Ryan v. New York Telephone Co.

• Decision Date: 14 June 1984
• Parties: , 467 N.E.2d 487 Edward C. RYAN et al., Respondents, v. NEW YORK TELEPHONE COMPANY et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 823

478 N.Y.S.2d 823

62 N.Y.2d 494, 467 N.E.2d 487

Edward C. RYAN et al., Respondents, v. NEW YORK TELEPHONE COMPANY et al., Appellants.

Court of Appeals of New York.

June 14, 1984.

Saul Scheier, John M. Clarke and Michael J. Toolan, New York City, for appellants

John J. Janiec, New York City, for respondents.

OPINION OF THE COURT

JASEN, Judge.

We are asked to decide whether the doctrine of collateral estoppel precludes this action by reason of a prior administrative determination rendered after a full hearing. While this court has previously outlined the requirements of collateral estoppel on recent occasions, this case presents us with some aspects we have not fully addressed before.

Plaintiff, Edward Ryan, was discharged from his employ with defendant New York Telephone Company for theft of company property. Defendants Lauriano and Perrino, company security investigators, had observed Ryan removing what appeared to be company property from the workplace. They stopped him and called the police who arrested Ryan and charged him with petit larceny and criminal possession of stolen property.

Following his discharge from work, Ryan applied for unemployment insurance benefits, but his application was rejected by a claims examiner of the Department of Labor on the ground that the discharge was the result of his own misconduct. Ryan filed an appeal from that initial determination and a hearing, transferred upon his request from a location near his home in New Jersey to New York, was held before an Unemployment Insurance Administrative Law Judge. Ryan was advised that he was entitled to have an attorney represent him at the hearing but, despite his having already retained counsel for the criminal proceedings on the afore-mentioned charges, he chose instead to appear with a union representative who was familiar with such administrative hearings. After considering the testimony of witnesses, including Ryan, who were examined and cross-examined extensively, the Administrative Law Judge sustained the ruling of the claims examiner and disallowed benefits, finding, inter alia, that "claimant was seen * * * removing company property from the company premises" and holding that "evidence * * * establishes that claimant lost his employment for company property without authorization he lost his employment due to misconduct in connection therewith." This determination was subsequently affirmed by the Unemployment Insurance Appeal Board whose decision was, in turn, upheld by the Appellate Division.

During the pendency of the foregoing administrative proceedings and Judicial review, the criminal action in which Ryan was represented by counsel resulted in an adjournment in contemplation of dismissal. Ultimately, it was restored to the Trial Calendar on the motion of the defendant and, on the People's motion, the charges were dismissed "in the interest of justice." (See CPL 210.40, subd. 2; cf. CPL 170.55, subd. 2.)

Between the conclusion of the criminal proceedings and the Appellate Division's affirmance of the administrative determination thereafter, plaintiffs commenced this action asserting claims for false arrest, malicious prosecution, slander and wrongful discharge, and an additional claim for the resultant injuries to Ryan's wife. Defendants pleaded an affirmative defense of res judicata and collateral estoppel on the basis of the prior administrative determination denying Ryan's claim for unemployment benefits. When plaintiffs moved to dismiss the affirmative defense, defendants cross-moved to dismiss the first, second, third, sixth and seventh causes of action comprising claims for false arrest, malicious prosecution, slander and two claims for wrongful discharge, respectively. Special Term granted plaintiffs' motion and dismissed the affirmative defense, finding that the "totality of the situation", including the prior forum, Ryan's lack of counsel and the availability of "new evidence", "dictates that it would be unfair to deny the plaintiff his day in court." A divided Appellate Division, 94 A.D.2d 646, 462 N.Y.S.2d 601, affirmed for the reasons stated at Special Term and granted leave to appeal to this court, certifying the following question. "Was the order of the Supreme Court, as affirmed by this Court, properly made?" We now reverse, grant defendants' cross motion to dismiss, and answer the certified question in the negative.

At the outset, it should be made clear that the doctrines of res judicata and collateral estoppel are applicable to give conclusive effect to the quasi-judicial determinations of administrative agencies (Matter of Evans v. Monaghan, 306 N.Y. 312, 323-324, 118 N.E.2d 452; Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552; see, also, restate ment, Judgments 2d, § 83), when rendered pursuant to the adjudicatory authority of an agency to decide cases brought before its tribunals employing procedures substantially similar to those used in a court of law. (Matter of Venes v. Community School Bd., 43 N.Y.2d 520, 524, 402 N.Y.S.2d 807, 373 N.E.2d 987; United States v. Utah Constr. Co., 384 U.S. 394, 422, 86 S.Ct. 1545, 1560, 16 L.Ed.2d 642; see, also, 2 Davis, Administrative Law §§ 18.03, 18.08, 18.10; Restatement, Judgments 2d, § 83, subd. and Comment b.) "determinations, when final, become conclusive and binding on the courts." (Bernstein v. Birch Wathen School, 71 A.D.2d 129, 132, 421 N.Y.S.2d 574, affd. 51 N.Y.2d 932, 434 N.Y.S.2d 994, 415 N.E.2d 982; see, also, Matter of Newsday, Inc. v. Ross, 80 A.D.2d 1, 5, 437 N.Y.S.2d 376.)

To be sure, it is a fundamental principle that "a judgment rendered jurisdictionally and unimpeached for fraud shall be conclusive, as to the questions litigated and decided, upon the parties thereto and their privies, whom the judgment, when used as evidence, relieves from the burden of otherwise proving, and bars from disproving, the facts therein determined." (Fulton County Gas & Elec. Co. v. Hudson Riv. Tel. Co., 200 N.Y. 287, 296-297, 93 N.E. 1052; see, also, Hinchey v. Sellers, 7 N.Y.2d 287, 197 N.Y.S.2d 129, 165 N.E.2d 156; Matter of New York State Labor Relations Bd. v. Holland Laundry, 294 N.Y. 480, 63 N.E.2d 68; 46 Am.Jur.2d, Judgments § 415.) This rule of res judicata is founded upon the belief that " 'it is for the interest of the community that a limit should be prescribed to litigation, and that the same cause of action ought not to be brought twice to a final determination. Justice requires that every cause be once fairly and impartially tried; but the public tranquillity demands that, having been once so tried, all litigation of that question, and between those parties, should be closed forever.' " (Fish v. Vanderlip, 218 N.Y. 29, 36-37, 112 N.E. 425, quoting Greenleaf's Evidence, §§ 522, 523; see, also, Schuylkill Fuel Corp. v. Nieberg Realty Corp., 250 N.Y. 304, 165 N.E. 456; Hendrick v. Biggar, 209 N.Y. 440, 103 N.E. 763.)

The doctrine of collateral estoppel, a narrower species of res judicata, precludes 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 or those in privity, whether or not the tribunals or causes of action are the same. (Ripley v. Storer, 309 N.Y. 506, 517, 132 N.E.2d 87; see, also, Restatement, Judgments 2d, § 27; 46 Am.Jur.2d, Judgments, § 415; 9 Carmody-Wait 2d, N.Y.Prac., Judgments, § 63:205.) We have recently reaffirmed that collateral estoppel allows "the determination of an issue of fact or law raised in a subsequent action by reference to a previous judgment on a different cause of action in which the same issue was necessarily raised and decided." (Gramatan Home Investors Corp. v. Lopez, 46 N.Y.2d 481, 485, 414 N.Y.S.2d 308, 386 N.E.2d 1328.) What is controlling is the identity of the issue which has necessarily been decided in the prior action or proceeding.

Of course, the issue must have been material to the first action or proceeding and essential to the decision rendered therein (Silberstein v. Silberstein, 218 N.Y. 525, 528, 113 N.E. 495; see, also, Hinchey v. Sellers, supra; Ripley v. Storer, supra; Ward v. Boyce, 152 N.Y. 191, 46 N.E. 180), and it must be the point actually to be determined in the second action or proceeding such that "a different judgment in the second would destroy or impair rights or interests established by the first" (Schuylkill Fuel Corp. v. Nieberg Realty Corp., supra, 250 N.Y. at p. 307, 165 N.E. 456 see, also, S.T. Grand, Inc. v. City of New York, 32 N.Y.2d 300, 304-305, 344 N.Y.S.2d 938, 298 N.E.2d 105).

In addition, where the party against whom collateral estoppel is asserted claims that he was not afforded a full and fair opportunity in the prior administrative proceeding to contest the decision now said to be controlling, he must be allowed to do so. A determination whether the first action or proceeding genuinely provided a full and fair opportunity requires consideration of "the 'realities of the litigation', including the context and other circumstances which * * * may have had the practical effect of discouraging or deterring a party from fully litigating the determination which is now asserted against him". (People v. Plevy, 52 N.Y.2d 58, 65, 436 N.Y.S.2d 224, 417 N.E.2d 518.) Among the specific factors to be considered are the nature of the forum and the importance of the claim in the prior litigation, the incentive and initiative to litigate and the actual extent of litigation, the competence and expertise of counsel, the availability of new evidence, the differences in the applicable law and the foreseeability of future litigation. (Gilberg v. Barbieri, 53 N.Y.2d 285, 292, 441 N.Y.S.2d 49, 423 N.E.2d 807; Schwartz v. Public Administrator, 24 N.Y.2d 65, 72, 298 N.Y.S.2d 955, 246 N.E.2d 725.)

In the application of collateral estoppel with respect to administrative determinations, the burden rests upon the proponent of collateral...