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
_________________

X
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GUILLERMO HERRERA,
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Plaintiff-Appellant,
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-
No. 10-5421
v.
,
>
-
-
CHURCHILL MCGEE, LLC, NATHAN

Defendants-Appellees. -
CHURCHILL, and PATRICK MCGEE,
N
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.*

_________________

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.