On January 30, 2017, in CSX Transportation, Inc. v. General Mills, Inc., the US Court of Appeals for the Eleventh Circuit held that in diversity cases, state collateral estoppel law dictates the preclusive effect of a prior judgment ( (11th Cir. Jan. 30, 2017)).

In 2005, a General Mills employee filed a diversity case in federal court against CSX, seeking damages for injuries he sustained in a railcar accident. A jury found CSX solely at fault and awarded the plaintiff $20 million in damages. CSX requested indemnification from General Mills under their mutual Sidetrack Agreement, in which General Mills broadly assumed "all risk of loss, damage, cost, liability, judgment and expense…in connection with any personal injury to or death of any persons…that may be sustained or incurred in connection with, … the operation of [General Mills'] trackmobile or locomotive power." However, the Agreement specifically relieved General Mills from all liability for losses caused by CSX's "sole negligence." General Mills refused to indemnify CSX, and CSX sued to enforce the Agreement.

General Mills moved to dismiss the complaint based on the clause that relieved General Mills from liability for losses caused by CSX's sole negligence. General Mills argued that, because the jury found CSX to be solely at fault in the prior action, collateral estoppel relieved General Mills from having to re-litigate the issue. The district court agreed, and dismissed CSX's complaint.

CSX appealed, arguing that the district court should have applied Georgia's collateral estoppel law (which only permits collateral estoppel to apply in subsequent litigation involving the same parties), rather than federal collateral estoppel law (which permits non-parties to the prior action to invoke collateral estoppel offensively or defensively in subsequent litigation). Because General Mills was not a party to the prior litigation, CSX argued that Georgia law did not permit General Mills to rely on the prior jury's finding.

Resolving an inconsistency created by its prior decisions, the US Court of Appeals for the Eleventh Circuit held that in diversity cases, state collateral estoppel law dictates the preclusive effect of a prior judgment (see Palmer & Cay, Inc. v. Marsh & McLennan Cos., 404 F.3d 1297, 1310 (11th Cir. 2005) (holding that federal courts should apply the state collateral estoppel law in diversity cases); but see Tampa Bay Water v. HDR Engineering, Inc., 731 F.3d 1171, 1179 (11th Cir. 2013) (holding that federal courts should apply federal collateral estoppel law in diversity cases). Accordingly, the court reversed and remanded the case to district court to apply Georgia's collateral estoppel law.