An agency may decline to acknowledge that requested records exist in response to a Freedom of Information Law request

An agency may decline to acknowledge that requested records exist in response to a Freedom of Information Law request

Abdur-Rashid v NYC Police Department, 2018 NY Slip Op 02206, Court of Appeals

Hashmi v NYC Police Department, 2018 NY Slip Op 02206, Court of Appeals

The Chief Judge of the Court of Appeals described the issue presented in this appeal as follows: "May a public entity decline to acknowledge that requested records exist in response to a Freedom of Information Law request,  Public Officers Law §84 et seq. [FOIL], when necessary to safeguard statutorily exempted information."

A majority of the court held that the public entity may, affirming the Appellate Division's determination.

The court was split, in whole or in part, in this important decision, with the opinion by Chief Judge DiFiore in which. Judges Fahey, Garcia and Feinman concur while Judge Wilson dissented in part in an opinion and Judge Stein dissented in an opinion in which Judge Rivera concurs, the full text of decision, including Judge Wilson's and Judge Stein's opinions, are posted on the Internet.

Click on the following URL to access the decision:

http://www.nycourts.gov/reporter/3dseries/2018/2018_02206.htm

The anatomy of an administrative disciplinary decision

The anatomy of an administrative disciplinary decision

Marentette v City of Canandaigua,, 2018 NY Slip Op 01764, Appellate Division, Fourth Department

The §75 disciplinary Hearing Officer found the Fire Chief [Chief] of the City of Canandaigua guilty acts of misconduct, having committed acts of insubordination by repeatedly violated the directive of his superior, making unauthorized entries on his subordinates' time sheets, and acts of incompetence by authorizing the expenditure of public funds on several occasions in violation of the City's procurement policies.

The Hearing Officer recommended that the Chief be demoted. The appointing authority determined that termination was warranted given the gravity of the misconduct, the Chiefs "disciplinary record," earlier "unsuccessful attempts at remediation," and the loss of trust in the Chief.

In response to the Chief's appeal of the decision of the appointing authority, the Appellate Division, sustained the actions of the disciplinary action Hearing Officer and the appointing authority and:

1. Rejected the Chief's argument that preponderance of the evidence is the applicable evidentiary standard in this case explaining that "It is well established that substantial evidence is generally the applicable evidentiary standard for disciplinary matters involving public employees under Civil Service Law §75, and that due process requires application of the preponderance of the evidence standard only "when the penalty of dismissal is accompanied by some added stigma." Here, said the court, there was nothing in the record suggesting that stigma has resulted from the Chief's termination in that he has not been "[effectively] prohibited from obtaining future . . . employment [as a firefighter or an officer of a fire department], or that he is subjected to a public registry of any sort";

2. Ruled that the determination that the Chief committed acts of insubordination and incompetence was supported by substantial evidence; i.e., by "such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact.";

3. Said that the Chief's exculpatory explanations for his conduct raised an issue of credibility that the Hearing Officer was entitled to resolve against him.;

4. Was unpersuaded by the Chief's contention that the termination of his employment was unjustified under the circumstances, indicating that the court's review of the penalty imposed by the appointing authority "is extremely limited" does not include "any discretionary authority or interest of justice jurisdiction in reviewing the penalty imposed."; and

5. Citing Kelly v Safir, 96 NY2d 32, [rearg denied 96 NY2d 854], concluded that the penalty of termination was "not so disproportionate to the offense[s] as to be shocking to one's sense of fairness"  and thus "did not constitute an abuse of discretion as a matter of law ... particularly in light of [the Chief's] conduct underlying the charges and his history of disciplinary infractions during his tenure as Fire Chief."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01764.htm

Jurisdictional classification and reclassification of positions in the Classified Service

Jurisdictional classification and reclassification of positions in the Classified Service

Spence v New York State Department of Civil Service, 2017 NY Slip Op 08570, Appellate Division, Third Department

Jurisdictional classification involves the assignment of positions in the classified service to the competitive, non-competitive, exempt or labor classes.* In contrast, position classification is a grouping of positions, under common and descriptive titles, that are substantially similar in the essential character and scope of their duties and responsibilities and in the qualifications for appointment to such positions.

In this Article 78 action, Wayne Spence, as President of the New York State Public Employees Federation, [PEF], challenged the decision of the New York State Civil Service Commission [Commission] placing positions of "Empire Fellow" in the State's Empire Fellow Program in the noncompetitive class.

The Empire Fellow Program was created as part of an initiative to recruit and train professionals for policy making roles in state government. Empire Fellows work for two years under the auspices of the Office of General Services [OGS], which assigns them to perform work under senior officials throughout New York State's Executive branch of government that involves the formulation, preparation and execution of high-level projects.

Initially the Commission placed these positions in the exempt class. Subsequently OGS asked the Commission to jurisdictionally reclassify these positions to "Empire Fellow in the noncompetitive class" of the Classified Service and to reflect this change in it Rules for the Classified Service.

PEF opposed the jurisdictional reclassification of these positions and commenced this CPLR Article 78 proceeding. Supreme Court dismissed the petition and PEF appealed the ruling.

The Appellate Division affirmed the lower court's ruling, explaining Administrative determinations concerning position jurisdictional classifications are subject to only limited judicial review and will not be disturbed in the absence of a showing that the decision is "wholly arbitrary or without any rational basis."

Although, said the court, it is "well settled that appointments and promotions within the civil service system must be merit-based and, when 'practicable,' determined by competitive examination," the Commission may nevertheless place a title in the noncompetitive class where "it is impracticable to determine merit and fitness ... by competitive examination." In addition, opined the Appellate Divisions, impracticability could arise "due to either the confidential nature of the position or because the character of the position renders an examination inadequate to measure the qualifications of the prospective employee."

The Appellate Division noted that the "knowledge, skills and abilities" needed to analyze and develop policy could be assessed by competitive examination and titles involving those skills have been classified as being in the Competitive Class and candidates for appointment to such positions have been tested for such skills. But, said the court, "A competitive examination could not discern ... whether a potential fellow had the 'diplomacy, sound judgment and discretion' needed to both responsibly handle restricted information and maintain the trust of the senior appointed officials with whom he or she would closely work."

Also noted was the fact that "new fellows would need to be selected every two years"** which OGS contended made competitive testing impracticable due to respondent Department of Civil Service's "lack of experience in testing for fellowship-type positions, and the conflict between the two-year [f]ellow appointment cycle and the time and resources needed to develop a new competitive testing regimen."

These factors, said the court, provide a rational basis for the Commission's jurisdictional  classification of the Empire Fellow title as positions in the noncompetitive class and that it would "not interfere with its judgment" despite "a substantial variance of opinion" as to the best jurisdictional classification.

Another aspect of jurisdictional reclassification” of a position is the status of the individual in the newly jurisdictionally reclassified position. For example, should a position in the noncompetitive class jurisdictionally be reclassified to the competitive class, in Fornara v Schroeder, 261 NY 363, the Court of Appeals held that if the then incumbent held tenure in the noncompetitive class position, he or she will be continued in service as a tenured permanent employee in the competitive class position without further examination.

In addition, an employee in the classified service may retain certain statutory rights upon the changing of the jurisdictional classification of his or her position from the classified service to the unclassified service. For example, §355-a.10.a. of the Education Law, in relevant part, provides that “The incumbent of any position in the classified service which is determined to be in the unclassified service shall … retain the rights and privileges of the classified service jurisdictional classification with respect to discipline, dismissal and suspension for as long as such person remains in the redesignated position.”

* Positions in the Classified Service,  Civil Service Law §§41-44, are deemed to be in the Competitive Class unless placed, or approved for placement, in another jurisdiction class by the Civil Service Commission or otherwise so designated by law. §35 of the Civil Service Law addresses position in the Unclassified Service.

** §41.2 of the Civil Service Law, in pertinent part, "Upon the occurrence of a vacancy in any position in the exempt class, the state or municipal civil service commission having jurisdiction shall study and evaluate such position and, within four months after the occurrence of such vacancy, shall determine whether such position, as then constituted, is properly classified in the exempt class. Pending such determination, said position shall not be filled, except on a temporary basis.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_08570.htm

Fiscal stress remains low among villages

Fiscal stress remains low among villages
Ten Villages, Two Cities Cited in Latest Fiscal Stress Scoring

Click on text highlighted in color to access the full report.

State Comptroller Thomas P. DiNapoli’s Fiscal Stress Monitoring System has identified 10 villages and two cities in New York in some level of fiscal stress in 2017. The system evaluated all non-calendar year local governments and designated one village and one city in “significant fiscal stress,” four villages in “moderate fiscal stress” and five villages and one city as “susceptible to fiscal stress.”

“Our indicators show fiscal stress is relatively low among New York's villages,” said DiNapoli. “I continue to encourage local officials to be mindful about how practices today might impact budgetary solvency in the future. Our monitoring system helps keep local officials and the public informed on this important community issue each year, including the economic and demographic drivers of fiscal stress.”

DiNapoli’s office evaluated 529 villages, which predominantly have a fiscal year ending on May 31. The most recent round of scoring also assessed the 17 cities in New York with non-calendar fiscal years.

This is the fifth year DiNapoli’s office has assessed levels of fiscal stress in local governments. Using financial indicators that include year-end fund balance, cash position, short-term borrowing and patterns of operating deficits, DiNapoli’s monitoring system creates an overall fiscal stress score which ultimately drives final classifications.

For the fiscal year ending 2017, the city of Long Beach (Nassau Co.) and the village of Island Park (Nassau) were designated in “significant fiscal stress.”

The villages of Andover (Allegany), Ellenville (Ulster), Granville (Washington) and Valley Stream (Nassau) were listed in “moderate fiscal stress.” The city of Yonkers (Westchester) and the villages of Baldwinsville (Onondaga), Canisteo (Steuben), Catskill (Greene), Dering Harbor (Suffolk) and Walden (Orange) were designated as “susceptible to fiscal stress.”

The fiscal stress scores also show that in 2017:

Three villages moved out of fiscal stress and four villages moved into a fiscal stress category; and

Forty-four villages failed to file the necessary and required annual financial reports and did not receive a score.

In January, DiNapoli released fiscal stress scores for school districts. In September, his office will release scores for municipalities with a calendar-year fiscal year, which includes all counties, towns, 10 villages, and the majority of cities.

DiNapoli's office recently implemented system enhancements which were developed with direct input from local government and school district officials. The changes provide local officials with more easy-to-understand information that can help them address specific challenges facing their communities.

For a full list of villages and cities in fiscal stress, visit:

http://www.osc.state.ny.us/localgov/fiscalmonitoring/localgovernments/munis-stressed.htm

To search the complete list of fiscal stress scores, visit:

http://wwe1.osc.state.ny.us/localgov/fiscalmonitoring/fsms.cfm

Distinguishing between official acts and unofficial acts for the purposes of claiming qualified immunity from lawsuits in New York State courts

Distinguishing between official acts and unofficial acts for the purposes of claiming qualified immunity from lawsuits in New York State courts

Zervos v Trump, NYS Supreme Court, Index No. 150522/17

Judge Jennifer G. Schecter, citing Clinton v Jones, 520 US 681 [Clinton], held that a sitting president is not immune from being sued in state courts for unofficial acts* and denied President Donald J. Trump's [Defendant] motion to dismiss Summer Zervos' [Plaintiff] petition.

Plaintiff had alleged that in 2007 Defendant had subjected her to unwelcome "sexually inappropriate misconduct" and then defamed her after she had "publicly described her interactions with [Defendant] in detail, including his unwanted sexual misconduct" at a press conference on October 16, 2016.

Plaintiff alleged later that same day, Defendant responded in a statement that was widely reported and appeared on his campaign website that "[t]o be clear, I never met [Plaintiff] at a hotel or greeted her inappropriately a decade ago. That is not who I am as a person and it is not how I've conducted my life." Subsequently Defendant stated Plaintiff's "allegations are 100% false". . They are made up, they never happened ..." at campaign rallies.

A false statement tending "to expose a person to public contempt, hatred, ridicule, aversion or disgrace constitutes defamation" and in this action Plaintiff alleged that the public statements made by the Defendant that Plaintiff's "allegations are 100% false ... They are made up, they never happened" constitute defamation.

The court explained that "No one is above the law" and as the Supreme Court held in Clinton, "the President of the United States has no immunity and is 'subject to the laws' for purely private acts." Any such immunity was grounded "the nature of the function performed, not the identity of the actor who performed it."

Then-President William Jefferson Clinton was required to defend himself against a civil-rights action that included a state-law defamation claim in federal court and the Supreme Court rejected Clinton's argument that "interactions between the Judicial Branch and the Executive, even quite burdensome interactions, necessarily rise to the level of constitutionally forbidden impairment of the Executive's ability to perform its constitutionally mandated functions" and the rule is no different with respect to commencing litigation related to a  President's unofficial conduct in a state court.

The court noted that in Davis v Blenheim, 24 NY3d 262 , the New York State Court of Appeals determined that a defamation action could be maintained against a defendant who called individuals claiming to have been victims of sexual abuse liars and stated that he believed that they were motivated by money to go public. The Court concluded that the statements were susceptible to a defamatory connotation because they communicated that defendant had information unknown to others that justified his statements that the individuals were neither credible nor victims of abuse.

Judge  Schecter opined that "Defendant -- the only person other than plaintiff who knows what happened between the two of them -- repeatedly accused plaintiff of dishonesty not just in his opinion but as a matter of fact. He not only averred that plaintiff told 'phony stories' and issued statements that were 'totally false' and 'fiction,' he insisted that the events 'never happened' and that the allegations were '100% false [and] made Up.'" The court said that "[a]  reader or listener, cognizant that Defendant knows exactly what transpired, could reasonably believe what Defendant's statements convey: that Plaintiff is contemptible because she 'fabricated' events for personal gain."

Referring to the means of communication used by Defendant, the court said the "[m]ost importantly, in their context, Defendant's repeated statements -- which were not made through op-ed pieces or letters to the editor but rather were delivered in speeches, debates and through Twitter, a preferred means of communication often used by Defendant -- cannot be characterized simply as opinion, heated rhetoric or hyperbole." Further, the fact that Defendant's statements about Plaintiff's veracity were made while he was campaigning to become President of the United States, "does not make them any less actionable."

Accordingly, Judge Schecter ruled that the Plaintiff's complaint sufficiently stated a cause of action.

* The distinction made between "official actions" and "personal activities" is reflected in §17 [Defense and indemnification of state officers and employees in civil actions]; §18 [Defense and indemnification of officers and employees of public entities in civil actions]; and §19 [Reimbursement of defense costs incurred by or on behalf of state employees in criminal action] of the Public Officer Law. Essentially these sections provide that the employer shall provide for the defense and indemnification of the officer or employee in any civil action or proceeding in any state or federal court arising out of any alleged act or omission which occurred or is alleged in the complaint to have occurred while the officer or employee was acting within the scope of his or her public employment or duties.

The decision is posted on the Internet at:

https://www.politico.com/f/?id=00000162-44a5-de1c-abfe-6cbd18470002

Review of decisions that are the product of compulsory arbitration are subject to stricter judicial scrutiny than decisions resulting from voluntary arbitration procedures

Review of decisions that are the product of compulsory arbitration are subject to stricter judicial scrutiny than decisions resulting from voluntary arbitration procedures
Berkley v New York City Dept. of Educ., 2018 NY Slip Op 01669, Appellate Division, First Department

The standard of review mandated by Education Law §3020-a(5)(a) is that set out in  CPLR Article 75. Article 75 provides that an arbitration award may be vacated only on a showing of misconduct, bias, exceeding of power or procedural defects as set out in 7511(b)1.* Further, where the arbitration is compulsory, as it is with respect to appeals from a §3020-a administrative disciplinary decision, judicial scrutiny is stricter than applicable in reviewing a determination resulting from a voluntary arbitration proceeding.

Supreme Court granted the New York City Department of Education's [Education] motion to confirm a §3020-a hearing officer's award terminating an educator's [Educator] employment as a school teacher with Education. Educator appealed the Supreme Court's decision, which ruling was unanimously affirmed by the Appellate Division.

Educator had argued that his due process rights were violated because [1] a specification in the charges filed against him "did not allege the specific date of the misconduct" and [2] the hearing officer improperly relied on hearsay evidence that included out-of-court statements by students.

The Appellate Division indicated that with respect to specification in charges that did not indicate the specific date or dates of the alleged misconduct, due process in the context of administrative hearings requires only that the charges be "reasonably specific, in light of all the relevant circumstances, to apprise the party whose rights are being determined of the charges against him [or her] . . . and to allow for the preparation of an adequate defense."

The Appellate Division held that Supreme Court had properly found that Educator's due process rights were not violated by the failure to specify the date he was alleged to have engaged in the charged misconduct in that he was provided with enough information to mount an adequate defense. Moreover, at the hearing, he did not indicate any vagueness with regard to the incident, since he knew the name of the student who made the complaint and had received statements by other students in the room at the time.

With respect to Educator's claim that his due process rights violated by the hearing officer's partial reliance on hearsay evidence , the Appellate Division explained that hearsay evidence may be the basis of an administrative determination, as Educator had himself acknowledged. Further, noted the court, the challenged hearsay evidence "was supported by the testimony of various school administrators and aides," who were subject to cross-examination by Educator.

In addition, the Appellate Division held that Supreme Court had correctly concluded that the hearing officer's decision was supported by the record, in that ample evidence, including Educator's admissions, supported the finding of the hearing officer and that the  hearing officer was entitled to reject Educator's explanations based on an assessment of Educator's credibility.

As to the penalty imposed, the termination of Educator's employment with Education,  the Appellate Division held that the penalty imposed "does not shock the conscience in light of the seriousness of the misconduct and [Educator's] failure to heed warnings."

* The First Department noted that it has applied a "hybrid" standard which incorporates the arbitrary and capricious test in CPLR article 78 as well.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01669.htm

Employee's claim of constructive dismissal as a result of taking FMLA leave dismissed

Employee's claim of constructive dismissal as a result of taking FMLA leave dismissed

Groening v Glen Lake Community School, USCA, Sixth Circuit, Docket #17-1848

Joan Groening, the superintendent of Glen Lake Community Schools, underwent surgery that required her taking six weeks of Family and Medical Leave Act,  [FMLA] leave. She then returned to work part-time. Later Groening's elderly mother fell ill and Groening took intermittent FMLA leave to care for her throughout the rest of the school year.

When the board told her that it was "hesitant to approve her travel plans for an upcoming conference" Groening submitted a "notice of retirement" to take effect at the end of the following academic year. 

Groening’s contract provided for ninety days of paid leave per year and a payout for any unused days when she retired and asked Groening for a report of the leave she had taken during the then current school year. Groening 's report indicated that her absences on leave, vacation, and business trips totaled twelve weeks. When the board told her that it was "hesitant to approve her travel plans for an upcoming conference" Groening submitted a "notice of retirement" to take effect at the end of the following academic year.

Deciding that it needed to clear up any discrepancies in Groening's leave records before the end of the following school year, the school board voted "to audit the district’s business office"  in order to determine, among other things, any discrepancies in Groening's leave records  before the end of the following school year." 

Groening decided not to wait until the end of the following school year as she had planned and she resigned the day before the auditors sent their report to the board. In her resignation she stated that she had no choice but "to step aside" because of the board’s continued "intent to retaliate against her for her lawful use of leave" and a short time later filed this lawsuit, contending that board retaliated against her because she went on medial leave, which she alleged constituted a violation of FMLA.

FMLA provides that an eligible employee may claim up to twelve weeks of unpaid, job-protected leave per year in connection with, among other things, the employee's recovering from a serious health condition or to care for an immediate family member with a serious health condition. Further, the Act prohibits employers from retaliating against employees who take FMLA leave, or otherwise interfering with their right to do so. 

The federal district court,  finding that Groening could not show she had suffered an adverse employment action as the result of her taking FMLA leave, granted the school district's motion for summary judgment and dismissed Groening's petition. Groening appealed.

The Sixth Circuit Court of Appeals said that to establish a prima facie case that the school district violated  FMLA  Groening was required to show that the board knew she was engaged in FMLA-protected activity and subjected her to an adverse employment action because of it.  Here, said the court, Groening "concedes that the board did not fire, demote, or discipline her for taking leave" but rather she contends that she was constructively discharged. Noting that the Doctrine of Constructive Discharge "is hard to prove," the court explained that in order to prevail in an action alleging constructive discharge the employee must show that  his or her working conditions were objectively intolerable and that her employer deliberately created those conditions  in hopes that they would force her to quit. In contrast, the court observed that the Doctrine does not protect employees who leave their job “in apprehension that conditions may deteriorate later.”

To show that her working conditions were objectively intolerable, Groening claimed that the board [1] subjected her to months of hostility because it believed her absences "was holding up the school district’s business;" [2] "spearheaded an audit that was designed to find evidence of wrongdoing"  and [3] continued to complain that she was not doing her job and was “wasting [its] time” thereby giving her "no choice but to resign."

The court opined that these conditions, even viewed in the light most favorable to Groening, fell far short of showing constructive discharge, explaining that the Sixth Circuit has repeatedly held that an employer’s criticism of an employee does not amount to constructive discharge —"especially when the employer’s criticism is limited to a few isolated incidents, as it was here."

Further, said the Circuit Court, "employers are permitted to investigate their employees for wrongdoing, including wrongdoing related to protected leave." Indeed, notes the decision, "neither an internal investigation into suspected wrongdoing by an employee nor that employee’s placement on paid administrative leave pending the outcome of such an investigation constitutes an adverse employment action”

Concluding that Groening had failed to raise a genuine issue of material fact as to whether her working conditions were objectively intolerable and thus she could not show that she was constructively discharged, the Circuit Court sustained the district court's ruling granting the school board's motion for summary judgment on Groening's retaliation claim.

As to Groening contention that the board interfered with her right to take leave, to a survive a motion summary judgment on this claim Groening must show that (1) she was an eligible employee, (2) the board was a covered employer, (3) she was entitled to take leave, (4) she gave the board notice of her intent to take leave, and (5) the board denied her FMLA benefits or interfered with her FMLA rights. Groening, said the court, failed to establish a genuine issue of material fact with respect to the 5th element required to be demonstrated and sustained the lower court's granting summary judgment in the school district's favor on this branch of Groening's action as well.

Finally, the Circuit Court observed that Groening's remaining arguments "fare no better" and dismissed her appeal.

The decision is posted on the Internet at:

http://www.opn.ca6.uscourts.gov/opinions.pdf/18a0049p-06.pdf

Students sue school district alleging school district administrators violated their civil rights

Students sue school district alleging school district administrators violated their civil rights

Graphic Arts Mut. Ins. Co. v Pine Bush Cent. Sch. Dist., 2018 NY Slip Op 01565, Appellate Division, Second Department

Commercial General Liability [CGL] issued School District and Educators Legal Liability policies well as CGL umbrella policies to the Pine Bush Central School District.

In lawsuit commenced in the United States District Court, Southern District of New York, captioned T.E. v Pine Bush Central School Dist., Docket #12-CV-2303), [the Federal Case] five students [T.E.] alleged that certain Pine Bush officers [the Defendants] and other school administrators violated their civil rights by being deliberately indifferent to anti-Semitic harassment and discrimination perpetrated by other students against them. The school district's superintendent, one of the named defendants, advised the Defendants that CGL had indicated that CGL would pay the costs of the defense in the action but reserved its right to disclaim coverage upon further investigation of the allegations.

CGL did pay the costs of defending the Defendants through the resolution of the Federal Case and during mediation, the parties to the Federal Case agreed to settle that action for a total of $3,000,000 in compensatory damages and $1,480,000 in attorneys' fees. A representative of CGL attended the mediation but did not contribute toward the settlement, disclaiming any duty to indemnify the Defendants with respect to the Federal Action.

CGL then commenced this action, Graphic Arts Mutual Insurance Co. v Pine Bush Central School District [State Case]. CGL, alleging five causes of action and sought a judgment declaring that CGL was not obligated to indemnify Defendants in the Federal Case under the various policies issued by it to the School District with respect to the allegations of "intentional discriminatory conduct related to disparate treatment."

CGL claimed that exclusions in the policies [1] "precluded coverage for claims seeking damages stemming from intentional discriminatory conduct," and [2] that those claims did not fall under the definition of either a covered "occurrence" or 'loss' as those terms were defined by the policies.*

The Defendants moved pursuant to CPLR §3211(a)(1) and (7) to dismiss CGL's  complaint. Supreme Court granted those branches of the Defendants' motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss the first, second, third, and fourth causes of action. The Appellate Division reversed the Supreme Courts order, on the law, with costs.

The Appellate Division noted that a motion to dismiss on the basis of CPLR §3211(a)(1) may be granted "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law."

As to the motion to dismiss a claim pursuant to CPLR §3211(a)(7) for failure to state a cause of action, "the court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory."

According to the language employed in the CGL coverage part of CGL's primary policies, coverage was provided for bodily injury caused by an "occurrence," which was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The SDELL coverage part of the policies "afforded coverage for a 'loss,' which excluded matters that may be deemed uninsurable under the law."

However, said the court, the question of whether a loss is the result of an accident must be determined from the point of view of the insured and where the loss is unexpected, unusual, or unforeseen from the point of view of the insured, the loss constitutes an accident.

Significantly, the Appellate Division explained that an act that is intentionally committed or performed may still be considered an accident within the meaning of an insurance policy, as long as the insured did not expect or intend the harm caused. Accordingly, whether an event or series of events qualifies as an accident is a question of fact.

In the words of the Appellate Division, "[R]egardless of the initial intent or lack thereof as it relates to causation, or the period of time involved, if the resulting damage could be viewed as unintended by the fact finder the total situation could be found to constitute an accident" and "The duty to defend is measured against the allegations of pleadings but the duty to pay is determined by the actual basis for the insured's liability to a third person."

The relevant allegations set forth in the Federal Action "averred that the Defendants deliberately ignored complaints and their own observations of student-on-student anti-Semitic harassment and discrimination or responded in an unreasonable or inadequate manner to such complaints and observations."

T.E., in the Federal Action, further alleged that repeated and frequent incidents of anti-Semitic harassment and discrimination against them by other students, which were reported to school officials on numerous occasions and directly observed on other occasions by school personnel, gave rise to an inference that the Defendants "intended for the harassment to occur" based upon the Defendants' practices, policies, and customs in dealing with reports and observations of anti-Semitic harassment and discrimination; that the Defendants "intentionally discriminated" against the plaintiffs, that the defendants' conduct "aided and incited" unlawful discrimination; and that the Defendants' acts and omissions were "undertaken recklessly and with the intent to engage in wrongful conduct."

The Appellate Division explained that "it is not legally impossible to find accidental results flowing from intentional causes, i.e., that the resulting damage was unintended although the original act or acts leading to the damage were intentional," the insurance policies do not conclusively establish that CGL is obligated to indemnify the Defendants in the Federal Action, and "the other evidence submitted by the Defendants did not utterly refute the factual allegations set forth in T.E.'s complaint."

Accordingly, whether the incidents set forth in the Federal Action concerning "intentional causes" were accidents present questions of fact which cannot be determined on a motion to dismiss pursuant to CPLR 3211(a)(1) and (7) and  Supreme Court should have denied those branches of the Defendants' motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss the first, second, third, and fourth causes of action.

* CGL, in a fifth cause of action, sought a declaration that, in the event it was found the CGL had a duty to indemnify Defendants in the Federal Action, the duty to indemnify would be limited to that part of the settlement that was found to be reasonable, as CGL alleged that the settlement amount in the Federal Action was excessive. 

N.B. In the companion appeal to this action, Graphic Arts Mutual Insurance Company v Pine Bush Central School District, 2018 NY Slip Op 01566, the Appellate Division ruled that "it is premature to render a determination on the reasonableness of the settlement amount tendered by the defendants in the underlying action entitled T.E. v Pine Bush Central School Dist., commenced in the United States District Court for the Southern District of New York under case number 12-CV-2203, until the issue of indemnification has been decided."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01565.htm

It is legally possible to find "accidental results" flowing from "intentional causes" for the purposes of indemnification pursuant to the terms of an insurance policy

It is legally possible to find "accidental results" flowing from "intentional causes"  for the purposes of indemnification pursuant to the terms of an insurance policy

Graphic Arts Mut. Ins. Co. v Pine Bush Cent. Sch. Dist., 2018 NY Slip Op 01565, Appellate Division, Second Department

Commercial General Liability [CGL] issued School District and Educators Legal Liability policies well as CGL umbrella policies to the Pine Bush Central School District.

In lawsuit commenced in the United States District Court, Southern District of New York, captioned T.E. v Pine Bush Central School Dist., Docket #12-CV-2303), [the Federal Case] five students [T.E.] alleged that certain Pine Bush officers [the Defendants] and other school administrators violated their civil rights by being deliberately indifferent to anti-Semitic harassment and discrimination perpetrated by other students against them. The school district's superintendent, one of the named defendants, advised the Defendants that CGL had indicated that CGL would pay the costs of the defense in the action but reserved its right to disclaim coverage upon further investigation of the allegations.

CGL did pay the costs of defending the Defendants through the resolution of the Federal Case and during mediation, the parties to the Federal Case agreed to settle that action for a total of $3,000,000 in compensatory damages and $1,480,000 in attorneys' fees. A representative of CGL attended the mediation but did not contribute toward the settlement, disclaiming any duty to indemnify the Defendants with respect to the Federal Action.

CGL then commenced this action, Graphic Arts Mutual Insurance Co. v Pine Bush Central School District [State Case]. CGL, alleging five causes of action and sought a judgment declaring that CGL was not obligated to indemnify Defendants in the Federal Case under the various policies issued by it to the School District with respect to the allegations of "intentional discriminatory conduct related to disparate treatment."

CGL claimed that exclusions in the policies [1] "precluded coverage for claims seeking damages stemming from intentional discriminatory conduct," and [2] that those claims did not fall under the definition of either a covered "occurrence" or 'loss' as those terms were defined by the policies.*

The Defendants moved pursuant to CPLR §3211(a)(1) and (7) to dismiss CGL's  complaint. Supreme Court granted those branches of the Defendants' motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss the first, second, third, and fourth causes of action. The Appellate Division reversed the Supreme Courts order, on the law, with costs.

The Appellate Division noted that a motion to dismiss on the basis of CPLR §3211(a)(1) may be granted "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law."

As to the motion to dismiss a claim pursuant to CPLR §3211(a)(7) for failure to state a cause of action, "the court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory."

According to the language employed in the CGL coverage part of CGL's primary policies, coverage was provided for bodily injury caused by an "occurrence," which was defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The SDELL coverage part of the policies "afforded coverage for a 'loss,' which excluded matters that may be deemed uninsurable under the law."

However, said the court, the question of whether a loss is the result of an accident must be determined from the point of view of the insured and where the loss is unexpected, unusual, or unforeseen from the point of view of the insured, the loss constitutes an accident.

Significantly, the Appellate Division explained that an act that is intentionally committed or performed may still be considered an accident within the meaning of an insurance policy, as long as the insured did not expect or intend the harm caused. Accordingly, whether an event or series of events qualifies as an accident is a question of fact.

In the words of the Appellate Division, "[R]egardless of the initial intent or lack thereof as it relates to causation, or the period of time involved, if the resulting damage could be viewed as unintended by the fact finder the total situation could be found to constitute an accident" and "The duty to defend is measured against the allegations of pleadings but the duty to pay is determined by the actual basis for the insured's liability to a third person."

The relevant allegations set forth in the Federal Action "averred that the Defendants deliberately ignored complaints and their own observations of student-on-student anti-Semitic harassment and discrimination or responded in an unreasonable or inadequate manner to such complaints and observations."

T.E., in the Federal Action, further alleged that repeated and frequent incidents of anti-Semitic harassment and discrimination against them by other students, which were reported to school officials on numerous occasions and directly observed on other occasions by school personnel, gave rise to an inference that the Defendants "intended for the harassment to occur" based upon the Defendants' practices, policies, and customs in dealing with reports and observations of anti-Semitic harassment and discrimination; that the Defendants "intentionally discriminated" against the plaintiffs, that the defendants' conduct "aided and incited" unlawful discrimination; and that the Defendants' acts and omissions were "undertaken recklessly and with the intent to engage in wrongful conduct."

The Appellate Division explained that "it is not legally impossible to find accidental results flowing from intentional causes, i.e., that the resulting damage was unintended although the original act or acts leading to the damage were intentional," the insurance policies do not conclusively establish that CGL is obligated to indemnify the Defendants in the Federal Action, and "the other evidence submitted by the Defendants did not utterly refute the factual allegations set forth in T.E.'s complaint."

Accordingly, whether the incidents set forth in the Federal Action concerning "intentional causes" were accidents present questions of fact which cannot be determined on a motion to dismiss pursuant to CPLR 3211(a)(1) and (7) and  Supreme Court should have denied those branches of the Defendants' motion which were pursuant to CPLR 3211(a)(1) and (7) to dismiss the first, second, third, and fourth causes of action.

* CGL, in a fifth cause of action, sought a declaration that, in the event it was found the CGL had a duty to indemnify Defendants in the Federal Action, the duty to indemnify would be limited to that part of the settlement that was found to be reasonable, as CGL alleged that the settlement amount in the Federal Action was excessive. 

N.B. In the companion appeal to this action, Graphic Arts Mutual Insurance Company v Pine Bush Central School District, 2018 NY Slip Op 01566, the Appellate Division ruled that "it is premature to render a determination on the reasonableness of the settlement amount tendered by the defendants in the underlying action entitled T.E. v Pine Bush Central School Dist., commenced in the United States District Court for the Southern District of New York under case number 12-CV-2203, until the issue of indemnification has been decided."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01565.htm

Audits and examination reports issued during the week ending March 17, 2018 by NYS Comptroller Thomas P. DiNapoli

Audits and examination reports issued during the week ending March 17, 2018 by NYS Comptroller Thomas P. DiNapoli 

Click on text highlighted in color to access the full report.

Office of Children and Family Services (OCFS): Financial Oversight of the Advantage After School Program (2016-S-39)
OCFS has some appropriate controls to limit program contract spending, including a maximum cost per child of $1,375 and a maximum allowable contract budget, which is calculated by multiplying providers’ maximum average daily attendance (MADA) by the $1,375 maximum per child. OCFS reimbursements to program providers did not exceed the maximum contract budget. However, there is a risk that providers can exceed the maximum cost per child if they serve significantly fewer children than their MADA but do not reduce their expenditures proportionally.

City University of New York (CUNY): Borough of Manhattan Community College (BMCC): Controls Over Bank Accounts (Follow-Up) (2015-S-93)
CUNY Central officials provided auditors a list of 23 bank accounts that they were aware of at BMCC. Seven of BMCC’s accounts were opened after CUNY’s bank authorization policy was established in 2008. However, CUNY did not have the required notification forms for one of these accounts. Auditors also identified two accounts that were not on CUNY’s list. These findings point to weaknesses in the monitoring of bank accounts, which increase the risk that BMCC personnel could conduct transactions using unauthorized accounts.

Department of Environmental Conservation (DEC): Generic PINs (2017-BSE7-01)
Auditors found DEC’s use of fuel cards does not comply with the Office of General Services’ Fuel Card Services Contract Guidelines, the State Vehicle Use Policy and DEC’s Policies and Procedures. DEC does not have sufficient controls in place to ensure all fuel purchases are appropriate.  DEC officials have not implemented a previous comptroller’s recommendation to assign unique PINs to individual employees, consistent with the guidelines.

Department of Health (DOH): Nursing Home Surveillance (Follow-Up) (2017-F-12)
An initial audit issued in February 2016, found DOH generally met its obligations to conduct Standard Health and Complaint surveys of nursing homes in accordance with federal and state requirements, but its enforcement policies and procedures needed to be strengthened to better protect the health and well-being of nursing home residents. In a follow-up report, auditors found DOH officials addressed the problems identified in the initial audit, having implemented all four of the prior audit’s recommendations.

Department of Health: Medicaid Program: Managed Care Organizations (MCOs): Payments to Ineligible Providers (2016-S-59)
During the audit period, the DOH launched efforts to improve its ability to detect and prevent payments by MCOs to ineligible providers. Notwithstanding those efforts, however, auditors identified certain weaknesses that, if properly addressed, could help better detect and prevent improper payments to ineligible providers. Auditors determined MCOs improperly paid $50.3 million during the audit period.

State Education Department (SED): Universal Pre-Kindergarten Program (UPK): Monitoring of Health and Safety Requirements (Follow-Up) (2017-F-30)
An initial audit report issued in December 2016 found SED did not directly monitor UPK providers for health and safety. Instead, SED relied on the school district operating the UPK program, or the Office of Children and Family Services, to ensure that UPK providers were complying with health and safety requirements. In addition, auditors found a wide disparity in the way UPK providers were being monitored for health and safety. In a follow-up, auditors found SED officials have made some progress in addressing the issues identified in the initial audit.

Metropolitan Transportation Authority (MTA): New York City Transit: Operational Training and Medical Assessments of Train Crews (2016-S-26)
Auditors found MTA’s New York City Transit unit is not in compliance with the requirements of the Induction Training curriculum established for its train crews. This lack of compliance may be tied to poor outcomes. For instance, all four train operators in the audit sample who had five or more operating incidents during the audit period had a history of failing grades and/or tests and quizzes missing from their training files. Auditors also found: train operators and conductors are not always meeting or completing refresher training requirements; many of their required annual hearing tests were either done late or not at all; train crews not in compliance with medical assessment requirements; and there were  inconsistencies with test scoring and file maintenance, including missing test files, ungraded tests, and missing attendance records.

Metropolitan Transportation Authority: Staten Island Railway (SIR): Operational Training and Medical Assessments of Train Crews (2017-S-71)
Auditors found SIR’s records were insufficient to document that training was satisfactorily completed. For a randomly selected sample of conductors who underwent Induction Training during the audit period, 61 percent of test papers were either not graded or missing. In addition, for the randomly selected sample of engineers, 81.7 percent of test papers for those newly hired and 41.7 percent of test papers for those promoted were either not graded or missing. Five of the ten conductors randomly sampled were required to take Book of Rules Refresher Training during the audit period. However, only two of the five had records that supported satisfactory completion of all exams. Auditors found similar results for the Signals Refresher Training, with only two of eight conductors having records to support satisfactory completion. Train crews were also not in compliance with medical assessment requirements. 

Selected reports posted in Employment Law News by WK Workday

Selected reports posted in Employment Law News by WK Workday

Source: WK Workday - Week of March 16, 2018

Click on text highlighted in color to access the full report.

Top labor and employment developments in February 2018

In huge EEOC win, appeals court finds discrimination on basis of transgender/transitioning status violates Title VII

Hospital once linked to church and still giving pastoral care may invoke ministerial exception

Not currently diagnosed with sleep apnea, fired dispatcher can’t show FMLA or disability bias

Fear obesity could lead to other conditions supports rejected applicant’s regarded-as disabled claim

Using election observer who was just fired for brandishing life-like toy gun didn’t taint union election

Mayor who fired long-term employee for ‘unacceptable’ email should have been granted qualified immunity

Disabled receptionist sexually assaulted by coworker awarded over $95K against unsympathetic hotel employer