Justice Stevens, delivered the opinion of the Court.
In Hansberry v. Lee, 311 U.S. 32, 37 (1940), we held that it would violate the Due Process Clause of the Fourteenth Amendment to bind litigants to a judgment rendered in an earlier litigation to which they were not parties and in which they were not adequately represented. The decision of the Supreme Court of Alabama that we review today presents us with the same basic question in a somewhat different context.
Jason Richards and Fannie Hill (petitioners) are privately employed in Jefferson County, Alabama. In 1991 they filed a complaint in the Federal District Court challenging the validity of the occupation tax imposed by Jefferson County
Petitioners represent a class of all nonfederal employees subject to the county's tax.
The county moved for summary judgment on the ground that petitioners' claims were barred by a prior adjudication of the tax in an earlier action brought by the acting director of finance for the city of Birmingham and the city itself. That earlier action had been consolidated for trial with a separate suit brought by three county taxpayers, and the Supreme Court of Alabama upheld the tax in the resulting appeal. See Bedingfield v. Jefferson County, 527 So.2d 1270 (1988). After examining the course of this prior litigation, the trial court granted the county's motion for summary judgment as to the state constitutional claims, but refused to do so as to the federal claims because they had not been decided by either the trial court or the Alabama Supreme Court in Bedingfield.
On appeal, the county argued that the federal claims as well as the state claims were barred by the adjudication in
The Alabama Supreme Court concluded that even though the opinion in Bedingfield did not mention any federal issue, the judgment in that case met these requirements. The court gave three reasons for this conclusion: (1) The complaints in the earlier case had alleged that the county tax violated the Equal Protection Clause of the Fourteenth Amendment and an equal protection issue had been argued in the appellate briefs, 662 So. 2d, at 1129; (2) the taxpayers in Bedingfield adequately represented petitioners because their respective interests were "essentially identical," 662 So. 2d, at 1130; and (3) in pledging tax revenues and issuing bonds in 1989, the county and the intervenor "could have relied on Bedingfield as authoritatively establishing that the county occupational tax was not unconstitutional for the reasons asserted by the Bedingfield plaintiffs," 662 So. 2d, at 1130.
Justice Maddox dissented. He agreed with the trial judge that no federal constitutional claim had been adjudicated in Bedingfield. 662 So. 2d, at 1130-1131. Moreover, he concluded that the mere fact that the theory advanced by the petitioners in this case could have been asserted in Bedingfield constituted an insufficient reason for barring this action. 662 So. 2d, at 1131-1132.
State courts are generally free to develop their own rules for protecting against the relitigation of common issues or the piecemeal resolution of disputes. Postal Telegraph Cable Co. v. Newport, 247 U.S. 464, 475 (1918). We have long held, however, that extreme applications of the doctrine of res judicata may be inconsistent with a federal right that is "fundamental in character." Id., at 476.
Of course, these principles do not always require one to have been a party to a judgment in order to be bound by it. Most notably, there is an exception when it can be said that there is "privity" between a party to the second case and a party who is bound by an earlier judgment. For example, a judgment that is binding on a guardian or trustee may also bind the ward or the beneficiaries of a trust. Moreover, although there are clearly constitutional limits on the "privity" exception, the term "privity" is now used to describe various relationships between litigants that would not have come within the traditional definition of that term. See generally Restatement (Second) of Judgments, ch. 4 (1980) (Parties and Other Persons Affected by Judgments).
In addition, as we explained in Wilks:
Here, the Alabama Supreme Court concluded that res judicata applied because petitioners were adequately represented in the Bedingfield action. 662 So. 2d, at 1130. We now consider the propriety of that determination.
We begin by noting that the parties to the Bedingfield case failed to provide petitioners with any notice that a suit was pending which would conclusively resolve their legal rights. That failure is troubling because, as we explained in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950), the right to be heard ensured by the guarantee of due process "has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear or default, acquiesce or contest." Id., at 314; Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985); Schroeder v. City of New York, 371 U.S. 208, 212-213 (1962). Nevertheless, respondents ask us to excuse the lack of notice on the ground that petitioners, as the Alabama
Our answer is informed by our decision in Hansberry v. Lee, 311 U. S., at 40-41. There, certain property owners brought suit to enforce a restrictive covenant that purported to forbid the sale or lease of any property within a defined area to "any person of the colored race." Id., at 37-38. By its terms the covenant was not effective unless signed by the owners of 95 per cent of frontage in the area. At trial, the defendants proved that the signers of the covenant owned only about 54 percent of the frontage. Nevertheless, the trial court held that the covenant was enforceable because the issue had been resolved in a prior suit in which the parties had stipulated that the owners of 95 percent had signed. Id., at 38 (referring to Burke v. Kleiman, 277 Ill.App. 519 (1934)).
Despite the fact that the stipulation was untrue, the Illinois Supreme Court held that the second action was barred by res judicata. See Lee v. Hansberry, 372 Ill. 369, 24 N.E.2d 37 (1939). Because the plaintiff in the earlier case had alleged that she was proceeding "on behalf of herself and on behalf of all other property owners in the district," id., at 372, 24 N. E. 2d, at 39, the Illinois Supreme Court concluded that all members of that "class," including the defendants challenging the stipulation in the present action, were bound by the decree. We reversed.
We recognized the "familiar doctrine . . . that members of a class not present as parties to the litigation may be bound by the judgment where they are in fact adequately represented
Even assuming that our opinion in Hansberry may be read to leave open the possibility that in some class suits adequate representation might cure a lack of notice, but cf., id., at 40; Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974); Mullane v. Central Hanover Bank & Trust Co., 339 U. S., at 319, it may not be read to permit the application of res judicata here. Our opinion explained that a prior proceeding, to have binding effect on absent parties, would at least have to be "so devised and applied as to insure that those present are of the same class as those absent and that the litigation is so conducted as to insure the full and fair consideration of the common issue." 311 U. S., at 43; cf. Phillips Petroleum Co. v. Shutts, 472 U. S., at 811-812. It is plain that the Bedingfield action, like the prior proceeding in Hansberry itself, does not fit such a description.
The Alabama Supreme Court concluded that the "taxpayers in the Bedingfield action adequately represented the interests of the taxpayers here," 662 So. 2d, at 1130 (emphasis added), but the three county taxpayers who were parties in Bedingfield did not sue on behalf of a class; their pleadings did not purport to assert any claim against or on behalf of any nonparties; and the judgment they received did not purport to bind any county taxpayers who were nonparties. That the acting director of finance for the city of Birmingham also sued in his capacity as both an individual taxpayer and a public official does not change the analysis. Even if we were to assume, as the Alabama Supreme Court did not, that
As a result, there is no reason to suppose that the Bedingfield court took care to protect the interests of petitioners in the manner suggested in Hansberry. Nor is there any reason to suppose that the individual taxpayers in Bedingfield understood their suit to be on behalf of absent county taxpayers. Thus, to contend that the plaintiffs in Bedingfield somehow represented petitioners, let alone represented them in a constitutionally adequate manner, would be "to attribute to them a power that it cannot be said that they had assumed to exercise." Hansberry, 311 U. S., at 46.
Because petitioners and the Bedingfield litigants are best described as mere "strangers" to one another, Martin v. Wilks, 490 U. S., at 762, we are unable to conclude that the Bedingfield plaintiffs provided representation sufficient to make up for the fact that petitioners neither participated in, see Montana v. United States, 440 U.S. 147, 154 (1979), nor had the opportunity to participate in, the Bedingfield action. Accordingly, due process prevents the former from being bound by the latter's judgment.
Respondents contend that, even if petitioners did not receive the kind of opportunity to make their case in court that due process would ordinarily ensure, the character of their
Our answer requires us to distinguish between two types of actions brought by taxpayers. In one category are cases in which the taxpayer is using that status to entitle him to complain about an alleged misuse of public funds, see, e. g., Massachusetts v. Mellon, 262 U.S. 447, 486-489 (1923), or about other public action that has only an indirect impact on his interests, e. g., Stromberg v. Board of Ed. of Bratenahl, 64 Ohio St.2d 98, 413 N.E.2d 1184 (1980), Tallassee v. State ex rel. Brunson, 206 Ala. 169, 89 So. 514 (1921). As to this category of cases, we may assume that the States have wide latitude to establish procedures not only to limit the number of judicial proceedings that may be entertained but also to determine whether to accord a taxpayer any standing at all.
Because the guarantee of due process is not a mere form, however, there obviously exists another category of taxpayer cases in which the State may not deprive individual litigants of their own day in court. By virtue of presenting a federal constitutional challenge to a State's attempt to levy personal funds, petitioners clearly bring an action of this latter type. Cf. ibid. (distinguishing between "public" and "private" actions). Indeed, we have previously struck down as a violation of due process a state court's decision denying an individual taxpayer any practicable opportunity to contest a tax on federal constitutional grounds. See BrinkerhoffFaris Trust & Sav. Co. v. Hill, 281 U.S. 673 (1930). There, we explained:
In any event, the Alabama Supreme Court did not hold here that petitioners' suit was of a kind that, under state law, could be brought only on behalf of the public at large. Cf. Corprew v. Tallapoosa County, 241 Ala. 492, 3 So.2d 53 (1941) (discussing state statutory quo warranto proceedings). To conclude that the suit may nevertheless be barred by the prior action in Bedingfield would thus be to deprive petitioners of their "chose in action," which we have held to be a protected property interest in its own right. See Logan v. Zimmerman Brush Co., 455 U.S. 422, 429-430 (1982); Phillips Petroleum Co. v. Shutts, 472 U. S., at 812 (relying on Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950)); Hansberry v. Lee, 311 U. S., at 37. Thus, we are not persuaded that the nature of petitioners' action permits us to deviate from the traditional rule that an extreme application of state-law res judicata principles violates the Federal Constitution.
Of course, we are aware that governmental and private entities have substantial interests in the prompt and determinative
Because petitioners received neither notice of, nor sufficient representation in, the Bedingfield litigation, that adjudication, as a matter of federal due process, may not bind them and thus cannot bar them from challenging an allegedly unconstitutional deprivation of their property. Accordingly, the judgment of the Alabama Supreme Court is reversed, and the case is remanded to that court for further proceedings not inconsistent with this opinion.
It is so ordered.