Opinion ID: 1902852
Heading Depth: 1
Heading Rank: 4

Heading: Full and Fair Opportunity to Litigate the Issue

Text: Turning to the fourth prong, whether K-Mart had a full and fair opportunity to litigate the issue of whether Rue stole a bag of potato chips, Rue notes, quite correctly, that proceedings before a Referee satisfy the minimum requirements of procedural due process. Parties to such proceedings have, inter alia, the right to be represented by counsel, the right to present testimony and documentary evidence, and the right to subpoena and cross-examine witnesses. See 34 Pa.Code §§ 101.21 (relating to conduct of hearings); 101.31 (relating to subpoenas); and 101.52 (relating to investigation reports). See also Unemployment Compensation Board of Review v. Ceja, 493 Pa. 588, 427 A.2d 631 (1981) (plurality opinion). However, proceedings before a Referee clearly do not allow parties to litigate issues in the manner available in a court of record. For example, the Rules of Evidence do not apply in Referees' hearings, and there is no procedure for prehearing discovery. See Section 505 of the Unemployment Compensation Law, as amended, 43 P.S. § 825 ([T]he conduct of hearings and appeals ... shall be in accordance with rules of procedure prescribed by the board whether or not such rules conform to common law or statutory rules of evidence and other technical rules of procedure. . . .). Moreover, there are two significant factors that distinguish unemployment compensation proceedings from court proceedings. First, the unemployment compensation system is specifically designed to adjudicate matters quickly, because one of its primary goals is to get[] money into the pocket of the unemployed worker at the earliest point that is administratively feasible. California Department of Human Resources v. Java, 402 U.S. 121, 136, 91 S.Ct. 1347, 1356, 28 L.Ed.2d 666 (1971). See also McNeill v. Unemployment Compensation Board of Review, 510 Pa. 574, 579, 511 A.2d 167, 169 (1986); Swineford v. Snyder County, 15 F.3d 1258, 1268-69 (3d Cir. 1994). Thus, proceedings before a Referee are, by design, brief and informal in nature. [3] See, e.g., 34 Pa.Code §§ 101.51 (relating to ex parte hearings); 101.121-101.126 (relating to telephone hearings). Second, the amount of money in controversy in most unemployment compensation proceedings is, from the employer's perspective, quite minimal. The most the employer has at stake is a small increase in the amount of future contributions to the Unemployment Compensation Fund. In light of such minimal risk, the employer often has little incentive to litigate vigorously, or even to retain counsel and/or attend a hearing. This is in stark contrast to a subsequent civil action, which, as this case exemplifies, may subject the employer to liability for amounts tens of thousands of times greater than those at stake in the proceedings before the Referee. The substantial procedural and economic disparities between unemployment compensation proceedings and later civil proceedings negate the preclusive effect of a Referee's factual findings. Pursuant to Restatement (Second) of Judgments, Section 28, issue preclusion is not appropriate where: A new determination of the issue is warranted by differences in the quality or extensiveness of the procedures followed in the two [proceedings] or . . . [T]he party sought to be precluded . . . did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action. The comments to Section 28 suggest that collateral estoppel should not apply where, the procedures available in the first [proceeding] may have been tailored to the prompt, inexpensive determination of small claims and thus may be wholly inappropriate to the determination of the same issues when presented in the context of a much larger claim, nor where, the amount in controversy in the first action may have been so small in relation to the amount in controversy in the second that preclusion would plainly be unfair. Restatement (Second) of Judgments, Section 28, Comments (d) and (j). See also Verbilla v. Workers' Compensation Appeal Board, 668 A.2d 601, 605 (Pa.Cmwlth.1995) (discussing Section 28, Comment (d)). The circumstances described in Section 28 are present here. Because of the fast and informal nature of the proceedings before the Referee, as well as the negligible economic consequences thereof, we conclude that K-Mart did not have a full and fair opportunity to litigate the issue of whether Rue stole a bag of potato chips. Accordingly, the Superior Court correctly held that the Referee's factual finding that Rue did not steal a bag of potato chips should not have been accorded preclusive effect in the defamation action. [4] Thus, we AFFIRM the Order of the Superior Court. SAYLOR, J., did not participate in the consideration or decision of this case.