Supreme Court Narrowly Rejects Second Circuit's Sweeping "Defense Preclusion" Doctrine

Earlier this month, the United States Supreme Court unanimously rebuffed the Second Circuit's attempt to expand the scope of res judicata to include the so-called concept of "defense preclusion" – a novel doctrine that would have barred defendants from raising defenses not asserted in previously adjudicated disputes regardless of whether the disputes share a common nucleus of operative fact. Lucky Brand Dungarees, Inc. v. Marcel Fashions Group, Inc..

The Second Circuit had set forth a four factor test to bar defenses where "(i) a previous action involved an adjudication on the merits"; "(ii) the previous action involved the same parties"; "(iii) the defense was either asserted or could have been asserted, in the prior action"; and "(iv) the district court, in its discretion, concludes that preclusion of the defense is appropriate." Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc., et al.. The elements of this test are familiar enough, drawing inspiration