Lucky Brands Dungarees Inc. v. Marcel Fashions Group Inc.


Under the doctrine of preclusion, can a defendant who fails to raise a defense in a prior action be barred from raising that defense in subsequent actions between the same parties?

Oral argument: 

This case asks the Supreme Court to consider whether courts can prevent a defendant from raising a defense if the defendant failed to assert that defense against the same plaintiff in a prior, similar lawsuit. The Second Circuit recognized “defense preclusion” as a valid civil procedure concept to bar Lucky Brands Dungarees from raising a new defense in a trademark infringement lawsuit against Marcel Fashions Group where Lucky Brands Dungarees could have raised this defense in a previous lawsuit over the same alleged infringement. Lucky Brands Dungarees contends that applying defense preclusion against a defendant conflicts with fundamental principles of res judicata and is a novel invention by the Second Circuit that is harmful to defendants whose interests change over time. Marcel Fashions Group counters that defense preclusion is a logical feature of res judicata and argues that this doctrine clearly applies to defendants who, after losing a lawsuit, do not change their conduct. The Supreme Court’s decision in this case will impact when and how defendants strategically raise defenses in civil litigation.

Questions as Framed for the Court by the Parties 

Whether, when a plaintiff asserts new claims, federal preclusion principles can bar a defendant from raising defenses that were not actually litigated and resolved in any prior case between the parties.


Both the Petitioner Marcel Fashions Group (“Marcel”) and the Respondent Lucky Brand Dungarees (“Lucky”) are clothing companies. Marcel Fashions Grp. Inc. v. Lucky Brand Dungarees Inc. at 3. For almost twenty years, the two companies have “hotly” disputed the right to a certain trademark. Id.

Beginning in 2001, Marcel sued Lucky for allegedly infringing on Marcel’s trademark “Get Lucky” by printing that term on Lucky’s clothing products. Id. at 4. The parties ended that lawsuit in 2003 by entering into a settlement agreement in which Marcel agreed to release Lucky from any claims of trademark infringement, and in exchange, Lucky agreed to stop using the term “Get Lucky” in the future. Id. at 4–5. However, the parties later disagreed over whether the settlement agreement prevented Marcel from suing Lucky for any future infringements of the trademark, or if it only addressed infringements that arose prior to 2003. Id. at 5–6.

In 2005, Lucky sued Marcel for issuing a license for the “Get Lucky” trademark. Id. at 6. Marcel counterclaimed, arguing that Lucky had continued to use the “Get Lucky” trademark after the 2003 settlement agreement in violation of that agreement. Id. In response to the counterclaim, Lucky initially argued that the settlement agreement protected Lucky from any and all trademark infringement claims—occurring both before and after 2003—that Marcel could raise. Id. at 6–7. However, Lucky stopped using this defense later in the proceedings. Id. at 7. Marcel’s counterclaim ultimately prevailed at trial, and the district court entered an injunction preventing Lucky from using the “Get Lucky” trademark in the future. Id. at 7–8.

In 2011, Marcel sued Lucky again, claiming that Lucky’s continued use of the “Lucky Brand” trademark violated the district court’s injunction from the previous lawsuit. Id. at 8. Lucky moved to dismiss, relying on the defense that it had briefly raised in the previous action—that the 2003 settlement agreement protected Lucky from all of Marcel’s infringement lawsuits, past and future. Id. at 9. The district court agreed with Lucky and dismissed Marcel’s claim. Id. The district court found that the settlement agreement did not include a time limit on its release of claims, and consequently concluded that the agreement released any relevant claims that Marcel had against Lucky. Id.

Marcel appealed to the United States Court of Appeals for the Second Circuit (the “Second Circuit”), which reversed the district court’s decision. Id. at 3–4. The Second Circuit determined that Lucky was barred from raising the settlement agreement as a defense under the doctrine of res judicata—which precludes a party from raising claims in a current action that the party could have raised in a prior action against the same adversary—because Lucky had largely failed to raise that defense during the 2005 lawsuit. Id. at 12. The Second Circuit emphasized that this concept, which it termed “defense preclusion” (because it prevents the assertion of a defense rather than a claim), is designed to ensure the finality of judgments and avoid the costs and uncertainty of relitigating the same claims. Id. at 11–12. The Second Circuit laid out four requirements for applying defense preclusion to bar a party from asserting a previously available defense: (1) a court decided a previous action on the merits; (2) that action involved the same parties; (3) the party “either asserted or could have . . . asserted” the defense in that action; and (4) the district court determined that defense preclusion was proper after finding that efficiency concerns outweigh unfairness to the party attempting to assert the defense. Id. at 22.

Finding that all four of these requirements were satisfied in this case, the Second Circuit held that Lucky was barred from asserting the settlement agreement as a defense. Id. at 22–24. As a result, the Second Circuit vacated the judgment of the district court and remanded for further proceedings. Id. at 24­–25. Lucky petitioned the United States Supreme Court for certiorari, and the Court granted certiorari on June 28, 2019. See Proceedings & Orders, 18-1086.



Lucky argues that the Second Circuit’s concept of defense preclusion fundamentally misconstrues one of the foundational principles of civil procedure: res judicata. Brief for Petitioner, Lucky Brands Dungarees, Inc. at 22. According to Lucky, the doctrine of res judicata is made up of only two types of preclusion: claim preclusion and issue preclusion. Id. at 22–23. Lucky contends that defense preclusion fits into neither of those two categories, and thus is a novel invention without basis in civil procedure jurisprudence. Id. at 25, 31. Lucky believes that the Second Circuit’s application of defense preclusion is inconsistent with claim preclusion because the claims against Lucky in the present case (the “Current Action”) are different from the claims Lucky faced in the prior case (the “2005 Action”). Id. at 24–26. Lucky explains that claim preclusion does not bar distinct claims from being made in subsequent actions, but only bars the same claim from being made, and notes that the lower courts in this case recognized that Marcel’s claims in the 2005 Action could not be the same as Marcel’s claims in the Current Action because the alleged trademark violations in the Current Action took place after the 2005 Action concluded. Id. at 25–26. Given this difference in timing, argues Lucky, for claim preclusion purposes, the two actions should be treated as arising out of separate transactions—and thus constituting separate claims—even if the underlying violation, an alleged infringement on Marcel’s trademark, is the same. See id. at 26. Lucky asserts that when the same plaintiff in separate actions asserts two claims that arose from separate transactions, the defendant can raise defenses in the second action that it opted not to raise in the first action. Id.

Lucky also acknowledges that courts have recognized a different kind of defense preclusion in the past, where a losing defendant attempts to use an unraised, available defense from a prior action to subsequently, acting as the plaintiff, attack the result of that action in a later action. Id. at 28. In the present case, Lucky points out that it is not acting as the plaintiff and that the defense it asserts in the Current Action would not impact the relief Marcel received in the 2005 Action, nor does it seek to attack the 2005 result. Id. Moreover, Lucky emphasizes that Marcel is not using the Current Action to enforce the 2005 Action because in the Current Action, Marcel attempts to collect additional damages that it could not have obtained at the time of the conclusion of the 2005 Action. Id. at 29–30.

Lucky further asserts that since claim preclusion cannot apply between the 2005 Action and the Current Action, “defense preclusion” as defined by the Second Circuit is an attempt to create a new and improper version of issue preclusion. Id. at 31. Lucky notes that issue preclusion is supposed to apply only to issues that have been conclusively and definitively decided in a final judgment and points out that the court in the 2005 Action recognized that it had not conclusively decided the settlement agreement issue, which Lucky seeks to raise as a defense in the Current Action. Id. at 32–33.

Marcel counters that the core values of res judicata are not fixed, and that defense preclusion is in harmony with the historic and modern use of claim preclusion and issue preclusion. Brief for Respondent, Marcel Fashion Group, Inc. at 24–26. Marcel claims that there are two categories of defense preclusion that differ only in form and not in substance. Id. at 26. According to Marcel, Lucky in fact recognizes one type of defense preclusion in its argument, the type typically used on collateral attack by a former defendant. Id. at 30. The type applicable in this case, Marcel asserts, occurs where a defendant in a subsequent action attempts to employ defenses that were available against a plaintiff in an original action between the same parties. Id. In order to apply defense preclusion, Marcel continues, (1) the parties in the two actions must be the same, (2) the defense must have been available in the original action, (3) the prior action must have concluded in a valid and final judgment, and (4) there must be a “common set of operative facts” between the two actions to the extent that a decision in favor of the defendant in the second action would harm the interests and relief the plaintiff received in the first action. Id. at 27, 31.

Marcel argues that if Lucky had brought its current defense as a claim instead—seeking a declaration that Marcel cannot enforce its trademark against Lucky—preclusion would clearly apply because Lucky would effectively be asking the court to relitigate the 2005 Action and reverse the decision in Marcel’s favor. Id. Marcel asserts that allowing Lucky to effectively relitigate the 2005 Action, merely because Lucky was not the party that initiated the Current Action, contradicts principles of res judicata and should be prohibited by defense preclusion just as it would if Lucky had been the plaintiff in the Current Action. Id. at 31–32, 35. Marcel indicates that claim preclusion does not bar the Current Action against Lucky because this action deals with Lucky’s later-in-time infringement on the same trademark that was violated in the 2005 Action, but Marcel argues that because the 2005 Action and the Current Action implicate a “common set of operative facts,” defense preclusion must still apply. Id. at 31. Marcel goes on to explain that claims are based on the same operative facts where they concern the same or “connected transactions” which are based on the same facts and seek the same relief. Id. at 37–38. Marcel contends that just because the 2005 Action and the Current Action arose out of different transactions does not mean that those transactions were not connected as to their facts, evidence, and legal rights for preclusion purposes. Id. at 42. Therefore, Marcel concludes, although Marcel’s claims and Lucky’s defense arose out of the same set of operative facts, because Marcel’s claims involve conduct that occurred after the 2005 Action, their claims are not precluded, but Lucky’s defense, which could have been raised during the 2005 Action, is. Id.

Finally, Marcel challenges Lucky’s position that because there is no claim preclusion, res judicata dictates that only issue preclusion may apply. See id. at 40–41. Instead, Marcel contends that even if claim preclusion does not apply, defense preclusion still can because defense preclusion relies on the element of res judicata that emphasizes that before preclusion applies, a party must have an actual opportunity to have raised an argument in a previous suit, and Marcel believes Lucky had that opportunity. See id. at 41. Marcel argues that for res judicata and defense preclusion purposes, what matters most is that a second action not challenge the correctness of the first action if the defendant could have raised that challenge during the first action. Id. at 32.


Lucky contends that defense preclusion conflicts directly with the Federal Rules of Civil Procedure because defense preclusion gives all defenses the same effect as compulsory counterclaims, which are forfeited if not raised in an original proceeding. Brief for Petitioner at 34–35. At the heart of this conflict, emphasizes Lucky, is the difference between defenses and counterclaims: a defense is a response to another party’s claim and is not adjudicated separately from that claim, while a counterclaim is an affirmative argument for relief that could be adjudicated separately. Id. at 34. Lucky maintains that the Second Circuit effectively ignored the distinction between defenses and counterclaims, treating any defense that a defendant could possibly assert like a compulsory counterclaim under Federal Rule 13(a), and thus barred if not asserted at the first opportunity. Id. at 35–36. According to Lucky, the blurred concept of defense preclusion conflicts directly with the text of the Federal Rules of Civil Procedure, which distinguishes between defenses and counterclaims under Federal Rule 8(c). Id. at 36. Lucky argues that the defense it wishes to employ in the Current Action is a defense, and not a counterclaim, since it could not create any affirmative relief for Lucky if successful. Id. Finally, Lucky notes that even if a court were to treat its defense as a counterclaim, it would not be a compulsory counterclaim, but a permissive one, because the 2005 Action and the Current Action are based upon different facts; thus, Lucky contends that applying defense preclusion here would give its defense even greater preclusive effect than if Lucky had asserted its defense in the form of a counterclaim. Id. at 37.

Marcel counters that Rule 13(a) acts as an efficient means for courts to implement res judicata and that the Federal Rules of Civil Procedure do not restrict courts from applying other elements of res judicata in conjunction with the Federal Rules. Brief for Respondent at 49. Marcel highlights that in the past, many courts have consistently supplemented Rule 13(a) with other preclusion rules when res judicata policies permit it. Id. Marcel argues that the purposes of defense preclusion and compulsory counterclaims are identical: both prevent a situation where the result of a second decision somehow weakens or defeats the first decision concerning the same cause of action. Id. at 50. Marcel contends that labeling something a defense or a counterclaim, or permissive or compulsory, for the purposes of the Federal Rules of Civil Procedure makes no difference since both defense preclusion and compulsory counterclaims ensure that a defendant cannot relitigate the same claim twice or weaken the finality and result of the first decision. Id. at 50–51. Marcel asserts that such a defense, regardless of how it is labeled, must be barred. Id. at 51.



Lucky warns that creating a doctrine of defense preclusion, and thus barring subsequent actions between the same parties all defenses the defendant could have raised initially, could prove overly rigid, as numerous strategic factors can change from one lawsuit to another. Brief for Petitioner at 42. Lucky maintains that the Supreme Court’s current precedent acknowledges the “reality” that a defendant’s interests will shift over time. Id. For example, Lucky points to the value of the lawsuit, the strength of the claims involved, and the tactical emphasis of one defense over another as reasons why a defendant might choose to omit a defense in one action but raise it in another. Id. Lucky argues that under the Second Circuit’s defense preclusion approach, a defendant will have no choice but to fully litigate every plausible defense, lest the defendant be precluded from raising an ignored defense in a subsequent action. Id. at 41. And despite a district court’s discretion, Lucky contends that a court will almost always find that litigation inefficiencies will unfairly weigh against defendants if they fail to raise a defense immediately. Id. at 46. Ultimately, Lucky concludes, defense preclusion creates the very inefficiencies that it is supposed to eliminate by establishing rigid new requirements for defendants. Id. at 41.

Marcel counters that defense preclusion protects the certainty, finality, and repose that completed lawsuits offer to parties. Brief for Respondent at 22–23. Marcel suggests that defendants might continue to act wrongfully after a first lawsuit if they know they can continue to assert novel defenses to protect themselves when they are sued again. Id. at 39–40. Indeed, Marcel emphasizes that the same litigation values advanced by the wider res judicata doctrine are equally served by defense preclusion, and without these doctrines, litigation could become endless: plaintiffs would continue to raise new grounds for liability, and defendants would continue to raise new defenses in response, all to the detriment of an overburdened court system. Id. at 23. Marcel also argues that defense preclusion is not unjust because it applies only in the “rare” case where a defendant continues to act wrongfully after losing a lawsuit. Id. at 44. Marcel continues that district courts retain flexibility and may decline to apply defense preclusion if the result would be overly harsh to a defendant, such as where a defense was clearly not useful in a previous action, or where the parties were not sophisticated companies guided by competent counsel. Id. at 43–44.


Lucky additionally argues that defense preclusion is especially ill-suited to trademark infringement actions because in trademark cases, facts and circumstances often change between successive lawsuits. Brief for Petitioner at 42–43. Lucky contends that shifting understandings of an individual trademark’s meaning and relevance can mean that certain defenses to infringement may become more important or useful over time, but that defense preclusion would rigidly prevent the use of such newly vital defenses. Id. at 44.

Marcel responds that Lucky’s concerns about using defense preclusion in trademark infringement actions are exaggerated. Brief for Respondent at 45. Marcel notes that other doctrines of res judicata—such as claim and issue preclusion—already apply in the trademark context just as they do in any other type of civil litigation. Id. Further, Marcel argues that pointing to changed circumstances as a situation where defense preclusion would be unfair is a “red herring” because judges can decide not to apply defense preclusion when circumstances have truly changed between the parties. Id. at 46.

Edited by 


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