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Although the United States Supreme Court has ruled that Social Security Disability claims of total disability do not estop a subsequent ADA suit, the 3rd U.S. Circuit Court of Appeals held that a workers’ compensation decision could estop such a claim. In Jones v. United Parcel Service, the 3rd Circuit held that, under Pennsylvania’s doctrine of collateral estoppel, Neil Jones was precluded from challenging the finding of the Commonwealth Court that he had fully recovered from his injuries and, therefore, was not disabled as a matter of law under the ADA. ‘FULLY RECOVERED’ Jones was working for UPS in December 1988 when he slipped and fell on some ice while making a delivery. He subsequently left the workforce while receiving workers’ compensation for his injury. Two years later, Jones was released to return to work on the basis of the finding of a consulting orthopedist that he was “fully recovered and was able to return to his pre-injury job without restrictions . . . .” Jones refused to return and UPS filed a petition to cease and terminate Jones’ benefits. In 1995, the workers’ compensation judge granted UPS’ petition. This decision was based upon Jones’ testimony and the reports and testimony of five separate physicians, including that of the consulting orthopedist, who testified that Jones’ reaction to various tests was a “manifestation of abnormal pain behavior.” That is, it was likely that he was faking his symptoms. Jones appealed the judge’s decision to the Workers’ Compensation Appeal Board, which affirmed. Jones then appealed to the Commonwealth Court, which affirmed the appeal board’s ruling. Jones’ petition for appeal to the Pennsylvania Supreme Court was denied. CLAIMS A ‘DISABILITY’ Meanwhile, in September 1996, Jones filed a one-count complaint in the U.S. District Court for the Western District of Pennsylvania against UPS, claiming that UPS violated the ADA by failing to provide him with a reasonable accommodation for his return to work. Jones insisted during discovery that he was completely incapable of performing his previous duties due to his work-related injury. This was consistent with his workers’ comp claim. He argued that UPS violated the ADA because it denied him alternative employment opportunities and did not reassign him to a vacant position. UPS filed a motion for summary judgment arguing that Jones’ ADA claim was barred by the doctrine of collateral estoppel. The district court granted summary judgment on alternate grounds in response to Jones’ appeal to the 3rd Circuit, UPS reasserted its position that Jones was collaterally estopped from asserting his ADA claim. The appellate court found that the estoppel issue was governed by Pennsylvania State law. In Rue v. K-Mart Corp., 713 A.2d 82, 84 (Pa. 1998), the Pennsylvania Supreme Court held that the doctrine of collateral estoppel applies where four factors are met: � An issue decided in a prior action is identical to one presented in a later action. � The prior action resulted in a final judgment on the merits. � The party against whom collateral estoppel is asserted was a party to the prior action. � The party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the prior action. BARRED FROM RE-LITIGATING Applying these factors to Jones’ workers’ compensation claim, the court found that each of the factors was met. Specifically, the issue presented in the ADA claim was whether Jones was “disabled” at the time that he sought reinstatement to UPS. This was the precise issue addressed by the workers’ compensation judge. Furthermore, the prior action was vigorously litigated in the administrative proceedings and then through the Pennsylvania appellate courts. This resulted in a final judgment on the merits against Jones. As such, the 3rd Circuit “[predicted] that the Pennsylvania Supreme Court would follow its decision in Rueunder the circumstances here and would give preclusive effect to the factual finding of the WCJ in the workers’ compensation proceeding that Jones was fully recovered from his worker-related injury, regardless of the differing policies behind the ADA and the Workers’ Compensation Act.” FINDINGS ARE NOT PRECLUSIVE While Pennsylvania courts and those applying Pennsylvania law, have consistently found that fully litigated workers’ compensation claims can have a preclusive effect upon subsequently litigation, courts have found the direct opposite result for unemployment compensation proceedings. In Rue, the Pennsylvania Supreme Court addressed directly the question of whether the doctrine of collateral estoppel applies to the factual findings of an unemployment compensation referee. In Rue, the plaintiff was terminated for stealing a bag of potato chips from K-Mart’s inventory. Rue applied for and received unemployment compensation benefits. Following a hearing, the unemployment compensation referee found as a matter of fact that “Rue did not misappropriate company property and did not eat a bag of the employers’ potato chips . . . .” K-Mart did not appeal the referee’s decision. Rue subsequently instituted civil action against K-Mart alleging that she had been defamed by publication of the reasons for her termination. The trial court granted Rue’s motion in limine preventing K-Mart from offering testimony at trial to establish the truth of its assertion that Rue had stolen the potato chips, based upon the estoppel effect of the unemployment compensation referee’s decision. After a jury verdict in favor of Rue, the Superior Court reversed the trial court’s decision and remanded the case for a new trial, holding that the doctrine of collateral estoppel did not apply to the referee’s factual findings. The Pennsylvania Supreme Court considered the referee’s decision in light the four factors discussed above. The court found that, although the issues presented before the referee and in the motion in limine were identical, K-Mart had not had a full and fair opportunity to litigate the issue of whether Rue stole the bag of potato chips. The court noted that, although the unemployment compensation hearing afforded the parties a right to counsel, the right to present testimony and documentary evidence and the right to subpoena and cross-examine witnesses, there was no discovery permitted and the rules of evidence do not apply. Furthermore, the court found that “the unemployment compensation system is specifically designed to adjudicate matters quickly, because one of its primary goals is to get money into the pocket of the employed worker at the earliest point that is administratively feasible. “Secondly, the amount of money in controversy in most unemployment compensation proceedings is, from the employer’s prospective, quite minimal. [I]n light of such minimal risk, the employer often has little incentive to litigate vigorously, or even to retain counsel and/or attend a hearing.” As such, the court held that “because of the fast and informal nature of the proceedings before the Referee, as well as the negligible economic consequences thereof, we conclude that K-Mart did not have a full and fair opportunity to litigate the issue of whether Rue stole a bag of potato chips.” While the Ruedecision leaves open the question of whether the discrete factual findings of an unemployment compensation referee could have a preclusive effect, the 3rd Circuit has held that in Title VII actions, “unreviewed administrative agency findings can never be accorded issue preclusive effect . . . . “ In Roth v. Koppers Industries, Inc., 993 F.2d 1058 (3d Cir. 1993), the court held that an unemployment compensation referee’s finding that Roth had been subjected to discrimination and harassment had no effect upon Roth’s subsequent claim for violation of Title VII and the Equal Pay Act. The court based its finding upon the United States Supreme Court’s decision in Tennessee v. Elliott, 478 U.S. 788 (1986), in which the court found that the federal statute governing treatment of state court judgments is not applicable to unreviewed state administrative fact findings. “[I]n a Title VII action a prior state decision enjoys issue preclusive effect only if rendered or reviewed by a court.” As the Jonescase suggests, the relationship between employment law and workers’ compensation law continues to tighten. Conversely, at least for federal statutory claims, unemployment compensation proceedings remain separate and distinct from employment law claims. Sid Steinberg is a partner in New Jersey-based Post & Schell, P.C. directors and officers litigation group. He concentrates his national litigation and consulting practice in the field of employment and employee relations law. Steinberg has lectured extensively on all aspects of employment law, including Title VII, the FMLA and the ADA.

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