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Under the Circumstances Plaintiff Could Not Strictly Comply with the Whistleblower Statute by Complaining to the Very People Involved in the Wrongful Conduct—Plaintiff Entitled to Back Pay and Prejudgment Interest for Retaliatory Demotion

The Court of Appeals, in a full-fledged opinion by Judge Abdus-Salaam, determined that plaintiff had complied with the whistleblower statute and was entitled to prejudgment interest on his award for retaliatory demotion. The statute, Civil Service Law  75-b, requires that any allegedly wrongful act first be reported to the “appointing authority.” However, in this case, the “appointing authority” were the very people plaintiff alleged committed the wrongful act. In this circumstance plaintiff’s complaints to his immediate superiors and then to the inspector general were deemed to comply with the statute. The Court of Appeals also reasoned that, because the purpose of the whistleblower statute is to make whistleblowers whole, the award of prejudgment interest under the statute is proper:

Under these particular circumstances, strict compliance with the reporting requirements of Civil Service Law § 75-b would not serve the purpose of the statute. Rather, courts should use their discretion in determining whether the overall actions of the plaintiff constitute a good faith effort to report the misconduct. In cases such as this — where the appointing authority is the one engaging in the alleged misconduct — an employee’s good faith effort to report the misconduct should be evaluated with attention to the employee’s practical inability to report to the appointing authority. The “good faith” provision in the statute affords courts the discretion to determine whether a plaintiff has met its requirements and appears to adequately account for situations like the one presented here. * * *

Here, an overall view of the comprehensive package of remedies listed in Labor Law § 740 (5), including undefined “compensation” and “remuneration,” demonstrates that the Legislature sought to make a whistleblowing plaintiff whole, which would include an award of prejudgment interest.  … [B]ecause the remedies listed in the statute appear to seek to make a whistleblowing plaintiff whole, awarding prejudgment interest would serve that purpose. By demoting plaintiff rather than awarding him a planned promotion and significant raise, defendants deprived plaintiff of access to what would have been a higher salary for a period of over 10 years. Awarding back pay with interest would serve to make plaintiff whole; thus, he is entitled to such a recovery. Tipaldo v Lynn, 2015 NY Slip Op 07698, CtApp 10-22-15

 

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Community College Retaliated Against Union for Its Advocacy

The Third Department upheld Supreme Court’s finding that a community college (petitioner) retaliated against the union (NIEU) in violation of the Civil Service Law by refusing to hire union employees for second jobs (for which union members received overtime pay). The court explained the relevant analytical criteria:

To prove its claim that petitioner [community college] engaged in an improper practice, NIEU was required to establish that it was engaged in activities protected by the Taylor Law (see Civil Service Law § 200 et seq.), that petitioner knew of these activities, and that it took the challenged action because of the activities … . “If the charging party proves a prima facie case of improper motivation, the burden of persuasion shifts to the party charged to establish that its actions were motivated by legitimate business reasons” … . Here, the parties agree that NIEU’s advocacy on the overtime issue was a protected activity and that petitioner was aware of NIEU’s advocacy. Their dispute focuses on whether petitioner’s decision to stop hiring NIEU members for second jobs was improperly motivated. Matter of Hudson Val. Community Coll. v New York State Pub. Empl. Relations Bd., 2015 NY Slip Op 07731, 3rd Dept 10-22-15

 

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Criteria for Whether Public Employer/Employee Dispute Is Arbitrable Explained

The Second Department determined the village’s petition to stay arbitration was properly denied. The firefighters’ union filed a grievance when the town decided to lay off six bargaining unit members and assign bargaining unit work to nonbargaining unit volunteers. Supreme Court determined the parties had agreed to arbitrate these matters in the collective bargaining agreement (CBA). The court explained the criteria for determining whether a public employer/employee dispute is arbitrable:

” The determination of whether a dispute between a public sector employer and employee is arbitrable is subject to [a] two-prong test'” …” Initially, the court must determine whether there is any statutory, constitutional, or public policy prohibition against arbitrating the grievance'”  … . “If there is no prohibition against arbitrating, the court must examine the parties’ collective bargaining agreement and determine if they in fact agreed to arbitrate the particular dispute” … .

Here, the petitioner argued that arbitration of layoffs of union-member firefighters is prohibited by public policy. Regarding a violation of public policy, “a dispute is not arbitrable if a court can conclude “without engaging in any extended factfinding or legal analysis” that a law “prohibit[s], in an absolute sense, [the] particular matters [to be] decided’ by arbitration”‘ … . The petitioner failed to point to any law or public policy that would prohibit arbitration of the grievance. * * *

The grievances were reasonably related to the general subject matter of the CBA and, therefore, the petitioner’s management rights granted under Article XVII, and “the question of the scope of the substantive provisions of the CBA [are] a matter of contract interpretation and application reserved for the arbitrator” … . Matter of Village of Garden City v Local 1588, Professional Firefighters Assn., 2015 NY Slip Op 07672, 2nd Dept 10-21-15

 

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Former Parking Enforcement Officer Entitled to Hearing Re: Whether Town Abolished Her Civil Service Position in Bad Faith

The Second Department determined petitioner was entitled to a hearing re: whether the town acted in bad faith in abolishing her position as a parking enforcement officer. Just prior to her termination, the town hired four parking enforcement officers who were not required to take the civil service examination:

In light of NY Constitution, article V, § 6, a public employer may abolish a civil service position when the “discontinuance of the position would promote efficiency and economy,” provided that the employer acts in good faith … . The Court of Appeals has stated that “[a] public employer may abolish civil service positions for the purpose of economy or efficiency, as long as the position is not abolished as a subterfuge to avoid statutory protection afforded civil servants before they are discharged'” … . Where a public employer has abolished a civil service position, an employee challenging that determination has the burden of proving that the employer engaged in a bad faith effort to circumvent the Civil Service Law … .

Here, it is undisputed that four new part-time parking enforcement officers were hired in 2011; one of those employees was hired in October 2011, only a month before the petitioner was informed that her position would likely be abolished. Further, the Town and Town Board submitted no evidence as to whether the decision to abolish the petitioner’s position was made by Town Board resolution, or by some other means. Pursuant to the doctrine of legislative equivalency, a civil service position “created by a legislative act can only be abolished by a correlative legislative act” … . Here, the record does not indicate the specific mechanism by which the petitioner’s position was abolished. Additionally, although the Town submitted some evidence showing that it undertook various cost-cutting measures in connection with its 2012 budget, the record contains no evidence as to any legislative or other deliberations underlying the determination at issue here. Matter of Colabella v Town of Eastchester, 2015 NY Slip Op 07656, 2nd Dept 10-21-15

 

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Negligent Supervision and Retention and Respondeat Superior Causes of Action Against City Department of Education (DOE) Should Not Have Been Dismissed—Complaint Alleged Sexual Abuse of Student By Teacher

The Second Department determined the causes of action against the City of New York Department of Education (DOE) alleging negligent supervision and retention of a teacher, as well as liability based upon respondeat superior, should not have been dismissed. The complaint alleged the sexual abuse of a student by a teacher, Watts, over the course of two years. The DOE failed to demonstrate it did not have actual or constructive notice of the teacher’s propensity for sexual abuse. Although the respondeat superior theory did not apply to the teacher (who acted outside the scope of employment) other employees, who were acting within the scope of employment, may have been negligent:

“Schools have a duty to adequately supervise the students in their care, and may be held liable for foreseeable injuries proximately related to the absence of adequate supervision” … . “The standard for determining whether the school has breached its duty is to compare the school’s supervision and protection to that of a parent of ordinary prudence placed in the same situation and armed with the same information” … . “Where the complaint alleges negligent supervision due to injuries related to an individual’s intentional acts, the plaintiff generally must demonstrate that the school knew or should have known of the individual’s propensity to engage in such conduct, such that the individual’s acts could be anticipated or were foreseeable” … . “Actual or constructive notice to the school of prior similar conduct generally is required” … . Similarly, in order to establish a cause of action based on negligent retention of an employee, “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 moving defendants failed to establish, prima facie, that the DOE had no specific knowledge or notice of Watts’ propensity to engage in the misconduct alleged in the complaint … . * * *

The Supreme Court also should have denied that branch of the moving defendants’ motion which was for summary judgment dismissing the cause of action alleging liability based upon a theory of respondeat superior insofar as asserted against the DOE. “Under the doctrine of respondeat superior, an employer may be vicariously liable for the tortious acts of its employees only if those acts were committed in furtherance of the employer’s business and within the scope of employment” … . Here, the DOE may not be held liable under a theory of respondeat superior for the alleged misconduct committed by Watts, as it is undisputed that those acts were not committed in furtherance of the DOE’s business and within the scope of Watts’ employment … . However, as the plaintiffs correctly contend, the complaint adequately alleged that other employees of the DOE were negligent in the performance of their respective duties, and that such negligence constituted a proximate cause of the infant plaintiff’s injuries. In this regard, the moving defendants failed to establish, prima facie, that these other employees were not acting within the scope of their employment …, that they were not negligent, or that any such negligence was not a proximate cause of the alleged injuries … . Nevaeh T. v City of New York, 2015 NY Slip Op 07642, 2nd Dept 10-21-15

 

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Termination for Insubordination Proper

The Fourth Department determined that petitioner, the former chief operator of a city water treatment plant, was properly terminated for insubordination. Petitioner complained directly to the NYS Department of Health about a supervisor’s decision, thereby allegedly violating directives concerning the chain of command. Matter of Gaffney v Addison, 2015 NY Slip Op 07372, 4th Dept 10-9-15

 

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Petitioner-Employee Did Not Demonstrate the Union Breached Its Duty of Fair Representation, Therefore Petitioner Did Not Demonstrate an Exception to the “Exhaustion of Remedies” Pre-Requisite for an Article 78 Proceeding

The Second Department determined petitioner’s Article 78 action should have been dismissed because petitioner did not demonstrate an exception to the requirement that she exhaust all the grievance remedies provided by the collective bargaining agreement. Petitioner was terminated from her employment at a county community college:

Generally, an employee covered by a collective bargaining agreement which provides for a grievance procedure must exhaust administrative remedies prior to seeking judicial remedies … . However, the failure to exhaust administrative remedies may be excused where the employee can prove that the union breached its duty of fair representation in the handling of the employee’s grievance … . Breach of the duty of fair representation occurs only when a union’s conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith … . Here, the petitioner did not allege that the union’s conduct was arbitrary, discriminatory, or made in bad faith, and the record does not support such a conclusion … . Accordingly, as the petitioner failed to establish that an exception to the exhaustion doctrine was applicable, the Supreme Court should have denied the petition and dismissed the proceeding on the merits. Matter of McLaughlin v Hankin, 2015 NY Slip Op 07272, 2nd Dept 10-7-15

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Elements of Causes of Action for (1) Misappropriation of (a) Trade Secrets, (b) Business Ideas, and (c) Labor, Skills and Expenditures, (2) Breach of Fiduciary Duty (Delaware Law), (3) Aiding and Abetting Breach of Fiduciary Duty (Delaware Law), (4) Unjust Enrichment, and (5) Promissory Estoppel Described in Some Detail

The First Department, in a full-fledged opinion by Justice Richter, determined the complaint stated causes of action against the Cohen defendants for essentially stealing plaintiffs’ ideas for a website. Defendant Cohen, an investor, eventually served as chairman and CEO of a company formed by plaintiffs to develop the website. The complaint alleged that Cohen caused a strain among the partners which stalled the project. Cohen circulated a liquidation agreement which was never addressed by the other partners. Then, the complaint alleged, Cohen took the plaintiffs’ ideas and website-development work to the founders of Pinterest, which, the complaint alleged, was formed based upon the ideas Cohen misappropriated from plaintiffs. The plaintiffs sued the Cohen defendants and Pinterest. All the causes of action against Pinterest were dismissed by Supreme Court. The First Department held the complaint stated causes of action against the Cohen defendants for (1) breach of fiduciary duty (under Delaware Law), (2) misappropriation of trade secrets, (3) misappropriation of ideas, (4) and misappropriation of labor, skill and expenditures. (Apparently the unjust enrichment cause of action, which Supreme Court dismissed only re: Pinterest, was not a subject of the appeal.) The First Department found that all the causes of action against Pinterest were properly dismissed.   The opinion includes detailed descriptions of the elements of breach of fiduciary duty (Delaware law), aiding and abetting breach of fiduciary duty, unjust enrichment, misappropriation of trade secrets, misappropriation of ideas, misappropriation of labor, skills and expenditures, and promissory estoppel. The discussions are too extensive to be fairly summarized here.  Schroeder v Pinterest Inc., 2015 NY Slip Op 07232. 1st Dept 10-6-15

 

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Criteria for Arbitrability of Dispute Involving Public Employees Succinctly Explained

Reversing Supreme Court, the Second Department determined the dispute about compensation for police officers during Hurricane Sandy was arbitrable under the terms of the Collective Bargaining Agreement (CBA). The court explained the relevant analytical criteria:

Public policy in New York favors arbitral resolution of public sector labor disputes … . However, a dispute between a public sector employer and employee is only arbitrable if it satisfies a two-prong test … . “Initially, the court must determine whether there is any statutory, constitutional, or public policy prohibition against arbitrating the grievance” … . If there is no prohibition against the arbitration, the court must determine whether the parties agreed to arbitrate the particular dispute by examining their collective bargaining agreement … .

Here, the Village does not assert on appeal that arbitration of this grievance was prohibited by statute or public policy, and we find no such prohibition. “In analyzing whether the parties in fact agreed to arbitrate the particular dispute, a court is merely to determine whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the CBA'” … . Here, the relevant arbitration provisions of the CBA are broad, as they provide for arbitration of any grievance, defined as “any claimed violation, misinterpretation or inequitable application of this Agreement,” which remains unresolved following completion of step three of the grievance procedure. Moreover, there is a reasonable relationship between the subject matter of the dispute, which involves compensation over a specific time period, and the general subject matter of the CBA … . Contrary to the Village’s contention, whether the evidence supports the grievance is a question for the arbitrator, and not the courts, to decide … .

Moreover, the Village’s contention that arbitration of the grievance was precluded because the PBA failed to comply with a condition precedent is without merit. The “threshold determination of whether a condition precedent to arbitration exists and whether it has been complied with, is for the court to determine” … . By contrast, “[q]uestions concerning compliance with a contractual step-by-step grievance process have been recognized as matters of procedural arbitrability to be resolved by the arbitrators, particularly in the absence of a very narrow arbitration clause or a provision expressly making compliance with the time limitations a condition precedent to arbitration” … . Matter of Incorporated Vil. of Floral Park v Floral Park Police Benevolent Assn., 2015 NY Slip Op 07026, 2nd Dept 9-30-15

 

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Unlike a “State Human Rights Law” Cause of Action, a “New York City Human Rights Law” Cause of Action Is Supported If Racial Bias Played “Any Role” (As Opposed to a “Motivating and Substantial Role”) In the Discriminatory Action

The plaintiff alleged he was terminated from employment due to racial bias and sued under the Executive Law (New York State Human Rights Law) and under New York City Human Rights Law. Plaintiff acknowledged that he was sleeping on the job, a legitimate reason for termination. Plaintiff’s New York State Human Rights Law cause of action was dismissed because plaintiff could not show that racial bias played a “motivating or substantial role” in the termination. But, because the criteria for a cause of action under the New York City Human Rights Law are broader, the New York City Human Rights Law cause of action survived summary judgment. Under the New York City Human Rights Law, if termination was motivated “in part” by racial bias, even though there was a legitimate reason for termination, the termination is actionable:

The Court of Appeals has recognized that the New York City Human Rights Law must be construed “broadly in favor of discrimination plaintiffs, to the extent that such a construction is reasonably possible” … . Thus, the New York City Human Rights Law is to be more broadly interpreted than similarly worded federal or State antidiscrimination provisions … . The Appellate Division, First Department, has interpreted the New York City Human Rights Law as requiring that unlawful discrimination play ” no role'” in an employment decision … . Our Court has expressed general agreement with the First Department’s interpretation of the New York City Human Rights Law … . Thus, under the broadly worded and broadly interpreted New York City Human Rights Law, if the supervisor’s decision to report the plaintiff was motivated by racial or ethnic animus, even in part, the defendant may be held liable.

The evidence undisputedly established that the plaintiff’s employment was terminated by the defendant because the plaintiff was found to be asleep while on duty, in violation of its rules. Additionally, there was evidence that the defendant had a zero-tolerance policy with respect to violations of that rule. Further, it is also not disputed that the defendant’s no-tolerance policy regarding the termination of the employment of employees found sleeping while on duty is a legitimate policy. Nevertheless, the plaintiff presented evidence that his supervisor reported him to the defendant’s management in part out of racial animus, and did not report other, non-Indian employees who were found sleeping while on duty. Thus, the plaintiff raised a triable issue of fact as to whether his supervisor’s unlawful discrimination, which is to be imputed to the defendant, played a role in the termination of the plaintiff’s employment. Accordingly, the Supreme Court erred in granting that branch of the defendant’s motion which was for summary judgment dismissing the cause of action alleging a violation of the New York City Human Rights Law … . Singh v Covenant Aviation Sec., LLC, 2015 NY Slip Op 06911, 2nd Dept 9-23-15

 

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