What is “Collateral estoppel”?

Issue preclusion, also known as "collateral estoppel," refers to the principle that a final judgment on a particular issue prevents the same parties or their privies from relitigating that issue in a subsequent lawsuit.

If an issue was actually litigated and determined in a prior lawsuit, it cannot be raised again in a subsequent lawsuit. This principle is designed to prevent parties from getting a second bite at the apple by raising the same issue in a different context.

For example, suppose that a plaintiff brings a lawsuit against a defendant for breach of contract, and the court enters a final judgment in favor of the defendant finding the contract was not valid. If the plaintiff brings a second lawsuit against the defendant for a different claim but still seeks to assert the validity of the contract as part of the new claim, the defendant can assert a defense based on collateral estoppel. It should be noted that if the plaintiff tried to bring a second lawsuit against the same defendant for the same breach of contract, the defendant could assert res judicata as a defense as the plaintiff's claim could be barred by claim preclusion because it would involve the same cause of action that was already decided in the first lawsuit.