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IN THIS SUIT BY A NEW JERSEY CASINO TO RECOVER DEFENDANT’S GAMBLING DEBT, DEFENDANT RAISED AFFIRMATIVE DEFENSES ALLEGING PLAINTIFF CASINO VIOLATED PROVISIONS OF NEW JERSEY’S CASINO CONTROL ACT (CCA); THE CONTROLLING AGENCY, THE CASINO CONTROL COMMISSION (CCC), HAS PRIMARY JURISDICTION OVER THOSE COMPLAINTS; THE COMPLAINTS MUST BE RULED ON BEFORE THE COURT CAN CONSIDER PLAINTIFF’S SUMMARY JUDGMENT MOTION (FIRST DEPT).

​The First Department, in a full-fledged opinion by Justice Kapnick, determined the plaintiff, a New Jersey casino (Golden Nugget), was not entitled to summary judgment this action seeking to recover defendant’s (Chan’s) $200,000 gambling debt. Defendant had raised affirmative defenses based upon complaints alleging the dice used by the casino violated the Casino Control Act (CCA) which defendant filed with the New Jersey Division of Gaming Enforcement (DGE). The Casino Control Commission has primary jurisdiction over those complaints. Therefore the complaints must be ruled upon before summary judgment can be considered by the court:

Supreme Court’s granting of summary judgment to plaintiff was premature. The motion court should instead have deferred any decision until receipt of DGE’s ruling on Chan’s “patron complaint” based on the same violations, since that grievance was filed prior to the commencement of plaintiff’s litigation and remained pending at the time of its decision. While DGE has ruled that the same scribing violations against another casino do not violate the CCA, there has been no ruling by DGE in any matter concerning defendant’s allegations of “non-transparent dice.” Accordingly, the motion for summary judgment is denied, with leave to renew upon a ruling by DGE on the “patron complaint,” or after six months if DGE has failed to resolve this issue despite sufficient notice to DGE by the parties … . Golden Nugget Atl. City LLC v Chan, 2023 NY Slip Op 02176, First Dept 4-27-23

Practice Point: Here a New Jersey sued defendant to recover a $200,000 gambling debt. Defendant raised violations of New Jersey’s Casino Control Act as affirmative defenses. Because New Jersey’s Casino Control Commission has primary jurisdiction over those complaints, they must be ruled on before the court can consider the casino’s summary judgment motion.

 

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IN THIS SUIT BY YELLOW CAB MEDALLION OWNERS AGAINST THE NYC TAXI AND LIMOUSINE COMMISSION, PLAINTIFFS DID NOT STATE A CLAIM FOR BREACH OF AN IMPLIED COVENANT OF GOOD FAITH OR DECEPTIVE BUSINESS PRACTICES; PLAINTIFFS’ CLAIMS WERE BASED UPON DEFENDANTS’ ALLEGED FAILURE TO REGULATE COMPETING SERVICES LIKE UBER AND LYFT (CT APP).

The Court of Appeals determined the lawsuit against the NYC Taxi and Limousine Commission (TLC) and New York City by taxi services which purchased yellow cab medallions at an auction in 2013 failed to state a claim. The plaintiffs argued defendants breached an implied covenant of good faith by failing to regulate competing services like Uber and Lyft and engaged in deceptive business practices under General Business Law 349:

… [T]he covenant cannot be used to “imply obligations inconsistent with other terms of the contractual relationship,” and encompasses only those “promises which a reasonable person in the position of the promisee would be justified in understanding were included” … . * * *

… [P]laintiffs acknowledged in the bid forms that defendants made no representations or warranties “as to the present or future value of a taxicab medallion.” As plaintiffs concede on this appeal, that language is flatly inconsistent with any suggestion that defendants guaranteed the value of their medallions. …

… [P]laintiffs acknowledged in the bid forms that defendants made no representations or warranties “as to the present or future application or provisions of the rules of the [TLC] or applicable law.” The plain language of that disclaimer put plaintiffs on notice that they—not defendants—bore the risk that either TLC’s rules or its “application” thereof might change after the sale of the medallions. * * *

Section 349 prohibits “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state” (General Business Law § 349 [a] …). …. [T]he government’s issuance of a taxicab license is not a consumer-oriented transaction protected by section 349 … . Singh v City of New York, 2023 NY Slip Op 02141, CtApp 4-25-23

Practice Point: Yellow cab medallion holders, when the purchased the medallions at auction, agreed the bid included disclaimers stating the future value of the medallions was not guaranteed. Therefore the breach-of-a-covenant-of-good-faith cause of action failed. In addition, the deceptive business practices (General Business Law 349) cause of action the purchase of yellow cab medallions is not a consumer-oriented transaction subject to the statute.

 

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PETITIONER OPERATED HIS BARBER SHOP OUT OF HIS HOME IN MARCH 2020 AFTER THE GOVERNOR ORDERED BARBER SHOPS CLOSED DUE TO COVID-19; REVOCATION OF PETITIONER’S BARBER LICENSES WAS DEEMED TOO SEVERE A PENALTY; THERE WAS A DISSENT (THIRD DEPT). ​

The Third Department, over a dissent, determined the revocation of petitioner’s barber operator license and barber shop license was too severe a penalty for violating the state’s COVID-19 policy in early 2020. After the governor ordered barber shops closed due to COVID, petitioner opened his barber shop in his home in March 2020. He closed his home operation in May 2020 when he was hospitalized with COVID:

The Secretary is empowered to impose a range of penalties for a barber’s misconduct, with a reprimand being the least severe, then a fine of up to $500, then license suspension and, most seriously, license revocation (see General Business Law §§ 441 [a]; 443). As noted above, petitioner has been a licensed barber since 1963 and, before the proceedings at issue here, had a clean disciplinary record for nearly six decades. The ALJ found that petitioner “sincerely believed” that he was entitled to reopen his shop in March 2020 and was remorseful for having done so, as well as that he did not knowingly work while suffering from COVID-19. Further, although petitioner failed to operate in accordance with COVID-19 guidelines after he was permitted to reopen, it appears that such resulted from his lack of familiarity with the particulars of the guidelines, and it must be noted that those guidelines and other COVID-19 restrictions had been lifted by the time of the Secretary’s determination … . It is accordingly unclear how petitioner’s conduct during the COVID-19 emergency would pose an ongoing threat to the public that would warrant the maximum sanction of permanently barring him from performing the work he had otherwise done without incident for almost 60 years. “Under these circumstances, and considering petitioner’s otherwise unblemished record, revocation was too severe a penalty,” and we therefore “remit to [the Secretary] to impose a less severe penalty” … . Matter of Lalima v New York State Dept. of State, 2023 NY Slip Op 01121, Third Dept 3-2-23

Practice Point: Here revocation of petitioner’s barber licenses was deemed too severe a penalty. After the governor ordered barber shops closed in March 2020 due to COVID, petitioner continued cutting hair in his home.

 

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THE CHALLENGES TO THE PROCEDURES FOR RELIGIOUS AND MEDICAL EXEMPTIONS FROM THE COVID-19 VACCINE MANDATE FOR NYC TEACHERS, AS WELL AS “LEAVE WITHOUT PAY” FOR THOSE WHO DID NO APPLY FOR AN EXEMPTION, WERE PROPERLY REJECTED (FIRST DEPT).

The First Department, over a dissent, determined the COVID-19 vaccine mandates imposed by the arbitrator for NYC Department of Education (DOE) employees properly survived the hybrid Article 75/78 challenge. The arbitration initiated by the United Federation of Teachers (UFT) resulted in the September 10, 2021 Impact Award which established procedures for religious and medical exemptions:

The article 75 claims were properly dismissed, as petitioners lack standing to challenge the Impact Award and failed to join UFT as a necessary party. The article 75 claims also fail on the merits. As to the article 78 claims, petitioners are unable to show that DOE made an error of law or acted irrationally. * * *

Petitioners are similarly situated teachers employed by DOE. All received notification by email that they were being placed on Leave Without Pay (LWOP) status because they were not in compliance with DOE’s COVID-19 Vaccine Mandate. They were informed that they could not report to their school sites as of Monday, October 4, and that, in order to return to work, they were required to upload proof of having received the first vaccine shot and “E-sign the attestation stating that you are willing to return to your worksite within seven calendar days of submission.” The notifications also summarized the options for separation and leave extensions. Petitioners, with the exception of Loiacono, did not submit proof of vaccination or request religious or medical exemptions. * * *

When a union represents employees during arbitration, only that union — not individual employees — may seek to vacate the resulting award … .

Petitioners also failed to join UFT as a party. UFT advocated successfully for the exemptions, accommodations, and extended benefits for teachers otherwise unwilling to be vaccinated, all of which were prescribed in the Impact Award. Accordingly, UFT would be adversely impacted by a judgment favorable to petitioners and is thus a necessary party (CPLR 1001[a] …). Matter of O’Reilly v Board of Educ. of the City Sch. Dist. of the City of N.Y., 2023 NY Slip Op 00957, First Dept 2-21-23

Practice Point: The individual NYC Department of Education (DOE) employees did not have standing to challenge the results of the COVID-19 vaccine-mandate arbitration initiated by the United Federation of Teachers (UFT). The UFT was a necessary party to the challenge but was not made a party. The DOE did not act arbitrarily or capriciously. Essentially the procedures for religious and medical exemptions to the vaccine mandate were upheld. Teachers who did not apply for an exemption and were not vaccinated were deemed properly placed on leave without pay (LWOP).

 

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A BREACH OF CONTRACT ACTION IS NOT PROPERLY CONVERTED TO AN ARTICLE 78 PROCEEDING; HERE THE PHYSICIAN SUED THE HOSPITAL FOR FAILING TO HONOR A CONTRACTUAL COMMITMENT TO ADMIT PLAINTIFF TO A RESIDENCY PROGRAM; THE PHYSICIAN’S ACTION WAS PRECLUDED FOR FAILURE TO EXHAUST THE ADMINISTRATIVE REMEDIES UNDER THE PUBLIC HEALTH LAW (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the breach of contract action should not have been converted to an Article 78 and the action was precluded by plaintiff-physician’s failure to exhaust the administrative remedies under the Public Health Law. Plaintiff was matched to a residency program at defendant hospital and the hospital was contractually bound to offer the residency to the plaintiff. The hospital sought a waiver which was denied, and the hospital still refused to offer the residency to plaintiff. Plaintiff sued for breach of contract and requested a preliminary injunction. Supreme Court improperly converted the action to an Article 78 (mandamus) proceeding and granted the preliminary injunction. The appellate division held a breach of contract action cannot be converted to an Article 78:

Invoking CPLR 103(c), the Supreme Court erroneously converted the subject branch of the plaintiff’s motion and this action into a proceeding pursuant to CPLR article 78. Under CPLR 103(c), courts are empowered to convert a civil judicial proceeding that was brought in the improper form to the proper form and convert a motion into a special proceeding. Here, the court erred in concluding that a proceeding pursuant to CPLR article 78 was the proper form. “[A] CPLR article 78 proceeding is not the proper vehicle to resolve contractual rights” … . “Indeed, it is well settled that mandamus relief lies only to compel the performance of purely ministerial acts, and may not be used when there are other available remedies at law, such as a breach of contract action” … . * * *

Supreme Court should not have rejected the hospital’s argument that the branch of the plaintiff’s motion which was for preliminary injunctive relief against it should be denied because the plaintiff failed to exhaust his administrative remedies under Public Health Law article 28. Public Health Law § 2801-b(1) makes it an “improper practice” for a hospital to deny, withhold, or terminate professional privileges for a reason unrelated to “patient care, patient welfare, the objectives of the institution or the character or competency of the applicant.” “To enforce the statutory prohibition against improper practices, the Legislature created a two-step grievance process by which a physician may obtain injunctive relief requiring the hospital to restore wrongfully terminated staff privileges” … . “First, the physician must submit a complaint to the [public health and health planning council (hereinafter PHHPC)]” … . “It is the duty of the [PHHPC] to undertake a prompt investigation of the action complained of and to allow the parties to the dispute to submit, in a strictly confidential setting, any relevant information in support of their respective positions” … . “After investigating the physician’s complaint, the [PHHPC] will either direct the hospital to reconsider its decision or inform the parties of its determination that the complaint lacks merit” … . Khass v New York Presbyt. Brooklyn Methodist Hosp., 2023 NY Slip Op 00851, Second Dept 2-15-23

Practice Point: A breach of contract action is not properly converted to an Article 78 proceeding pursuant to CPLR 103(c).

Practice Point: A hospital’s failure to honor its contractual commitment to admit plaintiff physician to a residency program is subject to administrative remedies under the Public Health Law which must be exhausted before bringing suit.

 

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THE IMPLEMENTATION OF FEES FOR CIVIL SERVICE EXAMS IS NOT A CONDITION OF EMPLOYMENT SUBJECT TO NEGOTIATION UNDER THE TAYLOR LAW (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Singas, reversing the appellate division and the NYS Public Employees Relations Board (PERB), determined the implementation of application fees for promotional and transitional civil service exams.by the Department of Civil Service (DCS) was not a condition of employment subject to negotiation under the Taylor Law:

Civil Service Law § 50 (5) vests DCS with power to impose fees to recoup the administrative costs of conducting civil service exams, not with authority to alter the employer-employee relationship through the imposition of the fees. The fees for promotional and transitional exams at issue here are akin to fees imposed by an agency with plenary authority to set fees for licenses that an employer may demand as a job requirement, such as a driver’s license or professional license. As with those fees, DCS’s statutory authority to impose the at-issue application fees is unrelated to the employment itself. The fees have no connection to job qualifications, criteria for employment, or job-related duties and obligations. The imposition of the subject fees is therefore not encompassed within the definition of terms and conditions of employment under Civil Service Law § 201 (4). Nor did the waiver of the fees for State employees render them terms or conditions of employment.

Because the imposition of the fees was not a term and condition of employment, the State had no obligation to negotiate with respect to their implementation. PERB’s conclusion to the contrary was error. Matter of State of New York v New York State Pub. Empl. Relations Bd., 2023 NY Slip Op 00805, CtApp 2-14-23

​Practice Point: Fees for civil service promotional and transitional civil services exams are not a condition of employment subject to negotiation under the Taylor Law.

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PETITIONER, A FORMER CORRECTION OFFICER SEEKING REINSTATEMENT, WAS ENTITLED TO THE RECORDS OF THE PSYCHOLOGICAL EXAMINATION WHICH FOUND HIM UNFIT; THE WAIVER OF THE RIGHT TO REVIEW THOSE DOCUMENTS, SIGNED BY PETITIONER, WAS A NULLITY (THIRD DEPT).

​The Third Department, in a full-fledged opinion by Justice Pritzker, reversing Supreme Court, determined petitioner, a former correction officer seeking reinstatement, was entitled to discovery of the records of the psychological examination which found him unfit to serve as a correction officer. The court held that the waiver of the right to review such documents (signed by the petitioner at the outset) was a nullity:

… [W]e do not agree that the limited review procedures established in Correction Law § 8 can lawfully be used to side-step and effectively eviscerate the robust protections set forth in 4 NYCRR 5.9 (e) (3), which directly apply to those seeking reinstatement under Civil Service Law § 71 … . Nevertheless, although both statutes have different purposes — Correction Law § 8 is designed to eliminate applicants “who exhibit psychological disorders that would indicate their unsuitability for the job” … , whereas Civil Service Law § 71 was enacted for the “protection of an employee separated from the service by reason of a disability resulting from occupational injury or disease” … — both purposes can be achieved, and the statutes harmonized by permitting the use of Correction Law § 8 testing while preserving the review procedure set forth in 4 NYCRR 5.9 relative to employees falling within Civil Service Law § 71 … . Notably, despite the use of Correction Law § 8 testing, this matter remains distinctly a Civil Service Law § 71 reinstatement case.

… [P]etitioner is minimally entitled to receive the clandestine psychological report that formed the very basis for the disqualification for reinstatement, as well as all other rights attendant to a hearing held pursuant to article 3 of the State Administrative Procedure Act. … [T]o the extent that petitioner signed a waiver purporting to extinguish these rights, the waiver is a nullity inasmuch as respondent’s policy requiring all applicants to sign the consent and release form is an unpromulgated rule under the definition of “[r]ule” within State Administrative Procedure Act § 102 (2) (a) (i), and therefore is without effect … . Matter of Williams v New York State Dept. of Corr. & Community Supervision, 2022 NY Slip Op 07280, Third Dept 12-22-22

Practice Point: Petitioner, a former correction officer seeking reinstatement, was entitled to the records of the psychological exam which found him unfit. The waiver of the right to review the documents, signed by petitioner at the outset, was based upon an unpromulgated rule and therefore was of no effect.

 

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RESPONDENT STATE COLLEGE WITHHELD EXCULPATORY EVIDENCE IN THIS COLLEGE MISCONDUCT PROCEEDING WHICH RESULTED IN PETITIONER-STUDENT’S EXPULSION; THE EXPULSION PENALTY WAS VACATED AND THE STUDENT WAS REINSTATED IN GOOD STANDING (FIRST DEPT). ​

The First Department, reversing the expulsion of petitioner-student and reinstating the student in good standing, determined the respondent state college had withheld exculpatory evidence which indicated petitioner did not carve a racial epithet on an elevator door. Two students claimed to have seen petitioner carve the epithet. Another student sent an email stating he had seen the epithet on the door before the students arrived for the semester. That email was never disclosed to the petitioner:

Article III of Section 4 of respondent’s Code of Conduct enumerates the due process rights of students charged with violations. In addition to the right to a fair hearing, a charged student “has the right to copies of written reports pertinent to the case . . .” Respondent’s failure to turn over exculpatory evidence in its possession prior to the hearing violated its own policies and procedures, thereby violating petitioner’s due process rights … . Now, in hindsight, it cannot be said that petitioner received a fair hearing where evidence tending to prove his innocence was withheld.

Accordingly, after our independent review of the record as a whole, we now find that this exculpatory evidence, the extensive alibi evidence as well as other objective evidence of petitioner’s innocence render the charges unsupportable as a matter of law thus warranting vacatur of the expulsion penalty, expungement of all references to the underlying charges contained in petitioner’s academic record and his reinstatement as a student in good standing … . Matter of Mozdziak v State Univ. of N.Y. Mar. Coll., 2022 NY Slip Op 06759, First Dept 11-29-22

Practice Point: In this misconduct proceeding in a state college, the student was entitled to due process. The college’s failure to turn over exculpatory evidence required vacation of the expulsion penalty and reinstatement of the student in good standing.

 

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PETITIONER NYC FIREFIGHTER WAS DENIED ACCIDENTAL DISABILITY RETIREMENT (ADR) BENEFITS WITHOUT ANY EXPLANATION IN THE MEDICAL BOARD’S FINDINGS; THE MATTER WAS REMITTED FOR A NEW DETERMINATION BASED ON A RECORD ADEQUATE FOR REVIEW (FIRST DEPT).

The First Department, annulling the denial of accidental disability retirement (ADR) benefits in this firefighter-disability case, determined that the Medical Board’s failure to explain the reasons for its conclusion there was no accident and the injuries were not debilitating required remittal to the Medical Board and a new determination by the Board of Trustees with a record adequate for review:

… [T]he Medical Board found petitioner to be disabled on account of the left shoulder injuries he sustained on March 22, 2018. However, citing “inconsistencies” and a “lack of witnessed accounts . . . that would suggest . . . an accident,” the Board denied petitioner an ADR benefit. When the insufficient explanation was raised before the Board of Trustees, they acknowledged that a witness statement was not necessary, and stated that they did not understand what the Medical Board was referring to with regard to inconsistencies in the manner of petitioner’s injuries. Nevertheless, when the Board of Trustees reconsidered the matter, it simply took a vote on petitioner’s application without any deliberation or indication as to why he had been denied an ADR benefit, issuing a conclusory denial without any explanation as to why they had adopted the Medical Board’s unsupported statements about alleged inconsistencies concerning the nature of petitioner’s injuries.

The Medical Board failed to provide any factual basis concerning the alleged inconsistencies and why it did not believe petitioner’s injuries to be accidental. Further, the determination of the Medical Board was devoid of any articulated basis for its conclusion that the limitations of petitioner’s cervical and lumbar spine were not a debilitating or incapacitating condition for performing the duties of a firefighter. The failure to set forth an adequate statement of the factual basis for the determination forecloses the possibility of fair judicial review … . Matter of Reynolds v New York City Fire Pension Fund, 2022 NY Slip Op 06330, First Dept 11-10-22

Practice Point: Here the injured NYC firefighter was denied accidental disability retirement (ADR) but the Medical Board did not give any reasons for its conclusion. The findings were annulled and the matter remitted for a new determination and the creation of an adequate record for review.

 

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DEFENDANT PLED GUILTY TO DWI AND THE JUDGE REVOKED HIS DRIVERS LICENSE FOR ONE YEAR; THE DMV SUBSEQUENTLY DENIED DEFENDANT’S APPLICATION TO REINSTATE HIS LICENSE; DEFENDANT’S MOTION TO VACATE HIS CONVICTION ON THE GROUND HE WAS NOT AWARE HE COULD PERMANENTLY LOSE HIS LICENSE SHOULD HAVE BEEN DENIED (SECOND DEPT). ​

The Second Department, reversing Supreme Court, in a comprehensive decision worth consulting, determined defendant’s motion to vacate his DWI conviction should not have been granted: Defendant pled guilty and Supreme Court revoked his driving license for one year. When defendant applied to reinstate his drivers license he was notified by the Department of Motor Vehicles (DMV) that, based on his prior DWI-related convictions or incidents, his application had been denied. Defendant brought a  motion to vacate his conviction, arguing that his guilty plea was not knowing and voluntary because the plea was based on his understanding he would lose his license for one year. Supreme Court granted the motion and the People appealed:

The Supreme Court erred in granting the defendant’s motion to vacate the judgment of conviction on the ground that his plea of guilty was not entered knowingly, voluntarily, and intelligently. The subject regulation that led to the denial of the defendant’s application for relicensing did not exist at the time he entered his plea of guilty, and it would have been impossible for the court to inform the defendant of consequences flowing therefrom … . “‘The defendant’s grievance lies with the enactment and enforcement of the new regulation, not the manner of his conviction'” … .

To the extent that the potentially permanent license revocation authorized under the subject regulation is a consequence of the defendant’s instant plea of guilty at all (see People v Avital, 64 Misc 3d 483, 485 [Town of East Fishkill Just Ct, Dutchess County] [denial of relicensing under 15 NYCRR 136.5 results not from any particular conviction, but from the applicant’s “complete driving history”]), it is, as the defendant acknowledges, a collateral consequence of his plea … . * * *

… [A] consequence of a conviction must represent an exceptionally severe liberty deprivation [i.e., deportation] in order to fall within the narrow category of collateral consequences of which a defendant must be advised at the time of entering the plea. … [W]e cannot conclude that the permanent loss of a driver license fits into that category. People v Maggio, 2022 NY Slip Op 06262, Second Dept 11-9-22

Practice Point: Defendant pled guilty to DWI knowing his license would be revoked by the court for one year. His application to reinstate his license was subsequently denied by the DMV. The fact that defendant’s license could be revoked permanently by the DMV was a collateral consequence of the plea which did not affect the voluntariness of the plea. A defendant need not be aware of a collateral consequence to render a plea voluntary. The rare exception is a collateral consequence which affects a liberty interest, deportation for example.

 

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