What constitutes valid issue preclusion?

Valid issue preclusion, also known as collateral estoppel, requires that the same issue was litigated and determined in a prior case. For issue preclusion to apply, several criteria must be met:

1. The issue in question must have been identical to the issue decided in the previous case.
2. The issue must have been actually litigated, meaning it was contested and not merely assumed or available for the parties.

3. The prior resolution of the issue must have been necessary to the outcome of the previous case, meaning the court had to decide it for the judgment in that case to be valid.
4. The parties in the subsequent case must have had a full and fair opportunity to litigate the issue in the prior case, although they do not necessarily need to be the same parties.

This correct option captures the essence of what issue preclusion entails, emphasizing that a valid preclusion only occurs when there has been a definitive judicial determination regarding the issue in question from the earlier case.

The other options do not reflect the criteria for valid issue preclusion: a default judgment does not involve litigation on the merits, settling a matter out of court does not involve a judicial determination on an issue, and differing parties can still be bound by the