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85 Calif. L. Rev. 479  

March, 1997

Unsettling Settlements: Should Stipulated Reversals be Allowed to Trump Judgments' COllateral Estoppel Effects Under Neary?

Steven R. Harmon
 
Stipulated reversal is a procedure whereby litigants, typically during the pendency of an appeal and in order to facilitate settlement, ask the appellate court to dispose of the case by reversing the trial court's judgment rather than dismissing the appeal. In Neary v. Regents of University of California, the California Supreme Court broadly endorsed this procedure by holding that appeals courts should grant stipulated reversal requests absent extraordinary circumstances such as a compelling public interest.

Neary has been widely criticized, particularly insofar as stipulated reversal negates the issue preclusive effect of a trial court judgment so reversed. Under current collateral estoppel doctrine, a party found liable, for example, for manufacturing a defective product in an initial action is precluded from contesting the issue of defectiveness in later actions brought by different plaintiffs. However, if the initial action is reversed by stipulation, the first judgment has no preclusive effect in later actions.

This Comment examines the relationship between stipulated reversal under Neary and the preclusive effects of judgments. The author concludes that, notwithstanding the Neary presumption in favor of stipulated reversal, a judgment's collateral estoppel effects provide a sufficiently compelling public interest to support an appellate court's decision to deny a request for stipulated reversal. In particular, the author argues that preserving a judgment's preclusive effects: 1) promotes judicial economy by encouraging settlement and avoiding repetitious litigation of identical issues; 2) prevents inconsistent judgments which undermine the integrity of the judicial system; and 3) avoids the appearance of manipulation of the judicial system by wealthy litigants, who can use stipulated reversal to "purchase" additional chances to relitigate issues already decided against them.

Copyright © 1997 by California Law Review, Inc.
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