Rao v. County of Fairfax VA , 108 F.3d 42 ( 1997 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
G.V.V. RAO,
Plaintiff-Appellant,
v.
COUNTY OF FAIRFAX VIRGINIA; IFTIKAR
KHAN, in his individual and official
capacities; RICHARD GOZIKOSKI, in
his individual and official
capacities; JOHN DI ZEREGA, in his
individual and official capacities;
No. 96-1189
ANTHONY GRIFFIN, in his individual
and official capacities; WILLIAM J.
LEIDINGER, in his individual and
official capacities,
Defendants-Appellees,
and
THOMAS M. DAVIS, III, in his
individual and official capacities,
Defendant.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
James C. Cacheris, Chief District Judge.
(CA-95-817-A)
Argued: January 29, 1997
Decided: March 3, 1997
Before HAMILTON, WILLIAMS, and MICHAEL, Circuit Judges.
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Vacated and remanded by published opinion. Judge Hamilton wrote
the opinion, in which Judge Williams and Judge Michael joined.
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COUNSEL
ARGUED: Solaman G. Lippman, Washington, D.C., for Appellant.
Robert Lyndon Howell, Deputy County Attorney, Fairfax, Virginia,
for Appellees. ON BRIEF: Richard H. Semsker, Shannon M. Salb,
Washington, D.C., for Appellant. David P. Bobzien, County Attorney,
Robert M. Ross, Assistant County Attorney, Fairfax, Virginia, for
Appellees.
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OPINION
HAMILTON, Circuit Judge:
The principal issue in this appeal is whether the findings of the
Civil Service Commission of Fairfax County (CSC), which were not
reviewed by a Virginia state court, may be afforded preclusive effect
in a subsequent action under Title VII of the Civil Rights Act of 1964,
42 U.S.C. §§ 2000e to 2000e-5 (1996). The district court held that the
findings of the CSC were entitled to preclusive effect in a subsequent
Title VII action. Because such findings may not be afforded preclu-
sive effect under the Supreme Court's decision in University of Tenn.
v. Elliott, 478 U.S. 788 (1986), we vacate the district court's judgment
and remand for further proceedings consistent with this opinion.
I.
Plaintiff/appellant, G.V.V. Rao, is a United States citizen of Indian
descent who was hired as a civil engineer by the defendant/appellee,
County of Fairfax, Virginia (Fairfax), on January 3, 1989. On May 2,
1989, Rao was dismissed. As a result of that dismissal, Rao filed a
discrimination charge with the Fairfax office of the Equal Employ-
ment Opportunity Commission (EEOC). On July 7, 1989, Rao and
Fairfax entered into a settlement agreement pursuant to which Rao's
2
EEOC discrimination charge was withdrawn and Rao was reinstated
with no loss in position or benefits.
Rao began working for Fairfax again on July 10, 1989. Thereafter,
Rao filed another charge of discrimination, this time with the CSC.
Rao requested the CSC to hold a hearing on his charges of national
origin discrimination and retaliation against Fairfax. In October 1991,
the CSC issued its ruling, concluding that Rao was neither discrimi-
nated against nor retaliated against by Fairfax. The CSC hearing
panel's decision was issued after the CSC held prehearing confer-
ences to define issues, made a record of the evidentiary proceeding
before it, allowed the parties to introduce testimony from witnesses,
subjected those witnesses to cross examination, and made detailed
findings of fact and conclusions based on those findings.1
In June 1993, Rao filed yet another charge of discrimination with
the EEOC, raising claims of national origin discrimination and retalia-
tion. The EEOC determined in August 1993 that Rao was discrimi-
nated against and retaliated against by Fairfax, but Fairfax refused
conciliation. Later, after a protracted disagreement with a supervisor
over a particular sewer project, Rao was suspended in September
1994 and then terminated by Fairfax three months later. Rao filed a
final charge of national origin discrimination and retaliation with the
EEOC in January 1995 as a result of his termination. The EEOC
issued Rao a right to sue letter, and Rao timely brought this action in
the United States District Court for the Eastern District of Virginia.
Rao sued Fairfax, alleging, inter alia, claims of national origin dis-
crimination and retaliation pursuant to Title VII. The district court
granted summary judgment to Fairfax on these claims based on its
conclusion that the 1991 CSC determination that Rao was not dis-
criminated against by Fairfax was entitled to preclusive effect as to
Rao's Title VII claims.2 Rao appeals.
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1 Under Virginia law, the factual findings and decisions of the CSC are
binding in Virginia state courts. See Va. Code Ann. § 15.1-7.2(10)(a)(6)
(Michie 1991).
2 Rao's complaint also alleged claims of national origin discrimination
and retaliation against several individual defendants, violations of 42
3
II.
Our analysis of the preclusive effect of a state administrative or
judicial proceeding on a subsequent federal court action begins with
28 U.S.C. § 1738, which extends to federal courts the principles
embodied in the Full Faith and Credit Clause of the Constitution, U.S.
Const. Art IV, § 1, cl. 1. Section 1738 provides in relevant part:
The records and judicial proceedings of any court of any . . .
State . . . shall have the same full faith and credit in every
court within the United States . . . as they have by law or
usage in the courts of such State . . . from which they are
taken.
According to the Supreme Court, in promulgating§ 1738, Congress
"specifically required all federal courts to give preclusive effect to
state-court judgments whenever the courts of the State from which the
judgments emerged would do so." Allen v. McCurry, 449 U.S. 90, 96
(1980).
In Kremer v. Chem. Constr. Corp., 456 U.S. 461 (1982), the
Supreme Court discussed the relationship between§ 1738 and Title
VII. In that case, Kremer lost his discrimination claim before the state
agency responsible for enforcing New York's anti-discrimination law.
Both an administrative appeal board and the Appellate Division of the
New York Supreme Court affirmed the agency's decision. Kremer
then filed a Title VII action in federal district court. The district court
held that the agency decision should be afforded preclusive effect as
to Kremer's Title VII action. The Second Circuit affirmed. The
Supreme Court agreed that the Title VII claim was barred, rejecting
Kremer's argument that Congress intended Title VII to be exempt
from the requirements of § 1738. The Court noted in a footnote, how-
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U.S.C. § 1983 against Fairfax and several individual defendants, and vio-
lations of state law against certain individual defendants. The district
court granted summary judgment to the defendants on these claims, and
Rao does not attack these rulings on appeal. Accordingly, we review
only the district court's grant of summary judgment to Rao on his
national origin discrimination and retaliation claims against Fairfax.
4
ever, that § 1738 and state rules of preclusion would not apply to "un-
reviewed administrative determinations by state agencies." 456 U.S.
at 470 n.7. The Court reasoned:
EEOC review of discrimination charges previously rejected
by state agencies would be pointless if the federal courts
were bound by such agency decisions. Nor is it plausible to
suggest that Congress intended federal courts to be bound
further by state administrative decisions than by decisions of
the EEOC. Since it is settled that decisions by the EEOC do
not preclude a trial de novo in federal court, it is clear that
unreviewed administrative determinations by state agencies
also should not preclude such review even if such a decision
were to be afforded preclusive effect in a State's own courts.
Id. (citations omitted).
The footnote in Kremer became the holding of the Supreme
Court's decision in Elliott. In Elliott , a black University of Tennessee
employee, threatened with discharge, sought a hearing under the Ten-
nessee Uniform Administrative Procedures Act in much the same way
Rao requested a CSC hearing into his discrimination charges against
Fairfax. See 478 U.S. at 790. Before the hearing was held, however,
Elliott filed suit in the United States District Court for the Western
District of Tennessee alleging that his proposed discharge was
racially motivated and seeking relief under Title VII, § 1983, and
other civil rights statutes. See id.
Following the administrative hearing involving the testimony of
more than 100 witnesses and the presentation of 150 exhibits, a Uni-
versity of Tennessee administrative assistant, acting as an Administra-
tive Law Judge (ALJ) under state law, determined that the University
of Tennessee was not motivated by racial prejudice when it sought to
discharge Elliott. See id. at 791. Elliott did not seek review of the
administrative decision in the Tennessee courts, choosing instead to
pursue his Title VII and civil rights claims in federal court. See id. at
792. In that suit, the University of Tennessee claimed that the ALJ's
ruling was entitled to preclusive effect and moved for summary judg-
ment on the ground that Elliott's suit amounted to an improper collat-
eral attack on the ALJ's ruling. See id. The district court agreed and
5
granted summary judgment to the University of Tennessee. See id.
The Sixth Circuit reversed. As to Elliott's Title VII claim, the Sixth
Circuit concluded that, under Kremer, res judicata did not foreclose
Elliott's Title VII claims because unreviewed administrative determi-
nations by state agencies do not preclude a trial de novo in federal
court on a Title VII claim, even if the adverse administrative decision
is afforded preclusive effect in the state's own courts. See id. at 792-
93. As to Elliott's claims under § 1983 and other civil rights statutes,
the Sixth Circuit concluded that these claims also were not foreclosed
by the unreviewed administrative decision. Id. at 794 (emphasis
added).
In affirming in part and reversing in part, the Supreme Court first
noted that § 1738 applies to state court judgments and not unreviewed
administrative determinations. See id. at 794. Next, the Court consid-
ered whether a federal common-law rule of preclusion would be con-
sistent with Congress' intent in enacting Title VII and the
Reconstruction civil rights statutes. With respect to the claims arising
under the Reconstruction civil rights statutes, the Court held that the
administrative fact-finding could have issue preclusive (collateral
estoppel) effect. See id. at 797 (no language in the Reconstruction
civil rights statutes "`remotely expresses any congressional intent to
contravene the common-law rules of preclusion'" (quoting Allen, 449
U.S. at 97-98)); see also Layne v. Campbell County Dep't of Social
Servs., 939 F.2d 217, 219-21 (4th Cir. 1991) (administrative fact-
finding can have issue preclusive effect on § 1983 claim). However,
the Court reached the opposite conclusion with regard to the Title VII
claim, because "Congress did not intend unreviewed state administra-
tive proceedings to have preclusive effect on Title VII claims."
Elliott, 478 U.S. at 796. The Court found Congressional intent for
such a result in Title VII's direction that the EEOC accord "`substan-
tial weight to final findings and orders made by State and local
authorities in proceedings commenced under State or local [employ-
ment discrimination] law.'" Id. at 795 (quoting 42 U.S.C. § 2000e-
5(b)). The Court reasoned that, through the Congressionally-enacted
"substantial weight" standard, Congress intended something less than
preclusion. Id. ("[I]t would make little sense for Congress to write
such a provision if state agency findings were entitled to preclusive
effect in Title VII actions in federal court.").
6
Following Elliott, circuit courts have uniformly held that unre-
viewed administrative agency findings can never be afforded preclu-
sive effect in a subsequent Title VII action. See Roth v. Koppers
Indus., Inc., 993 F.2d 1058, 1060-63 (3d Cir. 1993); McInnes v.
California, 943 F.2d 1088, 1093-94 (9th Cir. 1991); DeCintio v.
Westchester County Med. Ctr., 821 F.2d 111, 114-15 (2d Cir. 1987);
Duggan v. Board of Educ., 818 F.2d 1291, 1293-95 (7th Cir. 1987);
Abramson v. Council Bluffs Community Sch. Dist., 808 F.2d 1307,
1308-09 (8th Cir. 1987). As the Ninth Circuit explained in McInnes:
The clear teaching of Elliott is that in a Title VII action a
prior state decision enjoys issue preclusive effect only if
rendered or reviewed by a court. Under either of those cir-
cumstances, 28 U.S.C. § 1738 applies by its own terms. In
contrast, unreviewed administrative determinations lack pre-
clusive effect in a subsequent Title VII action, regardless of
any preclusive effect state law might accord to them. Sec-
tion 1738 does not apply to such determinations, and the
Court in Elliott refused to fashion a federal common-law
rule of preclusion in the Title VII context.
943 F.2d at 1093-94.
Under Elliott, the district court's decision in this case cannot stand.
The district court erred because it failed to note that despite the "adju-
dicatory" nature of the CSC hearing, the October 1991 decision
remains, at bottom, an unreviewed state administrative determination
which is not entitled to any preclusive effect in a Title VII case. See
id. at 797.3
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3 Fairfax argues that the CSC hearing panel was an actual court. This
argument is without merit. When deciding whether a state hearing panel
constitutes an actual court, we must engage in a two-step process. First,
we look to state law to see what powers the Commonwealth vests in the
CSC hearing panel. See Kremer, 456 U.S. at 466-67. Second, we look to
federal law to determine whether the CSC hearing panel constitutes a
"court" within the meaning of § 1738. See Adam v. Saenger, 303 U.S. 59,
64 (1938). The CSC certainly enjoys adjudicatory-type powers. For
example, it can conduct hearings, make evidentiary rulings, apply the
law, and a Virginia trial court can enforce its decisions. See Va. Code
7
Absent the district court's erroneous reliance on the 1991 CSC
decision for preclusive effect on Rao's Title VII claims against Fair-
fax, there is no proper legal conclusion contained in the district
court's order upon which Fairfax could be granted summary judg-
ment. Thus, the record in this case is not subject to meaningful appel-
late review, and any appellate review of the merits of Rao's claims
would be improvident at this time. Under the circumstances, it is
more appropriate to vacate the district court's judgment granting sum-
mary judgment to Fairfax and remand the case to the district court
with instructions to address the merits of Rao's Title VII discrimina-
tion and retaliation claims against Fairfax.
III.
For the reasons stated, the judgment of the district court is vacated
and the case is remanded for further proceedings consistent with this
opinion.
VACATED AND REMANDED FOR FURTHER PROCEEDINGS
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Ann. § 15.1-7.2. However, those adjudicatory provisions do not render
the CSC hearing panel an actual court. First, a county grievance panel is
provided for separately from the section of the Virginia Code defining
the role of its courts. See Va. Code Ann.§§ 16.1-69.1 to 17-237. Second,
the terminology used by the Virginia Code is quite instructive; it uses the
term "panel hearing" to describe the process undertaken by the CSC but
later mentions that "[e]ither party may petition the [local] circuit court"
for enforcement of the CSC decision. See Va. Code Ann. 15.1-
7.3(A)(11) (emphasis added). Moreover, the powers enjoyed by the CSC
are certainly no greater than those possessed by the state agency at issue
in Kremer, nor the ALJ in Elliott. Accordingly, the CSC hearing panel
is not a "court" within the meaning of § 1738.
8