The question in this case whether a small claims court judgment has a claim- or issue-preclusive effect on a later case in a different court involving the same parties and issues.
The preclusive effect of a judgment is governed by two related concepts–claim preclusion and issue preclusion. Generally speaking, issue preclusion prevents the relitigation of an issue that was actually litigated and resolved in a prior litigation, whereas claim preclusion prevents a party from raising a claim that was not raised in a prior litigation but could have been.
New York City Civil Court Act § 1808 affects these rules as they apply to judgments issued by the New York City small claims court. Under § 1808, a small claims judgment “shall not be deemed an adjudication of any fact or issue found therein in any other action or court.” At the same time, § 1808 reduces the amount of “a subsequent judgment obtained in another action or court involving the same facts, issues and parties” by the amount of the small claims judgment.
Here, Charlene Simmons worked for Trans Express, a transportation-services company. In August 2018, she sued Trans Express in small claims court in New York City, seeking money for “nonpayment of wages.” The court awarded her a $1,000 judgment in September 2018. Then, in October 2018, Simmons sued Trans Express in federal district court, alleging wage-and-hour claims under the federal Fair Labor Standards Act and New York Labor Law. The district court dismissed the complaint as barred by the doctrine of claim preclusion. Rejecting Simmons’s argument that § 1808 expressly allowed her federal suit, the court held that Simmons’ small claims judgment precluded her from later litigating her state and federal wage-and-hour claims, which she could have brought in her prior case.
On appeal, the Second Circuit certified to the Court of Appeals a question about the preclusive effect of § 1808. The court did so because of a department split over the issue. The Second Department has held that § 1808 allows a plaintiff to litigate in a later case claims arising out of the same facts and against the same parties involved in an earlier small claims judgment. The First and Third Departments, however, have held that small claims judgments are subject to ordinary claim-preclusion rules, and that § 1808 applies only to issue preclusion.
The Court of Appeals accepted the certified question.
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