The Doctrine of Election of Remedies bars an individual from attempting to litigate a matter involving the same issue earlier adjudicated in a different forum

The Doctrine of Election of Remedies bars an individual from attempting to litigate a matter involving the same issue earlier adjudicated in a different forum

Nizamuddeen v New York City Tr. Auth., 2016 NY Slip Op 04418, Appellate Division, Second Department
Appeal of Matthew Nadolecki, Decisions of the Commissioner of Education, Decision No. 16,894, 

The New York City Transit Authority, [MTA] hired Arif Nizamuddeen as a bus operator subject to a probationary period of employment. The Nizamuddeen had notified MTA that in 2006 he had been diagnosed with non-Hodgkin's lymphoma, which was in remission, when he was selected for employment.

After numerous extensions of Nizamuddeen’s period of probation, in March 2014 MTA terminated the Nizamuddeen’s employment “due to his unsatisfactory attendance record after multiple episodes of absences from work.”

Nizamuddeen filed a complaint with the New York State Division of Human Rights [SDHR] alleging that MTA terminated his employment because of his disability in violation of Executive Law Article 15, New York State’s Human Rights Law. SDHR dismissed Nizamuddeen’s discrimination claim on the merits.*

Nizamuddeen subsequently commenced a CPLR Article 78 proceeding against MTA in the Supreme Court, asserting allegations essentially identical to those set out in the complaint he had filed with SDHR. Supreme Court denied Nizamuddeen’spetition and dismissed the proceeding on the ground that Nizamuddeen was precluded from maintaining the proceeding by the election of remedies provision in Executive Law §297(9). 

Nizamuddeen appealed the Supreme Court’s determination.

The Appellate Division sustained the Supreme Court’s ruling, explaining that Executive Law §297(9) provides that an individual claiming to be aggrieved by unlawful discrimination on the part of the employer may sue in court "unless such person had filed a complaint [with the SDHR]." Thus the individual’s filing of a complaint with SDHR precludes the commencement of an action in the Supreme Court asserting the same discriminatory acts.* Nizamuddeen, said the Appellate Division, “is barred from maintaining this CPLR Article 78 proceeding by the election of remedies doctrine because the instant claims are based on the same allegedly discriminatory conduct asserted in [Nizamuddeen’s] complaint filed with [SDHR].”

The Appeal of Matthew Nadolecki, Decisions of the Commissioner of Education, Decision No. 16,894, provides another example of the application of the Doctrine of Election of Remedies.

The Commissioner said that “It is well settled that a school employee who elects to submit an issue for resolution through a contractual grievance procedure may not bring an appeal to the Commissioner of Education for review of the same matter.”

Nadolecki brought a "Level 1" grievance in which he alleged that the district’s efforts to terminate him violated provisions set out in the controlling collective bargaining agreement and asserted that certain other contractual provisions regarding evaluations and observations were not adhered to. As relief, he sought an arbitration award directing the rescission of his termination. Both this and “the Level 2 grievance” were denied.

The Commissioner found that Nadolecki was attempting to raise the same issues in this appeal that he had raised in the contract grievance, rejecting his argument that because he only grieved school district’s “intention” to terminate his employment, he is entitled to commence an appeal on those same issues with respect to his "actual termination."  

The Commissioner explained that in his grievance Nadolecki’s claimed that the school district violated the provisions of the collective bargaining agreement and these was the same issues he presented in his appeal to the Commissioner. 

Accordingly, the Commissioner dismissed his appeal “for lack of jurisdiction,” noting that Nadolecki’sclaims “would be dismissed under the doctrine of election of remedies in any case.”  The prior commencement of an action or proceeding in another forum for the same or similar relief constitutes an election of remedies which precludes the initiation of an appeal to the Commissioner. 

* In contrast to SDHR’s dismissing Nizamuddeen’s complaint on the merits, had SDHR  dismissed his complaint for “administrate convenience” or had Nizamuddeen, prior to the hearing before the SDHR hearing officer, successfully requested that SDHR dismiss his complaint and annul his “election of remedies” to submit to the jurisdiction of SDHR, he could have pursued his Human Rights Law claim in a judicial forum.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04418.htm

Consolidation of Investigator titles in State Department and Agencies

Consolidation of Investigator titles in State Department and Agencies

New York State Department of Civil Service  

General Information Bulletin No. 16-03, Investigator Titles Consolidation

Scott DeFruscio, New York State Department of Civil Service Director of Staffing Services has posted New York State Department of Civil Service General Information Bulletin No. 16-03 explaining the changes to investigator titles described in a memorandum from the Department’s Director of Classification and Compensation dated May 20, 2016, and which took effect on June 16, 2016.

Bulletin No. 16-03 describes the Investigator series replacing the numerous titles currently in use and provides information developed to guide departments and agencies addressing the hiring and career mobility of employees in these new title series.

The result of the changes in the Investigator series on existing titles could result in a title consolidation, a reallocation, or a title change. Therefore, the impact of this change on employee mobility and eligible list usage may differ depending on relevant circumstances.

The Classification and Compensation memorandum is posted on the Internet at:

http://www.cs.ny.gov/businesssuite/News-and-Advisories/Classification-and-Compensation-Memos/index.cfm

General Information Bulletin No. 16-03 is posted on the Internet at:

https://www.cs.ny.gov/ssd/pdf/GIB16-03.pdf

 

Reimbursment of Medicare premiums paid by retirees participating in their former employer’s health insurance plan

Supreme Court, Broome County, granted Theodora Q. Bryant’s CPLR Article 78 application to annul a determination of Chenango Forks Central School District to terminate reimbursement of certain Medicare premiums.* 

The Public Employment Relations Board directed the School District to rescind its June 2003 memorandum in which it notified employees and retirees that it was terminating its practice of reimbursing Medicare Part B premiums.

In a companion case PERB ruled that the school district must reinstate its former practice of reimbursing retirees for Medicare Part B premiums -- the same relief sought in the current proceeding.

The Appellate Division noted that PERB's order in the companion case has been upheld by the Court of Appeals [see 2013 NY Slip Op 04039 (2013)]. Accordingly, Bryant received the full relief challenged by School District in the current appeal as a result of that determination, . Accordingly, the court ruled that the instant appeal is now moot.

As to argument advanced under color of an exception to the mootness doctrine, the Appellate Division held that the claimed exception “does not apply in that, although the issue advanced herein may recur and is significant, it is not likely to evade review.”

* The underlying facts are set forth in the Appellate Division’s prior decision (21 AD3d 1134 [2005]) and in the companion case brought by the Chenango Forks Central School District (Matter of Chenango Forks Cent. School Dist. v New York State Pub. Empl. Relations Bd., 95 AD3d 1479 [2012], affd ___ NY3d ___, 2013 NY Slip Op 04039 [2013]). See, also, NYPPL’s summary of that decision posted on the Internet at http://publicpersonnellaw.blogspot.com/search?q=bryant

The decision is posted on the Internet at: http://www.courts.state.ny.us/reporter/3dseries/2013/2013_04379.htm

Health insurance company’s claim for reimbursement for certain medical cost it incurred from a “no fault” automobile insurance carrier denied

Health insurance company’s claim for reimbursement for certain medical cost it incurred from the “no fault” automobile insurance carrier denied
Aetna Health Plans v Hanover Ins. Co., 2016 NY Slip Op 04658, Court of Appeals

In this action brought pursuant to the Comprehensive Motor Vehicle Reparations Act [Insurance Law §5101, et seq. -- the "No-Fault" Law] Aetna Health Plans alleged that it paid certain bills that should have been paid by Hanover Insurance Company, the no-fault insurer involved in this action, that were submitted to Aetna by the medical providers. Ultimately Hanover refused to reimburse Aetna for all of the payments Aetna made to the medical providers.

The resolution of this action by the Court of Appeals may, under certain circumstances, impact on the administration of General Municipal Law §§207-a and 207-c with respect to medial expenses paid by a municipality on behalf of a police officer or firefighter injured in the line of duty.

Aetna, as its insured’s assignee, sued Hanover seeking a court order directing Hanover to fully reimbursement it for all of the medical expenses it paid directly to the medical providers. Hanover, in response, moved to dismiss the complaint based upon Aetna’s “lack of standing,” contending that Aetna was not entitled to direct reimbursement because, citing 11 NYCRR 65-3.11(a),* Aetna was an insurance company and not a provider of health care services. Hanover argued that the only type of assignee permitted were those set out in the regulation and Aetna was not in privity of contract with Hanover.

The Court of Appeals agreed with Hanover, holding that that the Comprehensive Motor Vehicle Reparations Act [Insurance Law §5101, et seq. -- the "No-Fault" Law] does not contemplate that reimbursement for expenses paid by a “health insurer” is to be paid to the “health insurer” in contrast to providing for such a payment to be made to a “health care provider.”

The Doctrine of Unintended Consequences might have been be triggered by this ruling.

General Municipal Law §§207-a and 207-c, respectively, provide that the employer shall be liable for the payment of the salary or wages payable to a firefighter or police officer who suffers disability as the result of an injury or disease suffered in course of performing his or her official duties and for the cost of medical or hospital care or treatment furnished such personnel until the appropriate health authority or physician shall certify that such injured or sick fireman or police officer has recovered and is physically able to perform his or her regular duties.

Further, these sections provide that “Notwithstanding any provision of law contrary thereto contained herein or elsewhere, a cause of action shall accrue to the municipality for reimbursement in such sum or sums actually paid as salary or wages and or for medical treatment and hospital care as against any third party against whom the policeman shall have a cause of action for the injury sustained or sickness caused by such third party.”

The Court of Appeals’ ruling in Aetna Health Plans could have an impact, in whole or in part, on a municipality as the police officer’s or firefighter’s employer in situations where the municipality seeks reimbursement for medical and, or, hospital expenses it incurred pursuant to the mandates of §§207-a and 207-c in providing “medical or hospital care” for police and fire personnel in situations where the Comprehensive Motor Reparations Act would otherwise be operative.

* 11 NYCRR 65-3.1, Applicability, provides that “The following are rules for the settlement of claims for first-party and additional first-party benefits on account of injuries arising out of the use or operation of a motor vehicle, a motorcycle or an all-terrain vehicle. These rules shall apply to insurers and self-insurers, and the term insurer, as used in this section, shall include both insurers and self-insurers as those terms are defined in this Part and article 51 of the Insurance Law, the Motor Vehicle Accident Indemnification Corporation (MVAIC), pursuant to section 5221(b) of the Insurance Law and any company or corporation providing insurance pursuant to section 5103(g) of the Insurance Law, for the items of basic economic loss specified in section 5102(a) of the Insurance Law;” and

11 NYCRR 65-3.11(a) provides “An insurer shall pay benefits for any element of loss other than death benefits, directly to the applicant or, when appropriate, to the applicant's parent or legal guardian or to any person legally responsible for necessities, or, upon assignment by the applicant or any of the aforementioned persons, shall pay benefits directly to providers of health care services as covered under section 5102(a)(1) of the Insurance Law, or to the applicant's employer for loss of earnings from work as authorized under section 5102(a)(2) of the Insurance Law. Death benefits shall be paid to the estate of the eligible injured person.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04658.htm

The term “race” includes ethnicity for purposes of 42 USC 1981 and Title VII

The term “race” includes ethnicity for purposes of 42 USC 1981 and Title VII

Village of Freeport and Andrew Hardwick v Barrella, USCA, Second Circuit, No. 14-2270-cv (L) et. al.

Christopher Barrella sued the Village of Freeport and its former mayor, Andrew Hardwick, [Hardwick] alleging Hardwick violated 42 USC 1981, Title VII of the Civil Rights Act of 1964, 42 USC 2000e, and the New York State Human Rights Law, New York Executive Law §290. Barrella alleged that Hardwick had not appointed him chief of police because Barrella was a white Italian-American, and that Hardwick had instead appointed a less-qualified Hispanic candidate to the position. A federal district court judge denied Hardwick’s motions for summary judgment as a matter of law. After a trial the jury returned a verdict in favor of Barrella.

Hardwick appealed the decision. The Second Circuit affirmed the judgment of the District Court insofar as it denied Hardwick's motions for summary judgment.

The Circuit Court explained that longstanding Supreme Court and Second Circuit precedents indicated that "race" includes ethnicity for purposes of  42 USC 1981, so that discrimination based on “Hispanic ancestry” or lack thereof constitutes racial discrimination under that statute. Further, said the court, "race" should be defined the same way for purposes of Title VII.

Accordingly, the Circuit Court reject Hardwick's argument that an employer who promotes a white Hispanic candidate over a white non-Hispanic candidate cannot have engaged in racial discrimination and affirmed the judgment of the District Court insofar as it denied Hardwick's' motion for judgment as a matter of law pursuant the Federal Rules of Civil procedure.

However, the Circuit Court ruled that the District Court erred in permitting "lay opinion testimony" that speculated as to Hardwick's reasons for not appointing Barrella. This, said the court, was a violation of Rule 701(b) of the Federal Rules of Evidence and because this case was factually close, this did not constitute “a harmless error.”

The judgment of the District Court was vacated and the matter remanded for a new trial consistent with the consistent with the decision of the Circuit Court of Appeals.

The decision is posted on the Internet at:

https://casetext.com/case/vill-of-freeport-andrew-hardwick-v-barrella

Exhausting administrative remedies

Exhausting administrative remedies
Ross v Blake, USSC, Docket No. 15-339

This decision by the United States Supreme Court considered an appeal involving the federal Prison Litigation Reform Act [PLRA], 42 USC 1997e(a) requirement that an inmate exhaust “such administrative remedies as are available” before bringing suit. The Supreme Court vacated the Fourth Circuit’s “unwritten 'special circumstances’ exception” to the exhaustion of administrative remedy as being inconsistent with the text and history of the PLRA,” explaining that “[m]andatory exhaustion statutes like the PLRA foreclose judicial discretion.”*

Of special interest to public employers and employees not operating in a penal environment was the Supreme Court’s observation that “that there are certain circumstances in which an administrative remedy, although officially on the books, is not available.”

The court then provided the following examples of an administrative procedure being illusory or unavailable:

1. Where the procedure operates as a dead end;

2. Where the appointing authority or the employee organization is unable or consistently unwilling to provide relief;

3. Where the administrative scheme is so opaque that it becomes, practically speaking, incapable of use; and

4. Where a grievance process is rendered unavailable should an appointing authority thwarts the employee from taking advantage of it through misrepresentation, or intimidation. 

Courts, as a general rule, will not consider lawsuits filed by public employees protesting some administrative determination unless the individual has exhausted his or her administrative remedies. The major exception to this rule: any attempt to exhaust the available administrative remedy would constitute an exercise in futility. Typically the courts apply this exception when it is decided that the administrative decision "is a foregone conclusion."

The exhaustion rule, however, is not inflexible and need not be followed where an agency's action is challenged as either unconstitutional or wholly beyond its grant of power [Watergate II Apartments v Buffalo Sewer, 46 NY2d 52] or where it is alleged that the administrative agency or process followed by the administrative agency violates the individual's constitutional rights to due process [Levine v Board of Education, 173 A.D.2d 619].

However, questions involving proper statutory interpretation and the reasonable interpretation of an agency's own regulations must first be raised within the agency's own administrative review process before being presented to the courts [Crumb v Broadnax, 178 A.D.2d 781].

An employee’s withdrawnal of his or her grievance has the effect of exhausting his or her administrative remedy. [Vega v Department of Correctional Services, 186 A.D.2d 340].

In Wilbur v Town of Rockland, 53 F.3d 542, the Circuit Court of Appeals, Second Circuit, said an employee suing the Town for alleged violations of her freedom of association under the First Amendment pursuant to 42 USC 1983 was not required to exhaust her state administrative remedies as a prerequisite to commencing a federal action, the general rule being that federal courts may not require exhaustion of administrative remedies as a "condition precedent" to 42 USC 1983 litigation.

From time to time courts are asked to settle questions about which officials or bodies have "primary jurisdiction" and should be turned to first to resolve employment disputes. In Hessney v Tarrytown Public Schools, 228 A.D.2d 954, we learn that the Commissioner of Education "is uniquely suited" to resolve questions concerned with the similarity of the duties of teaching positions and failing to initially submit the issue to him could be fatal to an individual's claim.

In any event, in cases in which the employee is alleged to have failed to exhaust his or her administrative remedy,” the employee typically has the burden of proving his or her seeking a judicial remedy falls within the ambit of one or more of the “exceptions to the rule,” frequently a difficult task.

* The court explained that PLRA contains its own, textual exception to mandatory exhaustion. Under §1997e(a), the exhaustion requirement hinges on the "availab[ility]" of administrative remedies. Thus there must exhaust available remedies, but one need not exhaust unavailable ones.

The decision is posted on the Internet at:

https://casetext.com/case/ross-v-blake

Selected reports issued by the Office of the State Comptroller during the week ending June 11, 2016

Selected reports issued by the Office of the State Comptroller during the week ending June 11, 2016

Click on text highlighted in color to access the entire report

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

City University of New York (CUNY): Medgar Evers College: Controls Over Bank Accounts (2015-S-92)

CUNY officials provided auditors with a list of 24 bank accounts at Medgar Evers. Fourteen accounts were opened after CUNY’s bank authorization policy was established in 2008. However, CUNY did not have any of the required notification forms for these accounts. Additionally, auditors found an additional two accounts that were not on the list. These findings point to weaknesses in the monitoring of bank accounts, which increase the risk that college personnel could conduct transactions using unauthorized accounts. Of 54 payments (totaling $810,608) paid from six selected bank accounts, 26 (totaling $118,782) were either improper or were unsupported. 

Higher Education Services Corporation: Tuition Assistance Program Wagner College (2015-T-3)

Auditors determined Wagner was overpaid $97,947 because school officials incorrectly certified students as eligible for state financial aid awards. Incorrect certifications include eight students who received awards but had not met the good academic standing requirements and three students who were not enrolled at Wagner for the semesters in question. 

Higher Education Services Corporation: Tuition Assistance Program at Vaughn College (2015-T-6)

Vaughn's certification procedures for state financial aid substantially complied with the governing law and regulations. Auditors found that of the 50 awards tested, only two (totaling $3,945) were certified in error. As such, auditors concluded there is a low risk that a significant number of students certified for state financial aid were not eligible for awards. 

Office of Alcoholism and Substance Abuse Services (OASAS): Contracted Programs With Puerto Rican Organization to Motivate, Enlighten and Serve Addicts Inc. (PROMESA) (2015-S-24)

Auditors found that despite two relatively recent audits by OASAS, claims submitted by PROMESA for the two years ended June 30, 2014 continued to include costs that were not valid or consistent with state guidelines. PROMESA reported about $23 million in costs associated with contracted OASAS programs during the period. The audit examined about $9 million of these expenses and identified problems with over 90 percent – $8.2 million. 

Office of Alcoholism and Substance Abuse Services (OASAS): Drug and Alcohol Treatment Program: Provider Claiming of Depreciation Expenses (2015-S-84) 
OASAS is not effectively monitoring Drug and Alcohol Treatment program contracts to ensure provider claims do not include state reimbursement for depreciation expenses. Auditors found providers inappropriately claimed $2.7 million in depreciation expenses, of which $2.2 million was funded by OASAS. Also, OASAS could potentially use the remaining $454,238 for inappropriate increases to providers’ future program budgets. 

Office of Parks, Recreation and Historic Preservation (OPRHP): Controls Over Cash Advance Accounts (Follow-Up) (2016-F-3)

An initial audit report issued in December 2014 found OPRHP advance accounts received little scrutiny and made recommendations to improve internal controls over these accounts. In a follow-up report, auditors determined the agency made significant progress in correcting the problems identified in the initial report. Of the eight prior audit recommendations, seven have been implemented and one recommendation has not been implemented. 

State Education Department (SED): League for the Handicapped, Compliance with the Reimbursable Cost Manual (2015-S-89)

For the fiscal year ended June 30, 2014, auditors identified $4,354 in costs that were charged to the preschool special education programs that did not comply with SED’s requirements for reimbursement. The non-reimbursable costs included insufficiently documented expenses, costs for services that were not directly related to the programs, unallowable working capital interest and credit card late fees.

State University of New York (SUNY): Compliance With Payment Card Industry Standards (2015-S-65)

SUNY schools were generally knowledgeable about PCI compliance and the need to protect credit card data from unauthorized access; however, auditors identified areas where system and data controls need to be improved to meet certain compliance standards. Among a range of issues, auditors identified weaknesses in the completeness of the systems’ component inventories, network segmentation, the resolution of compliance deficiencies and the oversight of affiliated campus organizations. 

State University of New York Downstate Medical Center: Review of Collecto Inc. (2016-BSE4-02)

Auditors examined Downstate contracts with Collecto for debt collection services. Under the $2.5 million contract, Downstate pays Collecto various commission rates based on the amount collected by account type and size. Of the $29,288 examined, auditors found overpayments of $14,355 and additional potential overpayments of $2,664. The remaining $12,269 was appropriate and properly supported.

Department of Taxation and Finance: Personal Income Tax Refunds (2015-1A-001)

The department processes all New York state personal income tax returns. During the audit period, the department processed almost 7.5 million refunds totaling over $8.6 billion. From this population, auditors examined 31,978 refunds totaling almost $516.5 million. Of those, auditors identified and returned 11,469 questionable refunds totaling about $53.3 million.

New York’s Freedom of Information Law does not permit the custodian of the records to routinely charge for employee time spent searching for documents responsive to a FOIL request

New York’s Freedom of Information Law does not permit the custodian of the records to routinely charge for employee time spent searching for documents responsive to a FOIL request

Ripp v Town of Oyster Bay, 2016 NY Slip Op 04226, Appellate Division, Second Department

In a CPLR Article 78 proceeding to compel the production of certain documents pursuant to the Freedom of Information Law (Public Officers Law Article 6) [FOIL], the Town of Oyster Bay [Town], appealed that part of the Supreme Court decision that barred the Town requiring the petitioner, Robert O. Ripp, to prepay certain estimated costs as a condition of producing the requested documents for inspection.

Ripp had requested that the Town make certain documents available for inspection pursuant to FOIL. The Town conditioned the disclosure of the documents upon Ripp prepaying $1,920 to cover the estimated costs associated with producing the documents.

The Appellate Division sustained the Supreme Court’s order explaining that:

1. FOIL requires state and municipal agencies to make available for public inspection and copying all records, subject to certain exemptions;

2. Where an agency conditions disclosure upon the prepayment of costs or refuses to disclose records except upon prepayment of costs, it has the burden of "articulating a particularized and specific justification" for the imposition of those fees;

3. The agency must demonstrate that the fees to be imposed are specifically authorized by the cost provisions of FOIL; and

4. The custodian of the records must meet this burden "in more than just a plausible fashion."

In this case the Appellate Division found that the Town had failed to satisfy these requirements, noting that the only evidence in the record justifying the imposition of costs was a letter to Ripp stating that it would take a Town employee a minimum of eight weeks, at $240 per week, to review 2,500-3,000 files to identify the records available for inspection.

While an agency may charge for employee time spent extracting or segregating data from an electronic database, the court distinguished electronic “records” from “hardcopy” records and explained that FOIL does not permit an agency to charge for employee time spent searching for paper documents.*

The Appellate Division opined that the Town had failed to demonstrate that the prepayment costs it demanded were properly based upon employee time related to retrieving electronic files, rather than a manual search of hard copies for which the Town's recoupment costs are limited to 25¢ per photocopy.**

Accordingly, said the court, the Supreme Court properly directed the Town to make the paper records or documents sought available for Ripp’s inspection without the prepayment of the estimated costs.

* Weslowski v Vanderhoef, 98 AD3d 1123, provides a comprehensive review of the elements involved in the custodian of the records lawfully requiring payments attributed to complying with a FOIL request.

**The person requesting the documents may avoid this $.25 per page charge by simply inspecting the documents "on site" rather than ordering photocopies of the documents of interest.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04226.htm

If an employee engaged in repeated acts constituting disloyalty to the employer, forfeiture of compensation and benefits is warranted under the Faithless Servant Doctrine

If an employee engaged in repeated acts constituting disloyalty to the employer, forfeiture of compensation and benefits is warranted under the Faithless Servant Doctrine

City of Binghamton v Whalen, 2016 NY Slip Op 04289, Appellate Division, Third Department

John C. Whalen had been employed by the City of Binghamton[City] as its Director of Parks and Recreation and, in that capacity, was entrusted with the collection of various fees and funds on behalf of the City. In April 2014, Whalen pleaded guilty to grand larceny in the third degree, admitting that he stole more than $50,000 from the City between January 2007 and November 2012.

The City subsequently sued Whalen seeking [1] to recover all compensation it had paid to him during the period of the theft and [2] a judicial declaration that it is under no obligation to furnish him with health insurance earned through his employment. The City moved for summary judgment in its favor.

Supreme Court granted the City’s summary judgment on the issue of liability. However Supreme Court concluded that in view of Whalen’s “otherwise ‘unblemished’ 35 years of service to [the City]" and notwithstanding his over a half a "decade of thievery," there were issues of fact raised as to whether forfeiture of compensation was warranted under the faithless servant doctrine. The City appealed.

The Appellate Division said the Supreme Court’s ruling that there were issues of fact to be considered with respect to the faithless servant doctrine was error and ruled that the City was entitled to summary judgment on the issue of damages and a declaration that it is relieved of its obligation to provide Whalen with health insurance benefits.

The court explained that New York law with respect to the disloyal or faithless performance of employment duties has developed for well over a century and, citing Western Elec. Co. v Brenner, 41 NY2d 291, said that "an employee is to be loyal to his [or her] employer and is 'prohibited from acting in any manner inconsistent with his [or her] agency or trust and is at all times bound to exercise the utmost good faith and loyalty in the performance of his [or her] duties.'" 

In the words of the Appellate Division, “[u]nder what is commonly referred to as the faithless servant doctrine, ‘[o]ne who owes a duty of fidelity to a principal and who is faithless in the performance of his [or her] services is generally disentitled to recover his [or her] compensation, whether commissions or salary.’ Thus, where an employee ‘engage[s] in repeated acts of disloyalty, complete and permanent forfeiture of compensation, deferred or otherwise, is warranted.’"*

Clearly there was no dispute that Whalen’s admission to stealing more than $50,000 from the City over the course of a nearly six-year period constitutes conclusive proof of such facts and established the City's entitlement to judgment as a matter of law on the issue of Whalen's liability. Further, said the Appellate Division, “[t]he Court of Appeals has made clear that forfeiture of compensation is required even when some or all of ‘the services were beneficial to the principal or [when] the principal suffered no provable damage as a result of the breach of fidelity by the agent.’"

Thus, said the Appellate Division, what Supreme Court characterized as Whalen's “exemplary performance of his duties when he was not stealing from [the City] does not insulate him from the application of the faithless servant doctrine” with respect to his  persistent pattern of disloyalty over the six-year period during which he stole from the City.

As to the damages claimed by the City, it submitted documentary evidence establishing that it paid Whalen $316,535.54 in compensation between January 2007 and November 2012, and Whalen failed to submit any competent proof to dispute that figure. Accordingly, the Appellate Division awarded the City damages in the amount of $316,535.54 and declared that the City was relieved of its obligation to provide Whalen health insurance benefits earned through his employment.

* See William Floyd Union Free School Dist. v Wright, 61 AD3d 856.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04289.htm

An eligible list found to be invalid prior to its "expiration" had no legal existence and thus it could not have "expired," permitting the establishment of a "corrected' list"

An eligible list found to be invalid prior to its "expiration" had no legal existence and thus it could not have "expired," permitting the establishment of a "corrected' list"

Crociata v Cassano, 2016 NY Slip Op 04212, Appellate Division, Second Department

New York City Fire Commissioner Salvatore J. Cassano declining to promote Anthony L. Crociata to the rank of Fire Marshal. Crociata sued the Commissioner and Supreme Court ordered that Crociata’s name be placed “on a special eligible list for promotion to the rank of Fire Marshal” and that that he be reconsider for such promotion.

In response to Cassano’s appeal of the Supreme Court's ruling the Appellate Division vacated the lower court's order and dismissed the proceeding in its entirety.

Although noting that “[t]he only available remedy to a Civil Service examinee who is determined to have been improperly passed over for an appointment or promotion is a judicial direction for reconsideration,” the court said that in this instance the relief awarded by the Supreme Court -- directing Cassano to reconsider Crociata’s application for promotion -- was improper, as the eligible list on which his name had appeared had expired by operation of law.

The court explained that although Crociata had commenced his lawsuit before the date on which the list had expired, “he failed to adequately allege that the list itself was constitutionally invalid,” citing Pena v NYC Civil Service Commission, 27 AD3d 293. 

In the Pena case the Appellate Division found that Pena had not challenge the validity of the original eligible list, but sought to have her name placed on a "special list," pursuant to Civil Service Law §56(3).* However, said that court, “in order to be placed on a special eligible list, [Pena] was required first to successfully challenge the validity of the list itself prior to its expiration."

The Pena court, citing City of New York v New York State Div. of Human Rights, 93 NY2d 768, said that only if Pena’s challenge to the list itself was successful would she have a remedy that comports with Article V, §6 of the New York State Constitution, in that the original list would have had no legal existence and thus could not have expired, allowing for extension of a 'corrected' list.”

In Crociata’s situation the court held that Supreme Court “erred in directing [Cassano] to place [Crociata’s] name on a special eligible list for promotion to the rank of fire marshal and reconsider him for such promotion. 

* Civil Service Law §56.3 addresses situations where the individual was disqualified and such disqualification has been reversed, or the individual's rank order on an eligible list has been adjusted, as the result of an administrative or judicial action or proceeding. In contrast, Civil Service Law §56.4 is triggered where a court of competent jurisdiction has determined that an eligible list is invalid and provides that the court may order the creation of a special eligible list having a duration of not less than one nor more than four years commencing at the time the corrected list is published.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_04212.htm