Simmons v. Trans Express Inc.

• Decision Date: 13 April 2020
• Docket Number: August Term 2019,No. 19-438,19-438
• Citation: 955 F.3d 325
• Parties: Charlene SIMMONS, Plaintiff-Appellant, v. TRANS EXPRESS INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

955 F.3d 325

Charlene SIMMONS, Plaintiff-Appellant,

v.TRANS EXPRESS INC., Defendant-Appellee.

No. 19-438

August Term 2019

United States Court of Appeals, Second Circuit.

Argued: January 17, 2020

Decided: April 13, 2020

Abdul K. Hassan, Abdul Hassan Law Group, PLLC, Queens Village, New York, for Plaintiff-Appellant Charlene Simmons.

Emory D. Moore, Jr. (P. Kevin Connelly, on the brief), McDermott Will & Emery LLP, Chicago, Illinois, for Defendant-Appellee Trans Express Inc.

Before: Hall, Sullivan, and Bianco, Circuit Judges.

Richard J. Sullivan, Circuit Judge:

Plaintiff-Appellant Charlene Simmons sued Defendant-Appellee Trans Express Inc. under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. , and the New York Labor Law ("NYLL"), alleging that she was entitled to unpaid overtime wages, liquidated damages, and attorneys’ fees. Trans Express moved to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, contending that Simmons’s suit is barred by claim preclusion because of a previous case involving the same parties in Queens Small Claims Court. The district court (Eric N. Vitaliano, Judge ) granted Trans Express’s motion, determining that (1) claim preclusion applies to judgments rendered in New York small claims court, (2) no exception to claim preclusion applied to Simmons’s federal suit due to the limits on recovery in small claims court, and (3) claim preclusion barred Simmons’s suit because her claims arose from the same facts as the small claims court action and could have been raised in that action. On appeal, Simmons maintains that New York City Civil Court Act § 1808 (" Section 1808") – the relevant state res judicata statute pertaining to New York City small claims court judgments – does not bar her federal suit. Because this issue turns on a question of state law for which no controlling decisions of the New York Court of Appeals exist, and about which New York’s Appellate Division is divided, we certify the proper interpretation of Section 1808 to the Court of Appeals, pursuant to 22 N.Y.C.R.R. § 500.27 and 2d Cir. R. 27.2(a).

I. BACKGROUND

Simmons worked for Trans Express, a transportation services company headquartered in Brooklyn, as a driver from April 2012 to April 2013 and again from June 2016 to June 2018. After her employment with Trans Express ended, Simmons sued Trans Express in August 2018 in Queens Small Claims Court, seeking "monies arising out of nonpayment of wages." App’x at 18. After trial before a small claims arbitrator, the court awarded Simmons a $1000 judgment and a $20 disbursement. Trans Express paid this amount and satisfied the judgment on September 28, 2018.

Thereafter, on October 24, 2018, Simmons filed this federal suit. She alleged that, despite her working in excess of forty hours a week, Trans Express did not pay her time-and-a-half for her overtime hours, thereby violating the unpaid overtime provisions of the FLSA and several provisions of the NYLL. She sought a declaratory judgment as well as an award of unpaid wages, liquidated damages, interest, costs, and attorneys’ fees.

Trans Express moved to dismiss the complaint pursuant to Rule 12(b)(6), contending that Simmons’s prior small claims court action barred her federal suit under the doctrine of claim preclusion. The district court agreed and granted Trans Express’s motion. First, the district court determined that "res judicata applies to judgments of New York’s small claims courts" and that Section 1808, which provides that judgments in small claims courts "shall not be deemed an adjudication of any fact at issue or found therein in any other action or court," concerned only issue preclusion, not claim preclusion. Id. at 25. Consequently, the fact that a small claims court adjudicated Simmons’s prior claim did not "rescue th[e] action from the bar of res judicata, if the bar [was] otherwise applicable." Id. at 26.

Second, the district court rejected Simmons’s claim that "res judicata d[id] not apply because the small claims court was only empowered to award $5,000 in damages and the present action seeks greater relief." Id. Though the court acknowledged that "formal jurisdictional or statutory barriers" precluding a plaintiff from asserting a claim in a previous action could prevent the application of res judicata, id. (quoting Weitz v. Wagner , No. CV-07-1106 (ERK) (ETB), 2008 WL 5605669, at *3 (E.D.N.Y. July 24, 2008), report and recommendation adopted , ECF No. 54 (E.D.N.Y. Aug. 11, 2008)), it determined that New York does not consider the small claims court damages limit to meet that requirement.

Third, the district court determined that, because the claims in Simmons’s federal suit arose from her employment at Trans Express and had accrued prior to the small claims court action, Simmons could have asserted the claims in the prior proceeding. Therefore, her federal suit was barred by claim preclusion.

Fourth, the district court disagreed with Simmons’s contention that "federal wage and hour policy neutralizes any res judicata effect of the prior small claims judgment," id. at 31, rejecting her interpretation of Caserta v. Home Lines Agency, Inc. , 273 F.2d 943 (2d Cir. 1959). Instead, the district court construed Caserta to "simply stand[ ] for the proposition that employers cannot relieve themselves of their obligations under [the] FLSA by contract." App’x at 32.

Finally, the district court determined that the small claims court’s failure to describe in detail the reasons for its decision did not preclude the district court from applying claim preclusion, because "there is no need to determine the grounds for" a court’s judgment before giving it preclusive effect. Id. at 33.

On appeal, Simmons challenges the district court’s determination that claim preclusion bars her federal suit, raising three broad arguments. First, Simmons asserts that Section 1808 provides for a narrow form of res judicata that allows subsequent claims "involving the same facts, issues and parties," and therefore, does not bar her current case. Simmons’s Br. at 14–23. Second, she maintains that even if Section 1808 mirrors "traditional" principles of claim preclusion, her current suit is not barred because she did not assert, and could not have asserted, the claims raised here in her small claims case. Id. at 24–31. Third, again relying on Caserta , she asserts that claim preclusion is not a cognizable defense to FLSA and NYLL claims because it is incompatible with the policy goals of those statutes.

II. STANDARD OF REVIEW

"We review de novo the dismissal of a complaint under Rule 12(b)(6), accepting all allegations in the complaint as true and drawing all inferences in favor of the plaintiff." TechnoMarine SA v. Giftports, Inc. , 758 F.3d 493, 498 (2d Cir. 2014). "Our review of a district court’s application of res judicata is also de novo ." Id.

III. DISCUSSION

A. The New York Courts’ Conflicting Interpretations of Section 1808

"Under the doctrine of res judicata , or claim preclusion, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Id. at 499 (quoting St. Pierre v. Dyer , 208 F.3d 394, 399 (2d Cir. 2000) ). Because a New York small claims court decided Simmons’s previous action, New York law determines the preclusive effect of that judgment. See Migra v. Warren City Sch. Dist. Bd. of Educ. , 465 U.S. 75, 81, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984) ("[A] federal court must give to a state-court judgment the same preclusive effect as would be given that judgment under the law of the State in which the judgment was rendered."). Consequently, to answer whether claim preclusion bars Simmons’s federal suit, we must first determine what preclusive effect New York courts give to judgments rendered in New York small claims court.

Section 1808, the New York state statute governing the preclusive effects of New York City small claims court judgments, states:

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.

Simmons asserts that Section 1808 narrowed the preclusive effects of res judicata for small claims court judgments and allows for "subsequent litigation of claims that arise out of the same or related facts with claims in the prior [small claims court] action." Simmons’s Br. at 14. She supports her interpretation of the statute by first contending that "small claims judgments only have res judicata effect as to ‘the exact same claim in subsequent proceedings.’ " Id. at 16 (quoting Farbstein v. Hicksville Pub. Library , 323 F. Supp. 2d 414, 423 (E.D.N.Y. 2004) ). She next asserts that the plain language of Section 1808 "specifically allows [her] to bring a claim in a subsequent action involving the same issues and parties and even the same facts" and points to the fact that the statute includes a "set-off provision" reducing future awards "by the amount of a judgment awarded under this article." Id. at 21–22 (quoting Section 1808 ). She last appeals to the "structure, purpose and intent" of the small claims court, urging that "the purpose of ... [Section] 1808 and small claims court is to allow for expedited recovery of small claims through the informal process of small claims court without an attorney, while preserving bigger statutory claims for other higher courts." Id. at 23.

It cannot be doubted that Simmons’s textual contentions have persuasive force. Section 1808 clearly contemplates a subsequent action "involving the same facts, issues and parties" as the small claims court action. The statute even provides for a set-off in those circumstances: "a subsequent judgment ... shall be reduced by the amount of a judgment...