An administrative penalty or sanction must be sustained by a judicial tribunal absent a showing that the penalty is shocking to one's sense of fairness

The petitioner [Plaintiff] in this CPLR Article 78 proceeding was found to have violated 48 RCNY 6-25[a][9], a provision prohibiting a representative of a party appearing in a proceeding before Office of Administrative Trials and Hearings [OATH] from submitting any documents "which he or she knows, or reasonably should have known, to be false, fraudulent or misleading."

OATH found Plaintiff had violated 48 RCNY 6-25[a][9] by submitting "fraudulent receipts on behalf of two separate clients in support of their claims" and permanently barred Plaintiff from appearing before it as a nonattorney representative. Plaintiff appealed

Supreme Court overturned OATH's decision and remanded the matter to it "for an in-person hearing on the issue of whether [Plaintiff] had violated OATH's rules." OATH, in turn, appealed the Supreme Court's ruling.

The Appellate Division, citing Matter of Kelly v Safir, 96 NY2d 32, reversed the Supreme Court's decision on the law, explaining that an administrative penalty or sanction must be upheld unless it is "so disproportionate to the offense as to be shocking to one's sense of fairness."

OATH had determined the Plaintiff had submitted fraudulent receipts on behalf of two separate clients in support of their claims that they had missed their hearing dates because their cars broke down on their way to their separate hearings. The Appellate Division held that "[u]nder the circumstances, the penalty here is not shocking to one's conscience."

In addition, the Appellate Division noted that the record indicated that Plaintiff was given the opportunity to submit a written rebuttal to the charges after he was informed of the claims made against him and that OATH reviewed his submission before rendering its final determination.

The Appellate Division, observing that Plaintiff had the opportunity to submit a written rebuttal, opined that this opportunity sufficed "as a remote method of appearing before the Chief Administrative Law Judge, and is allowed for by OATH's own rules," citing  Matter of Thornton v New York City Dept. of Educ., 167 AD3d 444.

Click HEREto access the text of the Appellate Division's opinion.

Determining if a private entity is required to pay its employees assigned to provide services to a public entity "prevailing wages and supplements"

Executive Cleaning Services Corporation [Cleaning] employed six individuals to perform cleaning services at the Ossining Public Library [Library] pursuant to a agreement between the parties. Library, however, "did not represent that it was a public agency or that the prevailing wage law applied" until a Cleaning employee told Library that "Cleaning had failed to provide compensation for the work performed under the contract."*  

Library then notified Cleaning that it, as a public employer subject to Article 9 of the New York State Labor Law, would withhold final payment under the agreement until the prevailing wage issue was resolved. Library also advised the Department of Labor [Department] of the employee's complaint. This resulted in the Department's Bureau of Public Work investigating the matter and concluding that the service Cleaning was providing Library was subject to the prevailing wage provisions of Article 9.

Ultimately the Commissioner of Labor affirmed, in full, its hearing officer's findings and recommendations that:

1. Assessed Cleaning for an underpayment of $16,671.57 in wages and supplements;

2. Determined that Cleaning's underpayment was non-willful "[g]iven [Cleaning's] inexperience, and [Library's] failure to provide a written contract and prevailing wage-rate schedules;" and

3. Cleaning be assessed interest at the rate of 6% per year on its underpayment, as well as a civil penalty in the amount of 5% of the underpayment and interest.

Cleaning filed a CPLR Article 78 challenging the Commissioner's decision coupled with a petition for declaratory judgment seeking, among other things, a court determination that its employees were not subject to the prevailing wage provisions of Labor Law Article 9 for services provided Library because [1] Library was not a public agency within the meaning of Labor Law §230(3) and [2] the work performed was not "construction-like" labor.

The Appellate Division agreed with Cleaning that the work performed for Library by its employees was not subject to the prevailing wage provisions of Labor Law Article 9, explaining that:

1. §17 of Article I, of the New York State Constitution provides, in pertinent part, that "[n]o laborer, worker or mechanic, in the employ of a contractor or sub-contractor engaged in the performance of any public work ... shall ... be paid less than the rate of wages prevailing in the same trade or occupation in the locality within the state where such public work is to be situated, erected or used;"

2. This constitutional mandate is implemented by Labor Law Article 8, which, in pertinent part, requires the payment of prevailing wages to "laborers, work[ers] or mechanics" performing construction-like labor in connection with certain public work contracts, citing Labor Law §220[3][a]; and

3. Article 9 of the Labor Law extended such prevailing wage protections to certain types of service contracts and, in particular, Labor Law §231[1] provides that "[e]very contractor shall pay a service employee under a contract for building service work a wage of not less than the prevailing wage in the locality for the craft, trade or occupation of the service employee" and  Labor Law §230[2] provides that "any person performing work in connection with the care or maintenance of an existing building ... for a contractor under a contract with a public agency** which is in excess of [$1,500]" and expressly encompasses "building cleaner[s]."

The Appellate Division, citing Matter of M.G.M. Insulation, Inc. v Gardner, 20 NY3d at 475, opined that the Court of Appeals rejected the proposition that "an entity may be considered the 'functional equivalent' of a public agency for prevailing wage purposes"***and held that "Executive Cleaning's contract with [Library] is not subject to the prevailing wage provisions of Labor Law Article 9," and annulled the Commissioner's determination.****

In the words of the court as Cleaning's agreement with Library was "not subject to the prevailing wage provisions of Labor Law Article 9, the Commissioner's determination must be annulled" and "in light of our determination, [Cleaning's] remaining contentions are academic." 

However, citing  Matter of Paladino v Board of Educ. for the City of Buffalo Pub. Sch. Dist., 183 AD3d 1043, the Appellate Division, noting that Cleaning's request for declaratory relief is not authorized in a proceeding transferred to it pursuant to CPLR 7804 (g), severed that part of its action and remitted the issue to Supreme Court "for entry of an appropriate judgment."

* The Appellate Division noted that "a payroll issue delayed the employee's payment, but the employee was eventually compensated."

** Labor Law §230 [3] defines a public agency as "the state, any of its political subdivisions, a public benefit corporation, a public authority or commission or special purpose district board appointed pursuant to law, and a board of education."

*** The Appellate Division, in a footnote in its opinion, confirmed "the existence of authority holding that, as education corporations, public libraries are generally considered to be "separate and distinct from the municipalit[ies] that created [them]."

**** Citing  Matter of Paladino v Board of Educ. for the City of Buffalo Pub. Sch. Dist., 183 AD3d 1043, the Appellate Division noted that as Cleaning's request for declaratory relief is not authorized in a proceeding transferred pursuant to CPLR 7804(g), it severed  that part of this action and remitted it to Supreme Court for entry of an appropriate judgment.

Click HERE to access the Appellate Division's decision.

 

Forfeiture of entitlement to vested retirement benefits by operation of law

Supreme Court denied the CPLR Article 78 petition filed by a former New York City police officer [Plaintiff] seeking a court order annulling the determination of the New York City Police Pension Fund [Fund] denying Plaintiff's application for vested retirement benefits. Plaintiff appealed the Supreme Court's decision, which decision was sustained by the Appellate Division. 

Plaintiff had been earlier terminated by operation of law pursuant to Public Officer Law §30(1)(e) upon his felony conviction of perjury in the first-degree. Although Plaintiff's conviction was subsequently vacated,* his application seeking reinstatement to the New York City Police Department [Department] following the vacation of his conviction was denied. 

Citing Matter of Durudogan v City of New York, 134 AD3d 452, the Appellate Division ruled that Supreme Court had correctly determined that although  Plaintiff had slightly more than 10 years of service with the Department, he forfeited any entitlement to vested retirement benefits upon his dismissal by operation of law pursuant to Public Officers Law §30(1)(e).

The court explained that notwithstanding the vacation of Plaintiff's conviction, the Department, following a hearing, determined that Plaintiff had "committed misconduct unrelated to his perjury conviction that raised serious questions regarding his fitness to serve" and denied his application for reinstatement. The Appellate Division ruled that as Plaintiff failed to appeal the Department's denial of his application for reinstatement, he "remained ineligible for any vested benefits."

Further, the Appellate Division noted that Plaintiff:

1. Failed to comply with the requirement under Administrative Code of City of NY §13-256(a)(4) that he file an application for benefits at least 30 days before "discontinuance of service;" and

2. Did not qualify under Administrative Code §13-256.1(a) to receive benefits "aside from his dismissal, since he lacked at least 20 years of service [in the New York City Police Pension Fund].

The Appellate Division also rejected Plaintiff''s contention that the forfeiture of his pension benefits was "a harsh penalty that shocks one's sense of fairness,"** because this argument was asserted for the first time on appeal and thus "is unpreserved ...  and would not be considered."

* See People v Hadid, 121 AD3d 811

** See Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale and Mamaroneck, Westchester County, 34 NY2d 222.

Click HEREto access the Appellate Division's decision in the instant appeal.

 

Audits and reports issued by the New York State Comptroller during the week ending January 29, 2021

New York State Comptroller Thomas P. DiNapoli announced the following audits were issued during the week ending January 29, 2021.

Click on the text highlighted in color to access the complete audit report.

SCHOOL DISTRICT AUDITS

New York State Comptroller Thomas P. DiNapoli today announced the following school district audits were issued.

Clyde-Savannah Central School District – Network Access Controls (Seneca County and Wayne County) District officials did not ensure that the district’s network access controls were secure. Officials did not regularly review network user accounts and permissions to determine whether they were appropriate or needed to be disabled. Sensitive information technology (IT) control weaknesses were communicated confidentially to officials. Protecting IT assets becomes more critical as the district moves to increased reliance on a remote learning environment and administrative operations due to the COVID-19 pandemic.

Van Hornesville-Owen J. Young Central School District – Financial Management (Herkimer County and Otsego County) The board and district officials did not effectively manage financial condition. The practice of over-estimating appropriations each year and annually appropriating fund balance that was not needed to finance operations contributed to the district maintaining a surplus fund balance that exceeded the statutory limit by $1.5 million and resulted in higher tax levies than necessary.

Fiscal Stress Monitoring System Report

Comptroller Thomas P. DiNapoli’s Fiscal Stress Monitoring System indicates that 31 school districts are susceptible to some level of fiscal stress for the school year ending on June 30, 2020. DiNapoli said “This is a time of unprecedented uncertainty as the COVID-19 pandemic continues to disrupt school district operations and finances” and urged school district leaders to closely monitor their financial conditions, "even if their fiscal stress scores were low in the early days of the crisis.”

Click HEREto access the Comptroller's report.

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CPLR Article 78 petition dismissed as untimely, barred by the Doctrine of Res Judicata and barred by the Doctrine of Collateral Estoppel

Supreme Court rejected the CPLR Article 78 action filed by the Petitioner [Plaintiff] again seeking a court order annulling the decision of the New York City Department of Education [DOE] terminating Petitioner's employment.

Plaintiff had challenged her being appointed as a probationary employee by DOE upon her reinstatement to a position with the agency in 2009 after she had been terminated from her from her position in 2010. Plaintiff contending that she had attained tenure by estoppel* and thus could be removed from her position only after "notice and hearing" pursuant to the controlling disciplinary procedure and being found guilty of one or more of charges filed against her.

Supreme Court, considering a number of procedural issues, held that Plaintiff's instant Article 78 petition was [1] untimely, [2] barred by the Doctrine of Res Judicata and [3] barred by the Doctrine of Collateral Estoppel, dismissed the proceeding. 

As to the basis underlying the Supreme Court's rulings on these procedural matters:

1. The commencement of an action at law is deemed "untimely" if the required petition or similar instrument is not filed with the judicial or quasi-judicial tribunal having jurisdiction within the period of time specified by the relevant law, rule or regulation or, in some instances, the terms of a collective bargaining agreement negotiated pursuant to Article 14 of the New York State Civil Service Law, the so-called "Taylor Law";

2. The Doctrine of Res Judicata bars considering claims that could have been advanced in an earlier judicial or quasi-judicial proceeding in the course of a subsequent litigation; and

3. The Doctrine of Collateral Estoppel providesthat when an issue of fact has once been determined by a judicial or quasi-judicial body of competent jurisdiction the determination is conclusive as to the controverted issues and cannot again be litigated by the same parties in any future litigation.

Plaintiff appealed the Supreme Court's ruling. The Appellate Division, however,  unanimously affirmed the Supreme Court's decision, explaining:

a. Plaintiff's challenge with respect to her probationary status upon reinstatement by DOE in 2009 and the discontinuance of her employment under color of her being a "probationary employee" in 2010 was untimely and to the extent Plaintiff submitted a renewed challenge against DOE in 2015 concerning such action by DOE, it was similarly barred; and

b. Supreme Court correctly determined that the instant proceeding was barred by res judicata and collateral estoppel as Plaintiff had asserted claims arising from her reinstatement and subsequent discontinuance from her position by DOE in actions that raised the same issue with respect to her allegation that she had attained "tenure by estoppel" in two actions she had brought in federal court, one in 2011 and a second in 2013, and another such action she brought in state court in 2015. 

* * Tenure by estoppel, also referred to as tenure by acquisition, tenure by default, or tenure by inaction, results "by operation of law" in the event the appointing authority does not lawfully terminate the probationary employee on or before the last day of the individual's original, or extended, probationary period.

Click HEREto access the Appellate Division's ruling.

 

New York State Comptroller DiNapoli issues preliminary analysis of the 2021-22 Executive Budget

According to an initial analysis by New York State Comptroller Thomas P. DiNapoli, the Executive Budget for State Fiscal Year 2021-22 relies on a range of actions to respond to the pandemic as well as eliminate a looming gap – spending cuts, new revenues, use of fund balances and increased borrowing – demonstrating the need for significant federal aid.

The Comptroller’s analysis noted that federal funds are being used to pay for operating expenses typically covered by the General Fund, which could lead to greater out-year gaps and worsen the state’s structural imbalance between revenue and spending. He also questioned whether certain debt proposals were necessary.

 

Click HEREto access the Comptroller's preliminary analysis.

CPLR Article 78 petition dismissed as untimely, barred by the Doctrine of Res Judicata and barred by the Doctrine of Collateral Estoppel

Supreme Court rejected the CPLR Article 78 action filed by the Petitioner [Plaintiff] again seeking a court order annulling the decision of the New York City Department of Education [DOE] terminating Petitioner's employment.

Plaintiff had challenged her being appointed as a probationary employee by DOE upon her reinstatement to a position with the agency in 2009 after she had been terminated from her from her position in 2010. Plaintiff contending that she had attained tenure by estoppel* and thus could be removed from her position only after "notice and hearing" pursuant to the controlling disciplinary procedure and being found guilty of one or more of charges filed against her.

Supreme Court, considering a number of procedural issues, held that Plaintiff's instant Article 78 petition was [1] untimely, [2] barred by the Doctrine of Res Judicata and [3] barred by the Doctrine of Collateral Estoppel, dismissed the proceeding. 

As to the basis underlying the Supreme Court's rulings on these procedural matters:

1. The commencement of an action at law is deemed "untimely" if the required petition or similar instrument is not filed with the judicial or quasi-judicial tribunal having jurisdiction within the period of time specified by the relevant law, rule or regulation or, in some instances, the terms of a collective bargaining agreement negotiated pursuant to Article 14 of the New York State Civil Service Law, the so-called "Taylor Law";

2. The Doctrine of Res Judicata bars considering claims that could have been advanced in an earlier judicial or quasi-judicial proceeding in the course of a subsequent litigation; and

3. The Doctrine of Collateral Estoppel providesthat when an issue of fact has once been determined by a judicial or quasi-judicial body of competent jurisdiction the determination is conclusive as to the controverted issues and cannot again be litigated by the same parties in any future litigation.

Plaintiff appealed the Supreme Court's ruling. The Appellate Division, however,  unanimously affirmed the Supreme Court's decision, explaining:

a. Plaintiff's challenge with respect to her probationary status upon reinstatement by DOE in 2009 and the discontinuance of her employment under color of her being a "probationary employee" in 2010 was untimely and to the extent Plaintiff submitted a renewed challenge against DOE in 2015 concerning such action by DOE, it was similarly barred; and

b. Supreme Court correctly determined that the instant proceeding was barred by res judicata and collateral estoppel as Plaintiff had asserted claims arising from her reinstatement and subsequent discontinuance from her position by DOE in actions that raised the same issue with respect to her allegation that she had attained "tenure by estoppel" in two actions she had brought in federal court, one in 2011 and a second in 2013, and another such action she brought in state court in 2015. 

* * Tenure by estoppel, also referred to as tenure by acquisition, tenure by default, or tenure by inaction, results "by operation of law" in the event the appointing authority does not lawfully terminate the probationary employee on or before the last day of the individual's original, or extended, probationary period.

Click HEREto access the Appellate Division's ruling.