Applying the Doctrine of Collateral Estoppel

Applying the Doctrine of Collateral Estoppel

Clifford v County of Rockland, 2016 NY Slip Op 05112, Appellate Division, Second Department

The doctrine of collateral estoppel bars a party from relitigating an issue clearly raised in an action or proceeding and decided against that party in a subsequent action or proceeding regardless of whether or not the tribunals or causes of action are the same.

This doctrine was applied in litigation brought by Deirdre A. Clifford in a New York State court seeking to recover damages for an alleged breach of contract and discrimination on the basis of disability in violation of New York’s Executive Law §296, the State's Human Rights Law.

Clifford, an employee of County of Rockland, commenced this action against the County in Supreme Court. Rockland, however, moved to dismiss Clifford’s complaint as barred by the doctrine of collateral estoppel, citing the dismissal of her claims against it in an earlier federal action she had brought in the United States District Court for the Southern District of New York.*

Clifford, on the other hand, claimed that her State action should go forward because the Federal District Court had declined to exercise supplemental jurisdiction over her State law claims.

Supreme Court granted the County's motion to dismiss Clifford’s petition, which ruling was affirmed by the Appellate Division. The Appellate Division explained that the doctrine of collateral estoppel comes into play when four conditions are met:

(1) The issues in both proceedings are identical;

(2) The issues in the prior proceeding were actually litigated and decided;

(3) There was a full and fair opportunity to litigate in the prior proceeding: and

(4) The issue previously litigated was necessary to support a valid and final judgment on the merits.

Further, said the Appellate Division, the party attempting to invoke the doctrine has the burden of demonstrating the identity of the issues, while the party seeking to avoid the court’s application of the doctrine must establish the lack of a full and fair opportunity to litigate the issue in the earlier proceeding. Stated another way, the doctrine will be applied where the initial tribunal, having jurisdiction, declined to exercise its jurisdiction over a plaintiff's claims but decided issues identical to those raised by the plaintiff in his or her subsequent action before another tribunal.

Here, said the Appellate Division, Clifford’s breach of contract claim in her State action alleged that certain terms of a disciplinary action settlement agreement disposing of certain disciplinary charges filed against her were violated. However, said the court, those allegations which she now raised in her State action were considered and rejected in the federal action.

With respect to Clifford’s claims under New York State’s Human Rights Law [NYSHRL], the Appellate Division said that "the standards for recovery under the New York Human Rights Law are in nearly all instances identical to Title VII [of the Civil Rights Act of 1964] and other federal law" and the Federal District Court determined that Rockland County had “legitimate, independent, and nondiscriminatory reasons for its employment actions, and that those reasons were not a pretext for discrimination.”

This determination, said the court, was dispositive of Clifford’s NYSHRL claims.

Finding that [1] Rockland County had met its burden of demonstrating that the issues Clifford raised in her State action were identical to those decided against her in the federal action and [2] Clifford failed to demonstrate that she did not have a full and fair opportunity to litigate these issues in her federal action, the Appellate Division held that Supreme Court properly granted the County's motion to dismiss Clifford’s State complaint.

* Clifford v County of Rockland, 2012 WL 2866268, 2012 US Dist LEXIS 98783 [USDC SD NY, 10 CV 9679 (VB)], affirmed 528 Fed Appx 6 [2d Cir]).

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_05112.htm

Selected reports issued by the Office of the State Comptroller during the week ending July 9, 2016

Selected reports issued by the Office of the State Comptroller during the week ending July 9, 2016

Source: Office of the State Comptroller

Click on text highlighted in color to access the posting. 

Executive Director of Baychester Youth Council indicted for allegedly stealing more than $100,000 from federal grant monies

N.B. An indictment is an accusatory instrument and not proof of a defendant's guilt.

Earnestine Russell has been charged with grand larceny. Bronx District Attorney Darcel D. Clark and New York State Comptroller Thomas P. DiNapoli announced that the longtime director of a Bronx youth group has been indicted on charges she stole $112,000 from a state-administered, federally funded grant provided to support after-school programs for middle school children.

District Attorney Clark said, "The defendant, Earnestine Russell, allegedly turned the Baychester Youth Council into a façade for her thievery, and enriched herself for years instead of enriching the lives of the children she purported to cherish."

State Comptroller DiNapoli said, "Earnestine Russell allegedly took public money intended to give children a safe and nurturing place to go after school and spent it on personal trips and electronic equipment for herself. After my office found her theft, we worked closely with Bronx County District Attorney Darcel D. Clark and her staff to make certain that Ms. Russell is held accountable."

District Attorney Clark said that Ms. Russell, 66, was indicted on second-degree grand larceny and second-degree criminal possession of stolen property. She was arraigned on July 6, 2016, before Bronx Supreme Court Justice Steven Barrett. Bail was set at $30,000 cash and an examination of surety. Ms. Russell is due back in court on August 9, 2016.

According to the investigation by the Bronx District Attorney's Office and the State Comptroller's Office, in 2008, Ms. Russell--who has run the Baychester Youth Council since the 1980s -- received a federal grant, administered by the New York State Education Department, for more than $2.7 million over five years to create a 21st Century Community Learning Center.

The State Comptroller's Office audited Ms. Russell in 2012 and found she used $250,400 for inappropriate or undocumented expenses-- including a home theater-- and the grant was revoked.

The Bronx DA's Office began investigating and found that Ms. Russell had moved the grant money through numerous bank accounts; made cash withdrawals; wrote checks to cash, herself or family; and made wire transfers from the accounts. When confronted with her gambling records, which showed betting of more than $150,000 during the fraud period of 2009-2011, Ms. Russell denied betting, then explained the figures also showed winnings she bet. Ms. Russell also told investigators that she could "make whatever use of [the money]" she saw fit.

The case is being prosecuted by Assistant District Attorneys Markus Sztejnberg of the Economic Crimes Bureau and Jeffrey Glucksman , Chief of Trial Bureau 70, under the supervision of William Zelenka, Chief of the Economic Crimes Bureau, and Jean T. Walsh, Chief of the Investigations Division.

District Attorney Clark thanked the State Comptroller's Division of Investigations and Bureau of State Expenditures, as well as New York State Police Investigators John Bode and Charles Sands and Senior Investigators Michael Vazquez, Michael Davis and John Vescio for their assistance in the investigation, and retired Assistant Bronx District Attorney Linda Tacoma for her diligent work on the case.

For a copy of the audit, go to http://osc.state.ny.us/audits/allaudits/bseaudits/bse2011-0021.htm

Since taking office in 2007, DiNapoli has committed to fighting public corruption and encourages the public to help fight fraud and abuse.  Individuals can report allegations of fraud involving public funds by calling the toll-free Fraud Hotline at 1-888-672-4555, by transmitting an e-mail to investigations@osc.state.ny.us, by filing a complaint online athttp://osc.state.ny.us/investigations/complaintform2.htm or by mailing a complaint to Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236.

New York State Comptroller Thomas P. DiNapoli announced the following audits have been issued:

NYC Human Resources Administration (HRA) and the Office of Temporary and Disability Assistance (OTDA): Benefit Eligibility Assessment Process (2015-F-28)
An initial audit issued in May 2014 found that HRA applied a fair and consistent assessment process when determining client eligibility in compliance with governing policies and procedures. Auditors also determined that changes were necessary to reduce the number of overturned HRA determinations and costly, and in some cases unnecessary, OTDA Fair Hearings. Auditors also found that OTDA's closed-case coding system did not always adequately describe the case resolution. In a follow-up report, auditors found OTDA and HRA have made significant progress in addressing the issues identified in the initial report.

New York Wine and Grape Foundation: Use of State Appropriations (2015-S-102)
The foundation has appropriately used its state money to fund allowable activities. The foundation has also exceeded its contractual commitment to leverage state money. Although it is only required to obtain outside funding equal to what the state provides, it has obtained nearly double that. The foundation has established effective internal controls over most of its financial operations. However, auditors found that certain revenue payments were being sent directly to an employee's home and not to the foundation's business office. Foundation officials immediately rectified the problem.

Department of Health (DOH): Program Oversight and Monitoring of the Maximus Contract for the New York State of Health (Insurance Marketplace) Customer Service Center (2015-S-80)
DOH has an effective system to ensure that Maximus is complying with contract requirements and meeting performance standards. DOH can make improvements noted by actions already taken, such as requiring Maximus to provide a complete sample population for each business function the department reviews; and to increase staffing to complete more quality assurance reviews.

Department of Economic Development (ESD): Review of Trivision Tek Group Inc. (2016-BSE01-01)
Auditors found ESD approved three vouchers totaling $350,000 payable to Trivision for services previously paid for and for services never performed. This includes $330,200 for consulting services Trivision performed as a subcontractor at DOH and $19,800 for project management services that were never performed. As a result of the examination, auditors rejected the final $211,109 payment request from Trivision to ESD. In addition, ESD recovered the $138,891 it paid under the grant.

New York State Thruway Authority: Contract Participation of Disadvantaged Business Enterprises and Minority- and Women-Owned Business Enterprises (MWBE) (2014-S-76)
The Thruway has not accurately reported its MWBE utilization. For example, the authority consistently reports only a portion of its eligible contract expenses, thereby overstating its MWBE utilization rate. Further, the Thruway did not make adjustments for payments to MWBE prime contractors who, in turn, paid other MWBE contractors as subcontractors, resulting in a double-counting of payments.

State falls short in verifying if companies qualify for tax breaks under Excelsior Program

Empire State Development Corp. (ESD), the entity in charge of doling out millions of dollars in tax credits to companies that pledge to expand in New York state, could not verify that many of the companies participating in the Excelsior Jobs Program met their obligations or even justify giving the businesses tax breaks in the first place, according to an auditreleased by State Comptroller Thomas P. DiNapoli.

DiNapoli’s auditors found a range of problems from lowering job creation goals after companies did not meet expectations to not verifying if jobs were full-time or part-time. ESD also could not produce evidence that several companies actually created jobs and did not simply shift jobs.

“New York state gives away millions of dollars each year in tax breaks for companies that are supposed to create jobs and expand under the Excelsior program, but ESD’s oversight leaves a lot to be desired,” DiNapoli said. “ESD needs to stop lowering the bar and giving companies a pass when they fall short of promises. ESD needs to ensure these businesses are not taking advantage of state taxpayers.” 

The Excelsior Jobs Program, established in 2010, provides refundable tax credits to businesses in targeted industries in exchange for creating and maintaining specific numbers of new jobs or making significant capital investments. The program replaced the Empire Zone Program and was aimed at bringing greater accountability to the companies’ for their economic development commitments.

ESD requires companies to submit an annual performance report to account for their annual job creation and investment totals, as well as other supporting documentation such as tax reports and invoice receipts for qualified investments. Companies need to meet at least 75 percent of the agreed-upon commitments to receive any benefits.

According to ESD reports, 1,152 businesses applied to participate in the program from September 2010 through March 2015. Of these, the state accepted 328 businesses (29 percent), and committed over $548 million in tax credits to them in exchange for their commitment to invest nearly $5.8 billion and create 34,472 new jobs in New York.

Auditors examined 25 companies that, as of June 2015, were authorized to receive 39 tax credits totaling $4.84 million.

Specifically, DiNapoli’s auditors found ESD failed to exercise due diligence when approving any of the 25 sampled companies for participation in the program and does not follow its own protocol for scrutiny of applications. ESD did not provide auditors with documentation to verify that the 25 companies met all of the eligibility requirements before being officially admitted into the program and could not verify the companies met the agreed-upon job growth and investment benchmarks for five of the 39 (13 percent) tax credits totaling $214,000.

For 34 of the 39 issued tax credits totaling $4.6 million, ESD provided auditors with worksheets that staff used to compile data to support their tax credit calculations. However, although ESD steadfastly maintains it gave the auditors all the information it had, most of the files lacked the documentation to support that ESD had actually exercised due diligence and taken steps to verify the reported amounts. 

For example, on 31 of the worksheets provided, ESD workers made notations indicating they had compared their data with information contained on corroborating state tax forms. Yet, those forms were present for only a very few companies.  In one case where information was available, auditors found ESD used a higher wage amount than was actually paid according to the tax forms. This resulted in at least $187,062 in excess tax credits being authorized to this company for 2012.

In addition, 11 of the worksheets were for credits based on promised investments and each indicated that ESD staff had reviewed company invoices to support investments made. However, ESD provided auditors with complete corroborating support for only eight of the 39 tax credits, accounting for just $417,000 (less than 9 percent) of the $4.84 million.

For four of the 34 tax credits for which ESD provided supporting worksheets, auditors found that ESD adjusted the original annual job creation commitment numbers after the fact to align with the lower job creation totals that the companies had actually attained. As a result, the three companies involved received a total of $358,329 in tax credits to which they would otherwise not have been entitled.

For two of the revisions, ESD could not provide evidence from the company justifying the need for the revision – including one company whose 2012 job commitment was reduced from 600 to 363 for no apparent reason. Another company subsequently closed operations after being authorized to receive $556,446 in tax credits.

Auditors also found no evidence that ESD took steps to determine whether companies shifted employees from related companies and counted them as new jobs to the state.

DiNapoli’s auditors found that ESD does not require companies to provide evidence that new jobs met the 35-hour work week criterion, nor does it even collect this data. Instead, ESD accepts companies’ annual performance report certification that the reported employees worked at least 35 hours a week as sufficient validation.

Auditors visited four companies and reviewed various records. At one company, two of the seven new employees – the chief executive officer and the chief financial officer – did not work 35 hours per week in 2013 and 2014. At the second company, a range of 33 to 40 employees, whom the company listed as new hires, actually worked part-time in 2012 and 2013 and did not meet the 35-hour per week work criterion.

DiNapoli recommended ESD:

1. Obtain sufficient corroborating documentation to support that all program participants meet the eligibility requirements for job growth and investments before receiving tax credits;

2. Ensure that all tax credit calculations are correct before issuing any credits;

3. Limit modifications to annual job growth and investment requirements to only unforeseen justifiable circumstances; 

4. Ensure project files contain all required documentation to support that companies met eligibility requirements before being accepted into the program;

5. Establish and use specific, objective and quantifiable criteria for ranking program applications; and

6. Increase program transparency by including complete and accurate information in quarterly reports.

DiNapoli’s auditors noted that ESD officials were not forthcoming in responding to requests for project files and for other information related to the sampled companies and the program in general.

ESD officials disagreed with the audit’s findings. Their full response is contained in the audit. DiNapoli’s auditors noted that ESD officials did not respond to some of the preliminary findings, addressing certain specific findings and ignoring others. ESD officials also avoided addressing the audit’s overall conclusions.

DiNapoli has cited numerous concerns that ESD provides limited public reporting on the results of economic development programs and often cannot verify if programs are achieving desired results.

In May 2015, DiNapoli released an auditof ESD’s $211 million campaign to promote economic development and tourism in the state and found it delivered no tangible results. His office has also released a series of audits on the state’s minority- and women-owned business enterprises that found inaccurate and significantly inflated reporting.

Read the report Performance of the Excelsior Jobs Program, or go to: http://www.osc.state.ny.us/audits/allaudits/093016/15s15.pdf 

Fraudulent entities alleging a philanthropic status undercut the trust of corporate and individual donors wishing to contribute to legitimate charitable organizations

Fraudulent entities alleging a philanthropic status undercut the trust of corporate and individual donors wishing to contribute to legitimate charitable organizations

Source: Charity Navigator and posted as a public service

Charity Navigator [CN] has posted a list of organizations soliciting funds for various purposes it characterizes as fraudulent and scams that undercut the trust of donors to social sector charitable organizations.

Such solicitations prey upon the emotions and positive intentions of the public by posing as a legitimate charity. However, said CN, “[t]hey are not registered with the IRS, and many are under investigation for fraud.”

CN at http://www.charitynavigator.org/ is itself a 501(c)(3) organization, seeks to guide intelligent giving by rating various charitable organizations in order to advance a more efficient and responsive philanthropic marketplace in which givers and the charities they support work in tandem to overcome our nation’s and the world’s most persistent challenges. CN evaluations are made available on the Internet without charge.

Organizations on Charity Navigator’s list of “fraudulent” entities is posted on the Internet at:

http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=2228&utm_source=Charity+Navigator%27s+Mailing+List&utm_campaign=da54cbb57a-July16InactiveNewsletter7_8_2016&utm_medium=email&utm_term=0_b21df0343b-da54cbb57a-94922261

A staffing requirement for safety purposes and job security provisions set out in a collective bargaining agreement distinguished

A staffing requirement for safety purposes and job security provisions set out in a collective bargaining agreement distinguished

Matter of City of Lockport (Lockport Professional Firefighters Assn., Inc.), 2016 NY Slip Op 05254, Appellate Division, Fourth Department

The collective bargaining agreement [CBA] between the City of Lockport [City] and the Lockport Professional Firefighters Assn., Inc. [LPFA], the exclusive bargaining representative for all firefighters employed by the City except the fire chief, included the following:

1. The City agreed to "staff all equipment with adequate firefighters to assure that any evolutions the firefighters are called upon to perform can be conducted with enough firefighters to assure the safety of the staff performing the evolution;"

2. LPFA, in exchange for the City’s agreement to maintain a minimum staffing level of nine firefighters per shift,* agreed to the relocate dispatch communication duties out of the department;

3. The parties agreed that the City, subject to the terms of the CBA and applicable law, could adjust staffing levels "to account for changes in population, technology, apparatus, or other relevant circumstances;" and;

4. The parties agreed to "meet cooperatively for the purpose of discussing issues relating to firefighter and public safety issues[,] and logistical issues[,] associated with the transfer of dispatch duties."

The Board of Fire Commissioners subsequently voted to remove an ambulance from service and to reduce the minimum staffing level from nine firefighters per shift to seven firefighters per shift, which changes were then implemented by the fire chief.

LPFA filed a grievance contending that the City had violated the CBA by reducing the number of firefighters per shift from nine to seven and demanded the restoration of the minimum staffing level to nine firefighters per shift. The City denied the grievance and LPFA demanded that the matter be submitted to arbitration. 

The City objected to submitting the issue to arbitration and initiated a CPLR Article 75 proceeding seeking a permanent stay of arbitration. Supreme Court denied the City’s petition and granted LPFA’s "cross-motion" compel arbitration.  The City appealed the Supreme Court’s ruling.

Affirming the lower court’s determination, the Appellate Division, citing Matter of Alden Cent. Sch. Dist. [Alden Cent. Schs. Administrators' Assn.], 115 AD3d 1340, held that "It is well settled that, in deciding an application to stay or compel arbitration under CPLR 7503, the court is concerned only with the threshold determination of arbitrability, and not with the merits of the underlying claim." In making that determination, the court conducts a two-part analysis: first it must determine if there is public policy prohibition against arbitration of the grievance. Second, if no such prohibition is found to exist, the court must determine if the parties did, in fact, agreed to arbitrate the particular dispute by examining the provisions of the relevant collective bargaining agreement.

The City had contended that the staffing provision in the CBA constituted a job security provision** and job security provisions are not arbitrable as a matter of public policy.

The Appellate Division, however, rejected the City’s public policy argument, explaining that New York State “has a strong public policy favoring arbitration of public sector labor disputes …, and judicial intervention on public policy grounds constitutes a narrow exception to the otherwise broad power of parties to agree to arbitrate all of the disputes arising out of their juridical relationships'."***As a general principal in determining the arbitrability of the issue, said the court, "any doubts as to whether [an] issue is arbitrable will be resolved in favor of arbitration."

Further, opined the Appellate Division, Supreme Court did not err in determining that the staffing provision at issue constituted a safety provision, i.e., a condition of employment, rather than a job security provision that could be subject to the public policy exception to arbitration.

In contrast to a job security provision in a CBA, which typically provides for “no layoff" during the life of the agreement, the Appellate Division said that the staffing provision relied upon by the City “does not operate to mandate a total number of firefighters that must be employed, nor does its stated intent relate to job protection; rather, the staffing provision relates solely to the minimum number of firefighters required to be present for each shift.”

Significantly, said the court, in drafting and agreeing to the staffing provision, “the parties expressly sought to ensure firefighter and public safety associated with the transfer of dispatch communication duties that allowed for the reduction in the minimum per shift staffing level” to nine firefighters per shift.

Accordingly, the Appellate Division concluded that Supreme Court properly determined that the staffing provision is not a job security provision, and therefore not subject to analysis under the narrow public policy exception to arbitration.

Turning to the second branch of the analysis, the arbitrability of the issue, the Appellate Division said that “it is undisputed that the parties agreed to arbitrate all grievances arising from the CBA.” Accordingly, the question “Does the reduction of the minimum staffing level from nine firefighters per shift to seven firefighters per shift based on the elimination of an ambulance from service constitutes a violation of the CBA?” goes to the merits of the grievance itself, not to its arbitrability and thus is a matter for the arbitrator to resolve.

* This minimum staffing level of nine firefighters per shift was less than the minimum level set in a prior arbitration award, which award had provided for a minimum staffing level of ten firefighters per shift.

** A job security provision essentially provides that, at least for the duration of the agreement, an employee need not fear losing his or her job except as otherwise permitted by law.

*** See Matter of City of Lockport [Lockport Professional Firefighters Assn., Inc.], 133 AD3d 1358

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_05254.htm

An individual is disqualified from receiving unemployment insurance benefits if he or she lost his or her employment as a result of acts constituting a felony

An individual is disqualified from receiving unemployment insurance benefits if he or she lost his or her employment as a result of acts constituting a felony

Matter of Valvo (Commissioner of Labor), 2016 NY Slip Op 05017, Appellate Division, Third Department

Labor Law §593 (4) provides that a person who loses his or her employment as a result of an act constituting a felony in connection with such employment is disqualified from receiving benefits for 12 months following the end of such employment. As the Court of Appeals explained in Matter of Sinker [Sweeney], 89 NY2d 485, "a felony is 'in connection with' employment for purposes of Labor Law §593(4) if it results in breach of a duty, express or implied, [a] claimant owes an employer."

Nicholas Valvo, a sanitation worker for a municipal employer, was arrested on charges of grand larceny in the third degree and scheme to defraud in the second degree. His employment with the municipality was terminated on February 28, 2013 based upon his disciplinary history and the arrest. He then applied for, and received unemployment insurance benefits, including regular and emergency unemployment insurance compensation benefits, totaling $16,488.

Valvo subsequently resolved the criminal charges filed against him by pleading guilty to two counts of grand larceny in the second degree and grand larceny in the third degree.

The Department of Labor, however, issued an initial determination finding that, among other things, that Valvo was disqualified from receiving unemployment insurance benefits under Labor Law §593(4) because he had lost his employment as a result of acts constituting a felony. The Department charged him with a recoverable overpayment of the unemployment insurance benefits he had received and assessed a penalty of $2,473 due to his willful misrepresentations to obtain such benefits.The Unemployment Insurance Appeal Board sustained the Department’s decisions and Valvo its ruling.

The Appellate Division upheld the Appeal Board’s decision, explaining that Valvo’s “larcenous conduct raised serious questions as to his integrity and suitability for municipal employment … given the detrimental impact his continued employment could have had upon the public's trust in municipal employees.” Accordingly, said the court, it saw no reason to disturb the Board's determination that Valvo’s misconduct was sufficiently connected to his employment as to disqualify him for unemployment insurance benefits.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_05017.htm