February 1, 2013
On December 7, 2012, the Fourth Appellate District for the Court of Appeal of the State of California affirmed the granting of summary judgment in a matter and confirmed that an adverse administrative decision in an internal grievance process can bar later civil claims, including claims based on the Fair Employment and Housing Act. In Basurto v. Imperial Irrigation District, the Court of Appeal concluded that, where an employee elects to avail himself of internal grievance procedures and receives an adverse final ruling, those findings will have collateral estoppel or res judicata effect on subsequent civil claims, including FEHA claims whether he chose to raise said FEHA claims at the administrative hearing or not.
Imperial Irrigation District employed Salvador Basurto for 31 years as a “zanjero” or “one who is in charge of water distribution.” Basurto delivered water to farmers using a District vehicle. At 8 a.m. on March 31, 2003, while on duty and driving a District vehicle, Basurto collided with another vehicle causing property damage and injuring the other driver. Basurto admitted to police, at the time of the accident, that he had been drinking the prior night. While the police concluded that he was not under the influence, they did determine that Basurto caused the accident by failing to yield the right of way. This incident prompted the District to terminate Basurto, who elected to appeal his termination through the District internal complaint procedures. After a prolonged writ of mandate process and two separate administrative hearings, the District Board issued a six-page decision concluding that the termination was appropriate and denying Basurto’s grievance. This final decision came after an extensive hearing that had all of the earmarks of a legal proceeding with a court reporter, attorneys representing both sides, submission of evidence, objections to evidence that were ruled upon, and the presentation of witnesses (who testified under oath and were subject to cross examination).
While pursuing his writ of mandate and before participating in the second administrative hearing, Basurto initiated a civil litigation against the District that included claims of age or race discrimination and wrongful termination. Following the second administrative hearing and the conclusion of Basurto’s efforts to overturn the adverse determination, the District filed a motion for summary judgment in the civil action arguing that Basurto’s civil claims were all barred by the prior adverse administrative decision under principles of collateral estoppel and res judicata, in that Basurto could and should have raised those claims before the District Board, but failed to do so. The trial court agreed with this argument and granted the District’s motion for summary judgment.
Basurto appealed this determination. Basurto’s appeal contended that administrative decision should not bar his claims because the internal complaint procedures were not sufficiently judicial in character to allow for collateral estoppel or res judicata.
On this appeal, the Court of Appeal was asked to consider whether the trial court erred in granting summary judgment on the ground that Basurto’s civil claims for discrimination and wrongful termination were barred as a matter of law by the doctrines of collateral estoppel and res judicata. The Court of Appeal determined that the trial court had correctly granted the motion. In reaching this conclusion, the Court of Appeal determined that the District had satisfied the threshold prerequisites for application of these principles. The Court of Appeal went on to hold “that an administrative decision may operate as a bar to later judicial relief only when the court is first satisfied that the administrative proceeding leading to that decision had a sufficiently ‘judicial’ character. In other words, administrative findings may be given preclusive effect only when the administrative agency ‘is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate.” However, the Court of Appeal clarified that, in order for an administrative hearing to qualify as sufficiently “judicial” for collateral estoppel purposes, it was not required to be identical to a judicial trial, so long as basic due process considerations were satisfied. This requirement is met where the hearing is conducted in an impartial manner; testimony is received under oath or affirmation; the parties are allowed to call, examine and cross-examine witnesses; the parties are allowed to make oral and written argument; and a verbatim record of the proceeding is created. Finally, the hearing officer must also provide a written statement of decision that applies existing rules to the facts of the case.
Since the District had satisfied these prerequisites, the Court of Appeal concluded that, if an employee such as Basurto voluntarily chooses to first obtain relief by means of his employer’s internal procedures, then said employee must fully exhaust that avenue of relief. This includes not merely exhausting the administrative remedy itself, but also the judicial remedies that are the exclusive means of reviewing any administrative decision. The failure to properly set aside an adverse administrative decision will render that decision final and binding on that employee’s later civil claims, including FEHA claims. With regard to this last point, the Court of Appeal specifically held that Basurto’s election not to raise age or race discrimination allegations at his administrative hearing did not prevent the application of collateral estoppel. “A party cannot circumvent the doctrine simply by cherry-picking which facts and theories to raise at his administrative hearing and which to reserve for a civil lawsuit, if all speak to the same issue – which in this case was the wrongfulness of Basurto’s discharge – and if the party has a full and fair opportunity to present all those facts for determination. . . . As the Supreme Court observed long ago: ‘[E]ven though the causes of action be different, the prior determination of an issue is conclusive in a subsequent suit between the same parties as to that issue and every matter which might have been urged to sustain or defeat its determination.”
This case is significant because it reinforces the long-standing legal precept that if an employee chooses to pursue administrative remedies, then he will be bound by any final adverse determination in a subsequent civil litigation, including claims based on the FEHA.