The U.S. Court of Appeals for the Second Circuit recently affirmed the dismissal of a plaintiff’s Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL) overtime pay claims in federal court, after she previously had obtained relief for substantially similar claims in small claims court. Simmons v. Trans Express, Inc., 2021 U.S. App. LEXIS 32032 (2d Cir. Oct. 26, 2021). The Second Circuit has jurisdiction over the federal courts in New York, Connecticut, and Vermont.

The Underlying Lawsuits

Plaintiff Charlene Simmons, a former driver for defendant Trans Express, filed suit against the company in small claims court in Queens, New York, claiming she was entitled to “monies arising out of nonpayment of wages.” The case subsequently was referred to a small claims arbitrator, who awarded the plaintiff $1,020, which the company paid. Shortly thereafter, the plaintiff filed suit in New York federal court, asserting violations of the FLSA and NYLL arising out of the same non-payment of wages, as well as compensation for the company’s failure to provide her with certain notices required by state law. On motion by Trans Express, the district court dismissed the plaintiff’s lawsuit on the basis of res judicata, that is, that her claims were barred by her prior recovery in small claims court.

The Appeal

On appeal to the Second Circuit, the plaintiff contended that New York City Civil Court Act § 1808 prevented any preclusive effect of her small claims award. Section 1808 states:

A judgment obtained under this article shall not be deemed an adjudication of any fact at issue or found therein in any other action or court; except that a subsequent judgment obtained in another action or court involving the same facts, issues and parties shall be reduced by the amount of a judgment awarded under this article.

Given the language of this provision, the Second Circuit certified the question to the New York Court of Appeals (the highest court in New York) of whether Section 1808 bars application of the claim preclusion doctrine (res judicata) to recoveries in small claims court. Answering in the negative, the New York Court of Appeals held that although “‘[S]ection 1808 abrogates . . . the common-law issue preclusive effect of small claims judgments,’ ordinary rules of claim preclusion apply to the judgments of the small claims court.” The Second Circuit then affirmed the dismissal of the plaintiff’s claims.

First, the Court of Appeals rejected the plaintiff’s argument that claim preclusion, as an affirmative defense, cannot form the basis of a dismissal on the pleadings unless all of the elements of the defense are apparent from the face of the pleadings (i.e., the plaintiff’s judicial complaint). On the contrary, the Second Circuit noted, the district court is permitted to consider documents of  which it may take judicial notice, such as the summons and judgment sheet from the plaintiff’s small claims court case. Notably, those documents showed that the plaintiff filed her small claims court case “to recover monies arising out of nonpayment of wages,” and that she was awarded $1,020 for “unpd. OT” which, the Second Circuit added, was “obviously a notation for unpaid overtime.”

Moreover, given that New York applies a “transactional” approach to the claim preclusion doctrine, it was clear that the wage claims plaintiff was asserting in federal court arose out of the same transaction as her small claims court lawsuit, and therefore were barred. The transactional approach provides that “the claim preclusion rule extends beyond attempts to relitigate identical claims . . . [to] all other claims arising out of the same transaction or series of transactions.” Here, the Court of Appeals held that it had “little difficulty concluding” that the federal court claims and small claims court claims were “nearly identical ‘in time, space, origin, [and] motivation.’” The Second Circuit further joined the conclusion of several other circuit courts, that nothing in the FLSA barred the application of the claim preclusion doctrine.