Federal whistle blower protection against retaliation is not triggered unless the individual complies with the procedures set out in the controlling federal law, rule or regulation

Federal whistle blower protection against retaliation is not triggered unless the individual complies with the procedures set out in the controlling federal law, rule or regulation

Digital Realty Trust, Inc. v. Somers, USSC, No. 16-1276

Both the Sarbanes-Oxley Act of 2002, typically referred to as the Sarbanes-Oxley Act and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, generally referred to as the Dodd-Frank Act, shield whistle blowers from retaliation by their employer for "whistle blowing" but they differ in important respects.

Sarbanes-Oxley applies to all "employees" who report misconduct to the Securities and Exchange Commission [SEC], any other federal agency, Congress, or an internal supervisor [see 18 U. S. C. §1514A(a)(1)].

In contrast, Dodd-Frank defines a "whistle blower" as any individual who provides . . . information relating to a violation of the securities laws to the SEC, in a manner established, by rule or regulation, by the SEC [see, generally, 15 U. S. C. §78u– 6(a)(6)].

Paul Somers alleged that his employer, Digital Realty Trust, Inc., [DRT] terminated him shortly after he reported suspected securities-law violations by the company to senior DRT management. Somers then initiated litigation against DRT, contending that he had been terminated in retaliation for his "whistle blowing" in violation of Dodd-Frank.

DRT asked the court to dismiss Somers lawsuit contending that Somers was not a whistle blower within the meaning of 15 USC §78u-6(h) because he failed to alert the Security and Exchange Commission of the suspected violations of Dodd-Frank prior to his termination.

The District Court denied the motion, and the Ninth Circuit affirmed. The Court of Appeals concluded that §78u-6(h) does not necessitate recourse to the SEC prior to gaining "whistle blower" status, and it accorded deference to the SEC's regulation, citing Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837.

The Supreme Court reversed, holding that the Dodd-Frank anti-retaliation provision does not extend to an individual who, like Somers, had not reported a violation of the securities laws to the SEC prior to his or her termination from his or her employment.

The court explained that "When a statute includes an explicit definition, [the court] must follow that definition ...."An individual who falls outside the protected category of “whistle blowers” as defined in the law, rule or regulation is ineligible to seek redress regardless of the conduct in which that individual has engaged. 

With respect to officers and employees of New York State as an employer and its political subdivisions, §75-b of the Civil Service Law provides as follows:

"2. (a) A public employer shall not dismiss or take other disciplinary or other adverse personnel action against a public employee regarding the employee's employment because the employee discloses to a governmental body information: (i) regarding a violation of a law, rule or regulation which violation creates and presents a substantial and specific danger to the public health or safety; or (ii) which the employee reasonably believes to be true and reasonably believes constitutes an improper governmental action. "Improper governmental action" shall mean any action by a public employer or employee, or an agent of such employer or employee, which is undertaken in the performance of such agent's official duties, whether or not such action is within the scope of his employment, and which is in violation of any federal, state or local law, rule or regulation" [emphasis supplied].

In Ringle v Onondaga County, 267 AD2d 1088, in determining Ringle’s and Sawyer’s rights under Section 75-b of the Civil Service Law, the Appellate Division noted that alleged violations of Section 75-b are typically challenged by the individual bringing an Article 78 action [Article 78, Civil Practice Law and Rules].* 

In filing such a petition, said Appellate Division, the individual seeks to vindicate a private rather than a public right. What private right? The right not to be dismissed or otherwise subjected to reprisals because of his or her disclosures to other governmental agencies of the media.

This conclusion meant that both Ringle and Sawyer had fallen into a procedural trap.

The Appellate Division said that because the “Civil Service Law Section 75-b causes of action Ringle and Sawyer brought sought to vindicate only their individual interests their claims were properly dismissed by the lower court because neither had filed a notice of claim as required by Section 50-a of the General Municipal Law Section and Section 52 of the County Law.**

In addition, the court pointed out that Section 75-b does not serve as a shield against disciplinary action being taken against an employee where there is a “separate and independent basis” for discipline the individual.

Finally, the Appellate Division observed that “by commencing actions pursuant to Civil Service Law Section 75-b, Ringle and Sawyer are barred from asserting any other State law cause of action related to the alleged retaliatory discharges.”

* In contrast, in DiGregorio v MTA Metro-N. R.R., 140 AD3d 530, the court ruled that where the collective bargaining agreement so provides, an allegation that the employer violated the “whistle-blower” statute is adjudicated in accordance with the terms of the agreement.

** This ruling implies that where an individual sues a school district or BOCES claiming he or she was dismissed or subjected to punitive action in violation of Section 75-b, he or she must file a notice of claim in accordance with Section 3813(1) of the Education Law. 

The decision is posted on the Internet at:

https://www.supremecourt.gov/opinions/17pdf/16-1276_b0nd.pdf

 

A governmental entity operating in a public capacity may loose its right to claim sovereign immunity in litigation if it is found that the underlying cause of action involved its acting in a proprietary capacity

A governmental entity operating in a public capacity may loose its right to claim sovereign immunity in litigation if it is found that the underlying cause of action involved its acting in a proprietary capacity

Connolly v Long Is. Power Auth., Court of Appeals, 2018 NY Slip Op 01148

As was indicated in an earlier posting in NYPPL entitled Sovereign Immunity, Absolute Immunity, Qualified Immunity, Use Immunity, Transaction Immunity and Qualified Privilege, since updated to include the Connolly decision,  claims that may be advanced by public officers and employees involved in litigation and, or, administrative hearings, there are a number of theories that may be cited as a defense that will bar or limit legal action being taken, or continued, against an individual.

In Turturro v City of New York, 28 NY3d 469, the Court of Appeals addressed another theory for a defendant claiming immunity in an effort to avoid litigation, a claim that the entity is a governmental body. In Turturro the court explained that a government entity performing a purely proprietary, non-governmental role when its activities essentially substitute for or supplement traditionally private enterprises. In contrast, a government entity will be deemed to have been engaged in a governmental function when its acts are undertaken for the protection and safety of the public pursuant to the general police powers.

The issue before the Court of Appeals in the captioned matter was whether the defendants, the  Long Island Power Authority (LIPA), Long Island Lighting Company (LILCO), and National Grid Electric Services, LLC (National Grid) were, collectively entitled to dismissal of plaintiffs' amended complaints on the rationale that the actions challenged were governmental and discretionary as a matter of law. 

The court rejected the defendants argument that assuming their actions were not discretionary, "plaintiffs' failure to allege a special duty is a fatal defect." Rather, the Court of Appeals ruled that because defendants had not met their threshold burden of demonstrating that the action was governmental in the context of its "pre-answer, pre-discovery CPLR §3211(a)(7) motions," it could not concluded that plaintiffs' complaints fail to state causes of action as a matter of law.

The Court of Appeals also took note of the fact that LIPA was a public authority that was created by the legislature as a "corporate municipal instrumentality of the state . . . which shall be a body corporate and politic and a political subdivision of the state, exercising essential governmental and public powers," and authorized it to operate in LILCO's service area (Public Authorities Law §1020-c [1], [2]).

It then explained that it is "well settled that, "[d]espite the sovereign's own statutory surrender of common-law tort immunity for the misfeasance of its employees, governmental entities somewhat incongruously claim — and unquestionably continue to enjoy — a significant measure of immunity fashioned for their protection by the courts" (Haddock v City of New York, 75 NY2d 478, 484 [1990]). 

The doctrine of governmental function immunity "reflects separation of powers principles and is intended to ensure that public servants are free to exercise their decision-making authority without interference from the courts," citing Valdez v City of New York, 18 NY3d 69. Additionally, said the Court of Appeals, "this immunity reflects a value judgment that — despite injury to a member of the public — the broader interest in having government officers and employees free to exercise judgment and discretion in their official functions, unhampered by fear of second-guessing and retaliatory lawsuits, outweighs the benefits to be had from imposing liability for that injury."

Because the issue in this CPLR §3211(a)(7) motion is whether plaintiffs' complaints have stated a viable claim, the first issue that to be considered "is whether the . . . entity was engaged in a proprietary function or acted in a governmental capacity at the time the claim arose. This is because if the action challenged in the litigation is governmental, the existence of a special duty is an element of the plaintiff's negligence cause of action.

As the court explained in (Matter of World Trade Ctr. Bombing Litig., 17 NY3d 428, "[w]hen the liability of a governmental entity is at issue, it is the specific act or omission out of which the injury is claimed to have arisen and the capacity in which that act or failure to act occurred which governs liability."

Assuming the government entity was acting in a governmental capacity, the court observed that a plaintiff may nevertheless state a viable claim by alleging the existence of a special duty to the plaintiff, citing Turturro, 28 NY3d at 478. 

If the plaintiff establishes the elements of the cause of action, including special duty, the government entity can avoid liability under the governmental function immunity defense by proving the challenged actions were discretionary in nature and that discretion was, in fact, exercised. However, because the governmental immunity defense protects government entities from liability only for discretionary actions taken during the performance of governmental functions, "[t]he . . . defense has no applicability where the [entity] has acted in a proprietary capacity, even if the acts of the [entity] may be characterized as discretionary."

Viewing plaintiffs' allegations in the light most favorable to plaintiffs, "as [the Court of Appeals] must given the procedural posture" of this action, plaintiffs' allegations concern the providing of electrical power by defendants, a service that traditionally has been provided by private entities in the State of New York., nor does LIPA dispute that the provision of electricity traditionally has been a private enterprise which, in the normal course of operations, would be a proprietary function.

Accordingly, the Court of Appeals said that it could not, as "a matter of law based only on the allegations in the amended complaints, as amplified," conclude that LIPA was acting in a governmental, rather than a proprietary, capacity when engaged in the conduct claimed to have caused plaintiffs' injuries.

The decisions is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01148.htm

Audits and examination reports issued during the week ending February 16, 2018 by NYS Comptroller Thomas P. DiNapoli

Audits and examination reports issued during the week ending February 16, 2018 by NYS Comptroller Thomas P. DiNapoli 

Click on text highlighted in color to access the full report.

Department of Taxation and Finance: Oversight of the Agricultural Assessment Program (2017-S-26)
The New York Agricultural Districts Law allows reduced property tax bills for land in agricultural production by limiting the property tax assessment of the land to its prescribed per-acre Agricultural Assessment Value (AAV). Auditors identified an error in the Tax Department’s calculation in 2006 that caused subsequent years’ AAVs to be incorrect, including those certified and communicated to local assessors during the audit period. This resulted in about $10.4 million in excess agricultural exemptions granted to program property owners during the three-year period 2014 through 2016 for 10,416 properties in the eight counties analyzed. Because of the excess exemptions, an estimated $349,069 in real property taxes were not collected.

New York Racing Association (NYRA): Capital Program Revenue and Expenses (Follow-Up) (2017-F-26)
An initial audit issued in October 2015 found that NYRA lacked a formal long-term capital planning process for Video Lottery Terminal (VLT) revenues. The annual capital plans used by NYRA lacked supporting documentation for the resources and costs associated with the listed projects and NYRA did not have a formal project management system to effectively monitor capital project status. Auditors also found NYRA used VLT revenues for operating expenses, which was not in accordance with prescribed professional standards. In a follow-up, auditors found NYRA made some progress in addressing the issues identified.

New York Racing Association: Financial Condition and Selected Expenses (Follow-Up) (2017-F-27)
An initial audit report issued in June 2016, assessed NYRA’s financial condition. Auditors found that although NYRA’s overall financial condition was sound, its traditional racing-related operations continued to produce multi-million-dollar annual deficits. Also, NYRA had paid certain expenses that were not ordinary or necessary for racing operations, which contributed to NYRA’s racing-related deficits. In a follow-up, auditors found NYRA made some progress in addressing the issues identified.

State Education Department (SED)/Division of State Police (DSP): Compliance With the Enough is Enough Act (2017-S-38)
Auditors found SED has made progress in complying with some of its key responsibilities under the act, however, it has fallen behind meeting or completing others. SED’s implementation time frames resulted in delays in meeting certain requirements, including reporting critical incident data to the Governor and Legislature. SED may not meet the reporting requirement until late 2019 – two years later than the act requires. DSP has met its responsibilities under the act.

Office of Temporary and Disability Assistance (OTDA): New York State Supplemental Payments (SSP) Made to Deceased Individuals (2016-BSE7-01)
OTDA administers the New York SSP, which provides a supplemental benefit to Supplemental Security Income (SSI) recipients and other qualifying state residents. Auditors found OTDA processed 553 SSP payments totaling approximately $42,000 to 78 individuals who died from 1 to more than 16 years prior to their last SSP payment in the examination period.  Of the 553 payments, 380 were transacted, meaning the payment was either electronically deposited into the recipient’s bank account or the recipient’s check was negotiated. The remaining 173 payments were either stopped, escheated or remain uncashed.  

Office of Temporary and Disability Assistance: SSP Payments Made to State Employees (2016-BSE7-02)
OTDA processed 105 SSP payments totaling $6,870 to 14 state employees who were ineligible to receive benefits because the wages they earned exceeded the SSP income eligibility limits. As a result of the findings, OTDA determined the daily file from the Social Security Administration contained incorrect income eligibility information for an additional 3,000 SSP recipients. Officials planned to correct these 3,000 recipients’ records.

SUNY Downstate Medical Center failed to "get its money’s worth" from cost-cutting consultant

The State University of New York (SUNY) Downstate Medical Center paid a consultant $34 million for a plan to help the hospital out of financial trouble, but a report released today by State Comptroller Thomas P. DiNapoli questions whether $74 million in savings even happened.

A prior DiNapoli audit released in August 2016 found questionable travel and excessive lodging expenses for the contractor, Pitts Management Associates (PMA), which it charged to SUNY Downstate while working on this project.

“SUNY Downstate’s fiscal problems were severe and it needed help. But it failed to monitor PMA’s $34 million contracts and did not get what it paid for,” DiNapoli said. “When my office is precluded from reviewing a contract, poor oversight requirements can lead to empty promises by vendors. This is another example of why proper contract oversight is needed to protect public dollars.”

Legislation passed in 2013 authorized SUNY Downstate to obtain services related to its restructuring without following state procurement requirements, including executing contracts without prior approval from DiNapoli’s office. The contract failed to clearly define how PMA would measure savings or delineate its responsibilities, nor did it include “claw back” cost recovery provisions for nonperformance. As a result, DiNapoli’s auditors found that PMA used unsound calculations and questioned more than $74 million of the $85 million in purported savings reviewed.

The flawed methodologies and magnitude of the discrepancies led DiNapoli’s auditors to question the reliability of the remainder of PMA’s total claimed savings of $138 million. They also concluded that SUNY Downstate officials did not properly monitor and assess PMA’s performance under the contract.

DiNapoli recommended that SUNY Downstate management:

● Establish clear agreements and contracts with vendors using measurable deliverables.

● Include cost recovery provisions in future contracts.

● Establish controls to properly administer future contracts, including:

● Effectively monitoring contractor progress; and

● Safeguard against a contractor’s failure to meet contract requirements, including monetary retainage, until the contractor meets the terms and conditions.

SUNY generally agreed with the recommendations but noted that under PMA several improvements were realized. The audit report notes where savings were achieved through the PMA contract. The complete response is included in the audit.

For a copy of the report, go to:

http://osc.state.ny.us/audits/allaudits/bseaudits/bse20180214.htm

The authority of a court to modify an arbitration award is limited

The authority of a court to modify an arbitration award is limited

Matter of Lackawanna Professional Fire Fighters Assn., Local 3166, IAFF, AFL-CIO (City of Lackawanna), 2017 NY Slip Op 08994, Appellate Division, Fourth Department

Supreme Court Lackawanna Professional Fire Fighters Association's petition to confirm an arbitration award and granted the City of Lackawanna's motion to vacate the award. The Association appealed and the Appellate Division unanimously reversed the Supreme Court's ruling "on the law" confirmed arbitration award in favor of the Association.

The Appellate Division ruled that in this instance the arbitrator had merely interpreted and applied the provisions of the relevant collective bargaining agreement [CBA] as she had the authority to do.

The Appellate Division explained that a court is powerless to set aside the arbitrator's interpretation of the contract provision at issue "merely because the court disagrees with it" and a court may not countenance such an action. In any event, we conclude that the plain language of the CBA supports the arbitrator's reasoning. Nothing in the CBA suggests that the contribution requirement applies to retirees so as to render that language ambiguous. If the parties had wished to create such a requirement, they could have done so. Indeed, the record establishes that respondent previously proposed adding such a requirement to the CBA, but that proposal was rejected through collective bargaining.

By vacating the arbitration award, Supreme Court had effectively amended the CBA by adding a provision that the parties previously declined to adopt. Accordingly, the Appellate Division reversed the Supreme Court's order, granting the Association's petition to confirm the arbitration award.

§7511(b) of the Civil Practice Law and Rules sets out the limited grounds authorizing  a court's vacating an arbitration award as follows:

 1. The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate if the court finds that the rights of that party were prejudiced by:

 (i) corruption, fraud or misconduct in procuring the award; or

 (ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

 (iii) an arbitrator, or agency or person making the award exceeded his [or her] power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

 (iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_08994.htm

Police offices and firefighters applying for accidental disability retirement benefits must demonstrate that his or her incapacity was the "natural and proximate result of an accident" within the meaning of §363[a][1] of the Retirement and Social Security Law

Police offices and firefighters applying for accidental disability retirement benefits must demonstrate that his or her incapacity was the "natural and proximate result of an accident" within the meaning of §363[a][1] of the Retirement and Social Security Law

Kelly v DiNapoli, 2018 NY Slip Op 01016, Court of Appeals

Kowal v DiNapoli, 2018 NY Slip Op 01019, Court of Appeals

In these appeals, the Court of Appeals was asked to determine whether petitioners, both first responders, respectively established entitlement to accidental disability retirement benefits by demonstrating that they were incapacitated "as the natural and proximate result of an accident . . . sustained in . . . service" within the meaning of Retirement and Social Security Law §363[a][1].

Finding that neither of these two first responders had demonstrated that their respective injuries were caused by "sudden, unexpected events that were not risks inherent in their ordinary job duties," the Court of Appeals ruled that neither Kelly nor Kowal had established entitlement to the benefits that they, respectively, sought and affirmed the Appellate Division's decision in Matter of Kelly v DiNapoli, 137 AD3d 1470, and reverse the Appellate Division's decision in Matter of Sica v DiNapoli, 141 AD3d 799.

In Kelly the court concluded that he was expected to assist injured persons, and that responding to emergencies is among the ordinary duties of police officers. While it was not disputed that Kelly was acting within the scope of his job duties when he responded to that emergency call.

Although noting that under the circumstances a different result would not have been unreasonable, the Court of Appeals ruled that "there was substantial evidence in the record to support the determination that Kelly's actions in assisting the injured residents of the house during life-threatening conditions fell within his job duties, and that his injuries did not result from a sudden, unexpected event that was not a risk inherent in his duties as a police officer"

With respect to Sica, the court indicated that "the alleged accident was exposure to toxic fumes in the supermarket, leading to a disabling heart condition" but then observed that "Sica was fulfilling his regular duties as a firefighter in responding to [a] 911 call."

Noting that the Comptroller had found that Sica "exposure to toxic chemicals was a risk for which Sica had been trained, that he had responded to a gas leak in the past, and that his job duties specifically required 'working with exposure to . . . fumes, explosives, toxic materials, chemicals and corrosives,'" the Court of Appeals concluded that "it is not unexpected that a firefighter whose job duties required him to respond to emergency medical calls would be exposed to toxic fumes in responding to a call for difficulty breathing."

Thus, said the court, the Comptroller "rationally concluded that Sica's injuries were the result of a risk inherent in his ordinary duties as a firefighter."

Matter of Kelly v DiNapoli is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01016.htm

Matter of Kowal v DiNapoli is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_01019.htm

Disability Benefits for fire, police and other public sector personnel 

NYPPL's e-book focusing on retirement for disability under the NYS Employees' Retirement System, the NYS Teachers' Retirement System, General Municipal Law Sections 207-a/207-c and similar statutes providing benefits to employees injured both "on-the-job" and "off-the-job." For more information click on  http://booklocker.com/books/3916.html

A violation of a agency policy or procedure does not constitute an actual violation of law, rule or regulation sufficient to sustain a cause of action within the meaning of §740(2) of the Labor Law

A violation of a agency policy or procedure does not constitute an actual violation of law, rule or regulation sufficient to sustain a cause of action within the meaning of §740(2) of the Labor Law

Young v Madison-Oneida Bd. of Coop. Educ. Servs., 2017 NY Slip Op 08960, Appellate Division, Fourth Department

The Plaintiff in this action was formerly employed by Madison-Oneida Board of Cooperative Educational Services (BOCES) as Assistant Director of Alternative Education. When Plaintiff's term of appointment expired BOCES did not reappoint Plaintiff to the position.

Plaintiff then commenced this action alleging unlawful retaliatory action under Labor Law §740(2), the "whistle-blowers' statute," by BOCES and the individual defendants, who were BOCES employees during the period of Plaintiff's employment there.

Supreme Court granted BOCES' motion for summary judgment, which ruling the Appellate Division affirmed. The Appellate Division explained that to prevail in the Labor Law §740(2) cause of action, Plaintiff had the burden of proving that BOCES retaliated against him because he "disclose[d] or threaten[ed] to disclose to a supervisor or to a public body an activity, policy or practice of [BOCES] that [was] in violation of law, rule or regulation which violation creat[ed] and present[ed] a substantial and specific danger to the public health or safety" or because he "object[ed] to, or refuse[d] to participate in any such activity, policy or practice in violation of a law, rule or regulation."

BOCES, however, established as a matter of law that the conduct on their part that was alleged by Plaintiff did not amount to violation of law, rule or regulation under the statute. Petitioner's complaint of BOCES alleged wrongful conduct, said the court, even had Plaintiff proven such wrongdoing "did not constitute an 'actual violation of law to sustain a cause of action' under Labor Law §740(2).

The Appellate Division opined that "BOCES alleged violations of its internal procedures do not qualify as a law, rule or regulation under the statute."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_08960.htm