The custodian of a record destroying or altering it so as to make it unavailable for use in litigation may result in sanctions being imposed of the custodian

The custodian of a record destroying or altering it so as to make it unavailable for use in litigation may result in sanctions being imposed of the custodian

Zacharius v Kensington Publ. Corp., 2017 NY Slip Op 06995, Appellate Division, First Department 

Spoliation is the destruction or alteration of a document that makes it unavailable for use as evidence in a legal proceeding. Further, spoliation is presumed to be damaging to the spoliator's interest with respect to proving his or her claims or his or her defenses when it is intentionally changed, modified, deleted or destroyed.

In Matter of Klikocki (NYS Department of Corrections, Mount McGregor), 216 AD2d 808, the Appellate Division decided that evidence Klikocki claimed would be helpful in his defense in a disciplinary action that the employer had destroyed had not been destroyed in an effort to conceal something but rather occurred in accordance with the normal procedure concerning the retention or destruction of certain records after they had been retained for a specified period of time.

In contrast, in Zacharius [Plaintiff] Supreme Court's granted Kensington's [Defendant]  motion for spoliation sanctions to the extent of directing Plaintiff to pay the attorneys' fees and costs incurred by Defendants in reviewing Plaintiff's e-mail account and in preparing the motion seeking sanctions for spoliation. Supreme Court's ruling was unanimously affirmed by the Appellate Division, with costs.

The Appellate Division held that the spoliation sanctions imposed by Supreme Court  were providently granted as the record demonstrated that Plaintiff, an attorney, was in control of the email account at issue; was aware of Plaintiff's obligation to preserve it at the time it was destroyed, with or without service of Defendants' litigation hold notice as Plaintiff [1] had commenced the action; and [2] had a "culpable state of mind," demonstrated by admitted to having intentionally deleted well over 3,000 emails during the pendency of the action.

In the words of the Appellate Division, "Destroyed evidence is automatically presumed 'relevant' to the spoliator's claims when it is intentionally deleted." The court noted that although Plaintiff asserted only "irrelevant emails" were deleted, Plaintiff's own emails "evidenced intentional deletion of thousands of emails" and Defendants recovered at least one email that was pertinent to the allegations in Plaintiff's complaint.

Under the circumstances, said the Appellate Division, Supreme Court "providently exercised its discretion in limiting the sanction against Plaintiff to costs and attorneys' fees, rather than the "drastic remedy" of striking Plaintiff's complaint as the Defendants were "not entirely bereft of evidence tending to establish [its] position."

Another element to consider: Is the custodian of the record required by law to retain the record for a minimum period of time?

For example, EEOC regulation implementing Title VII [42 USC 2000e-8(c)] requires “every employer ... subject to this subchapter” to “(1) make and keep such records relevant to the determinations of whether unlawful employment practices have been or are being committed, [and] (2) preserve such records for [two years].”

In Byrnie v Town of Cromwell Board of Education, CA2, 243 F.3d 93, Judge Rosemary S. Pooler said that “where, as here, a party has violated an EEOC record-retention regulation, a violation of that regulation can amount to a breach of duty necessary to justify a spoliation inference in an employment discrimination action.” As the Byrnie decision demonstrates, an employer's failure to retain these records for the statutory minimum period required may become a critical element in the course of litigation.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_06995.htm

Seeking relief from judgment from a tribunal other than the one that handed down the judgment

Seeking relief from judgment from a tribunal other than the one that handed down the judgment

Cherry v. New York City Department of Correction, USCA, 2nd Circuit, Docket No. 16-3725

Bernard Cherry was terminated from his position with the NYC Department of Corrections [DOC] after an administrative law judge [ALJ] at the Office of Administrative Trials and Hearings [OATH] found him guilty of excessive absenteeism and failure to comply with orders. Cherry appealed the ALJ's findings and recommendation and the Appellate Division on the New York State Supreme Court affirmed the administrative action resulting in Cherry's dismissal from his position.

Cherry subsequently sued New York City, DOC, and several officials, asserting claims for employment discrimination in federal district court. The federal district court dismissed that case on timeliness grounds, and Second Circuit Court of Appeals affirmed the lower court's ruling. Cherry, proceeding pro se,* next filed this action under Federal Rules of Civil Procedure 60(d)(1) and (3), alleging that DOC committed fraud on the court by submitting forged documents during the OATH hearing.

Although the district court interpreted Cherry’s complaint as a request to vacate the judgment in Cherry’s earlier employment discrimination suit in the instant appeal Cherry subsequently clarified that "he was actually asking the district court to vacate the OATH decision."

The Second Circuit, noting that it must "construe pro se complaints “liberally and interpret them ‘to raise the strongest arguments that they suggest," said that "Cherry explicitly states that he was requesting the district court to vacate the judgment of the state administrative law judge."

Accordingly, the Second Circuit said that it lacked subject matter jurisdiction. and dismissed Cherry's action seeking to vacate the ALJ's determination.

The court explained that the plaintiff bears the burden of establishing subject matter jurisdiction over his own claims. Here, said the Circuit Court of Appeals, there is no diversity jurisdiction under 28 U.S.C. §1332 nor is there federal question jurisdiction under 28 U.S.C. §1331.

Cherry cited  Federal Rules of Civil Procedure 60(d)(1) and (3) in his brief in support of his petition but the Second Circuit, citing Cresswell v. Sullivan & Cromwell, 922 F.2d 60, pointed out that "it is well-settled that the Federal Rules of Civil Procedure 'do not provide an independent ground for subject matter jurisdiction over an action for which there is no other basis for jurisdiction.'”**

Noting that district court had correctly refused to exercise ancillary jurisdiction over Cherry’s claims as Cherry sought relief from judgment from a tribunal different than the one that handed down the judgment, the Circuit Court said that there is no independent ground for jurisdiction in contrast to “an independent action brought in the same court as the original lawsuit” which does not “require an independent basis for jurisdiction.

* A Latin phrase meaning "for oneself" or "on one's own behalf".

** In addition, the Circuit Court said that were it to construe Cherry's claim under 42 U.S.C. §1983 [the Civil Rights statute], such an action would be untimely as the otherwise relevant three-year statute of limitations had elapsed.

The decision is posted on the Internet at:

http://www.ca2.uscourts.gov/decisions/isysquery/a41b39fb-5c98-474a-9626-e28a30cda4d9/13/doc/16-3725_so.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/a41b39fb-5c98-474a-9626-e28a30cda4d9/13/hilite/

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending October 7, 2017

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending October 7, 2017

Source: Office of the State Comptroller

Click on text highlighted in color  to access the full report

New York State Comptroller Thomas P. DiNapoli issued the following audits and examinations:

Department of Health: Questionable Payments for Practitioner Services and Pharmacy Claims Pertaining to a Selected Physician (Follow-Up) (2017-F-2)
An initial audit issued in September 2015 found significant issues with medical records provided by a physician to support his Medicaid claims. There was insufficient assurance that the doctor provided appropriate medical care and that services totaling $1,039,404 warranted Medicaid payment. At the time of the follow up review, the Office of the Medicaid Inspector General (OMIG) was actively investigating the doctor. According to OMIG officials, steps will be taken to implement each of the four recommendations made in the initial audit pending the results of the investigation.

Department of Health (DOH): Medicaid Program: Administrative Costs Used in Premium Rate Setting of Mainstream Managed Care Organizations (MCOs) (2015-S-76)
Auditors found that one MCO reported about $9.8 million in administrative expenses that were not allowable. Several MCOs appear to have shifted costs from the non-allowable category of marketing to the allowable category of facilitated enrollment, contrary to the intent of a policy change that was initiated from the Governor's Medicaid Redesign Team proposal. As a result, DOH is not fully realizing the annual savings that should occur as a result of the policy change. For fiscal year 2014-15, auditors estimate DOH paid MCOs about $127 million for facilitated enrollment through the premium rates. However, despite the magnitude of these payments, DOH does not adjust each MCO's premium to reflect the MCO's actual facilitated enrollment activities.

Hudson River Park Trust: Selected Financial Management Practices (2016-F-22)
A prior audit found the trust needed to improve its practices related to revenue collection, procurement, investments, payroll, budgeting and equipment inventories. In a follow-up, auditors found that the trust made progress in correcting the problems identified in the initial report. However, additional actions are still needed.

Metropolitan Transportation Authority: New York City Transit - Train On-Time Performance (Follow-up) (2017-F-8)
A prior audit determined that for calendar years 2013 and 2014, actual on-time performance for subways was well below the goal of 91.9 percent. In a follow-up, auditors found that the MTA made limited progress in addressing the problems identified in the prior report. Of the two prior audit recommendations, neither were fully implemented. Moreover, since the conclusion of the last audit, on-time performance has continued to decline.

State Education Department (SED): Lois Bronz Children's Center Inc., Compliance with the Reimbursable Cost Manual (2016-S-86)
The center provides preschool special education services to children with disabilities who are between three and five years of age. For the two years ended June 30, 2014, auditors identified $177,786 in ineligible costs that the center reported to SED for reimbursement. Auditors also identified $132,713 in questionable costs that the center reported from a contract it could not prove was competitively bid.

Thruway Authority: Compliance With Payment Card Industry Standards (2017-S-11)
Auditors identified several matters that management should address to improve the authority's information security program for cardholder data and to help ensure it meets PCI requirements. The Thruway has not taken fundamental steps to secure its network and could also improve certain other technical safeguards over the cardholder data it processes.

State Comptroller DiNapoli also released the following Municipal Audits

Town of Canandaigua – Fund Balance, Water Operations and Information Technology (Ontario County)
The board has not developed a long-term financial or capital plan, including a plan for reserves, or require a cash flow analysis. The board has not provided sufficient fiscal oversight of the town's water operations. As a result, there are no procedures for the accounting records to be maintained for each water district or extension to ensure that costs are equitably and appropriately distributed. The board has also not adopted policies to sufficiently protect its IT assets.

Greece Public Library – Information Technology (Monroe County)
Library officials need to improve controls to ensure that Library IT assets are adequately safeguarded. The board has not adopted any IT policies, including those addressing acceptable use, password management, user accounts, access rights, data backups, hardware and software inventories, restricting personal use, remote access or the disposal of hardware and electronic media.

Industrial Development Agency Board Governance (2017-MS-1)
Of the six IDAs examined, auditors found 49 of 155 projects reviewed contained incorrect information, including inaccurate job creation and retention numbers, project status and transfer information. The agencies' 2014 annual reports indicated they would create or retain 13,818 jobs, but they actually created or retained 10,209 jobs, a shortfall of 26 percent. In addition, the Orange County IDA's board acted outside of its authority by agreeing to accept a grant and administering the grant funds in consideration for approving a payment in lieu of taxes agreement.

Town of Junius – Supervisor's Records and Reports (Seneca County)
The town supervisor relied on the secretary to perform most of the financial transactions without providing adequate oversight. Consequently, the town's records are incomplete and not up-to-date, and are therefore, unreliable. The supervisor also failed to provide the board with the necessary financial reports to adequately monitor operations, and did not file the required reports with the appropriate agencies.

Orange County Community College – Information Technology and Financial Activities (2017M-111)
The board did not adopt adequate IT policies that address appropriate computer use and security. The board also needs to improve its purchasing procedures to ensure college officials procure goods and services in accordance with applicable statutes. College officials did not ensure that claims were properly authorized, supported and for legitimate purposes.

Village of Ravena – Departmental Collections and Leave Accruals (Albany County)
The recreational director and other staff collected pool fees but did not issue receipts or maintain records to adequately account for collections. Staff also did not properly update the accounting records and did not accurately record departmental collections.

Westchester County Sewer Districts – Financial Condition (2017M-155)
County officials have adopted structurally balanced budgets using fund balance in a judicious manner. The budget process for the county's sewer districts found officials adequately monitor the budget throughout the year.

For access to state and local government spending, public authority financial data and information on 140,000 state contracts, visit Open Book New York. The easy-to-use website was created to promote transparency in government and provide taxpayers with better access to financial data.

An individual is not deemed permanently disabled if undergoing a reasonably safe surgical procedure would permit the individual to perform the duties of his or her position

An individual is not deemed permanently disabled if undergoing a reasonably safe surgical procedure would permit the individual to perform the duties of his or her position

2017 NY Slip Op 07026, Appellate Division, Third Department

The New York State Comptroller denied Petitioner's applications for both accidental and performance of duty disability retirement benefits relying on the opinion of his medical expert, an orthopedic surgeon with respect to Petitioner's ability to perform the duties of his position.  Petitioner then filed an Article 78 action seeking a court order vacating the Comptroller's decision.

The Comptroller's expert had stated that although Petitioner "was currently disabled from performing his job duties as a police officer," the expert also opined that Petitioner had not suffered a permanent disability and further stated that were Petitioner to undergo "a reasonably safe surgical procedure" there was a significant likelihood that Petitioner would regain strength, stability and function so as to allow him to perform the duties of his position, "including being able to carry and discharge a firearm and a pepper spray canister, use a baton and handcuffs and make arrests."

The Petitioner's treating orthopedic surgeon, however, had opined that Petitioner was permanently disabled from performing his job duties and although the procedure suggested by the Comptroller's medical expert was a safe procedure, he would not recommend Petitioner undergo such surgery because, in his opinion, it would not result in Petitioner being able to perform his duties as a police officer.

The Appellate Division affirmed the Comptroller's determination, explaining that "An applicant for accidental disability retirement benefits [and performance of duty disability retirement benefits] bears the burden of proving that he or she is permanently incapacitated from performing his or her job duties" and that here the record indicated that the Comptroller "considered Petitioner's actual job duties in determining whether he was permanently disabled."

Citing Matter of Dingee v DiNapoli, 56 AD3d 876, the Appellate Division observed that "[i]n determining whether a person is permanently disabled, [the Comptroller] may consider whether proper medical treatment is reasonably and safely available to correct the disability." Further, the Appellate Division said that it was not free to substitute its assessment of the medical evidence for that of the Comptroller, "whose determinations must be upheld when they are supported by substantial evidence."

Further, the court noted that "The Comptroller has the exclusive authority to resolve conflicting medical evidence and to credit one expert's opinion over another."

As the Comptroller's expert's was of the opinion that there was a significant likelihood that further medical treatment would alleviate Petitioner's disability was rationally based upon his examination of Petitioner and a review of Petitioner's medical records, the Appellate Division ruled that "the Comptroller's determination that Petitioner did not meet his burden of proving a permanent incapacity from performing his job duties is supported by substantial evidence and will not be disturbed."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_07026.htm

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PERB will defer to an arbitration award involving the same parties and the same issue in determining an improper practice charge only in limited circumstances

PERB will defer to an arbitration award involving the same parties and the same issue in determining an improper practice charge only in limited circumstances

Matter of Buffalo Teachers Fedn., Inc. v New York State Pub. Empl. Relations Bd., 2017 NY Slip Op 06800, Appellate Division, Fourth Department

The Buffalo City School District [District] adopted a resolution naming a single health insurance carrier for the teachers in its employ. This, however, constituted a change to the of the terms of the controlling collective bargaining agreement [CBA] between the District and the Buffalo Teachers Federation [Federation], the teachers' collective bargaining representative. The District explained that "it was forced either to make that change to the CBA or to make 'massive cuts' in other areas." The Federation filed a grievance and demanded that the District's actions be submitted to arbitration.

The District subsequently sent a letter to 88 teachers informing them that they were to be laid off because of "the failure to reach an agreement on a single health insurance carrier had forced the District to make budgetary cuts elsewhere." Ultimately the District discontinued the services of the 88 teachers and implemented its resolution naming a single health insurance carrier. The Federation filed an improper practice charge alleging violations Civil Service Law §209-a (1) (a) and (d) of the Taylor Law (Civil Service Law Article 14 with New York State Public Employment Relations Board [PERB]

While that charge was pending before PERB, the grievance proceeded to arbitration. The  arbitrator concluded that the District had discharged the teachers "wrongfully, in furtherance of its ill-conceived effort to force the Union into submissive acceptance of the unilateral modification" to the CBA. The District was directed to reinstate the teachers with back pay whereupon the District filed an Article 75 petition seeking to vacate the arbitration award.

Supreme Court confirmed the arbitration award and the District appealed that ruling. The Appellate Division ruled that "the arbitrator acted in excess of the power granted to him with respect to that part of the award concerning the teachers" and vacated that part of the award providing for the reinstatement of the teachers.*

The improper practice charge, however,  proceeded before PERB on a stipulated record before an Administrative Law Judge [ALJ]. The ALJ concluded that the discharge of the 88 teachers was "the final step in the preconceived scheme designed to pressure [the Federation] to drop the single carrier grievance" and thus violated the Taylor Law and, as the arbitrator had ruled, the ALJ ordered the District to reinstate the teachers with back pay.The District filed exceptions to the ALJ's decision with PERB. 

PERB relying on the "long-recognized distinction between a threat of retaliation because either a union or covered employee exercises protected rights and a statement that there might be layoffs if the exercise of protected rights results in cost increases for the employer," concluded that the District "announced the layoffs as a decision that had already been made and explained the underlying reason for the layoffs." Thus, ruled PERB, "the  discharge of the teachers did not violate the statute" and reversed that part of the ALJ's determination that directed that the District reinstate the 88 teachers. The Federation then initiated the instant proceeding seeking to annul PERB's determination.

The Appellate Division observed that its review was limited to whether PERB's determination was affected by an error of law, arbitrary and capricious or an abuse of discretion, or unsupported by substantial evidence. The court then explained that  ... "the agency charged with implementing the fundamental policies of the Taylor Law, [PERB] is presumed to have developed an expertise and judgment that requires us to accept its decisions with respect to matters within its competence."

The court rejected the Federation's contention that PERB's "determination was arbitrary and capricious inasmuch as PERB departed from its own precedent in refusing to defer to the arbitration award." The Appellate Division commented that although an administrative body acts arbitrarily and capriciously in departing from its own precedent and failing to explain the reasons for the departure, here PERB's determination was consistent with its own precedent. PERB, said the court, "will defer to an arbitration award only in limited circumstances and it usually does not do so where the charging party alleges a violation of Civil Service Law §209-a(1)(a).

As the Federation alleged the District had violated §209-a(1)(a) and (d), it was the precedent of PERB to refuse to defer to the arbitration award in this case. Further, said the court, to the extent that the arbitrator made findings with respect to the layoffs, it was reasonable for PERB not to defer to the arbitration award because the arbitrator had been earlier found to have exceeded the scope of his authority and his findings were inconsistent with PERB's interpretation of the statute.

Although it is unlawful for a public employer "to interfere with, restrain or coerce public employees in the exercise of [certain] rights," such as their right to participate in organizing activity, "for the purpose of depriving them of such rights," in this instance the District had explained "that layoffs were a cost-cutting measure made necessary by the failure to reach an agreement on health insurance." The Appellate Division concluded that, based upon its review of the record, "it was rational for PERB to determine that the layoffs were not motivated by an improper purpose." 

* See Matter of Buffalo Teachers Fedn., Inc. v Board of Educ. of City Sch. Dist. of City of Buffalo, 50 AD3d 1503, leave to appeal denied, 11 NY3d 708. 

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_06800.htm