Herrera v. Churchill McGee, LLC

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 12a0137p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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GUILLERMO HERRERA,

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Plaintiff-Appellant,

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No. 10-5421

v.

,

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CHURCHILL MCGEE, LLC, NATHAN

Defendants-Appellees. -

CHURCHILL, and PATRICK MCGEE,

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Appeal from the United States District Court

for the Eastern District of Kentucky at Lexington.

No. 09-00072—Karl S. Forester, District Judge.

Argued: July 21, 2011

Decided and Filed: May 16, 2012

Before: MOORE and KETHLEDGE, Circuit Judges; MARBLEY, District Judge.*

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COUNSEL

ARGUED: Michael J. O’Hara, O’HARA, RUBERG, TAYLOR, SLOAN &

SERGENT, Covington, Kentucky, for Appellant. Mason L. Miller, MILLER WELLS,

PLLC, Lexington, Kentucky, for Appellees. ON BRIEF: Michael J. O’Hara, Roula

Allouch, O’HARA, RUBERG, TAYLOR, SLOAN & SERGENT, Covington, Kentucky,

Cori Hash, KENTUCKY EQUAL JUSTICE CENTER, Lexington, Kentucky, for

Appellant. Mason L. Miller, Will E. Messer, MILLER WELLS, PLLC, Lexington,

Kentucky, for Appellees.

*

The Honorable Algenon L. Marbley, United States District Judge for the Southern District of

Ohio, sitting by designation.

1

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 2

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OPINION

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KAREN NELSON MOORE, Circuit Judge. Guillermo Herrera filed this lawsuit

against his former employer, Churchill McGee, LLC, and its two owners (collectively,

“Churchill McGee”), alleging discrimination and retaliation under state and federal law.

The district court dismissed Herrera’s claims on the ground that Herrera had previously

filed an administrative complaint alleging discrimination with a county human rights

commission, and the commission found no probable cause to believe that any violation

of state anti-discrimination laws had occurred. The district court ruled that the

administrative decision had the effect of barring Herrera’s state-law claims under

election-of-remedies principles and his federal-law claims under the doctrine of

administrative preclusion. We AFFIRM the dismissal of Herrera’s state-law claims and

federal-law discrimination claim. Because the county agency did not adjudicate

Herrera’s federal retaliation claim, however, we REVERSE the grant of summary

judgment as to Herrera’s federal retaliation claim.

I. BACKGROUND

Guillermo Herrera was hired by the Churchill McGee construction company in

June 2003 and worked as a laborer until he was fired on March 24, 2008. In Herrera’s

termination letter, Patrick McGee stated that Herrera was being fired “due to

unsatisfactory attendance and incarceration in jail following conviction of a

misdemeanor or felony by a court of competent jurisdiction, which results in missing at

least five (5) days work.” R.25-3 (Termination Letter). After his termination, Herrera

filed a complaint with the Lexington-Fayette Urban County Human Rights Commission

(“Fayette HRC” or “HRC”) on April 4, 2008, in which he alleged that Churchill McGee

both garnished his wages improperly and fired him on account of his race and national

origin. Herrera is a Cuban of African ancestry and he alleged that white, non-Cuban

employees of Churchill McGee received more favorable treatment.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 3

On July 21, 2008, Emily Williams, an investigator with the Fayette HRC, sent

Herrera a letter in which she said that she had completed her investigation and “found

insufficient evidence to support [his] allegations.” R.10-3 at 1 (July 21, 2008 Letter).

Specifically, she found that

Churchill McGee, LLC has treated other employees in the same or

similar manner with regards to terminations, cell phone bill charges, and

absences. The investigation reveals that they have . . . terminated black,

white, and Latino employees for the same or similar reasons that you

were terminated.

Id. She stated that her findings were not a final decision on Herrera’s claims and that he

could provide more information to her if he wished:

If you have any additional information you would like me to consider,

please contact me within the next five (5) days. If I do not hear from

you, I will submit my recommendation to the Executive Director for his

review and he will make the final determination with regards to your

charge.

Id. Finally, she advised Herrera to speak with his “own legal counsel” if he had any

questions “regarding the procedures or information in this letter.” Id. at 2.

Herrera did go to see Williams within the next five days, but she told him that the

decision was already in the hands of the Executive Director of the Fayette HRC.

Williams then took Herrera to speak with HRC Executive Director William Wharton,

who told Herrera that he would review Williams’s investigation and issue a decision.

Wharton also advised Herrera that Herrera’s only option available at that time would be

to speak with an attorney about carrying his case forward.

On July 31, 2008, the Executive Director issued his decision, in which he

dismissed Herrera’s complaint for the following reason:

Based upon the investigation conducted, we are unable to conclude that

the information obtained establishes violation(s) of the statutes. This

does not certify that the Respondent is in compliance with the statutes.

No finding is made as to any other issues that might be construed as

having been raised by this charge.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 4

R.10-4 (Fayette HRC Dismissal). This decision also notified Herrera of his right to

apply for reconsideration, and it stated that if Herrera did not seek reconsideration within

twenty days, “an Order of Dismissal shall be issued.” Id. Herrera did not seek

reconsideration, and twenty-one days later, an Order of Dismissal was entered, in which

the Executive Director noted that no probable cause had been found. At the bottom of

the Order is a paragraph giving Herrera notice of some of the implications of the Order.

In particular, it states that, “This is a notice that if the Charging Party so chooses to

pursue this matter further by filing a private court action, the Commission requests that

you send a copy of the Court complaint to this office within ten (10) days of filing. The

file will then be preserved.” R.10-5 (Order of Dismissal).

On March 4, 2009, Herrera filed this complaint against Churchill McGee and its

owners, Nathan Churchill and Patrick McGee. The complaint lists seven counts against

the defendants, only the first two of which are relevant to this appeal. Both counts are

for discrimination and retaliation, but Count One is based on 42 U.S.C. § 1981, and

Count Two is based on the Kentucky Civil Rights Act (“KCRA”), KY. REV. STAT. ANN.

§ 344.450.1

Churchill McGee filed a motion for partial judgment on the pleadings in July

2009, seeking dismissal of Count Two. The district court granted the motion and

dismissed this count on October 26, 2009, on the ground that the KCRA claim in Count

Two was barred by the KCRA’s election-of-remedies provision, KY. REV. STAT. ANN.

§ 344.270. Section 344.270 provides, in full, as follows:

The provisions of KRS 13B.140 notwithstanding, commission shall not

take jurisdiction over any claim of an unlawful practice under this

chapter while a claim of the same person seeking relief for the same

grievance under KRS 344.450 is pending. A state court shall not take

jurisdiction over any claim of an unlawful practice under this chapter

while a claim of the same person seeking relief for the same grievance is

pending before the commission. A final determination by a state court

or a final order of the commission of a claim alleging an unlawful

1

Section 344.450 provides, in relevant part: “Any person injured by any act in violation of the

provisions of this chapter shall have a civil cause of action in Circuit Court to enjoin further violations, and

to recover the actual damages sustained, together with the costs of the law suit.”

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 5

practice under KRS 344.450 shall exclude any other administrative

action or proceeding brought in accordance with KRS Chapter 13B by

the same person based on the same grievance.

KY. REV. STAT. ANN. § 344.270. Because his complaint with the Fayette HRC was not

pending at the time Herrera brought this suit, only the final sentence of § 344.270 is

relevant. According to the district court, § 344.270 bars individuals from bringing a

civil-rights lawsuit after unsuccessfully seeking relief on the same claims from an

administrative civil-rights commission in Kentucky, meaning that Herrera’s unsuccessful

complaint with the Fayette HRC barred him from bringing the KCRA claim in Count

Two.

A few months later, in March 2010, the parties filed cross-motions for summary

judgment. The district court granted Churchill McGee’s motion on April 13, 2010, and

dismissed the case. The court dismissed Count One for reasons somewhat similar to

Count Two; it held that the doctrine of administrative preclusion barred relitigation of

the federal § 1981 discrimination and retaliation claims because the Fayette HRC had

already considered and rejected Herrera’s administrative complaint, which was based

on essentially the same claims. Herrera filed a timely notice of appeal from the district

court’s orders on the motions for partial judgment on the pleadings and summary

judgment.

II. ANALYSIS

We review de novo a district court’s grant of both judgment on the pleadings and

summary judgment. Poplar Creek Dev. Co. v. Chesapeake Appalachia, L.L.C., 636 F.3d

235, 240 (6th Cir. 2011); Stansberry v. Air Wis. Airlines Corp., 651 F.3d 482, 486 (6th

Cir. 2011).

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 6

A. Herrera’s Kentucky Civil Rights Act Claim

Herrera contends that the district court erred in holding that Kentucky Revised

Statute § 344.270 barred him from bringing his KCRA claim under § 344.450, arguing

that the Order of Dismissal from the Fayette HRC was not a final order.

In interpreting state law, “we apply the law of the state’s highest court,” and

when the state’s highest court has not ruled on an issue, we “must ascertain the state law

from all relevant data, including the state’s intermediate court decisions.” Ellis ex rel.

Pendergrass v. Cleveland Mun. Sch. Dist., 455 F.3d 690, 697–98 (6th Cir. 2006)

(internal quotation marks omitted). Intermediate appellate decisions “are accorded

weight, although a federal court is not bound by lower court determinations if convinced

by other data that the state’s highest court would determine otherwise.” Bailey v. V & O

Press Co., 770 F.2d 601, 604 (6th Cir. 1985).

Kentucky courts have consistently treated Orders of Dismissal based on lack of

probable cause as final orders that trigger the election-of-remedies bar of § 344.270. See

Vaezkoroni v. Domino’s Pizza, Inc., 914 S.W.2d 341, 341–42 (Ky. 1995); Burton v. Ky.

State Police, 341 S.W.3d 589, 592–93 (Ky. Ct. App. 2011); Grisby v. UPS Ground

Freight, Inc., No. 2007-CA-002401-MR, 2009 WL 1636293, at *1, 4–5 (Ky. Ct. App.

June 12, 2009); accord Young v. Sabbatine, No. 97-5169, 1998 WL 136559, at *1, 4 (6th

Cir. Mar. 19, 1998) (unpublished opinion). In Vaezkoroni, Burton, and Grisby, the

plaintiffs were barred from bringing KCRA claims in court after their complaints with

the state or county human rights commission were dismissed based on a finding of “no

probable cause.”

In Vaezkoroni, the Supreme Court of Kentucky described as “well settled” the

notion that the KCRA “‘provides alternative sources of relief, one administrative and

one judicial.’” 914 S.W.2d at 342 (quoting Meyers v. Chapman Printing Co., 840

S.W.2d 814, 820 (Ky. 1992)). Moreover, the court stated that it would be “absurd” to

assume that an individual could pursue a charge with the state or local commission and

then, if that was unsuccessful, file a separate lawsuit in the courts. Id. In addition, the

court held that a decision by a local commission, such as the Fayette HRC, should have

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 7

the same preclusive effect as a decision by the Kentucky Commission on Human Rights.

Id. A contrary holding, “[t]aken to its logical extreme, . . . would offer an individual the

option of proceeding before a local commission, then before the circuit court and finally

before the Ky. Commission. This is not the case.” Id.

Herrera has not provided any caselaw to the contrary. He correctly notes that

subsequent cases have narrowed the holding in Vaezkoroni, but only by identifying as

dicta the language in that opinion suggesting that the mere filing of a complaint with the

human rights commission would bar a subsequent KCRA suit on election-of-remedies

ground. See Brown v. Diversified Decorative Plastics, LLC, 103 S.W.3d 108, 110–13

(Ky. Ct. App. 2003) (en banc). These cases clarify that § 344.270 does not bar an

individual who files a complaint with a human rights commission, but later withdraws

that complaint before the commission issues a final order, from filing suit under the

KCRA in court. Id.; Wilson v. Lowe’s Home Ctr., 75 S.W.3d 229, 236 (Ky. Ct. App.

2001). Because Herrera did not withdraw his HRC complaint prior to the issuance of

the Order of Dismissal, Brown and Wilson have no bearing on this case.2

Although neither party raised the issue, we note that the statutory language is

now somewhat ambiguous as to whether a final order of a human rights commission will

bar subsequent judicial proceedings or just further administrative proceedings. The

election-of-remedies provision states that:

A final determination by a state court or a final order of the commission

of a claim alleging an unlawful practice under KRS 344.450 shall

exclude any other administrative action or proceeding brought in

accordance with KRS Chapter 13B by the same person based on the

same grievance.

2

Herrera also points to Clifton v. Midway College, 702 S.W.2d 835 (Ky. 1985), but that case is

likewise inapposite. The Clifton court expressed sympathy for the plaintiff, whose complaint had been

traded back and forth between the Kentucky Human Rights Commission and the federal EEOC, as “the

victim of a bureaucratic shuffle without the benefit of any kind of evidentiary hearing on the merits of her

charges,” but the decision that election of remedies did not bar her KCRA suit hinged on the fact that the

state agency “[n]ever issued any order relating to the claim of discrimination.” Id. at 837; see also Brown,

103 S.W.3d at 114 (describing Clifton). Herrera argues that an Order of Dismissal is not a final order for

§ 344.270 purposes, but, as described above, Kentucky courts have consistently held that it is.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 8

KY. REV. STAT. ANN. § 344.270.3 Prior to 1996, by contrast, the provision read:

A final determination by a state court or the commission of a claim

alleging an unlawful practice under KRS 344.450 shall exclude any other

action or proceeding brought by the same person based on the same

grievance.

KY. REV. STAT. ANN. § 344.270 (1984), amended by KY. REV. STAT. ANN. § 344.270

(1996).

The Supreme Court of Kentucky has not interpreted § 344.270 since the 1996

amendment; the last case that court decided involving § 344.270 was Vaezkoroni in

1995. As described above, it appears that post-1996 decisions of the Kentucky

intermediate appellate courts have consistently applied the rule that a final order from

a human rights commission bars subsequent judicial proceedings based on the same

grievance. Burton, 341 S.W.3d at 592–93; Grisby, 2009 WL 1636293, at *4–5; see also

McKissic v. Commonwealth of Ky. Transp. Cabinet, 334 S.W.3d 885, 890 (Ky. Ct. App.

2010) (KCRA suit barred after plaintiff raised the same claims in proceedings before the

state Personnel Board).4

We therefore view these intermediate-appellate-court cases as “relevant data” in

predicting how the Supreme Court of Kentucky would rule on the issue of whether this

suit is barred. Ellis, 455 F.3d at 697–98. We believe that the Supreme Court of

Kentucky would hold that, where an individual receives an Order of Dismissal from a

civil rights commission—whether state or local—and the individual does not seek

further relief in the manner prescribed by the commission, but rather files a KCRA

lawsuit in court based on the same claim, the election-of-remedies doctrine bars the

subsequent lawsuit. We therefore affirm the district court’s grant of partial judgment on

the pleadings with respect to Count Two, the KCRA claim.5

3

KRS Chapter 13B governs administrative hearings. See KY. REV. STAT. ANN. § 13B.005 et seq.

4

The Supreme Court of Kentucky denied discretionary review in Grisby and McKissic.

5

Although it does not affect our conclusion, we note that the Order of Dismissal’s reference to

a subsequent private court action, see R.10-5 (“[I]f the Charging Party so chooses to pursue this matter

further by filing a private court action, the Commission requests that you send a copy of the Court

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 9

B. Herrera’s § 1981 Claims

Herrera next argues that the district court erroneously applied administrative

preclusion to dismiss Count One, his federal claims under § 1981. As an initial matter,

he contends that Churchill McGee waived the affirmative defense of administrative

preclusion by failing to raise it in a timely manner before the district court.

Alternatively, Herrera argues that the requirements for administrative preclusion were

not met as to his race-discrimination claim and that preclusion does not apply to his

retaliation claim because he did not present that claim to the Fayette HRC.

1. Waiver

Herrera first argues that Churchill McGee waived the affirmative defense of

administrative preclusion because it first raised that defense in its response to Herrera’s

motion for summary judgment, which was filed after the close of discovery. Herrera

contends that he suffered prejudice from this delay by losing out on the opportunity to

conduct discovery on the HRC’s investigation and by being forced to address the issue

within the limits of a reply brief.

Herrera is incorrect. Churchill McGee raised the affirmative defense of collateral

estoppel in its Answer. See R.3 at 5, ¶ 38 (“Herrera’s claims are barred by the doctrines

of res judicata, collateral estoppel, detrimental reliance, waiver, and estoppel.”).

Moreover, Herrera has not shown any prejudice from Churchill McGee’s decision to

address the defense in its response brief. See Smith v. Sushka, 117 F.3d 965, 969 (6th

Cir. 1997) (holding that the defendant’s failure to plead an affirmative defense did not

constitute waiver when the failure “did not result in surprise or unfair prejudice to [the

plaintiff]”). Herrera was on notice that Churchill McGee considered the HRC

proceedings relevant to its defense, because Churchill McGee had already successfully

argued that the HRC’s Order of Dismissal barred Herrera’s KCRA claim on election-of-

remedies grounds. With this notice, Herrera could have conducted any necessary

complaint to this office within ten (10) days of filing.”), strikes us as unnecessarily confusing, especially

for a pro se complainant. If that sentence is meant to refer to seeking judicial review of the agency’s

decision, as the district court characterized it, it could certainly do so more clearly.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 10

discovery regarding the HRC proceedings prior to the close of discovery and the

deadline for filing dispositive motions. In addition, Herrera had an opportunity fully to

brief the preclusion issue on appeal.6 Accordingly, under these circumstances, Churchill

McGee did not waive its preclusion defense.

2. Herrera’s Race-Discrimination Claim

State administrative decisions are given preclusive effect with respect to issues

later raised in a federal-court lawsuit “‘[w]hen an administrative agency is acting in a

judicial capacity and resolves disputed issues of fact properly before it which the parties

have had an adequate opportunity to litigate.’” Univ. of Tenn. v. Elliott, 478 U.S. 788,

797–98 (1986) (quoting United States v. Utah Constr. & Mining Co., 384 U.S. 394,

421–22 (1966)). In such circumstances, “federal courts must give the agency’s

factfinding the same preclusive effect to which it would be entitled in the State’s courts.”

Id. at 799; see also Cockrel v. Shelby Cnty. Sch. Dist., 270 F.3d 1036, 1046 (6th Cir.

2001) (“[F]ederal courts must give the factual findings of a state agency that is acting

in a judicial capacity preclusive effect if such findings would have preclusive effect in

the State’s courts.”). Administrative preclusion “is favored as a matter of general

policy,” but “its suitability may vary according to . . . the relative adequacy of agency

procedures.” Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104, 109–10 (1991).

Herrera argues both that the Fayette HRC was not acting “in a judicial capacity” and that

he did not have “an adequate opportunity to litigate” his discrimination claim.

At the outset, we note that “[i]t is difficult to state a general formula to capture

the essential elements of adjudicatory procedure that may entitle administrative decisions

to preclusion effects in subsequent judicial proceedings.” 18B WRIGHT & MILLER,

FEDERAL PRACTICE AND PROCEDURE § 4475, at 483 (2d ed. 2002). Likewise, a full and

fair opportunity to litigate does not require any “single model of procedural fairness, let

6

Because we find no unfair prejudice, we need not address the sufficiency under Federal Rule

of Civil Procedure 8(c) of Churchill McGee’s rather barebones pleading of the affirmative defense of

preclusion. We therefore have no occasion to address, and express no view regarding, the impact of Bell

Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), on

affirmative defenses.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 11

alone a particular form of procedure.” Kremer v. Chem. Constr. Corp., 456 U.S. 461,

483 (1982). After examining the particular circumstances of this case, we agree with

Churchill McGee that the requirements of Elliott have been met.

We have held that “[a]n administrative board acts in a judicial capacity when it

hears evidence, gives the parties an opportunity to brief and argue their versions of the

facts, and the parties are given an opportunity to seek court review of any adverse

findings.” Nelson v. Jefferson County, 863 F.2d 18, 19 (6th Cir. 1988). As described

in more detail below, Herrera had the opportunity to present evidence and could seek

judicial review of the administrative decision. Although the Fayette HRC does not

appear to have requested formal briefing, Herrera had the opportunity to present his

charges against Churchill McGee and to communicate with the HRC investigator

throughout the process.

We also take some guidance on this issue from Kremer, in which the Supreme

Court considered a Title VII employment-discrimination suit brought after the plaintiff

had sought relief with the New York State Division of Human Rights (“NYHRD”).

456 U.S. at 463–64. Without conducting a hearing, the NYHRD issued a no-probable-

cause finding, which was affirmed first in an administrative appeal and again by an

intermediate appellate court. Id. at 464. Kremer could have obtained—but did not

seek—review by the New York Court of Appeals. Id.

Considering the NYHRD procedures for discrimination claims, the Supreme

Court rejected Kremer’s argument “that the New York administrative and judicial

proceedings in this case were so deficient that they are not entitled to preclusive effect

in federal courts.” Id. at 467. In New York:

Before th[e] determination of probable cause is made, the claimant is

entitled to a full opportunity to present on the record, though informally,

his charges against his employer or other respondent, including the right

to submit all exhibits which he wishes to present and testimony of

witnesses in addition to his own testimony. The complainant also is

entitled to an opportunity to rebut evidence submitted by or obtained

from the respondent. He may have an attorney assist him and may ask

the division to issue subpoenas.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 12

Id. at 483 (internal quotation marks and citations omitted). In the end, the Court had “no

hesitation in concluding that this panoply of procedures, complemented by

administrative as well as judicial review” provided the complainant with a full and fair

opportunity to litigate his discrimination claims. Id. at 484.7

In Kentucky, a complainant presents his or her charges against the employer to

the Fayette HRC in “[a] short, plain and concise statement.” R.27-11 at 5 (Fayette HRC

Rules, § 2.010). Next, “the Respondent shall file with the Commission a verified

statement of position or evidence with respect to each and every allegation of the

complaint.” Id. at 6 (Id. § 2.020). The HRC investigator is then required to “make a

prompt and thorough investigation of the allegations of the Complaint.” Id. at 7 (Id.

§ 2.030).

A Fayette HRC investigator has the authority to require all parties to attend a

Fact-Finding Conference, “for the purposes of: 1. Identifying the issues in dispute;

2. Ascertaining the positions of the parties; 3. Resolving those issues that can be

resolved; 4. Obtaining evidence; and 5. Determining the likelihood of a predetermination

settlement.” Id. Further, the investigator can “request access to premises, records, and

documents relevant to investigation of the Complaint,” and, if that request is denied, can

obtain a subpoena. Id. The investigator can also interview witnesses outside of a formal

Fact-Finding Conference.

If the HRC determines after an investigation that no probable cause exists to

support the claim of discrimination, it will dismiss the complaint. Beyond the

investigation and probable-cause determination, HRC procedures allow for an

unsuccessful complainant to request reconsideration by the HRC’s Executive Director

and to seek review by the Kentucky courts. See id. at 12–13 (Fayette HRC Rules,

7

We note that Kremer is not directly on point because the NYHRD’s no-probable-cause finding

was reviewed and affirmed in state court. See Kosakow v. New Rochelle Radiology Assocs., P.C., 274 F.3d

706, 727–28 (2d Cir. 2001) (emphasizing this element of Kremer and distinguishing it from cases

involving the preclusive effect of unreviewed administrative decisions). In such circumstances, the source

of any preclusive effect is the Full Faith and Credit statute, 28 U.S.C. § 1738. Kremer, 456 U.S. at

466–68, 481–82. The preclusive effect of unreviewed administrative decisions, by contrast, stems from

common-law preclusion principles. Elliott, 478 U.S. at 796–97. Nonetheless, much of the Court’s analysis

in Kremer focused on the adequacy of the administrative procedures.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 13

§§ 2.050(I), 2.060); KY. REV. STAT. ANN. § 344.240. Upon reconsideration by the

Executive Director, the complainant can introduce new evidence. R.27-11 at 12–13

(Fayette HRC Rules, § 2.050(I)).

Based on the available procedures, the HRC rules appear to have provided

Herrera with a similar ability to present his claims and any supporting evidence as

Kremer had in New York. As in Kremer, Herrera had an “opportunity to present on the

record, though informally, his charges against his employer.” 456 U.S. at 483. Herrera

could submit evidence in support of his claim and, because the Fayette HRC rules do not

contain a deadline for the submission of evidence, seemingly could have responded to

any evidence submitted by or obtained from Churchill McGee with additional evidence

of his own. The Fayette HRC can obtain subpoenas, though it is not clear whether

Herrera could have asked the investigator to do so. Herrera could seek assistance from

an attorney. Administrative reconsideration and judicial review are available.

Indeed, in Herrera’s case, the Fayette HRC investigator informed him multiple

times that he could submit evidence in support of his claims. The investigator also

interviewed one of Herrera’s former co-workers at Herrera’s request. Insofar as Herrera

complains about not being able to present additional evidence to the investigator (even

though the investigator’s July 21, 2008, letter stated that she would accept more

evidence), Herrera could have argued this point on reconsideration or before a court on

appellate review of the HRC’s decision. Both the investigator and the Executive

Director advised Herrera that he might wish to consult an attorney.

Herrera makes much of the fact that the Fayette HRC did not hold a hearing

before dismissing his complaint for lack of probable cause. Although many of the

administrative-preclusion cases Herrera cites involved a formal hearing before the

agency, we have never held that such a hearing is a precondition to administrative

preclusion. Under the Fayette HRC rules, the agency will hold a hearing only after it has

determined that probable cause supports the complainant’s claim of discrimination.

R.27-11 at 18 (Fayette HRC Rules, § 2.100). If administrative preclusion applied only

to lawsuits filed by those individuals who had a hearing before the Fayette HRC, then

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 14

some individuals who brought claims to the HRC would be precluded from filing a

subsequent lawsuit in federal court, but others would not, depending upon the outcome

of the administrative proceeding. Moreover, Herrera’s position would lead to the

dubious result that a complainant with a weaker case (i.e., whose claim was dismissed

without a hearing for lack of probable cause) would be in a more favorable position with

respect to preclusion than a complainant with a stronger case (i.e., whose claim was

supported by probable cause and thus merited a hearing).

In addition, the Fayette HRC’s purpose is to resolve discrimination claims, the

same purpose served by a § 1981 suit in federal court. We have declined to apply

administrative preclusion when the agency proceedings served a more limited purpose

than the subsequent lawsuit. In Hicks v. Floyd County Board of Education, for example,

we held that a decision by a state unemployment insurance commission that the

employer had unfairly forced the employee to leave did not bar a subsequent sex-

discrimination lawsuit under § 1983. 99 F. App’x 603, 604–05 (6th Cir. 2004)

(unpublished opinion). Affording preclusive effect to such determinations would

undermine the purposes of unemployment-compensation hearings; the heightened stakes

could “turn[] an unemployment hearing into a forum for thorough exploration of

[discrimination] issues” and thus “defeat the purpose of providing fast, cheap resolution

of unemployment claims.” Id. at 605 (citing Berrier v. Bizer, 57 S.W.3d 271, 281 (Ky.

2001)). No such risk exists in the Fayette HRC context, because both parties already

have an incentive to pursue the central issue—employment discrimination—vigorously.

Although it is somewhat of a close call, we are ultimately convinced that the

Fayette HRC was acting “in a judicial capacity” and that “the parties have had an

adequate opportunity to litigate” the issues contained in Herrera’s § 1981 race-

discrimination claim. Elliott, 478 U.S. at 797–98 (quoting Utah Constr. & Mining Co.,

384 U.S. at 421–22). The fact that the HRC’s Order of Dismissal for lack of probable

cause received neither administrative reconsideration nor judicial review does not

change this conclusion, because both options were available. Herrera’s “fail[ure] to

avail himself of the full procedures provided by state law does not constitute a sign of

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 15

their inadequacy.” Kremer, 456 U.S. at 485; see also Chapman v. Farris, No. 2002-CA-

000573-MR, 2004 WL 1367117, at *3 (Ky. Ct. App. June 18, 2004) (“That [plaintiff]

did not utilize the opportunities afforded him under KRS Chapter 13B in the

administrative proceedings . . . cannot be used in his favor to relitigate the same issue

in the circuit court.”).

Finally, the Fayette HRC’s decision would receive preclusive effect in Kentucky

courts. As detailed above, a final determination from the Fayette HRC would bar a

subsequent KCRA lawsuit on election-of-remedies grounds. In addition, Kentucky

courts would give preclusive effect to the agency’s decision on traditional issue-

preclusion grounds. Kentucky courts preclude litigation of an issue in a subsequent

proceeding if that same issue was actually litigated, actually decided, and necessary to

the judgment in a prior proceeding. Yeoman v. Ky. Health Policy Bd., 983 S.W.2d 459,

465 (Ky. 1998). As in federal court, “[d]ecisions of administrative agencies acting in

a judicial capacity are entitled to the same res judicata effect as judgments of a court.”

Ky. Bar Ass’n v. Harris, 269 S.W.3d 414, 418 (Ky. 2008) (citing Godbey v. Univ. Hosp.

of the Albert B. Chandler Med. Ctr., Inc., 975 S.W.2d 104, 105 (Ky. Ct. App. 1998)).

Herrera’s § 1981 race-discrimination claim is based on the same premise as his

claim before the Fayette HRC—that he was treated differently than similarly situated

employees of a different race and national origin. The issue of disparate treatment was

actually litigated and actually decided by the HRC and was necessary to the HRC’s

determination that no probable cause existed to support Herrera’s KCRA claim. The

investigator found that “other employees [at Churchill McGee] have experienced the

same treatment regardless of their race or national origin.” R.10-3 at 1 (July 21, 2008

Letter). Accordingly, Herrera is precluded from arguing in his § 1981 suit the same

issue, i.e., that he was treated less favorably in the terms and conditions of employment

than similarly situated employees outside of his protected class.8

8

Herrera notes that his administrative complaint did not include claims against Defendants

Churchill and McGee, the owners of Churchill McGee, as individuals. Kentucky courts, however, apply

issue preclusion “when at least the party to be bound is the same party in the prior action.” Moore v.

Commonwealth, 954 S.W.2d 317, 319 (Ky. 1997). Because Herrera is the “party to be bound” and was

a party to the HRC proceedings, Churchill and McGee can assert non-mutual issue preclusion as a defense.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 16

Because the administrative decision here would receive preclusive effect in

Kentucky courts, the final requirement of Elliott is satisfied. The district court was

therefore correct in holding that the doctrine of administrative preclusion bars Herrera’s

§ 1981 race-discrimination claim in Count One, and we affirm its grant of summary

judgment as to that claim.

3. Herrera’s Retaliation Claim

Herrera contends that, even if administrative preclusion bars his race-

discrimination claim, his federal retaliation claim is not barred because he never

presented that claim to the Fayette HRC. Churchill McGee counters that the HRC

necessarily decided that no retaliation had occurred by finding that Churchill McGee

fired Herrera for excessive absences and that this reason was not pretextual. However,

the HRC made no such findings. The HRC concluded only that Churchill McGee did

not treat Herrera differently than similarly situated white employees. Disparate

treatment is one way to show pretext, but it is not the only way. See, e.g., Manzer v.

Diamond Shamrock Chems. Co., 29 F.3d 1078, 1084 (6th Cir. 1994). The HRC made

no determination as to whether Churchill McGee’s proffered reason for the termination

had any basis in fact or actually motivated the discharge, for example. See id. The HRC

did not find that Churchill McGee fired Herrera because of excessive absences, only that

Churchill McGee did not fire Herrera because he is African-Cuban.

Moreover, Herrera could still maintain a retaliation claim even if his excessive

absences were sufficient to support termination. We held in Hollimon v. Shelby County

Government that the county merit review board’s determination that the plaintiff had

been terminated for good cause did not preclude her from bringing Title VII retaliation

and discrimination claims in federal court when she had not raised those issues before

the board. 325 F. App’x 406, 409–10 (6th Cir. 2009) (unpublished opinion). Even

though the board concluded that Hollimon had “violated the policies and procedures of

the Shelby County Government, . . . [it] did not decide whether those stated justifications

were the real reason behind Hollimon’s firing or just a facade.” Id. at 410 (internal

quotation marks and citations omitted). Issue preclusion thus did not apply, because

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 17

“[t]he board never decided one way or another whether retaliation was involved.” Id.

We reached the same conclusion in Cockrel, holding that issue preclusion would not bar

the plaintiff’s § 1983 retaliation claim “[e]ven if the appeals board had decided that the

reasons proffered by the defendants for Cockrel’s discharge were adequate to support

the termination and that there was substantial evidence of defendants’ proffered reasons

in the record,” because, “unless Cockrel raised her retaliation claim, it would not have

decided, nor even considered, whether the true motivation of defendants’ actions was to

retaliate against her.” 270 F.3d at 1046–47. As in Hollimon and Cockrel, the Fayette

HRC simply did not consider the issue of whether Herrera’s termination was an act of

retaliation.

Because the HRC did not litigate or decide any issue regarding retaliation,

Kentucky courts would not give preclusive effect to the HRC’s no-probable-cause

determination in a subsequent retaliation suit. See Yeoman, 983 S.W.2d at 465. The

third prong for administrative preclusion under Elliott is not satisfied. Accordingly, the

district court erred in applying administrative preclusion to dismiss Herrera’s § 1981

retaliation claim.9

Although Churchill McGee urges us to rule in its favor on the merits of summary

judgment if we disagree with the district court’s preclusion holding, we decline to do so.

The merits of Herrera’s retaliation claim are best addressed in the first instance by the

district court.

9

Because Churchill McGee never argued before the district court or on appeal that Herrera’s

retaliation claim was barred by claim preclusion, we do not consider that possibility. Although claim

preclusion is a purely legal issue that we can address sua sponte under “special circumstances,” Arizona

v. California, 530 U.S. 392, 412 (2000), we do not do so here because it would require us first to weigh

in on a circuit split. The federal courts of appeals are split as to whether unreviewed state administrative

decisions have claim-preclusive as well as issue-preclusive effect. Compare Plough v. West Des Moines

Cmty. Sch. Dist., 70 F.3d 512, 515 n.6 (8th Cir. 1995) (claim preclusion), with Dionne v. Mayor & City

Council of Baltimore, 40 F.3d 677, 684–85 (4th Cir. 1994) (no claim preclusion) and Gjellum v. City of

Birmingham, 829 F.2d 1056, 1064–65 & n.21 (11th Cir. 1987) (same); see also Hitt v. Connell, 301 F.3d

240, 247 & n.3 (5th Cir. 2002) (recognizing the circuit split and suggesting that claim preclusion is

available). Elliott expressly addressed only the issue-preclusive effect of agency factfinding. See Nelson,

863 F.2d at 19 (noting that “Elliott dealt with issue preclusion”). Without the benefit of briefing on this

matter, we decline to stake out a position in this debate.

No. 10-5421 Herrera v. Churchill McGee, LLC et al. Page 18

III. CONCLUSION

For the reasons stated above, we affirm the district court’s grant of Churchill

McGee’s motion for partial judgment on the pleadings as to Herrera’s KCRA claim and

the motion for summary judgment as to his § 1981 race-discrimination claim. We

reverse the district court’s grant of summary judgment as to Herrera’s § 1981 retaliation

claim and remand for further proceedings consistent with this opinion.

REVERSED in part and AFFIRMED in part.