Seventh Circuit reaffirms that issue preclusion applies to United States government

Anyone who has watched a television legal drama knows that different standards of proof apply in a criminal prosecution and a civil trial; a prosecutor must prove guilt beyond a reasonable doubt, while civil liability requires only a bare majority (a preponderance, in legalese) of the evidence. The Seventh Circuit’s recent decision in United States v. Egan Marine Corp., Nos. 15-2477 & 15-2485 (7th Cir. Dec. 12, 2016), turns primarily on the interplay of those two standards.

In January 2005, a barge exploded en route from Joliet, Illinois to Chicago. The explosion caused the death of a deckhand named Alex Oliva and led to an oil spill. After an investigation, the United States government concluded that the explosion resulted from a sequence of events that began when the master of the tug boat pushing the barge told Oliva to use a propane torch to warm a pump on the barge. Because the barge was carrying clarified slurry oil, the use of an open flame was both inherently dangerous and contrary to federal regulations. The United States sought to place the blame on the tug’s master, Dennis Egan, and its owner, Egan Marine Corp., by obtaining a criminal indictment.

Before pursuing the criminal case, the United States sought civil recovery from Egan Marine. In the civil case, the United States contended that Egan Marine was liable because its employee, Dennis Egan, had negligently instructed Oliva to use a propane torch, which caused an explosion and, in turn, both Oliva’s death and an oil spill. After a bench trial, the court found that “the government did not prove, by a preponderance of the evidence, that Alex Oliva was using a propane torch on the cargo pump of the [barge] at the time of the incident.” Egan Marine, slip op. at 2-3 (quoting district court 2011 decision). The government could have appealed that decision but opted not to.

Undeterred by the civil result, the government proceeded with its criminal prosecution against both Dennis Egan and Egan Marine. The defendants attempted to terminate the criminal case, arguing that the civil determination that the government could not prove its theory by a preponderance of the evidence meant it could not prevail under the higher criminal standard of proof beyond a reasonable doubt. The defendants’ argument rested on the doctrine of issue preclusion (collateral estoppel, in legalese), which prevents a party from relitigating an issue already decided by a court. Issue preclusion prohibits a litigant who lost in one case from filing a new case to try again.

The judge hearing the criminal case—who was not the same judge who heard the civil case—dismissed the defendants’ preclusion argument. He did not assert that the issues raised by the criminal prosecution differed from those in the civil trial. And he did not assert that anything was wrong with or procedurally improper about the civil trial. Instead, “he simply announced that he would disregard the civil judgment because that course seemed best to him.” Id. at 7. At the conclusion of the criminal prosecution, the court found the defendants guilty, sentencing Dennis Egan to prison, placing Egan Marine on probation, and assessing nearly $6.75 million in restitution against both defendants.

In the defendants’ appeal, the Seventh Circuit declared, in no uncertain terms, that the government is no more entitled than any other litigant to “a situation in which it can win but not lose.” Id. at 6. In doing so, the court explained that “had the criminal case gone to trial first and defendants been acquitted, the United States doubtless would be arguing that it could still pursue civil remedies because of the different burdens of persuasion.” Id. In that circumstance, the government would be right. But, “by bringing the civil case first, the United States received the benefit of civil discovery, which is more extensive than that allowed in criminal prosecutions…—discovery that it could put to use in the criminal case as well as the civil one.” Id. at 6-7. While the court acknowledged it could “understand why the United States seeks these advantages,” it did “not think [the government was] entitled to them, without the detriment of being bound by the civil judgment if it loses.” Id. at 7. As a result, the appellate court reversed the defendants’ convictions and ordered that judgments of acquittal be entered.

The case makes clear that the government must play by the same rules as other litigants. And if the government chooses to pursue both criminal penalties and civil recovery, that does not guarantee it two independent chances to make its case. Instead, the government must make strategic decisions and abide by the consequences. While this seems like an obvious principle, it was sufficiently uncertain that the government was willing to argue against it (and that the criminal trial judge accepted the government’s view). Not only does the Seventh Circuit’s decision reject the government’s desired double-standard, it does so emphatically. In addition to using strong, resounding language, the Seventh Circuit issued its opinion only one week after oral argument in the case. One week is an incredibly short period for the three-judge panel to decide the case, have one judge explain the decision in a written opinion, and have the other two judges review, edit, and finalize the written opinion.[1] This immediate turn-around is a substantial departure from usual processes that underscores the court’s view of this case as a slam-dunk.

Filed Under: Appellate Law Municipal Law