Court Opinion

ID: 4692444
Source: CourtListenerOpinion
Date Created: 2021-06-03 13:11:44.267672+00
Date Added: 2024-06-11T08:05:16.297078
License: Public Domain

State of New York                                                       OPINION
Court of Appeals                                         This opinion is uncorrected and subject to revision
                                                           before publication in the New York Reports.

 No. 34
 Charlene Simmons,
         Appellant,
      v.
 Trans Express Inc.,
         Respondent.

 Abdul K. Hassan, for appellant.
 Emory D. Moore, Jr., for respondent.

 STEIN, J.:

       Plaintiff commenced an action against defendant, her former employer, in a small

 claims part of Civil Court, seeking money damages arising out of the purported

 nonpayment of wages. Following a trial before a small claims arbitrator, the court awarded
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plaintiff $1,000 “for unpd. OT,” plus $20 in disbursements.1 After defendant satisfied the

small claims judgment, plaintiff commenced this action in the United States District Court

for the Eastern District of New York, seeking additional damages based on defendant’s

failure to pay her overtime wages in violation of federal and state law. Defendant moved

to dismiss the complaint, asserting that the prior small claims judgment barred the federal

litigation under the doctrine of claim preclusion, also known as res judicata. As relevant

here, plaintiff argued that NY City Civ Ct Act § 1808 rendered claim preclusion

inapplicable to small claims judgments unless the subsequent action raised exactly the

same claim or theory as the earlier action. The District Court rejected plaintiff’s argument

based in part on the legislative history of section 1808 (see 355 F Supp 3d 165, 169 [ED

NY 2019]), and plaintiff appealed. Recognizing that this Court has never provided an

interpretation of section 1808, the Second Circuit certified the following question:

              “Under New York City Civil Court Act § 1808, what issue
              preclusion, claim preclusion, and/or res judicata effects, if any,
              does a small claims court’s prior judgment have on subsequent
              actions brought in other courts involving the same facts, issues,
              and/or parties? In particular, where a small claims court has
              rendered a judgment on a claim, does [s]ection 1808 preclude
              a subsequent action involving a claim arising from the same
              transaction, occurrence, or employment relationship?”

(955 F3d 325, 331 [2d Cir 2020]).

       This Court accepted the certified question pursuant to section 500. 27 of our Rules

of Practice (35 NY3d 966 [2020]). We now conclude that, under NY City Civ Ct Act §

1
  The record does not provide any additional information about the specific nature of the
allegations or proof supporting plaintiff’s claim, or the reason(s) why she opted to
commence a small claims action.
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1808, small claims judgments do not have collateral estoppel or issue preclusive effect

(with one exception), but such judgments may have the traditional res judicata or claim

preclusive effect in a subsequent action involving a claim between the same adversaries

arising out of the same transaction or series of transactions at issue in a prior small claims

court action.

       NY City Civ Ct Act article 18 governs small claims parts in New York City courts.

Section 1808 provides that a judgment of the small claims part “shall not be deemed an

adjudication of any fact at issue or found therein in any other action or court; except that a

subsequent judgment obtained in another action or court involving the same facts, issues

and parties shall be reduced by the amount” of the small claims judgment.2 Plaintiff argues

that NY City Civ Ct Act § 1808 limits the preclusive effect of small claims judgments; in

plaintiff’s view, only those judgments resolving the precise same claim or claims raised in

a later action may be given preclusive effect under the statute. In that regard, plaintiff

contends that, by enacting section 1808, the legislature intended to abandon our

transactional approach to claim preclusion as applied to small claims judgments. We

disagree.

       “Under res judicata, or claim preclusion, a valid final judgment bars future actions

between the same parties on the same cause of action” (Parker v Blauvelt Volunteer Fire

2
 Identical language appears in each of the provisions governing small claims court in other
Uniform Court Acts (see Uniform Justice Ct Act § 1808; Uniform Dist Ct Act § 1808;
Uniform City Ct. Act § 1808) and also in separate statutes governing commercial small
claims (see NY City Civ Ct Act § 1808-A; Uniform Dist Ct Act § 1808-A; Uniform City
Ct. Act § 1808-A).
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Co., 93 NY2d 343, 347 [1999]; see Matter of Reilly v Reid, 45 NY2d 24, 28 [1978]). “One

linchpin of res judicata is an identity of parties actually litigating successive actions against

each other: the doctrine applies only when a claim between the parties has been previously

‘brought to a final conclusion’” (City of New York v Welsbach Elec. Corp., 9 NY3d 124,

127 [2007], quoting Parker, 93 NY2d at 347). Importantly, the claim preclusion rule

extends beyond attempts to relitigate identical claims. We have consistently applied a

“transactional analysis approach” in determining whether an earlier judgment has claim

preclusive effect, such that “once a claim is brought to a final conclusion, all other claims

arising out of the same transaction or series of transactions are barred, even if based upon

different theories or if seeking a different remedy” (O’Brien v City of Syracuse, 54 NY2d

353, 357 [1981] [emphasis added]; see e.g. Matter of Hunter, 4 NY3d 260, 269 [2005];

Schuylkill Fuel Corp. v Nieberg Realty Corp., 250 NY 304, 306-307 [1929]). This rule is

grounded in public policy concerns, including fairness to the parties, and is “intended to

ensure finality, prevent vexatious litigation and promote judicial economy” (Xiao Yang

Chen v Fischer, 6 NY3d 94, 100 [2005]; see e.g. Matter of Hunter, 4 NY3d at 269-270;

Matter of Hodes v Axelrod, 70 NY2d 364, 372-373 [1987]).

       Although the transactional approach casts a facially broad preclusive net, this Court

has taken a pragmatic and flexible attitude toward claim preclusion, recognizing that the

doctrine, “if applied too rigidly, could work considerable injustice” (Matter of Reilly, 45

NY2d at 28). Thus, to determine whether two claims arise out of the same transaction or

series of transactions, we have held that courts should analyze whether the claims turn on

facts that “‘are related in time, space, origin, or motivation, whether they form a convenient

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trial unit, and whether their treatment as a unit conforms to the parties’ expectations or

business understanding or usage’” (Xiao Yang Chen, 6 NY3d at 100-101, quoting

Restatement [Second] of Judgments § 24 [2]; see e.g. Smith v Russell Sage Coll., 54 NY2d

185, 192 [1981]). Ultimately, the application of the transactional approach to claim

preclusion seeks to prevent litigants from taking two bites at the apple; however, “[i]n

properly seeking to deny [litigants] two days in court, [we] must be careful not to deprive

[them] of one” (Matter of Reilly, 45 NY2d at 28 [internal quotation marks and citation

omitted]).

       Collateral estoppel, or issue preclusion, is related to, but distinct from, the doctrine

of res judicata. Collateral estoppel prevents “‘a party from relitigating in a subsequent

action or proceeding an issue clearly raised in a prior action or proceeding and decided

against that party . . . whether or not the . . . causes of action are the same’” (Parker, 93

NY2d at 349 [emphasis added], quoting Ryan v New York Tel. Co., 62 NY2d 494, 500

[1984]; see Schuylkill Fuel Corp., 250 NY at 306-307). The doctrine applies only where

“the issue in the second action is identical to an issue which was raised, necessarily decided

and material in the first action,” and the party who is being estopped “had a full and fair

opportunity to litigate the issue in the earlier action” (Parker, 93 NY2d at 349; see e.g.

ABN AMRO Bank, N.V. v MBIA Inc., 17 NY3d 208, 226 [2011]; Schwartz v Public Adm'r

of County of Bronx, 24 NY2d 65, 69-70 [1969]). As with claim preclusion, we have

similarly cautioned against the mechanical application of issue preclusion (see e.g. Jeffreys

v Griffin, 1 NY3d 34, 41 [2003]). Considering the facts of each case, a court must examine

“‘the realities of litigation,’ such as recognition that if the first proceeding involved trivial

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stakes, it may not have been litigated vigorously” (Staatsburg Water Co. v Staatsburg Fire

Dist., 72 NY2d 147, 153 [1988], quoting Gilberg v Barbieri, 53 NY2d 285, 292 [1981]).

We have explained that “the fundamental inquiry is whether relitigation should be

permitted in a particular case in light of what are often competing policy considerations,

including fairness to the parties, conservation of the resources of the court and the litigants,

and the societal interests in consistent and accurate results” (id. at 153; accord Buechel v

Bain, 97 NY2d 295, 304 [2001], cert denied sub nom Bain v Buechel, 535 US 1096 [2002]).

       With these well-established principles in mind, our analysis of NY City Civ Ct Act

§ 1808 begins with the statutory language itself because “[i]t is fundamental that a court,

in interpreting a statute, should attempt to effectuate the intent of the [l]egislature, and

where the statutory language is clear and unambiguous, the court should construe it so as

to give effect to the plain meaning of the words used” (Patrolmen’s Benevolent Assn. of

City of N.Y. v City of New York, 41 NY2d 205, 208 [1976] [internal citations omitted]; see

Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583 [1998]). The first

clause of section 1808 states that “[a] judgment obtained [from small claims court] shall

not be deemed an adjudication of any fact at issue or found therein in any other action or

court” (emphasis added). Inasmuch as this provision refers narrowly and specifically to

“an adjudication of any fact,” it is best interpreted as addressing only collateral estoppel,

which—as noted above—applies to bar relitigation of facts and identical issues that were

decided in earlier actions and fully and fairly litigated by the estopped party, but may not

preclude relitigation of related claims (see Ryan, 62 NY2d at 500).

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       However, the remaining language of the statute introduces some ambiguity.

Specifically, the second clause of section 1808 expressly provides an exception to the first

clause where “a subsequent judgment obtained in another action or court involve[s] the

same facts, issues and parties” as a prior small claims court action (NY City Civ Ct Act §

1808). In that circumstance, the second clause mandates that the judgment in the second

action “be reduced by the amount of [the small claims] judgment” (NY City Civ Ct Act §

1808), thereby incorporating a set-off provision that would, for example, preclude plaintiffs

from obtaining a double recovery in an action against one defendant for the identical

damages recovered in a prior small claims action against another defendant. Plaintiff

points to the reference in the second clause to “facts, issues, and parties” for the proposition

that this broader language implies that section 1808 may address claim preclusion as well

as issue preclusion. Stated differently, section 1808 is not a paragon of clarity.

       In order to resolve ambiguity, we inquire into “the spirit and purpose of the

legislation,” by examining “the statutory context of the provision as well as its legislative

history” (Matter of Sutka v Conners, 73 NY2d 395, 403 [1989]; see New York Bankers

Assn. v Albright, 38 NY2d 430, 434 [1975]). Prior to its amendment in 2005, former NY

City Civ Ct Act § 1808 provided that “[a] judgment obtained under this article may be

pleaded as res judicata only as to the amount involved in the particular action and shall not

otherwise be deemed an adjudication of any fact at issue or found therein in any other

action or court” (emphasis added). Despite the reference to “res judicata,” some lower

courts have read the former version of section 1808 “to divest the small claims judgment

of its . . . collateral estoppel or issue preclusion use” only, not its claim preclusion effect

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(Omara v Polise, 163 Misc 2d 989, 990 [App Term, 2d Dept 1995] [internal quotation

marks omitted], see Royster v Consolidated Edison, 114 Misc 2d 529, 531-532 [Civ Ct,

NY County1982]; see also Siegel, New York Practice § 585 at 926 [2d ed 1991]).

       Citing to these and other cases, the sponsor’s memorandum in support of the 2005

amendment codifying the current version of section 1808 commented that the term res

judicata was removed from the statute because it was “inapposite,” inasmuch as that term

“refer[red] to ‘claim preclusion,’ which is necessary to ensure finality of the proceeding”

(see Sponsor’s Mem, Bill Jacket, L 2005, ch 443 at 3). Instead, “[t]he true intent of section

1808 [was] to make clear that a small claims judgment has no collateral estoppel or ‘issue

preclusion’ effect in a subsequent proceeding so as to protect parties from any unforeseen

consequences of the small claims proceeding,” and the dual purposes of the 2005

amendment to section 1808 were to “make[] that [intent] clear and harmonize[] the

statutory provisions with case law” (id. [emphasis added]). Although there are other

statements in the sponsor’s memo that, taken out of context, might be read to imply that

the legislature also intended to clarify that a small claims judgment is to have limited res

judicata effect, the statutory language does not clearly reflect such an intent. Critically,

“[t]he [l]egislature is . . . presumed to be aware of the decisional . . . law in existence at the

time of an enactment, and to have abrogated the common law only to the extent that the

clear import of the language used in the statute requires” (Arbegast v Board of Educ. of S.

New Berlin Cent. School, 65 NY2d 161, 169 [1985] [internal citation omitted]). Given the

equivocal text of NY City Civ Ct Act § 1808 and the legislative history of the 2005

amendment, we simply cannot conclude that the legislature intended to replace traditional

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claim preclusion analysis with a narrower form of the doctrine that would apply only where

a plaintiff attempted to relitigate the exact same claim previously decided in small claims

court.3

          We are mindful that, for many citizens of New York, proceedings in small claims

court—a legislatively-created subpart of courts that otherwise possess broader

jurisdiction—will be their sole interaction with the judicial system, often without the

advantage of legal representation.          This underscores the necessity for easily

comprehensible procedural rules. Although there may well be reasonable policy arguments

in favor of further limiting the preclusive effect of small claims judgments beyond the

express limitations imposed by NY City Civ Ct Act § 1808, those arguments—some of

which are advanced by plaintiff and accepted by the dissent—are best made to the

legislature, not the courts. As presently formulated, section 1808 abrogates only the

common-law issue preclusive effect of small claims judgments (subject to the set-off

provision); it does not limit the effect of claim preclusion, as we have traditionally applied

that doctrine in other contexts. Consequently, a small claims judgment may preclude a

subsequent claim between the same adversaries arising out of the same transaction or series

of transactions as the prior action.

3
 Significantly, we do not hold, as the dissent claims, that section 1808 bars “all subsequent
claims arising out of the same transaction or series of transactions that were or could have
been raised in the small claims action” (dissenting op at 6 ). We conclude only that a small
claims judgment may preclude a subsequent claim arising out of the same transaction or
series of transactions as the prior action because section 1808 does not displace the
common-law transactional approach to claim preclusion. In addition, we have no occasion
on this appeal to pass upon the interrelationship between claim preclusion and this State’s
permissive counterclaim rule (see dissent op at 15 n 2).
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                                           - 10 -                                   No. 34

       On this certified question, we do not resolve the question of whether the federal

claims brought by this plaintiff are precluded by the prior small claims judgment. We leave

that query to the federal courts, to be determined through application of our well-

established, practical, and flexible transactional approach to claim preclusion.

       Accordingly, the certified question should be answered in accordance with this

opinion.

                                           - 10 -
RIVERA, J. (dissenting):

      The Second Circuit has certified, and we have accepted, a question which asks us

to elucidate the preclusive effect of a small claims court judgment under New York City

Civil Court Act § 1808 on a subsequent action brought in another court “involving the same

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                                            -2-                                       No. 34

facts, issues, and/or parties” (955 F3d 325, 331 [2d Cir 2020]). The section’s text,

legislative history, and statutory purpose, and the small claims framework generally

(intended for quick resolution of modest claims by pro se litigants) make clear that section

1808: (1) bars litigation in another court or action of an identical claim rejected on the

merits in small claims court; and (2) permits subsequent litigation of a claim involving the

same facts, issues, and parties which resulted in a judgment in favor of the prevailing party

in the first action, but reduces any award in the second action by the amount of the small

claims judgment. Preclusion is otherwise strictly prohibited.

       I write separately because the majority interpretation is contrary to the legislative

will, wrong on the law, and inevitably imposes a severe hardship on small claims pro se

claimants—who, because they are unaware of their rights and in urgent need of money to

meet their basic needs, or because they cannot afford lengthy and costly litigation, accept

a quick and modest small claims payout rather than initially pursuing a larger award in

another court.

                                             I.

                                             A.

       Small claims court was designed for persons “who do[] not have an attorney and

cannot afford to get involved in a long drawn-out confrontation” (Hayden v L.I.L.C.O., 116

Misc 2d 445, 447 [Nassau Dist Ct 1982]). Even in their earliest manifestations, New York’s

small claims courts have required that “the practice and procedure . . . be simple, informal

and inexpensive, for the prompt determination of” small claims (Liberman v Am.

Lumbermans Mut. Cas. Co., 203 Misc 816, 819 [Civ Ct, Queens County 1953]). The

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                                            -3-                                       No. 34

purpose of the statutes that provide for small claims proceedings is, therefore, “to spare all

sides the expense of an attorney” (Siegel, NY Prac § 581 [6th ed 2018]) by “operate[ing]

on the basis of simplified practice . . . to do ‘substantial justice’” (Royster v Consolidated

Edison, 114 Misc 2d 529, 533 [Civ Ct, NY County 1982] [internal citation omitted]; see

also Levins v Bucholtz, 208 Misc 597, 599 [App Term, 1st Dept 1955] [“It is thus

abundantly clear that the small claims court was devised to meet courageously and

effectively the challenge of the small claim. Its history manifests its underlying

philosophy—quick, simple and inexpensive justice”]).

       In furtherance of this purpose, article 18 of the New York City Civil Court Act

provides a forum for quick resolution of claims in a small claims part of the court, with

jurisdiction limited to claims involving only modest amounts of money,1 designed for

unrepresented parties with limited resources, who have the option to proceed with binding

and non-appealable arbitration before a court-appointed arbitrator (see e.g. NY City Civ Ct

Act § 1801 [defining jurisdictional amount]; id. § 1802 [providing for the establishment of

small claims parts and requiring that they serve as “a simple, informal and inexpensive

procedure for the prompt determination of such claims in accordance with the rules and

principles of substantive law”]). To ensure that unrepresented lay persons understand the

proceedings, the court clerk must provide “information written in clear and coherent

language” concerning small claims court procedures as well as an explanation of relevant

1
  At the time plaintiff filed her small claims complaint, the court’s jurisdiction was limited
to claims of $5,000 or less. The jurisdictional maximum amount for small claims court in
New York City was later raised to $10,000 (see NY City Civ Ct Act § 1801).
                                            -3-
                                            -4-                                      No. 34

terms and procedures (see id. § 1803). Significantly, the court is charged with

“conduct[ing] hearings upon small claims in such manner as to do substantial justice

between the parties according to the rules of substantive law and shall not be bound by

statutory provisions or rules of practice, procedure, pleading or evidence” (id. § 1804).

       Section 1808 balances the concerns of ensuring that legally unsophisticated, pro se

litigants have adequate access to justice with the general need for finality in legal

proceedings. Thus, section 1808 does not bar a prevailing party from seeking additional

relief on the same claims resolved on the merits in the small claims action. However, the

section does prevent that party from obtaining a financial windfall by “double dipping.”

Moreover, as explicitly contemplated by section 1808, the prevailing party may pursue in

a subsequent action those claims not previously litigated, even if arising from the same

transaction or series of transactions involving “the same facts, issues and parties”—albeit

subject to a reduction by the amount of the small claims judgment. This ensures that the

prevailing party may seek their full remedy above the jurisdictional limits of small claims

court, while preventing an unfair double recovery.

                                             B.

       Plaintiff Charlene Simmons worked for defendant Trans Express Inc. as a driver in

Queens, New York from 2012 to 2013 and again from 2016 to 2018, when defendant

terminated her employment. She alleges that she worked for $12.50 an hour, for 60-to-84

hours per week, five-to-seven days per week, without additional payment for overtime, as

required by state and federal law. Shortly after she was fired, plaintiff filed a pro se

complaint in small claims court against defendant for nonpayment of wages, requesting the

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                                            -5-                                       No. 34

$5,000 maximum jurisdictional amount. The parties appeared before a small claims

arbitrator, who awarded plaintiff $1,000, without interest, and an additional $20.00 in

disbursements. The amount is approximately one to two week’s pay at her regular $12.50

hourly rate, without an overtime differential.

       As plaintiff argued in her brief to the Second Circuit, when “faced with the . . .

immediate and complete loss of her regular . . . wages, [she] filed an action in New York

City Small Claims Court.” At oral argument before our Court, plaintiff’s counsel confirmed

that plaintiff needed the money as quickly as possible and brought the small claims action

for her prospective wages—what she would have earned if she had not been fired—to

address her pressing financial needs. This is, presumably, the situation facing many

claimants seeking relief in small claims court and is the scenario the legislature sought to

address by providing for quick, inexpensive resolution of claims for damages that, while

commonly considered modest in amount, are potentially of great significance to the

claimant. Indeed, it was only six weeks from the time plaintiff filed her small claims action

to when she received defendant’s $1,020 check. If plaintiff had proceeded in the regular

part of the court, she would likely have waited much longer to resolve the dispute, at a cost

potentially higher than what the claim is worth. The legislature understood that costly

proceedings discourage individuals from asserting their rights and, if the parties litigate,

the actions consume judicial resources in excess of the small money awards.

       Plaintiff, represented by counsel, subsequently filed this action against defendant in

federal district court under the federal Fair Labor Standards Act and New York’s Labor

Law for backpay and overtime for the hours she worked prior to her termination from

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                                            -6-                                       No. 34

employment. Defendant moved to dismiss, arguing that the small claims judgment is res

judicata and bars the claims asserted in the federal complaint. The district court granted the

motion, concluding that plaintiff’s claims arise from the same or related facts as those in

the small claims action and, therefore, could have been raised in the prior proceeding

(Simmons v Trans Express Inc., 355 F Supp 3d 165, 171 [ED NY 2019]).

        Upon plaintiff’s appeal, the Second Circuit noted that her “textual contentions have

persuasive force” because section 1808 appears to contemplate plaintiff’s subsequent

litigation. However, as our Court had not addressed the issue, the Second Circuit certified

the question as to the preclusive effect, if any, of a small claims judgment on a subsequent

action involving the same facts, issues and/or parties, especially the effect of section 1808

on a claim involving the same transaction, occurrence or employment relationship as the

prior small claims judgment.

        The majority correctly states that a small claims judgment has no collateral estoppel

effect (majority op at 2-3). However, like the district court below, the majority

misinterprets section 1808 as a bar on all subsequent claims arising out of the same

transaction or series of transactions that were or could have been raised in the small claims

action (id. at 8-9). That conclusion is contrary to the text of section 1808, its statutory

context, the statute’s purpose, and the very legislative history that the majority relies on

(id. at 7-8).

                                             II.

        As the majority acknowledges, the legislature can—and in fact did—abrogate the

application of common law preclusion principles to small claims judgments (see id. at 8,

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                                             -7-                                       No. 34

citing Sponsor’s Mem, Bill Jacket, L 2005, ch 443 at 3). Section 1808 mandates that

              “[a] judgment obtained under this article shall not be deemed
              an adjudication of any fact at issue or found therein in any other
              action or court; except that a subsequent judgment obtained in
              another action or court involving the same facts, issues and
              parties shall be reduced by the amount of a judgment awarded
              under this article.”

The text thus makes clear that the legislature did not codify New York’s transactional res

judicata doctrine but instead adopted a narrower rule designed to serve the legislature’s

goal of achieving substantial justice through the small claims adjudicatory framework.

       The first sentence of section 1808 explicitly contemplates future litigation arising

out of the same factual transactions and deprives factual adjudications in small claims court

of preclusive effect in those subsequent actions. Thus, by its terms, section 1808 rejects

traditional principles barring relitigation of an action arising out of the same transaction or

series of transactions. The second sentence provides an exception but only as to the effect

of a small claims judgment on a prevailing party’s subsequent award in litigation involving

the same facts, issues, and parties. Therefore, section 1808 bars only relitigation of an

unsuccessful claim. A small claims adjudication has no effect on any other claim, except

by way of a monetary set off against the prevailing small claimant’s future award.

       Nowhere does the text of section 1808 indicate that the transactional approach to

res judicata applies. To the contrary, as the majority acknowledges, section 1808 is

designed to ensure that parties are not subject to unforeseen consequences of a small claims

proceeding (majority op at 8, citing Sponsor’s Mem, Bill Jacket, L 2005, ch 443 at 3). If,

as the majority asserts, the legislature meant for traditional res judicata rules to apply to

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                                             -8-                                      No. 34

small claims court judgments, it would have said so explicitly (see Cruz v TD Bank, N.A.,

22 NY3d 61, 72 [2013] [“Put another way, if the legislature had intended to impose” a

particular limitation, “it would have said so in the statute”]).

       Although the majority invokes “statutory context” (majority op at 7), its analysis of

that context is mistaken. The statutory framework provides that the small claims court

“shall not be bound by statutory provisions or rules of practice, procedure, pleading or

evidence” and that, instead, the small claims court “shall conduct hearings upon small

claims in such manner as to do substantial justice between the parties according to the rules

of substantive law” (NY City Civ Ct Act § 1804). Thus, the majority’s assertion that the

legislature did not “intend[] to replace traditional claim preclusion analysis” (majority op

at 8-9) is a non sequitur, as that analysis has simply never been imported into the statutory

framework of article 18. Instead, the legislature adopted a limited preclusion rule designed

to further the substantial justice goals of small claims proceedings.

       Additionally, section 1808 works in tandem with section 1810 and together they

define the contours of a severely limited statutory restriction on future litigation, a fact

unaddressed by the majority. Section 1810 provides,

              “If the clerk shall find that the procedures of the small claims
              part are sought to be utilized by a claimant for purposes of
              oppression or harassment, as where a claimant has previously
              resorted to such procedures on the same claim and has been
              unsuccessful after the hearing thereon, the clerk may in [their]
              discretion compel the claimant to make application to the court
              for leave to prosecute the claim in the small claims part. The
              court upon such application may inquire into the circumstances
              and, if it shall find that the claim has already been adjudicated,
              or that the claim is sought to be brought on solely for purposes
              of oppression or harassment and not under color of right, it may

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                                            -9-                                       No. 34

              make an order denying the claimant the use of the small claims
              part to prosecute the claim.”

This language confirms that the legislature was concerned with the relitigation of

unsuccessful claims and the misuse of the small claims forum for purposes of harassment,

not with barring litigation of claims that were never asserted in small claims court or with

relitigation of claims to obtain compensation up to the full measure provided by law (see

Siegel, NY Prac § 585 [6th ed 2018] [“The small claims part has from time to time been

used to harass a defendant with repetitious suits on the same dispute despite the claimant’s

prior losses . . . A statute, section 1810 in the lower court acts, was passed to meet the

problem”]).

       The legislative history supports this interpretation. Prior to 2005, section 1808

provided, “A judgment obtained under this article may be pleaded as res judicata only as

to the amount involved in the particular action and shall not otherwise be deemed an

adjudication of any fact at issue or found therein in any other action or court.” In 2005, the

legislature amended section 1808 to clarify that small claims judgments have limited

preclusive effect. The Memorandum in Support of the Amendment explains,

              “Section 1808 of the New York City Civil Court Act and the
              other Uniform Court Acts currently provides that a small
              claims judgment may be pleaded as res judicata only as to the
              amount involved in the particular action and is not otherwise
              an adjudication of any fact at issue or found in the small claims
              proceeding in any other action or court. The use of the term
              ‘res judicata’ is, however, inapposite. That term refers to
              ‘claim preclusion,’ which is necessary to ensure finality of the
              proceeding. The courts have consistently held that a small
              claims judgment is res judicata when the same claim is filed in
              another court. The true intent of section 1808 is to make clear
              that a small claims judgment has no collateral estoppel or

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              ‘issue preclusion’ effect in a subsequent proceeding so as to
              protect the parties from any unforeseen consequences of the
              small claims proceeding. This amendment to section 1808
              makes that clear and harmonizes the statutory provision with
              case law” (Sponsors Mem, Bill Jacket, L 2005, ch 443 at 3
              [citations omitted]).

The supporting memorandum makes clear that the term “res judicata” was “inapposite,”

not for the reasons suggested by the majority, but because the prior version of the statute

unartfully used the term to refer to issue preclusion. The memorandum explains that the

amendment corrects that misusage and clarifies that a small claims court judgment has no

issue preclusive (or collateral estoppel) effect.

       The memorandum also demonstrates that the amendment “harmonizes the statutory

provision with the case law.” The cases cited in the memorandum make plain what the

legislature understood the courts to have “consistently held” concerning the claim

preclusive effect of a small claims judgment. For instance, in 64 W. Park Ave. Corp. v

Parlong Realty Corp. (77 Misc 2d 1019 [Sup Ct, Nassau County 1974]), Supreme Court

held that the small claims judgment dismissing a counterclaim was a bar only to the same

claims asserted in a subsequent action. “There being a lack of identity in causes of action,”

the small claims judgment “dismissing the counterclaim is not a res judicata bar to the first

cause of action here. In contra-distinction, the second and third causes of action here are

virtual carbon copies of the [small claims court] counterclaim” (id. at 1022 [internal

citations omitted]; see also NY Prac § 585 at 926 [2d ed 1991] [citing 64 W. Park for the

proposition that “res judicata . . . is the relevant doctrine . . . when the claim is the same”]

[emphasis added]).

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       The holding in 64 W. Park clarifies that the form of res judicata applicable to small

claims court judgments is simply not the traditional variant advocated by the majority. The

court there expressly permitted litigation of claims in a subsequent action—

notwithstanding that those claims arose out of the same transaction as the claims brought

in the first action—for the sole reason that the claims were not identical (id.). As the

majority recognizes, the legislature is presumed to be aware of the decisional law in

existence at the time of enactment (see majority op at 8, citing Arbegast v Bd. of Educ. of

S. New Berlin Cent. School, 65 NY2d 161, 169 [1986]). Indeed, here, there is no need to

presume, as the legislature’s explicit citation to 64 Park West as an example of what the

courts had “consistently held” reveals that the legislature understood the res judicata effect

of small claims judgments far more narrowly than the majority does, as do the rest of the

legislature’s citations (see e.g. Omara v Polise, 163 Misc 2d 989, 990 [App Term, 2d Dept

1995] [“If plaintiff loses the small claims suit to defendant, the loss precludes plaintiff from

suing defendant for the same cause again even in the regular part of the court. The attempt

to duplicate the claim in full made it a ‘res judicata’ (‘claim preclusion’) situation, and the

second action would be barred”]; Hayden, 116 Misc 2d at 451-452 [characterizing res

judicata as “the well settled doctrine of law that a judgment acts to bar subsequent action

raising the same cause of action” and noting that, under section 1808, “the small claims

action is an adjudication as to the amount, not of any facts at issue”]; Royster, 114 Misc 2d

at 532 [former Appellate Division Justice David B. Saxe, then a Civil Court Judge, holding

that, because the small claims plaintiff sought “to duplicate the claim in full and therefore

its relitigation” in Civil Court, the claim was barred by res judicata in accordance with

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section 1808]; Rosen v Parking Garage, 40 Misc 2d 178, 179 [Civ Ct, Bronx County 1963]

[holding that a small claims judgment in favor of the defendant is a res judicata bar to the

small claims plaintiff’s subsequent action on the same claim in the regular division of the

Civil Court]).

       Moreover, apart from 64 W. Park, the legislature’s citations are to cases in which

plaintiffs lost in small claims court before attempting to bring the same claim in a

subsequent action. In those cases, the courts determined that res judicata barred the

subsequent suit. The legislature’s approving citation to these cases as the consistent holding

of the New York courts underscores that, irrespective of the majority’s view of those cases,

the legislature understood res judicata—both before and after the 2005 amendment—to

preclude only those claims identical to the ones that plaintiffs lost in small claims court

(see Omara, 163 Misc 2d at 990 [“If plaintiff loses the small claims suit to defendant, the

loss precludes plaintiff from suing defendant for the same cause again even in the regular

part of the court”]; Royster, 114 Misc 2d 529, 531 [Civ. Ct. 1982] [“(I)f a plaintiff loses a

small claims suit to a defendant, that loss precludes the plaintiff from suing the defendant

for the same thing again even in the regular day session of the court”]; Rosen, 40 Misc 2d

at 178-79 [holding that res judicata applied because “in the Small Claims Part of this court,

the defendant was awarded judgment after trial before a Judge of this court”]).

       The amendment thus left intact the consistent holding of the New York courts that,

in the context of small claims actions, res judicata applies only “when the same claim is

filed in another court” by the losing small claimant (Sponsors Mem, Bill Jacket, L 2005,

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ch 443 at 3 [emphasis added]). The majority displaces the legislative understanding of this

case law in favor of its own.

                                             III.

       Notwithstanding the majority’s selective references to the legislative history and the

unsupported spin on the legislature’s intent, it is clear that a small claims judgment has

very limited preclusive effect in a subsequent action. That narrow bar makes perfect sense

because, as discussed, the small claims statutory framework provides an easy and quick

resolution of claims involving relatively small amounts of money for pro se claimants with

limited resources, without foreclosing access to the courts to seek additional monetary and

equitable relief.

       The majority’s interpretation ignores this protective aspect of the small claims

framework. Under the majority’s reading of section 1808, the small claims judgment is a

pyrrhic victory, as the prevailing party, like plaintiff here, secures an immediate small

award but forfeits a larger remedy. This is a particularly troubling result given that the

small claims court could not have awarded the larger sum sought by plaintiff in her federal

action. It is no answer that a party can simply pursue all claims in another court and thereby

avoid the preclusive effect of a small claims judgment. That presumes that the party knows

their options and is aware that they have claims for larger amounts of money—unlikely if

they are unrepresented and, due to exigency, have resorted to small claims court.

       Notably, under the majority’s interpretation, defendant (and other similarly

positioned parties) escapes liability for alleged federal and state labor law violations. A

thousand dollars is a small price to pay to avoid two years of unpaid overtime at time-and-

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a-half. In contrast, the majority’s rule deprives plaintiff of the full worth of her legal claims

simply because she took advantage of a legal mechanism intended to benefit pro se litigants

like her. The legislature certainly did not intend to set such a trap for the unwary nor to

penalize a party with limited resources in dire need of the funds allegedly owed, all while

allowing a defendant to avoid the full cost of its alleged violations.

                                              IV.

       Based on the text, purpose, and legislative history, section 1808 is properly

understood to provide that a claim is precluded in a subsequent action when that claim is

identical to the one asserted in the first action and was actually resolved against the plaintiff

on the merits. With that exception, the parties are not barred from litigating other claims

arising from the same facts in another court or action, but any future award is reduced by

the amount of the small claims judgment. For example, if P sues D in small claims court

and obtains a $2,000 judgment, and thereafter P sues D in federal court on the same cause

of action but for $100,000, the potential recovery in the latter action would be limited to

$98,000 (i.e., $100,000 - $2,000). However, if P lost the small claims action, P cannot

recover in federal court. This prevents P from getting two bites at the apple while also

allowing P to seek monetary recovery to the full extent provided by law. And D is exposed

to no greater legal liability than if P had initially commenced an action in a court without

a jurisdictional dollar limit. Nor is D disadvantaged in pursuing its own claims. Thus, if D

sues P in federal court for what would have been a counter claim arising from the same

facts as P’s small claims action, any facts adjudicated in the small claims proceeding are

not given issue preclusive effect in federal court, and D is not subject to a reduction in any

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federal judgment awarded in D’s favor. Also, if P successfully counterclaims in D’s action,

based on the same claim adjudicated in the small claims action, P’s award will be reduced

by $2,000.2

       That is what the legislature intended. The majority has disrupted that carefully

balanced approach by misinterpreting section 1808. Now, it is for the legislature to take

corrective action. Otherwise, individuals like plaintiff will find little substantial justice in

small claims—or any other court.

Following certification of a question by the United States Court of Appeals for the Second
Circuit and acceptance of the question by the Court pursuant to section 500.27 of this
Court’s Rules of Practice, certified question answered in accordance with the opinion
herein. Opinion by Judge Stein. Chief Judge DiFiore and Judges Fahey and Garcia concur.
Judge Rivera dissents in an opinion, in which Judge Wilson concurs.

Decided June 3, 2021

2
  Although a corporate defendant like Trans Express, Inc. could not assert a counterclaim
in small claims court, the majority’s interpretation of section 1808 appears to impose a
mandatory counterclaim requirement on other defendants, in contravention of section 1805
(c), which allows but does not require the opposing party to file a counterclaim.
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