Washington Case Update: Playing Offense: Collateral Estoppel Not Permitted Where New Defense Is Available

From the desk of Joshua P. Hayward: If a defendant has already litigated an issue in one court, can a new plaintiff use that against them in a completely different case in another jurisdiction? Read on to see how the Washington Court of Appeals addressed this issue in the context of a car component that caught fire.
Claims Pointer: The doctrine of collateral estoppel (also known as “issue preclusion”) prevents a party from litigating issues that have already been decided. For collateral estoppel to apply, the issue must (1) be identical to that involved in a prior case; (2) the issue was actually determined to a final judgment; (3) the same parties (or privy) must be involved; and (4) estoppel would not work an injustice on the party against whom it is applied. Normally, the doctrine of collateral estoppel is used defensively, but it may be applied “offensively” as long as four additional factors are considered, including that the “defendant might be afforded procedural opportunities in the later action that were unavailable in the first and that could readily cause a different result.”
State Farm Fire and Cas. Co. v. Ford Motor Co., Case No. 71302-7-I, 2015 WL 677345, Washington Court of Appeals, Division 1.
In 2010, Carol Coe-Hauskins’ 1994 Lincoln Town Car went up in flames and the fire spread to her home. Her insurer, State Farm, covered a portion of her expenses. A few months later, Coe-Hauskins and State Farm (collectively, “Hauskins”) filed a product liability suit against Ford Motor Company. Hauskins alleged that the fire was caused by a faulty speed control deactivation switch (SCDS), an electrical component installed in many of Ford’s vehicles. The SCDS had a high rate of malfunction leading to engine fires in Ford vehicles. In 2006, the National Highway Traffic Safety Administration (NHTSA) released a study in cooperation with Ford that revealed three factors that could cause the SCDS to have a high malfunction rate:
“(1) high vacuum pressure due to placement on the master cylinder; (2) SCDS orientation in the “vertical up” position (as opposed to angled); and (3) continuous power to the SCDS. The NHTSA found the factors to be present in several, but not all, Ford and Lincoln vehicles equipped with the…SCDS.”
Hauskins’ Lincoln did not exhibit either the first or second factor—the SCDS was not located on the master cylinder and was installed at a 45-degree angle. In 2007, Ford issued a recall for the 1994 Lincoln Town Car. Seventeen months before the fire, Hauskins took her Lincoln into a Ford dealership to receive the recall repair, which consisted of installing a fuse that would cut power to the SCDS if it became defective, thereby neutralizing any chance of fire.
In addition to a products liability claim, Hauskins filed a negligence claim for failure to warn of dangers associated with the Lincoln. Hauskins moved for partial summary judgment on the issue of design defect, arguing that Ford was precluded from re-litigating whether its product was defective under the doctrine of collateral estoppel. Ford presented evidence that the recall repair was not defective. The trial court nonetheless granted the motion, finding that Hauskins had established each element of collateral estoppel. The issues of causation and damages were tried before a jury. Ford attempted to present evidence that the repair was not defective, but the trial court excluded that evidence. When the jury deadlocked, the court declared a mistrial. Ford appealed the summary judgment ruling.
The Court of Appeals reversed the trial court’s ruling that Ford was precluded from re-litigating the issue of whether its product had a design defect. Hauskins identified two cases (South Carolina and Minnesota) in which Ford had litigated the issue of design defect related to faulty SCDS components and had lost on the issue. The Court of Appeals stated that the issues in either case were too factually dissimilar to meet the first element of collateral estoppel. In the South Carolina case, the car in question had not received the recall fix that Hauskins had on her car, so the issues were not the same. In the Minnesota case, although the car had received the recall fix, the SCDS configuration was different from the Lincoln because it contained all of the problems that the NHTSA identified in its study (placement on master cylinder, vertical up position, continuous power) whereas the 1994 Lincoln only had the last problem of continuous power.
The court also found that the legal standard used in the cases cited by Hauskins was not comparable to the standard in Hauskins’ case. In the other two cases, the plaintiffs sued under theories of negligence, whereas Hauskins sued under a theory of product liability that requires a completely different set of legal elements and standards.
The court furthermore concluded that use of offensive collateral estoppel would prejudice Ford because it was able to present new evidence that was unavailable in the prior cases. The court pointed out that in the prior cases, the court had not allowed evidence regarding whether the recall fix was defective. Hauskins argued that that evidence was not available here either because the trial court had disallowed the evidence. The Court of Appeals stated that even though the trial court had excluded evidence at trial, that same evidence was properly before the court on summary judgment on the issue of collateral estoppel, so it was available to be litigated. The court remanded the case to the trial court, to allow Ford to litigate the issue of design defect.
Case updates are intended to inform our clients and others about legal matters of current interest. They are not intended as legal advice. Readers should not act upon the information contained in this article without seeking professional counsel.