Opinion ID: 547610
Heading Depth: 1
Heading Rank: 3

Heading: Preclusionary Effects of State Proceedings

Text: 28 It is not clear from the district court's opinion whether the court relied on claim or issue preclusion for its holding that the findings of the Secretary of Education and the Commonwealth Court that the Board properly dismissed Bradley were entitled to preclusive effect, and therefore barred Bradley's First Amendment, equal protection and retaliatory discharge claims. At one point, the court explicitly refers to issue preclusion, saying the validly adjudicated facts established in the state court proceeding are entitled to collateral estoppel effect. App. at 741. However, the conclusion reached, that plaintiff is precluded from raising federal claims because he could have raised them in the state proceedings, suggests that the court actually applied claim preclusion. 29 The concepts are distinct. Claim preclusion, otherwise referred to as res judicata, gives dispositive effect to a prior judgment if the particular issue, albeit not litigated in the prior action, could have been raised. See McNasby v. Crown Cork & Seal Co., 888 F.2d 270, 275 (3d Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 1783, 108 L.Ed.2d 784 (1990). On the other hand, issue preclusion, referred to as collateral estoppel, bars relitigation only of an issue identical to that adjudicated in the prior action. See Gregory v. Chehi, 843 F.2d 111, 116 (3d Cir.1988). We must give the state judgment the same preclusionary effect as would the state. See 28 U.S.C. Sec. 1738 (1988); Migra v. Warren City School Dist., 465 U.S. 75, 81, 104 S.Ct. 892, 896, 79 L.Ed.2d 56 (1984).
30 Bradley argues that there is no claim preclusion because the Secretary of Education had no jurisdiction to grant the relief requested for constitutional violations, see McNasby, 888 F.2d at 276; Restatement (Second) of Judgments Sec. 26(1)(c) (1982), and that there is no claim preclusion as to his claims against the defendants in their individual capacities because the prior litigation was only against them in their official capacities, see Gregory, 843 F.2d at 119-20. We need not decide these issues because we conclude that Bradley validly reserved his federal claims in the state court proceedings. Our conclusion is based upon England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964), and section 26(1)(a) of the Restatement (Second) of Judgments.
31 Under England a party who has been forced to litigate in state court may reserve its federal claims for federal adjudication by informing the state court of its reservation of those claims. The England plaintiffs, graduates of chiropractic schools, filed suit in federal court challenging the educational requirements of a state statute which limited their right to practice in Louisiana. The district court abstained under Railroad Comm'n v. Pullman, 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), and remitted the plaintiffs to state court for a determination whether the state law applied to chiropractors. After the state court held that the law applied to chiropractors and was not unconstitutional, plaintiffs returned to federal court to resume their constitutional challenge. The district court dismissed the action on the ground that the state court determination was entitled to preclusive effect. 32 The Supreme Court reversed, holding that a party who had been subjected to abstention may reserve his federal claims for federal adjudication by informing the state court of the nature of his federal claims, that he does not wish to litigate those claims in state court, and that he intends, should the state courts hold against him on the question of state law, to return to the District Court for disposition of his federal contentions. England, 375 U.S. at 421, 84 S.Ct. at 467. In reaching its holding the Court stressed that in the abstention context the plaintiff's presence in state court is compelled and involuntary. Id. at 418, 84 S.Ct. at 466. In contrast, the Court noted, if a party freely and without reservation submits his federal claims for decision by the state courts, litigates them there, and has them decided there, then ... he has elected to forgo his right to return to the District Court. Id. at 419, 84 S.Ct. at 466. 33 Our precedent demonstrates the continued vitality of the rule enunciated in England. See, e.g., Kovats v. Rutgers, 749 F.2d 1041 (3d Cir.1984) (finding valid England reservation); New Jersey Educ. Ass'n v. Burke, 579 F.2d 764, 772-74 (3d Cir.), cert. denied, 439 U.S. 894, 99 S.Ct. 252, 58 L.Ed.2d 239 (1978) (same); see also Peduto v. City of North Wildwood, 878 F.2d 725, 729 n. 5 (3d Cir.1989) (holding that because the plaintiffs invoked the jurisdiction of the state court in the first instance, the application of England has no relevance here). 34 Defendants contend England does not apply because the federal court did not abstain and because Bradley's federal constitutional claims were inextricably intertwined with the issues litigated in state court--the propriety of Bradley's discharge. There have been intimations in some of our opinions that an England reservation in a state proceeding may be made only when the federal court has previously abstained. See, e.g., Switlik v. Hardwicke Co., 651 F.2d 852, 858-59 (3d Cir.), cert. denied, 454 U.S. 1064, 102 S.Ct. 614, 70 L.Ed.2d 601 (1981); Roy v. Jones, 484 F.2d 96, 100-01 (3d Cir.1973). However, these discussions are dicta because in each case the plaintiffs first brought their claims in state, not federal, court, and at no time in the state proceedings did they attempt to reserve their federal claims. Thus, they are not binding precedent. Cf. Third Circuit Internal Operating Procedure 9.1 (formerly 8.C). 35 Of more significance is the fact that the Supreme Court has never explicitly limited England to the Pullman abstention context, and we therefore look to the rationale underlying England to determine if it has equal applicability here. The Supreme Court explained the two bases of the England decision as the right of a litigant to choose a federal forum and the duty of the federal court to take jurisdiction over federal claims that have been properly brought before it. 375 U.S. at 415, 84 S.Ct. at 464. 36 Here, as in England, the plaintiff first filed his section 1983 action in federal district court raising numerous federal constitutional claims, and he entered the state proceedings only after having filed in federal court. It is true that Bradley, unlike plaintiffs in Pullman abstention cases, was not remitted to state court, but because Bradley was fired by the Board while his federal action was pending, the effect was not dissimilar. If Bradley was to utilize the administrative procedure provided by state law, he was required to appeal the adverse decision to the Secretary of Education, 24 Pa.Stat.Ann. Sec. 11-1131 (Purdon 1962), and to the Commonwealth Court, 24 Pa.Stat.Ann. Sec. 11-1132 (Purdon 1962); 42 Pa.Stat.Ann. Sec. 763(a) (Purdon 1981). Although arguably Bradley might have been required to make an election to bypass the state fora and contest the termination solely in federal court, the defendants did not object to Bradley's express reservation before both the Secretary and the Commonwealth Court of these federal claims for litigation in federal court. Indeed, the Secretary explicitly honored the reservation, citing England. Furthermore, although the federal court did not abstain, at defendants' request it stayed the federal proceedings pending the outcome of the state action and Bradley was unable to pursue his federal claims in a federal forum until the resolution of the state appeal of his termination. 37 Without deciding the general parameters of an England reservation, we conclude that in the procedural situation in which that reservation was made here, i.e., where (1) the plaintiff initiates an action in federal court, (2) the plaintiff appeals the termination of his employment through state prescribed procedures while explicitly reserving his federal claim, (3) both the defendant and the state tribunal acquiesce in the reservation, and (4) the federal action is stayed pending the outcome of the state proceeding, the reservation of plaintiff's federal claims for federal adjudication must be recognized. Therefore, the district court erred in holding that those federal claims which could have been litigated in state court but which were not were barred by claim preclusion. 38
39 Bradley argues that section 26 of the Restatement (Second) of Judgments provides an alternative basis for holding that claim preclusion is inapplicable. Section 26(1) provides for an exception to the general rule of claim preclusion where: 40 (a) The parties have agreed in terms or in effect that the plaintiff may split his claim or the defendant has acquiesced therein; or 41 (b) The court in the first action has expressly reserved the plaintiff's right to maintain the second action. 42 The comment to section 26(a)(1) explains that [a] main purpose of the general rule [against claim splitting] is to protect the defendant from being harassed by repetitive actions based on the same claim. The rule is thus not applicable where the defendant consents, in express words or otherwise, to the splitting of the claim. Restatement (Second) of Judgments Sec. 26(1)(a) comment a (1982). The comment also notes that [t]he failure of the defendant to object to the splitting of the plaintiff's claim is effective as an acquiescence in the splitting of the claim. Id. 43 In Coleman v. Coleman, 361 Pa.Super. 446, 522 A.2d 1115, 1120 (1987) (en banc), the Pennsylvania Superior Court stated that [t]he law of Pennsylvania is in accord with the approach taken by [section 26(1)(a) and (b) of] the Restatement. See also Keystone Bldg. Corp. v. Lincoln Savings and Loan Ass'n, 468 Pa. 85, 360 A.2d 191 (1976) (no claim preclusion where party reserved claim in consent decree). 44 Moreover, section 86 of the Restatement (Second) of Judgments makes clear that the exceptions described in section 26 apply to the effect of a state court judgment in a subsequent federal action. The commentary to the note on section 86 describes the reservation of federal rights with the acquiescence of the opposing party as an exception to the general rule that a plaintiff in state court is ordinarily obliged to assert both its federal and state claims in state court or face claim preclusion: 45 There are ... situations where the complainant may withhold the federal claim in the state action. For example, the opposing party may acquiesce in the federal claim being split off and reserved.... If the federal claim is effectively withheld, the result is permission to split the claim. Compare Sec. 26, Comment b. 46 Restatement (Second) of Judgments Sec. 86, comment f. 47 Similar reasoning has been applied by other courts of appeals. See Calderon Rosado v. General Electric, 805 F.2d 1085 (1st Cir.1986) (relying on section 26(1)(a)); Abramson v. University of Hawaii, 594 F.2d 202 (9th Cir.1979) (because state court dismissed federal claims to allow later adjudication, no preclusion). 48 The state administrative and judicial proceedings here fit precisely within section 26. Defendants had notice by Bradley's reservation in the state proceedings and could have objected then. Defendants acquiesced in Bradley's attempt to reserve his federal claims when they failed to object to his reservation before the Secretary of Education. The Secretary expressly accepted Bradley's reservation of his rights to maintain his federal claims in federal court. The policies underlying claim preclusion are the prevention of harassment of defendants and promotion of judicial economy. In the circumstances of this case, these policies are not undermined by rejecting defendants' claim preclusion defense.
49 It remains to be determined whether the state proceedings are entitled to any issue preclusive effect in federal court. As the Court recognized in England, even a litigant who has made a valid reservation may not relitigate an issue s/he fully and unreservedly litigated in state court. We hold that Bradley is bound by the determination made by the state adjudications that his conduct constituted negligence and persistent violation of school laws within the meaning of the Public School Code and thus was grounds for the termination of his employment. As to these issues the requirements of issue preclusion have been satisfied: the party against whom preclusion is asserted is the same, the issue (whether his conduct was grounds for dismissal under the statute) is identical; the previous judgment was final and on the merits; and the parties had a full and fair opportunity to litigate. See Kelley v. TYK Refractories, 860 F.2d 1188, 1194 (3d Cir.1988); Gregory, 843 F.2d at 121. 50 Bradley unreservedly litigated whether his conduct constituted negligence or persistent violation of school laws. His appeal of the Board's determination through state procedures would be meaningless if those state determinations of questions of state law were not given preclusive effect. See Kovats, 749 F.2d at 1046 (A state court's resolution of the state law question that required Pullman abstention clearly must be given some preclusive effect; otherwise abstention would be a meaningless procedure.); see also Wicker v. Board of Educ. of Knott County, Ky., 826 F.2d 442, 448-49 (6th Cir.1987) (state court's finding that school board was entitled to fire teacher under the applicable state statute is entitled to preclusive effect in federal action). 51 Giving preclusive effect to the state determination that Bradley's conduct warranted dismissal under state law is also consistent with the Restatement (Second) of Judgments. The illustration given to section 86, comment f, is strikingly similar to our case: 52 P is discharged from his employment in a state agency on the ground of gross insubordination. P brings an action under appropriate state procedure contesting the propriety of the discharge, but expressly reserves any possible federal claim, a reservation in which the state court acquiesces. Judgment is against P on a finding that he was guilty of gross insubordination. The rule of claim preclusion does not prevent P from maintaining any action in federal court, but the issue of insubordination may not be relitigated, assuming the state court proceeding afforded a fair opportunity to litigate the issue. 53 Restatement (Second) of Judgments Sec. 86, comment f, illustration 7 (1982) (emphasis added). 54 Bradley argues that he was not given a fair opportunity to litigate his constitutional claims, and complains about the procedure before the Board. Inasmuch as the only issue as to which issue preclusion would apply is not a constitutional one, but is whether his conduct constituted grounds for dismissal under state law, Bradley's argument misses the mark. In any event, his objections to the procedure are not persuasive. A party has been denied a full and fair opportunity to litigate only when state procedures fall below the minimum requirements of due process as defined by federal law. Kremer v. Chemical Construction, 456 U.S. 461, 481-82, 102 S.Ct. 1883, 1897-98, 72 L.Ed.2d 262 (1982). These did not. 3 55 It follows that the determination that Bradley was dismissed for cause under state law cannot be relitigated in the federal proceeding. We turn to examine Bradley's federal claims in light of our holdings as to preclusion.