Ryan v. New York Telephone Co.

Edward Ryan (plaintiff) was terminated from his employment with New York Telephone Co. (defendant) after two security investigators for the company, Lauriano and Perrino (defendants), saw Ryan taking company property. The investigators summoned the police who charged Ryan with petit larceny and criminal possession of stolen property. Ryan filed for unemployment benefits, which were denied by a claims examiner on the ground that his loss of employment was attributable to his own misconduct. On appeal, an administrative law judge (ALJ) upheld the examiner’s denial of benefits after hearing direct and cross-examination testimony of witnesses, including Ryan. The ALJ found that Ryan had been seen removing company property from the workplace, that he was not authorized to take the property, and that his discharge was accordingly due to his own misconduct. The ALJ’s decision was affirmed by the Unemployment Insurance Appeal Board, whose affirmance was upheld by the Appellate Division. While the foregoing appeals were pending, the criminal charges against Ryan were dismissed “in the interest of justice.” After the criminal charges were dropped but before the Appellate Division affirmed the denial of benefits, Ryan and his wife (plaintiff) filed a civil action against defendants. As an affirmative defense, defendants pleaded res judicata and collateral estoppel. The Ryans moved to dismiss that defense. Defendants then cross-moved to dismiss the Ryans’ claims for false arrest, malicious prosecution, slander, and wrongful discharge. The trial court granted the Ryans’ motion to dismiss defendants’ affirmative defense. When defendants appealed, the Appellate Division certified a question to the Court of Appeals: was the trial court’s decision regarding res judicata and collateral estoppel correct?