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Holden: Collateral Estoppel Does Not Violate Right to Trial by Jury

  • State: Alabama
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On Dec. 11, the Alabama Supreme Court rendered a decision finding that collateral estoppel does not violate the constitutional right to a trial by jury. This finding was based on a review of a motion for summary judgment order granted in favor of the employer by the Circuit Court of Shelby County in a retaliatory discharge case.

Joshua G. Holden

Joshua G. Holden

In that case, the employee was terminated for misconduct, according to the employer. The termination occurred after a workers' compensation claim had been filed. The employee ultimately filed for unemployment, and the city defended the unemployment claim, asserting that he was not due unemployment because he was terminated for misconduct.

The record clearly showed that the employee and employer proceeded to a hearing with both parties presenting evidence and securing testimony of witnesses before an administrative officer. The initial ruling by the unemployment board was that the employee was terminated for misconduct. The employee appealed this decision on multiple levels, but he ultimately chose not to move forward and appeal it all the way to the Circuit Court.

The employee instead amended his complaint in his workers’ compensation case to add a retaliatory discharge claim shortly before the final decision was issued by the unemployment board. The employer filed a motion for summary judgment, which was granted but then set aside due to service issues.

The summary judgment was reinstated and ultimately denied by the court, which found that it was not ripe for a decision at that time. Discovery went forward and the employer ultimately renewed its motion for summary judgment. The employee filed his opposition, arguing that he did not have adequate opportunity to litigate the issue and that applying collateral estoppel would violate his constitutional right to a trial by jury.

The Supreme Court held that, for collateral estoppel to apply in these types of cases, the same parties must be identified in both actions. In addition, the parties must have adequate opportunity to litigate the issues upon which collateral estoppel is being based.

The Supreme Court ultimately determined that the employee had adequate opportunity to argue that he was wrongfully terminated in his unemployment case. This included the chance to submit evidence as well as call witnesses to testify.

Even though the employee did not take advantage of his opportunity to litigate the issue, collateral estoppel could still be applied. Therefore, the decision at the unemployment hearing that he was terminated for misconduct prevented him from now arguing he was terminated solely because he filed a workers’ compensation claim.

The Supreme Court then addressed the employee’s argument that applying collateral estoppel in cases where the prior decision was administrative only and not decided by a jury was a violation of his constitutional rights. The Alabama Supreme Court stated that, while it had not addressed the issue, multiple other courts had, including the United States Supreme Court.

The Alabama Supreme Court cited cases that held that courts have not hesitated to apply res judicata when an administrative agency was acting in a judicial capacity to resolve disputed issues of fact involving the same parties. B&B Hardware Inc. v. Hargis Industries Inc., in which the United States Supreme Court stated, “The court has already held that the right to a jury trial does not negate the issue-preclusive effect of a judgment, even if the judgment was entered by juryless tribunal.”

The Alabama Supreme Court stated that the United States Supreme Court held that the Seventh Amendment does not prevent competent tribunals from issuing judgments that have a preclusive effect. Therefore, the Alabama Supreme Court held that if the administrative process in question had the characteristic of adjudication, there would be no reason why the administrative proceeding should not have the same preclusive effect that a court decision would have.

The court noted that the reasoning behind this was that the administrative proceeding that the employee was involved in had the essential elements of adjudication, which included adequate notice to persons who were bound by the adjudication and the right on the behalf of the party to present evidence and legal arguments to support their contentions and/or to rebut evidence and argument made by the opposing party.

As a result, the Alabama Supreme Court ultimately determined that collateral estoppel would still apply and would not violate the constitutional right to trial by jury in cases where an employer seeks to have the decision in an unemployment hearing preclude a retaliatory discharge claim under the Workers’ Compensation Act.

My 2 cents

As we have noted in prior blog posts, decisions in unemployment hearings can be beneficial in a workers’ compensation case that involves a retaliatory discharge claim. For this reason, we recommend to all employers that they secure legal representation and fully participate in the unemployment hearing to secure a favorable decision.

Joshua G. Holden is a partner of Fish Nelson & Holden LLC, headquartered in Birmingham, Alabama. This entry is republished, with permission, from the firm's Alabama Workers' Comp Blawg.

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