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March 5, 1985

Charlotte KADUSHIN, Plaintiff,
The PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Albert F. Moncure, Marvin Weiss, Alfred T. Robertson, Thomas A. Duff and Murray Mahl, Defendants.

The opinion of the court was delivered by: WEXLER


WEXLER, District Judge.

 This is an action primarily for employment discrimination. In the Second Cause of Action, however, plaintiff contends that she was illegally discharged by defendant Port Authority without a hearing, in violation of the Due Process Clause of the Fourteenth Amendment. Both sides have moved for partial summary judgment with respect to the Second Cause of Action.


 In July 1967 defendant hired plaintiff as a buyer. In July 1968 plaintiff became a permanent employee. On January 11, 1982 plaintiff's supervisor sent a memorandum to defendant's Executive Director, recommending that plaintiff be dismissed. On January 26, 1982 defendant's Assistant Personnel Director sent plaintiff a letter stating that (1) plaintiff's supervisor had recommended that plaintiff be dismissed because of poor attendance, lack of punctuality, poor performance, and insubordination, and that (2) "you may, within fourteen days from the date hereof, request an appearance before a department head. You may appear in person or by an authorized representative and, after receiving the explanation for the recommended action, may make a written or oral statement." On March 19, 1982 plaintiff and her attorney met with defendant's comptroller to discuss the matter. On April 20, 1982 plaintiff responded in writing to the charge. On May 13, 1982 defendant's Executive Director dismissed plaintiff. At no time was plaintiff given an opportunity to call witnesses.

 At the time plaintiff was hired, there was in effect a document known as "General Resolution 76" which had been adopted by the defendant Port Authority in 1941. The resolution provided that a permanent employee may not be discharged "except for good and sufficient reason", and may be discharged "only after a hearing under such rules and regulations of The Port of New York Authority as may then be in effect." At the time plaintiff was hired she received a booklet titled "Guide for Port Authority Personnel." The Guide stated, at page 13, that "an employee who has worked continuously for the Port Authority for at least 12 months shall not be removed from his position for as long as the Port Authority has need for the work he does, except for good and sufficient cause, and only after a hearing." The Guide also stated, at page 2: "In times to come, some of the policies and procedures described in the following pages may be changed to fit new situations. The basic idea behind them, however, will never change . . . fair treatment for everyone, and fitting recognition for meritorious service." There was also in effect at the time plaintiff was hired a document known as "General Circular No. 67", which had been issued by the Executive Director in 1942 and revised in 1946. The document provided, in Part I, § 6A, that disciplinary actions against professional and managerial employees would be governed by Part V. Part V provided for a hearing before the employee's Department Head, with the employee having the right to make a statement, and for an appeal to the Executive Director, with the employee having the right to make a statement to the Executive Director.

 On February, 13, 1969, the Port Authority modified General Resolution 76, by providing that professional and managerial employees "may be removed by the Executive Director with the approval of the Chairman of the Committee on Operations for any cause or reason under procedures established by the Executive Director and filed with the Committee on Operations." At the same time, the Executive Director adopted a new procedure for the discharge of professional and managerial employees, which (with minor modifications) is still in effect and is incorporated in Port Authority Instuction 20 - 1.11. The procedure currently provides that a discharge proceeding is initiated by a memorandum written by the employee's own Department Head. The employee may request an interview with a different Department Head designated by the Executive Director. Such different Department head then reports to the Executive Director, who makes the decision whether to discharge the employee.

 The Port Authority, it should be noted, was created pursuant to a compact between New York and New Jersey.


 Plaintiff contends that the relevant tenure regulations gave plaintiff a vested property interest in her job, and that her discharge without a full-scale evidentiary hearing constituted a taking of property without due process and an impairment of contract.

 A. The Arnett Case

 The case most directly on point is Arnett v. Kennedy, 416 U.S. 134, 94 S. Ct. 1633, 40 l.Ed.2d 15 (1974). *fn1" In that case plaintiff, a federal employee, was administratively charged with having libeled his superior. Statutory and regulatory provisions provided that plaintiff could not be discharged without cause, that plaintiff was entitled to a pre-termination opportunity to rebut any charges by submitting affidavits to the superior, and that plaintiff was entitled to a post-termination evidentiary trial-type hearing. Plaintiff failed to request a pre-termination opportunity to rebut the charges, and was discharged by the superior. A three-judge District Court held that plaintiff was entitled to a pre-termination hearing before an impartial tribunal with a right to present witnesses. The Supreme Court reversed and remanded. Justice Rehnquist, in a plurality opinion joined in by Chief Justice Burger and Justice Stewart, stated that although plaintiff had a statutorily created property interest in his job, such interest was entirely subject to statutorily created procedures, which permitted discharge without a fullscale evidentiary pre-termination hearing before an impartial tribunal. Justice Rehnquist apparently regarded the right to a post-termination evidentiary hearing as being relevant only insofar as such right was necessary to protect an employee against damage to his reputation, and apparently though that no such right would be constitutionally required in the absence of potential damage to reputation. Justice Powell, in a concurring opinion joined by Justice Blackmun, contended that once a substantive property interest has been created, the Constitution rather than a statute determines what minimum of procedure is needed to extinguish such right. Justice Powell found that the Constitution did not require a pre-termination evidentiary hearing before an impartial tribunal under the facts of the case, but apparently believed that a post-termination evidentiary hearing before an impartial tribunal was essential. Justice White, concurring in part and dissenting in part, stated that a post-termination evidentiary hearing was essential, although he noted that a different rule might apply where an employee is discharged for "reasons of pure inefficiency" rather than "specific charges of misconduct." Justice White further stated that while it was permissible that a pre-termination hearing be without witnesses, serious constitutional difficulties would arise if a statute were interpreted as permitting a pre-termination hearing without an impartial hearing examiner.

 B. Existence of Substantive Property Right

 In the instant case, the first issue is whether plaintiff had a substantive property interest in her job. We hold that she did. At the time plaintiff became a permanemt employee in July 1968, General Resolution 76 (as reflected in the Guide) unequivocally provided that plaintiff could be discharged only for good and sufficient cause, and only after a hearing. We hold that these provisions were sufficient to create a substantive property right under New York law. See Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 457 N.Y.S.2d 193, 443 N.E.2d 441 (1982). Although it is true that the Resolution and Guide contemplated the possibility of changes concerning hearing procedure, no suggestion was made ...

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