An administrative regulation, or an amendment to such regulation, will be sustained if not arbitrary or irrational

The Independent Insurance Agents and Brokers of New York, Inc., et al., [Petitioners], challenged the validity of the recently amended Insurance Regulation 187 (11 NYCRR 224), which provides protections to consumers engaging in life insurance and annuity transactions. 

The Court of Appeals held that "[b]ecause the Department of Financial Services [DFS] appropriately exercised its authority to create a carefully considered and clear regulation, it found no basis to invalidate the regulation." 

The court explained that: 

1. An administrative regulation will be upheld only if it has a rational basis, and is not unreasonable, arbitrary or capricious, citing New York StateAssn. of Counties v Axelrod, 78 NY2d at 166. 

2. "If a regulation is to be nullified, the challenger must establish that it is so lacking in reason for its promulgation that it is essentially arbitrary", citing Kuppersmith v Dowling, 93 NY2d 90.

3. "So long as the regulation is 'genuine[ly] reasonable and rational' it should be upheld—courts should not scrutinize the 'policy considerations underlying the' regulation”, citing New York StateAssn. of Counties v Axelrod, 78 NY2d 158.

The Court of Appeals then opined "The goal of the amendment is straightforward and supported by the administrative record, and the amendment is plainly tailored to achieve those objectives [and] DFS reasonably concluded that the 'best interest' framework was needed to protect consumers, and [Petitioners] cannot show that the amended regulation is 'essentially arbitrary'".

In the words of the court, "[e]ach of [Petitioners] arguments for invalidating the regulation is unavailing. Petitioners have fallen woefully short of their burden to sustain a facial due process challenge on vagueness grounds, and the extensive administrative record supporting the amended regulation refutes their alternative challenges."

Click on the URL shown below to access the text of the decision of the Court of Appeals.

 https://www.nycourts.gov/reporter/3dseries/2022/2022_05917.htm

 

Education Law §3012-c evaluation procedures apply only to classroom teachers and building principals

A New York City Department of Education [Employer] "per session football coach" [Coach] appealed the Employer's "unsatisfactory performance rating" for his services during the 2018 football season. 

Coach initiated a CPLR Article 78 action seeking a court order directing Employer to expunge the U-rating and reinstate "his ability to do per session [coaching] work  ...." contending that Employer "violated procedure by failing to conduct observations of his performance and provide him with notice of any of the misconduct."

The Appellate Division rejected Coach's argument, explaining that "the evaluation procedures set forth in Education Law §3012-c [Annual professional performance review of classroom teachers and building principals] expressly applies only to "classroom teachers and building principals and [Coach] has not demonstrated that they apply to per session coaches."

The Appellate Division then opined that the Employer's U-rating was not arbitrary and capricious and was supported by a rational basis by the evidence in the record. Such evidence said the court, indicated, among other things, Coach's "arrest for driving while intoxicated, continued alcohol usage on school premises, covering up of misconduct by a football player, and lack of leadership," which led to decline of the football program.

Click HEREto access the Appellate Division's decision in this action.

 

Determining "standing" to proceed with a CPLR Article 78 action

In 2018, Petitioner commenced a CPLR Article 78 proceeding to review a resolution of the Board of Trustees of the Village of Muttontown [Respondents] which provided that certain funds held in a fund for the acquisition of parkland were to be transferred into a general capital improvement fund. The petition also sought to annul Local Law No. 2-2018 of the Village of Muttontown to the extent that it provided for the indemnification of Village employees in the amount of any judgment obtained against them for punitive damages and for damages arising out of intentional wrongdoing or recklessness, based upon their acts as employees.

Petitioner asserted, inter alia,*that the resolution and the local law were passed in violation of various laws, including the State Environmental Quality Review Act (SEQRA).

Respondents moved to dismiss the proceeding, inter alia, on grounds of lack of standing. Petitioner opposed the motion, and cross-moved for leave to amend the petition and for leave to file a late notice of claim.

The Supreme Court granted the Respondents' motion, denied Petitioner's cross motion, denied the petition, and dismissed the proceeding. Petitioner appealed the court's rulings.

The Appellate Division sustained the Supreme Court's ruling, explaining that the Respondents' motions were "properly granted", explaining:

1. Generally, to establish standing to challenge governmental action, a petitioner must show that it would "suffer direct injury different from that suffered by the public at large, and that the injury asserted falls within the zone of interests or concerns sought to be promoted or protected by the statutory provision under which the agency has acted" [See Matter of Riverhead PGC, LLC v Town of Riverhead, 73 AD3d 931].

In this instance, the Appellate Division opine Petitioner did not adequately demonstrate that she suffered "direct injury different from that suffered by the public at large" and thus "failed to establish standing to challenge the resolution and the local law pursuant to CPLR article 78.

The Appellate Division also concluded that Supreme Court also correctly determined that the petitioner lacked standing to assert SEQRA claims. "To establish standing under SEQRA", said the court, "a petitioner must show (1) an environmental injury that is in some way different from that of the public at large, and (2) that the alleged injury falls within the zone of interests sought to be protected or promoted by SEQRA," citing Matter of Tuxedo Land Trust, Inc. v Town Bd. of Town of Tuxedo, 112 AD3d 726 and other decisions.

Further, noted the Appellate Division, "[t]o qualify for standing to raise a SEQRA challenge, a party must demonstrate that it will suffer an injury that is environmental and not solely economic in nature.

Thus, Supreme Court had properly granted Respondents' CPLR 3211(a) motion to dismiss the petition, denied the Petitioner's cross motion for leave to amend the petition and for leave to file a late notice of claim, denied the petition, and dismissed the proceeding.

* Latin for "among other things."

Click HERE to access the Appellate Division's ruling in this case.