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Barry v. City of New York

June 22, 1983

JOHN J. BARRY, MARGUERITE V. BARRY AND JAMES GEBHARDT, ON THEIR OWN BEHALF AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS-APPELLEES,
v.
CITY OF NEW YORK, NEW YORK CITY BOARD OF ETHICS, EDWARD I. KOCH, AS MAYOR OF THE CITY OF NEW YORK, AND DAVID N. DINKINS, AS CITY CLERK, DEFENDANTS-APPELLANTS; JAMES SLEVIN, MARY SLEVIN, BRIAN CLINTON, JOAN CLINTON, DR. STANLEY C. FELL, AND FRANK D'AMICO, ON THEIR OWN BEHALF AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS-APPELLEES-CROSS-APPELLANTS, V. CITY OF NEW YORK, NEW YORK CITY BOARD OF ETHICS, EDWARD I. KOCH, AS MAYOR OF THE CITY OF NEW YORK, FRANCIS T. P. PLIMPTON, AS CHAIRMAN OF THE BOARD OF ETHICS, POWELL PIERPOINT AND BARBARA SCOTT PREISKEL AS MEMBERS OF THE BOARD OF ETHICS, AND DAVID N. DINKINS AS CITY CLERK, DEFENDANTS-APPELLANTS-CROSS-APPELLEES



City of New York and other defendants appeal from decision of United States District Court for the Southern District of New York, which struck down public inspection provisions of City financial disclosure law. Slevin plaintiffs cross-appeal that portion of decision upholding constitutionality of law's filing requirements. Affirmed in part and reversed in part.

Feinberg, Chief Judge, Lumbard and Winter, Circuit Judges.

Author: Feinberg

FEINBERG, Chief Judge:

Defendants-appellants, the City of New York and various City officials, appeal from that portion of a decision of the United States District Court for the Southern District of New York, Abraham D. Sofaer, J., that struck down the public inspection provisions of a financial disclosure law enacted by the New York City Council. This is a consolidated appeal: the named plaintiffs in Slevin are employees of the New York City Fire Department and their spouses suing for themselves and others similarly situated; the similar suit in Barry is brought by employees of the Police Department and their spouses. The Slevin plaintiffs cross-appeal from that portion of the district court decision that upheld the constitutionality of the law insofar as it requires plaintiffs to file annual financial reports with the City Clerk. The opinion of the district court is reported at 551 F. Supp. 917 (1982). We affirm the district court's decision in part, and reverse in part.

I. Background

In 1975, after several years of study, the New York City Council enacted Local Law 1, New York City Admin. Code ยง 1106-5.0. As originally passed, Local Law 1 required a variety of City officials, candidates for City office, and all City employees whose salary was $25,000 or greater, to file annual reports disclosing certain financial information. The law made the reports available for public inspection. Local Law 1 was upheld by the New York State Supreme Court in Hunter v. City of New York, 88 Misc. 2d 562, 391 N.Y.S.2d 289 (1976). On appeal, however, the Appellate Division, First Department, invalidated the law. Hunter v. City of New York, 58 A.D.2d 136, 396 N.Y.S.2d 186 (1st Dept. 1977), aff'd, 44 N.Y.2d 708, 405 N.Y.S.2d 455, 376 N.E.2d 928 (1978). The Hunter court recognized that the purpose of the law, to deter corruption and conflicts of interest among City employees, was valid. Nonetheless, the court determined that Local Law 1 was invalid insofar as it contained no mechanism to prevent automatic public disclosure of all information provided. Hunter v. City of New York, supra, 396 N.Y.S.2d at 189-90.

In response, the City Council passed Local Law 48 (hereafter LL 48), which took effect in July 1979. LL 48 amends Local Law 1 to permit covered employees to assert privacy claims with respect to any of the information the statute requires. As amended, the City's financial disclosure law requires annual financial reports from most elected and appointed officials, candidates for City office, and all civil service employees with an annual salary equal to or greater than $30,000.*fn1 Covered employees and their spouses must provide extensive information about their personal finances, including, among other items, the identity of professional organizations from which the employee or a spouse derives $1,000 or more in income during the preceding year; the source of capital gains of $1,000 or more, other than from the sale of a residence; the source of gifts or honoraria of $500 or more; indebtedness in excess of $500 that is outstanding for 90 days or more; and the nature of investments worth $20,000 or more.*fn2 Intentional violations of these reporting requirements are punishable by imprisonment not to exceed one year or a fine not to exceed $1,000, or both.

The reports must be filed with the City Clerk, and may be inspected by a member of the public on request. Unlike its predecessor, however, LL 48 explicitly permits covered individuals to request that any item or items in their reports be withheld from public inspection on the ground that inspection "would constitute an unwarranted invasion of his or her privacy." In general, a privacy claim may be made at any time. When a request for access is pending, however, a privacy claim cannot be asserted for the first time, although a prior privacy claim can be supplemented on notice of a request for access.

When an inspection request is made and a privacy claim has been asserted, LL 48 requires the public members of the City's Board of Ethics*fn3 to consider the following factors in determining whether public inspection would constitute an unwarranted invasion of privacy:

(a) whether the item is of a highly personal nature;

(b) whether the item in any way relates to the duties of the positions held by such person;

(c) whether the item involves an actual or potential conflict of interest.

The Board must file a written decision with the City Clerk, who may then disclose only those portions of the requested financial statement that are not exempted on privacy grounds.

After LL 48 was passed, two class actions were filed to contest it. In August 1979, Fire Department Battalion Chiefs, Deputy Chiefs, Medical Officers, and their spouses*fn4 sued the City of New York, its Board of Ethics and the individual members thereof, the Mayor of the City of New York, and the City Clerk, seeking to enjoin the application of LL 48 to the plaintiff class. Slevin v. City of New York, No. 79 Civ. 4524 (S.D.N.Y.). (For convenience, we will refer to the defendants collectively as "the City"). Shortly afterwards, New York City Police Department Captains, Deputy Chiefs, Inspectors, Deputy Inspectors, Lieutenants, Police Surgeons, and their spouses*fn5 filed the companion action, Barry v. City of New York, No. 79 Civ. 4627 (S.D.N.Y.), against most of the same defendants, seeking to enjoin the application of LL 48 to the plaintiff class. The plaintiff officers in both cases are "uniformed city employees, occupying competitive civil service positions, who earn in excess of $30,000 annually." Slevin v. City of New York, supra, 551 F. Supp. 917, 923. The district court issued a preliminary injunction enjoining the application of LL 48 to the Slevin plaintiffs, and later expanded the injunction against defendants to cover the Barry plaintiffs. The cases were then consolidated and tried on the merits.

In a wide-ranging attack on the statute, plaintiffs claimed below that as applied to them, LL 48 violated their constitutional rights under the First, Fourth, Fifth, Ninth and Fourteenth Amendments. In a comprehensive opinion, Judge Sofaer sustained the constitutionality of the statute's filing requirements, but struck down the public inspection provisions as an unwarranted invasion of plaintiff's privacy.

On appeal, the City challenges that portion of the lower court decision invalidating LL 48's public inspection provisions. The Slevin plaintiffs contend in their cross-appeal that the statute should be struck down in its entirety; the Barry plaintiffs argue only that the district court was correct in striking down the law's public disclosure provisions. For simplicity, we deal first with the arguments raised by the City in its appeal, and by the Slevin plaintiffs in their cross-appeal.

II. The City Appeal and the Slevin Cross-Appeal

We note as an initial matter that the Supreme Court has dismissed for lack of a substantial federal question three appeals from state court decisions upholding financial disclosure laws. Montgomery County v. Walsh, 274 Md. 502, 336 A.2d 97 (Md. 1975), appeal dismissed, 424 U.S. 901, 47 L. Ed. 2d 306, 96 S. Ct. 1091 (1976); Fritz v. Gorton, 83 Wash. 2d 275, 517 P.2d 911 (Wash. 1974) (in banc), appeal dismissed, 417 U.S. 902, 41 L. Ed. 2d 208, 94 S. Ct. 2596 (1974); Stein v. Howlett, 52 Ill. 2d 570, 289 N.E.2d 409 (Ill. 1972), appeal dismissed, 412 U.S. 925, 37 L. Ed. 2d 152, 93 S. Ct. 2750 (1973). These dismissals are dispositions on the merits, and are binding on "the precise issues presented and necessarily decided by those actions." Mandel v. Bradley, 432 U.S. 173, 176, 53 L. Ed. 2d 199, 97 S. Ct. 2238 (1977) (per curiam). But although these dismissals "caution us against finding [LL 48] unconstitutional," Plante v. Gonzalez, 575 F.2d 1119, 1126 (5th Cir. 1978), cert. denied, 439 U.S. 1129, 59 L. Ed. 2d 90, 99 S. Ct. 1047 (1979), they cannot, as the district court put it, "fairly be said to preclude all of plaintiffs' challenges." 551 F. Supp. at 924. As the district court recognized, the statute challenged in this case, and the issues raised, differ in important respects from the statutes and issues considered in the state court decisions cited above. Id. Moreover, all three dismissals occurred prior to two Supreme Court decisions that recognized a constitutional interest "in avoiding disclosure of personal matters." Whalen v. Roe, 429 U.S. 589, 599, 51 L. Ed. 2d 64, 97 S. Ct. 869 (1977); Nixon v. Administrator of General Services, 433 U.S. 425, 457, 53 L. Ed. 2d 867, 97 S. Ct. 2777 (1977). Accordingly, this court must "undertake an independent examination of the merits." Mandel v. Bradley, supra, 432 U.S. at 177.

A. Right to Privacy

The central issue in this case is whether LL 48 violates plaintiffs' right to privacy. The exact nature and scope of the right to privacy has never been fully defined. In Whalen v. Roe, however, the Supreme Court summarized the relevant case law as follows:

The cases sometimes characterized as protecting "privacy" have in fact involved at least two different kinds of interests. One is the individual interest in avoiding disclosure of personal matters, and another is the interest in independence in making certain kinds of important decisions.

429 U.S. at 598-600 (footnotes omitted). These two interests have been characterized by the Fifth Circuit as interests in "confidentiality" and in "autonomy", respectively. Plante v. Gonzalez, supra, 575 F.2d at 1128.

The autonomy branch of privacy protects personal choice in "matters relating to marriage, procreation, contraception, family relationships, and child rearing and education." Paul v. Davis, 424 U.S. 693, 713, 47 L. Ed. 2d 405, 96 S. Ct. 1155 (1976). It is unclear whether financial disclosure laws significantly implicate any interests protected by the autonomy strand of the right to privacy. The Fifth Circuit has concluded that the autonomy interest does not cover "financial privacy." Plante v. Gonzalez, supra, 575 F.2d at 1132; see also O'Brien v. DiGrazia, 544 F.2d 543, 545 (1st Cir. 1976), cert. denied, 431 U.S. 914, 53 L. Ed. 2d 223, 97 S. Ct. 2173 (1977). The Fifth Circuit reasoned that financial regulations, such as tax laws, are common in this society, and that "the indirect effects caused by financial disclosure pale by comparison" with the effects of other regulations. Plante v. Gonzalez, supra, 575 F.2d at 1131. The court concluded that although "financial disclosure may affect a family . . . any influence does not rise to the level of a constitutional problem." Id. The district court in this case, however, after a careful analysis, decided that ...


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