In Allied Chem. v. Niagara Mohawk Power Corp., 72 N.Y.2d 271, 528 N.E.2d 153, 155, 532 N.Y.S.2d 230 (N.Y. 1988), cert. denied, 488 U.S. 1005, 102 L. Ed. 2d 777, 109 S. Ct. 785 (1989), the New York Court of Appeals set forth a test for determining whether an administrative proceeding may be characterized as "quasi-judicial" in nature, such that decisions rendered pursuant to its adjudicatory authority may be given preclusive effect in subsequent proceedings. The reviewing court must examine several factors: (1) whether the agency has statutory authority to act adjudicatively; (2) whether the procedures used in the administrative proceeding assured that the information presented to the agency was sufficient both quantitatively and qualitatively, so as to permit confidence that the facts asserted were adequately tested; (3) the parties expectations; and (4) whether according a preclusive effect would be consistent with the agency's scheme for administration.
In Allied, the New York Court of Appeals gave preclusive effect to a Declaratory Ruling issued by the NYPSC in a contractual dispute between an electric utility and an independent power producer. As is the case in the present litigation, the plaintiff in Allied was issued an unfavorable determination by the NYPSC and, rather than seek direct review of that decision, proceeded to collaterally attack the NYPSC's determination in a subsequent state court proceeding.
The Allied court specifically considered all four factors relevant to determining whether the NYPSC was a quasi-judicial body and held there was no doubt that an NYPSC ruling could be given preclusive effect. (528 N.E.2d at 156-57).
Having determined that under New York law, the Declaratory Ruling issued by the NYPSC may be given preclusive effect, the Court turns its attention to the question of whether the necessary elements for application of res judicata and/or collateral estoppel are present here. Res judicata (or "claim preclusion") embodies the idea that a final judgment of a claim on the merits between the same parties resolves both that claim and all others arising out of the same transaction. Ryan v. New York Tel. Co., 62 N.Y.2d 494, 467 N.E.2d 487, 488-91, 478 N.Y.S.2d 823 (N.Y. 1984). Collateral estoppel (or "issue preclusion") prevents relitigation by a party of an issue decided against it in prior litigation in which it had a full and fair opportunity to litigate the issue. (Id.) Both doctrines (1) avoid the unfairness that would result from allowing a party to obtain multiple hearings on the same issue, (2) prevent inconsistent judgments and (3) conserve judicial resources. See id.; International 800 Telecom Corp. v. Kramer, Levin, Nessen, Kamin & Frankel, 155 Misc. 2d 975, 978, 591 N.Y.S.2d 313 (N.Y. Sup. Ct. 1992).
New York takes a transactional analysis approach to res judicata issues. Under that approach, all claims which could have been brought out of a transaction are barred by a prior final resolution. O'Brien v. City of Syracuse, 54 N.Y.2d 353, 429 N.E.2d 1158, 445 N.Y.S.2d 687 (N.Y. 1981); International 800 Telecom, 155 Misc. 2d at 978. This furthers the interest of finality. In the present case, new York's doctrine of res judicata bars plaintiff from asserting here, for the second time, the claims embodied in its First, Third and Fourth causes of action. Those claims were already litigated between these parties before the NYPSC, which reached a final determination of those claims on the merits.
Plaintiff is also barred by the closely-related doctrine of collateral estoppel from relitigating the same issues already decided against it. Under New York law, three elements must be established in order for collateral estoppel to apply: (1) the issue in the present proceeding must be identical to the issue in the prior proceeding; (2) the issue decided in the prior proceeding must have been material to that proceeding; and (3) the party against whom the doctrine is asserted must have had a full and fair opportunity to litigate the issue in the prior proceeding. Ryan, 467 N.E.2d at 490-91. When applying the doctrine of collateral estoppel to an administrative determination, the Ryan court determined that the party seeking to invoke the doctrine bears the burden of demonstrating the identical nature and decisiveness of the issue, the party opposing the application of the doctrine bears the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior proceeding. (Id. at 491).
The Court determines that defendant, as the party seeking to invoke the doctrine of collateral estoppel, has met its burden. (See the NYPSC's written Opinion at Defendant's Br., Exh. 2 at 1-4). Plaintiff does not dispute either the identity or decisiveness of the issue but, rather, challenges the application of the doctrine here on the ground that the NYPSC lacked jurisdiction to render its decision in the first instance. (See Plaintiff's Opp. Br. at 12-21). Plaintiff argues that NYPSC's jurisdiction over the Agreement ended upon its approval of the Agreement in 1988 and that, therefore, "its determination can be given no effect." (Id. at 12). Plaintiff made the same argument to the NYPSC in its Response to Defendant's Petition for a Declaratory Ruling, and the NYPSC expressly determined that it did, in fact, have jurisdiction to resolve the particular contractual dispute brought before it.
The issue for this Court to address is not whether the NYPSC, in fact, had jurisdiction to render the decision it did but, rather, whether the collateral estoppel doctrine bars plaintiff's relitigation not just of the underlying contract issues raised before the NYPSC but of the question of the propriety of the NYPSC's jurisdiction to hear the dispute, as well. This issue is often referred to as "jurisdictional finality." In Underwriters National Assurance Co. v. North Carolina Life and Accident and Health Ins. Guar. Assn., 455 U.S. 691, 706, 71 L. Ed. 2d 558, 102 S. Ct. 1357 (1982), the United States Supreme Court reaffirmed the rule of jurisdictional finality established in Durfee, 375 U.S. at 113-15, stating that "the principles of res judicata apply to questions of jurisdiction as well as to other issues." See also Treinies v. Sunshine Mining Co., 308 U.S. 66, 78, 84 L. Ed. 85, 60 S. Ct. 44 (1939) (holding that collateral estoppel applied to a court's determination of its own jurisdiction). Holding that collateral estoppel applied to a determination made by the Rehabilitation Court (a lower court in North Carolina) about its own subject matter jurisdiction over a particular dispute, the Supreme Court stated:
Any doubt about this proposition [of jurisdictional finality] was definitely laid to rest in Durfee v. Duke (citation omitted), where this Court held that "a judgment is entitled to full faith and credit -- even as to questions of jurisdiction -- when the second court's inquiry discloses that those questions have been fully and fairly litigated and finally decided in the court which rendered the original judgment.
Underwriters National, 455 U.S. at 706 (emphasis added). See also Stoll v. Gottlieb, 305 U.S. 165, 172, 59 S. Ct. 134, 83 L. Ed. 104 (1938).
In the instant case, plaintiff fully and fairly litigated the issue of the NYPSC's jurisdiction over the dispute between the parties in the proceedings before the NYPSC, and the NYPSC expressly determined that it did, in fact, have jurisdiction to render a decision. (See Defendant's Br., Exh. B at 2-4). The Court has every reason to think that the courts of New York, who have not expressly stated their position on the rule of jurisdictional finality established in Durfee, would follow the holding of the United States Supreme Court in Underwriters National and the holdings of the various other Supreme Court and state court cases that have specifically addressed this issue.
The Court draws support for this proposition, as well, from the Restatement (Second) of Judgments § 12, wherein the modern rule which stresses finality of judgments is codified. It is the rule followed in most jurisdictions and, although this Court can find no New York case which cites § 12 specifically, the courts of New York do follow the Restatement (Second) of Judgments generally. Furthermore, the principles underlying the modern rule codified in § 12 are the very same principles underlying the doctrines of res judicata and collateral estoppel as defined by the courts of that State. Section 12 reads as follows:
When a court has rendered a judgment in a contested action, the judgment precludes the parties from litigating the question of the court's subject matter jurisdiction in subsequent litigation except if:
(1) The subject matter of the action was so plainly beyond the court's jurisdiction that its entertaining the action was a manifest abuse of authority; or