Columbia Cas. Co. v. Playtex FP, Inc.

• Decision Date: 27 November 1990
• Citation: 584 A.2d 1214
• Parties: Prod.Liab.Rep. (CCH) P 12,683 COLUMBIA CASUALTY COMPANY, an Illinois corporation, Defendant Below, Appellant, v. PLAYTEX FP, INC., formerly known as Playtex Family Products, Inc., a Delaware corporation, Playtex Services Corp., a Delaware corporation, Playtex Family Products Corporation, a Delaware corporation, Playtex FP Group Incorporated, a Delaware corporation, Playtex, Inc., a dissolved Delaware corporation, International Playtex, Inc., a dissolved Delaware corporation, Plaintiffs Below, Appellees. . Submitted:
• Court: Supreme Court of Delaware

Page 1214

584 A.2d 1214

Prod.Liab.Rep. (CCH) P 12,683

COLUMBIA CASUALTY COMPANY, an Illinois corporation Defendant Below, Appellant, v. PLAYTEX FP, INC., formerly known as Playtex Family Products Inc., a Delaware corporation, Playtex Services Corp., a Delaware corporation, Playtex Family Products Corporation, a Delaware corporation, Playtex FP Group Incorporated, a Delaware corporation, Playtex, Inc., a dissolved Delaware corporation, International Playtex, Inc., a dissolved Delaware corporation, Plaintiffs Below, Appellees.

Supreme Court of Delaware.

Submitted: Nov. 27, 1990.

Decided: Jan. 8, 1991.

Appeal from Superior Court. Affirmed.

Irving Morris (argued), Kevin Gross and Robert S. Bria, Morris, Rosenthal, Monhait & Gross, P.A., Wilmington (Ross, Dixon & Masback, Washington, D.C., of counsel), for appellant.

Walter L. Pepperman, II (argued), and James Lawless, IV, Morris, Nichols, Arsht & Tunnell, Wilmington (William J. McSherry, Jr. (argued), and Steven R. Haffner, Bryan, Cave, McPheeters & McRoberts, New York City, of counsel), for appellees.

Before CHRISTIE, C.J., WALSH and HOLLAND, JJ.

WALSH, Justice:

We have accepted for interlocutory review a decision of the Superior Court which rejected a claim of collateral estoppel asserted by the appellant, Columbia Casualty Company ("Columbia"), against its former insured, Playtex FP, Inc. ("Playtex"). The Superior Court ruled that Playtex was not precluded from relitigating the issue of Playtex's knowledge regarding the risk of toxic shock syndrome associated with the use of its super-absorbent tampons. Such knowledge was attributed to Playtex as a result of certain jury findings in a federal diversity action in Kansas. We agree with the Superior Court that the rendering jurisdiction's requirement of mutuality of collateral estoppel must be given the same preclusive effect in Delaware, and accordingly affirm.

I

The facts giving rise to this dispute are essentially uncontroverted. On April 2, 1983, Betty O'Gilvie died of toxic shock syndrome. ¹ Kelly O'Gilvie, her husband, brought a products liability action, based on diversity of citizenship, in the United States District Court for the District of Kansas alleging that his wife contracted toxic shock syndrome from her use of Playtex's super-absorbent tampons. O'Gilvie v. International Playtex, Inc., D.Kan., 609 F.Supp. 817 (1985), aff'd in part rev'd in part, O'Gilvie v. International Playtex, Inc., 10th Cir., 821 F.2d 1438 (1987), cert. denied sub nom., Playtex Holdings, Inc. v. O'Gilvie, 486 U.S. 1032, 108 S.Ct. 2014, 100 L.Ed.2d 601 (1988). The jury found for Mr. O'Gilvie and awarded $1,525,000 in compensatory damages and $10 million in punitive damages. In answering a series of special interrogatories, the jury determined that Playtex knew or should have known of the risks associated with the use of its super-absorbent tampons at the time of Mrs. O'Gilvie's death. ²

The trial court granted a partial remittitur of punitive damages on the condition that Playtex remove its super-absorbent tampons from the market. The Court of Appeals, however, ruled that the District Court lacked authority to order a conditional remittitur and reinstated the original judgment. Playtex then appealed to the United States Supreme Court which denied certiorari.

In April, 1989, Playtex filed its Superior Court action against Columbia, seeking reimbursement for payments made by Playtex in response to toxic shock syndrome claims. ³ Playtex also alleged bad faith on the part of Columbia in denying coverage. Columbia counterclaimed for rescission of the insurance policy alleging that Playtex had fraudulently misrepresented the risk posed by tampons when it obtained insurance in 1984.

Relying on special interrogatory eight in the O'Gilvie action, Columbia moved to bar relitigation of the issue of Playtex's knowledge of the risk of toxic shock syndrome from its super-absorbent tampons, based upon the doctrine of collateral estoppel. The Superior Court denied this motion. We accepted Columbia's motion for interlocutory appeal to resolve this issue.

II

The doctrine of collateral estoppel is designed to provide repose and put a definite end to litigation. ⁴ See Tyndall v. Tyndall, Del.Supr., 238 A.2d 343, 346 (1968). "Under ... [this] doctrine, where a question of fact essential to the judgment is litigated and determined by a valid and final judgment, the determination is conclusive between the same parties in a subsequent case on a different cause of action. In such situation, a party is estopped from relitigating the issue again in the subsequent case." Id. Thus, the doctrine of collateral estoppel provides repose by preventing the relitigation of an issue previously decided. In addition, by putting an end to litigation, it conserves judicial resources.

Originally, many courts required mutuality to assert collateral estoppel. Mutuality requires a party attempting to bar an adversary from relitigating an issue to have been a party in the prior litigation or in privity with a party in the prior litigation. See Bernhard v. Bank of America Nat. Trust & Savings Ass'n, 19 Cal.2d 807, 122 P.2d 892, 894 (1942). "Under the requirement of privity, only parties to the former judgment or their privies may take advantage of or be barred by it.... A privy is one who, after the rendition of the judgment, has acquired an interest in the subject matter affected by the judgment through or under one of the parties...." Id. Because it restricts standing, the mutuality requirement limits the situations in which collateral estoppel can be asserted. See Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 649, 58 L.Ed.2d 552 (1979).

Delaware, like many other jurisdictions, has abandoned the requirement of mutuality as a prerequisite to the assertion of collateral estoppel. "[T]he modern trend of decision and the rule in [Delaware], expands the use of the doctrine to situations where mutuality does not exist." Chrysler Corp. v. New Castle County, Del. Super., 464 A.2d 75, 79 (1983). As the California Supreme Court has observed:

No satisfactory rationalization has been advanced for the requirement of mutuality. Just why a party who was not bound by a previous action should be precluded from asserting it as res judicata against a party who was bound by it is difficult to comprehend. Many courts have abandoned the requirement of mutuality and confined the requirement of privity to the party against whom the plea of res judicata is asserted.

Bernhard, 122 P.2d at 895. Thus, many jurisdictions no longer require that a litigant have been a party in the prior litigation or in privity with a party in the prior litigation in order to assert collateral estoppel. It is sufficient that the party against whom collateral estoppel is asserted was a previous party.

The issue before us today, however, does not concern the effect of a prior Delaware judgment but involves the collateral estoppel effect to be given a judgment rendered by a federal district court in Kansas whose jurisdiction was based on diversity of citizenship. The question thus posed is essentially a choice of laws determination.

It is settled law in this jurisdiction that "the doctrines of res judicata and collateral estoppel require that the same effect be given a [foreign] judgment rendered upon adequate jurisdiction as [the foreign court] itself would accord such a judgment." Bata v. Hill, Del.Ch., 139 A.2d 159, 165 (1958), modified sub nom., Bata v. Bata, Del.Supr., 163 A.2d 493 (1960), cert. denied, 366 U.S. 964, 81 S.Ct. 1926, 6 L.Ed.2d 1255 (1961). Bata involved the collateral estoppel effect to be accorded a Dutch decision in a Delaware court. The Chancellor in Bata, applying principles of comity, determined that a judgment of a foreign court should be accorded the same preclusive effect that it would receive in the rendering jurisdiction. 139 A.2d at 174. On appeal, this Court noted with approval "the established rule" that the preclusive effect of a foreign judgment is measured by standards of the rendering forum. Bata v. Bata, 163 A.2d at 504.

The principle enunciated in Bata controls the issue before us today. We find no distinction in the fact that Bata's holding was directed to a judgment rendered by a court in another country as contrasted with a judgment rendered through the application of state law in a federal forum. Although founded on comity, the Bata principle is now one of sound judicial policy and requires that a Delaware court must give the judgments of another state court the same preclusive effect as would a court in that state.

Kansas requires mutuality of estoppel. See McDermott v. Kansas Public Service Co., 238 Kan. 462, 712 P.2d 1199 (1986). Columbia was not a party in O'Gilvie nor was it in privity with a party. Under Kansas law, Columbia could not prevent Playtex from relitigating the issue of its knowledge of the risk posed by super-absorbent tampons at the time Playtex obtained insurance from Columbia. In a Delaware court, the same result must follow.

Columbia contends that the Superior Court erred in denying its motion for collateral estoppel for lack of mutuality because Delaware has abandoned the mutuality requirement. It is argued that the decision of the Superior Court contravenes the internal policy of Delaware with regard to collateral estoppel. We find no merit in this argument.

While it is true that Delaware's abandonment of the mutuality requirement was prompted by the desire to conserve judicial resources and promote finality, see Coca-Cola Co. v. Pepsi-Cola Co., Del.Super., 172 A. 260, 262-63 (1934), a far more compelling conflict of law policy, based on the principle of comity, precludes acceptance of collateral estoppel in this case.

Comity permits one state to give effect to the laws of a sister state, not out of obligation, but out of respect and deference. 16 Am.Jur.2d, Conflict of Laws § 10, at 28 (1979). Thus...