Opinion ID: 662437
Heading Depth: 2
Heading Rank: 1

Heading: issues

Text: 38 The district court granted Swineford's initial summary judgment motion on the grounds the UCBR referee's decision had preclusive effect in Swineford's civil rights suit. The court later vacated its ruling. Swineford claims the district court was correct the first time, and issue preclusion prevents the defendants from rebutting her allegation that defendants fired her because of her protected speech. 6
39 Issue preclusion, also known as collateral estoppel, bars relitigation of issues adjudicated in a prior action. See Bradley v. Pittsburgh Bd. of Educ., 913 F.2d 1064, 1074 (3d Cir.1990). By contrast, claim preclusion, with which it is often confused, gives dispositive effect to a prior judgment if the particular issue, albeit not litigated in the prior action, could have been raised. Id. at 1070. 40 Traditionally, the Supreme Court has favored application of common-law preclusion doctrines to those determinations of administrative bodies that have attained finality. Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 111 S.Ct. 2166, 2169, 115 L.Ed.2d 96 (1991). As the Court stated: 41 When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose. 42 Id. (quoting United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642 (1966)). The policy behind the rule is that a losing litigant deserves no rematch after a defeat fairly suffered, in adversarial proceedings, on an issue identical in substance to the one he subsequently seeks to raise. Id. 43 Federal courts must give a state court judgment the same preclusive effect as would the courts of that state. See 28 U.S.C. Sec. 1738 (1988); 7 see also Migra v. Warren City School Dist. Bd. of Education, 465 U.S. 75, 81, 104 S.Ct. 892, 896, 79 L.Ed.2d 56 (1984) (teacher's state court action for breach of contract precluded subsequent federal court claim that the board's action breached her constitutional rights); McDonald v. West Branch, 466 U.S. 284, 104 S.Ct. 1799, 80 L.Ed.2d 302 (1984) (declining to preclude Sec. 1983 action brought after unsuccessful arbitration); Kremer v. Chemical Constr. Corp., 456 U.S. 461, 485, 102 S.Ct. 1883, 1899, 72 L.Ed.2d 262 (1982) (federal court in Title VII case must give preclusive effect to state court decision upholding state agency's rejection of an employment discrimination claim as meritless when the state court's decision would be preclusive in state's own courts). See generally 3 Ronald D. Rotunda & John E. Nowak, Treatise on Constitutional Law Sec. 19.38, at 662 (1992); Stephen B. Burbank, Interjurisdictional Preclusion, Full Faith & Credit and Federal Common Law: A General Approach, 71 Cornell L.Rev. 733 (1986). 44 Specifically, in University of Tennessee v. Elliott, the Supreme Court held that, when adjudicating Reconstruction Civil Rights laws, federal courts must give the same preclusive effect to state agency findings as would the state courts when the agency, acting in a judicial capacity, resolves disputed issues of fact. See 478 U.S. 788, 799, 106 S.Ct. 3220, 3226, 92 L.Ed.2d 635 (1986). 8 Thus, we must accord the referee's finding the same preclusive effect as would Pennsylvania courts. See Edmundson v. Kennett Square, 4 F.3d 186, 192 (3d Cir.1993). 45
46 For unreviewed state agency decisions, Pennsylvania courts apply issue preclusion when four conditions are met: first, the issue determined in the prior action is the same as that in a subsequent action; second, the party against whom the defense is invoked is identical to or in privity with the party in the first action; third, the previous judgment is final on the merits; fourth, the party had a full and fair opportunity to litigate on the merits. 9 Safeguard Mut. Ins. Co. v. Williams, 463 Pa. 567, 345 A.2d 664, 668 (Pa.1975). Only the first condition is relevant to this dispute. 47 In Pennsylvania, it is unsettled whether issue preclusion applies to findings made in an unemployment compensation hearing. Compare Frederick v. American Hardware Supply Co., 384 Pa.Super. 72, 557 A.2d 779 (1989) with Kelley v. TYK Refractories Co., 860 F.2d 1188 (3d Cir.1988) and Odgers v. Commonwealth Unemployment Compensation Bd. of Review, 514 Pa. 378, 525 A.2d 359 (1987); see also Louis B. Kushner and Alan C. Blanco, Collateral Estoppel Consequences of Unemployment Compensation Hearings in Wrongful Termination Hearings, 62 Pa.B.Ass'n Q. 37, 37 (1992) (conflicting authority leaves unsettled the question of the issue preclus[ion] or collateral estoppel effect which should be accorded Unemployment Compensation Referee or Board of Review findings in subsequent litigation.). 48 In Kelley v. TYK Refractories Co., we held the Pennsylvania Supreme Court would not preclude a plaintiff from pursuing a Sec. 1981 race discrimination claim even though the UCBR had previously determined plaintiff voluntarily quit. There, a white corporate executive at a Japanese corporation alleged the company discriminated against him in violation of Sec. 1981. In the first action, the UCBR denied Kelley's unemployment claim, finding he was not discharged but instead quit voluntarily. 860 F.2d at 1191. In his subsequent federal action, defendants asserted the UCBR determination as a shield to preclude relitigating the nature of Kelley's job termination. We rejected defendants' preclusion arguments because the issue of discharge before the board is [not] identical to the issue of discharge as presented in Kelley's Sec. 1981 claim. Id. at 1194. 49 Our ruling in Kelley was based on the Pennsylvania Supreme Court's decision in Odgers v. Commonwealth Unemployment Compensation Board of Review, 514 Pa. 378, 525 A.2d 359 (1987) that refused to give preclusive effect to an UCBR finding in a subsequent wrongful termination case. In the initial action the Commonwealth Court determined that the Philadelphia Federation of Teachers' work stoppage was a strike within the meaning of the Public Employee Relations Act (PERA). See Philadelphia Fed'n of Teachers v. Thomas, 62 Pa.Cmwlth. 286, 436 A.2d 1228 (1981). When individual teachers subsequently applied for unemployment compensation, the UCBR held the Commonwealth court's decision precluded the teachers from litigating the nature of their work stoppage under Pennsylvania's Unemployment Compensation Act. Odgers, 525 A.2d at 362. The Pennsylvania Supreme Court reversed, finding no issue preclusion because the issue before the lower court under PERA was not the same as that before the UCBR. 50 Under Odgers, reviewing courts must look beyond the superficial similarities between the two issues to the policies behind the two actions. 525 A.2d at 364. Only where the two actions promote similar policies will the two issues be identical for purposes of issue preclusion. Thus, issue preclusion could not apply because PERA primarily benefitted the public while the Unemployment Compensation Law principally benefitted private individuals. Id. 10 51 Since Kelley, the Pennsylvania Supreme Court has not spoken on the preclusive effect of UCBR findings in subsequent litigation. Pennsylvania's intermediate appellate courts have issued somewhat contradictory rulings on the subject. In Frederick v. American Hardware Supply Co., 384 Pa.Super. 72, 557 A.2d 779 (1989), the Pennsylvania Superior Court held that an earlier decision of the UCBR denying plaintiffs compensation because of willful misconduct precluded plaintiffs from asserting they had been wrongfully discharged in a subsequent contract claim. Id. 557 A.2d at 781. At issue was whether discharged employees could assert their employer breached an implied employment contract by wrongfully discharging them. Without mentioning Odgers and without discussing whether similar policies and rights were implicated by the Unemployment Compensation Law and the good cause requirement for employee discharge under contract law, the court found the UCBR's prior determination that the employees engaged in willful misconduct was the equivalent of good cause permitting discharge in the subsequent contract suit. Id. 557 A.2d at 781. 52 The Commonwealth Court, by contrast, refused to give preclusive effect to a State Police Court Martial Board's ruling in a subsequent UCBR hearing. In Pennsylvania State Police v. Commonwealth Unemployment Compensation Board of Review, 135 Pa.Cmwlth. 71, 578 A.2d 1360 (1990), the Commonwealth Court found no issue preclusion because the issue at the court martial was different from that before the UCBR. Id. 578 A.2d at 1361 (the issue in a willful misconduct case is not whether the employer had the right to discharge the employee for the conduct in question but whether the Commonwealth is justified in reinforcing that decision by denying benefits). 53 In this case, the issue before the UCBR was whether Swineford was ineligible for unemployment compensation benefits by reason of her willful misconduct. By contrast, the issue in this appeal is whether Swineford's firing violated her First Amendment right to speak out on a matter of public concern. As we noted in Kelley, the issue of discharge before the UCBR is not identical to the issue of discharge presented in a civil rights claim. 860 F.2d at 1194. Furthermore, we do not think that an administrative agency consisting of lay persons has the expertise to issue binding pronouncements in the area of federal constitutional law. Edmundson, 4 F.3d at 193. Therefore, we believe that under these circumstances the Pennsylvania Supreme Court would not give preclusive effect to a UCBR finding in this subsequent civil rights action. 11 54 Furthermore, sound policy supports this decision. The Unemployment Compensation Law is a depression-era statute. Its twin goals are to provide quick, basic compensation for workers who become unemployed through no fault of their own, and to protect the state treasury by shifting the cost of unemployment from the state welfare system to the employer pool. 43 P.S. Sec. 752; see also 76 Am.Jur.2d. Unemployment Compensation Sec. 2 & nn. 7-9 (1992). 55 Granting preclusive effect to UCBR findings here would undermine the policy of providing quick relief. Under the present system, the procedures to determine benefit eligibility are fast and informal. See, e.g., Pa.Unempl.Ins.Rep. (C.C.H.) p 4111 (if employers do not file appeal within 15 days of notification their right to appeal is waived); id. p 4115 (procedure need not follow common law or statutory rules of evidence); id. p 5636 (allowing telephone hearings under certain circumstances). Indeed, in this case, the hearing before the UCBR referee was relatively brief, and while this fact is not dispositive, the County was not represented by counsel. 56 So long as Board rulings are not preclusive, employers have little incentive to contest or appeal board findings. See Sewall v. Taylor, 672 F.Supp. 542, 544 (D.Me.1987) (Defendant's potential liability in the state administrative proceeding is far less than it is in a suit for unlawful discharge pursuant to 42 U.S.C. Sec. 1983.). By contrast, a broad rule of collateral estoppel might generate undue pressure to litigate to the utmost. Fleming James, Jr. & Geoffrey C. Hazard, Jr., Civil Procedure, Sec. 11.17, at 620 (3d ed. 1985). To the extent findings are preclusive, employers will litigate vigorously rather than risk compromising their defense in a subsequent suit where their potential liability is much greater. Applying issue preclusion would result, therefore, in protracted hearings and would slow the receipt of benefits. 57 The delay caused by granting preclusive effect to Board rulings would likewise frustrate the Act's policy of shifting the cost of unemployment from the state to the employer pool. See 43 P.S. Sec. 752. During the period when employers and workers engage in protracted litigation over benefit eligibility the state welfare system will have to bear additional costs in the form of increased welfare payments. See 76 Am.Jur.2d., Unemployment Compensation Sec. 2 n. 9 (1992). Thus, to the extent preclusion creates an incentive to litigate eligibility determinations, it runs counter to the stated policies of the Unemployment Compensation Law. Accordingly, we reaffirm our ruling in Kelley and hold Pennsylvania courts would not apply issue preclusion here because the policies underlying section 1983 and the Unemployment Compensation Law are sufficiently different. 12