A worker who missed a six-month window to file a payday claim with the Texas Workforce Commission can’t avail himself of the four-year statute of limitations on pursuing his claim in court. Saleh Igal, who alleges his company still owes him pay from his 2000 termination, is out of luck, according to the Texas Supreme Court.
Previously, the TWC had found that Igal waited too long to file his wage claim but added that Igal could pursue his case in court. Not so, the Supreme Court held on Dec. 7: The TWC decision blocks Igal from litigating his claim in court, despite TWC’s contention that Igal’s suit is not barred.
But, as the Supreme Court noted in its 5-4 decision, if Igal had pulled his claim before the TWC issued its decision, he could still have had his day in court.
The high court’s decision in Igal v. Brightstar Information Technology Group and BRBA addresses a law that is actually meant to help workers. [ See the court's opinion.]
In 1989, the state Legislature amended the Texas Payday Law to create an administrative procedure that workers can use to resolve wage claims “expeditiously and inexpensively,” Justice Dale Wainwright wrote for the majority in Igal.
The amended statute, Texas Labor Code �61.051(a), gives workers the option of filing in court or with the TWC to recover unpaid wages. But workers cannot do both under the statute.
“We hold that when a claimant pursues a wage claim to final adjudication before TWC, res judicata bars the claimant from later filing a lawsuit for the same damages in a Texas court of law,” Wainwright wrote.
Supreme Court Justices Paul Green, Phil Johnson and Don Willett and 2nd Court of Appeals Justice Bob McCoy, sitting by assignment, joined Wainwright in the decision. Justice Nathan Hecht recused himself from the case.
“Essentially, the court affirms the Texas Legislature’s decision to give complainants one bite of the apple,” says Anne Marie Finch, attorney for Brightstar and BRBA.
Finch, a partner in Godwin Pappas Ronquillo in Houston, says Igal chose his forum. “If he had chosen to file in court, he could have gone there,” she says.
But Charles Sartain, Igal’s attorney, says, “It kind of sucks the life out of the law to use a statute that was supposed to help the little guy and turn it into a gotcha.”
The statute of limitations for Igal to file his wage claim in court is four years, says Sartain, a shareholder in Looper Reed & McGraw in Dallas. Sartain says he plans to file a motion for rehearing with the Supreme Court.
The Supreme Court’s majority opinion provides the following factual and procedural background: Igal began working for BRBA in 1989 and executed an employment agreement with the company in April 1998. Brightstar acquired BRBA before the execution of Igal’s employment agreement and assumed BRBA’s obligations under the agreement. Igal alleged that Brightstar terminated his employment without cause on Jan. 19, 2000, and claimed he is owed unpaid wages, bonuses and benefits from May 2000 to January 2001. Brightstar had paid Igal only through April 2000. But Igal did not file his wage claim with TWC until July 17, 2001. After a TWC hearing officer dismissed Igal’s claim, he requested a hearing before a TWC appeals panel, which conducted hearings on the appeal.
TWC issued its decision on Feb. 19, 2002, concluding that Igal’s claim failed on the merits and that TWC lacked jurisdiction, because Igal filed the claim more than 180 days after his wages were due to be paid. TWC notified the parties that the decision would become final 14 days after the commission issued it unless one of the parties filed a motion for rehearing or sought judicial review of the decision.
On Aug. 16, 2002, Igal filed suit for breach of contract and a declaratory judgment against Brightstar and BRBA in the 192nd District Court in Dallas. The trial court granted the defendants’ motion for summary judgment on the ground that TWC’s prior decision barred Igal’s claims. The 11th Court of Appeals in Eastland affirmed the dismissal in 2004.
“The doctrine of res judicata prevents parties and their privies from relitigating a claim with a final adjudication from a competent tribunal,” then-11th Court Chief Justice W.G. “Bud” Arnot wrote for the court of appeals. Justices Terry McCall and Jim Wright, now the court’s chief justice, joined in the decision.
Igal argued in his petition for review to the Supreme Court that the TWC lacked jurisdiction to consider his claim and therefore its decision was void. A void decision could not preclude Igal from pursuing his common-law remedies, according to the brief.
However, the Supreme Court majority interpreted the Legislature’s creation of the 180-day filing limitation period “as a mandatory condition to pursuing the administrative cause of action and not as a bar to TWC’s exercise of jurisdiction.” The TWC had jurisdiction over Igal’s claim, and res judicata prevents Igal from pursuing his wage claim in court, according to the majority opinion.
“To pursue a common law remedy for the same wages as sought in his payday claim, a claimant must withdraw his administrative claim before the agency issues a final decision,” Wainwright wrote.
Michael Abcarian, who represents companies in labor and employment matters but who is not involved in Igal, says an employee who decides to abandon a claim before the TWC issues a decision “never got his bite of the apple, because he never closed his jaws.” But an employee can only ask the legal system for one final decision, says Abcarian, managing partner of the Dallas office of Fisher & Phillips.
Wainwright further noted in the majority opinion that TWC’s order “plainly resolved disputed facts and determined that Igal’s claim for unpaid wages was without merit.”
“I think he had a fair hearing,” says Finch, the defendants’ attorney.
But Sartain, Igal’s attorney, says, “There was never a resolution on the merits of the claim.”
TWC sided with Igal in its amicus curiae brief to the Supreme Court. Res judicata does not apply in Igal’s case because the “TWC was not a court of competent jurisdiction” or, alternatively, because “TWC’s order was not a judgment on the merits but a procedural dismissal for untimeliness,” the commission contended in its brief.
Tom Kelley, spokesman for the Office of the Attorney General, which represents TWC, declines comment. “The brief speaks for itself,” Kelley says.
Justice Scott Brister wrote in a dissenting opinion, “By holding Payday claims dismissed for tardiness cannot be refiled in court, the Court converts a law giving extra options to workers into a trap where they forfeit all their rights.”
Chief Justice Wallace Jefferson and Justices Harriet O’Neill and David Medina joined Brister in the dissent.
Brister noted that five federal appeals courts � the 1st, 2nd, 5th, 7th and 10th circuits � “agree that while dismissals based on limitations are usually preclusive, they are not preclusive when a case is filed in two different systems that apply two different limitations periods.”
But Wainwright wrote for the majority that the 5th U.S. Circuit Court of Appeals has held in cases like Igal that a dismissal on limitations grounds operates to bar subsequent litigation of the same dispute in the same jurisdiction.
Steve Kardell, who represents employees but is not involved in Igal, says the Supreme Court has the ultimate authority to determine what is jurisdictional from an agency standpoint.
Although the TWC tribunal said it did not have jurisdiction over Igal’s claim, “the truth of the matter is it did have jurisdiction,” says Kardell, a partner in Dallas’ Clouse Dunn Khosbin. “The claim just was not timely filed.”
Kardell says the Legislature put the Payday Law in place to give workers an option when they have wage claims. “The trap there is the res judicata side of it,” he says.
“This is what we consider a strict-constructionist case,” Abcarian says of the Supreme Court’s decision in Igal.
Notes Abcarian, “The issue is not what is fair in this situation. The issue is how the Texas statute that was involved is supposed to work.”