Lucky Brand Dungarees Inc. v. Marcel Fashions Group Inc.
Justia (with opinion) · Docket · oyez.org
Argued on Jan 13, 2020.Decided on May 14, 2020.
Petitioner: Lucky Brand Dungarees Inc., et al..Respondent: Marcel Fashions Group, Inc..
Advocates: Dale M. Cendali (for the petitioners)
Michael B. Kimberly (for the respondent)
Facts of the case (from oyez.org)
Marcel and Lucky Brand are competitors in the apparel industry, and this dispute arises over Marcel’s allegation that Lucky Brand is infringing on its “Get Lucky” trademark through its use of “Lucky” on its merchandise in violation of an injunction entered in an earlier action between the two parties.
In 2003, the two parties entered into a settlement agreement to resolve a trademark dispute in which Lucky Brand agreed not to use “Get Lucky” and Marcel agreed to release certain claims it might have in the future arising out of its trademarks. The two parties contest the scope of Marcel’s release of claims, with Marcel contending that it only released claims as to infringement that occurred prior to the 2003 execution of the agreement and Lucky Brand arguing that it released any future claim Marcel may have in relation to any trademark registered prior to the execution of the agreement. Further litigation ensued.
In litigation between the two parties over substantially the same trademark disputes, Lucky Brand argued for its interpretation of the 2003 settlement agreement. It moved to dismiss on the basis that because the marks at issue were registered prior to the settlement agreement, Marcel released any claim alleging infringement of those marks. The district court denied the motion, concluding that it was premature to determine which claims were subject to release in the 2001 agreement. However, the district court noted that Lucky Brand was “free to raise the issue . . . again after the record is more fully developed.” Lucky Brand raised the defense again in its answer and as an affirmative defense, but not again during the litigation. After a jury trial, the district court entered judgment for Marcel, declaring that Lucky Brand infringed on Marcel’s “Get Lucky” trademark and enjoining Lucky Brand from using the “Get Lucky” mark. Lucky Brand did not appeal.
In 2011, Marcel filed another lawsuit against Lucky Brand alleging that the latter continued to use “Lucky Brand” mark after the injunction. Lucky Brand moved for summary judgment on the basis that Marcel’s claims were precluded by res judicata in light of the final disposition of the previous action. The district court agreed, but the Second Circuit reversed, finding the allegedly barred claims “could not possibly have been sued upon in the previous case.” On remand, Marcel filed a second amended complaint, which Lucky Brand moved to dismiss on the sole basis that the 2001 agreement barred Marcel’s claims. The district court granted the motion and rejected Marcel’s argument that Lucky Brand was precluded from raising those claims.
The Second Circuit vacated, concluding that the doctrine of claim preclusion (or more precisely, defense preclusion) applied in situations as this one and that it barred Lucky Brand from invoking its release defense again in this action.

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

Conclusion
Because the trademark action at issue challenged different conduct—and raised different claims—from an earlier action between the parties, Marcel cannot preclude Lucky Brand from raising new defenses, including a defense that Lucky Brand failed to press fully in the earlier suit. Justice Sonia Sotomayor authored the opinion for the unanimous Court.
“Res judicata” is a term that comprises two doctrines of preclusion. First, issue preclusion (also known as “collateral estoppel”) precludes a party from litigating an issue actually decided in a prior