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Friday, October 23, 2015

Complying with the notice requirements set out in Civil Service Law §75-b, the so-called Whistleblower Statute


Complying with the notice requirements set out in Civil Service Law §75-b, the so-called Whistleblower Statute
Tipaldo v Lynn, 2015 NY Slip Op 07698, Court of Appeals

In this "whistleblower" action, the first issue to be resolved by the Court of Appeals is whether plaintiff John Tipaldo [Tipaldo] made a good faith effort to comply with the reporting requirements of Civil Service Law §75-b(2)(b).* The court held that Tipaldo had, under the circumstances, made a good faith effort to comply with the statute.

The genesis of Tipaldo's whistleblower action was his reporting of an alleged scheme by his superiors, defendants Christopher Lynn, then-Commissioner of the New York City Department of Transportation [DOT], and Richard Malchow, then-First Deputy Commissioner of the DOT, [the Defendants] to award a signage contract to Lynn's acquaintance in violation of New York City's public bidding rules. Tipaldo was  serving as DOT's Acting Assistant Commissioner for Planning and Engineering at the time.

On November 6, 1996, a number of DOT employees, including Tipaldo, were told that certain signs had been purchased from Commissioner Lynn’s friend. Tipaldo contended that he and other employees questioned the legality of the process and the DOT employees whose signatures were required to authorize the purchase refused to sign the authorization. On November 8, the Defendants solicited bids from the public. After the delivery and installation of the signs, DOT received several lower bids compared to the $6,000 paid to Commissioner Lynn's acquaintance. The Defendants then allegedly created a backdated memorandum stating that the need for the signs was "urgent" and that the order must be placed immediately rather than go through the competitive bidding process.

Tipaldo told his immediate supervisors about the Defendants' alleged misconduct and one or two business days later Tipaldo reported the Defendants' alleged actions to the Office of the Inspector General for the DOT and requested an investigation.

Tipaldo claimed that shortly after filing his report with the Inspector General, the Defendants retaliated against him by excluding him from meetings, removing him from supervising and managing several projects, and publicly making negative comments about him. Subsequently Tipaldo was removed from his then position of Acting Assistant Commissioner for Planning and Engineering and demoted. He initiated this action in 1997 pursuant to Civil Service Law §75-b, alleging that he was retaliated against for reporting improper governmental activity. He sought “a permanent injunction, reinstatement, all lost compensation, punitive damages, attorney's fees, and costs.”

The Defendants moved for summary judgment dismissing the complaint, arguing that Tipaldo had not complied with requirements of  Civil Service Law §75-b by not reporting the allegedly wrongful actions to the appointing authority before contacting the Inspector General's office. Tipaldo cross-moved for summary judgment. **

Supreme Court granted the Defendants' motion for summary judgment, agreeing with the Defendants that Tipaldo failed to state a cause of action by not reporting the Defendants' alleged misconduct to an appointing authority. 

Tipaldo appealed and the Appellate Division reversed the lower court’s ruling and granted Tipaldo's motion for summary judgment, stating, "[t]here is no dispute that retaliatory actions were taken against plaintiff, and although a cause of action pursuant to the subject statute requires plaintiff to have first reported the alleged violation to the internal [DOT] 'appointing authority,' here, that was defendants." The court determined that "plaintiff's good faith efforts in the manner and filing of his reporting, first informally to his immediate supervisors, and then soon thereafter to the [DOI], satisfactorily met the requirements of Civil Service Law §75-b (2)."

Ultimately the Court of Appeals affirmed the Appellate Division’s ruling, explaining that as the appointing authorities were Lynn and Malchow, Tipaldo “understandably did not report their alleged misconduct to them.” The court commented that the “scheme in which Lynn and Malchow purportedly engaged was quite deliberate. After entering into a contract with Lynn's acquaintance for the signs, they allegedly attempted to cover their tracks by publishing a notice seeking public bids and later releasing a memorandum stating that an immediate need for the signs required bypassing the normal bidding process. Thus, Lynn and Malchow would not likely have been receptive to plaintiff's complaints or reported themselves to the Department of Investigation.”*** 

The decision continues: “Under these particular circumstances, strict compliance with the reporting requirements of Civil Service Law § 75-b would not serve the purpose of the statute. Rather, courts should use their discretion in determining whether the overall actions of the plaintiff constitute a good faith effort to report the misconduct. In cases such as this — where the appointing authority is the one engaging in the alleged misconduct — an employee's good faith effort to report the misconduct should be evaluated with attention to the employee's practical inability to report to the appointing authority. The 'good faith' provision in the statute affords courts the discretion to determine whether a plaintiff has met its requirements and appears to adequately account for situations like the one presented here.”

The Court of Appeals held that:

[1] Tipaldo complied with the statutory reporting requirement by informing his immediate supervisors of the misconduct and thereafter reporting the misconduct to the DOT Inspector General;

[2] Whistleblowing is encouraged to prevent employer misconduct and provide appropriate remedies when it occurs; and

[3] Employees in situations like Tipaldo's should not be required to report to the appointing authority where such a report would prove impractical and possibly impede prompt resolution of the matter.

Finally, the court observed that “In view of the requirement, set forth in both New York City Mayoral Executive Order No. 16[3][d] and the DOT employee handbook, that employees such as Tipaldo disclose misconduct to the DOT Inspector General directly and without undue haste or face possible termination of their employment, we cannot say that Tipaldo lacked 'good faith' in reporting to his immediate supervisors only one or two business days before he reported his allegations to the DOT Inspector General.”

Affirming the Appellate Division's ruling, Court of Appeals said that given the conditions Tipaldo was facing, an overall view of his actions demonstrates good faith compliance with Civil Service Law §75-b..

* A second issued considered by the Court of Appeals: is prejudgment interest is available under Civil Service Law §75-b and Labor Law §740 (5)? The court held that prejudgment interest is available in actions of this kind.

** In the course of this litigation the Inspector General issued his determination, following an investigation, concluding that Tipaldo "suffered an adverse personnel action taken in retaliation for his having reported to the [DOI] information concerning conduct which he knew or reasonably believed to involve an abuse of authority on the part of another City official." The report recommended that Tipaldo be reinstated to his former position or a comparable position. Defendants initially declined to reinstate Tipaldo, but later issued an order of compromise offering to reinstate him to a comparable position with back pay and benefits, which offer Tipaldo rejected.

*** The Defendants conceded that there was no duly designated individual to whom Tipaldo could have reported his allegations.

The decision is posted on the Internet at:

Handbooks focusing on State and Municipal Public Personnel Law continue to be available for purchase via the links provided below:

The Discipline Book at http://thedisciplinebook.blogspot.com/

A Reasonable Penalty Under The Circumstances at http://nypplarchives.blogspot.com

The Disability Benefits E-book: at http://section207.blogspot.com/

Layoff, Preferred Lists at http://nylayoff.blogspot.com/

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