Kaufman v. Eli Lilly & Co.
65 N.Y. 449 (1985)
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Rule of Law:
The doctrine of collateral estoppel will not preclude a party from relitigating an issue when the prior determination was based on a novel or unresolved question of law that the party did not challenge, and therefore was not 'actually litigated' in the prior action.
Facts:
- In early 1954, Kaufman's mother was prescribed and ingested the drug diethylstilbestrol (DES) while pregnant with Kaufman to prevent a miscarriage.
- Eli Lilly & Company (Lilly) was one of approximately 147 pharmaceutical companies that manufactured and marketed DES for the prevention of miscarriages in 1954.
- In July 1973, at age 18, Kaufman was diagnosed with cancer of the cervix.
- As a result of her cancer, Kaufman underwent a radical hysterectomy, rendering her unable to bear children.
- Kaufman was unable to identify the specific manufacturer of the DES her mother ingested.
- A prior case, Bichler v. Lilly & Co., involved another woman with similar injuries whose mother ingested DES in 1953.
- In the Bichler case, the plaintiff was also unable to identify the manufacturer and proceeded against Lilly on a 'concerted action' theory, alleging that drug manufacturers conspired to market DES without adequate testing.
Procedural Posture:
- Kaufman instituted an action in 1976 against nine pharmaceutical companies, including Eli Lilly & Co., in a New York trial court (Special Term).
- The case was one of 15 similar DES actions designated as 'complex litigation' and assigned to a single judge.
- A different, related case, Bichler v. Lilly & Co., was tried first, resulting in a jury verdict against Lilly which was subsequently affirmed on appeal.
- Following the resolution of Bichler, Kaufman moved for partial summary judgment in her case, seeking to collaterally estop Lilly from relitigating certain factual issues decided by the Bichler jury.
- Lilly cross-moved to depose two jurors from the Bichler trial.
- The trial court granted Kaufman's motion for partial summary judgment and denied Lilly's cross-motion.
- Lilly, as appellant, appealed the trial court's order to the Appellate Division, which affirmed.
- The Appellate Division granted Lilly leave to appeal to the Court of Appeals of New York (the highest court in the state).
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Issue:
Does the doctrine of collateral estoppel preclude a defendant from relitigating a jury's finding of liability based on a concerted action theory when the legal validity of that theory was not challenged or decided in the prior action?
Opinions:
Majority - Simons, J.
No. Collateral estoppel does not preclude a party from relitigating a jury's finding when the legal basis for that finding was an unresolved question of law that was not actually litigated in the prior proceeding. The court reasoned that for collateral estoppel to apply, an issue must have been 'actually litigated and determined.' Because Lilly failed to challenge the legal appropriateness of the concerted action theory in the prior Bichler case, the validity of that theory was never litigated or decided by a court. Applying estoppel would improperly 'fix' the law in the emerging area of mass tort liability based on a single, unchallenged trial court theory. Therefore, while Lilly is precluded from relitigating factual findings that were contested in Bichler (e.g., inadequate testing), it is not precluded from challenging the legal theory of concerted action in this case.
Analysis:
This decision places a significant limitation on the use of offensive non-mutual collateral estoppel, particularly in the context of mass tort litigation involving novel legal theories. It clarifies that the 'actually litigated' requirement for issue preclusion is not met when a party fails to contest the underlying legal validity of a theory, even if a jury renders a verdict on it. The ruling prioritizes the proper development of unsettled law over the efficiency goals of preclusion, ensuring that foundational legal doctrines are established through full adversarial challenge and appellate review, not by default or waiver in a single 'test' case.
