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STAT MED. SERVS. v. DAUGHTERS OF JACOB GERIATRIC C

June 19, 1992

STAT MEDICAL SERVICES, INC. d/b/a Stat Nurses Registry, Plaintiff, against DAUGHTERS OF JACOB GERIATRIC CENTER, INC., Defendant.


The opinion of the court was delivered by: SHARON E. GRUBIN

 SHARON E. GRUBIN, United States Magistrate Judge:

 Plaintiff, Stat Medical Services, Inc. d/b/a Stat Nurses Registry, ("STAT"), is a California corporation with its principal place of business in Los Angeles. Its primary business is to supply licensed nurses and nurses aides who register with it to hospitals and nursing homes. STAT has had an office in New York since early 1989 and has offices in ten other cities in the United States as well as one in London. Defendant, Daughters of Jacob Geriatric Center, Inc. ("DOJ"), is a not-for-profit corporation operating as a nursing home in the Bronx.

 Pursuant to an agreement dated June 26, 1989, STAT began providing temporary nurses to DOJ on an as-needed basis in July 1989. Under the arrangement, STAT paid the nurses directly and sent DOJ weekly invoices which DOJ paid regularly through January 1990. Thereafter, however, DOJ ceased all payments to plaintiff, and it is stipulated by the parties that the outstanding unpaid invoices from February 1990 to September 1990 total $ 123,770.11. Defendant concedes this amount is due and that it is liable for it unless it can prove the affirmative defense of commercial bribery pursuant to New York Penal Law § 180.00 (McKinney 1988). A bench trial was held herein in October 1991, and defendant contends that it met its burden of proof on the affirmative defense. I, however, find that the evidence fell short of the required standard and, therefore, that judgment must be entered for the plaintiff.

 The evidence is undisputed that DOJ's office manager, Marcia Alexander, was hired by STAT in April 1990 for a part-time job during nights and weekends. Under N.Y. Penal Law § 180.00, "[a] person is guilty of commercial bribing in the second degree when he confers, or offers or agrees to confer, any benefit upon any employee, agent or fiduciary without the consent of the latter's employer or principal, with intent to influence his conduct in relation to his employer's or principal's affairs." Thus, this statute requires three elements which defendant claims were satisfied by STAT's hiring of Alexander: (1) the conferring of a benefit upon her, (2) without DOJ's consent, and (3) with the intent to influence her conduct at DOJ in favor of STAT. If defendant were able to sustain this claim under the statute, plaintiff would be prevented from recovering for the nurses' services provided because it is the law in New York that "a party will be denied recovery even on a contract valid on its face, if it appears that he has resorted to gravely immoral and illegal conduct in accomplishing its performance." McConnell v. Commonwealth Pictures Corp., 7 N.Y.2d 465, 471, 199 N.Y.S.2d 483, 487, 166 N.E.2d 494 (1960). See also Sirkin v. Fourteenth St. Store, 124 A.D. 384, 108 N.Y.S. 830, 833-34, 837 (1st Dep't 1908). *fn1" In other words, public policy prevents & party from profiting in the courts from its own wrongdoing. The first two elements of the defense have been satisfied. STAT's employment of Alexander, for which it paid her a regular salary, may be seen to have conferred a benefit upon her. Second, although plaintiff is hesitant to concede that was not informed by STAT of its hiring of Alexander, it is fair to say that DOJ's consent was not obtained and that there is no evidence that anyone at DOJ at a supervisory level or higher knew of Alexander's employment with STAT. Defendant has, however, failed to prove the third element of the statute -- that STAT's employment of Alexander was done "with intent to influence [her] conduct in relation to [her] employer's or principal's affairs."

 Before turning to the facts of the case, a word should be said about the standard of proof. It is undisputed that defendant bears the burden of proof to show its affirmative defense by clear and convincing evidence. That standard of proof is a high one, as it should be, given the serious allegations of misconduct at issue. The Supreme Court has explained:

 The function of any standard of proof is to "instruct the factfinder concerning the degree of confidence our society thinks he should have in the correctness of factual conclusions for a particular type of adjudication." In re Winship, 397 U.S. 358, 370, 25 L. Ed. 2d 368, 90 S. Ct. 1068 (1970) (Harlan, J., concurring). By informing the factfinder in this manner, the standard of proof allocates the risk of erroneous judgment between the litigants and indicates the relative importance society attaches to the ultimate decision.

 Colorado v. New Mexico, 467 U.S. 310, 315-16, 81 L. Ed. 2d 247, 104 S. Ct. 2433 (1984). The "clear and convincing" standard is an intermediate one, in that it is more than a "preponderance" of the evidence but less than "beyond a reasonable doubt." See Addington v. Texas, 441 U.S. 418, 423-24, 60 L. Ed. 2d 323, 99 S. Ct. 1804 (1979). According to the Supreme Court, a party would achieve the clear and convincing proof standard "only if the material it offered instantly titled the evidentiary scales in the affirmative when weighed against the evidence [its adversary] offered in opposition." Colorado v. New Mexico, 467 U.S. at 316. Judge Weinstein of the Eastern District of New York, who teaches evidence at Columbia University School of Law and is a noted author in the field, has declared the "quantified, the probabilities might be in order of above 70% under a clear and convincing evidence burden." United States v. Fatico, 458 F. Supp. 388, 405 (E.D.N.Y. 1978), aff'd, 603 F.2d 1053, (2d Cir. 1979), cert. denied, 444 U.S. 1073, 62 L. Ed. 2d 755, 100 S. Ct. 1018 (1980).

 Marcia Alexander had worked for DOJ for approximately three years before the events in question. As DOJ's office manager, her primary responsibilities were essentially clerical -- filing, typing, answering phones, keeping a calendar. She performed two other tasks that are of particular relevance here. As invoices from suppliers came in, she reviewed about 75% of them for accuracy before they were sent along to her superiors for approval. In addition, she made calls from time to time to find a temporary nurse to work at DOJ for a sick or absentee nurse. In calling for a temporary nurse, she utilized a nurse availability list given to her, which was prepared and kept on a regular basis by DOJ's nursing staff supervisors. The list showed nurses who were available for duty on the given days, and it included regular DOJ staff nurses as well as agency nurses who would be obtained through nursing agencies. In 1990 DOJ did business with apparently eight nursing agencies of which STAT was one. It was not part of Alexander's regular job duties, however, to obtain temporary nurses. She performed this task approximately once or twice a week and only when specifically told to do so by a nursing supervisor or staffing coordinator. Alexander testified that her method of proceeding was to start by calling the nurse at the top of the list and simply go down the list until the slot was filled.

 On April 23, 1990 Alexander was interviewed at STAT's New York office by Dennis Ferrigno, STAT's regional manager. At the conclusion of the interview, Ferrigno told Alexander she would probably get the job but that final approval had to come from his boss. The following day, Alexander went to STAT's office again for "orientation," during which STAT's staffing coordinator, Desiree Manbodh, explained to her what her duties would be. Alexander took both days as vacation days from DOJ. Based on Ferrigno's recommendation, Kaldeep Brar, STAT's owner and president in Los Angeles, approved the hiring of Alexander. Alexander learned she was hired one week after the interview and began work for STAT on May 10.

 Alexander's job for STAT as the "on-call person" was as follows. Commencing 5:30 p.m. each weekday, after STAT's offices closed, she was responsible for receiving at her home telephone calls from hospitals and nursing homes who needed nurses that night. Alexander's working hours at DOJ were 9 a.m. to 5 p.m., and it took her about 15 to 20 minutes to get home. When she arrived home she would speak by phone to Desiree Manbodh, who would wait for Alexander to arrive home and relate to Alexander which STAT nurses were available for work that night. Manbodh then transferred STAT's phone line to Alexander's home. A call to STAT after that time from any health care facility seeking a nurse would be received by Alexander who would then call the nurses on the list told to her by Manbodh. She also performed this job every third weekend, and on two Fridays during the time period in issue she received the weekend list of available nurses from Manbodh not orally, but by fax at DOJ's office. *fn2"

 Defendant essentially argues that because Alexander was in a position at DOJ to aid STAT's business and because STAT benefitted her by employing her without DOJ's consent, it has proved the element of intent and, hence, its affirmative defense of commercial bribery. DOJ bases this argument on what it calls the "law of human nature" that would require Alexander under these circumstances to show favoritism to STAT in connection with her duties at DOJ and that the court must infer, since this allegedly is the law of human nature, that such is precisely what STAT intended when it hired her. Defendant thus presents its argument as follows on page 8 of its post-trial memorandum: "The law is absolutely clear that the necessary intent to influence an employee flows automatically from the fact of the conferral of the secret benefit, since the natural and proper consequence of the benefit is to cause favoritism on the part of the employee." This court, however, holds to the contrary, because, despite defendant's hyperbole, it appears that such is not the law, nor should it be the law.

 Defendant's construction of the statute would effectively read out of it the express element of intent, making the statute satisfied simply upon the showing that a party paid some benefit to an employee of a second party with which it did business without the latter's consent. However, if the New York legislature had wanted those circumstances alone to constitute an offense, it certainly would have known how to draft a statute doing so. Instead, it enacted a statute requiring more -- i.e., that the trier of fact be satisfied that these actions were taken by the first party with the intent to influence the employee in relation to his or her employer's ...


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