim. Brief for Petitioner at 36. Rather, Taylor argues that the notice issue underscores the fundamental flaw of the D.C. Circuit's five-factor test. See Id. Without a legal relationship to bind them, Taylor not only lacked notice of Herrick's claims, but also lacked control over the litigation to ensure that Herrick adequately represented Taylor's interests. See Id.
When may a court's denial of one person's claim prevent a second person from asserting a very similar claim in a later lawsuit? In this case, the U.S. Supreme Court will examine the "virtual representation" concept of claim preclusion and will determine whether courts may use it to bar the suit of a person who had neither a legal relationship with the parties in the prior suit nor notice of that suit. The outcome of this case could significantly impact plaintiffs' litigation options, defendants' susceptibility to multiple similar lawsuits, and the availability of Freedom of Information Act ("FOIA") requests to persons with related interests in governmental information.
Petitioner Brent Taylor disputes the D.C. Circuit's conclusion that his interests were adequately represented in the prior FOIA suit brought by Greg Herrick. See Brief for Petitioner at 8. According to Taylor, claim preclusion applies to a non-party of the prior case only if the non-party could have held the party accountable for its litigation conduct. See Id. Taylor argues that the multi-factor "virtual representation" test applied by the D.C. Circuit is too expansive and cannot adequately replace a legal relationship requirement. See Id. at 8-9. Thus, Taylor asserts that because he had no legal relationship with Herrick in the previous case and did not receive notice of the case, Taylor should not be bound by the result. See Id. at 9.
In contrast, Respondents Robert A. Sturgell, the Federal Aviation Administration ("FAA"), and The Fairchild Corporation ("FAA Parties") support the D.C. Circuit's holding that Taylor's suit is precluded as a correct application of Supreme Court precedent in the public-law context, where the claim being litigated implicates wide public interest. See Brief for Federal Respondent in Opposition at 15; Brief of Respondent The Fairchild Corporation ("Fairchild Brief") at 44. In the FAA's view, the D.C. Circuit properly found that Herrick adequately represented Taylor because of the close relationship between the two men, as evidenced by their joint aircraft restoration work and their sharing of discovery materials. See Brief for Federal Respondent in Opposition at 10-11.
Due Process and Autonomy Interests
Plaintiffs in general oppose a broad application of claim preclusion on due process and individual freedom grounds because such an approach limits a plaintiff's freedom to bring a lawsuit similar to one already litigated. According to the American Association for Justice, the D.C. Circuit's "virtual representation" framework threatens a plaintiff's individual due process right to have an opportunity to present his claim regardless of prior judgments. See Brief for American Association of Justice as Amici Curiae in Support of Petitioner at 11-12. Under the D.C. Circuit's test, two corporations that share transactions, cooperate in legislative activities, and employ the same counsel would theoretically be precluded from bringing separate suits regarding the same statute. See Brief of Civil Procedure and Complex Litigation Professors as Amici Curiae in Support of Petitioner ("Law Professors' Brief") at 14. Additionally, the test could unnecessarily complicate proceedings by making the preclusion determination turn on a detailed inquiry into the relationship between parties to current and former litigations. See Id. at 16; Brief for Lavonna Eddy and Kathy Lander in Support of Petitioner ("Eddy and Lander Brief") at 3.
A liberal approach to nonparty claim preclusion might also restrict plaintiffs' decisional autonomy. According to the amici law professors, nonparties should be bound by prior judgments only in a limited and established set of circumstances: class actions, control of the prior action by a nonparty, privity, and certain special proceedings. See Law Professors' Brief at 3. Nonparty preclusion in other circumstances, they argue, effectively creates a class action without designating a class representative to protect the interests of all class members. See Id. at 10. Absent class action safeguards, a broad nonparty preclusion regime would force nonparties with similar claims to intervene in prior suits in order to protect their rights, thus limiting their freedom to make autonomous litigation choices. See Eddy and Lander Brief at 3.
Efficiency and Exposure Concerns
Although plaintiffs favor narrow claim preclusion, defendants and courts seek to limit redundant litigation. Defendants and courts disfavor relitigation of identical claims that unduly burden them and potentially produce inconsistent results. See Taylor v. Blakey, 490 F.3d at 971. The FAA asserts that, in the context of public-law suits targeting a government entity, the costs imposed by many potential plaintiffs seeking the same result justify expansive preclusion. See Brief for Federal Respondent in Opposition at 12. Likewise, the Fairchild Corporation cautions that Taylor's proposed legal relationship prerequisite to preclusion would interfere with courts' rightful power to bar the claims by plaintiffs who collude to bring separate suits to maximize their chances of a favorable result. See Fairchild Brief at 17.
Implications for FOIA Requests
According to organizations that frequently make FOIA requests, preclusion of FOIA suits based on "virtual representation" would undermine core individual interests protected by FOIA. See Brief of the National Security Archive, the Reporters Committee for Freedom of the Press, OpenTheGovernment.org, the National Whistleblower Center, and the Electronic Frontier Foundation in Support of Petitioner at 3-4. FOIA enforcement and its goal of promoting federal agency transparency depend upon lawsuits from private parties, each of whom may have different yet equally legitimate reasons for seeking the same information. See Id. In this context, the D.C. Circuit's approach could restrict judicial oversight of agencies' denials of FOIA requests, to the detriment of the interested public. See Id. at 1.
For agencies such as the FAA, however, wide availability of FOIA suits might encourage repeated FOIA requests and suits from a group potentially as large as the entire U.S. adult population. See Brief for Federal Respondent in Opposition at 12. This outcome would impose costly defense burdens on federal agencies and companies protecting proprietary information originally submitted to the government. See Fairchild Brief at 44.
In this case, the U.S. Supreme Court will determine the scope of the "virtual representation" theory of privity for claim preclusion purposes. At issue is a complex litigation question of potentially wide applicability. Claim preclusion principles balance plaintiffs' constitutional rights to a day in court against broader societal interests in judicial economy and protection from unwarranted exposure to repetitive litigation. By clarifying the boundaries of the "virtual representation" theory for barring claims, the outcome of this case could broadly influence plaintiffs' strategies for preserving legal interests as well as defendants' and government entities' methods for protecting themselves from costly successive suits.
Written by: William Grimshaw & Stephen Markus
Edited by: Ferve Ozturk