Let's Pretend It Never Happened

So you defended the case as well as you could, but the plaintiff got a judgment anyway. Now you want to settle, and a term of your desired settlement is an order vacating the earlier judgment so it will have no effect against you by third parties for collateral estoppel purposes. Assuming you can get such an order from the court, can you be sure it will hold up? Maybe yes, maybe no. The U.S. Court of Appeals for the Second Circuit respected such a provision in Harris Trust & Savings Bank v. John Hancock Mutual Life Insurance, 970 F.2d 1138 (2d Cir. 1992), but the Third Circuit recently held otherwise in Sentinel Trust Co. v. Universal Bonding Insurance Co., 316 F.3d 213 (3d Cir. Jan. 8, 2003). The issue for the Third Circuit was whether the vacated judgment had become "final" for issue preclusion purposes. Practice tip: If you want a settlement to include this protection, you better get the adverse judgment vacated before it becomes final.