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Florida Choice of Law Provision Re: Covenants Not to Compete Unenforceable in New York/the Nonsolicitation Covenant at Issue Was Overbroad and Unenforceable

In a full-fledged opinion by Justice Whalen, the Fourth Department determined that Florida law re: covenants not to compete was “truly obnoxious” to New York law and the nonsolicitation covenant at issue was overbroad and unenforceable:

…[W]e conclude that Florida law prohibiting courts from considering the hardship imposed on the person against whom enforcement is sought is “ ‘truly obnoxious’ ” to New York public policy …, inasmuch as under New York law, a restrictive covenant that imposes an undue hardship on the employee is invalid and unenforceable for that reason ‘’’ .  Furthermore, while New York judicially disfavors such restrictive covenants, and New York courts will carefully scrutinize such agreements and enforce them “only to the extent that they are reasonably necessary to protect the legitimate interests of the employer and not unduly harsh or burdensome to the one restrained”…, Florida law requires courts to construe such restrictive covenants in favor of the party seeking to protect its legitimate business interests (see Florida Statutes § 542.335 [1] [h]). * * *

A non-solicitation covenant is overbroad and therefore unenforceable “if it seeks to bar the employee from soliciting or providing services to clients with whom the employee never acquired a relationship through his or her employment” … .  Here, the non-solicitation covenant purported to restrict [defendant] from, inter alia, soliciting, diverting, servicing, or accepting, either directly or indirectly, “any insurance or bond business of any kind or character from any person, firm, corporation, or other entity that is a customer or account of the New York offices of the Company during the term of [the] Agreement” for two years following the termination of Johnson’s employment, without regard to whether defendant acquired a relationship with those clients. We conclude that the language of the non-solicitation covenant renders it overbroad and unenforceable … . Brown and Brown Inc… v Johnson…, 1109, 4th Dept 2-7-14

 

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Crude Conduct Not Motivated by Petitioners’ Gender/Case of Same Sex Discrimination Not Made Out

The Third Department determined a case of “same sex” sex discrimination had not been made out.  The petitioners (Bargy and Colon) are male.  The conduct complained of related to the supervisor’s (Andross’) bringing a woman to the hotel room in which all three men were staying during a construction project and having sex with her.  After a dispute between the petitioners and the woman, the supervisor fired them:

Here, neither the written complaints nor testimony of Bargy or Colon set forth any allegations or indication of how Andross’ conduct was motivated by their gender or that their grievances to petitioner were ignored because of their gender.  The ALJ’s decision does not refer to any proof supporting a finding that complainants’ gender was relevant to, or a reason for, the conduct.  Of the recognized paths for showing same-sex discrimination, the only one even arguably applicable is harassment based on gender-stereotyping.  However, the ALJ made no such finding.  … We fully agree that Andross’ conduct was crude, coarse and grossly unprofessional; nevertheless, in the absence of proof of gender-based discrimination, such conduct does not establish a claim.  We are constrained by the record to conclude that there is not substantial evidence that the conduct was caused by or related in any relevant fashion to complainants’ gender … . Matter of Arcuri v Kirkland…, 516735, 3rd Dept 1-9-14

 

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Medical Corporation Not Responsible for Unauthorized Disclosure of Medical Information by Employee Acting Outside the Scope of Employment

In a full-fledged opinion by Judge Pigott, over a dissent, the Court of Appeals answered a certified question from the Second Circuit in the negative.  The question was: “Whether, under New York law, the common law right of action for breach of the fiduciary duty of confidentiality for the unauthorized disclosure of medical information may run directly against medical corporations, even when the employee responsible for the breach is not a physician and acts outside the scope of her employment?”:

… [A] medical corporation's duty of safekeeping a patient's confidential medical information is limited to those risks that are reasonably foreseeable and to actions within the scope of employment.  Doe v Guthrie Clinic Ltd, 224, CtApp 1-9-14

 

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Court Does Not Have the Power to Determine Whether Arbitrator Misinterpreted Collective Bargaining Agreement/Court Can Not Review Merits of Arbitrator’s Determination

The Second Department determined Supreme Court should not have vacated the arbitrator’s award because the award was not “irrational:”

“[J]udicial review of arbitration awards is extremely limited” … . In determining any matter arising under CPLR article 75, “the court shall not consider whether the claim with respect to which arbitration is sought is tenable, or otherwise pass upon the merits of the dispute” (CPLR 7501). Accordingly, it is ” not for the courts to interpret the substantive conditions of [a] contract or to [otherwise] determine the merits'” … . “An arbitration award must be upheld when the arbitrator offer[s] even a barely colorable justification for the outcome reached'” … .

The Court of Appeals has recognized “three narrow grounds that may form the basis for vacating an arbitrator’s award—that it violates public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator’s power”… . As relevant here, an arbitrator exceeds his or her power if the award “g[ives] a completely irrational construction to the provisions in dispute and, in effect, ma[kes] a new contract for the parties” …

The petitioner’s contention that the arbitrator misinterpreted the terms of the collective bargaining agreement constitutes a challenge to the merits of the arbitrator’s determination … . Since the arbitrator’s determination was not “completely irrational” … , the petitioner’s challenge to the merits of the arbitrator’s determination does not provide a ground for vacating that determination… . Matter of Sheriff Officers Assn Inc v Nassau County, 2014 NY Slip Op 00108, 2nd Dept 1-8-14

 

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Administrative Decision Maker, Who Had Previously Ruled Against Petitioner/Employee in Disciplinary Proceedings, Should Have Been Disqualified from Reviewing Hearing Officer’s Recommendations Made in a Related Subsequent Proceeding

The Third Department, over a partial dissent, determined the mayor (Bertoni), who ruled against the petitioner/employee on disciplinary charges, should have been disqualified from reviewing the hearing officer’s recommendations made in a subsequent PERB hearing.  After noting petitioner could properly be punished for testifying falsely in the hearings, the Third Department explained:

Reversal is required … because Bertoni should have been disqualified from reviewing the Hearing Officer’s recommendations.  To be sure, an administrative decision maker is not deemed biased or disqualified merely on the basis that he or she reviewed a previous administrative determination and ruled against the same employee, or presided over a prior proceeding involving a similar defense or similar charges … .  However, where, as here, there is evidence indicating that the administrative decision maker may have prejudged the matter at issue, disqualification is required… . Botsford v Bertoni, 516709, 3rd Dept 12-26-13

 

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Police Officer’s Actions In a Private Dispute Could Not Be Invoked Against Municipality Under Doctrine of Respondeat Superior

The Third Department determined that the doctrine of respondeat superior could not be invoked against a municipality for the actions of an off-duty police officer, even where the officer characterized his actions as an arrest.  Here the police officer injured the plaintiff in a private dispute that had nothing to do with the officer’s official duties:

“The doctrine of respondeat superior renders an employer 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” … .  Thus, “where an employee’s actions are taken for wholly personal reasons, which are not job related, his or her conduct cannot be said to fall within the scope of employment” … .  Notably, and as is relevant to the matter before us, “[a] municipality cannot be held vicariously liable for acts perpetrated by a member of its police force in the course of engaging in a personal dispute, without any genuine official purpose, whether or not the police officer characterizes such conduct as an arrest or incident to an arrest” … . Stevens v Kellar, 516875, 3rd Dept 12-19-13

 

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Language of Collective Bargaining Agreements Entitled Retirees to the Same Health Benefits As Were In Effect at the Time of Retirement

In a full-fledged opinion by Judge Lippman, the Court of Appeals determined the language used in successive collective bargaining agreements established a vested right to a continuation of the same health coverage in effect at the time of an employee’s retirement:

We hold that the contracts establish a vested right to a continuation of the same health coverage under which plaintiffs retired, until they reach age 70, and that the Insurance Moratorium Law does not provide a basis for abrogating retirees’ vested contractual rights.  However, because issues of fact remain as to the intended scope of plaintiffs’ right, remittal for further factual development is required to determine whether the challenged increases in co-pays for prescription drugs amount to a breach of contract. Kolbe… v Tibbetts…, 235, CtApp 12-12-13

 

 

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Arbitrator Exceeded His Authority by Modifying Punishment Imposed by Town Upon Employee for Misconduct

The Second Department determined an arbitrator exceeded his authority (by modifying punishment) as that authority was described in a stipulation prior to the hearing, and further determined objection to the arbitrator’s exceeding his authority was not waived by the town. Petitioner was a town employee who had been suspended for thirty days for misconduct.  The arbitrator determined there was just cause for the town’s action, but imposed a lesser penalty.  The town brought the Article 75 proceeding to address whether the arbitrator had exceeded his authority by modifying the punishment:

“Judicial review of an arbitrator’s award is extremely limited” … . A court may vacate an arbitration award pursuant to CPLR 7511(b)(1)(iii) “only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator’s power” (…see CPLR 7511[b][1][iii]…).

A party can only waive its contention that an arbitrator acted in excess of his or her power “by participating in the arbitration with full knowledge” of the alleged error that is being committed and “by failing to object until after the award” is issued … . * * *

At the beginning of the arbitration, the issue to be determined was defined as whether there was just cause to punish [the employee] and, “if not,” what the remedy should be. As framed in this manner, the issue to be determined by the arbitrator was in accordance with his powers, as set forth in Article X(E)(6) of the [Collective Bargaining Agreement], which only empowered the arbitrator to provide [the employee] with a remedy upon a finding that the imposition of discipline was not founded on just cause. Since the arbitrator found that there was just cause for the discipline imposed, the arbitrator exceeded his authority in reducing the penalty imposed. Matter of Town of Babylon v Carson, 2013 NY Slip Op 07980, 2nd Dept 11-27-13

 

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NYC Fire Department Cannot Be Compelled to Bargain Over the “Zero Tolerance” Drug-Test Policy for EMS Personnel

In a full-fledged opinion by Justice Richter, the First Department determined the “zero tolerance” policy requiring the termination of emergency medical services personnel who fail or refuse a drug test was not subject to mandatory collective bargaining:

This appeal raises the question of whether the New York City Fire Department’s “zero tolerance” policy, requiring automatic termination of certain emergency medical services [EMS] employees who fail or refuse to provide a specimen for a drug test, should have been subject to mandatory collective bargaining. The New York City Board of Collective Bargaining found that this issue was not required to be bargained, and unions representing the employees brought this article 78 proceeding. We now uphold the Board’s decision because the City Charter provides that the discipline of these EMS employees is the sole province of the New York City Fire Commissioner, and because the Fire Department’s determination of an appropriate penalty for illegal drug use relates to its primary mission of providing public safety. * * *

The Court of Appeals recently reiterated that a public employer cannot be compelled to bargain over “inherent[] and fundamental[] policy decisions relating to the primary mission of the public employer” … . FDNY’s interest in ensuring that its EMS workers are drug-free directly relates to the primary mission of treating and providing transport for sick and injured citizens and ensuring that EMS workers do so safely. This Court of Appeals precedent provides further support for our conclusion that FDNY cannot be compelled to bargain over this fundamental public safety policy decision. Matter of Roberts v NYC Off of Collective Bargaining, 2013 NY Slip Op 07870, 1st Dept 11-26-13

 

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School District Attorney Was “Employee” Not “Independent Contractor”

The Third Department reversed the Comptroller’s finding that an attorney for a school district was an independent contractor, not an employee, requiring the attorney to refund retirement benefits already paid.  In explaining the criteria for an “employee” who provides professional services, the Third Department wrote:

Where professional services are involved, the absence of direct control is not dispositive of the existence of an employer-employee relationship … .  Rather, such an employment relationship may be evidenced by “control over important aspects of the services performed other than results or means” …, i.e., “over-all control is sufficient to establish the employee relationship where [professional] work is concerned” … .  In our view, the Comptroller’s determination that petitioner was not an employee of the school district is not supported by substantial evidence.

Here, both the school board president and the assistant superintendent testified that the school board routinely engaged in discussions about whether to retain petitioner’s services as an employee or an independent contractor, and the board continually chose the former because it was more cost effective for the school district.  The testimony also indicated that, although there was no written contract with petitioner, the board and the assistant superintendent directed petitioner as to what work needed to be completed and when services were to be performed, the assistant superintendent and board reviewed petitioner’s work for its sufficiency and the president monitored petitioner’s performance and conducted annual performance evaluations.  Additionally, both the testimony and documentary evidence indicated that petitioner was a salaried employee paid every two weeks by paycheck, from which income taxes, Social Security, Medicare and health insurance premiums were deducted, and petitioner received a W-2 form annually.  Further, petitioner’s appointment as an employee of the school district was recognized by the County Department of Civil Service as a “School Attorney” – an exempt position – at a salary in 1974 of $3,400 per year.  Matter of Mowry v DiNapoli, 516295, 3rd Dept 11-21-13

 

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