Opinion
Introduction
Two pretrial questions are presented in this products liability case alleging a design defect in the defendant manufacturer’s product: (1) whether a “final” judgment was entered in a prior action involving the same defendant and another plaintiff so as to permit the application of the collateral estoppel doctrine? and (2) assuming the first question is answered in the affirmative, whether the collateral estoppel doctrine should be applied to preclude the defendant from relitigating the design defect issue in the present action? The prior action was the first action against the defendant resulting in a jury determination that the product was defective in design; however, there have since been two jury verdicts in other separate actions—one against and one in favor of the defendant on the design defect issue.
We answer the first question in the affirmative and the second question in the negative. Accordingly, the writ is denied.
Procedural History
Petitioner seeks damages for personal injuries sustained when he became entangled in a model No. 9900 cotton picking machine manufactured by real parties in interest Deere & Company and John Deere Company (hereinafter Deere). Petitioner alleges the machine is defective in design because it was not equipped with an emergency shutoff switch at ground level which a person en *935 tangled in the machine could use to turn off the power. Deere defends the design on the theory that if a shutoff switch were placed at ground level it would encourage the operator to leave the cab without turning off the power contrary to an explicit warning sign posted in the cab.
In June 1982, petitioner moved for partial summary adjudication of the issues, asserting that Deere was barred by collateral estoppel from contesting the equipment was defective because of a judgment entered in an identical case against Deere tried in the San Francisco Superior Court in July 1980 in the action Floyd A. Demanes, special administrator of the estate of William Don Gilbert, deceased, et al., v. John Deere Company et al. (Super. Ct. San Francisco, No. 701849; 1 Civ. 52728, app. dism., hereinafter Demanes).
In Demanes, the jury found by special verdict that the Deere cotton picker was defective in design because of the absence of the shutoff switch at ground level and that the defect was the proximate cause of the decedent’s death. The jury awarded $262,500 to the administrator Demanes for the wrongful death of the decedent Gilbert after adjusting for the comparative fault of the decedent and his employer (fixed at 25 percent of the total award of $350,000, less workers’ compensation liens). The special verdict and a judgment thereon was entered and filed on July 25, 1980.
Deere appealed from the judgment and during the pendency of the appeal, the parties reached a settlement agreement. Pursuant to this agreement entitled “Receipt and Release in Full,” Deere agreed to pay $218,837 to the administrator Demanes and to withdraw its appeal. The plaintiffs agreed to give a full release to Deere. The agreement provided that Deere “disclaim[ed] any liability of any kind whatsoever” and the parties agreed to “settle this matter in order to avoid the further expense, inconvenience and distraction of litigation.” The agreement further provided that it was “a compromise settlement of a disputed claim and the payment and withdrawal of the Appeal in consideration of this release shall not be construed to be an admission of liability.” Finally, the plaintiffs agreed to dismiss their action against Deere with prejudice. The appeal was ordered dismissed by the appellate court on November 9, 1981.
In the instant action, Deere opposed petitioner’s motion for summary adjudication of the issue of the defective design of the product on the ground that none of the requirements for application of collateral estoppel was present. The trial court denied the motion on the ground that the Demanes action was never final. 1
*936 On August 26, 1982, petitioner filed a petition for writ of mandate challenging the trial court’s denial of the motion for partial adjudication of the issues. We issued the present order to show cause.
A “Final ” Judgment for Issue Preclusion Purposes in Later Actions Against Deere Was Entered, in the Demanes Case
The Restatement Second of Judgments explains the concept of judgment finality for issue preclusion purposes: “The rules of res judicata are applicable only when a final judgment is rendered. However, for purposes of issue preclusion (as distinguished from merger and bar), ‘final judgment’ includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect. ” (Rest.2d Judgments, § 13, italics added.) This section “makes the general commonsense point that such conclusive carry-over effect should not be accorded a judgment which is considered merely tentative in the very action in which it was rendered. On the contrary, the judgment must ordinarily be a firm and stable one, the ‘last word’ of the rendering court—a ‘final’judgment.” (Id., § 13, com. a, italics added.)
As emphasized by the Restatement, it is important to determine whether a judgment is “final” for purposes of appellate review or merger and bar, as distinguished from issue preclusion in subsequent actions. (Rest.2d Judgments, § 13, com. b.) The requirement of finality of judgment is interpreted strictly, as indicated above, when considered for purposes of appellate review or application of bar or merger. Issue preclusion, however, is a different matter. “But to hold invariably that that kind of carry-over is not to be permitted until a final judgment in the strict sense has been reached in the first action can involve hardship—either needless duplication of effort and expense in the second action to decide the same issue, ...” (Id., § 13, com. g.) The Restatement cautions: “Before [giving carry-over effect], the court should determine that the decision to be carried over was adequately deliberated and firm, even if not final in the sense of forming a basis for a judgment already entered. Thus preclusion should be refused if the decision was avowedly tentative. On the other hand, that the parties were fully heard, that the court supported its decision with a reasoned opinion, that the decision was subject to appeal or was in fact reviewed on appeal, are factors supporting the conclusion that the decision is final for the purpose of preclusion.” (Ibid.) We would add an additional factor: if a judgment for the plaintiff is settled on appeal favorably to the plaintiff, the decision may be final for issue preclusion purposes provided the other factors of certainty and firmness are satisfied.
Although California law is settled that pending appeal a trial court judgment is not final and will not be given res judicata effect (Code Civ. Proc., *937 § 1049), 2 once the appeal is settled favorably to the plaintiff and thereafter dismissed, the Restatement analysis and reason itself dictate that the trial court judgment reemerges with sufficient finality to permit the application of collateral estoppel.
A prior decision of this court supports such a holding. In
Louie Queriolo Trucking, Inc.
v.
Superior Court
(1967)
During pendency of the first action, Queriolo Trucking sued Tumblin for property damage to its truck and contents. Following the disposition of the first action, Queriolo Trucking sought to file a supplemental complaint alleging that the liability issue had been resolved against Tumblin and that Tumblin was estopped from denying its negligence and from asserting the contributory negligence on the part of its driver. The trial court denied Queriolo’s motion.
We issued a writ of mandate directing the trial court to permit the supplemental complaint to be filed. Although we found that the judgment on the jury’s verdict on the liability phase of the earlier trial had been prematurely entered since the damage phase had not been tried, we concluded the dismissal with prejudice following the settlement of the action amounted to a “judgment covering all issues.” (
Justice Stone in his concurring opinion in
Queriolo Trucking, supra
(252 Cal.App.2d at pp. 200-201) emphasized that the so-called retraxit was entered after a jury trial and was not the result of a pretrial settlement made before liability had been judicially determined. “The critical question is whether the [collateral estoppel] doctrine applies to those issues of a . . . trial that are fully litigated whether resolved by a final judgment or by a retraxit after verdict or decision of the court. If collateral estoppel is not applicable, the . . . trial becomes a vehicle by which a defendant can . . . litigate identical liability issues a number of times in multiple actions arising from the same transaction. ”
(Id.,
at p. 201; see also
Sylvester
v.
Soulsburg
(1967)
Deere argues that
Queriolo Trucking
was incorrectly decided and that we should follow
Lea
v.
Shank
(1970)
In
Lea
v.
Shank, supra,
*939 On appeal, the judgment was reversed with directions to try all issues necessary to determine the question of defendant’s liability (including plaintiffs contributory negligence, if any) and to enter judgment for plaintiff against either or both defendants if found to be liable for the damages previously determined. The reviewing court noted the record failed to show that the settlement in the earlier action by plaintiff’s passenger was based on an acceptance by defendant driver of the jury’s finding of liability in that action; hence, “[t]he settlement of the [prior] action following the return of special verdicts did not serve to make those verdicts binding adjudications available to Lea in his action; ...” (Id., at pp. 977-979.)
We believe
Lea
incorrectly held that for collateral estoppel purposes “a dismissal with prejudice operates as a judgment in favor of the party dismissed.” The only authority cited for this proposition is
McDonald
v.
Severy
(1936)
The purpose of a dismissal with prejudice is to end the litigation and to prevent the plaintiff from again filing suit on the same cause of action or related causes of action arising from the same transaction against the same defendant. (See
Goddard
v.
Security Title Ins. & Guar. Co.
(1939)
Finally, the
Lea
court observed that the record on appeal before it was ambiguous on whether consideration of the contributory negligence of the plaintiff driver as pleaded by the defendant driver had been withdrawn from the first jury. The court was concerned about this and stated there was “an unsatisfac
*940
tory record upon which to say the defense of contributory negligence had been withdrawn or waived. The response of counsel for Shank and McAtee might have been intended to express disagreement with the representation that there was no issue of contributory negligence within the more extensive disagreement that ‘the issue of liability is res judicata.’ ” (
We construe this language to mean the reviewing court in Lea was seriously concerned about the integrity of the jury determination of the defendant’s liability in the first action, i.e., since there had been no consideration of the plaintiff driver’s contributory negligence, there was substantial doubt regarding the jury’s finding of liability on the part of the defendant. 4 In the present case, the question of petitioner’s contributory negligence will not be precluded by the former judgment; the jury will consider this particular plaintiff’s possible contribution to his own injuries.
To summarize, not only is
Lea
distinguishable from the present case, we reject
Lea’s
holding that a retraxit followed by a dismissal with prejudice may not be construed as a judgment for plaintiff on the merits for collateral estoppel purposes. While facially appealing,
Lea’s
holding does not accord with reality. Under no stretch of the imagination in the present case can the payment of $218,837 on the $262,600 judgment (83 percent of the judgment) be considered a judgment on the merits for Deere; rather, it reflects a considered decision by Deere that pursuing the appeal to its conclusion would result in Deere paying the full judgment plus interest. Deere’s facade of continued nonliability by the use of stereotyped language in the settlement agreement does not alter the fact that the plaintiff prevailed in the lawsuit because of the jury’s finding of a product defect.
5
If recitals in the prior judgment or court papers were the test of the effect of the judgment on subsequent actions, “the doctrine of
res judicata
would disappear as a legal principle, and the bar of a judgment would depend wholly upon the whim of the first judge, or, more probably, on the form of proposed order drafted by successful counsel. . . . [I]t is the nature of the action and the character of the judgment that determines whether it is
res judicata. ” (Goddard
v.
Security Title Ins. & Guar. Co., supra,
We conclude that the requisite finality for issue preclusion purposes under the collateral estoppel doctrine is met in the instant case. This, however, does not end our inquiry.
*941 The Collateral Estoppel Doctrine Does Not Apply to Successive Products Liability Actions Involving the Same Defendant When There Are Inconsistent Verdicts.
Collateral estoppel is an equitable concept based on fundamental principles of fairness. For issue preclusion purposes it means that a party ordinarily may not relitigate an issue that was fully and fairly litigated on a previous occasion.
The Restatement explains, however, that because the law of collateral estoppel is essentially equitable in nature there must be some leeway for reexamination of judgments, i.e., there must be some limit to the principle of finality to accord basic fairness to the parties. (Rest.2d Judgments, Introduction, p. 11.) One of the circumstances to be considered in determining whether a party should be precluded from relitigating an issue with an opposing party is whether “the determination relied on as preclusive was itself inconsistent with another determination of the same issue.” (Rest.2d Judgments, § 29, sübd. (4).) Comment f to section 29 of the Restatement Second of Judgments amplifies this point: “Giving a prior determination of an issue conclusive effect in subsequent litigation is justified not merely as avoiding further costs of litigation but also by underlying confidence that the result reached is substantially correct. Where a determination relied on as preclusive is itself inconsistent with some other adjudication of the same issue, that confidence is generally unwarranted. The inference, rather, is that the outcomes may have been based on equally reasonable resolutions of doubt as to the probative strength of the evidence or the appropriate application of a legal rule to the evidence. That such a doubtful determination has been given effect in the action in which it was reached does not require that it be given effect against the party in litigation against another adversary.” 6
In Parklane Hosiery Co.
v.
Shore
(1979)
Nevertheless, the Supreme Court cautions that the offensive use of collateral estoppel does not promote judicial economy in the same way defensive use does
(id.,
at p. 329 [
The Supreme Court specifically observed that offensive collateral estoppel would be unfair to a defendant if the judgment relied upon as a basis for estoppel is itself
inconsistent with
one or more previous judgments in favor of the defendant. (
None of the cases discussed so far
(Parklane Hosiery Co.
v.
Shore, supra,
Hardy
v.
Johns-Manville Sales Corp.
(5th Cir. 1982)
Although
Parklane Hosiery Co.
and
Hardy
v.
Johns-Manville
involved federal court trials, we believe the principles articulated therein concerning the effect of inconsistent verdicts on the application of collateral estoppel are equally pertinent to state court actions. As noted by the Oregon Supreme Court in
State Farm Fire & Cas. Co.
v.
Century Home Compon., Inc., supra,
“We agree with the commentators to the extent at least that, where there are extant determinations that are inconsistent on the matter in issue, it is a strong indication that the application of collateral estoppel would work an injustice. There seems to be something fundamentally offensive about depriving a party of the opportunity to litigate the issue again when he has shown beyond a doubt that on another day he prevailed.” (Fn. omitted.)
The San Joaquin County jury verdict (Smith v. John Deere Company et al. (Super. Ct. San Joaquin Co., No. 146978)) is inconsistent with the Demanes verdict on the design defect question. 9 In that case, the jury apparently accepted Deere’s theory why its machine should not have a cutoff switch at ground level and returned a defense verdict. A judgment was entered on the jury verdict on December 28, 1982, and the plaintiff’s motion for a new trial was denied on February 10, 1983.
The question whether a product has a design defect normally is one of fact. (BAJI No. 9.00.5 (6th ed. 1981 pocket pt.);
Barker
v.
Lull Engineering Co.
(1978)
*945 The writ is denied.
Andreen, J., and Stanton, J., * concurred.
Notes
Petitioner also relied on the case of Bates v. John Deere Co. (1 Civ. No. 53631, app. pending). In Bates the trier of fact also found that the Deere cotton picker was defective for lack of a cutoff switch. The case is still pending on appeal.
Under the federal rule and in a majority of state courts, the second plaintiff can use a judgment as res judicata in a later trial at any time before the first judgment has been reversed, vacated or modified. The pendency of the appeal does not suspend the operation of an otherwise final judgment as res judicata (see Comment, Res Judicata and the Bifurcated Negligence Trial (1969) 16 UCLA L.Rev. 203, 209-210, fn. 23).
We find nothing in the dismissal with prejudice provisions of Code of Civil Procedure section 581 which authorizes such a dismissal after a final judgment is entered in the trial court. Once the appeal is filed, jurisdiction of the action is vested in the appeals court. The dismissal of the appeal simply precludes another appeal from being filed. (Code Civ. Proc., § 913.)
After the appeal is dismissed a remittitur normally is issued which reinstates the jurisdiction of the trial court. (6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, §§ 516, 518, pp. 4464-4465.) Nothing further was done in the Demanes trial court after the filing of the remittitur.
Lea was decided before the comparative negligence doctrine of
Li
v.
Yellow Cab Co.
(1975)
We make no decision whether a dismissal with prejudice by a plaintiff for a nominal consideration following an appeal by the defendant could be construed as a judgment in plaintiff s favor. Realistically, it is somewhat difficult to envision such a settlement after the plaintiff has obtained a final judgment in the trial court.
The reporter’s notes to comment f point out that the relevance of the fact that the adjudication relied on as preclusive was itself inconsistent with another adjudication is suggested in
Blumcraft of Pittsburg
v.
Kawneer Company, Inc.
(5th Cir. 1973)
Currie reasoned that the 26th judgment would be an “aberration.” If preclusive effect should not be given to the 26th judgment, then it similarly should not be given to an adverse judgment rendered in the
first
action brought because “we have no warrant for assuming that the aberrational judgment will not come as the first in the series.” (Currie,
supra,
p. 289.) Currie therefore concluded that absent mutuality, collateral estoppel should not be applied where a defendant potentially faces more than two successive actions. (Currie,
supra,
p. 308.) However, as pointed out by the Oregon Supreme Court in
State Farm Fire & Cas. Co.
v.
Century Home Compon., Inc., supra,
Furthermore, Currie himself retreated from his original position by later asking rhetorically: “. . .so long as we retain sufficient faith in the institution of trial by jury to retain it for civil cases at all, what warrant is there for mistrusting the verdict for purposes of collateral estoppel when there is no suggestion that there has been compromise or other impropriety?” (Currie, Civil Procedure: The Tempest Brews (1965) 53 Cal.L.Rev. 25, 36.)
In Borel, the jury in part found that the defendants had failed to provide adequate warning on their products and that the defendant’s products had been a cause of Borel’s injuries. Borel was awarded $58,534.04 in damages. (493 F.2d at pp. 1086, 1093.)
We take judicial notice of the proceedings in Smith v. John Deere Company pursuant to Evidence Code sections 452 and 459. Although the jury trial in Smith v. John Deere had not been held when the present case was before the court below, in deciding whether to grant extraordinary relief before trial we view the facts as they exist today.
Assigned by the Chairperson of the Judicial Council.