Kremer v. Chemical Construction Corp.
(1982)
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Rule of Law:
Under 28 U.S.C. § 1738, a federal court in a Title VII case must give preclusive effect to a state court judgment that upholds a state administrative agency's rejection of an employment discrimination claim, provided the state proceedings satisfied the minimum procedural requirements of the Due Process Clause.
Facts:
- Rubin Kremer, an engineer of Polish-Jewish origin, was hired by Chemical Construction Corp. (Chemico) in 1973.
- In 1975, Chemico laid off Kremer along with several other employees.
- Chemico later rehired some of the laid-off employees, but did not rehire Kremer despite his several applications.
- Kremer believed his initial discharge and Chemico's subsequent failure to rehire him were motivated by discrimination based on his national origin and Jewish faith.
Procedural Posture:
- Rubin Kremer filed a discrimination charge with the federal Equal Employment Opportunity Commission (EEOC).
- The EEOC referred the charge to the New York State Division of Human Rights (NYHRD) as required by Title VII.
- The NYHRD investigated and determined there was no probable cause to believe Chemico had discriminated against Kremer.
- The NYHRD's Appeal Board upheld this determination.
- Kremer then filed a petition for review in the Appellate Division of the New York Supreme Court, an intermediate state appellate court.
- The Appellate Division unanimously affirmed the administrative decision.
- After the EEOC also issued a no-cause determination and a right-to-sue letter, Kremer filed a Title VII lawsuit against Chemico in the U.S. District Court for the Southern District of New York.
- The District Court, following circuit precedent, dismissed Kremer's complaint on the grounds of res judicata.
- The U.S. Court of Appeals for the Second Circuit affirmed the District Court's dismissal.
- The U.S. Supreme Court granted certiorari.
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Issue:
Does 28 U.S.C. § 1738 require a federal court to give preclusive effect to a state court judgment that upholds a state administrative agency's rejection of an employment discrimination claim, thereby barring a subsequent Title VII lawsuit in federal court?
Opinions:
Majority - Justice White
Yes, 28 U.S.C. § 1738 requires a federal court to give preclusive effect to the state court's judgment. The statute commands federal courts to afford the same full faith and credit to state court judgments that would apply in the state's own courts. An exception to § 1738 requires a clear and manifest congressional intent to create an implied repeal, which is absent in Title VII. The provisions in Title VII requiring deferral to state agencies and directing the EEOC to give 'substantial weight' to state findings apply to administrative proceedings, not to final state court judgments. The legislative history does not indicate any intent to override the traditional principles of comity and repose embodied in § 1738. As long as the state proceedings afford a 'full and fair opportunity' to litigate the issue, satisfying the minimum requirements of due process, the resulting state court judgment is entitled to preclusive effect.
Dissenting - Justice Blackmun
No, the state court judgment should not have preclusive effect. Title VII's structure and legislative history demonstrate Congress's intent to allow a federal trial de novo even after the conclusion of state 'proceedings,' a term that includes judicial review of agency actions. The majority's distinction between administrative and judicial proceedings is artificial; the state court's review was not a de novo trial on the merits but merely a deferential review of whether the agency's decision was arbitrary or capricious. By barring federal claims after such a limited review, the Court effectively grants preclusive effect to the state agency's decision, contrary to congressional intent. This ruling creates a perverse incentive for claimants to bypass state judicial review entirely, undermining the state's role in resolving discrimination claims.
Dissenting - Justice Stevens
No, the state court's judgment should not preclude a federal lawsuit. The key issue is the character of the state judicial review. The New York court did not conduct a de novo trial on the merits of the discrimination claim; it merely held that the agency's decision was not arbitrary or capricious. This establishes only that a rational factfinder could have decided the issue either way. It does not resolve the ultimate issue of discrimination. Therefore, a federal court can accept the New York judgment as settling that limited proposition and still proceed with a de novo trial on the merits of the Title VII claim without violating § 1738.
Analysis:
This decision significantly clarifies the relationship between state and federal forums in Title VII litigation, establishing that res judicata applies to state court judgments reviewing administrative decisions. It creates a critical distinction between unreviewed state administrative findings, which are not preclusive, and state court judgments, which are. The ruling forces potential plaintiffs into a crucial strategic choice: they can either proceed to federal court after an adverse state agency finding, or they can appeal within the state judicial system, thereby risking the forfeiture of their federal claim if the state court affirms the agency's decision. This holding reinforces principles of comity and finality but has been criticized for potentially limiting access to a federal forum for discrimination claims.
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