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Monday, October 24, 2016

Vacating an arbitration award based on allegations the award violated public policy

Vacating an arbitration award based on allegations the award violated public policy
Civil Serv. Empls. Assn., A.F.S.C.M.E. Local 1000, A.F.L.-C.I.O. v County of Nassau, 2016 NY Slip Op 06211, Appellate Division, Second Department

In New York City Tr. Auth. v Transport Workers Union of Am., Local 100, AFL-CIO, 99 NY2d 1, the Court of Appeals ruled that "judicial intervention [in a challenge to an arbitration award] on public policy grounds constitutes a narrow exception to the otherwise broad power of parties to agree to arbitrate all of the disputes arising out of their juridical relationships, and the correlative, expansive power of arbitrators to fashion fair determinations of the parties' rights and remedies." The court further explained that the pubic policy exception applies only in "cases in which public policy considerations, embodied in statute or decisional law, prohibit, in an absolute sense, particular matters being decided or certain relief being granted by an arbitrator.”

When an individual’s employment with the Nassau County Sheriff's Department was terminated he filed a grievance pursuant to the disciplinary procedures of the relevant collective bargaining agreement. The arbitrator designated to hear and determine the matter sustained the grievance and reinstated the individual to his former position with back pay.

The Civil Service Employees Association filed a petition pursuant to CPLR Article 75 on behalf of the individual seeking a court order confirming the arbitration award. Supreme Court granted the petition and Nassau County appealed the ruling in an effort to have the award judicially vacated.

The Appellate Division affirmed the lower court’s decision, explaining that upon timely application, an arbitration award should be confirmed unless the award is vacated or modified upon a ground specified in CPLR 7511, i.e.,

“(i) corruption, fraud or misconduct in procuring the award; or

“(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

“(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

“(iv) failure to follow the procedure of this article [75], unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.”

The court then noted the two “judicially determined” exceptions set out in Board of Educ. of Arlington Cent. School Dist. v Arlington Teachers Assn., 78 NY2d 33, whereby an arbitration award may not be vacated “unless it violates a strong public policy” or it “is irrational.”

In this instance, said the Appellate Division, the public policy considerations invoked by the Nassau County fail to meet the strict standards for overturning arbitration awards on public policy grounds.

Addressing Nassau County’s argument that the arbitrator’s award should be vacated on the ground of fraud or other misconduct, the court said the contention was “without merit.”

The decision is posted on the Internet at:

Saturday, October 22, 2016

Owners of for-profit school network to pay $4.3 million to resolve claims of overcharging State and failing to pay taxes

Owners of for-profit school network to pay $4.3 million to resolve claims of overcharging State and failing to pay taxes 

[Internet links highlighted in color]

On October 19, 2016, Comptroller Thomas P. DiNapoli, Attorney General Eric T. Schneiderman  and Acting Tax Commissioner Nonie Manion announced a settlement with K3 Learning, Inc. (f/k/a Metropolitan Preschools, Inc.) and its president and owner Michael C. Koffler, together with his sons, Brian and Daniel Koffler, and his special education preschool, Sunshine Development School (“SDS”), for overcharging the State of New York for services rendered by SDS and for failing to pay millions in personal and corporate income tax.  

Following a coordinated investigation with the Department of Taxation and Finance and an audit and investigation by the Office of the State Comptroller, Koffler and the other parties have agreed to pay the State over $4.3 million to resolve the investigation.

An investigation by the Attorney General’s and Comptroller’s office revealed a complicated leasing arrangement created by Michael Koffler and SDS with the purpose and effect of inflating claims for rent reimbursement to the State of New York.

Specifically, Bridan Realty III, LLC, an entity created and controlled by Michael Koffler, entered into a lease for space for the special education preschool SDS, and then subleased the space to SDS at a substantial mark up.  The investigation revealed no legitimate reason for the mark-up and found that Bridan performed no services for SDS.  Instead, the company was merely a pass-through entity controlled by the Kofflers and used to pay the Kofflers, their credit card bills, their boat expenses, and even partial tuition for Brian’s law school.  Indeed, the sham entity’s name derives from the Koffler sons, Brian and Daniel.

In addition, a
n audit and investigation by the Office of the State Comptroller found over a million dollars in an additional overcharges stemming from unreasonable high executive compensation for Michael Koffler, unrecoverable expenses – such as lobbying and legal fees –and accounting errors, among other erroneous charges.  As part of the agreement, SDS has agreed to any reimbursement rate adjustments required to fully compensate the State Education Department and the New York City Department of Education for these past overcharges.

The Attorney General, with the help of the Department of Taxation and Finance, found that each of Michael, Brian, and Daniel Koffler, as well as SDS, underreported taxable income on their tax returns.  In the largest tax avoidance finding, Michael Koffler reported millions in losses from various entities on his personal income tax return even though he lacked supportable basis to do so.  Additionally, he failed to report as income various personal and living expenses that were paid by entities under his control. These included payments from an “Executive Account” for rent for his New York City apartment, personal credit cards, various utility and maintenance bills for the Koffler’s vacation home in Westhampton and expenses incurred in Saint Barth’s and Westhampton.

The Comptroller’s examination was conducted by the Division of State Government Accountability and the Division of Investigations.  

Attorney General Schneiderman expresses his thanks to the staff of the New York State Department of Taxation and Finance, especially Stephanie Lane, Tax Auditor II in the Office of Counsel, for identifying the tax issues in the matter and for their important assistance in bringing this investigation to resolution. The Attorney General also thanked the Office of the State Comptroller for its work on the audit of SDS’s re-imbursement overcharges.  

The Attorney General’s investigation was conducted by Special Counsel Nicholas Suplina under the auspices of the Taxpayer Protection Bureau, which is overseen by Bureau Chief Thomas Teige Carroll and Deputy Bureau Chief Scott Spiegelman.  The Taxpayer Protection Bureau, which enforces the New York State False Claims Act including tax claims made thereunder, is a bureau in the Criminal Division, which is overseen by Chief Deputy Attorney General Jason Brown. 

Since taking office in 2007, DiNapoli has committed to fighting public corruption and encourages the public to help fight fraud and abuse.  Individuals can report allegations of fraud involving public funds by calling the toll-free Fraud Hotline at 1-888-672-4555, by transmitting an e-mail to investigations@osc.state.ny.us, by filing a complaint online at http://osc.state.ny.us/investigations/complaintform2.htm or by mailing a complaint to Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236.

Decision Squibs for the week ending October 21, 2016

Decision Squibs for the week ending October 21, 2016

Places of Public Accommodation: The Delaware Supreme Court overturned a Delaware Human Relations Commission’s award of damages, attorney’s fees, and costs holding that for the purpose of Delware’s Equal Accommodations Law a prison was not a place of "public accommodation." Ovens v Danberg,  Delaware Supreme Court, Docket #123, 2016, posted on the Internet at:

Employer-Employee: In CalPortland Company v Federal Mine Safety and Health Review Commission, USCA, District of Columbia, Docket #16-1094 held that the Commission could not order  a mine owner to temporarily reinstate an individual who has never been employed by that owner or operator pending a final order on the individual’s underlying discrimination complaint that was then pending before the Commission. The decision is posted on the Internet at: 

Lack of Mutual Assent: Marjorie Johnson, J.D., writing in Employment Law Daily, reports that although two employees continued working after they received a new Alternate Dispute Resolution policy which required that employment disputes be resolved through binding arbitration, there was no showing of mutual assent as they voiced their objections to the ADR policy and amended their previously filed EEOC charges to allege that the new policy was retaliatory. In an unpublished opinion labeled “Not Precedential”, the Third Circuit vacated a district court’s orders of dismissals of their separately filed discrimination claims and remanded for further proceedings. Scott v Education Management Corp., USCA, Third Circuit, No. 15-2177. Posted on the Internet at: http://www2.ca3.uscourts.gov/opinarch/152177np.pdf

Friday, October 21, 2016

Appealing Supreme Court’s denial of a party’s motion

Appealing Supreme Court’s denial of a party’s motion
Hamilton v Alley, 2016 NY Slip Op 06564, Appellate Division, Fourth Department

William E. Hamilton challenged his termination as a tenured school district administrator by bringing a CPLR Article 78 in Supreme Court. Supreme Court denied Hamilton’s motion to amended his petition. He appealed the Supreme Court’s action and the Appellate Division modified the Supreme Court order denying his amended petition in part by granting Hamilton’s motion to amend the petition in part.*

Hamilton next asked Supreme Court “for leave to renew his amended petition.” Supreme Court denied Hamilton’s motion explaining that he had failed to offer new facts “that were unavailable” when the court initially denied the amended petition.

Hamilton then challenged the Supreme Court’s denial of his subsequent motion for leave to renew the amended petition but in this instance the Appellate Division dismissed his appeal.

The Appellate Division explained that Hamilton’s motion, “purportedly seeking leave to renew,” was actually a motion seeking “leave to reargue.” However, said the court, “no appeal lies from an order denying leave to reargue," citing Hill v Milan, 89 AD3d 1458.

The decision is posted on the Internet at:

An employer may seek summary judgment in human rights action by offering a legitimate, nondiscriminatory reason rebutting allegations of unlawful discrimination

An employer may seek summary judgment in human rights action by offering a legitimate, nondiscriminatory reason rebutting allegations of unlawful discrimination  
Tibbetts v Pelham Union Free School Dist., 2016 NY Slip Op 06699, Appellate Division, Second Department

§296(1)(a) of the New York State Human Rights Law provides that "[i]t shall be an unlawful discriminatory practice . . . [f]or an employer . . . because of an individual's . . . disability . . . to discharge from employment such individual."

To establish a prima facie violation of §296(1)(a), a plaintiff must show that (1) he or she is a member of a protected class; (2) he or she was qualified to hold the position; (3) he or she was terminated from employment or suffered another adverse employment action; and (4) the discharge or other adverse action occurred under circumstances giving rise to an inference of discrimination.

Jennifer Tibbetts sued the Pelham Union Free School District to recover damages for alleged employment discrimination on the basis of disability in violation of Executive Law §296. Tibbetts, a probationary music teacher, alleged that she was injured in a slip-and-fall accident and was unable to work for approximately a week while she recovered from her injuries. She alleged that the accident left her disabled, and approximately two weeks after she returned to work, she was terminated because of her disability.

Supreme Court, Westchester County granted Pelham’s motion for summary judgment, dismissing Tibbetts’ complaint. Tibbetts appealed the Supreme Court’s ruling.

Sustaining the lower court’s decision, the Appellate Division said that Pelham had submitted evidence that it terminated Tibbetts’ employment “due to an unusually large number of documented complaints from parents about her interactions with students,” which began shortly after she was appointed to her position and continued throughout the course of her employment. Pelham also submitted evidence that it had no notice of Tibbetts’ alleged disability at the time that she was terminated.

Considering Supreme Court’s granting Pelham’s motion for summary judgment, the Appellate Division explained that “… a defendant, upon offering legitimate, nondiscriminatory reasons for the challenged action, is also required to demonstrate the absence of a triable issue of fact as to whether its explanation for its termination of the plaintiff's employment was pretextual.” In the court’s opinion Pelham had satisfied both requirements.

The Appellate Division found that Pelham had met its burden on its motion for summary judgment of offering legitimate, nonpretextual reasons for terminating Tibbetts’ employment. Rejecting Tibbetts’ contention that “the temporal proximity between the alleged onset of her disability and her discharge” supports an inference of discrimination in this action, the court said that Pelham had demonstrated that it had no knowledge of her alleged disability at the time that she was dismissed from her position.

As Tibbetts failed to raise a triable issue of fact as to whether Pelham’s explanation for her termination "was false, misleading, or incomplete" and her affidavit “was based on speculation and presented what appear to be feigned issues of fact designed to avoid the consequences of her earlier deposition testimony,” the Appellate Division concluded that “Supreme Court properly granted [Pelham’s] motion for summary judgment dismissing the amended complaint insofar as asserted against it.”

The decision is posted on the Internet at:

Handbooks focusing on New York State and Municipal Public Personnel Law:

The Discipline Book - A 458 page guide to disciplinary actions involving public officers and employees. For more information click on http://booklocker.com/books/5215.html

The Layoff, Preferred List and Reinstatement Manual - a 645 page e-book reviewing the relevant laws, rules and regulations, and selected court and administrative decisions. For more information click on http://booklocker.com/books/5216.html

The Disability Benefits E-book: - This e-book focuses on disability benefits available to officers and employees in public service pursuant to Civil Service Law §§71, 72 and 73, General Municipal Law §207-a and §207-c, the Retirement and Social Security Law, the Workers’ Compensation Law, and similar provisions of law. For more information click on: http://booklocker.com/3916.html

A Reasonable Penalty Under The Circumstances - a 618-page volume focusing on New York State court and administrative decisions addressing an appropriate disciplinary penalty to be imposed on an employee in the public service found guilty of misconduct or incompetence. For more information click on http://booklocker.com/7401.html


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