No res judicata after ADA plaintiff re-files failed state case in federal court

Victims of employment discrimination can bring their claims before the New York State Division of Human Rights, which holds hearings on these claims and issues rulings which State Supreme Court can review. What if you lose your case in State Supreme Court and then bring a discrimination claim in federal court?

Experienced employment lawyers would say that you can't achieve in federal court what failed in state court. But there are some technical exceptions, including one resolved in Hanrahan v. Riverhead Nursing Home, decided on September 25.

Hanrahan filed an administrative charge with SDHR claiming that her employer discriminated because of her disability. The case went to a hearing in SDHR, and she lost, so she appealed to State Supreme Court in Suffolk County, which dismissed the case because Hanrahan did not name SDHR as a defendant to the petition. (It should have been a defendant because SDHR ruled against her at the hearing).

The district court dismissed the federal claim on res judicata grounds. Res judicata is a Latin phrase which generally means, "you brought and lost the same case in one court, so don't try it again in another court." But for res judicata to apply, the case in state court has to be resolved on the merits. Under New York law, nonjoinder of a party who should be joined (such as SDHR in this case) is a ground for dismissal "without prejudice," which means the case can be filed again with the right defendant. That is not a dismissal on the merits. It is a procedural dismissal which does not end the case for good. The Court of Appeals (Parker, Hall and Lynch) concludes that "it is thus clear that the dismissal of Hanrahan's petition for failure to join the NYDHR was not a dismissal on the merits. That dismissal, therefore, does not preclude Hanrahan from filing a new complaint, whether in state or federal court."

This seems clear enough. So why was Hanrahan's federal case dismissed? The district court said that her failure to re-file the petition "in the face of the state court's invitation to correct her error [was] tantamount to abandonment of the state proceeding." While dismissals for failure to prosecute based on failure to amend and re-file a faulty complaint are usually granted after the court instructs the deficient party to do so, that did not happen here, not so far as the Second Circuit can tell. While Hanrahan could have appealed from State Supreme Court's adverse ruling, that would have prompted the Appellate Division to reject the case because she did not serve the Town in a timely manner. That would be a decision on the merits, triggering res judicata. As Hanrahan's lawyer knew better and filed the case in federal court, this procedural bar does not apply, and the case is reinstated.