May 14, 2011

The doctrine of primary jurisdiction and the doctrine of the exhaustion of administrative remedies considered in determining the jurisdiction of the court

The doctrine of primary jurisdiction and the doctrine of the exhaustion of administrative remedies considered in determining the jurisdiction of the court
Matter of Neumann v Wyandanch Union Free School Dist., 2011 NY Slip Op 03859, Appellate Division, Second Department 

Sally Neumann sued the Wyandanch Union Free School District for its alleged breach of her employment contract. Supreme Court’s dismissal of Neumann’s breach of contract action. Neumann also claimed that she had attained tenure by estoppel as “Director of Technology” with the school district

Neumann, was employed by Wyandanch as its "Director of Technology" in November 2004. She was later transferred to the position of "Assistant Superintendent for Curriculum and Technology." In September 2008 the District assigned her to the position of "Assistant Director for Curriculum and Technology."

The collective bargaining agreement between the District and the Wyandanch Administrators Association provided that "Director" positions were eligible for tenure and represented by the Association, but the "Assistant Superintendent" position was nontenured and excluded from Association membership.

In July 2008, Neumann had entered into an employment contract with the District for her third year of employment as Assistant Superintendent. The contract provided that the "terms and conditions of employment" not otherwise addressed in the contract were incorporated from the collective bargaining agreement. Under the collective bargaining agreement, claims relating to its terms were subject to a mandatory grievance process.

In September 2008, following her assignment to the "Assistant Director for Curriculum and Technology" position, the District reduced Neumann's salary to $135,706. In November 2008, the District abolished Neumann's position, and no longer paid her a salary after that date.

Neumann commenced a hybrid CPLR article 78 proceeding and plenary action seeking a judgment declaring that she had acquired tenure by estoppel as a Director based in part on her service in the Assistant Superintendent position. She also sought damages based on the District's alleged breach of contract when it reduced and finally ceased to pay her the salary provided for in the July 2008 employment agreement.

The Supreme Court, relying on the doctrine of primary jurisdiction, dismissed Neumann’s action claiming she had acquired tenure by estoppel and directed her to raise her tenure claim before the Commissioner of Education. The court also dismissed her claim alleging breach of contract.

Addressing "The doctrine of primary jurisdiction,” the court explained that the doctrine provides that where the courts and an administrative agency have concurrent jurisdiction over a dispute involving issues beyond the conventional experience of judges . . . the court will stay its hand until the agency has applied its expertise to the salient questions," citing Flacke v Onondaga Landfill Sys., 69 NY2d 355. Further, said the court, "The doctrine . . . applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body. In such situations “the judicial process is suspended pending referral of such issues to the administrative body for its views.'"

In contrast, where the determination does not require the special competence of an administrative agency, the doctrine does not apply.

In this instance the Appellate Division ruled that the interpretation and enforcement of Neumann's employment agreement was not within the Commissioner of Education's specialized knowledge and experience. Rather its interpretation and enforcement depends on common-law contract rules that lie within the purview of the judiciary. Accordingly, said the court, Supreme Court’s dismissal of Neumann’s cause of action alleging breach of contract under color of the doctrine of primary jurisdiction was improper and the Supreme Court should have retained jurisdiction to decide that cause of action.

As to the School District’s argument that Neumann’s dismissal was nevertheless proper because she was required to exhaust her administrative remedies by submitting the matter to the grievance procedure mandated under the collective bargaining agreement, the Appellate Division said that “the clear terms of [Neumann’s employment agreement and relevant provisions of the collective bargaining agreement” indicate that Association’s grievance remedies were not available to Neumann with respect to her cause of action alleging breach of contract.
Consequently, Neumann was entitled to seek judicial review directly, and thus her cause of action breach of contract should not have been dismissed.

The decision is posted on the Internet at: