Employment Discrimination Case Continues in Federal Court; “Election of Remedies” and Issue Preclusion Arguments Rejected

In Scarborough v. U.S. Security Associates, Inc., 2019 WL 3369456 (S.D.N.Y. July 26, 2019) – an age and race employment discrimination case – the court denied defendant’s FRCP 12(c) motion for dismissal on the pleadings.

Here, plaintiff had filed a complaint in the New York State Division of Human Rights, which issued a “no probable cause” determination. Plaintiff filed an appeal of this Order pursuant to New York CPLR Article 78. The New York Supreme Court dismissed the appeal. Plaintiff then commenced this action in federal court, asserting a violation of 42 U.S.C. § 1981 (which, in sum, prohibits race discrimination in the making and enforcement of contracts).

Defendant argued that plaintiff’s complaint should be dismissed on two grounds/theories: (1) the “election-of-remedies” provision of the New York State Human Rights Law; (2) issue preclusion. The court disagreed on both counts.

As to the election of remedies issue, the court explained:

New York’s Human Rights Law contains an election-of-remedies limitation. It creates a cause of action for “[a]ny person claiming to be aggrieved by an unlawful discriminatory action … unless such person had filed a complaint hereunder [with the NYSDHR] or with any local commission on human rights.” N.Y. Exec. L. § 279(9). Although the election-of-remedies limitation applies equally to claims brought in both state and federal courts, it is no more than a limitation on the statutory rights created by the Human Rights Law. York v. Ass’n of Bar of City of New York, 286 F.3d 122, 127 (2d Cir. 2002). It has no effect on claims brought under federal law. Accordingly, the election-of-remedies limitation does not bar plaintiff’s claims under 42 U.S.C. § 1981.

As to issue preclusion, the court summarized the law:

Under New York law, issue preclusion occurs if (1) the issue in question was actually and necessarily decided in the prior proceeding, and (2) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the first proceeding.”3 Vargas v. City of New York, 377 F.3d 200, 205-06 (2d Cir. 2004). “The party seeking to invoke [issue preclusion] has the burden to show the identity of the issues, while the party trying to avoid application of the doctrine must establish the lack of a full and fair opportunity to litigate.” In re Dunn, 24 N.Y.3d 699, 704 (2015).

*3 A finding of “no probable cause” by the NYSDHR may have preclusive effect on a subsequent claim under 42 U.S.C. § 1981. Kirkland v. Peekskill, 828 F.2d 104, 108 (2d Cir. 1987). In the context of administrative agency determinations, however, the doctrine of issue preclusion “is applied more flexibly, and additional factors must be considered by the court.” ABN AMRO Bank, N.V. v. MBIA Inc., 17 N.Y.3d 208, 226 (2011) (citation omitted). These additional factors are designed to ensure “that the administrative decision [was] ‘quasi-judicial’ in character,” that is, rendered pursuant to “procedures substantially similar to those used in a court of law” such that there was a “full and fair opportunity to contest the decision now said to be controlling.” Id. (citation omitted).

To determine whether an NYSDHR determination was “quasi-judicial,” the New York Court of Appeals has instructed courts to consider “the various elements which make up the realities of litigation.” Kosakow v. New Rochelle Radiology Assocs., P.C., 274 F.3d 706, 734 (2d Cir. 2001) (citation omitted). The specific factors to be considered include “the size of the claim, the forum of the prior litigation, the use of initiative, the extent of the litigation, the competence and experience of counsel, the availability of new evidence, indications of a compromise verdict, differences in the applicable law and foreseeability of future litigation.

Applying the law, the court found that issue preclusion was not warranted:

Although the defendant has satisfied its burden to show an identity of issues between the subject matter of the NYSDHR proceeding and plaintiff’s federal law claims, the plaintiff did not have the full and fair opportunity to litigate the issue in the NYSDHR proceeding that New York law requires to preclude further litigation of those claims. Plaintiff was not represented by counsel before the NYSDHR, and the NYSDHR’s determination was “based primarily, if not exclusively, upon a review of the papers submitted.” Kosakow, 274 F.3d at 734. There is no record of any witness interviews or any hearing or conference held with the parties. Plaintiff did not have an opportunity to cross-examine any witnesses. The informality of the forum, the limited scope of the litigation, and plaintiff’s status as a pro se litigant counsel against a determination that the NYSDHR Order has preclusive effect.

Based on this, the court denied defendant’s motion for judgment on the pleadings.

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