Act No. 2 of October 17, 1961 (Act 2) created a procedural process for the expeditious adjudication of employment claims in Puerto Rico. Among other ways to streamline the process, Act 2 bars the employer from filing a counterclaim against the employee.¹ In Bacardí Corporation v. Evaristo Torres Arroyo, 2019 TSPR 133, 202 D.P.R. __ (July 26, 2019) (Bacardí), however, the Supreme Court of Puerto Rico held that Act 2’s counterclaim bar does not preclude an employer from commencing a separate and independent action against the employee outside of Act 2’s summary proceedings.

In Bacardí, the employer went through a reorganization that eliminated several job positions. The plaintiff, whose job was eliminated, signed a general release of all claims against the company and received proper consideration in exchange. Almost a year later, the plaintiff sued the employer for unjust dismissal under PR Act No. 80 of May 30, 1976, P.R. Laws Ann. tit. 29 §185a et seq.  The employer raised several affirmative defenses in its response, including that the complaint was precluded by the general release signed by the plaintiff at the time of his termination.  The employer also filed an independent breach of contract suit against the plaintiff, claiming that the plaintiff breached the release agreement and had to return the consideration disbursed in exchange for the release, as well as indemnify the company for any expenses, costs and attorneys’ fees incurred in defending against the plaintiff’s claims.

The trial court found that Act 2’s counterclaim bar did not preclude an employer from filing an independent suit against the employee and denied the employee’s motion to dismiss.  The plaintiff appealed the decision to the Court of Appeals, which revoked the trial court’s decision and dismissed the company’s breach of contract claims. The employer then appealed to the Supreme Court, which revoked the lower court's decision.

In essence, the Supreme Court of Puerto Rico recognized that allowing the employer to counterclaim under Act 2 would complicate the proceedings and would alter its summary nature. The Supreme Court noted, however, that the text of Act 2 does not preclude an independent lawsuit by the employer against the employee; it merely prohibits any counterclaims under the summary proceedings of Act 2. The Supreme Court highlighted that Act 2 is a procedural law that does not create or eliminate causes of action and does not impede an employer from exercising its cause of action. Moreover, the legislative history of Act 2 establishes that there was no intent to preclude lawsuits outside of the summary proceedings.

The Supreme Court noted further that a trial court has wide discretion in managing cases under Act 2, such as ordering the matter to follow ordinary litigation proceedings instead of the expedited process, if necessary, or consolidating or separating causes of action, as well as imposing sanctions on any party for frustrating the summary proceedings. Accordingly, a trial court has discretion to consolidate in myriad ways, depending on the facts of each action; or it could proceed with both simultaneously, or hold off on the employer’s action until the summary proceeding concludes.

Overall, the trial court could grant parties special treatment to promote judicial economy. Additionally, if the claims share material facts, the doctrine of collateral estoppel may apply if one court renders its decision prior to the other. However, the Supreme Court noted an exception to the collateral estoppel doctrine, where a defendant had fewer procedural opportunities available in the first proceedings, i.e., under the summary proceedings of Act 2, the doctrine would not apply to the second proceedings, i.e., under ordinary proceedings. Therefore, the Supreme Court held that Act 2’s summary procedure does not preclude the employer from filing a separate and independent lawsuit against the employee under ordinary proceedings, and ordered the trial court to proceed accordingly.