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May 6, 1981

Suzanne ROSS, Plaintiff,
Nathan ALLEN (correct name Niathan Allen), Executive Director of Henry Street Settlement, William Spiller, Director of Henry Street School, and Robert Wolf, Clinical Director of Henry Street School, Defendants

The opinion of the court was delivered by: SWEET

Plaintiff Suzanne Ross ("Ross") brought this civil rights action against the defendants, directors of the Henry Street Settlement ("the Settlement") and the Henry Street School ("the School"), alleging that they violated certain of her constitutional and statutory rights by terminating her employment as a school psychologist after she complained to the Board of Education about their suspension of one student at the school. The case is before me on a motion to dismiss, brought pursuant to Rule 12(b)(6), Fed.R.Civ.P. The motion is denied in part and granted in part.

The complaint alleges the following facts.

 The School was established and operates as a school for handicapped children. Most of its students are placed there by the New York City Board of Education ("the Board") pursuant to a contractual agreement. The Board retains responsibility for the students' education. It monitors and regulates the School's programs. The School receives substantial government funding, which is channelled to it through the Board as conduit. Some of its facilities are located in government buildings.

 Ross was hired by the School in October, 1979. She is a psychologist, whose duties at the School included "psychological evaluation, psychotherapy, and teaching."

 In late March of 1980, one of Ross' students was told by officials at the School to stay home indefinitely because of certain behavior problems. The student had no hearing and was not formally suspended. When Ross learned of this action, she spoke with the defendants. She told Robert Wolf ("Wolf") that her clinical judgment was that it was in the child's best interest to remain in school. She also told the defendants that the School had acted illegally. She read the applicable law to Wolf.

 In the face of the defendants' inaction, Ross advised the student and her mother of the student's procedural rights. She also contacted the Child Advocacy Project of the New York City Board of Education, which agreed with Ross about the alleged infraction of the student's rights. Two days later, on April 24, 1980, the School reversed its position and reinstated the student. According to the allegations of the complaint, the student had missed ten days of school. Also on April 24, Ross was dismissed. She was given two reasons for her dismissal, one, that she had contacted the Board of Education, an "outside agency," about the School's allegedly illegal activities, and two, that she had assumed an inappropriate role as child advocate. Plaintiff appealed that dismissal through internal administrative channels; however, that appeal was unsuccessful.

 For purposes of this motion to dismiss, the preceding recitation of facts taken from Ross' complaint is taken as true. See California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 515, 92 S. Ct. 609, 614, 30 L. Ed. 2d 642 (1972).

 Based on these alleged facts, Ross asserts three separate causes of action. First, she asserts a cause of action under 42 U.S.C. § 1983 for violation of her First and Fourteenth Amendment rights. Second, she alleges that her rights under § 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 and regulations promulgated thereunder were infringed by her dismissal. Finally, she claims that defendants' actions violated her rights under the Education for All Handicapped Children Act, 20 U.S.C. § 1401, et seq., (EAHCA) and applicable regulations.

 Defendants challenge the legal sufficiency of the complaint on all three grounds. As to the first cause of action, they maintain that the requisite state action to sustain a claim under § 1983 is lacking. As to the second cause of action, they claim that § 504 is inapplicable here because no discrimination on the basis of handicap is alleged. In addition, as to both the second and third causes of action, defendants contend that Ross lacks standing under the statutes and regulations she invokes.

 On a motion to dismiss, "the sole issue is whether under the facts alleged in the plaintiff's complaint it appears to a certainty that the plaintiff is entitled to no relief." Holmes v. Silver Cross Hospital of Joliet, 340 F. Supp. 125, 130 (N.D.Ill.1972). Under the first two causes of action alleged here, in accordance with the facts as pleaded, Ross may be able to establish entitlement to relief. However, I agree with the defendants that she lacks standing to sue under EAHCA. Accordingly, at this stage of this litigation, I reject defendants' challenge to the legal sufficiency of Ross' first two claims, but grant the motion to dismiss the third.

 It is true, as defendants assert, that on her first cause of action plaintiff has the burden of proving that her dismissal was the result of state action. See Jensen v. Farrell Lines, Inc., 625 F.2d 379, 384 (2d Cir. 1980), cert. denied, 450 U.S. 916, 101 S. Ct. 1359, 67 L. Ed. 2d 341 (1981). However, under this complaint she may be able to carry that burden in accordance with the "state-function" approach to determining state action. Under this approach a court may find state action if "the conduct of the private actor is equivalent to the performing of a state function, or is traditionally associated with sovereignty." Id.

 Application of the state function test is problematic. However, light may be shed on the instant case by a comparison of two cases in this Circuit, Perez v. Sugarman, 499 F.2d 761 (2d Cir. 1974) and Lefcourt v. Legal Aid Society, 445 F.2d 1150 (2d Cir. 1971).

 Perez was a civil rights action alleging constitutional infringements by, among others, two private child care institutions, the New York Foundling Hospital and St. Joseph's Home for Children. The complaint alleged unconstitutional detention of the plaintiff's children. The court applied the state function test and found that the institutions acted "under color of state law," and were therefore open to suit under § 1983. In doing so, it placed primary reliance on the statutory scheme involved. Under that scheme, the government was charged with primary responsibility for the welfare of needy children, but could discharge that responsibility either directly or through an authorized agency. The defendant institutions were such authorized agencies. The court found that although it had entrusted the plaintiff's children to those private institutions, the state was "in effect providing the care through (those) institutions, " Perez, supra, at 765, and concluded that "(this) exercise of the administrative placing prerogative does not affect in any way the State's ultimate responsibility for the well-being of the children, and, consequently, the public nature of the function being performed." Id.

 In Lefcourt, the plaintiff alleged that his dismissal from service as a Legal Aid Society ("Society") attorney abridged his First and Fourteenth Amendment rights. The Second Circuit affirmed the district court's dismissal of the complaint, finding that the Society did not perform a public function for purposes of § 1983. The court emphasized the autonomy of the Society, and the fact that its primary duty was to its clients, not to the city. It also stressed the fact that legal representation of criminal defendants is traditionally a private, not a public function, notwithstanding the fact that the state might be forced to assume responsibility for indigent defendants in the ...

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