What is the difference between res judicata and collateral estoppel?

What is the difference between res judicata and collateral estoppel?

• A. Res judicata bars claims that were never litigated in any court.
• B. Collateral estoppel allows re-litigation of previously decided issues.
• C. Res judicata bars claims that could have been raised in a final judgment; collateral estoppel prevents re-litigation of actually litigated issues in later cases.
• D. Collateral estoppel applies only to state courts.

Answer: (C)

The difference being tested is between claim preclusion and issue preclusion. Res judicata, or claim preclusion, blocks a party from bringing a claim in a later case if that claim could have been raised in a final judgment on the merits. The emphasis is on the entire claim and what could have been included in the prior suit; once there’s a final judgment, related claims arising from the same situation are barred.

Collateral estoppel, or issue preclusion, works differently. It prevents re-litigation of a specific factual or legal issue that was actually litigated and essential to a prior judgment. In later cases, the same issue can’t be reargued against the same party (or someone in privity with them), even if the later case involves a different claim.

So the correct statement ties res judicata to claims that could have been raised in the prior final judgment and ties collateral estoppel to preventing re-litigation of actually litigated issues in later cases. The other choices blur these distinctions: res judicata isn’t about claims never litigated, collateral estoppel isn’t about allowing re-litigation of decided issues, and collateral estoppel isn’t limited to state courts.