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Court Rejects Application of Res Judicata and Collateral Estoppel To Retaliation Claim Purportedly Decided By State and Federal Courts

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  • Posted on: Nov 8 2021

By: Jeffrey M. Haber

The doctrines of res judicata and collateral estoppel embody related but distinct concepts. They both stand for the general proposition that a party to a litigation should have only one bite at the apple and should not be permitted to relitigate the same issue over and over again.

Under the doctrine of res judicata, a final judgment on the merits of a claim precludes re-litigation of that claim by a party, and those in privity with that party.1 This means that parties cannot relitigate the claim and all claims arising out of the same transaction, or series of transactions, even if based upon different theories or if seeking different remedies. It is a “transactional analysis” that the courts of New York apply to “preclude the litigation of matters that could have or should have been raised in a prior proceeding arising from the same ‘factual grouping.’”2 Ultimately, the application of res judicata requires the claim sought to be resolved to have been “reasonably and plainly comprehended to be within the scope” of the prior dispute.3

The doctrine of collateral estoppel prevents a party from relitigating an issue that was “raised, necessarily decided and material in the first action,” provided the party had a full and fair opportunity to litigate the issue.4 Collateral estoppel is an equitable defense “grounded in the facts and realities of a particular litigation, rather than rigid rules.”5 The proponent of collateral estoppel has the burden of demonstrating “the identicality and decisiveness of the issue,” while the opponent has the burden of establishing “the absence of a full and fair opportunity to litigate the issue in [the] prior action or proceeding.”6

[Ed. Note: This Blog examined the doctrine of res judicata here.]

These doctrines apply to prior arbitration proceedings,7 as well as prior determinations by state appellate and federal courts.8

In New York, the Civil Practice Law and Rules (“CPLR”) specifically recognizes res judicata and collateral estoppel as bases for dismissal.9 Both concepts are also affirmative defenses under the CPLR.10

Recently, Justice Francis Kahn, III had the opportunity to consider the foregoing principles in Denson v. Donald J. Trump for President, Inc., 2021 N.Y. Slip Op. 32095(U) (Sup. Ct. N.Y. County Oct. 26, 2021) (here).

Plaintiff commenced the action claiming, among other things, that she endured a hostile work environment, experienced sex discrimination, and faced retaliation related to her employment with Defendant, Donald J. Trump for President, Inc., a corporate entity formed to facilitate Donald J. Trump’s 2016 presidential campaign.

Central to the action were the non-disclosure and non-disparagement provisions (“NDAs”) contained within the employment agreement that Plaintiff executed as a condition of her employment. Among other things, these provisions prohibited Plaintiff from disclosing, disseminating, or publishing any confidential information unfavorable to Donald J. Trump, his family, or his businesses. Further, the agreement provided that Plaintiff could not demean or disparage Trump, his family, or his businesses publicly. At the sole election of Defendant, any dispute arising under or relating to the NDAs was to be resolved by binding arbitration.

Defendant filed a demand to arbitrate the issues of whether Plaintiff breached the NDAs and whether it was entitled to an award of damages. Defendant moved to compel arbitration, which Justice Arlene Bluth denied by order dated August 9, 2018. Justice Bluth found that the arbitration provision could not be interpreted to apply to Plaintiff’s affirmative state law claims arising out of her employment.

While the motion was sub judice, Plaintiff commenced another action against Defendant in the United States District Court for the Southern District of New York, where she sought a declaration that the NDAs were void and unenforceable as against public policy. Plaintiff claimed that after she commenced the New York State action, Defendant retaliated against her by bringing an arbitration proceeding in which Defendant sought a determination of its claims that Plaintiff breached the NDAs through disclosure of confidential information and making disparaging statements in connection with the lawsuit.

Defendant moved again to compel arbitration, this time in the SDNY, and to dismiss Plaintiff’s complaint. By order dated August 30, 2018, Judge Jesse M. Furman granted Defendant’s motion finding that the parties had agreed to proceed with binding arbitration and that the validity of the agreement was an issue to be resolved by the arbitrator. Judge Furman found that his determination was not inconsistent with Justice Bluth’s ruling since the federal court claims did not arise out of her employment, but out of the agreement.

After arbitration, at which Plaintiff only tacitly participated, the arbitrator concluded, among other things, that the validity of the NDAs was an issue that was properly before him and found those provisions enforceable. Plaintiff moved to vacate that award, which Justice Bluth denied.11

The Appellate Division, First Department reversed Justice Bluth’s order and vacated the arbitration award holding that it was “partly made in violation of public policy, and otherwise in excess of the arbitrator’s authority.”12

In reaching its conclusion, the First Department reasoned as follows:

By concluding that the allegations in the federal action are tantamount to disclosure of confidential information violative of the NDA, the arbitrator improperly punished plaintiff for availing herself of a judicial forum. Defendant is hard-pressed to explain how plaintiff could have pursued her rights without setting forth necessary factual statements for the federal court to consider.

Thereafter, Plaintiff commenced a class action suit against Defendant in New York State Supreme Court which sought a declaratory judgment on behalf of all persons with an employment agreement with Defendants that the NDA contained therein was void. Plaintiff further sought an injunction prohibiting enforcement of the NDA. That action was removed to federal court. In that action, Judge Paul G. Gardephe denied Defendant’s motion to dismiss and granted Plaintiff’s motion for summary judgment to the extent that the NDAs within the employment agreement was declared invalid and unenforceable as to Plaintiff. Judge Gardephe held that neither the non-disclosure nor the non-disparagement clauses were sufficiently definite to be enforceable. Judge Gardephe declined to “Blue Pencil” or pare down the scope of the NDAs, stating:

Moreover, the Campaign’s past efforts to enforce the non-disclosure and non-disparagement provisions demonstrate that it is not operating in good faith to protect what it has identified as legitimate interests. The evidence before the Court instead demonstrates that the Campaign has repeatedly sought to enforce the non-disclosure and non-disparagement provisions to suppress speech that it finds detrimental to its interests.

While the motion before Judge Gardephe was sub judice, the state court granted Plaintiff’s motion to amend her complaint to include a cause of action for retaliation pursuant to Section 8-107(7) of New York City Human Rights Law based upon Defendant’s action in bringing the arbitration and attempting to enforce the award therein.

Plaintiff moved for summary judgment on her retaliation cause of action on the basis that this claim had been determined as a matter of law in Plaintiff’s favor by the First Department and in the federal court. Justice Kahn denied the motion, holding that the doctrines of res judicata and collateral estoppel did not apply to her claim.

Plaintiff argued that the First Department’s finding that “the arbitrator improperly punished Plaintiff for availing herself of a judicial forum” and Judge Gardephe’s notations that Defendant was “not operating in good faith to protect what it has identified as legitimate interests” and that Defendant “has repeatedly sought to enforce the non-disclosure and non-disparagement provisions to suppress speech that it finds detrimental to its interests” fell squarely within the parameters of the preclusion doctrines at issue. Justice Kahn rejected this argument.

With respect to res judicata, the Court said that “it cannot by any measure be concluded that the substantive issues underlying Plaintiff’s New York City Human Rights Law §8-107[7] were comprehended to be within the scope of either proceeding.”13 To that end, the Court explained that “neither court made a holding that Defendant violated each and every element under that statute.”14 “In vacating the arbitration award,” said the Court, the First Department concluded that “the arbitrator, not Defendant, penalized Plaintiff for the allegations she made in the federal action.”15 Indeed, said the Court, Plaintiff accused Defendant of using “the arbitration proceeding as a litigation tactic,” a factual argument “the Appellate Division expressly eschewed” because it would be “contrary to established law that a strong public policy justifying the vacatur of an arbitration award must be apparent from the face of the award, without extended factual inquiry.”16

As to Judge Gardephe’s holding, the Court noted “that the NDAs were invalid and unenforceable as to Plaintiff because “the NDAs were not sufficiently definite.”17 The Court said that the “comment that Defendant acted in ‘bad faith’ was, at most, dicta.”18

Concerning collateral estoppel, the Court held that “neither the Appellate Division nor Judge Gardephe necessarily decided the issue of retaliation, either in whole or in part, when coming to their conclusions.”19

“In any event,” concluded the Court, “the disparate nature of the prior proceedings and the matter before this Court demonstrates Defendant was not afforded a full and fair opportunity to litigate Plaintiff’s retaliation claim under New York City Human Rights Law §8-107[7].”20

Takeaway

Res judicata and collateral estoppel address preclusion of issues and claims after judgment: res judicata precludes a party from asserting a claim that was litigated in a prior action, while collateral estoppel precludes relitigating an issue decided in a prior action.

In Denson, Plaintiff was unable to demonstrate that the First Department and SDNY decisions precluded Defendants from defending against Plaintiff’s retaliation claim. With respect to res judicata, the substantive issues underlying Plaintiff’s New York City Human Rights Law §8-107[7] were not litigated in the prior state court and federal actions. And, with respect to collateral estoppel, Defendant was not afforded a full and fair opportunity to litigate Plaintiff’s retaliation claim under New York City Human Rights Law §8-107[7] in either court. Thus, the Court denied Plaintiff’s motion.


Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.


1. E.g., O’Brien v. City of Syracuse, 54 N.Y.2d 353,357 (1981).

2. Board of Managers of Windridge Condos. One v. Horn, 234 A.D.2d 249 (2d Dept. 1996).

3. Kim v. NRT New York LLC, _A.D.3d __ , 2021 N.Y. Slip Op. 05291 (1st Dept. 2021).

4. E.g., Parker v. Blauvelt Volunteer Fire Co., 93 N.Y.2d 343, 349 (1999).

5. Buechel v. Bain, 97 N.Y.2d 295, 303 (2001).

6. Ryan v. New York Tel Co., 62 N.Y.2d 494, 501 (1984).

7. Mahler v. Campagna, 60 A.D.3d 1009 (2d Dept. 2009); see also Rembrandt Ind. v. Hodges Intl., 38 N.Y.2d 502, 504 (1976); Lopez v. Parke Rose Mgt. Sys., 138 A.D.2d 575, 577 (2d Dept. 1988)

8. Milone v City University of New York, 153 A.D.3d 807, 808-809 (2d Dept. 2017); see also Emmons v Broome County, 180 A.D.3d 1213 (3d Dept. 2020).

9. See CPLR § 3211(a)(5).

10. See CPLR § 3018(b).

11. Denson v. Donald J Trump for President, Inc., __ Misc. 3d __ , 2019 N.Y. Slip Op. 30611(U) (Sup. Ct. NY County 2019).

12. Denson v. Donald J Trump for President, Inc., 180 A.D.3d 446 (1st Dept. 2020).

13. Slip Op. at *3.

14. Id.

15. Id. at *3-*4.

16. Id. at *4.

17. Id.

18. Id.

19. Id. (citations omitted).

20. Id. (citations omitted).

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