Puerto Rico Supreme Court Holds Act 2's Counterclaim Bar Does Not Preclude Employer's Independent Suit

Author:Ms Erika Berríos and Daniel Limés Rodríguez
Profession:Littler Mendelson

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 affirmed.

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...

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