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Court Of Appeals Changes Standard For Collateral Estoppel

On December 10, 2013 the Court of Appeals, in a stunning unanimous decision, reversed its own ten-month old determination, that an individual found able to return to work by the Worker’s Compensation Board (WCB), was precluded from re-litigating the issue in a subsequent civil suit.

The plaintiff in Auqui, Jose Verdugo, was injured on December 24, 2003 when a sheet of plywood fell from a building and struck him, causing head, neck, and back injuries. At a full WCB hearing, in which both sides were permitted to introduce expert medical testimony subject to cross examination, the administrative law judge found that Verdugo wasno longer disabled as of January 24, 2006. On review, the Worker’s Compensation Board panel affirmed the finding. Meanwhile, Verdugo’s wife, acting as her husband’s guardian, brought a lawsuit against the owner of the premises[1]. The owner moved to preclude the plaintiff from “re-litigating” the date his disability ended based on the WCB determination, which the Supreme Court granted and which the Appellate Division reversed but granted leave to appeal to the Court of Appeals, which initially reversed, finding preclusion in favor of the owner.

The original decision, Auqui v. Seven Thirty One Limited Partnership et al., 20 N.Y.3d 1035 (N.Y. February 2013) (“Auqui I”), found that Verdugo was barred from re-litigating the issue since he had a full and fair opportunity to litigate it based on the doctrine of collateral estoppel. Judge Pigott dissented on the grounds that administrative determinations of law as well as mixed issues of law and fact are not entitled to collateral estoppel treatment. Although Judge Pigott acknowledged whether Vergugo was injured was an issue of fact, he wrote whether this made him “disabled” under the meaning of the Worker’s Compensation Law was a “mixed issue of law and fact” which was not entitled to collateral estoppel in a civil lawsuit.

The Auqui I was heralded by the defense bar and the insurance community since although WCB determinations could preclude plaintiffs, they could not preclude defendants who had no opportunity to appear at the hearing. If the WCB found the claimant capable of returning to work, they would be precluded from seeking lost future earnings in a subsequent civil case. Auqui I however, was understandably decried by the plaintiff’s bar and the labor community resulting in a motion to reargue that was supported by amici curiae from organizations on both sides of the issue including the New York State Trial Lawyers Association, the AFL-CIO, the Defense Association of New York, Inc. and the New York State Bar Association.

Upon re-argument, instead of adopting Judge Pigott’s dissent, the Court went considerably further than it seemingly had to, finding there was “no identity of issue” between the WCB hearing and the civil lawsuit. Auqui v. Seven Thirty One Limited Partnership et al., 2013 N.Y. Slip Op. 08192 (December 10, 2013)(“Auqui II”). While Auqui II did not expressly preclude a finding of collateral estoppel based on a WCB hearing, it is our opinion this was the practical effect of the decision. Indeed, Auqui II has the potential to significantly limit the use of collateral estoppel in all cases.

Instead of adopting Judge Pigott’s argument that the question involved a mixed issue of law and fact, the majority focused on the differences between the “scope and focus” of a Worker’s Compensation action versus a civil lawsuit. It pointed out that juries are asked to determine a plaintiff’s total loss not just whether they are disabled. While the WCB focused “on a claimant’s ability to perform the duties of his or her employment” regardless of fault, negligence actions are “focused on the larger question of the impact of the injury over the course of plaintiff’s lifetime.”

Auqui II focused on whether a Worker’s Compensation action was identical in scope to a civil lawsuit, rather than focusing on whether the subject issue was “identical”. The Court emphasized the limited scope and “expedited nature of worker’s compensation proceedings” suggesting that the claimant at a WCB hearing “may not have the means to litigate the matter beyond the issue presented to the Board.” Since Verdugo was “represented by counsel, submitted medical reports, presented expert testimony, and cross-examined the defendants’ experts regarding…ongoing disability” the Court’s concern with Verdugo not having the “means to litigate” did not refer to the size of his pocketbook, but to the limitations of the WCB hearing.

The Court seemed particularly concerned that Verdugo did not present neuropsychiatric testing at the WCB hearing that his doctors in the civil suit claimed was necessary to diagnose his brain injury. Nothing in the decision however, suggests that Verdugo was precluded from submitting neuropsychiatric testing at the WCB hearing, it was simply the choice of his counsel. This begs the question whether the standard for collateral estoppel remains whether there was a full and fair opportunity to litigate an issue, as opposed to whether the issue actually was fully litigated. Auqui II thus seems to have significantly de-emphasized the question of “opportunity” from the standard.

Auqui II not only appears to bar collateral estoppel from being asserted in a civil action as a result of a WCB determination[2], it also provides an argument against its use in many other cases, since there will often be a difference between the “scope and focus” of the two actions as well as an argument that the issue was not fully litigated in the first action. As long as the litigant opposing it can claim that a necessary expert or piece of evidence was not submitted in the first action due to some difference in scope between the two actions, the court, on the basis of Auqui II, would find it difficult to preclude the issue on the basis of collateral estoppel.

[1] The Court of Appeals did not find the guardianship relevant to the issue of plaintiff’s disability since “[t]he issue of plaintiff’s incapacity was not opposed at the guardianship proceeding (in which defendants were not a party)” and it seemed that the Court viewed the guardianship as a ploy to “buttress the contention that Jose Verdugo is still disabled.”

[2] Eugene T. Boulé, Guy J. Levasseur, & Adam B. Rosen. “New York’s Highest Court Reverses Itself on Prior Damages-Limiting Decision.” Martindale.com, December 16, 2013, last accessed December 30, 2013.

Categories: Construction, Premises Liability
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