PENNY L TESKE, Applicant
NORTHWEST AIRLINES GROUNDS, Employer
LIBERTY MUTUAL FIRE INS CO, Insurer
Northwest Airlines Grounds and Liberty Mutual Fire Insurance Company (respondents) submitted a petition for commission review alleging error in the administrative law judge's Findings and Order issued in this matter on April 8, 2004. Briefs were submitted by the parties. The applicant submitted a claim with the department for mental injury allegedly arising out of and in the course of her employment with the employer. In his decision dated April 8, 2004, the administrative law judge upheld the applicant's claim. In doing so, he took notice of an October 2002 decision issued by an arbitrator involving the applicant and three female co-workers. The applicant and the three co-workers asserted that Northwest Airlines had subjected them to hostile and disparate treatment because of their sex, in violation of Title VII of the Civil Rights Act of 1964. The arbitrator upheld their claims and awarded monetary damages together with costs. The ALJ found that the arbitrator's decision invoked the doctrine of issue preclusion, relative to the applicant's worker's compensation claim. He found that the arbitrator's decision that Northwest had engaged in illegal sexual harassment of the applicant precluded a finding that the applicant had not been subjected to "unusual stress" as defined in School District No. 1 v. DILHR, 62 Wis. 2d 370, 377-78, 215 N.W.2d 373 (1974). Respondents dispute this finding.
The parties to the worker's compensation proceeding also entered into a verbal stipulation, which partly because it was verbal, is unclear in its details. In the ALJ's handwritten hearing notes it is noted that for purposes of processing an appeal from the department's ruling on issue preclusion, respondents stipulated to " . . . a causal relationship between the applicant's mental/emotional condition and the alleged stress she claims to have undergone while employed at NWA." Whatever this vaguely-worded stipulation actually meant, it is clear that respondents agreed to it only on a contingent basis. They agreed to it in order to facilitate an appeal of the department's ruling (made informally at the time of the stipulation) that issue preclusion applied to the question of whether the applicant had been subjected to unusual stress. It is clear from the correspondence that constitutes the only record of this administrative proceeding, that respondents never agreed or intended to forfeit their other defenses to a compensable mental injury, should the issue of unusual stress be resolved against them.
With this background in mind, and after careful review of the administrative record, the commission makes the following:
¶12. "Issue preclusion refers to the effect of a judgment in foreclosing relitigation in a subsequent action of an issue of law or fact that has been actually litigated and decided in the prior action." Northern States Power Co. v. Bugher, 189 Wis. 2d 541, 550, 525 N.W.2d 723 (1995). The general rule on issue preclusion is: "When an issue of fact or law is actually litigated and determined by a valid judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action . . .whether on the same or a different claim." Precision Erecting, Inc. V. M&I Marshall & Ilsley Bank, 224 Wis. 2d 288, 301, 592 N.W.2d 5 (Ct. App. 1998) (quoting Restatement (Second) of Judgements § 27 (1982)).
¶13. However, any application of the issue preclusion doctrine must comport with principles of fundamental fairness. See Precision Erecting, 224 Wis. 2d at 304. The Supreme Court has adopted a five-actor fundamental fairness test. See id. at 305. A court may consider some or all of the following factors when making the decision to invoke issue preclusion:
(1) could the party against whom preclusion is sought, as a matter of law, have obtained review of the judgment;
(2) is the question one of law that involves two distinct claims or intervening contextual shifts in the law;
(3) do significant differences in the quality or extensiveness of proceedings between the two courts warrant relitigation of the issue;
(4) have the burdens of persuasion shifted such that a party seeking preclusion had a lower burden of persuasion in the first trial than in the second; or
(5) are matters of public policy and individual circumstances involved that would render the application of collateral estoppel to be fundamentally unfair, including inadequate opportunity or incentive to obtain a full and fair adjudication in the initial action?"
Applying these tests to the question of whether issue preclusion applies to the applicant's work injury claim, the commission concludes that it does not. First, the record does not contain a copy of any contract between the parties defining the conditions upon which they agreed to submit to arbitration, but normally such agreements are that the arbitrator's decision will be final. The conditions under which a court may overturn an arbitrator's decision are extremely limited (see Wis. Stat. § 788.10 and Dane County v. Dane County Union Local 65, 210 Wis. 2d 267, 274-75, 565 N.W.2d 540 (1997). Accordingly, the appellate review process to which the arbitrator's decision would be subject is wholly unlike the review process found in Wis. Stat. § 102.18(3) (LIRC review) and Wis. Stat. § 102.23 (court review).
Second, the applicant's claim of gender discrimination was distinct from her worker's compensation claim of a work-related post-traumatic stress disorder (PTSD) attributable to unusual stress. The arbitrator specifically declined to make a finding regarding whether the applicant had sustained PTSD. (1) The law of work-related mental injury under School District No. 1 v. DILHR is contextually different from the law of gender based discrimination under Title VII.
Third, the only factual findings the arbitrator made regarding the applicant were:
"Penny Teske was new on the job and not trained to operate the belt loader when Iacoviello assigned her to it. As she struggled with the unfamiliar equipment he stood by without helping her. Teske's position was changed from ramp employee to counter agent in 1999, but Iacoviello went out of his way to harass her. He would appear in the gate area or at the counter area where Teske was working and stand and glare at her for long periods. He would be found in the gate area when Teske was alone there, or would stand close behind her when she was working. His duties did not require him to be in these places."
The arbitrator did not discuss any testimony from the supervisor. In fact, it is unclear whether the supervisor testified before the arbitrator, and whether the arbitrator made his decision based on testimony or based on submission of written allegations, stipulations, or arguments. The arbitrator did not address any medical opinions, and apparently did not review any. There are serious questions concerning the quality and extensiveness of the arbitration proceeding when measured against the evidence that would be produced in a worker's compensation proceeding. In a WC proceeding the parties are given the opportunity to bring all relevant witnesses, and in a case claiming mental injury, they must submit medical evidence.
Fourth, the burden of persuasion applicable to this arbitration proceeding is unclear. The applicant has not attempted to define it. In a worker's compensation proceeding she would be required to provide credible evidence that she was subjected to unusual stress that caused PTSD or some other mental injury. If nothing else, the burden of proving PTSD was not on the applicant's shoulders in the arbitration proceeding; however, based on her claim, it would be in a worker's compensation proceeding.
Fifth, for all the above reasons it would be fundamentally unfair to apply issue preclusion in this case. The claim made in the arbitration proceeding, while involving the same factual milieu, was fundamentally different from the claim made under Chapter 102.
NOW, THEREFORE, this
The Findings and Order of the administrative law judge are set aside. The matter is remanded to the department for a hearing with respect to the applicant's claim for a compensable mental injury. Thereafter, the department shall issue its decision, which shall be subject to normal appeal rights.
/s/ James T. Flynn, Chairman
/s/ David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
cc:
Attorney Samuel J. Bomier
Attorney Michael C. Frohman
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