Policy Statement: Kremer v. Chemical Construction Corp., 486 U.S. 461, 28 EPD 32,674 (1982) (II)

N-915

                                                                                                                         May 9, 1986

1. SUBJECT: Policy statement: Kremer v. Chemical Construction Corp., 456 U.S.
   461, 28 EPD ¶ 32,674 (1982).
2. PURPOSE: This Policy Statement reflects the Commission's view, in light of the Supreme Court's decision in Kremer, of the effect of prior state court or administrative decisions on the Commission's processing of charges.
3. ORIGINATOR: Guidance Division, Office of Legal Counsel.
4. INSTRUCTIONS: File after page 605-49 in § 605 of Volume II, Jurisdiction.

            (a)        Introduction - Kremer v. Chemical Construction Corporation, 456 U.S. 461, 28 EPD ¶32,674 (1982), addressed the issue of whether a party is precluded from filing a Title VII action in federal court after a state court has affirmed a state agency decision finding no discrimination (an adverse decision). The Court held that a federal court generally must dismiss a Title VII action if the suit would be precluded by a prior state court decision under that state's law and if due process requirements were met in the state proceedings.

                        While the Kremer decision deals with federal court action, it may affect the Commission's processing of certain charges. The Commission will generally dismiss a case that would be barred in federal court under Kremer.[1] This Policy Statement will provide background information on the Kremer case and the principle of preclusion. It will also discuss the application of Kremer when EEOC receives charges in the following contexts:

• a state court has affirmed a state fair employment practices (FEP) agency decision finding no discrimination (§ (d));
• a state court decision has been issued under a state law that differs from the applicable federal law (§ (e));
• a charging party has received an adverse state agency decision and has not appealed to state court (§ (f));
• a charging party has received an adverse state court judgment with no prior state agency action (§ (g));
• a state court action has been dismissed with no final decision on the merits of the case (§ (h));
• on appeal by respondent, the state court has reversed a state agency decision that was in favor of the charging party (§ (i)(l));
• in a state court action brought by a state agency on behalf of a charging party, the state court has reversed the state agency's finding of discrimination (§ (i)(2));
• in a state court action brought by a charging party after receiving a favorable state agency decision and a notice of right to sue, the state court has reversed the state agency's finding of discrimination (§ (i)(3));
• the charging party has prevailed in a state agency action and/or in state court but seeks supplemental relief under federal law (§ (j)).

                        Finally, this Policy Statement will provide assistance in the actual processing of Kremer-type charges (§ (k)).

            (b)       Preclusion Principle - Preclusion generally refers to the concept that an action cannot be pursued in court when a prior action involving the same issues and the same parties has been concluded and decided on the merits. This preclusive effect is often referred to as "res judicata and/or collateral estoppel."

                        Under res judicata or "claim preclusion", a final judgment on the merits precludes the parties and those with very closely related interests ("privies") from relitigating in a subsequent action involving the same claim any issues that were or could have been raised in the first proceeding. Under collateral estoppel or "issue preclusion," once a court decides an issue of law or fact necessary to its judgment, that decision precludes relitigation of the same issue in an action involving a different claim between the same parties or their privies. The general policy behind preclusion is to promote judicial finality and thereby bar repetitious suits involving the same parties and the same issues.

                        Preclusion principles vary in each state, but virtually all states require that the initial court judgment have been a final one on the merits and that the parties in both actions be the same or in privity with one another. In addition, for claim preclusion to apply, the claim in the second action must be the same as the claim in the first action. State law often differs as to how each of the above requirements is to be met. For example, see Medina v. Chase Manhattan Bank, 737 F.2d 140, 142 (1st Cir. 1984) (voluntary dismissals are not "on the merits" under Puerto Rican law); Loudermill v. Cleveland Board of Education, 721 F.2d 550, 557 (6th Cir. 1983) (dismissal for lack of subject matter or personal jurisdiction is not a final decision on the merits under Ohio law); Hickman v. Electronic Keyboarding, Inc., 741 F.2d 230, 233, 35 EPD ¶34,603 (8th Cir. 1984) (under Missouri law, privity connotes those who have "such an identity of interest that the party to the judgment represented the same legal right); Grann v. City of Madison, 738 F.2d 786, 789, 34 EPD ¶34,517 (7th Cir. 1984) (Wisconsin law defines privies "as those who succeed to the ownership of property or some right or interest therein under one of the parties to the litigation"); Patzer v. Board of Regents of the University of Wisconsin System and State Department of Administration, 763 F.2d 851, 855, 37 EPD ¶35,314 (7th Cir. 1985) (two claims arising out of the same transaction are the same claim under Wisconsin law); Trujillo v. County of Santa Clara, 775 F.2d 1359, 1366, 37 EPD ¶35,424 (9th Cir. 1985) (two claims relating to the same "primary right" are the same for purposes of preclusion under California law).

            (c)        Kremer Decision - The plaintiff in this case, Rubin Kremer, filed a charge with the EEOC alleging that the respondent failed to rehire him after he was laid off, due to his national origin and religion. The EEOC deferred the charge to the New York State Division of Human Rights (NYDHR), a State FEP agency. The agency investigated and dismissed the charge finding no probable cause to believe that the employer had unlawfully discriminated against Kremer.

                        Kremer appealed the determination to the NYDHR Appeal Board which upheld the state agency's determination. Kremer again brought his charge to the attention of EEOC and also appealed the state agency determination to state court. The state Court affirmed the state agency determination. Shortly thereafter, the EEOC found no reasonable cause to believe that the respondent had discriminated against Kremer, and it issued a notice of right to sue. Kremer then filed a Title VII action in federal district court. The district court dismissed his complaint in light of the earlier state court determination, the Second Circuit affirmed the dismissal, and the Supreme Court granted certiorari.

                        The Supreme Court decided the case by analyzing the relationship between Title VII and 28 U.S.C. § 1738. Section 1738 requires federal courts to give the same preclusive effect to state court judgments that would apply in the state's own courts.[2] Thus, if state law would prevent an individual from relitigating issues that were or could have been decided in a prior state court action, then the federal courts must also accept the state court decision as final and dismiss any action raising those same issues. The Court determined that Title VII contains no express or implied repeal of § 1738, and therefore Title VII claimants are bound by its requirements.[3] However, for preclusion to apply in federal court, the state law under which state proceedings were held must cover the discrimination that is alleged under Title VII. (See § (e).) In Kremer the New York State law was at least as broad as Title VII and clearly covered the alleged discrimination.

                        The Supreme Court cautioned that if a claimant did not have a 'full and fair opportunity' to litigate the claim or issue in the state administrative and judicial proceedings, then preclusion would not apply. Kremer, 456 U.S. at 480. In defining this requirement, the Court said that the state proceedings need do no more than satisfy the minimum procedural requirements of the Fourteenth Amendment's Due Process Clause. Id. at 481. The Court held that the procedures afforded Kremer under New York law satisfied the Due Process Clause. Under New York law, NYDHR was required to investigate Kremer's complaint and provide him with a full opportunity to present his case on the record, submit exhibits and witnesses' testimony, and rebut the respondent's evidence. If the investigation had disclosed probable cause and efforts at conciliation had failed, or if the Appeal Board had found that there had not been a full investigation and a full opportunity for Kremer to present his case, then NYDHR would have been required to hold a public hearing. Finally, judicial review was available in the New York courts. Although Kremer had failed to avail himself of all the procedures provided by state law, this did not render those procedures inadequate.

                        Thus, to summarize, Kremer holds that a federal court in a Title VII action must give preclusive effect to a state court decision when that decision would be accorded preclusive effect under state law and when the state proceedings satisfied due process requirements. Whenever a charge is filed with EEOC after an adverse state court decision[4] under any of the circumstances described in §§ (d) through (j) below, the EOS should always consult with the Regional Attorney as to relevant state law and due process concerns.

Note: Although a prior state court ruling may preclude a charging party from relitigating an employment discrimination issue in federal court, an EEOC field office may pursue a charge if the Regional Attorney and District Director decide that doing so is warranted by public interest considerations e.g., the extent of present harm and the likelihood of future harm.

            (d)       Judicially Affirmed State FEP Agency Decision - Where a charge is filed with EEOC and the circumstances surrounding it are identical to Kremer, a federal court action will clearly be precluded, and therefore the EOS should generally recommend dismissal of the charge (but see note above on possibility of Commission action). Thus, if a state FEP agency[5] has found no reasonable cause to believe that a charging party's allegation of discrimination is true, and a state court has affirmed the agency's decision, the Commission will dismiss a charge brought by the same parties or privies that involves the same claim or raises the same issues if the Regional Attorney determines that the state court decision would be given preclusive effect under state law and that due process requirements were met in the state proceedings.[6] (See §(k) for the procedures and language to be used in dismissing the charge.)

Example - CP files a charge in State X with a state FEP agency, claiming that R discriminated against him on the basis of religion and race. The agency finds no reasonable cause to believe that R discriminated against CP, and CP appeals to state court. The court decides the case on the merits, affirming the agency decision. CP then files a charge with EEOC, raising the same issues. The Commission will generally dismiss CP's charge if the Regional Attorney determines that the laws of State X would preclude CP from relitigating the issues of religion and race discrimination in state court and that due process requirements were met in the state proceedings. If either of those preconditions are not met, Kremer will not bar litigation of the case in federal court, and the EOS should therefore continue to process the charge.

                        The result in the above example would be the same if CP had not alleged race discrimination in the state proceedings but could have done so. (See § (b).)

                        Often the circumstances surrounding a charge filed with the EEOC are similar to the facts in Kremer but are not identical. The following subsections discuss the various situations that can arise and how the EOS should proceed in each case.

            (e)        State Court Decision Issued Under Law That Differs from Applicable Federal Law - In Kremer, the state court decision, finding no discrimination, was issued under a state FEP law that was at least as broad as Title VII in regard to Kremer's allegations. In some situations, however, a state court decision may be based on a state law that differs greatly from the applicable federal law.

                        For preclusion to apply in federal court, Kremer requires that the state law under which state proceedings were held must cover the discrimination alleged under federal law. Kremer, 456 U.S. at 479. Thus, if a charging party alleges religious discrimination under Title VII, and the applicable state law only covers race, sex, and national origin discrimination, then the Commission will not be bound by a state court decision issued under that law. Similarly, if state law does not cover sex discrimination in the provision of disability benefits for spouses of employees then, because Title VII does cover that issue, an adverse state court decision under the state law will not bar a federal action on spousal coverage.

                        Additionally, a state court decision that conflicts with federal law will not bar a federal action. For example, a state court might find that an employer who failed to hire a woman did not discriminate when the employer was only complying with a state protective law. If the state protective law conflicts with Title VII then, because Title VII supersedes the state law, the Commission will not be bound by the state court's finding of no discrimination. Also, where the bona fide occupational qualification (BFOQ) exception provided by state law is broader than that provided by Title VII, the Commission would not be bound by a state court's finding of no discrimination based on the BFOQ exception. See Reynolds v. N.Y. State Department of Correctional Services, 568 F. Supp. 747, 33 EPD ¶33,993 (D.C. N.Y. 1983) (under New York State law, sex is always a BFOQ for correction officer positions in all-male institutions, whereas under Title VII the BFOQ exception only applies to correction officer positions in potentially violent situations; district court finds that prior state court determination of no discrimination based on the BFOQ exception does not preclude federal claim).

                        If a state court decision is issued under a non-FEP state law on review of a non-FEP agency decision, preclusion can still apply in federal court provided that the state law covers the alleged discrimination. Commission Decision No. 86-4, CCH Employment Practices Guide ¶6862. Federal courts have held that the rationale of Kremer extends to state court review of non-FEP agency decisions pursuant to non-FEP laws. See Ross v. Communication Satellite Corp., 759 F.2d 355, 36 EPD ¶35,103 (4th Cir. 1985) (state court review of a determination of the Maryland Employment Security Administration on a claim of sex discrimination and retaliation); Burney v. Polk Community College, 728 F.2d 1374, 34 EPD ¶34,295 (11th Cir. 1984) (state court review of a determination of the Polk Community College Board of Trustees on a racial discrimination claim in connection with a guidance counselor's dismissal). However, if under state law a decision on a discrimination issue under a non-FEP law would not bar an action under a different statute, then a federal action will not be precluded. For example, see Ross v. Communication Satellite Corp. (under Maryland law, a judicial determination is not binding on another adjudicator who is seeking to determine the same issue under a different statute; therefore, a decision under the Maryland Unemployment Insurance Law would not bar a Title VII claim because the purposes of the two statutes are unrelated and the standards of recovery are different).

                        Although a state court finding of "no discrimination" will be denied preclusive effect by the Commission and by federal courts if it was issued under a state law that does not cover the discrimination that is alleged under federal law or that conflicts with federal law, the state court's findings on other issues in the case may be entitled to preclusion if the requirements of Kremer are met.

Example - CP files a claim for unemployment compensation with the state unemployment compensation board, alleging that she was terminated from her position because of her age. The board denies unemployment compensation based on its findings that CP was guilty of misconduct, that this misconduct was the basis for R's termination of CP, and that R had not discriminated against CP. After the board's findings are affirmed in state court, CP files a charge against her employer with EEOC. There are three possible approaches for the EEOC to take: (1) The charge will generally be dismissed if the Regional Attorney determines that: the state unemployment compensation statute under which the state proceedings were held prohibits age discrimination and does not conflict with provisions of the ADEA; under state law the state court decision would preclude relitigation of the age discrimination issue; and CP had a full and fair opportunity to litigate her discrimination claim. (2) If the Regional Attorney determines that the state statute does not cover age discrimination or that it conflicts with the ADEA, then the EOS should proceed with investigating the charge, but the state court findings on whether CP was guilty of misconduct and whether this was a reason for R's termination of CP should be given preclusive effect if the Regional Attorney determines that it would be entitled to preclusion under state law.[7] (3) Regardless of whether the unemployment compensation statute prohibits age discrimination, the Regional Attorney might determine that, as in Ross, a decision under    the unemployment compensation statute would not under state law preclude an action under a different statute such as the ADEA. The EOS should then proceed with investigating all issues raised in the charge.

            (f)        Unreviewed State Agency Decision - A state agency decision which is not reviewed by a state Court is not entitled to preclusive effect under Kremer. Commission Decision No. 86-4, CCH Employment Practices Guide ¶6862; Kremer, 456 U.S. at, 470, n.7; Elliot v. University of Tennessee, 766 F.2d 982, 988, 37 EPD ¶35,419 (6th Cir.), cert. granted, 106 S. Ct. 522 (1985); Heath v. John Morrell & Co., 768 F.2d 245, 248, 38 EPD ¶35,544 (8th Cir. 1985); Ross v. Communications Satellite Corp., 759 F.2d at 361 n.6; Bottini v. Sadore Mgt. Co., 764 F.2d 116, 120, 37 EPD ¶35,354 (2nd Cir. 1985). 28 U.S.C. § 1738 only applies to state court decisions and therefore does not require federal courts to give preclusive effect to unreviewed state agency determinations.

                        Only one federal appeals court has accorded preclusive effect to an unreviewed state agency decision. In Buckhalter v. Pepsi-Cola General Bottlers, Inc., 768 F.2d 842, 38 EPD ¶35,539 (1985), the Seventh Circuit acknowledged that §1738 applies only to state court proceedings. However, it held that the common law doctrine of administrative res judicata accords finality to the findings of a state FEP agency acting in an adjudicatory capacity. The findings of an agency acting only in an investigatory capacity would not be entitled to preclusive effect.

                        While it is the Commission's position that unreviewed State agency decisions should not preclude federal actions, the Commission acknowledges that Buckhalter does apply to suits brought by private parties in the Seventh Circuit.[8] However, when a District Office is reviewing a decision by a state agency in the Seventh Circuit under the substantial weight procedures, the District Director and Regional Attorney may decide to pursue a charge based on public interest considerations (see §(c)).

                        In all other circuits, unreviewed decisions of FEP or non-FEP agencies acting in either adjudicatory or investigatory capacities should not be given preclusive effect.

Example 1 - CP files a charge with the Ohio Civil Rights Commission, an FEP agency, alleging that R discriminated against him on the basis of religion. The agency conducts an adjudicatory hearing in which CP and R are represented by counsel, submit legal memoranda in support of their respective positions, and examine and cross-examine witnesses. The agency decides that there is no reasonable cause to believe that R discriminated against him on the basis of religion. CP does not appeal to state court, but instead files a charge with EEOC. The EOS should proceed with investigating the charge under the applicable substantial weight review procedures, regardless of whether the agency decision would be entitled to preclusive effect under Ohio law.

Example 2 - CP files a claim for unemployment compensation with the Ohio Bureau of Employment Security, a non-FEP agency, alleging that R discharged him because of his race. The agency, acting only in an investigatory capacity, denies the claim for unemployment compensation on the basis that the discharge was for just cause and that R             had not discriminated against CP. CP then files a charge with EEOC, again alleging that R discriminated against him on the basis of race. The EOS should proceed with    investigating the charge, regardless of whether the agency decision would be entitled to preclusive effect under Ohio law.

Example 3 - Same facts as Example 1 except that CF files his state charge in Illinois, in the Seventh Circuit. While CF might be precluded from bringing a federal court action, the Commission can pursue the charge if - in the course of the substantial weight review - the District Director and Regional Attorney decide that doing so is warranted by public interest considerations.

Example 4 - Same facts as Example 2 except that CP files his unemployment compensation claim in Indiana, in the Seventh Circuit. The EOS should proceed with investigating CP's charge even if the requirements for preclusion would be met under Indiana law, because the agency is a non- FEP agency and because it acted only in an investigatory capacity. (See fn. 8.)

            (g)       State Court Decision with No State Agency Action - If an individual brings an employment discrimination action directly to state court without first filing a charge or claim with a state agency, the state court decision will still be given preclusive effect in federal court under Kremer if it would be entitled to preclusive effect under state law and if due process requirements are met. Section 1738 does not require a prior state agency decision for preclusion to apply. Thus, the Commission will generally dismiss a charge filed with EEOC where the Regional Attorney determines that a prior adverse state court decision would be given preclusive effect under state law and that due process requirements were met, regardless of whether a state agency had also rendered a decision.

Example - Under the FEP law of State X, a claimant can file a charge with the state FEP agency or proceed directly to state court. CP files suit directly in state court, alleging that R discriminated against him on the basis of race. The court finds no discrimination, and CP files a charge with EEOC raising the same issues. The EOS should dismiss the charge if the Regional Attorney determines that the state court decision would be entitled to preclusive effect under state law and that due process requirements were met. The fact that there was no state agency decision will not affect whether preclusion will apply.

            (h)       State Court Action Dismissed with No Decision on the Merits -When a charge is filed with EEOC after a state court action raising the same claim or the same issues has been dismissed with no decision on the merits, the EOS should ask the Regional Attorney to determine whether the judgment would be given preclusive effect under the law of the state from which the judgment emerged. Commission Decision No. 85-14, CCH Employment Practices Guide ¶6855.

                        Generally, for a state court judgment to operate as a bar to a subsequent suit on the same claim or raising the same issues, it must have been a final decision on the merits of the case. F.T.C. v. Food Town Store, Inc., 547 F.2d 247 (4th Cir. 1977); Central R.R. Co. of N.J. v. Need, 26 N.J. 172, 139 A.2d 110, cert. denied, 357 U.S. 928 (1958). A dismissal for lack of subject matter or personal jurisdiction or a dismissal for failure to prosecute would generally not be considered a final judgment on the merits. However, state law must always be examined to determine whether the decision would be considered a final one on the merits and whether that decision would be given preclusive effect.

Example - CP files a charge with a state agency in State X alleging that R discriminated          against her on the basis of race. The agency finds no reasonable cause to believe that R discriminated against CP, and CP appeals to state court. The court dismisses the case for failure to prosecute. CP then files a charge with EEOC raising the same issues. The EOS should ask the Regional Attorney to determine whether the state court dismissal for failure to prosecute would be given preclusive effect under the law of State X and whether due process requirements were met. If not, the EOS should proceed with processing the charge.

            (i)        Judicially Reversed State Agency Decision - There are three circumstances in which a state court might reverse a state agency finding of discrimination: 1) respondent appeals to state court; 2) a state agency files suit on charging party's behalf; or 3) a state agency issues to charging party a notice of right to sue and the charging party files suit in state court. In all of the above circumstances, state court reversal of the state agency's finding of discrimination will preclude the charging party from bringing a federal action if the requirements of Kremer are met.

                        (1) Respondent Appeals to State Court - Where a respondent appeals to state court and obtains a reversal of a state agency decision that was in favor of the charging party, Kremer and §1738 will bar a subsequent federal court action if the requirements for preclusion are met. The preclusion effect given to state court decisions under §1738 does not depend on whether the charging party or the respondent sought state court review. Commission Decision No. 85- 17, CCH Employment Practices Guide, ¶6858. This position is consistent with federal court decisions since Kremer, which have generally found that Kremer cuts both ways." Patzer v. Board of Regents of University of Wisconsin, 577 F. Supp. 1553, 1557 (W.D. Wisc. 1984), rev'd on other grounds, 763 F.2d 851, 37 EPD ¶35,314 (7th Cir. 1985). In Gonsalves v. Alpine Country Club, 727 F.2d 27, 33 EPD ¶34,150 (1st Cir. 1984), the respondent appealed a decision by the state fair employment practices agency in favor of the charging party to state court. The state court ruled in favor of the respondent and the federal district court gave preclusive effect to the state court's decision. The First Circuit Court of Appeals affirmed, holding that [the basic thrust of Kremer is the recognition that Congress did not 'envision full litigation of a single [discrimination] claim in both state and federal forums.' (citation omitted) [A] fair reading of Kremer shows that its rationale rests on neutral principles, not on the happenstance of which party - employer or employee - brings the state court action." 727 F.2d at 29. In King v. City of Pagedale, 573 F. Supp. 309 (E.D. Missouri 1983), the court held that [t]he Supreme Court's reliance on 28 U.S.C. §1738 compels the conclusion that preclusion applies to a state judgment regardless of who sought judicial review. Id. at 313. See also Trujillo v. County of Santa Clara. 775 F.2d at 1364-66; Hickman v. Electronic Keyboarding, Inc., 741 F.2d at 232 n.3; Unger v. Consolidated Foods Corp., 693 F.2d 703, 710 n. 11, 30 EPD ¶33,161 (7th Cir. 1982).

                       Of course, if state law would draw a distinction between a case brought by a charging party and one brought by a respondent and deny preclusive effect to a decision in an action that was brought by the respondent, then a federal court would do so as well. See Trujillo v. County of Santa Clara, 775 F.2d at 1365; Hickman v. Electronic Keyboarding, Inc., 741 F.2d at 232 n.3.

Example 1 - CP files a charge with a state agency in State X alleging that R discriminated against her in the payment of wages on the basis of sex. After investigating the case, the agency finds reasonable cause to believe that R discriminated against CP. R appeals to state court and obtains a reversal of the state agency decision. CP then files a Title VII charge with EEOC. The Regional Attorney determines that under the laws of State X the state court decision in the action brought by R would preclude CP from relitigating the issues in state court, and that due process requirements were met in the state proceedings. The EOS should therefore recommend dismissal of CP's charge unless, of course, the District Director and Regional Attorney determine that public interest considerations warrant pursuit of the case.

Example 2 - Same facts as above, except that the Regional Attorney determines that the law of State X would draw a distinction between a state court action brought by R and one brought by CP and give preclusive effect only to the latter. The EOS should proceed with investigating CP's charge because her action would not be precluded in federal court.

                        (2) State Agency Files Suit in State Court - Where a state agency brings a state court action on behalf of a charging party and the state court reverses the agency's finding of discrimination, the charging party may be precluded from bringing a subsequent federal action if the requirements of Kremer are met. In examining state law, the Regional Attorney will determine whether a state court would hold that the charging party and the state agency that brought the state court action in his or her behalf were in privity. If under state law they would be considered in privity and the state court decision would preclude relitigation of the case, and, if the Regional Attorney determines that due process requirements were met, then the EOS should dismiss the charge. For example, see Kellman v. Dept. of Mental Health and Corrections, 610 F. Supp. 1031, 38 EPD ¶35,738 (D. Me. 1985) (state court finding of no discrimination held to bar federal action where state agency brought suit "for the use of" the charging party and, under state law, charging party would be considered "a real party in interest" to the state proceedings).

Example - CP files a charge with a state FEP agency alleging that she was not hired by R because of her sex. The agency finds reasonable cause to believe that R discriminated against CP on the basis of sex. R refuses to conciliate and the agency files suit in state court on CP's behalf. The court rules in favor of R, holding that the agency had failed to         prove discrimination. CP files a charge with EEOC, again alleging that R discriminated against her on the basis of sex. The Commission will generally dismiss the charge if the Regional Attorney determines that: under state law CP and the state agency were in privity; the state court decision would preclude relitigation of CP's claim; and due process requirements were met.

                        (3) Charging Party Files Suit in State Court - Where a charging party files suit in state court after receiving a favorable state agency decision and a notice of right to sue, and the court reverses the agency's finding of discrimination, the charging party will be precluded from bringing a subsequent federal action if the requirements of Kremer are met. The fact that the charging party filed suit in state court after obtaining a favorable agency decision instead of appealing an adverse agency decision in no way changes the standard Kremer analysis of state law and due process.

            (j)        Supplemental Relief - If a charging party has prevailed in state agency and/or state court proceedings, (s)he will not be precluded from bringing a federal action to recover supplemental relief if that relief was not authorized under state law. New York Gaslight Club, Inc. v. Carey, 447 U.S. 54, 23 EPD ¶30,955 (1980). Such an action is not precluded under Kremer since the charging party could not have sought the supplemental relief in state court. Commission Policy Statement Notice N-915, April 1986, CCH Employment Practices Guide ¶____. Therefore, the EOS should continue to process charges where state law does not provide for the form of relief being sought. However, where a charging party seeks only attorney fees, the Commission will limit its role to issuing a notice of right to sue. Id.

                        If the relief being sought by a charging party was authorized under state law, but it was not granted by the state court or the charging party failed to ask for it, §1738 as interpreted by Kremer may bar a federal action seeking that relief, if a subsequent state action for the additional relief, would be precluded under state law. Trujillo v. County of Santa Clara (res judicata applies where the state court was authorized to award attorney fees but declined to do so). Thus, where state law authorizes the particular form of relief being sought by a charging party, the EOS should ask the Regional Attorney to determine whether preclusion would apply under state law. If state law precludes a subsequent action on the issue of relief, the charge should generally be dismissed regardless of whether the charging party asked for the relief in state court. If state law does not preclude such an action, the EOS should continue to process the charge unless, as stated above, the charging party seeks only attorney fees.

                        Regardless of whether or not the federal relief being sought is authorized under state law, all issues that were decided by the state court, such as whether or not the charging party suffered discrimination, will be entitled to preclusive effect under Kremer if they would be accorded preclusive effect under state law.

Example 1 - CP files a charge in State X alleging that R discriminated against him on the       basis of national origin. The state agency decides in favor of CP and R appeals. The state court affirms the agency's decision, holding that R discriminated against CP on the basis of national origin. The state FEP law authorizes damages, back pay, and reinstatement, and the state court awards damages and back pay but not reinstatement. CP files a charge with EEOC seeking reinstatement under Title VII. The Commission will generally dismiss the charge if the Regional Attorney determines that under state law the State court decision would preclude a subsequent action for reinstatement and that due process requirements were met, regardless of whether CP had actually asked for reinstatement in the state court action.

Example 2 - Same facts as above, except the Regional Attorney determines that the state FEP law does not authorize reinstatement. The EOS will process the charge, but the state court finding that R had in fact discriminated against CP will be given preclusive effect if the Regional Attorney determines that the issue would be accorded preclusive effect under state law. In other words, the Commission will accept as final the state court's finding of discrimination and focus only on whether CP is entitled to reinstatement.

            (k)       Charge Processing - When a state court decision that is related to a charge filed with EEOC is brought to the attention of a district or area office, a copy of that decision should be obtained from the respondent or the state court. If a relevant state court action is pending and a decision has not yet been issued, then the EOS should determine the status of that action and the parties and issues involved.

                        The EOS should recommend dismissal of a charge without any further investigation where there is a prior state court decision and the requirements of Kremer are met, whether the charging party, respondent, or anyone else brings the decision to the Commission's attention.[9] It does not matter when the state court decision is issued; it can either be before the Commission has begun processing the charge or at any time during the processing. However, a pending state court action which is still in progress and in which no decision has been issued will not affect the Commission's decision or determination. If a state court decision has been issued but an appeal of the decision is still pending, the EOS should ask the Regional Attorney to determine whether under state law the pendency of the appeal would alter the preclusive effect of the original decision. If not, the charge should be dismissed if the requirements of Kremer are met.

                        If the charging party requests a notice of right to sue before the Commission has issued a decision or determination, the charge should be closed and the notice of right to sue issued according to the instructions in §6 of Volume I of the Compliance Manual, Issuance of Notices of Right to Sue on Request.

                        If, after consulting with the Regional Attorney, the EOS determines that a charge should be dismissed pursuant to Kremer, the District/Area office should dismiss that charge and issue a notice of right-to-sue. The following language should be used on the dismissal form:

Dismissed pursuant to the U.S. Supreme Court decision in Kremer v. Chemical Construction Corp., 456 U.S. 461, 28 EPD ¶32,674 (1982).

                        The Commission will not issue "no cause" determinations in Kremer-type cases because no determinations on the merits of such charges will be made.

 

5/9/1986
___________                                      Approved:       _________________________
Date                                                                            Clarence Thomas
                                                                                    Chairman

[1] Although Kremer involved Title VII, its rationale also applies to the Age Discrimination in Employment Act (ADEA) and Equal Pay Act (EPA).

[2]  Municipal court decisions may also preclude federal court actions if such decisions would be entitled to preclusive effect under state law. Section 1738 does not apply to tribal court decisions, nor is there any other statute that requires federal courts to defer to such decisions. However, if the Regional Attorney determines that a treaty covering a particular tribe requires federal courts to give preclusive effect to the decisions of that tribe's courts, then EEOC will also give preclusive effect to such decisions under the terms of the treaty.

[3]  The same rationale dictates that Section 1738 also applies to ADEA and EPA claimants, since neither of those acts contains an express or implied repeal of the statute. See Whitfield v. City of Knoxville, 756 F.2d 455, 459, 36 EPD ¶135,072 (6th ct 1985); Rotert v. Jefferson Federal Savings and Loan, 623 F. Supp. 1114, 39 EPD ¶35,817 (D.C. Conn. 1985).

[4]  The Commission's procedures will not be affected by a pending state court action in which no decision has yet been issued. (See § (k).)

[5]  See § (e) for a discussion of the application of Kremer where the state proceedings were held pursuant to a non-FEP law.

[6]  However, as discussed in § (c), if the District Director and the Regional Attorney determine that the Commission may wish to pursue broader issues of employment discrimination raised in the charge, then the EOS should pursue the investigation.

[7]  Despite preclusion of these issues, EEOC might still make a cause determination if the investigation uncovers that the employer's reason for terminating CP was in fact a pretext for discrimination. For example, the investigation might disclose that similarly situated younger employees who were also guilty of misconduct were not terminated, thus demonstrating that CP's misconduct was only one factor in the employer's decision, with other discriminatory factors involved as well. Also see Hill v. Coca Cola Bottling Co of NY, 786 F.2d 550 (2d Cir. 1986). New York State unemployment compensation proceedings can include considerations of race discrimination claims, but plaintiff here was denied full and fair opportunity to litigate them. While federal action on the Title VII claim was therefore not precluded, the state court's decision that plaintiff had engaged in misconduct could not be relitigated. However, plaintiff could still prove his Title VII claim by showing that Black employees were subject to harsher discipline for misconduct than other employees.

[8]  Although the Commission generally would not draw a distinction between FEP and non-FEP agency decisions when determining whether preclusion would apply, it will do so in this circumstance because Buckhalter only dealt with an FEP agency decision. Furthermore, if the charging party prevailed before any state agency, Buckhalter acknowledges that (s)he may file a federal action for supplemental relief. (See § (j).)

[9]  However, if the District Director and the Regional Attorney determine that it is in the public interest, then the EOS should pursue the investigation. (See § (c).)