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Issue Preclusion Can Kill Claim; If You Have Litigated An Issue Before An Administrative Agency, You May Be Precluded From Relitigating It In Court
An old adage says that you only get one bite at the apple. This can be true in litigation, especially if you have already pursued a claim unsuccessfully before an administrative agency. However, not every case is the same, and not every administrative proceeding will preclude later litigation in court over similar issues.
The California Supreme Court, responding to a request from the federal Ninth Circuit Court of Appeals, recently offered helpful analysis in this area. The case is Murray v. Alaska Airlines. The plaintiff was a former employee who had been “outsourced” when the airline closed a facility. He contended that he was fired for whisleblowing activities, and filed a claim in that regard with the U.S. Secretary of Labor. Following an investigation (the employee participated through his attorney), the secretary, however, rejected the claim on the ground that there was no “nexus” between the alleged protected activity and the employee’s outsourcing. The employee did not appeal the administrative ruling.
The employee proceeded, however, to file a complaint in state court contending he had been wrongfully terminated. The airline removed the case to federal court on diversity grounds. The federal trial court dismissed the compliant on the ground that it was barred by the doctrine of collateral estoppel (issue preclusion).
The employee appealed to the Ninth Circuit, which referred the question of state law to the California Supreme Court for an advisory opinion. The court stated that under the circumstances of this case, the employee’s claim was barred by the prior administrative proceedings. The court’s comments are helpful in evaluating future cases where this issue may arise. To quote the court:
“The doctrine of collateral estoppel, or issue preclusion, is firmly embedded in both federal and California common law. It is grounded on the premise that once an issue has been resolved in a prior proceeding, there is no further fact-finding function to be performed. . . . Collateral estoppel . . . has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy, by preventing needless litigation.”
“It is settled that the doctrine of collateral estoppel or issue preclusion is applicable to final decisions of administrative agencies acting in a judicial or quasi-judicial capacity.”
“[J]udicial exhaustion ‘may arise when a party initiates and takes to decision an administrative process—whether or not the party was required, as a matter of administrative exhaustion, to even begin the administrative process in the first place. Once a decision has been issued, provided that decision is of a sufficiently judicial character to support collateral estoppel, respect for the administrative decisionmaking process requires that the prospective plaintiff continue that process to completion, including exhausting any available judicial avenues for reversal of adverse findings. . . . Failure to do so will result in any quasi-judicial administrative findings achieving binding, preclusive effect and may bar further relief on the same claims.”
“Ultimately, the inquiry that must be made is whether the traditional requirements and policy reasons for applying the collateral estoppel doctrine have been satisfied by the particular circumstances of this case. Here, [the employee] who has been represented by counsel at every stage of the prior administrative and present court proceedings, voluntarily instituted an action against his former employer, Alaska, under the federal whistleblower protection statute . . . . At the conclusion of the Secretary’s preliminary investigation, and upon receipt of her adverse factual findings and decision, Murray effectively abandoned his administrative action and brought suit against Alaska in state court, raising claims that would ultimately turn on the same key factual matter of causation resolved against him in the earlier proceedings. He failed to take the steps required to lawfully withdraw his administrative complaint, failed to exercise his absolute statutory right to a formal de novo hearing of record before an administrative law judge (ALJ), and, consequently, failed to exercise his statutory right to appeal any adverse findings and decision of the ALJ to the Ninth Circuit. All such omissions occurred in the face of clear statutory notice to [the employee] that his forfeiture of such rights would result in the Secretary’s preliminary factual findings and decision becoming a final nonappealable order by operation of law.”
The California Supreme Court went on to note that the United States Supreme Court “has explained that the focus of our inquiry should be on whether the party against whom issue preclusion is being sought had an adequate opportunity to litigate the factual finding or issue in the prior administrative proceeding [citing United States v. Utah Construction Co., 384 U.S. 394 (1966)].”
Finally, the court noted that “[a]ppellate courts of this state have followed suit, likewise recognizing that “[i]t is the opportunity to litigate that is important in these cases, not whether the litigant availed himself or herself of the opportunity.” (Emphasis by the court.)
One of the most important questions in any client intake interview is whether the matter at hand has been litigated before – either in a prior court case or before an administrative agency that sits as an adjudicatory body.
For your convenience, a complete copy of the court’s ruling is attached.
We regularly advise employers, unions, and individual employees about issues that arise in the workplace. Feel free to give us a call if you have questions or issues in this area.