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QUESTION OF FACT WHETHER HOSPITAL MAY BE VICARIOUSLY LIABLE FOR TREATMENT PROVIDED BY A NON-EMPLOYEE IN THE HOSPITAL EMERGENCY ROOM (SECOND DEPT).

The Second Department determined there was a question of fact whether the hospital, Good Samaritan, was vicariously liable for the alleged malpractice of a physician, Chin, who, although not a hospital employee, treated plaintiff in the hospital emergency room:

“In general, under the doctrine of respondeat superior, a hospital may be held vicariously liable for the negligence or malpractice of its employees acting within the scope of employment, but not for negligent treatment provided by an independent physician, as when the physician is retained by the patient himself” … . However, “[a]n exception to this general rule exists where a plaintiff seeks to hold a hospital vicariously liable for the alleged malpractice of an attending physician who is not its employee where a patient comes to the emergency room seeking treatment from the hospital and not from a particular physician of the patient’s choosing” … . …

Here, although Good Samaritan established that Chin was not its employee, the evidence submitted in support of its motion for summary judgment was insufficient to demonstrate, prima facie, that the plaintiff entered Good Samaritan’s emergency room seeking treatment from a privately selected physician rather than from the hospital itself … . Fuessel v Chin, 2020 NY Slip Op 00404, Second Dept 1-22-20

 

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SUPREME COURT SHOULD NOT HAVE, SUA SPONTE, GRANTED RELIEF NOT REQUESTED IN PLAINTIFFS’ UNOPPOSED MOTION AND SHOULD NOT HAVE CONSIDERED EVIDENCE NOT BEFORE IT; THE ORDER SETTLING A CLASS ACTION FOR UNPAID WAGES AND OVERTIME SHOULD NOT HAVE DECLARED INVALID CERTAIN OPT-OUT STATEMENTS WHICH WERE NOT REFERRED TO IN PLAINTIFFS’ MOTION AND WERE NOT OTHERWISE BEFORE THE COURT (SECOND DEPT).

The Second Department, reversing Supreme Court in this class action seeking unpaid wages and overtime, determined Supreme Court should not have. sua sponte, declared certain opt-out statements (opting out of the class action settlement) invalid because the issue was not raised by the plaintiff’s motion and the opt-out statements were not properly before the court:

Pursuant to the February 2018 order, all class members who did not opt out were permanently enjoined from asserting, pursuing, and/or seeking to reopen claims that were released pursuant to the settlement agreement. The February 2018 order also contained a handwritten provision declaring that “[t]he opt outs received on 1/26/18 from Lee Litigation Group are deemed invalid as they were dated prior to the Class Notice which was sent 12/27/17, and do not contain the required opt-out language pursuant to the Class-Notice ordered by this court on November 22, 2017.” Such relief was not sought in the motion filed by the plaintiffs nor was it contained in the proposed order submitted to the court by the plaintiffs’ counsel.  …

CPLR 908 provides that “[a] class action shall not be dismissed, discontinued, or compromised without the approval of the court,” and that “[n]otice of the proposed dismissal, discontinuance, or compromise shall be given to all members of the class in such manner as the court directs.” Contrary to the plaintiffs’ contention, the Supreme Court should not have, sua sponte, declared invalid certain opt-out statements that were not part of the plaintiffs’ unopposed motion and which relief was not requested in the motion. “[A] court may grant relief that is warranted by the facts plainly appearing on the papers on both sides, if the relief granted is not too dramatically unlike the relief sought, the proof offered supports it, and there is no prejudice to any party” … . Here, the court strayed from this principle … . The relief awarded by the court, sua sponte, in the handwritten provision in the February 2018 order is “dramatically unlike” the relief sought by the plaintiffs and was prejudicial to the appellants … . Moreover, the opt-out statements referred to in the February 2018 order were not among the exhibits submitted on the plaintiffs’ motion, and therefore were not properly before the court for consideration … . Robinson v Big City Yonkers, Inc., 2020 NY Slip Op 00447, Second Dept 1-22-20

 

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BECAUSE THE DEFENDANT EMPLOYER SUFFERED NO DAMAGE AS A RESULT OF PLAINTIFF’S BREACH OF THE CONFIDENTIALITY PROVISION OF THE EMPLOYMENT CONTRACT, DEFENDANT EMPLOYER WAS NOT ENTITLED TO ENFORCEMENT OF THE LIQUIDATED DAMAGES PROVISION IN THE CONTRACT; PLAINTIFF’S BREACH-OF-AN-ORAL-CONTRACT CAUSE OF ACTION SHOULD NOT HAVE BEEN DISMISSED BECAUSE PLAINTIFF SUBMITTED EVIDENCE OF PARTIAL PERFORMANCE BY DEFENDANT AND PLAINTIFF’S RELIANCE ON THE ORAL MODIFICATION (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined that, although the law firm defendants demonstrated plaintiff attorney violated the confidentiality provision of her employment contract, the law firm was not entitled to enforcement of the liquidated damages provision of the contract because the law firm did not demonstrate it suffered any damage as a result of plaintiff’s breach. In addition, plaintiff’s cause of action alleging the law firm defendants violated an oral agreement promising her a five percent bonus related to attorney’s fees paid for cases in which she was involved should not have been dismissed because she presented some evidence she had in fact been paid several such bonuses:

“Liquidated damages constitute the compensation which, the parties have agreed, should be paid in order to satisfy any loss or injury flowing from a breach of their contract” … . “A contractual provision fixing damages in the event of breach will be sustained if the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation. If, however, the amount fixed is plainly or grossly disproportionate to the probable loss, the provision calls for a penalty and will not be enforced” … . Although the party challenging the liquidated damages provision has the burden to prove that the liquidated damages are, in fact, an unenforceable penalty … , the party seeking to enforce the provision must necessarily have been damaged in order for the provision to apply … . Here, defendants did not identify to the motion court any damages that they sustained as a result of plaintiff’s breach of the agreement. …

The law firm defendants met their burden on summary judgment by providing plaintiff’s employment agreement which did not include any reference to a 5% nondiscretionary bonus, and which included a general merger clause requiring any modification to be in writing. However, plaintiff raised a triable issue of fact as to this claim. … [T]he Court of Appeals has held that while generally an oral modification may not be enforced in light of a merger clause, an oral modification may be enforced if there is partial performance that is “unequivocally referable to the oral modification” or if one party “induced another’s significant and substantial reliance upon an oral modification.” Rubin v Napoli Bern Ripka Shkolnik, LLP, 2020 NY Slip Op 00250, First Dept 1-14-20

 

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SANCTIONS IMPOSED FOR A DELAYED RESPONSE TO DISCOVERY DEMANDS WERE TOO SEVERE, EFFECTIVELY PRECLUDING PROOF OF COUNTERCLAIMS CENTRAL TO THE DEFENSE; NEW TRIAL ORDERED (FIRST DEPT).

The First Department, reversing the verdict in favor of plaintiff employees, determined the sanctions imposed upon the employer (appellants) for a delayed response to discovery demands were too severe and ordered a new trial. The plaintiffs alleged appellants breached oral employment contracts. The appellants in their counterclaims alleged plaintiffs breached their fiduciary duty by violating Securities and Exchange Commission (SEC) regulations and destroying and replacing handwritten notes about conversations with one of the appellants. The sanctions effectively prevented the appellants from demonstrating plaintiffs’ violation of SEC violations and destruction of evidence:

Pursuant to CPLR 3126, if a party “refuses to obey an order for disclosure or wilfully fails to disclose information which the court finds ought to have been disclosed . . . , the court may make such orders with regard to the failure or refusal as are just.” Although “[i]t is within the trial court’s discretion to determine the nature and degree of the penalty,” “[t]he sanction should be commensurate with the particular disobedience it is designed to punish, and go no further than that” … . Further, “the drastic remedy of striking a party’s pleading . . . for failure to comply with a discovery order is appropriate only where [it is] conclusively demonstrate[d] that the non-disclosure was willful, contumacious or due to bad faith” … .

Although the court here did not strike a pleading, its ruling could fairly be viewed as having done so, since the precluded evidence was critical to the fiduciary duty claims. Moreover, the court’s drastic sanctions were disproportionate to the alleged discovery malfeasance. It is unclear why a short continuance to give plaintiffs time to review the newly-produced documents would not have been a viable option, or why further curative instructions would not have sufficed. The record as a whole does not support a finding of willfulness or bad faith so as to justify the severe sanctions imposed … . No basis exists to indicate that this was anything other than a disagreement over the scope of discovery. Indeed, the court at trial stated that the alleged discovery omissions “appear[] not to have been in bad faith.” Beach v Touradji Capital Mgt., LP, 2020 NY Slip Op 00230, First Dept 1-14-20

 

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PLAINTIFF ALLEGED DEFENDANT’S EMPLOYEE, A SECURITY GUARD, ATTACKED HER; DEFENDANT’S EMPLOYEE ALLEGED PLAINTIFF ATTACKED HIM AND HE ACTED IN SELF DEFENSE; THE EMPLOYER WOULD NOT BE LIABLE UNDER EITHER SCENARIO; THE EMPLOYER’S MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined the security guard’s employer’s (SEB’s) motion for summary judgment in this third-party assault case should have been granted. Plaintiff alleged the security guard attacked her without provocation. The security guard alleged he acted in self defense after plaintiff and others attacked him. The employer would not be liable in either scenario:

Plaintiff Gregory testified that SEB’s employee, a security guard who was then working at a movie theater, attacked her with a box cutter and slashed her face and body with it after she tapped him on the shoulder and told him she had enjoyed the movie she had just seen. The security guard gave a different version of events and claimed that he was acting in self defense after plaintiffs and others attacked him with box cutters. However, neither version of events would give rise to liability on the part of SEB. Under plaintiff’s version of events, SEB could not be held liable because SEB’s employee’s unprovoked assault on Gregory with a box cutter was not within the scope of any duties he may have had as a security guard and was not done in furtherance of SEB’s business interests … . Under the security guard’s version of events, even assuming for purposes of this appeal that his actions were within the scope of his duties as a security guard and were done in furtherance of SEB’s business interests, SEB would not be held liable because the security guard’s actions were taken in self-defense after being attacked by patrons of the movie theater. Gregory v National Amusements, Inc., 2020 NY Slip Op 00223, First Dept 1-9-20

 

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PLAINTIFFS WERE NOT SIGNATORIES TO CONTRACTS WHICH REQUIRED ARBITRATION OF WAGE-UNDERPAYMENT ALLEGATIONS AND PLAINTIFFS DID NOT EXPLOIT THE BENEFITS OF THE CONTRACTS; THEREFORE PLAINTIFFS COULD NOT BE COMPELLED TO ARBITRATE (SECOND DEPT).

The Second Department determined the plaintiffs in this putative class action alleging wage-underpayment in violation of Labor Law article 6 could not be compelled to arbitrate. Plaintiffs were not parties to the contracts with defendants which compelled arbitration and did not seek to exploit the benefits of those contracts:

… [U]nder limited circumstances nonsignatories may be compelled to arbitrate” … . Under the direct benefits theory of estoppel, a nonsignatory may be compelled to arbitrate where the nonsignatory “knowingly exploits” the benefits of an agreement containing an arbitration clause, and receives benefits flowing directly from the agreement … . “The benefits must be direct, and the party seeking to compel arbitration must demonstrate that the party seeking to avoid arbitration relies on the terms of the agreement containing the arbitration provision in pursuing its claim” … . Where the benefits are merely “indirect,” a nonsignatory cannot be compelled to arbitrate a claim … . “A benefit is indirect where the nonsignatory exploits the contractual relation of the parties, but not the agreement itself” … .

Here, contrary to the defendants’ contention, the plaintiffs should not be compelled to arbitrate based upon the agreements. The record does not establish that the plaintiffs were even aware of the existence of the agreements or that they knowingly exploited the benefits of the agreements … . Arboleda v White Glove Enter. Corp., 2020 NY Slip Op 00098, Second Dept 1-8-20

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PLAINTIFF STATED A CAUSE OF ACTION FOR VIOLATION OF LABOR LAW 196-d AGAINST A CORPORATE OFFICER AND A SHAREHOLDER INDIVIDUALLY FOR FAILING TO REMIT SERVICE CHARGES AND GRATUITIES TO THEIR WAITSTAFF EMPLOYEES; REQUEST FOR AN EXTENSION TO SEEK CLASS CERTIFICATION SHOULD HAVE BEEN GRANTED; MOTION TO AMEND THE COMPLAINT SHOULD HAVE BEEN GRANTED; PLAINTIFF’S DISCOVERY DEMANDS WERE PALPABLY IMPROPER (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined: (1) plaintiff banquet server had stated a cause of action against the Cortses (an officer and a shareholder in the corporation, Falkirk Management, sued by plaintiff) individually alleging the Cortses were plaintiff’s employers within the meaning of Labor Law 196-d and did not remit service charges and gratuities to the waitstaff; (2) corporate shareholders and officers like the Cortes can be liable for corporate violations of the Labor Law; plaintiff’s discovery demands were burdensome or immaterial and therefore improper (CPLR 3101(a)); (3) plaintiff’s request for an extension to move for class certification should have been granted (CPLR 901(a); 902); and (4) plaintiff’s motion to amend the complaint should have been granted:

… [T]he complaint alleged that the Cortses exercised control over the “day-to-day operations” of “[the Country Club],” including “authority regarding the pay practices” of Falkirk Management. * * *

… [T]he information sought by the plaintiff in her first set of interrogatories and first request for the production of documents was largely burdensome or immaterial, and consequently, palpably improper … . * * *

A plaintiff’s need to conduct pre-class certification discovery to determine whether the prerequisites of a class action set forth in CPLR 901(a) can be satisfied constitutes good cause for the extension of the 60-day time period fixed by CPLR 902 … . * * *

[Re: the motion to amend the complaint:] the defendants alleged no surprise or prejudice … . Moreover, the proposed amendments are not palpably insufficient or patently devoid of merit … . Lomeli v Falkirk Mgt. Corp., 2020 NY Slip Op 00115, Second Dept 1-8-20

 

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THIRD-PARTY PLAINTIFFS WERE NOT REQUIRED TO AND DID NOT PARTICIPATE IN THE WORKERS’ COMPENSATION PROCEEDINGS; THEREFORE THE WORKERS’ COMPENSATION BOARD’S FINDING THAT THIRD-PARTY DEFENDANT WAS PLAINTIFF’S EMPLOYER WAS NOT BINDING ON THE THIRD-PARTY PLAINTIFFS (FIRST DEPT).

The First Department, reversing Supreme Court, determined the Workers’ Compensation Board’s finding that third-party defendant I & G Group was plaintiff’s employer was not binding on the third-party plaintiffs because the third-party plaintiffs did not participate in the Workers’ Compensation proceedings. Therefore the matter has to be litigated and I & G Group’s motion for summary judgment should should not have been granted:

The Court of Appeals has … recognized that a decision by the worker’s compensation board may not be binding on parties who do not participate in its hearings. * * * “[U]nless the Legislature expands the definition of parties in interest, the unfortunate result will be that a duplicative proceeding must be held and the issue of compensability adjudicated anew because defendants never had a full and fair opportunity’ to litigate the question” … .

Here, because it is undisputed that appellants [third-party plaintiffs] were not given notice of the worker’s compensation hearing, and were not afforded the opportunity to present evidence or cross-examine witnesses, their third-party claims, in which they challenge the identity of plaintiff’s employer, should not have been dismissed as precluded by the board’s prior determination of that issue … . Martinez v 250 W. 43 Owner, LLC, 2020 NY Slip Op 00058, First Dept 1-7-20

 

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PENSION OF POLICE OFFICER CONVICTED OF MURDER AND ATTEMPTED MURDER CAN, UNDER THE SON OF SAM LAW, BE REACHED TO SATISFY A $1 MILLION JUDGMENT OBTAINED BY THE CRIME VICTIM (THIRD DEPT).

The Third Department determined the Son of Sam Law trumped the CPLR, the Retirement and Social Security Law, and the Administrative Code of the City of New York with respect to the pension of a former NYC police officer who was convicted of murder and attempted murder and against whom plaintiff obtained a personal injury judgment of more than $1 million:

“Executive Law § 632-a sets forth a statutory scheme intended to improve the ability of crime victims to obtain full and just compensation from the person(s) convicted of the crime by allowing crime victims or their representatives to sue the convicted criminals who harmed them when the criminals receive substantial sums of money from virtually any source and protecting those funds while litigation is pending” … . … [I]n 2001, the Legislature amended the [Son of Sam] law to allow a crime victim to seek recovery from “funds of a convicted person,” which includes “all funds and property received from any source by a person convicted of a specified crime,” but specifically excludes child support and earned income (Education Law § 632-a [1] [c]). * * *

This Court has found … that CPLR 5205 (c) is superseded by the Son of Sam Law … . Defendant’s assertions that Retirement and Social Security Law § 110 and Administrative Code of the City of New York § 13-264 protect his pension from assignment to satisfy plaintiff’s money judgment are similarly without merit due to the broad reach of the Son of Sam Law … . Prindle v Guzy, 2020 NY Slip Op 00011, Third Dept 1-2-20

 

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ALTHOUGH THE ALLEGED RETALIATORY ACTIONS BY THE EMPLOYER TOOK PLACE YEARS AFTER PLAINTIFF STOPPED WORKING FOR THE EMPLOYER, THE COMPLAINT STATED VALID CAUSES OF ACTION FOR RETALIATORY EMPLOYMENT DISCRIMINATION AND PROMISSORY ESTOPPEL, SUPREME COURT REVERSED (FIRST DEPT). ​

The First Department, reversing Supreme Court, reinstated the retaliation (employment discrimination) and promissory estoppel causes of action against Artforum International Magazine. Plaintiff, an art curator, alleged sexual harassment by an Artforum publisher. After meeting with the two other publishers about the alleged harassment, the publishers allegedly promised to ensure the harassment would never happen again. Instead, plaintiff alleged, the publishers retaliated against her. The central issue on appeal is whether the actions by Artforum, which took place after plaintiff had left the magazine’s employment, could still be subject to the employment-discrimination prohibitions of the New York City Human Rights Law (NYC Administrative Code 8-107). The First Department held that the close-knit nature of the fine art business, and the effect the alleged retaliation by Artforum can have on plaintiff’s career in the art world, warranted finding plaintiff had stated valid causes of action:

… [T]here is jurisprudential grounding for expanding the boundaries of the employment context that is central to discrimination and retaliation claims in section 8-107(7) to the extent necessary to provide redress when there exists some nexus between the retaliatory harm alleged and a relationship characterized in some manner as one of employment, past or present. …

Similar reasoning can be justified in reading some expansiveness into the undefined and similarly ambiguous term “employment” for remedying retaliation under Administrative Code section 8-107(7). However, some safeguards are necessary to avoid the unintended consequence of allowing a lawsuit against a party who happens to be a plaintiff’s former employer on a retaliation theory when there is no reasonable connection between the harm alleged and that economic relationship. The plaintiff, if not a current employee, should be shown to occupy a subordinate position in an ongoing economic relationship that is threatened by the “employer’s” retaliation, and the nature of the retaliation itself should have a demonstrable nexus to the harm being alleged. Schmitt v Artforum Intl. Mag., Inc., 2019 NY Slip Op 09352, First Dept 12-26-19

 

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