Demonstrating a constitutional claim of member service credits bars their prehearing removal and the cancellation of the individual's retirement application by the retirement system

Demonstrating a constitutional claim of member service credits bars their prehearing removal and the cancellation of the individual's retirement application by the retirement systemKravitz v DiNapoli, 2014 NY Slip Op 08284, Appellate Division, Third Department

Jay A Kravitz, a licensed physician, provided part-time professional services to four public school districts since the mid-1980s. In the course of his providing such services, Kravitz was reported as a school employee to the New York State and Local Employees' Retirement System [ERS] and made annual employer contributions toward his public pension.

In a September 2011 letter from ERS notified Kravitz that ERS had been determined that he was an independent contractor rather than an employee of the school districts that he served and thus would lose approximately 20 years of member service credits in the Retirement System. Kravitz was also advised that [1] he had the right to a hearing to challenge the determination; [2] if no hearing was requested within four months, the service credits would be removed and [3] any contributions he made would be refunded.

Kravitz timely requested a hearing, but such a hearing had not been held as of the date of this decision by the Appellate Division. The court noted that the record includes a November 2012 letter from Kravitz's attorney requesting that the hearing be deferred until the following August due to Kravitz's absence from the country.

In October 2012, Kravitz filed an application with the Retirement System but ERS advised Kravitz that as a result of “the loss of approximately 20 years of service credits,” his remaining 1.55 years of service credits “rendered him ineligible to receive a pension benefit at that time.” Kravitz's attorney objected to ERS “removal of Kravitz's service credits” and requested that ERS process Kravitz's retirement application pending the hearing. ERS, however, advised Kravitz that he was not eligible for retirement benefits because he had insufficient years of service credits and canceled his retirement application.

Kravitz then commenced a CPLR Article 78 action seeking a judgment declaring that ERS' removal of his service credits and refusal to accept and process his retirement application was, among other things, arbitrary and capricious and a violation of due process. ERS asked Supreme Court to dismiss Kravitz's petition “for failure to state a cause of action” and for his failure to exhaust administrative remedies. Finding that Kravitz failed to exhaust his administrative remedies, Supreme Court granted ERS' motion.

ERS contended that inasmuch as it has not made a final determination with regard to Kravitz's service credits and retirement application, the matter is not ripe for judicial consideration, citing Swergold V Cuomo, 70 AD3d 1290. Kravitz argued that even though no hearing has occurred, the matter is ripe for judicial review because ERS had already removed his service credits and canceled his retirement application, resulting in a violation of his constitutional due process rights to such a predeprivation hearing.

The Appellate Division said that it agreed with Kravitz and vacated the Supreme Court's ruling.In Swergold the Appellate Division found that the member's due process claims “were rendered moot and/or were premature after the Retirement System restored their service credits pending administrative hearings and averred that it would not revoke those credits until the completion of such hearings.”

In contrast to Swergold, in Kravitz, said the court, ”not only has the Retirement System removed Kravitz's service credits, it has also canceled Kravitz's retirement application and has not represented that it would restore his service credits until his hearing is completed and a final determination is rendered.”

Accordingly, requiring Kravitz to exhaust his administrative remedies arguably could cause irreparable injury, for example, in the event of his death pending an administrative hearing.

Under these circumstances, said the Appellate Division, it concluded that Kravitz “has a cognizable constitutional claim regarding the prehearing removal of his service credits and cancellation of his retirement application that is ripe for our review and survives [ERS'] motion to dismiss.

As Kravitz's appeal was before the Appellate Division on ERS' pre-answer motion to dismiss, the court ruled that the matter must be remitted to Supreme Court to permit ERS to serve an answer to Kravitz's petition.

However, in a footnote to its ruling, Appellate Division said that “Considering the viability of the petition, we are of the view that [ERS] should be precluded from removing Kravitz's service credits and refusing to accept his retirement application until a final determination is made by Supreme Court with respect to the petition and by the Comptroller as to his employment status after an administrative hearing.”

The decision is posted on the Internet as:http://www.nycourts.gov/reporter/3dseries/2014/2014_08284.htm

Placing an employee on an involuntary leave of absence pursuant to Civil Service Law §72.5

Placing an employee on an involuntary leave of absence pursuant to Civil Service Law §72.5
2014 NY Slip Op 08273, Appellate Division, Third Department

This appeal considers the placement of an employee [Anonymous] (1) on an involuntary leave of absence pursuant to Civil Service Law §72.5 and [2] a subsequent determination by Anonymous’ appointing authority to terminate Anonymous’ employment pursuant to Civil Service Law §73.

Anonymous was employed as a police officer and was placed on involuntary leave by the appointing authority pursuant to Civil Service Law §72.5 after the appointing authority determined that there was probable cause to believe that the continued presence of Anonymous on the job represented a potential danger to persons or property or would severely interfere with agency operations.

Anonymous was then examined by a physician who found that Anonymous was “mentally unfit to perform the duties of his position at that time.”

Pursuant to a request by Anonymous' employee organization a hearing was conducted and the Hearing Officer issued a written decision on April 19, 2012 finding that Anonymous was properly subjected to an involuntary leave of absence approximately one year earlier due to being mentally unfit at that time and recommended that Anonymous be discharged from his position.* Anonymous appealed the determination and in November 2012 the New York State Civil Service Commission denied Anonymous' appeal of the appointing authorities determination to place him on such involuntary leave.

In a letter dated April 20, 2012, the appointing authority notified Anonymous that his employment was terminated effective March 31, 2012 pursuant to Civil Service Law §73.

In May 2012, Anonymous challenged the appointing authority’s determination to terminate his employment, requested that the determination be revoked and asserted that due process of law required a more recent medical evaluation of his mental fitness to perform his work duties, as no medical assessment had been conducted in more than a year. The appointing authority denied Anonymous' demand for a post-termination §73 hearing.

Anonymous commenced this proceeding to annul the Commission's determination regarding his placement on involuntary leave and to annul the appointing authority's determination to terminate his employment. He also sought a court order directing his reinstatement to his former position with back pay and benefits.

The Appellate Division rejected Anonymous' contention that he was denied pre-termination due process protections, explaining that “Minimum pre-termination due process requirements are satisfied where, as here, an employee is given notice of the grounds for possible discharge and some opportunity to respond." The record makes it clear that Anonymous was well aware of the appointing authority’s concerns with his mental ability to serve as a police officer and that he contested, at every turn, the allegations that his psychological condition was deficient prior to his discharge from employment.

The court, however, agreed with Anonymous' assertion that the failure to conduct a post-termination hearing was violative of his right to due process, noting that employees who are terminated from their positions pursuant to Civil Service Law §73 "are entitled to a full post-termination hearing."

The court, however, agreed with Anonymous' assertion that the failure to conduct a post-termination hearing was violative of his right to due process, Although the appointing authority speculated that “it is unlikely that Anonymous could produce medical evidence establishing his fitness to occupy his position as of the date of his termination from employment.” the Appellate Division said that were it to accept such reasoning, "it would allow an agency that is intent on terminating an employee to arbitrarily decide whether a post-termination hearing was necessary, a determination which flies in the face of existing law.”

In the words of the Appellate Division, “The rationale for providing [Anonymous] with a post-termination hearing is to afford him a final opportunity to present proof demonstrating how his mental condition changed, if at all, and whether he is able to perform his job duties as of the date of his termination. To deny Anonymous' request for a post-termination hearing was constitutionally infirm and, therefore, remittal of this matter is necessary for the completion of such administrative proceedings,” citing House v New York State Off. of Mental Health, 262 AD2d 929.

* Although the phrase used in the decision is "be discharged from his position," such termination is not a pejorative dismissal as §73, in pertinent part, specifically provides that an individual terminated from a §72 leave “may, within one year after the termination of such disability, make application to the civil service department or municipal commission having jurisdiction over the position last held by such employee for a medical examination to be conducted by a medical officer selected for that purpose by such department or commission.” §73 further provides that “If, upon such medical examination, such medical officer shall certify that such person is physically and mentally fit to perform the duties of his former position, he shall be reinstated to his former position, if vacant, or to a vacancy in a similar position or a position in a lower grade in the same occupational field in his former department or agency. If no appropriate vacancy shall exist to which such reinstatement may be made, or if the work load does not warrant the filling of such vacancy, the name of such person shall be placed on a preferred list for his former position in his former department or agency, and he shall be eligible for reinstatement in his former department or agency from such preferred list for a period of four years.”

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2014/2014_08273.htm

Allegations of unlawful discrimination based of the employer‘s failure to promote an individual to higher level positions

Allegations of unlawful discrimination based of the employer‘s failure to promote an individual to higher level positions
Okocha v City of New York, 2014 NY Slip Op 08261, Appellate Division, First Department

The Appellate Division ruled that Supreme Court was correct in dismissing the petition filed by Emmanuel O. Okocha, Esq. alleging unlawful discrimination” which was based on the City of New York’s failure to promote him from an Attorney Level II position to one of two Attorney Level III positions  posted in November 2006.

The court said the Okocha’s claim failed because the two Attorney Level III positions posted were never filled because “there was no longer a need” for them. Further, said the Appellate Division, the City did not  discriminate against him when it did not promote him from Attorney Level II to Attorney Level IV in January 2008, explaining that the two attorneys promoted to the Level IV  positions had previously been Level III attorneys and therefore were more qualified than Okocha for promotion to Level IV.

Okocha also contended that the City’s Human Resources Administration's (HRA) investigations into his maintenance of a private practice of law, which resulted in disciplinary action being taken against him, constituted adverse or differential treatment. The Appellate Division said that an arbitrator had sustained the misconduct charges filed against Okocha and sustained the penalty imposed, termination and thus the allegations of misconduct were fully substantiated and Okocha’s attempt to collaterally attack the arbitrator's findings of misconduct in this appeal “cannot now be countenanced.”

The court explained that the doctrine of collateral estoppel precludes considering Okocha's claim that the HRA misconduct investigations were initiated in retaliation for his commencement of this action as Okocha had raised this contention at the arbitration proceeding and the arbitrator expressly rejected it.

As to Okocha’s claim that the HRA failed to promote him in retaliation for his prior complaints of mistreatment is not barred by collateral estoppel, the Appellate Division held that it failed on the merits. HRA's actions in failing to promote Okocha, said the court, were not materially adverse or disadvantageous to him since, as noted earlier, the two positions listed in the November 2006 job postings were never filled and the January 2008 job postings “were filled by objectively better-qualified candidates.”

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2014/2014_08261.htm
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A death benefit payable by a New York Employees’ Retirement System is a testamentary substitute that may permit a non-designated spouse to exercise his or her “right of election”

A death benefit payable by a New York Employees’ Retirement System is a testamentary substitute that may permit a non-designated spouse to exercise his or her “right of election”

Gopaul v New York City Employees' Retirement Sys., 2014 NY Slip Op 08020, Appellate Division, Second Department

Shakuntala Devi Tika Gopaul, the widow of a member of the New York City Employees' Retirement System (NYCERS), sued NYCERS after it refused to accept her late husband's fully completed and notarized designation of beneficiary form naming her as his sole beneficiary.

Gopaul filed her petition in Supreme Court seeking an order to require NYCERS to accept, as effective, a designation of beneficiary form naming her as the sole beneficiary of her late husband's death benefit rather than to her late husband's sons, who were previously designated as his beneficiaries.

The Appellate Division noted that this proceeding could potentially involve the administration of a decedent's estate because the death benefit payable by NYCTRS is a testamentary substitute against which the Gopaul could exercise a right of election even if it was determined that she was not the designated beneficiary.

As the Surrogate's Court declined to exercise jurisdiction over this proceeding before it was commenced in the Supreme Court, the Appellate Division said that the Supreme Court “providently exercised its discretion in denying that branch of NYCERS' motion s pursuant to CPLR §325(e) to remove this proceeding to the Surrogate's Court.”

The Appellate Division also ruled that Supreme Court properly denied NYCERS' alternative motion seeking to dismiss the Gopaul’s petition as time-barred. In this proceeding, which was in the nature of mandamus to compel NYCERS to perform a ministerial act, the Appellate Division said that the four-month statute of limitations begins to run "after the NYCERS's refusal, upon the demand of  [Gopaul] . . . to perform its duty."

As the filing of a CPLR Article 78 petition can itself be construed as a demand, the Appellate Division ruled that as Gopaul made her demand that NYCERS perform its duty to accept her late husband's fully completed and notarized designation of beneficiary form by filing the petition in this proceeding in February 2012, the petition is not time-barred.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2014/2014_08020.htm
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Providing for the defense and indemnification of school officials pursuant to Public Officers Law §18(3)(a) or Education Law §381

Providing for the defense and indemnification of school officials pursuant to Public Officers Law §18(3)(a) or Education Law §3811

Appeal of Betty Carmand and Steven White, Decisions of the Commissioner of Education, Decision #16,689

In this appeal to the Commissioner of Education, Betty Carmand and Steven White challenged the Board of Education of the East Ramapo Central School District's decision under color of §18 of the Public Officers Law to expend district funds to appoint counsel to defend or otherwise represent current and former board members and district employees in connection with several actions, proceedings and other matters. 

Carmand and White contended that the individual respondents named in their appeal are not entitled to defense and indemnification of legal costs with respect to the relevant Administrative and Federal civil actions in which they were involved because [1] they had engaged in a pattern of willful and intentional misconduct which includes the breach of fiduciary duties, defrauding the district and its residents, and committing “Constitutional torts”; [2] they were not acting within the scope of their employment or duties when the acts or omissions giving rise to the causes of action occurred; and [3] their acts or omissions were made in bad faith and thus such “respondents/defendants are not entitled to legal representation, defense, and indemnification, pursuant to Public Officers Law §18(3)(a) or Education Law §3811.”*

After considering a number of procedural issues, the Commissioner addressed the merits of the appeal, which he sustained in part.

Addressing the Board's contention Public Officers Law §18 controls and that Education Law §3811 is irrelevant to this appeal, the Commissioner explained:

1. Education Law §3811 provides for the defense and indemnification of school board members, officers and employees if they comply with certain procedural steps where the matter arises out of the exercise of their powers or the performance of their duties; and a court or the Commissioner, as the case may be, certifies that the individual appeared to act in good faith with respect to the exercise of his powers or the performance of his duties while

2. Public Officers Law §18(3) provides for defense and indemnification in any civil action or proceeding arising out of any alleged act or omission which occurred or allegedly occurred while acting within the scope of the individual’s employment or duties.

However, Public Officers Law §18[4][b] provides that the duty to indemnify under this statute does not arise where the injury or damage resulted from intentional wrongdoing or recklessness on the part of the employee.

Further Public Officers Law §18(12 provides that, the rights accorded to employees regarding defense and indemnification under the Public Officers Law shall take the place of defense and indemnification provisions provided by another enactment unlessthe public entity provides that the benefits shall supplement and be in addition to protections conferred by another law.

Once adopted by a public entity or board, Public Officers Law §18 normally becomes the exclusive source of an employee’s or board member’s defense and indemnification rights, but not if the governing body elects to retain existing protections under another enactment by providing that the benefits of Public Officers Law §18 would supplement, or be in addition to, the protections conferred by an existing enactment.

In this instance, said the Commissioner, the Board approved a resolution adopting the protections afforded under Public Officers §18 in which it expressly stated that such protections shall be in addition to the indemnification provisions available under Education Law §3811. The Commissioner concluded that Education Law §3811 is the primary source of defense and indemnification in this case and protections under Public Officers Law §18 are secondary

Addressing the challenge to the appointment of counsel in the Federal Action and the Attorney General Investigation, the Commissioner found that the complaint specifically alleges that the Remaining Individual Respondents, as defendants in that action, “were at all times herein acting under color of state law in the course and scope of their duties and functions as officers and agents of the [district] ... although in a manner ultra vires.”

Noting that the district’s insurance carrier disclaimed coverage because the Federal Action alleged certain intentional wrongful conduct, the Commissioner said that he was not bound by the determination of a school district’s insurance carrier that was interpreting the terms of an insurance policy. The Commissioner then held that the complaint in the Federal Action alleges conduct arising out of the performance of the Remaining Individual Respondents’ duties as board members and the initial appointment of counsel for their defense in the Federal Action was appropriate. 

However, said the Commissioner, the ultimate determination whether the conduct charged arises out of the remaining Individual Respondents’ performance of their duties thus entitling them to indemnification of their legal costs must be made within the context of the underlying proceedings.

Similarly, a determination of whether a board member is eligible for indemnification based on lack of good faith cannot be made until a final decision is rendered in the underlying action or proceeding. 

The Commissioner explained that “Until a final decision is rendered, there is no factual record on which to base a finding that the board member is disqualified from receiving indemnification”

Turning to that part of the Board’s resolution that purported to “unconditionally” indemnify the Remaining Individual Respondents in the Administrative Action and the Federal Action, the Commissioner said that neither Public Officers Law §18 nor Education Law §3811 authorizes unconditional indemnification.

Further, the Commissioner said that a Board resolution dated October 2, 2012 broadly provides that “current and former members, officers and employees shall be fully and unconditionally indemnified ...” in the future, without regard to any particular individual, whether the individual’s actions  arose out of the exercise of his or her powers or the performance of his or her duties, were within the scope of his or her public employment or duties, or whether the action was undertaken in good faith or constitutes intentional wrongdoing or recklessness – criteria set forth under Education Law §3811 and Public Officers Law §18. The Commissioner said that “such broad, unconditional action disregards such criteria, is void as against public policy and cannot be permitted.”

The Commissioner also noted that the several defendants/respondents will require “Certificates of Good Faith” to be eligible receive indemnification for their defense and other costs. As that question is still pending in the court actions, the Commissioner aid that “it cannot be decided separately in this appeal.”

As to the Board's appointed counsel prospectively, pursuant to Public Officers Law §18, for the defense and indemnification of any current and former board members and district employees who may be subpoenaed or compelled to testify in the Attorney General Investigation, Carmand and White contend that this was improper because the Attorney General Investigation is not a “civil action or proceeding, state or federal” as contemplated by Public Officers Law §18 (3)(a), the Commissioner agreed. Further, said the Commissioner, “Education Law §3811 also applies wherever a board member, officer or employee defends 'any action or proceeding' (Education Law §3811[1]), a prerequisite not met here.”

With respect to any concerning the reasonableness of the attorneys’ fees incurred by the district the Commissioner said that he did not have jurisdiction to rule on such an issue either under either Education Law §3811 or Public Officers Law §18. Rather, said the Commissioner, such a challenge should be brought in a taxpayer’s action in court. Similarly, noted the Commissioner, Public Officers Law §18(3)(c) expressly provides that any dispute regarding “the amount of litigation expenses or the reasonableness of attorneys’ fees shall be resolved by the court upon motion or by way of a special proceeding.”

As to the issue related to the Open Meetings Law raised by Carmand and White, the Commissioner pointed out that Public Officers Law §107 vests exclusive jurisdiction over complaints alleging violations of the Open Meetings Law" in the Supreme Court of the State of New York, and alleged violations thereof may not be adjudicated in an appeal to the Commissioner."

The Commissioner then sustained the appeal filed by Carmand and White to the extent indicated in his ruling and promulgated the following orders:

IT IS ORDERED that that September 13, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of Daniel Schwartz in the Federal Action is annulled insofar as it provides for unconditional indemnification; and

IT IS FURTHER ORDERED that that September 13, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of Moses Friedman in the Federal Action is annulled insofar as it provides for unconditional indemnification; and

IT IS FURTHER ORDERED that that September 13, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of Yehuda Weissmandl in the Federal Action is annulled insofar as it provides for unconditional indemnification; and

IT IS FURTHER ORDERED that that September 13, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of Richard Stone in the Federal Action is annulled insofar as it provides for unconditional indemnification; and

IT IS FURTHER ORDERED that the October 2, 2012 resolution of the Board of Education of the East Ramapo Central School District relating to defense and indemnification of unnamed individuals in an Attorney General Investigation is hereby annulled insofar as it applies to the Remaining Individual Respondents.

* Carmand and White also alleged that one of the respondents, Daniel Schwartz was improperly provided with separate counsel in the Administrative Action.  Other issues raised by Carmand and White in this appeal: [a] appointed counsels’ fees were unreasonable; [b] the board's lack of authority to appoint counsel to “defend” school officials an Attorney General Investigation or to proactively initiate litigation against the Attorney Genera; [c] the propriety of the votes taken at each board meeting appointing counsel and [d] the board's allege violations of the Open Meetings Law. 

                              
The decision is posted on the Internet at:
http://www.counsel.nysed.gov/Decisions/volume54/d16689