Declarations of an agent not always deemed an admission of the employer in the course of litigation

Declarations of an agent not always deemed an admission of the employer in the course of litigation

Simpson v NYC Transit Authority, 1st Dept., 283 AD2d 419

Suppose a former employee is called to testify against his or her former employer as a witness in an action brought by another individual. Is such testimony to be considered an “admission” by the former employee's employer? This was one of the issues in the Simpson case.

A jury awarded Simpson $250,000 after finding the NYC Transit Authority guilty of employment discrimination in violation of New York State's Executive Law Section 296 and Administrative Code of the City of New York Section 8-502. The Authority appealed.

It seems that the Transit Authority's former Director of Equal Employment Opportunity had testified on behalf of Simpson and, presumably, against the agency. Was the former Director's testimony to be deemed an admission to the extent that it was adverse to the Authority's interests?

Noting that the such testimony contained hearsay, Appellate Divisions said that in such situations a declaration made by an agent [here the former Director of Equal Employment Opportunity] without authority to speak for the principal [i.e., the Authority], even where the agent was authorized to act in the matter to which his declaration relates, does not fall within the “speaking agent” exception to the rule against hearsay and is not an admission that can be received in evidence against the principal.

Concluding that the testimony by the Authority's former Director was improperly admitted as admissions against the Authority, the Appellate Division ruled that this constituted reversible error and remanded the matter to Supreme Court for a new trial.

Applying the terms of disciplinary settlement agreement

Applying the terms of disciplinary settlement agreement

Perretti v NYC Transit Auth., 283 AD2d 737

The New York City Transit Authority challenged a decision by the Unemployment Insurance Appeals Board granting one of its employees, Frank P. Perretti, unemployment insurance benefits.

Perretti was suspended from his employment as a sheet metal mechanic following a “physical altercation with a fellow employee.”

Perretti filed a grievance and subsequently entered into a stipulation providing that Perretti would be suspension without pay for 30 days and would enroll in and cooperate with an employee assistance program.

When Perretti attempted to return to work at the end of his 30-day suspension without pay, the Authority sent him for a psychiatric evaluation.

Despite testing negative for alcohol or substance abuse, the Authority insisted that Perretti complete the employee assistance program without pay before he was permitted to return to work.

The Unemployment Insurance Appeal Board ruled that Perretti was disqualified from receiving unemployment insurance benefits during his 30-day suspension, but entitled to benefits during the time that he was enrolled in the alcohol treatment program. The Appellate Division agreed, finding no reason to disturb the Board's determination.

The court said that the record indicates that Perretti had signed the stipulation with the understanding that he could return to work immediately upon the conclusion of his suspension period. His attempts to return to work were frustrated by the employer's additional requirements that he undergo a psychiatric evaluation and alcohol counseling.

The Appellate Division pointed out that to the extent that the Authority asserts that Perretti was not ready, willing and able to work [see Labor Law Section 591(2)], “we note that any obstacle in this regard was caused by the [Authority's insistence that [Perretti] attend an alcohol counseling program despite his negative history of any alcohol abuse.”

The court's view disciplinary settlements in much the same fashion -- holding the employer to observe the specific terms agreed upon by the parties.

The classic example: Taylor v Cass, 505 NYS2d 929. Here a disciplinary settlement provided that Taylor would be subject to termination without any hearing if, in the opinion of his superior, his job performance was adversely affected by Taylor's consumption of alcohol. Taylor was subsequently terminated for sleeping on the job.

Although the employer claimed that the termination without a hearing was permitted under the terms of the disciplinary settlement agreement, the Appellate Division disagreed and directed Taylor's reinstatement to his position with back pay and benefits.

The court pointed out that the reason given for summarily terminating Taylor -- sleeping on the job -- was not authorized by the settlement agreement. The court ruled that Taylor could only be terminated without a hearing if he was found to have violated the specific reason set out in the settlement agreement: the performance of his duties was unsatisfactory because of his consumption of alcohol.

Disciplinary action follows teacher’s using inappropriate language in the classroom

Disciplinary action follows teacher’s using inappropriate language in the classroom

Bernstein v Norwhich City School District, 282 A.D.2d 70, motion for leave to appeal denied 96 N.Y.2d 937

In May 1998 Richard C. Bernstein, a tenured English teacher in the Norwich High School was charged with conduct unbecoming a teacher, insubordination, neglect of duty and incompetence for using what the district regarded as inappropriate verbiage in the course of teaching a lesson.

Bernstein's performance evaluation, which was introduced at the disciplinary hearing, indicated that High School Principal James Walters believed that Bernstein gave undue emphasis upon sexual imagery in his selected readings, classroom discussions and writing assignments.

Also noted in the evaluation was the fact that students had complained that Bernstein had a “tendency to compare them to characters from the books that they were reading in class whose sexual proclivities he had discussed.”

The evaluation concluded with a directive to “de-emphasize sexual aspects of the literary works that you deal with in your classroom.” It also stated that “[t]his concern has been voiced loud and clear during the course of the 1994-95 school year by parents and students. I will anticipate a different focus in your discussions during the 1995-96 school year.”

In the course of the May 1998 disciplinary action, students from Bernstein's eleventh grade English honors class testified that Bernstein used the words “penis” and “clitoris” when explaining a literary technique.

During a meeting with Principal James Walters Bernstein conceded he used these words in a discussion when introducing the topic of “phallogocentrism”, a theory of feminist literary criticism involving phallic symbolism, as a background to understanding and interpreting literature.

The Hearing Officer concluded that while the evidence and testimony did not support a finding of guilt on each of the specifications charged, a preponderance of the credible evidence did support the charge of conduct unbecoming a teacher and insubordination.

As to charges of insubordination, the Hearing Officer noted that Bernstein had been warned both orally and in writing by Walters that he should de-emphasize the sexual aspects of literary works and be cautious about classroom discussions that have sexual overtones.

The hearing officer indicated that while Bernstein's use these two words in a vacuum may well not have intended to lead to a discussion of sexual matters, he concluded that their use by Bernstein constituted poor judgment in light of his employment history. The hearing officer imposed a penalty of $3,000 fine and a letter of reprimand.

Bernstein appealed. A Supreme Court justice confirmed the hearing officer's determination as to guilt but found that it was error to impose both a letter of reprimand and a fine. A rehearing limited to the issue of penalty was ordered.

Bernstein then appealed to the Appellate Division solely on substantive findings of the hearing officer related to the disciplinary charges sustained by the lower court.

The Appellate Division said that “the cumulative testimony” given at the disciplinary hearing provided the requisite quantum of evidence to support the charges sustained by the hearing officers. Further, said the court, the fact that Bernstein was found guilty of fewer than all of the specifications alleged “is of no merit in challenging the determination rendered.”

Bernstein also argued that “his academic freedom must be protected because the information that he was presenting has material educational value.” The Appellate Division was not persuaded by this argument.

The court noted that in O'Connor v Sobol, 173 AD2d 74 [appeal dismissed, 80 NY2d 897], it had concluded that notwithstanding teachers' rights to choose methodology under principles of academic freedom, school officials must be permitted “to establish and apply their curriculum in such a way as to transmit community values” providing their discretion is “exercised in a manner that comports with the transcendent imperatives of the First Amendment.”

Noting that Bernstein had been previously warned of Walters' concern regarding the sexual content and age appropriateness of the material that he was presenting and was also aware that his prior choice of materials offended community values, the Appellate Division said that “we can find no basis upon which we would disturb the determination rendered.”

The Fireman's Rule

The Fireman's Rule

Currie v McQueen, Supreme Court, Nassau County, [Not selected for publication in the Official Reports]

A New York City police officer sued to recover damages for injuries he sustained on when, while in the course of his duties, he was assaulted by McQueen as he attempted to arrest him during a public demonstration.

McQueen contended that Currie's action for assault is barred by the “Fireman's Rule” as set out by the Court of Appeals in Santangelo v State, 71 NY2d 393.

In Santangelo, the Court of Appeals expressly barred police officers from bringing a personal injury action sounding in negligence arising from “the very situations that create the occasion for their services.”

Justice Phelan said that the holding in Santangelo and similar cases was effectively overruled by an amendment to the Section 11-106 of the General Obligations Law. Section 11-106 gives a limited right of recovery to police officers and firefighters injured by the negligence or intentional conduct of any person except an employer or co-employee.

The theory underlying this change: although public policy considerations support the preclusion of negligence claims against the governmental entities which employ firefighters and police officers are cogent, these considerations do not justify barring firefighters and police officers from recovering damages when they are injured or killed as a result of the negligence of private parties.

Expanding on this, Justice Phelan ruled that there is even less justification in barring recovery resulting from the intentional acts of a private party and rejected McQueen's motion to dismiss Currie's complaint “sounding in assault and battery.”

Jarema Credit and probationary service

Jarema Credit and probationary service

Decisions of the Commissioner of Education, 14,557, April 12, 2001 [MacDonald and the North Tonawanda City School District]

Arthur G. McDonald served as a tenured music teacher with the Kenmore-Tonawanda Union Free School District until June 1990.

In September 1991 North Tonawanda was appointed him as a part-time [.6 full-time equivalent] music teacher. He served in this capacity until February 1992, when the district appointed MacDonald as a full-time long-term substitute music teacher.

In September 1997, MacDonald's employment status underwent another change: the district appointed MacDonald as a part-time [.8 full-time equivalent] music teacher through June 1998.

In July 1998, MacDonald was appointed to a position in the Music K-12 tenure area subject to a two-year probationary term. By letter dated June 19, 2000, Superintendent John H. George informed MacDonald that he would not recommend him for retention as a tenured employee. The district terminated MacDonald's as a probationary teacher on July 12, 2000.

MacDonald objected, contending that pursuant to Education Law Sections 2509(1)(a) and 3012(1)(a), he should have received two years probationary service credit -- so-called “Jarema” credit -- for his continuous long-term substitute teaching in the district. He claimed that with such Jarema credit, his probationary period would have terminated September 8, 1999 rather than June 2000, and that he therefore acquired tenure by estoppel and acquiescence when district continued his employment beyond September 8, 1999.

The district, on the other hand, argued that by accepting the part-time (.8 FTE) position for the 1997-98 school year, MacDonald created a “gap” year in his full-time employment with the district and thus he is not entitled to receive Jarema credit for his long-term substitute service.

The Commissioner said that MacDonald “correctly asserts” that where a teacher is entitled to both probationary periods specified in Education Law Sections 2509(1)(a) and 3012(1)(a), the shorter of the two probationary periods governs. Accordingly, the issue to be resolved in this case is whether MacDonald is whether petitioner is entitled to Jarema credit for his full-time substitute service.

On this issue the Commissioner said that he saw no reason to deviate from the long-standing interpretation that regular substitute service must immediately precede a probationary appointment for a teacher to be eligible for Jarema credit.

Thus, said the Commissioner, because MacDonald's service was interrupted by a year of part-time service, he is not entitled to Jarema credit and dismissed his appeal.

Responsibility for the payment of health insurance claims

Responsibility for the payment of health insurance claims

Berkowitz v Neuman, 283 AD2d 179

This “denial of health insurance benefits” case was brought on behalf of Mildred Neuman, a retired employee of the Mount Vernon City School District, who was a beneficiary under the District's Employee Health Benefit Plan.

The health insurance plan [plan] was administered by American Group Administrators (AGA) until August 31, 1997, when United HealthCare became the insurance carrier for the District.

Although the greater part of the ruling addresses questions concerning Neuman’s eligibility for benefits based on her receiving treatment that was a “covered medically necessary” in contrast to seeking benefits for “excluded custodial care,” the Appellate Division also addressed the question of liability for the payment of benefits in the event a health insurance plan administrator is found to have incorrectly denied a covered individual benefits available under the health insurance plan.

The Appellate Division's conclusion:

Even if the plan administrator was solely responsible for determining medical necessity and made an incorrect determination, payment of the claim would still be the plan's responsibility.

Employee contributions by a member of a public retirement system as “disposable income” for the purposes of filing for bankruptcy

NYC Employees' Retirement System v Sapir, CA2,243 F.3d 124*

Sharlene De Ann Taylor, an employee of the New York City Housing Authority [NYCHA], filed for Chapter 13 bankruptcy in accordance with 11 U.S.C. 1325(b). Her employment required Taylor to join the New York Cite Employees' Retirement System [NYCERS]. This, in turn, required that she make an employee contribution of $134.20 per month. This amount is automatically deducted from her salary and deposited with NYCERS. This mandatory employee retirement contribution is the focus of the Circuit Court of Appeals inquiry in this action.

The basic issue the Circuit Court of Appeals, Second Circuit was asked to resolve in the Taylor case was whether or not Taylor’s employee contributions to the Retirement System, required by State law, was “disposable income” within the meaning of the federal Bankruptcy Code. In other words, are the monies required as the employee's contribution to NYCERS insulated from being distributed among Taylor's creditors?

Section 1325(b)(2)(A) of the Bankruptcy Code defines “disposable income,” as is applicable here, as “income which is received by the debtor and which is not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor.” The Bankruptcy Code, however, does not define “reasonably necessary.”

The Second Circuit decided to provide bankruptcy court judges with a “flexible solution,” allowing those courts to consider the facts in each individual case in determining whether or not the pension contributions qualify as a “reasonably necessary” expense for that debtor.

If the bankruptcy judge finds that the such contributions are a reasonably necessary expense for an individual debtor based on the circumstances confronting that debtor, that amount will excluded in the determining “disposable income” for the purposes of the bankruptcy proceeding.**

Conversely, if the judge finds that the contributions are not a reasonably necessary expense for an individual debtor based on the circumstances confronting that debtor, they will be included in determining the amount of an individual's disposable income, and the employee contribution deduction will be ordered discontinued for the duration of the Bankruptcy Plan. In determining whether or not pension contributions are reasonably necessary for an individual debtor, the Circuit Court said that the bankruptcy judge may consider any factors properly before the court, including but not limited to:

1. The age of the debtor and the amount of time until expected retirement;

2. The amount of the monthly contributions and the total amount of pension contributions debtor will have to buy back if the payments are discontinued;

3.The likelihood that buy-back payments will jeopardize the debtor's fresh start;

4. The number and nature of the debtor's dependents;

5. Evidence that the debtor will suffer adverse employment conditions if the contributions cease;

6. The debtor's yearly income; and

7. The debtor's overall budget

The Circuit Court also said that the Bankruptcy Court judge could also consider any other constraints on the debtor that make it likely that the pension contributions are reasonably necessary expenses for that debtor. These could include, for example, the obligations set out in a divorce decree with respect to distribution of pension assets to a spouse.

The court commented that “[a]dministrative inconvenience to NYCERS and NYCHA, however, is not to be considered. The impact on the administrator of the fund is irrelevant in determining whether or not the pension contribution is a reasonably necessary expense to an individual debtor.

* The respondent “Sapir” is Jeffrey L. Sapir, the standing Chapter 13 Trustee for the Southern District of New York.

** A retirement system member’s retirement allowance consists of two parts: an annuity portion funded by the employee’s contributions to the system and a pension portion underwritten by employer contributions to the system. Presumably the “discontinuation of employee contributions” for the duration of the Bankruptcy Plan will have an impact only on the annuity portion of the individual’s retirement allowance.