Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: July 11, 2016

Collateral Estoppel Bars Plaintiff from Litigating Factual Issues Determined in Prior Arbitration

On June 30, 2016, the First Department issued a decision in Advanced Aerofoil Technologies AG v. MissionPoint Capital Partners LLC, 2016 NY Slip Op. 05231, holding that the doctrine of collateral estoppel barred a plaintiff’s claims, explaining:

The motion court correctly determined that the doctrine of collateral estoppel bars plaintiff from litigating two factual issues that were determined in a prior arbitration proceeding commenced by plaintiff, namely, whether any of plaintiff’s confidential information was misappropriated and whether nonparty Flowcastings was its direct competitor. That the instant action arises out of a nondisclosure agreement between plaintiff and defendant while the arbitration was held in connection with an agreement between plaintiff and its former employees is of no consequence. Plaintiff’s core claim is the same in both: that confidential information was wrongly taken from it and used to start a competing company.

Since plaintiff is the party sought to be collaterally estopped, it is of no consequence that defendant was not a party to the arbitration.

(Internal quotations and citations omitted).

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