## Facts

- Jefferson County, Alabama imposed an “occupation tax” on certain workers’ wages.
- Earlier litigation (Bedingfield) challenged the same tax; the Alabama Supreme Court upheld the tax.
- Richards and other county taxpayers later filed a state-court class action challenging the tax under both federal and state constitutional provisions.
- The trial court held the state-law claims were precluded by Bedingfield but concluded the federal constitutional claims were not precluded because they had not been decided.
- The Alabama Supreme Court held that res judicata also barred the federal constitutional claims, reasoning the Richards plaintiffs were “adequately represented” in Bedingfield.
- The U.S. Supreme Court granted review to decide whether this nonparty preclusion violated the Fourteenth Amendment’s Due Process Clause.

## Issues

1. Whether due process permits a state court to preclude taxpayers’ federal constitutional claims based on a prior taxpayer suit when the later taxpayers were not parties, had no notice, and were not adequately represented in a properly structured representative proceeding.

## Decision

- The Court unanimously reversed.
- Due process prohibited binding the Richards plaintiffs to the Bedingfield judgment because they received neither notice of the earlier litigation nor representation sufficient to justify nonparty preclusion.
- The Court rejected treating all taxpayers as in “privity” with prior taxpayer litigants merely because they were affected by the same tax.
- The case was remanded for further proceedings; the federal constitutional claims could not be dismissed on res judicata grounds.

## Legal Principles

- As a due process matter, a person generally cannot be bound by a judgment in litigation to which the person was not a party.
- States’ res judicata rules are subject to federal constitutional limits; an “extreme” application of claim preclusion can violate due process.
- Nonparty preclusion may be permissible only in limited settings, such as traditional privity or a representative suit (including class actions) structured and conducted to ensure adequate representation of absent persons.
- Absent notice and a procedure designed to protect absent parties’ interests, a prior representative-type judgment cannot conclusively determine nonparties’ rights.

## Conclusion

The Court held that Alabama could not, consistent with due process, bar different taxpayers from bringing a federal constitutional challenge to a county tax based solely on an earlier taxpayer suit that provided them no notice and lacked procedures ensuring adequate representation of their interests.


Richards v. Jefferson County, 517 U.S. 793 (1996)