Collateral Estoppel - Persons Affected

Collateral estoppel is binding only upon those parties to the first action in which a decision was made and anyone who might be regarded as in privity with those parties, such as a bailor and bailee or a principal and his or her agent. In many jurisdictions a party in a lawsuit who is not subject to the estoppel effect of a prior judgment because the party was not a party to the original action in which the judgment was rendered can, in certain instances, use that judgment to bind his or her adversary who had been a party in the former action.

A defendant who, in a second action, pleads the defenses of collateral estoppel against the plaintiff uses it defensively. In many jurisdictions this use of the doctrine is considered fair because the plaintiff has the advantage of selecting the defendant and the forum in which the case is to be decided. The decision to commence the second lawsuit is based, in part, upon the findings or issues in the first action, and, therefore, it is not unreasonable to bind the plaintiff by the issues or findings made in that case.

In contrast, a plaintiff in a subsequent lawsuit who asserts collateral estoppel against a defendant uses the doctrine offensively to buttress his or her cause of action. Fewer jurisdictions, however, permit its offensive use since the defendant against whom it would be applied has neither the choice of forum nor of adversary.