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Docket Number

No. 11210.

Attorney(S)

Francis Anderson, Philadelphia, Pa. (Gray, Anderson, Schaffer Rome, Philadelphia, Pa., on the brief), for appellants. Louis Nizer, New York City (Phillips, Nizer, Benjamin Krim, New York City, Walter S. Beck, New York City, Wolf, Block, Schorr Solis-Cohen, Philadelphia, Pa., Louis J. Goffman, Mitchell E. Panzer, Philadelphia, Pa., Schnader, Harrison, Segal Lewis, Philadelphia, Pa., Wm. A. Schnader, Earl G. Harrison, Edward W. Mullinix, Philadelphia, Pa., on the brief), for appellees.

Judges

Herbert Funk Goodrich

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Smart Summary

Case Summary: Lawlor et al. v. National Screen Service Corp. et al., No. 11210 (3d Cir. Mar. 30, 1954)

Factual and Procedural Background

The plaintiffs (referred to as "Poster Co.") leased advertising posters ("standard accessories") to movie exhibitors in the Philadelphia area. The defendant (referred to as "Screen Corporation") distributed standard accessories, specialty accessories and "trailers" in Philadelphia and nationwide, holding exclusive distribution licenses from major motion picture producers.

In 1942 Poster Co. brought a treble-damages suit against Screen Corporation and three producers and sought an injunction. By stipulation the 1942 suit was dismissed with prejudice on April 21, 1943. On the same day Screen Corporation entered a contract to furnish Poster Co. with standard accessories and granted a nonexclusive license to compete in Philadelphia; that contract was renewed in 1946 for five years.

Poster Co. filed the present action in 1949 against Screen Corporation and eight producers, seeking an injunction and treble damages for the period 1943–1949. In 1951 Judge McGranery granted summary judgment as to an injunction against Screen Corporation only, but no final decree was framed. In 1953 Judge Kirkpatrick granted defendants' motion to dismiss on the ground that the 1942 dismissal with prejudice was res judicata of the claim. The Court of Appeals reviewed whether the 1942 dismissal with prejudice barred the later suit.

Legal Issues Presented

Whether the 1942 dismissal with prejudice operates as res judicata to bar Poster Co.'s 1949 suit (i.e., whether the 1949 suit asserts the "same cause of action" as the 1942 suit).
Whether collateral estoppel applies from the 1942 judgment (the opinion addresses whether any collateral estoppel effect exists given that the 1942 case was not tried).
Whether res judicata can be applied against defendants who were not parties to the 1942 action but who are alleged to stand in a sufficiently close relationship to those who were (i.e., whether res judicata can be extended to additional defendants joined in 1949).
Whether the 1942 settlement was voidable on the ground of duress (as claimed by the plaintiffs).

Arguments of the Parties

Appellants' (Poster Co.) Arguments

Plaintiffs alleged additional wrongful acts by defendants occurring after 1942 and sought treble damages and an injunction for the 1943–1949 period.
Plaintiffs contended the 1942 settlement/dismissal was obtained under "duress" (economic compulsion), implying the 1942 dismissal should not bar their later suit.

Appellees' (Defendants') Arguments

Defendants moved to dismiss the 1949 action on the ground that the 1942 dismissal with prejudice was res judicata of the same claim and therefore barred re-litigation.
With respect to defendants who were not parties to the 1942 suit, defendants (and Judge Kirkpatrick) argued that res judicata could be applied to them because of the sufficiently close relationship among the defendants (relying on the principle described in Bruszewski v. United States).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Restatement, Judgments § 68 (1942)	Defines when questions of fact actually litigated and determined are conclusive in later actions (collateral estoppel concept).	Used to explain the collateral estoppel principle and to distinguish it from the res judicata effect of a dismissal with prejudice when no issues were actually litigated.
United States v. International Building Co., 1953, 345 U.S. 502, 73 S.Ct. 807, 97 L.Ed. 1182	Holds that where there has been no hearing, no stipulations of fact, no briefs, no oral argument, and no showing that issues were determined, the prior judgment has no collateral estoppel effect.	Relied upon to show the 1942 dismissal produced no collateral estoppel effect because the earlier case had no hearing or adjudication of facts.
2 Freeman on Judgments 1395-96 (5th ed. 1925)	Authority that a consent judgment or dismissal with prejudice has the same preclusive effect as a judgment rendered after trial.	Used to support the proposition that the 1942 dismissal with prejudice operates as a bar to re-litigation of the same cause of action.
United States v. Parker, 1887, 120 U.S. 89, 7 S.Ct. 454, 30 L.Ed. 601	Supports the rule that a consent judgment/dismissal with prejudice functions as a bar like a litigated judgment.	Cited as precedent for treating the 1942 dismissal with prejudice as having the same effect as an adverse judgment after trial.
Urbino v. Puerto Rico Ry. Light Power Co., 1 Cir., 1947, 164 F.2d 12	Authority on the preclusive effect of consent judgments/dismissals with prejudice.	Quoted in support of the proposition that the 1942 dismissal with prejudice bars the same claim later asserted.
Williamson v. Columbia Gas Electric Corp., 3 Cir., 1950, 186 F.2d 464	Addressed difficulties in defining "cause of action" for res judicata purposes.	Cited as an instance where the Court struggled with the "cause of action" question, but noted as materially different from the instant problem and not directly aiding resolution here.
Restatement, Judgments, Introductory Note p. 239 (1942)	Explains that the term "cause of action" may have varying meanings in different contexts.	Used to frame the difficulty of determining whether the 1942 and 1949 suits assert the same cause of action.
"Res Judicata Reexamined" by Edward W. Cleary, 57 Yale L.J. 339 (1948)	Scholarly review of the literature on res judicata and cause of action issues.	Mentioned as part of the literature showing the complexity and disagreement surrounding the cause-of-action concept; not applied as binding authority.
Restatement, Judgments § 61, comment c (1942)	Illustrates that separate, isolated torts are distinct causes of action and prior judgments on one do not bar subsequent suits on separate torts.	Used by the court to distinguish situations where repeated wrongful acts constitute separate causes of action (example: repeated battery) from situations like the instant case.
Avery v. White, 1910, 83 Conn. 311, 76 A. 360	Discussed in Freeman on Judgments regarding repetition of trespass or similar torts.	Referenced (via Freeman) in illustrating when repeated torts may be separate causes of action.
Bruszewski v. United States, 3 Cir., 181 F.2d 419	Describes the application of res judicata against a plaintiff who asserts essentially the same claim against different defendants; enlarges res judicata beyond strict privity categories when fair.	Adopted by Judge Kirkpatrick and relied on by the Court to support applying res judicata to defendants not joined in the 1942 action where relationships among defendants are sufficiently close.
Rector v. Suncrest Lumber Co., 4 Cir., 1931, 52 F.2d 946	Addresses circumstances under which economic pressure does not constitute duress sufficient to void a contract or settlement.	Used to reject the plaintiffs' contention that the 1942 settlement was void for economic duress; the court held economic need alone does not constitute such duress in this context.
Restatement, Contracts § 494 (1932)	States the principle that mere economic necessity typically does not render a settlement void for duress (with specified exceptions).	Relied upon to support the court's rejection of plaintiffs' duress claim regarding the 1942 settlement.
Goodrich, "Permanent Structures and Continuing Injuries — The Iowa Rule," 4 Iowa L.Bull. 67 (1918)	Scholarly discussion of complexities when injuries arise from permanent structures or continuing invasions.	Referenced in the discussion demonstrating complexity of analogies in continuing-injury cases; not treated as binding precedent.

Court's Reasoning and Analysis

The court's analysis proceeded in logical steps:

The court distinguished res judicata (claim preclusion) from collateral estoppel (issue preclusion). It noted collateral estoppel was not implicated because the 1942 case was not tried and there was no adjudication of facts to bind the parties on particular issues (citing Restatement §68 and United States v. International Building Co.).
The court held that a consent judgment or dismissal with prejudice operates as a bar to subsequent litigation on the same cause of action, equivalent in effect to a litigated judgment (citing Freeman on Judgments, United States v. Parker, and Urbino v. Puerto Rico Ry. Light Power Co.). Thus the 1942 dismissal with prejudice could preclude later litigation if the subsequent suit asserted the same cause of action.
The decisive question became whether the plaintiffs' 1949 suit asserted the "same cause of action" as that asserted in 1942. The court acknowledged the conceptual difficulty of defining "cause of action" and noted prior authorities and commentary exploring the problem (Williamson, Restatement, and scholarly literature).
The court evaluated the substance of the complaints and concluded that although the 1949 complaint contained allegations of some additional acts since 1942, in essence both suits complained of the same combination or conspiracy by defendants to injure Poster Co.'s business and acts done pursuant to that combination. Therefore, the 1949 suit asserted essentially the same cause of action as the 1942 suit.
Regarding additional defendants joined in 1949 who were not parties to the 1942 suit, the court adopted Judge Kirkpatrick's reliance on Bruszewski: res judicata may be extended beyond formal privity where the relationship between defendants is close enough and it is fair and proper to apply the policy that litigation must end. The court accepted that the relationship among defendants here justified applying res judicata to them as well.
The plaintiffs' contention that the 1942 settlement was procured by economic "duress" was rejected. The court explained that mere economic necessity does not ordinarily void a settlement and cited Rector v. Suncrest Lumber Co. and Restatement, Contracts §494, while noting limited exceptions (e.g., certain employee claims) not applicable here.
The court thus concluded that the 1942 dismissal with prejudice barred the 1949 suit and that dismissal with prejudice had the same preclusive effect as an adverse judgment after trial.

Holding and Implications

Holding: The judgment of the District Court granting defendants' motion to dismiss was affirmed.

Implications:

Direct effect: Poster Co.'s 1949 action was held to be barred by the prior 1942 dismissal with prejudice; the plaintiffs cannot re-litigate the same cause of action in this matter and the dismissal stands.
The court applied established doctrines—(1) a dismissal with prejudice operates as a bar like an adjudicated judgment and (2) collateral estoppel did not apply because there was no prior adjudication of issues—rather than announcing a new rule. The opinion does not purport to create a novel legal precedent beyond applying the existing law to the facts before the court.

This summary is based exclusively on the text of the provided opinion.

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LAWLOR et al. v. NATIONAL SCREEN SERVICE CORP. et al.

GOODRICH, Circuit Judge.

This suit arises upon a matter collateral to the distribution and exhibition of motion picture films. The plaintiffs ("Poster Co.") are engaged in the business of leasing advertising posters ("standard accessories") to exhibitors in the Philadelphia area. The defendant ("Screen Corporation") distributes standard accessories, specialty accessories and "trailers" in the Philadelphia area and on a nation-wide basis. Screen Corporation has been granted exclusive licenses to distribute this material by all of the major moving picture producers.

In 1942 Poster Co. instituted a treble-damage suit against Screen Corporation and three of the eight producers who are defendants in the present action. Poster Co. also sought an injunction. By stipulation of the parties this suit was dismissed with prejudice on April 21, 1943. By a contract dated the same day, Screen Corporation agreed to furnish Poster Co. with standard accessories and granted Poster Co. a nonexclusive license to compete with it in Philadelphia. This contract was renewed in 1946 for a five-year period.

In 1949 Poster Co. commenced the present action against Screen Corporation and the eight producers, and again sought an injunction and treble damages from 1943 to 1949. In 1951 Judge McGranery granted Poster Co.'s motion for summary judgment as to an injunction against Screen Corporation only, but a final decree was never framed. In 1953 Judge Kirkpatrick granted the defendants' motion to dismiss on the grounds that the 1942 judgment was res judicata of this claim.

The phase of the doctrine of res judicata here concerned is the effect of the 1942 dismissal with prejudice as a bar to the present suit. No question of collateral estoppel by the former judgment is involved because the case was never tried and there was not, therefore, such finding of fact which will preclude the parties to that litigation from questioning the finding thereafter. Nor is there any question of merger of plaintiffs' claims by the 1942 judgment, because, by the dismissal with prejudice, the defendant is the record winner in the original suit.

"(1) Where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between the parties in a subsequent action on a different cause of action. * * *
"(2) A judgment on one cause of action is not conclusive in a subsequent action on a different cause of action as to questions of fact not actually litigated and determined in the first action." Restatement, Judgments § 68 (1942). For provisions regarding questions of law, see § 70. The Supreme Court has recently held that when, as here, there has been no hearing, no stipulations of fact, no briefs filed, no oral argument, and no showing that the issues were determined by the court the judgment has no effect as collateral estoppel. United States v. International Building Co., 1953, 345 U.S. 502, 73 S.Ct. 807, 97 L.Ed. 1182.

What did the 1942 judgment do to the possibility of recovery in this suit? It should be noted at the outset that our problem here is not affected by the fact that the dismissal of the 1942 action was by stipulation instead of the result of a trial on the facts and the law. A consent judgment or, like the one present, one which is a "dismissal with prejudice" has the same effect as a bar as if the case had gone to trial and the judgment rendered thereafter. 2 Freeman on Judgments 1395-96 (5th ed. 1925); United States v. Parker, 1887, 120 U.S. 89, 7 S.Ct. 454, 30 L.Ed. 601; Urbino v. Puerto Rico Ry. Light Power Co., 1 Cir., 1947, 164 F.2d 12.

The decision of the case is going to depend upon whether the plaintiffs in the present suit are suing upon the "same cause of action" as that upon which they sued in 1942 and lost. If they are, then they are barred from suing again. If they are not, they may maintain this action. This Court struggled with the "cause of action" question in Williamson v. Columbia Gas Electric Corp., 3 Cir., 1950, 186 F.2d 464, but the problem in that case was so different from the one here that we do not see that it materially aids our solution. It is recognized that the term may change its meaning when used in different situations. Restatement, Judgments, Introductory Note p. 239 (1942). There is already a goodsized body of legal literature on the question of what constitutes a cause of action, a subject upon which learned doctors disagree. Some of the literature on the problems is reviewed in "Res Judicata Reexamined" by Edward W. Cleary in 57 Yale Law Journal 339, 340 n. 7 (1948). Perhaps some words of that author (though not in context) show the difficulties here involved. He is talking about situations where a plaintiff splits his cause of action and he says at page 346: "In deciding such cases, the concept of a cause of action possesses real utility if applied with realization of what actually is at issue and with due regard for the other factors herein discussed." This sounds easy if one says it fast. The core of our problem is to find out whether what is at issue is the same thing as what was at issue.

Some situations are easy to solve and those are the ones upon which it is easy to find authority. Take the case of a single isolated tort, for instance. A attacks B and beats him. Six months later he does it again. Whatever judgment might be rendered, for either party, in a suit for the first battery would not be a bar to a suit for the second battery. Restatement, Judgments § 61, comment c (1942). The only possibility of its having any effect in the suit for the second battery would be the binding effects of collateral estoppel, if there were any. We have somewhat the same thing where the tort claimed is a repeated trespass to land by entering and cutting timber. Here, too, the invasion of the plaintiff's interest is a separate one each time and recovery or defeat in a first suit will not preclude a second unless some element of collateral estoppel is involved. When the plaintiff's complaint is for a nuisance maintained by the defendant or for a continuing invasion of plaintiff's land, by a structure on the defendant's land, then the question becomes complicated with factors such as the permanence of the structure, whether the invasion can be abated by means of an injunction, and so on. Here the problems have become so complex that there is little to be gained by referring to analogies which, themselves, show only a state of confusion.

Avery v. White, 1910, 83 Conn. 311, 76 A. 360, discussed in 2 Freeman on Judgments 1305 (5th ed. 1925).

See 2 Freeman, op. cit. supra note 2, at 1295 and following. For analysis of one state's difficulty along this line, see Goodrich, "Permanent Structures and Continuing Injuries — The Iowa Rule," 4 Iowa L.Bull. 67 (1918).

All this leads up to the instant problem but does not solve it. We have a further difficulty. Conspiracy alone is not a tort although it may be a crime, as pointed out in the Columbia Gas case cited above. Acts done in pursuance of the conspiracy become actionable when they hurt a plaintiff. On the other hand if the plaintiff complains about a conspiracy, asks for damages for acts done pursuant thereto and to have the conspiracy stopped by injunction, when he loses that lawsuit by judgment is he barred from thereafter claiming damages for other acts, or further acts, which he says are done in furtherance of the original conspiracy? We think he is, although neither counsel nor we have found an instance where on this very set of facts a court has so decided.

The following question then becomes the next one to answer. Did the plaintiffs in their 1942 suit base their claim upon essentially the same course of wrongful conduct of which they complained in 1949? Judge Kirkpatrick thought so and so decided. We agree. It is true that there are some additional allegations, some new acts which the plaintiffs say the defendants have done since the earlier suit. But we think in substance the complaint is the same and that what plaintiffs object to is an alleged combination of the defendants to do illegal things harmful to the plaintiffs' business and acts done pursuant to that combination. Since plaintiffs by their consent judgment in 1942 had an adjudication against their claim at that time we do not think they improve their position by reiterating essentially the same complaint in 1949.

Additional defendants were joined in the 1949 suit. Judge Kirkpatrick met this point as follows:

"The defense of res judicata is available to those defendants in the present suit who were not joined in the 1942 action. In Bruszewski v. United States [3 Cir.], 181 F.2d 419, the Court pointed out that where `res judicata is invoked against a plaintiff who has twice asserted essentially the same claim against different defendants, courts have * * * enlarged the area of res judicata beyond any definable categories of privity between the defendants.' The only question is whether the relationship between all the defendants is close enough to make it a fair and proper application of the policy of the law that there should be an end to litigation. I have no doubt that the relationship of the defendants in this case, taking into consideration the allegations of the 1942 complaint, is close enough to bring them all within the scope of the doctrine of res judicata."

We cannot improve upon this statement.

The plaintiffs claim that the 1942 suit was settled because of "duress." Of course it is not suggested that there was any physical compulsion. What is meant is that their economic position was such that this was the best settlement they could get. It is well settled that merely because one enters into an agreement which he would not enter if he did not need the money there is not such duress as will void the contract. See Rector v. Suncrest Lumber Co., 4 Cir., 1931, 52 F.2d 946; and Restatement, Contracts § 494 (1932). Lest this generalization be thought too sweeping it should be stated as a matter of caution that it does not apply to settlements of suits by railroad employees against employers for personal injuries, seamen's cases and the like.

The judgment will be affirmed.

LAWLOR v. NATIONAL SCREEN SERVICE CORP