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HUDSON VALLEY FREEDOM THEATRE, INC. v. HEIMBACH

May 5, 1981

HUDSON VALLEY FREEDOM THEATRE, INC., Plaintiff,
v.
Louis HEIMBACH, individually and as the Orange County Executive; Peter Replogle, individually and as the Director of the Orange County Employment and Training Administration; June Cook, individually and as former Director of the Orange County Employment and Training Administration; Lawrence Gaskins, individually and as an employee of the Orange County Employment and Training Administration; and the County of Orange, Defendants



The opinion of the court was delivered by: BRIEANT

MEMORANDUM AND ORDER

In this action, plaintiff Hudson Valley Freedom Theatre, Inc. ("HVFT"), a not-for-profit, tax-exempt organization located at Newburgh, New York, seeks compensatory and punitive damages, as well as injunctive relief. By motion docketed November 13, 1980 and fully submitted on February 24, 1981, defendants other than Cook moved to dismiss the various claims pleaded as against all defendants for want of subject matter jurisdiction, failure to state a claim, and as time barred. Affidavits have been received and considered, together with all matters presented to the Court in a prior motion for a preliminary injunction. There are no disputed issues of fact which need be reached to resolve the motion, which is granted for the reasons stated below.

 Plaintiff produces theatrical and artistic productions in Orange County and the mid-Hudson area, which it characterizes as "particularly reaching and involving the Black and Hispanic communities." Plaintiff's purpose for incorporating "was to create a theatre which would reflect the cultural needs, aspirations and creativity of the Black and Hispanic communities of the mid-Hudson area."

 Defendant Louis Heimbach is the County Executive of Orange County who is responsible for that County's application for and administration of all funds allocated to Orange County under the Comprehensive Employment and Training Act, 29 U.S.C. § 801 et seq. ("CETA"). Defendant Peter Replogle is the current Director of the Employment and Training Administration of Orange County, New York ("ETA"), the county agency responsible for administration of its CETA program. Defendant June Cook was the Director of ETA when the claims in this case allegedly arose in January and February 1978. Defendant Lawrence Gaskins is an employee of ETA. The County of Orange is also named as a defendant.

 Plaintiff corporation claims that defendants have deprived it of its rights in violation of the due process and equal protection clauses of the Fifth and Fourteenth Amendments, and in violation of 42 U.S.C. §§ 1981, 1983, 1985 and 2000d, by denying on account of race its application for CETA funds for a "theatre arts" project, and by terminating CETA funding on account of race for two positions in HVFT. Plaintiff also claims that in so doing, defendants have violated CETA. Finally, plaintiff claims that defendant June Cook violated 26 U.S.C. §§ 7217 and 6103 by disclosing to the public that HVFT had failed to remit its third quarter 1978 withholding taxes to the Internal Revenue Service.

 Subject matter jurisdiction in this Court is premised on 28 U.S.C. §§ 1331, 1343(1), (3) and (4), on 26 U.S.C. § 7217, and on the doctrine of pendent jurisdiction.

 In support of its claims, plaintiff alleges and we assume the facts set forth below. In June 1977, the Orange County ETA granted plaintiff's application to be a subcontractor or subgrantee of CETA funds in the amount of $ 111,150.00. Plaintiff was to use the grant in a project for the physical restoration of the Dutch Reformed Church building in Newburgh, New York. In February 1978, however, plaintiff was informed by June Cook, then newly appointed as Director of the Orange County ETA, that the CETA job of "restoration trainee" in the church restoration project was to be abolished.

 June Cook also informed HVFT in February 1978 that two Title II Public Employment positions "which the HVFT had were to be abolished by ETA due to lack of funds." In addition, it is alleged that two ETA youth programs which had been approved for HVFT as contractor in November 1977, and which were scheduled to begin in January 1978, were "inordinately delayed," with the reason given by ETA that "June Cook wanted verification that the HVFT was a "community-based organization qualified to receive these grants.' " Because of this delay, one of HVFT's youth programs had to be cancelled.

 The complaint also alleges that an application for $ 188,008.80 in CETA funds which was submitted by HVFT to the Orange County ETA in the Summer of 1978 was improperly denied. The application was entitled "Expansion of the Theatre Arts Industry Within the Greater Newburgh Community." Plaintiff alleges that in making a recommendation whether to accept this application, defendant Lawrence Gaskins, at the direction of June Cook, made "biased and perjurative (sic) comments" on the rating form, and that because of these comments the application was denied. *fn1" In July 1978 Curt Stewart, President and Artistic Director of HVFT, complained to the United States Department of Labor about claimed racial discrimination by the Orange County ETA. Mr. Stewart complained to the Department of Labor again in November 1978, mentioning particularly the denial of funding for HVFT's Theatre Arts project. In late 1978 and early 1979 the Department of Labor investigated these allegations, conducting an "overall Equal Employment Compliance Review" of the Orange County CETA program, simultaneously with its consideration of Mr. Stewart's complaint. Mr. James A. Ware, the Regional Administrator for Region II of the United States Department of Labor's ETA, informed Mr. Stewart by letter in July 1979 that the investigation had not substantiated HVFT's allegations of racial discrimination, but did direct that the two abolished PSE positions in complainant's workforce should be "immediately restored". Mr. Ware proposed that HVFT be allowed to resubmit its theatre arts project application or a substitute as a remedy because his investigation had found that the project had been improperly evaluated. HVFT wrote to Mr. Ware stating that these suggested remedies were inadequate; HVFT requested that it be awarded damages instead. Mr. Ware informed the HVFT that the Department of Labor does not award damages in such situations.

 Plaintiff also alleges that in December 1978 at a public session of the ETA Advisory Council, June Cook stated that HVFT had not paid its third quarter withholding taxes to the Internal Revenue Service. Finally, plaintiff alleges that during the Spring and early Summer of 1978 June Cook made a number of derogatory comments about HVFT and Curtis Stewart. Ms. Cook allegedly criticized HVFT privately and publicly by stating that the HVFT "did not have non-CETA personnel supervising CETA personnel, and that therefore HVFT was in violation of CETA regulations," although plaintiff asserts that during the period in question "there was no CETA regulation, law or policy mandating that it was improper for a CETA paid employee to supervise other CETA employees." Ms. Cook also allegedly "initiated inquiries into the personal life-style and sexual relations" of Mr. Stewart.

 Upon filing the complaint in this action on October 17, 1980, plaintiff moved by order to show cause for a preliminary injunction returnable October 27, 1980. Plaintiff requested that defendants be preliminarily enjoined (1) to pay plaintiff $ 12,500.00 as damages for defendants' unlawful abolition of the two Title II PSE positions, and (2) to pay plaintiff $ 188,008.80 for the institution and completion of the theatre arts project, or alternatively, to re-evaluate HVFT's application for CETA funding for the theatre arts project. On the return date, the motion for a preliminary injunction was withdrawn by the plaintiff upon a stipulation that plaintiff would submit an application for CETA funding for a "theatre arts" project for the 1980-81 fiscal year, and that defendant Orange County ETA would evaluate the application fairly in the ordinary course of its business.

 Defendants assert in support of their motion that plaintiff lacks standing to maintain its claims of discrimination on account of race; that claims under CETA therefore must be dismissed for lack of jurisdiction; that the allegations under 26 U.S.C. §§ 7217 and 6103 fail to state a claim upon which relief can be granted, and that all claims of racial discrimination against Orange County are barred by the special New York statutes of limitations affecting municipal corporations and governmental subdivisions.

 Defendants assert, and the Court agrees, that because plaintiff HVFT, as a corporation, has no racial identity, it cannot have been the target of any racial discrimination, and therefore has no standing to maintain its claims under the Civil Rights laws and the Fifth and Fourteenth Amendments.

 The standing doctrine in federal court comprises both constitutional requirements and prudential limitations. To satisfy the constitutional Article III jurisdictional requirement that a "case or controversy" has been presented to the Court, a plaintiff must show that it has suffered a "distinct and palpable injury," and that a "fairly traceable connection" exists between this injury and the defendants' challenged actions. Duke Power Co. v. Carolina Environmental Study Group, 438 U.S. 59, 72, 98 S. Ct. 2620, 2630, 57 L. Ed. 2d 595 (1978); Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 261, 97 S. Ct. 555, 561, 50 L. Ed. 2d 450 (1977); Warth v. Seldin, 422 U.S. 490, 501, 95 S. Ct. 2197, 2206, 45 L. Ed. 2d 343 (1975).

 Prudential limitations on standing, founded on considerations of judicial restraint, have also been articulated by the Supreme Court, although the elements of these limitations have not been stated as clearly as have the Article III requirements. In Data Processing Service v. Camp, 397 U.S. 150, 153, 90 S. Ct. 827, 829, 25 L. Ed. 2d 184 (1970), the Supreme Court stated that prudential limitations involved the question "whether the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the (relevant) statute or constitutional guaranty." See Warth v. Seldin, supra, at 500-01. More recently, however, the Supreme Court has suggested that plaintiffs need not "demonstrate a connection between the injuries they claim and the constitutional rights being asserted," except in the context of taxpayer suits. Duke Power Co. v. Carolina Env. Study Group, supra, at 78-80, 98 S. Ct. at 2633-2634. One prudential limitation on standing has been reiterated in ...


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