Brevan Howard Credit Catalyst Master Fund Limited v. Spanish Broadcasting System, Inc., C.A. No. 9209-VCG (Del. Ch. May 19, 2015). This letter decision explains the nuances and elements of the following principles on which it granted a motion to dismiss: res judicata, collateral estoppel and acquiescence. The first two deal with issue preclusion. Res judicata restricts the same cause of action, whereas collateral estoppel prevents the re-litigation of a factual issue previously adjudicated.
The court recites the five-part test that must be satisfied before res judicata operates to bar a claim. See n. 9. The court also provides the four-part test for applying the collateral estoppel doctrine. See n. 10. In addition, the court explains the significant differences between the two doctrines. See n. 11.
The court also provides the three prerequisites for applying the doctrine of acquiescence. See n. 18
Res judicata and collateral estoppel are commonly known concepts but their nuances and their specific prerequisites are not as well known. The concept of acquiescence is even less well known as a useful defense to bar certain claims in appropriate circumstances.
The elements of acquiescence were recently described by the Delaware Supreme Court (as quoted in this case), as follows:
A claimant has full knowledge of his rights and the material facts and (1) remains inactive for a considerable time; or (2) freely does what amounts to recognition of a complained of act; or (3) acts in a manner inconsistent with the subsequent repudiation, which leads the other party to believe the act has been approved. For the defense of acquiescence to apply, conscious intent to approve the act is not required, nor is a change of position or resulting prejudice.
Id. (citing Klaassen v. Allegro Dev. Corp., 106 A.3d 1035, 1047 (Del. 2014)).
Another recent Chancery decision in an unrelated case, also applied collateral estoppel to bar claims that had been previously litigated. See Asbestos Workers Local 42 Pension Fund v. Bammann, C.A. No. 9772 (Del. Ch. May 21, 2015).