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PETITIONERS, THE NEW YORK TAXI WORKERS ALLIANCE, HAD STANDING TO CONTEST THE NYC TAXI AND LIMOUSINE COMMISSION’S PILOT PROGRAM WHICH WOULD ADD 2500 FOR-HIRE VEHICLES TO THE CITY STREETS; PETITIONERS DEMONSTRATED THE ADDED VEHICLES WOULD REDUCE MEMBERS’ INCOME (INJURY-IN-FACT) IN VIOLATION OF A LOCAL LAW (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Higgitt, reversing Supreme Court, determined the petitioners, the New York Taxi Workers Alliance and two individual drivers, had standing to challenge a pilot program initiated by the NYC Taxi and Limousine Commission as violating a Local Law. The pilot program would put 2500 more for-hire vehicles (FHV’s} on the street. Petitioners argued standing based on evidence the pilot program will lower the income of the members of the Taxi Workers Alliance. Supreme Court had held the loss-of-income claim was speculative:

… [P]etitioners established both an injury in fact and that their alleged harm satisfies the zone of interest requirement, and they therefore have standing.

… [P]etitioners allege a concrete, particularized harm: a loss of income and a deterioration of driver well-being occasioned by the introduction or potential introduction of additional vehicles into the for-hire market. That harm is neither speculative nor conjunctural; rather, it is well-demonstrated by the legislative facts underpinning Local Law 147, which facts are based, in part, on industry data. Moreover, petitioners’ alleged harm is supported by the findings of the Committee on For-Hire Vehicles as expressed in their reports. The legislative materials evince a clear connection between the number of FHVs on the streets and driver income: when the number of FHVs increases without a corresponding increase in passenger demand, driver income decreases. * * *

… [P]etitioners demonstrated that the alleged harms of loss of income and deterioration of driver well-being fall within the zone of interests or concerns promoted or protected by Local Law 147. Two of the principal interests or concerns expressly promoted or protected by the law are driver income and driver well-being (see Administrative Code § 19-550[a]; 35 RCNY 59A-06[a][1]), and the significant legislative history of Local Law 147 confirms that the City Council was concerned with the human costs associated with the exceptional growth in the FHV market, particularly drivers’ ability to earn a living. Matter of New York Taxi Workers Alliance v New York City Taxi & Limousine Commission, 2025 NY Slip Op 06551, First Dept 11-25-25

Practice Point: To have standing to challenge a local law, the challenger must demonstrate an injury-in-fact and the injury is within the scope of the protections afforded by the local law.

 

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PLAINTIFF RADIATION ONCOLOGIST, THE SOLE SHAREHOLDER IN PLANTIFF PROFESSIONAL SERVICE CORPORATION, WHICH PAID PLAINTIFF ONCOLOGIST’S SALARY, SUCCESSFULLY SUED THE HOSPITAL WHICH EMPLOYED HIM FOR BREACH OF CONTRACT; THE COURT, IN A MATTER OF FIRST IMPRESSION, HELD THAT PLAINTIFF’S SALARY WAS NOT A CORPORATE EXPENSE AND THEREFORE WAS RECOVERABLE AS LOST PROFITS IN THE BREACH OF CONTRACT ACTION (THIRD DEPT).

The Third Department, in a full-fledged opinion by Justice Fisher, determined plaintiff’s salary, paid to hm as the sole shareholder in a professional service corporation, was not a corporate expense and therefore could be recoverable as damages for lost profits in this breach of contract action. Plaintiff, a radiation oncologist, successfully sued the hospital for breach of contract after the hospital terminated him. The instant dispute is about the available damages. In addition to ruling plaintiff could recover his lost salary from his professional service corporation as damages, the Third Department held defendant could present proof plaintiff mitigated his damages by finding employment, through another professional service corporation, with another hospital. The Third Department affirmed Supreme Court’s rulings:

Plaintiffs commenced this action asserting causes of action for, among others, breach of contract, wrongful termination, libel and slander. Following the completion of disclosure and motion practice, a judgment was entered in favor of plaintiffs on the four remaining causes of action for breach of contract. A jury trial on damages was scheduled, and the parties filed respective motions in limine disputing the method of calculating damages and whether evidence of ]plaintiffs’] duty to mitigate the damages suffered from defendant’s breach may be submitted to the jury. Such dispute essentially distills to whether the salary paid by a professional service corporation to its sole shareholder must be treated as an expense in calculating the lost profits, thus subtracting it from the corporation’s profits and correspondingly reducing its damages. Supreme Court, in a pair of well-reasoned decisions, determined that [plaintiff’s] salary as paid by [plaintiff professional service corporation] under the coverage agreement is not an expense and could be recoverable as damages for lost profits. Supreme Court further found that evidence of [plaintiffs’] efforts to mitigate the damages suffered from defendant’s breach may be submitted to the jury, and whether or not [plaintiff’s] postbreach earnings are income derived because of defendant’s breach is a question to be resolved by the jury in determining damages. Radiation Oncology Servs. of Cent. N.Y., P.C. v Our Lady of Lourdes Mem. Hosp., Inc., 2025 NY Slip Op 06112, Third Dept 11-6-25

Practice Point: Here, in a matter of first impression, the Third Department ruled that plaintiff oncologist, whose salary was paid by plaintiff professional service corporation in which plaintiff oncologist was the sole shareholder, could, in a breach of contract action, recover his lost salary as lost profits. In other words, in this situation, plaintiff’s salary was not considered to be a corporate expense which must be deducted from lost profits when calculating damages for breach of contract.

 

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THE DIVISION OF CRIMINAL JUSTICE SERVICES’ (DCJS’S) DETERMINATION THAT PETITIONER POLICE OFFICER WAS TERMINATED “FOR CAUSE” WAS CONTRADICTED BY THE FACTS; THE DETERMINATION WAS REVERSED AS “ARBITRARY AND CAPRICIOUS” (THIRD DEPT).

The Third Department, reversing Supreme Court, in a full-fledged opinion by Justice Clark, held the Division of Criminal Justice Services’ (DCJS’s) determination that petitioner police officer was terminated “for cause,” in the face of a consent order and evidence demonstrating petitioner resigned, was arbitrary and capricious.  The opinion is fact-specific and cannot be fairly summarized here:​

In its brief on appeal, DCJS states that it “interprets this regulation as requiring a causal nexus between the allegations of misconduct and the officer’s subsequent separation from service.” Although that is a facially rational interpretation of the regulation, DCJS’ determination that that is what occurred here lacks a sound basis in reason and disregards the facts … . Indeed, during the review process, DCJS had before it a copy of the consent award, which clearly stated that petitioner would be reinstated in good standing upon serving his suspension. Although the Police Chief claimed that petitioner never returned to work after the suspension period was over, petitioner submitted documentary evidence demonstrating the inaccuracy of that representation. Moreover, DCJS knew that the Police Chief had characterized petitioner’s separation from employment as a “standard resignation” … and that the consent award did not contain any provision precluding petitioner from seeking employment with the Schenectady County Sheriff’s Department, thereby raising a question as to the sincerity of the Police Chief’s representation [to that effect], as well as his subsequent “for cause” report. In these circumstances, it should have been clear to DCJS that the misconduct allegations were fully resolved upon petitioner serving his suspension and, therefore, the Police Chief’s subsequent reporting that petitioner resigned “in connection with allegations of misconduct” was materially inaccurate. Matter of Ferretti v New York State Div. of Criminal Justice Servs., 2025 NY Slip Op 06000, Third Dept 10-30-25

Practice Point: Consult this opinion for insight into when an administrative agency’s determination will be found “arbitrary and capricious.” Here the agency relied on representations by a police chief which were contradicted by the facts.

 

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THERE IS A QUESTION OF FACT WHETHER THE SCHOOL DISTRICT HAD CONSTRUCTIVE NOTICE OF THE ALLEGED SEXUAL ABUSE OF PLAINTIFF-STUDENT IN THIS CHILD VICTIMS ACT CASE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined defendants in this Child Victims Act case against the school district for negligent hiring, retention and supervision did not demonstrate a lack of constructive notice of the alleged sexual abuse of plaintiff-student by a custodian. Therefore the defendant’s motion for summary judgment should not have been granted:

“To establish a cause of action based on negligent hiring, negligent retention, or negligent supervision, it must be shown that the employer knew or should have known of the employee’s propensity for the conduct which caused the injury” … .

Here, the defendants’ evidence included testimony given by the plaintiff during his deposition that he was abused on dozens of occasions over three to four years, that there were several other students who were similarly abused, and that other custodians employed by the District were present in the school building after hours and on weekends and saw the plaintiff alone with the custodian in the building. Thus, contrary to the defendants’ contention, they failed to establish, prima facie, that the District lacked constructive notice of the custodian’s alleged abusive propensities and conduct … . PC-14 Doe v Lawrence Union Free Sch. Dist., 2025 NY Slip Op 05693, Second Dept 10-15-25

Practice Point: Consult this decision for insight into how a question of fact is raised about a school-defendant’s constructive notice of sexual abuse of a student by a school employee.

 

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IN THIS CHILD VICTIMS ACT CASE BASED ON ALLEGATIONS OF SEXUAL ABUSE BY A TEACHER IN THE 70’S, EVIDENCE SUBMITTED BY PLAINTIFF AND DEFENDANTS RAISED QUESTIONS OF FACT WHICH SUPPORTED THE NEGLIGENT SUPERVISION, TRAINING AND HIRING AND RETENTION CAUSES OF ACTION (FOURTH DEPT).

The Fourth Department, reversing Supreme Court in this Child Victims Act case, determined the negligent supervision, negligent training, and negligent hiring and retention causes of action against the school district, based on allegations of sexual abuse of plaintiff by a music teacher in the 70’s, should not have been dismissed. The evidence presented by the plaintiff and defendants included the observed behavior of the music teacher by another teacher, the dismissal of the music teacher from other schools, the conflicting information about arrests in the teacher’s employment applications, the suspicions of other teachers and the failure to report those suspicions:

… [P]laintiff submitted an affidavit wherein he averred that on two occasions the music teacher entered the boys’ locker room while plaintiff and his classmates were changing and that on each occasion the gym teacher instructed the music teacher to leave. Although the gym teacher denied observing the music teacher in the boys’ locker room during his deposition, plaintiff submitted an affidavit that the gym teacher executed in an unrelated case wherein he averred that he had “heard rumors from many students” that the music teacher had a sexual interest in the male students at the school and that he was “suspicious that [the music teacher] may have had inappropriate relationships with students.” The affidavit reflects that the gym teacher was “vigilant” and “kept an eye on” the music teacher—meeting weekly with another coach to “see if the other had witnessed any inappropriate behavior” by the music teacher—but nonetheless permitted the music teacher to transport students to and from games and swim meets.

* * * [[P]laintiff submitted the music teacher’s testimony, wherein he testified that he had “always” had students visit him at his home and that other teachers were aware that students would visit him at his home, where the abuse of plaintiff is, in part, alleged to have occurred … . …

Plaintiff also submitted an expert affidavit asserting that defendants failed to appropriately train and supervise other teachers and staff to report their knowledge of inappropriate behavior. * * *

… [D]efendants submitted the music teacher’s employment applications, wherein he submitted contradictory responses about whether he had been arrested; a reference from the principal of a junior high school where the music teacher had taught, who stated that the music teacher had been “dismissed or denied tenure” and “had a tendency to more or less pal with his seventh grade male students”; and a reference completed by a school counselor employed by a different district, who stated that the music teacher had been “dismissed or denied tenure” and that she would not employ him as a teacher in her school system. Harper v Buffalo City Sch. Dist., 2025 NY Slip Op 05595, Fourth Dept 10-10-25

Practice Point: Consult this decision for insight into the nature of the proof which will raise questions of fact in a Child Victims Act case against a school district alleging negligent supervision, training, hiring and retention.

 

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WITH RESPECT TO THE MANNER IN WHICH WORK IS PERFORMED, A GENERAL CONTRACTOR’S LIABILITY UNDER LABOR LAW 200 AND COMMON-LAW NEGLIGENCE STEMS FROM THE EXERCISE OF SUPERVISORY AUTHORITY; INFORMING THE WORKER OF WHAT WORK SHOULD BE DONE, MONITORING THE TIME AND QUALITY OF THE WORK, ENSURING COMPLIANCE WITH SAFETY REGULATIONS, AND HAVING THE AUTHORITY TO STOP WORK FOR SAFETY REASONS, DO NOT AMOUNT TO THE EXERCISE OF “SUPERVISORY AUTHORITY” (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined that defendant general contractor’s motion for summary judgment on the Labor Law 200 and common-law negligence causes of action should have been granted because defendant did not exercise supervisory authority over plaintiff’s work. The Fourth Department took pains to describe what does not constitute the exercise of supervisory authority:

… [T]he court erred in denying defendant’s motion with respect to the portions of plaintiff’s Labor Law § 200 and common-law negligence causes of action alleging negligence in the manner in which work was performed. It is well settled that ” ‘[w]here the alleged defect or dangerous condition arises from the contractor’s methods and the [defendant] exercises no supervisory control over the operation, no liability attaches to the [defendant] under the common law or under Labor Law § 200’ ” … .

Here, defendant established as a matter of law that it ” ‘did not actually direct or control’ ” the work [plaintiff was hired to do.] Contrary to plaintiff’s assertion, ” ‘[t]here is no direction or control if the [general contractor merely] informs the worker what work should be performed . . . [;] there is direction and control [only where the general contractor] specifies how that work should be performed’ ” … . “Similarly, ‘a general duty to ensure compliance with safety regulations or the authority to stop work for safety reasons’ ” … , or even the ” ‘monitoring and oversight of the timing and quality of the work’ ” … are insufficient to raise a triable issue of fact whether defendant exercised direction and control over the manner of plaintiff’s work. Szlapak v The L.C. Whitford, Co., Inc., 2025 NY Slip Op 05385, Fourth Dept 10-3-25

Practice Point: Informing a worker of what work is to be done, monitoring the time and quality of the work, ensuring compliance with safety regulations, having the authority to stop work for safety reasons, do not constitute the “the exercise of supervisory authority” such that a general contractor can be liable under Labor Law 200 and common-law negligence for the manner in which the work was done.

 

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THE COMMISSIONER’S FAILURE TO REVIEW THE HEARING OFFICER’S DETAILED DECISION BEFORE TERMINATING THE PETITIONER’S EMPLOYMENT RENDERED THE COMMISSIONER’S DETERMINATION “UNAVOIDABLY ARBITRARY” (THIRD DEPT). ​

The Third Department, reversing Supreme Court in this Article 78 proceeding, determined the respondent Panunzio, Commissioner of the City of Albany’s Department of General Services, did not review the hearing officer’s detailed decision before terminating petitioner’s employment with the city. Therefore the Commissioner’s determination was “arbitrary” and the Article 78 petition should not have been dismissed:

… [F]ollowing a disciplinary hearing held pursuant to Civil Service Law § 75 (2), a hearing officer “shall make a record of such hearing which shall, with his [or her] recommendations, be referred to such officer or body [having the power to remove the employee] for review and decision” … . The resulting administrative]determinations are entitled to a presumption of regularity … and, “in the absence of a clear revelation that the administrative body made no independent appraisal and reached no independent conclusion, its decision will not be disturbed” … . …

Panunzio did not … review the Hearing Officer’s detailed and thorough decision, as such was read into the record at the hearing and the hearing transcript was not received until after the determination terminating petitioner had already been issued. As Panunzio was unable to review the Hearing Officer’s complete report and findings, respondents had “no basis upon which to act” and their determination was thus “unavoidably . . . arbitrary” … . To be sure, a reviewing officer need not review all evidence presented before the hearing officer or defer to his or her findings … . Nevertheless, to permit respondents to issue a determination without even having the availability of the Hearing Officer’s complete report and findings would render the requirements of Civil Service Law § 75 (2) meaningless … . Matter of Alexander v City of Albany, 2025 NY Slip Op 04949, Third Dept 9-11-25

Practice Point: Hear the Commissioner terminated petitioner’s employment without first reading the detailed decision by the hearing officer, which the Commissioner is required to do by statute. The Commissioner’s determination was thereby rendered “arbitrary.” Petitioner’s Article 78 petition should not have been dismissed.

 

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SUPREME COURT PROPERLY CERTIFIED PLAINTIFFS AS A CLASS BASED ON THE FIVE MANDATORY FACTORS IN CPLR SECTIONS 901 AND 902; THE CLASS DEFINITION DID NOT CONSTITUTE AN IMPERMISSIBLE “FAIL SAFE” CLASS UNDER THE FEDERAL RULES OF CIVIL PROCEDURE (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Mendez, determined Supreme Court properly certified plaintiffs as a class in this wage dispute. Plaintiffs, who acted as “flaggers” at defendants’ construction sites, argued they were wrongly classified as “crossing guards” or “traffic control” and paid at a rate lower than the prevailing wage. The opinion rejected the argument that the class definition constituted an impermissible “fail safe” class under the Federal Rules of Civil Procedure:

CPLR 901(a) sets forth five factors required to obtain class certification, which are commonly referred to as, “numerosity, commonality, typicality, adequacy of representation and superiority” … . A class action can be maintained pursuant to CPLR 902 only if the five prerequisite factors stated in CPLR 901(a) are met … . * * *

Defendants assert that the class definition constitutes an impermissible “fail safe” class under the Federal Rules of Civil Procedure (FRCP), Rule 23(b). A “fail safe” class exists “when the class itself is defined in a way that precludes membership unless the liability of the defendant is established” … . A “fail safe” class is impermissible because it prevents an adverse judgment being entered against plaintiffs … . Defendants argue that the sole issue in the case is whether or not a particular member was in fact acting as a “flagger” and thus that class membership and liability are inextricably intertwined. …

Supreme Court’s decision amended the definition of the class to avoid an impermissible “fail safe” class under FRCP 23 (b), by excluding reference to “whether public works contracts required the payment of prevailing wages on subject projects” as applying to the ultimate issue of liability. Supreme Court amended the definition of the class to state, “All persons employed by Out-Look Safety LLC at any time since April 16, 2018 through January 28, 2024, who worked as non-union construction flaggers on Restani, Safeway, Triumph, and/or Hawkeye projects requiring the payment of prevailing wages in New York City.” McMillian v Out-Look Safety LLC, 2025 NY Slip Op 04963, First Dept 9-11-25

Practice Point: Consult this opinion for insight into the proof required to meet the five factors for class certification under CPLR 901 and 902, as well the nature of an impermissible “fail safe” class definition. “A ‘fail safe’ class exists ‘when the class itself is defined in a way that precludes membership unless the liability of the defendant is established’ …”.

 

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THERE IS A QUESTION OF FACT WHETHER PLAINTIFF WAS DEFENDANT’S EMPLOYEE SUCH THAT THE PROTECTIONS OF THE LABOR LAW APPLY IN THIS LADDER-FALL CASE; DEFENDANT AGREED TO FIX PLAINTIFF’S CAR IN RETURN FOR PLAINTIFF’S FIXING THE ROOF OF DEFENDANT’S REPAIR SHOP (SECOND DEPT).

The Second Department, reversing Supreme Court, determined there was a question of fact whether the relationship between defendant Houghtaling and plaintiff was an “employment” relationship such that the Labor Law applies to plaintiff’s fall from a ladder. Houghtaling agreed to repair plaintiff’s car in return for plaintiff’s seal-coating the roof of defendant’s automotive repair ship. Houghtaling argued plaintiff was a “volunteer,” not an employee:

… [T]he defendants failed to eliminate triable issues of fact as to whether the plaintiff was a hired worker entitled to the protections of the Labor Law. Houghtaling, who owned and operated the repair shop, testified at his deposition that a friend of the plaintiff had approached him about helping the plaintiff, who was “down and out,” by fixing the plaintiff’s car. Houghtaling responded that the plaintiff should bring in his car and that he would “do the best that [he] c[ould], like [he did] for everybody.” When the plaintiff came in, Houghtaling told him that the repairs would cost $900. The plaintiff asked what he could do for Houghtaling “in return.” According to Houghtaling, the roof of the shop had been leaking for five years and he had intended to fix the roof himself. Houghtaling told the plaintiff that he could seal coat the roof of the shop. Houghtaling performed the repairs on the plaintiff’s car at no charge, and the following weekend, the plaintiff began the work on the roof.

Under these circumstances, triable issues of fact remain as to whether the arrangement between the plaintiff and Houghtaling bore “the traditional hallmarks of an employment relationship” … , including a “mutual obligation . . . revealing an economic motivation for completing the task” and the employer’s right to decide “whether the task undertaken by the employee has been completed satisfactorily” … . Zampko v Houghtaling, 2025 NY Slip Op 04507, Second Dept 7-30-25

Practice Point: The protections of the Labor Law apply where there is a employment relationship between plaintiff and defendant. Here defendant agreed to fix plaintiff’s car in return for plaintiff’s repairing the repair shop’s roof. Plaintiff fell from a ladder when working on the roof. There was a question of fact whether the agreement created an employment relationship entitling plaintiff to the Labor Law protections.

 

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ALTHOUGH PETITIONER NURSING HOME, A LIMITED LIABILITY COMPANY, HAD AN EXCELLENT INFECTION CONTROL PROGRAM, IT WAS PROPERLY FINED FOR A VIOLATION OF THE INFECTION-CONTROL REGULATIONS BY ONE OF ITS EMPLOYEES (THIRD DEPT).

The Third Department, confirming the findings of the administrative law judge, in a full-fledged opinion by Justice Egan, determined the petitioner nursing-home-facility was subject to fines for violations of the COVID-19 infection-control regulations. The regulations required nursing home employees to change gowns and glove after being in a unit with COVID-19 positive residents. The court noted that petitioner, as a limited liability company, can be penalized for the intentional violation of regulations by its employees under an agency theory:

… [P]etitioner [limited liability company], like corporations and similar entities, may be penalized “for the intentional acts of its agents that are either (1) in violation of positive prohibitions or commands of statutes regarding corporate acts, (2) authorized through action of its officers or which are done with the acquiescence of its officers, or (3) performed on behalf of the corporation if undertaken within the scope of the agents’ authority, real or apparent” … . As it is alleged here that a regulation governing petitioner’s conduct was intentionally violated by one of its employees in the course of his work, petitioner may be penalized for that conduct, if proven. * * *

Petitioner had no deficiencies in the five infection control surveys conducted in the months leading up to the December 2020 survey, counsel for the Department conceded at the hearing that it “had a great infection control program for many months,” and the surveyor who witnessed the violation acknowledged that petitioner had developed an appropriate infection control plan and properly trained employees about their obligations under it. Respondent was nevertheless free to credit the proof that the aide violated that policy on one occasion in December 2020 and, notwithstanding petitioner’s efforts to argue otherwise, we are satisfied that such constitutes substantial evidence in the record for the determination that petitioner’s employee “violate[d], disobey[ed] or disregard[ed]” multiple provisions of 10 NYCRR 415.19 and the infection control program in the course of his work and that such rendered petitioner liable (Public Health Law § 12). Matter of RSRNC, LLC v McDonald, 2025 NY Slip Op 04131, Third Dept 7-10-25

Practice Point: Here a violation of Public Health Law regulations concerning COVID-19 infection control by an employee of petitioner nursing home, a limited liability company, warranted imposing a penalty on the nursing home.

 

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