Sample Question 7

Shortly after Plaintiff's initial filing, the SEC filed a public enforcement lawsuit against Silver, SEC v. Silver, in another federal district court. The claim asserted by the SEC, that the registration statement for the IPO contained false and misleading representations, was identical to the claim asserted in the Plaintiff v. Silver lawsuit. The SEC lawsuit went to trial very quickly, and Silver vigorously contested the misrepresentation issues in the SEC lawsuit. The SEC won its lawsuit. A declaratory judgment was entered finding that Silver's registration statement contained false and misleading information and enjoining Silver from making those misrepresentations in the future. That judgment became final, and Silver did not appeal.

Plaintiff then moved for partial summary judgment against Silver based on the judgment in SEC v. Silver. Plaintiff argued that the SEC v. Silver judgment conclusively determined the issue whether the information contained in the registration statement was false and misleading. Silver opposed the motion on the ground that it had the right to litigate this issue against Plaintiff because Plaintiff had not been a party to the SEC v. Silver lawsuit.

The district court judge denied Plaintiff's motion for partial summary judgment on the ground that Plaintiff, a non-party to the SEC v. Silver action, could not rely upon the judgment in that case to preclude Silver from relitigating issues that were central to Plaintiff's claim. Plaintiff filed an appeal from this decision, although

Plaintiff's case against Silver is still going forward in the district court.

Silver has moved to dismiss Plaintiff's appeal on the following grounds: (a) that the district court's denial of Plaintiff's judgment was not a final judgment subject to review; (b) that the collateral order exception is inapplicable; and (c) mandamus does not lie.

1. Did the district court properly refuse to give preclusive effect to the SEC v. Silver judgment when it denied Plaintiff's motion for partial summary judgment? Explain.

2. How should the appellate court rule on each of the grounds asserted in Silver's motion to dismiss the appeal? Explain.