In this context “privity with one another” is shorthand for a substantive legal relationship between a party to the prior action and a non-party, one which makes it fair to conclude that “the interests of the non-party were in fact represented and protected in the prior litigation,” Cook v. Sullivan, 149 N.H. 774, 779 (2003), such as “when a person controls or substantially participates in controlling the presentation or if a non-party authorizes a party in litigation to represent his or her interests,” id. Representation of interests is to be distinguished from commonality of interests. As noted in New Hampshire Motor Transport Ass’n v. Town of Plaistow, 67 F.3d 326, 328 (1st Cir. 1995), “normally something more is required for privity between the prior and present litigants than merely a common interest in the outcome.”
Is the relationship between a general contractor and its subcontractors enough to establish the necessary privity? If we analogize the contractor–subcontractor relationship to the employer–employee relationship, the answer would seem to be No. In Daigle v. City of Portsmouth, 129 N.H. 561, 573 (1987), the Court “reject[ed] privity by employment for the basic reason that an employer representing himself does not necessarily defend the interest of the employee whose behavior has become the occasion for legal action. There is, rather, a potential for conflict between their respective interests, and this case illustrates it well: the employer’s option to defend by claiming that its employee acted outside the scope of his employment is an option to defend the employer by sacrificing the employee.” The same is true when a GC defends against an owner’s tort claims on grounds that its subcontractor is an independent contractor for whose negligence the GC bears no responsibility.
It follows that a subcontractor is not automatically stuck with the outcome when the GC botches the claim – unless he had a duty to intervene in the case to assert his own rights, or authorized the GC to spearhead his claims (see Blog #55: Pass Through Claims). But he may still stick the owner with the outcome if the GC won the prior case. Say an owner litigates claims and counterclaims with his general contractor, and then sues the subcontractors for the same alleged sins. The subs should be able to invoke res judicata even though they were not parties to the first lawsuit. This result is suggested by Fiumara v. Fireman’s Fund Ins. Companies, 746 F.2d 87, 92 (1st Cir. 1984), where an insured litigated a case against his insurers in state court, and later sued the insurer’s investigators and testing laboratory in federal court:
“While these appellees were not parties to the state suit, the application of res judicata and collateral estoppel, both in the federal courts and in New Hampshire, is no longer grounded upon mechanical requirements of mutuality. Instead, the significant question is whether a party has had a full and fair opportunity for judicial resolution of the same issue. That opportunity was palpably present in the state court proceedings. And, given the allegations of the federal complaint that [appellees] were each and all acting as agents of the insurers when they committed the putative misdeeds for which they have now been sued, they clearly qualify as persons in privity with FFIC and DMFIC. Thus, the res judicata defense is unmistakably available to them.”