After 20 years of litigation, on May 14, 2020, the Supreme Court reversed and remanded the 2nd Circuit’s decision in Marcel Fashions Grp, Inc. v. Lucky Brand Dungarees et al., No. 2017-0361.
Below, Lucky Brand filed a motion to dismiss using an argument from a previous round of litigation that had not yet been raised in the case at hand, namely, that Marcel had released its claims in a previous settlement agreement. Marcel countered that Lucky Brand could not invoke the release defense, because Lucky could’ve done so earlier and hadn’t. The Second Circuit sided with Marcel, holding that “defense preclusion” prohibited Lucky Brand from raising a defense that it could have raised earlier.
SCOTUS first held that issue preclusion did not apply, and then, because the previous suit in which the defense was raised involved different marks and different conduct occurring at different times, that the two suits did not share a “common nucleus of operative facts.” Finally, the Court held that Marcel’s cited support for application of “defense preclusion” was not applicable to the facts at hand.