Case of the Day: Clay v. Hilton
Posted on April 29, 2020
The case of the day is Clay v. Hilton Worldwide Holdings, Inc. (W.D. Wash. 2020). Clay was in Phuket, Thailand, for a business conference. When he was strode on the stage during his presentation, he tripped and fell, suffering a serious injury. He sued the company that owned the hotel and the company that managed it for negligence in a Thai court. The case went to trial, but Clay didn’t attend, because his doctors had not yet cleared him for international travel. The Thai court refused to continue the trial as Clay had asked. Clay presented his evidence in writing only. The defendants did present witnesses, but Clay’s lawyers did not cross-examine them or present any witnesses of their own. The court held that Clay had failed to put on evidence to prove negligence and therefore entered a judgment in favor of the defendants. Clay then brought an action against Hilton in Washington. Hilton moved for summary judgment, arguing that the Thai judgment was entitled to claim-preclusive and issue-preclusive effect.
There was no real dispute about whether the court should recognize the Thai judgment. It was final and enforceable in a money damages case, and Clay did not try to show that one of the statutory exceptions to the ordinary rule of recognition. So the court concluded that the judgment was entitled to recognition. The court went on to apply the Washington law of res judicata and collateral estoppel, and it held that the Thai judgment did indeed preclude Clay’s claim.
This was apparently a correct approach under Washington precedent holding that “A recognized ‘foreign-country judgment is … [enforceable in the same manner and to the same extent as a judgment rendered in this state].” But it raises an interesting general question. Leaving aside the Washington precedent, what is the general rule about which law should govern the preclusive effect of a foreign country judgment. Here is what the Restatement (Second) of Conflict of Laws § 98 cmt. g (1988) provides:
A foreign nation judgment [entitled to recognition] will be given the same degree of recognition as a sister State judgment, subject to the qualification discussed in Comment f, so far as the immediate parties and the underlying claim are concerned. It is uncertain, however, whether an American court will always give similar effect to the foreign rules of privity in determining what persons, other than the parties, are bound by the judgment … and to the foreign rules as to splitting a claim or as to collateral estoppel …. Normally, an American court would apply the foreign rules as to these matters if these rules are substantially the same as the rules of the American court. It is also uncertain what effect would be given by an American court to foreign rules of res judicata with respect to findings by the court that it had jurisdiction over the defendant or over a thing or status or that it had competence over the subject matter of the controversy.
The Restatement is less than absolute here, but I think it supports what I understand to be the basic rule: once you decide that a judgment is entitled to recognition, you give it whatever preclusive effect it would have if the second action had been brought in a court in the same jurisdiction as the court that entered the first judgment. The policy of the rule seems sound: you don’t want to give a foreign judgment more preclusive effect than it would have at home, to avoid the mischief of forum shopping. You also don’t want to give it less preclusive effect, to avoid needless follow-on litigation. The Washington precedent (the case is Shanghai Commercial Bank Ltd. v. Kung Da Chang, 404 P.3d 62 (Wash. 2017), seems questionable to me. That’s not to say that the outcome would have been any different had the court applied Thai preclusion law.