Picking the playing field for dispute resolution is often key to a good outcome and can be done by contract long before litigation is a reality. Yet if that is not done, and one national corporation is in a contentious dispute with another, both sides may sue each other within days in different courts. The dilemma then is what to do when one court rules on an issue that is also before the other court, as was the case in recent product liability-related litigation. In a December 29, 2008 opinion rendered in Allianz Insurance Co. v. Guidant Corp., the Illinois Second District Appellate Court addressed what an Illinois court should do when another state’s court renders a decision on the same point in concurrent, parallel litigation between the same parties that contradicts an earlier ruling by the Illinois court.
In the Allianz v. Guidant litigation, Allianz sued Guidant in Illinois on November 6, 2003. Allianz sought a declaration that it had no duty to defend Guidant in product-liability litigation brought against Guidant based on a device manufactured by Guidant, the Ancure Device. Allegedly, the Ancure Device, a FDA-approved vascular graft with a delivery catheter, failed to stay deployed properly after insertion and was not as long as advertised. Guidant had spent at least $5 million settling some lawsuits with other lawsuits still pending. Allianz further sought a declaration that it had no duty to indemnify Guidant for any loss resulting from that product-liability litigation. Guidant sued Allianz in Indiana on November 8, 2003. Guidant sought damages for Allianz’s alleged breach of contract for its failure to defend and indemnify Guidant in that product-liability litigation and sought a declaration that Allianz was obliged to cover its subsequent losses due to that litigation.
Before the Illinois trial court, Allianz won interlocutory rulings on a certain coverage issue on June 12 and August 1 of 2006. On March 23, 2007, Guidant won a decision in the Indiana trial court on the same issue, in which the Indiana trial court acknowledged the Illinois trial court’s decisions but refused to draw the same conclusion. In May, while the Indiana trial court’s ruling was on appeal, Guidant asked the Illinois trial court to vacate its prior decisions in favor of the result arrived at in the Indiana court’s decision. The Illinois trial court refused, and the Illinois Appellate Court affirmed the trial court’s decision.
Guidant brought its argument under the guise of collateral-estoppel and Full-Faith-and-Credit doctrines, which the Appellate Court rejected on a number of technical points. It seems likely that the Appellate Court would have rejected this argument even if Guidant had met the technicalities of these doctrines. The purpose of these doctrines is to prevent relitigation of previously adjudicated claims. They are designed to spare courts from devoting any resources to disputes that already have been resolved. Here, Guidant litigated an issue to a decision in Illinois, then litigated the same issue again in Indiana. “In other words, under the procedural posture of this case, the parties did not ‘relitigate’ the [coverage] issue in Illinois after the Indiana court entered its orders. . . . Since the [coverage] issue had already been argued and decided in Illinois prior to the date the Indiana court entered the orders alleged to have preclusive effect, the principle underlying the doctrine of collateral estoppel – judicial economy – would not be served. In fact, all of the time and work devoted to this issue by the parties and the Illinois court would go for naught.”
This case is instructive for parties involved in competing, parallel litigation where there are efforts in both states to secure a judgment on the same issue. Each state would give effect to its own judgment, while other states likely would give effect to the judgment rendered last. To avoid an inconsistent judgment, the party that wins the judgment in the state whose court rules first may wish to register and enforce that judgment in the other state. This could halt that litigation proceeding in the other state’s court before that court could render a judgment against that party.