A vested right to retirement benefit to be provided by a New York State public retirement system may neither be diminished nor impaired "retroactively"

A 1957 decision of the New York State Comptroller provided for the inclusion of cash payments for accumulated vacation credits* in determining a member's "final average salary" for the purpose of computing the member's retirement benefits. In 1971 the Retirement and Social Security Law [RSSL] was amended** and eliminated the inclusion of cash payments for accumulated vacation credits in determining a member's retirement allowance.

When the Comptroller thereafter applied RSSL §431.1, as amended, to certain retiring members [Plaintiffs] of the retirement system who joined the system prior to the effective of the amendment, they challenged to "retroactive application" of the amendment with respect to the calculation of their retirement allowances, contending that such action constituted a violation of §7(a) of Article V of the New York State Constitution if retroactively applied to the Plaintiffs and others similarly situated.

The Court of Appeals agreed,*** opining that the Comptroller's 1957 decision constituted "a valid contract between the State Employees' Retirement System and its members" and if retroactively applied to the Plaintiffs and others similarly situated would constitute a violation of Article V, §7(a)**** of the State Constitution. In other words, pre-amendment members of the retirement system acquired a vested right to the benefit flowing from the 1957 decision by the Comptroller and "that benefit may not now be constitutionally impaired."

In contrast, insofar as members joining the Retirement System on or after the effective of the 1971 amendment to the RSSL are concerned, the Court of Appeals noted that such new entrants "acquired contractual rights subject to any statutes then outstanding, whether or not by the terms of the statutes they applied to current or future events."

In the words of the court,  "subdivision 1 of section 431 of the Retirement and Social Security Law ... which eliminates inclusion of cash payments for accumulated vacation credits, violates section 7 of article V of our State Constitution if retroactively applied to the plaintiff and others similarly situated." In other words, the change could only be applied to individuals becoming members of the retirement system on or after the effective date of the change.

* Such payments, said the court, represented "compensation for services actually rendered and are, therefore, properly includable in the computation of a member's final average salary."

** Chapter 503 of the Law of 1971 amended §431.1 of the Retirement and Social Security Law.

*** Kranker v Levitt, 30 NY2d 574.

**** Article V §7(a) provides that "After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired."

The decision is posted on the Internet at:

https://www.leagle.com/decision/197260430ny2d5741493

Evaluating a public employer's duty to defend and indemnify an employee named as a defendant in an "underlying action"

The City of Buffalo [Respondent] appealed from a judgment of Supreme Court denying its motion to dismiss the petition of two police officers [Officer A and Officer B] seeking a court order directing the Respondent to provide for their defense and indemnification* in an underlying action brought against them by a nonparty to this CPLR Article 78 proceeding.

Petitioners commenced their Article 78 proceeding after Respondent determined that it would not provide them with a defense or indemnification in the underlying action. Supreme Court ordered the Respondent to provide for a defense and indemnification of both Officer A and Officer B in the underlying action, whereupon the Respondent appealed the ruling to the Appellate Division.

The Appellate Division said it agreed with the Respondent that Supreme Court erred in granting the petition with respect to Officer A by denying that part of the Respondent's motion seeking to dismiss the petition as to Officer A on the ground that he failed to timely commence this proceeding. Accordingly, the Appellate Division so modified the Supreme Court's judgment with respect to Officer A.

In contrast, the Appellate Division said Supreme Court "properly determined, however, that Respondent's determination not to provide [Officer B] with a defense was arbitrary and capricious, noting that the Respondent's determination concerning Officer B was based on its conclusion that Officer B was acting outside the scope of her employment at the time of the incidents concerning the plaintiff in the underlying action.

The Appellate Division, observing that "it is undisputed that [Officer B] was on duty and working as a police officer when the alleged conduct occurred," opined that the facts that Officer B pleaded guilty to a disciplinary charge in connection with her conduct that gave rise to the underlying action "cannot establish, as [Respondent] must, that [Officer B's] was acting outside the scope of her employment at the time of the incidents concerning the plaintiff in the underlying action" by showing that Officer B's actions were "wholly personal" in nature.

Accordingly, the Appellate Division concluded that Supreme Court's determination that Officer B is entitled to indemnification was "premature at this time" and then elected to "further modify the [Supreme Court's] judgment accordingly."

* Presumably Officers A and B sought the Respondent's providing for their "defense and indemnification" pursuant to Public Officers Law §18, a provision in a collective bargaining agreement or as otherwise authorized by law, rule or regulation. §18 provides for the defense and indemnification of officers and employees of public entities which are defined as "(i) a county, city, town, village or any other political subdivision or civil division of the state, (ii) a school district, board of cooperative educational services, or any other governmental entity or combination or association of governmental entities operating a public school, college, community college or university, (iii) a public improvement or special district, (iv) a public authority, commission, agency or public benefit corporation, or (v) any other separate corporate instrumentality or unit of government; but shall not include the state of New York or any other public entity the officers and employees of which are covered by section seventeen of this chapter or by defense and indemnification provisions of any other state statute taking effect after January first, nineteen hundred seventy-nine."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_05877.htm

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Determining the date on which the four month statute of limitations for filing a timely CPLR Article 78 action begins to run

The Court of Appeals has defined "final and binding" in terms of completeness and exhaustion of administrative remedies as follows: "[f]irst, the agency must have reached a definitive position on the issue that inflicts actual, concrete injury and second, the injury inflicted may not be . . . significantly ameliorated by further administrative action or by steps available to the complaining party."*

Petitioner [Plaintiff] commenced this CPLR Article 78 proceeding seeking to compel the New York State Department of Education [DOE] to issue a school building leader certificate for which he had applied in 2014. DOE, contending that Plaintiff had not paid a necessary fee before the applicable deadline, had declined to issue the certificate and issued a notice of uncompleted requirements for certification on July 23, 2014. Plaintiff was also advised that he would be required to meet newly-enacted examination requirements.

In June 2016 inquiry Plaintiff contacted DOE concerning the status of his application. DOE responded, citing its July 2014 notice of uncompleted requirements. Ultimately DOE, in response to Plaintiff additional inquiry and request for "an official appeal," sent Plaintiff two documents dated December 9, 2016 entitled "Notice of Uncompleted Requirements for Certification" explaining that Plaintiff's application had been disapproved and restated that there was "no legal means by which [DOE could] overlook" the initial missed deadline for the required payment.** Plaintiff was also advised that should he wish "to further pursue the certification, he would need to reapply and meet all additional requirements."

DOE moved to dismiss Plaintiff's petition as untimely because the proceeding was commenced on April 28, 2017, more than four months after DOE's issued its December 9, 2016 determination. In rebuttal, Plaintiff contended that the statute of limitations began to run when he received the second, identical, notice dated January 3, 2017. Supreme Court granted DOE's motion to dismiss the petition, and Plaintiff appealed.

The Appellate Division sustained the Supreme Court's ruling, explaining that the definitive position stated in DOE's January 2017 notice is no different from that DOE expressed in its initial December 2016 notice. Further, said the court Plaintiff "does not argue that he was attempting to pursue further administrative remedies or took any additional action after the December 2016 notice was issued."

Accordingly, the Appellate Division ruled that Supreme Court's dismissal of Plaintiff's petition as untimely was correct, noting that DOE's determination became final and binding and the statute of limitations period began to run on December 9, 2016. Further, said the court, although there is a potential for prejudice in a case where a petitioner receives a subsequent, additional notice and then provides that postdated determination to his or her attorney, in this instance the Appellate Division opined "that no such prejudice has been alleged, nor was any justification for petitioner's failure to commence a proceeding based upon the December 2016 notice provided."

* See Walton v New York State Dept. of Correctional Servs., 8 NY3d 186, quoting Matter of Best Payphones, Inc. v Department of Info. Tech. & Telecom. of City of N.Y., 5 NY3d 30.

** The Appellate Division's decision notes that "for reasons still unknown and unexplained within the record or briefs," DOE issued the second identical notice dated January 3, 2017.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_05610.htm

Releasing annual employee financial disclosure statements to the public

The petitioner [Plaintiff] in this CPLR Article 78 action challenged the Suffolk County Legislature action [Resolution] directing the Suffolk County Board of Ethics [Board] to provide the Plaintiff's financial disclosure statements to the Ways and Means Committee of the Suffolk County Legislature. Supreme Court denied Plaintiff's petition and dismissed the proceeding whereupon Plaintiff appealed the lower court's determination, contending that the County Legislature's Resolution was, inter alia, arbitrary and capricious, an abuse of discretion, and in excess of the County Legislature's authority.

Suffolk County, as authorized by General Municipal Law §811(1), had adopted a local law requiring certain county employees to file annual financial disclosure statements with the Board. The Board was required to review each financial disclosure statement filed with it and determine whether there had been compliance with the disclosure requirements.

The County Code provided that an employee, at the time a financial statement was filed, could request that the Board withhold information from public disclosure on the ground that such disclosure would constitute an unwarranted invasion of privacy or a risk to an individual's safety or security.* Further, when the Board produces a financial statement for public inspection, it was required to notify the employee of the production and of the name of the person to whom it was provided.  

A newspaper published in Suffolk County submitted a request to the Board for release of the Plaintiff's financial disclosure statements. The request was denied by the Board and the newspaper did not challenge the Board's determination. Subsequently the County Legislature, citing sections of the New York Freedom of Information Law and the United States Code, adopted the Resolution directing the Board to provide the Plaintiff's financial disclosure statements for the period "2000 to the present" to the Ways and Means Committee of the County Legislature based the Board's denial of the newspaper's request for the petitioner's financial disclosure statements.**

Ultimately Supreme Court stayed the public release of the Plaintiff's financial disclosure statements and required that the statements be submitted to the court, in camera. The County Legislature submitted "a memorandum of law, an amended memorandum of law, and an affirmation of counsel to the County Legislature"  asserting that "members of the County Legislature have stated that the Board's determination was inconsistent with the intent and understanding of the [County] Legislature in enacting the financial disclosure statute."*** 

The Supreme Court reviewed the submitted financial disclosure statements and "redacted confidential information to protect the Plaintiff and his family." The court also directed the Board to produce redacted copies of the financial disclosure statements to the Ways and Means Committee of the County Legislature. The Board complied with the court's directive and the Plaintiff appealed the court's ruling to the Appellate Division.

Citing Marbury v Madison , 1 Cranch [5 US] 137, the Appellate Division explained that a legislative body may not usurp a court's power to interpret and apply the law to the particular circumstances before it and it is beyond the authority of the County Legislature to determine that the Board's decision to withhold the Plaintiff's financial disclosure statements from public inspection was incorrect and "to take it upon itself to obtain the statements and provide for their public release." In the words of the court, "the County Legislature wrongly placed itself in the position of a reviewing court", opining that this action "is particularly disturbing where the purportedly aggrieved newspaper took no steps to vindicate its rights to disclosure of the financial statements by the Ethics Board."

Noting that the County Legislature entrusted to the Board the responsibility for receiving and resolving requests for access to financial disclosure statements filed with the Board, the Appellate Division indicated that the "proper remedy for seeking review of a Board determination denying public access to a governmental record is to seek judicial review, not for the County Legislature to arrogate to itself a judicial function reserved for the courts and the courts alone."

The Appellate Division also disagreed with Supreme Court's determination to redact "confidential information to protect the [Plaintiff] and his family" not withstanding its holding that Plaintiff's financial disclosure statements were subject to public disclosure.  The court observed that while the Board is required to redact information pertaining to categories of value from all financial disclosure statements made available for public inspection, Supreme Court cited no authority for its decision to make further redactions.

The County Legislature also contended that the resolution could be sustained as a valid exercise of its oversight authority. However, said the Appellate Division, the record before it did not reflect that either the County Legislature or its Ways and Means Committee was conducting any oversight of the Board. Rather, noted the court, "it is undisputed on the record" before it that the resolution was adopted "for the purpose of circumventing the Ethics Board's determination to deny public release of the petitioner's financial disclosure statements."

The Appellate Division thought it significant that that the County Legislature determined, without examining the Board's determination, that the Board was wrong and took it upon itself to reverse this specific determination through the enactment of the resolution. Neither federal, state, nor county law countenance such a procedure. Thus, ruled the court, Plaintiff's petition must be granted, and the Resolution adopted by the County Legislature annulled.

* Even if no request to withhold information from public inspection is made by an employee, the County Code provides that categories of value are confidential and that such information is to be redacted by the Board before a financial disclosure statement is made available for public inspection.

** The Resolution also stated that the County Code "says that financial disclosure statements are available for public inspection and there appear[ ] to be no exceptions in the law that justify withholding a financial disclosure statement from public inspection" and that "in enacting the financial disclosure law, it was the intent of this Legislature that financial disclosure statements be available to the public."

*** The Board, although named as a respondent, did not appear before the court.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_05779.htm