Reply Brief — Lucky Brand Dungarees, Inc., et al., Petitioners v. Marcel Fashions Group, Inc.

NO. 18-1086

In the

Supreme Court of the United States

________________

LUCKY BRANDS DUNGAREES, INC., LUCKY BRAND

DUNGAREES STORES, INC., LEONARD GREEN &

PARTNERS, L.P., LUCKY BRAND DUNGAREES, LLC,

LUCKY BRAND DUNGAREES STORES, LLC, KATE

SPADE & CO.,

v.

Petitioners,

MARCEL FASHION GROUP, INC.,

Respondent.

________________

On Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

________________

REPLY BRIEF

________________

DALE M. CENDALI

JOHN C. O’QUINN

Counsel of Record

MATTHEW D. ROWEN

CLAUDIA RAY

KIRKLAND & ELLIS LLP

1301 Pennsylvania Ave., NW

MARY C. MAZZELLO

KIRKLAND & ELLIS LLP Washington, DC 20004

601 Lexington Avenue

(202) 389-5000

New York, NY 10022

(212) 446-4800

dale.cendali@kirkland.com

Counsel for Petitioners

December 12, 2019

TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................... ii

REPLY BRIEF ............................................................ 1

ARGUMENT ............................................................... 4

I.

The Claims In The Current Action Are Not

The Same As The Claims In The 2005 Action ... 4

A. The Two Suits Involve Different

Conduct, Different Theories of Liability,

and Different Periods of Time ...................... 4

B. Marcel Is Judicially Estopped from

Arguing Otherwise ....................................... 9

II. Affirming Would Require Abandoning Nearly

150 Years Of Settled Precedent ........................ 12

III. Marcel’s Remaining Arguments Fail ................ 16

A. This Case is Not a Collateral Attack ......... 16

B. The Current Action is Not a JudgmentEnforcement Action .................................... 19

C. Reversing Will Cause No Unfairness, but

Affirming Will ............................................. 21

CONCLUSION ......................................................... 23

ii

TABLE OF AUTHORITIES

Cases

Bank of Am., N.A. v. Caulkett,

135 S. Ct. 1995 (2015)............................................ 14

Christianson v. Colt Indus. Operating Corp.,

486 U.S. 800 (1988)................................................ 11

City of Beloit v. Morgan,

74 U.S. (7 Wall.) 619 (1868)............................. 20, 21

Comm’r v. Sunnen,

333 U.S. 591 (1948)................................................ 18

Cromwell v. County of Sac,

94 U.S. 351 (1877)........................................ 3, 18, 19

Davis v. Brown,

94 U.S. 423 (1877).......................................... passim

Fox v. Maulding,

112 F.3d 453 (10th Cir. 1997)................................ 16

Janus v. Am. Fed’n of State, Cty.,

& Mun. Emps., Council 31,

138 S. Ct. 2448 (2018)............................................ 14

Kansas v. Ventris,

556 U.S. 586 (2009)................................................ 11

Kimble v. Marvel Entm’t, LLC,

135 S. Ct. 2401 (2015)............................................ 14

Kremer v. Chem. Constr. Corp.,

456 U.S. 461 (1982).................................................. 4

Landscape Forms, Inc. v.

Columbia Cascade Co.,

113 F.3d 373 (2d Cir. 1997) ..................................... 5

iii

Mercoid Corp. v. Mid-Continent

Investment Co.,

320 U.S. 661 (1944).......................................... 18, 19

Nasalok Coating Corp. v. Nylok Corp.,

522 F.3d 1320 (Fed. Cir. 2008) .............................. 17

New Hampshire v. Maine,

532 U.S. 742 (2001)................................ 3, 10, 11, 15

Pegram v. Herdrich,

530 U.S. 211 (2000).................................................. 9

Pepper v. United States,

562 U.S. 476 (2011)................................................ 11

Tioga R.R. v. Blossburg & Corning R.R. Co.,

87 U.S. 137 (1873).................................................. 21

SimpleAir, Inc. v. Google LLC,

884 F.3d 1160 (Fed. Cir. 2018) ................................ 6

Stout v. Lye,

103 U.S. 66 (1880).................................................. 17

Taylor v. Sturgell,

553 U.S. 880 (2008)............................................ 1, 15

United States v. Tohono O’Odham Nation,

563 U.S. 307 (2011).................................................. 4

Whole Woman’s Health v. Hellerstedt,

136 S. Ct. 2292 (2016)................................ 2, 4, 5, 15

REPLY BRIEF

For the past 150 years, courts uniformly have held

that in a second suit involving different claims from

the parties’ first suit, the defendant is free to raise

defenses that could have been resolved in the first suit,

but were not. The decision below broke that unbroken

line of precedent. According to the Second Circuit,

“defense preclusion” can “bar[] a party from raising a

defense” that was not resolved in a prior case involving

different claims, so long as the defense “could have

been” resolved “in the prior action.” Pet.App.19. The

Second Circuit applied that new rule here, holding

that Lucky “is barred from asserting” a defense that

“was in no way ‘actually litigated and determined’” in

the parties’ prior case. Pet.App.9 n.3, 22.

That unprecedented decision cannot stand. The

line of authority the Second Circuit snubbed reflects

fundamental principles of preclusion. “The preclusive

effect of a judgment is defined by claim preclusion and

issue preclusion, which are collectively referred to as

‘res judicata.’” Taylor v. Sturgell, 553 U.S. 880, 892

(2008). Claim preclusion applies only when a claim is

the very same as a claim previously adjudicated, and

issue preclusion applies only when an issue of fact or

law was previously litigated and resolved. So, when a

later case involves different claims than a prior case,

res judicata does not bar defenses (i.e., issues of law)

unless they actually were resolved in the prior case.

Remarkably, Marcel now seems to agree. Marcel

admits that never-before-resolved defenses cannot be

precluded by operation of an earlier judgment unless

the “causes of action” in “the two suits” are “the same.”

Resp.Br.17; accord Resp.Br.21 (“the preclusion of a

2

defense requires … an identity of the cause of action”);

Resp.Br.50 (“Defense preclusion applies only when the

causes of action are the same[.]”). Yet rather than

follow that admission to its logical conclusion and

concede the error of the decision below, Marcel now

argues that the Current Action involves “the same

cause of action” as the 2005 Action—and as such, that

there is nothing novel or problematic about precluding

Lucky from raising new defenses. Resp.Br.17, 37.

That argument fails for three reasons. First, the

two suits involve distinct conduct and distinct theories

of liability. Marcel’s counterclaims in the 2005 Action

all depended on Lucky’s use of Marcel’s GET LUCKY

mark. But there is not a single allegation in Marcel’s

complaint in the Current Action that Lucky is still

using GET LUCKY. Liability in the prior action thus

does not compel liability here. Second, the two suits

cover different time periods, and a claim “predicated

on events that postdate” a prior suit is not “the very

same” as any prior claim. Whole Woman’s Health v.

Hellerstedt, 136 S. Ct. 2292, 2305 (2016). That rule is

particularly apt in the trademark context, where the

enforceability of a mark and the likelihood of

confusion between marks inherently depend on

extrinsic facts that are often in flux. Pet’rs.Br.43-45.

Third, Marcel is judicially estopped from arguing that

its claims here are the same as its counterclaims in

the 2005 Action. In the initial phase of this case

(Marcel I), Marcel convinced the Second Circuit that

its “claims” here are “new, separate and distinct” from

the counterclaims on which it prevailed in the 2005

Action. Amended Opening Br. 10, Marcel I, No. 124341 (2d Cir. July 8, 2013), Dkt. 82-10 (“AOB”)

(capitalization omitted); see also, e.g., id. at 15-25

3

(arguing that its claims here “‘are not related in time,

space, or origin to the wrongs litigated previously’”).

Having won on that argument, Marcel cannot take the

opposite position now. New Hampshire v. Maine, 532

U.S. 742, 749-51 (2001).

With that issue out of the way, this case is easy:

Because the claims in the Current Action are not the

same as in the 2005 Action, preclusion does not apply.

Marcel tries to complicate matters by arguing

that allowing Lucky to raise its release defense will

“impair rights established in the initial action.”

Resp.Br.30. But because the claims here derive from

conduct that is distinct from the conduct adjudicated

infringing in the 2005 Action, this case does not

threaten any rights established in that prior case.

Similarly irrelevant is Marcel’s exegesis on the

principle that “a defendant who suffers a defeat in one

proceeding will ordinarily be barred from raising in a

later proceeding any defense to the same cause of

action that was available to it in the earlier

proceeding.” Resp.Br.21 (emphasis added). As Lucky

has explained, that principle is just an “ordinary

incident of claim preclusion,” Pet’rs.Br.25, which

forecloses “not only” relitigation of “every matter

which was offered and received to sustain or defeat the

claim or demand,” but also litigation of “every matter”

(which includes defenses) “which might have been

offered for that purpose” in the first suit, but was not.

Cromwell v. County of Sac, 94 U.S. 351, 352 (1877).

That principle therefore applies “only when the causes

of action [in the two cases] are the same,” Resp.Br.50;

accord Pet’rs.Br.25, which is not the case here.

4

Reaching any other conclusion would require

overruling Davis v. Brown, 94 U.S. 423 (1877). Marcel

tries to fight that conclusion on two fronts. Marcel

first insists that “Davis stands only for the proposition

that a suit on one negotiable instrument represents a

different cause of action from a suit on a different

instrument.” Resp.Br.48. But that ignores the entire

second half of the opinion, which rejected a defensepreclusion argument identical to the one Marcel

makes here. See Davis, 94 U.S. at 427-29. Marcel next

asks this Court to ignore Davis. Resp.Br.48-49. But

Davis is perfectly consistent with modern doctrine;

indeed, this Court has reaffirmed its core holding over

a dozen times and “has never once cast doubt on the

vitality of the rule.” Pet’rs.Br.21.

Because the claims in the Current Action are not

the same as the counterclaims on which Marcel

prevailed in the 2005 Action, and the release defense

was not actually litigated in the 2005 Action,

preclusion does not apply. The Court should reverse.

ARGUMENT

I.

The Claims In The Current Action Are Not

The Same As The Claims In The 2005 Action.

A. The Two Suits Involve Different

Conduct, Different Theories of Liability,

and Different Periods of Time.

Two claims are not “the same” unless they “‘aris[e]

from the same transaction.’” United States v. Tohono

O’Odham Nation, 563 U.S. 307, 316 (2011) (quoting

Kremer v. Chem. Constr. Corp., 456 U.S. 461, 482 n.22

(1982)). That was true “in the 19th century,” id., and

it remains true today, see Whole Woman’s Health, 136

S. Ct. at 2305. Marcel is thus wrong that “[t]he claims

5

here and in the 2005 litigation are the same.”

Resp.Br.39. The claims in the Current Action derive

from “alleged infringements that occurred subsequent

to … the 2005 Action,” Pet.App.7 (citing Pet.App.48),

and “‘claims that are predicated on events that

postdate’” a prior case are not “the very same” as any

claims raised in the prior case. Whole Woman’s

Health, 136 S. Ct. at 2305.

The rationale behind that rule carries particular

force in the trademark context. Unlike the validity of

a note or a contractual obligation, the enforceability of

a mark or the likelihood of confusion between marks

depend on “marketplace realities,” i.e., extrinsic facts

(the context in which the marks are presented,

whether a disclaimer is used, the sophistication of

“potential purchasers,” the view of “the general

public,” the incidence of actual confusion, etc.) that

often change over time. Landscape Forms, Inc. v.

Columbia Cascade Co., 113 F.3d 373, 382 (2d Cir.

1997); see Pet’rs.Br.43-45. So even if, contrary to

reality, Marcel’s claims in the Current Action derived

from repeats of exactly the same conduct that was

adjudicated infringing in the 2005 Action—namely,

use of the “Lucky Brand” marks in conjunction with

GET LUCKY—liability in that prior suit still would

not compel liability here. After all, the marketplace

realities that prevailed (and thus contributed to

consumer confusion) when Lucky committed the

conduct found infringing in the 2005 Action may or

may not remain in place today.

In any event, the conduct underlying Marcel’s

claims here is different from the conduct adjudicated

infringing in the prior case. In the prior case, the court

6

imposed liability for “Lucky’s direct imitation of the

GET LUCKY mark,” Resp.Br.9, and “the jury”

imposed liability for Lucky’s “use of the ‘get lucky’

slogan alongside [Lucky’s] other marks,” Resp.Br.52.

All liability in the prior case thus “depended” on

Lucky’s use of GET LUCKY. Resp.Br.9-11. Marcel

acknowledges this in its brief, explaining that

“Marcel’s position” in the prior case “was that ‘the

constant mixing of [Lucky’s] trademarks and

[Marcel’s] trademark’” (namely GET LUCKY) is what

created consumer “confusion with respect to [Lucky’s]

use of ‘Lucky.’” Resp.Br.10 (emphasis added, first and

second alterations in original).

In the Current Action, by contrast, Marcel does

not allege that Lucky continued to use GET LUCKY.

See JA53-75. Marcel’s theory here is that Lucky has

used “the LUCKY BRAND Marks” 1 (which Lucky

owns) together with other instantiations of “the word

‘Lucky’” that are not GET LUCKY, and that such use

has diluted Marcel’s rights. JA63 ¶30; see JA69 ¶¶5355, JA70 ¶¶59-62. So even setting aside the fact that

the two cases cover different time periods, it could not

be clearer that they involve distinct causes of actions.

Cf. SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1165

(Fed. Cir. 2018) (“essential transactional facts” for

preclusion “include both the asserted patents and the

accused activity”).

1 The “Lucky Brand marks” refers to the twelve trademark

registrations appended to the 2010 Final Order and Judgment.

See Exhibit 1 to Final Order and Judgment, 1:05-cv-06757-LTSMTD (S.D.N.Y. June 1, 2010), Dkt. 248. Marcel’s two GET

LUCKY registrations are separately appended to the judgment.

7

Marcel nonetheless insists (at 46) that this case

“alleg[es] sales of identical merchandise creating the

same trademark confusion as the jury had found” “in

the 2005 action.” That is simply false. The judgment

in the 2005 Action is clear that Lucky’s merchandise

infringed Marcel’s rights only to the extent that it

“bear[ed] Marcel Fashion’s GET LUCKY trademark,”

and that Lucky’s “advertisements” infringed Marcel’s

rights only to the extent that they “use[d] … GET

LUCKY.” JA204; see also JA207 ¶5 (Lucky “infringed

[Marcel’s] GET LUCKY trademark … by using GET

LUCKY” in conjunction with “other trademarks”

Lucky owns). Again, Marcel acknowledges this in its

brief, 2 and stated it succinctly in its complaint.3

Because none of the claims in the Current Action

depends on, or even involves, use of GET LUCKY, the

two cases simply do not involve the same claim for

preclusion (or any other) purposes.

The Second Circuit’s denial of Marcel’s contempt

motion confirms that conclusion. Marcel sought “to

hold [Lucky] in contempt for violating the injunction

issued in the 2005 Action by its subsequent use of the

‘Lucky Brand’ marks.” Pet.App.53. The premise of the

motion was that the conduct alleged in the Current

Action is the same as the conduct adjudicated

infringing, and prohibited by a final permanent

2 “The confusion-based liability assessed by the jury in the 2005

action … arose principally out of Lucky’s continued use of the ‘get

lucky’ slogan alongside its other marks.” Resp.Br.52.

3 “In short, the Original Defendants were found liable … for

[their] use of the GET LUCKY and the LUCKY BRAND Marks

in connection with their clothing, apparel, accessory and

fragrance business….” JA61 ¶23.

8

injunction, in the 2005 Action. Pet.App.52-56. Had

the Second Circuit agreed that this case covers the

same conduct as the 2005 Action, it would have

granted Marcel’s contempt motion. Instead, the

Second Circuit denied the motion on the ground that

the 2005 Action dealt with Lucky’s having “us[ed] ‘Get

Lucky’” alongside its own marks, whereas the Current

Action deals with Lucky’s “use of the ‘Lucky Brand’

marks” in conjunction with other marks that are not

GET LUCKY. Pet.App.54-55. 4

In sum, the Current Action does not just cover a

different timeframe than the 2005 Action; it is

premised on distinct conduct and distinct theories of

liability. Or, to use Marcel’s words, the “facts,

evidence, and legal rights” that were adjudicated in

the 2005 Action are not the same as the “facts,

evidence, and legal rights” that are “at issue” here.

Resp.Br.33.

So even under the most “flexible”

understanding of what it means for two claims in two

cases to be the same, Resp.Br.38, the claims here are

not the same as the counterclaims in the 2005 Action.

Accordingly, “defense preclusion” does not apply.

4 Marcel accuses Lucky (at 11 n.3) of having argued “that the

verdict for Marcel” in the 2005 Action “might have been based

only on ‘Lucky’s use of GET LUCKY’ rather than on its use of

‘other LUCKY-formative marks.’” That misunderstands Lucky’s

point, which was that the final judgment in the 2005 Action

emphatically did not hold that Lucky’s “use of the ‘Lucky Brand’

marks” simpliciter (i.e., not in conjunction with GET LUCKY)

“constituted infringement of ‘Get Lucky.’” Pet.App.56.

9

B. Marcel Is Judicially Estopped from

Arguing Otherwise.

The doctrine of judicial estoppel prevents Marcel

from now arguing that its claims in the Current Action

are “the same” as its counterclaims in the 2005 Action.

Resp.Br.2, 4, 12, 17, 37. Judicial estoppel “prevents a

party” that “prevail[ed] in one phase of a case on an

argument” from “relying on a contradictory argument

to prevail in another phase.” Pegram v. Herdrich, 530

U.S. 211, 227 n.8 (2000). This is a textbook case for

judicial estoppel. Marcel not only argued in Marcel I

that the Current Action involves “new claims,” but

prevailed on that argument.

In Marcel I, the district court ruled that the

Current Action is based on “the same conduct” as the

2005 Action. Pet.App.68. Marcel’s sole argument in

Marcel I was that its complaint in the Current Action

“assert[s] new claims based on new facts and

circumstances.”

AOB.21.

Marcel repeated that

argument over and over again in Marcel I, arguing,

e.g., that the “claims” in the Current Action “‘are not

related in time, space, or origin to the wrongs litigated

previously’”; are “new”; are “separate and distinct”

from the claims in the 2005 Action; “involve[] different

transactions”; and so on. Id. at 10, 15-16, 18-21, 25.

Marcel literally underscored its view that “no

reasonable person could read” the Current Action as

being “based upon the same acts, facts, and

circumstances” as the counterclaims in the 2005

Action. Id. at 15-16 (underline in original).

And, crucially, Marcel won based on that

argument. The Second Circuit in Marcel I adopted

Marcel’s position, reversed the district court, and held

10

that the claims in the Current Action are not the same

as, and so are not precluded by, Marcel’s

counterclaims in the 2005 Action. Pet.App.46-52.

Marcel now insists that “the basis for the Second

Circuit’s decision in the first appeal” was that “‘a suit

claiming damages for prior infringements does not bar

a subsequent suit for damages for … [identical, postjudgment] infringements.’” Resp.Br.41 (alterations in

original) (quoting Pet.App.50).

Marcel’s inline

alterations to the opinion give away the game. The

Second Circuit emphatically did not hold that the

conduct at issue in the Current Action is “identical” to

the conduct in the 2005 Action. The court never once

described Marcel’s current claims as identical to or the

same as the 2005 Action; it referred to them only as

claims “for subsequent infringements” covering a

different period of time. Pet.App.50.

That is why Marcel’s refrain (at 3, 17, 37, 39) that

Lucky “conceded” that this case “involves the same

cause of action” as the 2005 Action is so galling: Lucky

lost in Marcel I. To be sure, Lucky argued in Marcel I

that the claims here and the counterclaims in the 2005

Action are the same. But it is always true in judicial

estoppel cases that both parties switched positions.

And yet only the party that tries to wriggle free from

its victory is subject to judicial estoppel.

New

Hampshire, 532 U.S. at 749-51. There is nothing

inequitable about that. The point of judicial estoppel

is “to protect the integrity of the judicial process.” Id.

at 749. Allowing a party “to gain an advantage by

litigation on one theory, and then seek an inconsistent

advantage by pursuing an incompatible theory,” is

antithetical to that integrity. Id. By contrast, a losing

11

party’s begrudging acceptance of the law of the case

raises no such concerns. Id. at 750-51. 5

Having prevailed in Marcel I by arguing that the

claims in the Current Action are “separate and

distinct” from its counterclaims in the 2005 Action,

Marcel cannot now argue that “[t]he claims here and

in the 2005 litigation are the same.” Resp.Br.39.

Allowing it do so would give it “an unfair advantage”

and “impose an unfair detriment on [Lucky].” New

Hampshire, 532 U.S. at 751. After all, Lucky litigated

Marcel II on the premise that it was stuck with Marcel

I as the law of the case, and Marcel II in fact took

Marcel I as a given. See Pet.App.7. The case for

judicial estoppel is thus plain. The claims here are not

the same as the counterclaims in the 2005 Action.

*

*

*

The claims in the Current Action are based on

distinct conduct from the conduct adjudicated

infringing and enjoined in the 2005 Action. The two

cases also cover distinct timeframes and marks. So as

both judicial estoppel and simple reality confirm, the

two cases do not involve the same cause of action.

The law-of-the-case doctrine instructs that “when a court

decides upon a rule of law, that decision should continue to

govern the same issues in subsequent stages in the same case.”

Pepper v. United States, 562 U.S. 476, 506 (2011). This Court has

admonished “courts of appeals” to “adher[e] strictly to principles

of law of the case.” Christianson v. Colt Indus. Operating Corp.,

486 U.S. 800, 819 (1988); see Kansas v. Ventris, 556 U.S. 586, 590

(2009) (this Court will “accept … the law of the case” particularly

where “judicial estoppel” points in the same direction).

5

12

II. Affirming Would Require Abandoning

Nearly 150 Years Of Settled Precedent.

In Davis v. Brown, 94 U.S. 423 (1877), this Court

squarely held that res judicata does not bar defenses

that “might have been … litigated and determined” in

an earlier case on “a different demand,” 6 but were not.

Id. at 428. The decision below directly conflicts with

Davis. Marcel’s attempts to evade that conclusion fail.

Davis was the second suit “between the same

parties.” Id. The defendants sought to raise a

“defence” that they claimed absolved them of liability.

Id. at 424. The plaintiff, who had prevailed in the first

suit, “contended” that “the judgment” in the first suit

barred the defense because the defendants could have

“pleaded and relied upon” it in the first suit, but chose

not to. Id. at 428. The Court rejected the plaintiff’s

position because it “confounded the operation of a

judgment upon the demand involved in the action[] in

which the judgment was rendered” (claim preclusion)

“with its operation as an estoppel in another action

between the parties upon a different demand” (issue

preclusion). Id. (emphasis added). The former

“operation” did not apply because the second suit

involved “a different demand” from the first, and claim

preclusion kicks in only when successive cases involve

the same claim. Id. The latter “operat[ion]” did not

apply either, because issue preclusion precludes

litigation “only upon the matter[s] actually at issue

and determined in the original action.” Id.

6 See Pet’rs.Br.18 n.6 (“demand,” “claim,” and “cause of action”

mean the same thing in this context).

13

Davis is on all fours with with this case. As in

Davis, this case is “a subsequent action between the

same parties upon a different demand” from the

claims in the parties’ prior suit. Id. at 424; see supra

Part I. As in Davis, the defendants here (Lucky) seek

to raise a defense that “was in no way ‘actually

litigated and determined’” in the parties’ prior suit.

Pet.App.9 n.3. Also as in Davis, the plaintiff (Marcel)

argues that res judicata bars the defense because it

“could have been raised in the 2005 lawsuit.”

Resp.Br.4, 14. Davis thus does not merely “shed[ ]

light on the question here,” Resp.Br.48; it definitively

resolves it. If stare decisis means anything, then this

case and Davis must come out the same way.

Marcel’s only responses are to deny that Davis

held what it held and to ask this Court to ignore or

overrule it. Resp.Br.47-49. Both are baseless.

According to Marcel, “[t]he question at issue in

Davis was whether the defendants had disclaimed

indorser liability on ten promissory notes.”

Resp.Br.47. That is incorrect. As Davis makes clear,

the ultimate “question[] presented” in the case was

whether “the judgment” in the first suit barred “the

defendants [from] setting up” in the second suit “any

defence” that they could have litigated in the first suit,

but did not. 94 U.S. at 424-25; see also id. at 427-28

(“The next question for determination relates to the

operation of the judgment recovered by the plaintiff

against the defendants, as an estoppel against their

setting up the defence founded upon the agreement.”).

Marcel next claims that “Davis stands only for the

proposition that a suit on one negotiable instrument

represents a different cause of action from a suit on a

14

different instrument.” Resp.Br.48. To be sure, Davis

did hold that. 94 U.S. at 425-27. But that conclusion

was antecedent to the ultimate holding in the case

that the indorser-defendants were allowed to raise the

agreement with the bank as a “defence” to liability

precisely because the second suit was “upon a different

demand” from the parties’ first suit. Id. at 428.

Marcel simply ignores the second half of the opinion,

which directly addresses the question presented here.

That leaves only Marcel’s fallback position (at 4849) that the Court should just ignore Davis. This

position is easily dismissed. Arguments to jettison

settled precedent are always suspect. Kimble v.

Marvel Entm’t, LLC, 135 S. Ct. 2401, 2409 (2015).

This one is particularly feeble. Marcel does not

address the stare decisis factors, see Janus v. Am.

Fed’n of State, Cty., & Mun. Emps., Council 31, 138 S.

Ct. 2448, 2479-86 (2018), or even squarely ask for

Davis to be overruled, see Bank of Am., N.A. v.

Caulkett, 135 S. Ct. 1995, 1999-2000 (2015). Nor does

Marcel address the dozens of cases that reaffirmed

Davis’ holding. See Pet’rs.Br.2-3, 19-21 (citing cases).

Instead, Marcel sheepishly claims (at 48) that the

Court need not worry about stare decisis because res

judicata has “evolv[ed]” since Davis was decided.

In reality, Davis is perfectly consistent with

“modern doctrine.” Resp.Br.49. Davis’ res judicata

analysis (which Marcel ignores) begins by expounding

the contours of claim preclusion—which it describes as

“the operation of a judgment upon the demand

involved in the action[] in which the judgment was

rendered”—in terms that track modern caselaw.

Compare 94 U.S. at 428 (“So far as the demand

15

involved in the action is concerned, the judgment has

closed all controversy; its validity is no longer open to

contestation, whatever might have been said or proved

at the trial for or against it.”), with, e.g., Taylor, 553

U.S. at 892 (“Under the doctrine of claim preclusion, a

final judgment forecloses ‘successive litigation of the

very same claim, whether or not relitigation of the

claim raises the same issues as the earlier suit.’”

(quoting New Hampshire, 532 U.S. at 748)). Davis

then distinguishes claim preclusion and issue

preclusion, explaining that only the latter applies “in

a subsequent action between the same parties upon a

different demand.” 94 U.S. at 428 (emphasis added).

That is also still the law. See, e.g., Taylor, 553 U.S. at

892 (“contrast[ing]” claim preclusion and issue

preclusion, and explaining that only the latter applies

“in the context of a different claim” (emphases added)

(quoting New Hampshire, 532 U.S. at 748-49)); see also

Whole Woman’s Health, 136 S. Ct. at 2305 (holding

that “claim preclusion” did not apply because the

claim was “not ‘the very same’” as in the parties’ prior

suit). And so Davis holds that res judicata did not

preclude the indorser-defendants from raising the

agreement defense in the second suit, because (1) the

second suit was “upon a different demand” from the

parties’ prior suit (which meant claim preclusion was

inapplicable), and (2) the defense was not “actually at

issue and determined in the” prior suit (which meant

issue preclusion was inapplicable). 94 U.S. at 428.

Each step in that reasoning is clear, and each step

tracks modern doctrine—which is why this Court has

reaffirmed that rule many times and never once

backtracked from it. See Pet’rs.Br.2-3, 19-21.

16

The holding of Davis thus controls here: Marcel’s

position is “clearly untenable.” Davis, 94 U.S. at 429.

III. Marcel’s Remaining Arguments Fail.

A. This Case is Not a Collateral Attack.

Marcel tries to complicate matters by expounding

principles not in dispute. For instance, Marcel argues

(at 26) that “[d]efense preclusion generally bars a

former defendant from converting a neglected defense

into a claim.” Lucky agrees. See Pet’rs.Br.28. But

that principle has no application here; after all, Lucky

is not asserting any claims in this case. Nor is Lucky

seeking to undo the judgment Marcel won in the 2005

Action. The cases Marcel invokes on pages 28-29 are

thus inapposite.

Take Fox v. Maulding, 112 F.3d 453 (10th Cir.

1997) (cited at 29), for example. After the Foxes

defaulted on their mortgage, the bank (SNB)

“instituted foreclosure proceedings against the Foxes’

home.” Id. at 456. The bank won. Id. The Foxes later

filed “RICO and pendent state claims” against SNB

and its officers. Id. at 458. Not only did the Foxes’

claims “challenge the validity of the loan and

mortgage at issue in the foreclosure action,” the Foxes

sought “recompense for ‘the value of the[ ] …

property’” the bank foreclosed on pursuant to the

judgment in the prior suit. Id. The Tenth Circuit

sensibly held the Foxes’ suit precluded, because

“successful prosecution of [the] claims” would have

“rendered meaningless” “SNB’s judgment in the

foreclosure action” by effectively forcing it to pay back

everything it obtained in the prior suit. Id. at 457-58.

That is what it means “to attack the judgment of

the first action.” Pet’rs.Br.28 (emphasis omitted)

17

(quoting Nasalok Coating Corp. v. Nylok Corp., 522

F.3d 1320, 1328 (Fed. Cir. 2008); see Resp.Br.29. But

that sort of collateral attack is not implicated here.

Unlike in Fox or in Stout v. Lye, 103 U.S. 66 (1880)

(cited at 27-28), Lucky is not trying “to set aside the”

judgment Marcel obtained in the parties’ prior suit or

“to reduce the” amount it had to pay pursuant to that

prior judgment. Resp.Br.28. All Lucky is trying to do

in this case is defend against new claims based on new

theories that were not adjudged infringing in the prior

suit.

Marcel is thus wrong to suggest (at 30-31) that

allowing Lucky to raise its release defense here would

“achieve the same practical result” as allowing Lucky

to file a “lawsuit seeking a judicial declaration that the

GET LUCKY trademark is not enforceable against it.”

That hypothetical lawsuit could not be more similar to

the Foxes’ suit. But it also could not be more different

from this suit. Again, the conduct alleged to infringe

Marcel’s rights here is not the same as the conduct

adjudicated infringing in the 2005 Action. The specter

of a hypothetical declaratory judgment action is thus

a straw man here. The prior judgment will remain

inviolate regardless of how this suit is resolved.

Nor does it make a difference that the new rule

the Second Circuit adopted is supposedly “flexible.”

Resp.Br.44. The Current Action involves different

claims than the 2005 Action, and even Marcel admits

that “the preclusion of a defense requires … an

identity of the cause of action.”

Resp.Br.21.

Flexibility is thus not a virtue here, but rather code for

a mutant form of preclusion. There is no flexibility to

18

hold that a never-before-resolved defense can be

precluded in a second suit involving a different claim.

The so-called “rule of defense preclusion” that

Marcel says (at 33) was “confirmed” in Cromwell (but

which is actually just an ordinary incident of claim

preclusion) is likewise not at issue in this case. To say

that “a judgment rendered upon a promissory note is

conclusive as to the validity of the instrument and the

amount due upon it, although it be subsequently

alleged that perfect defences actually existed,”

Resp.Br.34 (quoting Cromwell, 94 U.S. at 352) is just

to say that claim preclusion has teeth. After all, claim

preclusion could not “put[] an end to the cause of

action,” Comm’r v. Sunnen, 333 U.S. 591, 597 (1948),

unless it foreclosed “not only” relitigation of “every

matter” (including every defense) “which was offered

and received to sustain or defeat the claim,” but also

litigation of every matter “which might have been

offered for that purpose” in the parties’ first suit, but

was not. Cromwell, 94 U.S. at 352. But Lucky is not

trying to undo either “the validity of the” conclusion

that its use of the GET LUCKY mark violated Marcel’s

rights or “the amount” it was ordered to pay in

damages. Lucky is simply try to defend against new

claims for new acts.

Marcel’s discussion (at 34) of Mercoid Corp. v.

Mid-Continent Investment Co., 320 U.S. 661 (1944), is

similarly off base. Mercoid made plain that “[t]he case

[was] governed by the principle that where the second

cause of action between the parties is upon a different

claim[,] the prior judgment is res judicata not as to

issues which might have been tendered[,] but ‘only as

to those matters in issue or points controverted’” in the

19

parties’ prior suit. 320 U.S. at 671 (quoting Cromwell,

94 U.S. at 353). That (plus the fact that the

counterclaim at issue there was not compulsory) 7 is

why Mercoid’s counterclaim “could proceed despite

that it had not been raised in the first suit.”

Resp.Br.34. Marcel simply breezes past that point.

But that principle—which supplied the rule of decision

in Davis, see supra Part II—controls the outcome here.

B. The Current Action is Not a JudgmentEnforcement Action.

Marcel tries (at 31-32, 36-40) to liken this case to

a judgment-enforcement action. That effort fails. To

be sure, when a previously-losing defendant “induces

the original plaintiff to sue again” by engaging in

“conduct” that is “identical” to the conduct underlying

the judgment for the plaintiff, the defendant cannot

“raise [a] previously neglected defense” in the ensuing

action to enforce the plaintiff’s judgment. Resp.Br.32;

see Pet’rs.Br.28-31.

But, as discussed above

extensively, see supra Part I.A, the claims here are not

“identical” to the counterclaims in the 2005 Action.

Marcel’s claims in this case require establishing

that Lucky’s “use of the LUCKY BRAND Marks” in

conjunction with “other” marks that are not GET

LUCKY constitutes infringement of Marcel’s GET

LUCKY mark. JA69 ¶¶53-55, JA70 ¶¶59-62. And we

know to a certainty that the judgment in the 2005

7 Marcel concedes (at 49-50) that precluding defenses in a suit

involving different claims from the parties’ prior suit would

trammel the Federal Rules. Yet precluding defenses involving

different claims from the parties’ prior suit is exactly what the

Second Circuit did here. That is yet another reason the decision

below is wrong. See Pet’rs.Br.35-40.

20

Action does not cover that conduct. As noted, see supra

pp.7-8, in affirming the denial of Marcel’s contempt

motion, the Second Circuit rejected the argument

“that the verdict and judgment in the 2005 Action

must be taken as establishing that [Lucky’s] use of the

‘Lucky Brand’ marks constituted an infringement of

the ‘Get Lucky” mark,” calling it “not persuasive.”

Pet.App.55. That rejection was clearly correct. After

all, Marcel’s counterclaims in the 2005 Action all

depended on Lucky’s use of GET LUCKY, but no

claims in the Current Action do. See supra Part I.A.

This case simply does not involve “conduct” that is

“identical” to the conduct underlying the judgment in

the 2005 Action. Contra Resp.Br.38.

That is why City of Beloit v. Morgan, 74 U.S. (7

Wall.) 619 (1868), is inapposite. In the first City of

Beloit suit, the court held that the defendant (the

town) had to pay the plaintiff (Morgan) for certain

bonds the town had issued. Id. at 621. Naturally, the

only bonds Morgan sued upon in that first suit were

those that had come due. But Morgan owned other

bonds “of the same issue,” and when those later came

due, he “instituted” new “suits” to recover on them. Id.

The town responded by filing a “bill … to enjoin [him]

from [so] proceeding.” Id. In support of its bill, the

town raised “[n]umerous objections … to the validity

of the bonds.” Id. The problem for the City was that

“[t]he judgment” in the parties’ first suit “established

conclusively the original validity of the securities

described in the bill, and the liability of the town to

pay them.” Id. at 623. Put another way, even though

the bonds in the second suit were nominally different

from the bonds in the first suit (“the res of that case”)

because they came due at different times, the claims

21

to recover on them were identical. Id. at 622. Or, to

use Marcel’s language, the “facts, evidence, and legal

rights … at issue in the two lawsuits” were “the same.”

Resp.Br.33. City of Beloit accordingly held that the

town could not raise any “objections” to its obligation

to pay on the bonds, 74 U.S. at 621, because allowing

it to do so would undermine Morgan’s established

rights. See Tioga R.R. v. Blossburg & Corning R.R.

Co., 87 U.S. 137, 142-43 & n.4 (1873) (citing City of

Beloit).

But that holding has no application here. Unlike

in City of Beloit, the “facts, evidence, and legal rights”

here are not the same as in the 2005 Action. See supra

Part I.A. As such, the rule of decision applied in Davis

and reaffirmed many times over controls.

C. Reversing Will Cause No Unfairness, but

Affirming Will.

Finally, Marcel contends that it would be unfair

to allow Lucky to raise the release defense now

because Marcel “would have arranged its business

affairs differently” had the defense “been asserted

successfully in the first action.” Resp.Br.35. That is

not just speculative, it is nonsensical. Had the defense

“been asserted successfully in the first action,” Marcel

would have lost at least some counterclaims. Allowing

“Lucky to raise [the] defense in this subsequent suit”

thus would not “perversely reward Lucky” at all.

Contra Resp.Br.22. By contrast, not allowing Lucky to

raise the defense would perversely reward Marcel.

Lucky would be deprived not just of the benefit of its

bargain from the May 2003 Settlement Agreement,

but—more fundamentally—of the ability to defend

22

against entirely new claims that are premised on

conduct that has never been adjudicated infringing.

That is why Marcel’s fleeting due process

arguments (at 51-52) miss the mark. Lucky has had

no “opportunity to litigate” the claims that are “at

issue” in the Current Action. Contra Resp.Br.51.

Marcel admits that its counterclaims in the 2005

Action depended on “Lucky’s continued use of the ‘get

lucky’ slogan alongside its other marks.” Resp.Br.52.

But, as noted, see supra Part.I.A, use of GET LUCKY

is not alleged in the Current Action; Marcel’s current

theory of liability is that Lucky has infringed Marcel’s

trademark rights by using the ‘Lucky Brand’

trademarks” in conjunction with “other marks” that

are not GET LUCKY. JA69 ¶¶53-55, JA70 ¶¶59-62.

So even putting to the side the fact that the allegedlyinfringing acts took place at a different time than the

acts previously adjudicated infringing (and thus under

different real-world conditions that might affect

confusion), the actual conduct alleged to be infringing

here is different in kind. In that context, not allowing

Lucky to raise a defense because of a prior judgment

on different claims would not just be unfair; it would

contravene basic norms of due process.

23

CONCLUSION

For the foregoing reasons, this Court should

reverse.

Respectfully submitted,

DALE M. CENDALI

JOHN C. O’QUINN

Counsel of Record

MATTHEW D. ROWEN

CLAUDIA RAY

KIRKLAND & ELLIS LLP

MARY C. MAZZELLO

1301 Pennsylvania Ave., NW

KIRKLAND & ELLIS LLP Washington, DC 20004

601 Lexington Avenue

(202) 389-5000

New York, NY 10022

(212) 446-4800

dale.cendali@kirkland.com

Counsel for Petitioners

December 12, 2019