A key prerequisite for the proper application of issue preclusion is whether it appears that the party against whom it is pleaded had a “full and fair opportunity” to litigate the issue. Issue preclusion cannot be applied if such issue was not actually litigated in an earlier suit. Issue preclusion can potentially be pled in a subsequent suit by a stranger to the original suit. Issue preclusion can be appropriate when the following requirements are met:
- the issue is identical to one decided in the first action;
- the issue was actually litigated in the first action;
- resolution of the issue was essential to a final judgment in the first action; and
- the plaintiff had a full and fair opportunity to litigate the issue in the first action.
Satisfaction of the above requirements, however, does not necessarily guarantee that issue preclusion will be applied by the courts. One exception is the party against whom preclusion is sought could not, as a matter of law, have obtained review of the judgment in the initial action. Issue preclusion is also traditionally referred to as collateral estoppel.