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BARCIA v. SITKIN

September 8, 1994

NIDIA BARCIA, et al., Plaintiffs,
v.
LOUIS SITKIN, et al., Defendants. MUNICIPAL LABOR COMMITTEE, et al., Plaintiffs, v. LOUIS SITKIN, et al., Defendants.


Carter


The opinion of the court was delivered by: ROBERT L. CARTER

ROBERT L. CARTER, District Judge.

 The background of this discrimination action brought against the Unemployment Insurance Appeal Board of the State of New York (the "Board") and the New York State Department of Labor (together, "defendants") is set forth in two opinions reported at 683 F. Supp. 353 (S.D.N.Y. 1988) and 89 F.R.D. 382 (S.D.N.Y. 1981), and a third, unpublished opinion, No. 79 Civ. 5831 (S.D.N.Y. September 14, 1983), with which familiarity is assumed. In 1983, the parties entered into a Consent Judgment and Decree, dated March 2, 1983 (the "Consent Judgment"), as modified by a Stipulation and Order, dated June 6, 1985 (the "Stipulation") (together, the "Consent Decree"), to settle the claims of plaintiffs that they had been improperly denied unemployment benefits and fair hearings. Currently, plaintiffs have moved to find defendants in contempt of court for violating the Consent Decree. *fn1" Alternatively, plaintiffs seek a declaration that defendants are required to comply with the Consent Decree in all respects as to which they are presently not in compliance. In addition, plaintiffs ask for certain specific forms of relief, including a computerization and enhancement of the monitoring system currently in place to ensure defendants' compliance with the Consent Decree, a determination by the court that the time period during which plaintiffs have the right to monitor such compliance has not yet expired, an appointment of a Special Master, pursuant to Rule 53, F.R.Civ.p., various modifications of the Consent Decree and all reasonable attorney's fees, costs and disbursements associated with the filing and prosecution of their original contempt and supplemental motions.

 I.

 The Board provides the exclusive means for individual claimants to appeal determinations, rules and orders of the Commissioner of the New York State Department of Labor. New York Labor Law ┬ž 626 (McKinney 1988). A brief summary of the Board and its case file review procedures for both current and past claims as prescribed by the Consent Decree is set forth below.

 Following an adverse determination by an Unemployment Insurance Division office, a claimant is entitled to a hearing before a Board-supervised Administrative Law Judge (an "ALJ"). After an ALJ's decision is issued, the parties have the right to appeal to the Board for a limited period of time.

 When a timely appeal is made, the case is randomly assigned to a staff attorney, who reviews the transcript of the hearing and relevant documentation (a "current case file"). To conduct his or her review, the staff attorney completes a checklist, established pursuant to Consent Judgment P 39, and attached thereto as Appendix E (the "E checklist"), in an effort to ensure that the claimant received a fair and impartial hearing. The staff attorney then sends the completed E checklist along with a Summary of Appeal form -- which summarizes the facts of the case and the contentions of the parties and gives the staff attorney's analysis and recommendation -- to the first of two randomly assigned Board members. *fn2"

 The first Board member reviews the file, makes a determination to affirm or reverse the ALJ's decision, and then forwards the file to the second Board member for his or her determination. If the two Board members agree, the decision is forwarded to the parties. If the two disagree, they attempt to resolve their differences. If this is unsuccessful, a third Board member is asked to review the file, and attempts to forge a consensus with the other two Board members. If still unsuccessful, the entire Board, of which there are five members, meets to discuss the case, at which time the majority prevails and two Board members voting with the majority prepare a decision. If the Board reverses an ALJ's decision or where, in the opinion of the full Board, a case raises a substantial issue of law which requires clarification, the Board will write a decision, called a "long form" decision. Also, at this time, a Board member may write a dissenting opinion.

 In addition to issuing a decision affirming or reversing an ALJ's decision, a Board hearing may be conducted to develop new testimony, a case may be remanded for an ALJ to develop new testimony, or an ALJ may be asked to hold a new hearing on specific issues in the case. Ultimately, however, whatever remedial action is taken must be reflected on the checklist. If no action is taken, an explanation must be provided to show how a claimant's rights under the Consent Decree were otherwise protected.

 The Board also reviews the past claims of those who had been denied benefits prior to 1983 and who joined in bringing this action (the "class members"), *fn3" as required by the Consent Decree. A second checklist, established pursuant to Consent Judgment P 43, and attached thereto as Appendix F (the "F checklist"), was to be completed for each class member case file reviewed by the Board. The F checklist differs from the E checklist only to the degree that the E checklist reflects Board procedures changed or added by the Consent Decree. (See Pl. Mem. Supp. Proposed Settlement at 50.)

 II.

 A consent judgment or decree is "'an agreement of the parties entered upon the record with the sanction and approval of the court.'" Schurr v. Austin Galleries of Illinois, Inc., 719 F.2d 571, 574 (2d Cir. 1983) (quoting Oyster Bay v. Forte, 34 Misc. 2d 5, 6, 219 N.Y.S.2d 456, 459 (Sup. Ct. 1961)). Such an agreement normally embodies a compromise; the parties economize on costs and eliminate risks and, for those values, give up something which each might have gained in taking the litigation to its conclusion. The parties have opposing purposes and the consent decree embodies these divergent purposes to the extent achievable through the parties' skill and bargaining power. United States v. Armour & Co., 402 U.S. 673, 681-82, 29 L. Ed. 2d 256, 91 S. Ct. 1752 (1971); Hurley v. Coughlin, No. 77 Civ. 3847, 1993 U.S. Dist. LEXIS 10381, at *21-22 (S.D.N.Y. July 29, 1993).

 Therefore, the scope of a consent judgment must "be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it." Id. at 682; see also Huertas v. East River Housing Corp., 992 F.2d 1263, 1266 (2d Cir. 1993); United States v. International Bhd. of Teamsters, 978 F.2d 68, 73 (2d Cir. 1992); United States v. O'Rourke, 943 F.2d 180, 186 (2d Cir. 1991). However, without departing from the "four corners" rule enunciated above, a court, when construing a consent decree for enforcement purposes, may look to certain aids, such as the circumstances surrounding a settlement agreement's formation, any technical meaning words used may have had to the parties, and any other documents expressly incorporated in the decree. United States v. ITT Continental Baking Co., 420 U.S. 223, 238, 43 L. Ed. 2d 148, 95 S. Ct. 926 (1975); see also Huertas, 992 F.2d at 1267. Further, an examination of "'the circumstances surrounding the order and the context in which the parties were operating'" does not violate the "four corners" rule either. Schurr, 719 F.2d 571 at 574 (quoting ITT Continental Baking Co., 420 U.S. at 243). Finally, "deference is paid to the plain meaning of the language. . .and the normal usage of the terms selected." Berger v. Heckler, 771 F.2d 1556, 1558 (2d Cir. 1985).

 Resort may be had to extrinsic evidence only if the document contains language found to be ambiguous. Schurr, 719 F.2d at 575. An "ambiguous" word or phrase has been defined as "one capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business."' Walk-In Medical Centers, Inc. v. Breuer Capital Corp., 818 F.2d 260, 263 (2d Cir. 1987) (citation omitted). The simple existence of differences in interpretation between the parties, however, does not automatically lead to a finding of ambiguity. Hunt Ltd. v. Lifschultz Fast Freight, Inc., 889 F.2d 1274, 1277 (2d Cir. 1989).

 Although a court may not "randomly expand or contract the terms agreed upon in a consent decree," E.E.O.C. v. Local 580, 925 F.2d 588, 593 (2d Cir. 1991), a court, relying upon the quasi-judicial nature of consent decrees, may resort to equitable considerations. See. e.g., Chrysler Corp. v. United States, 316 U.S. 556, 86 L. Ed. 1668, 62 S. Ct. 1146 (1942) (duration of given provision extended even though extension not provided for in decree itself). In such cases, the proper test is whether "'the [requested interpretation] serve[s] to effectuate or thwart the basic purpose of the original consent decree.'" United States v. American Cyanamid Co., 719 F.2d 558, 564 (2d Cir. 1983) (quoting Chrysler Corp., 316 U.S. at 562), cert. denied, 465 U.S. 1101, 80 L. Ed. 2d 127, 104 S. Ct. 1596 (1984).

 If a court determines that one party has violated a consent decree, it may hold that party in civil contempt where the decree is clear and unambiguous, proof of noncompliance is clear and convincing and the party charged with contempt has not been reasonably diligent or energetic in attempting to accomplish what was ordered. Local 580, 925 F.2d at 594 (citing to E.E.O.C. v. Local 28, 753 F.2d 1172, 1178 (2d Cir. 1985) aff'd, 478 U.S. 421, 92 L. Ed. 2d 344, 106 S. Ct. 3019 (1986)); see also United States v. 20th Century Fox Film Corp., 882 F.2d 656, 659 (2d Cir. 1989), cert. denied, 493 U.S. 1021, 107 L. Ed. 2d 741, 110 S. Ct. 722 (1990) (contempt occurs when a party violates specific and definite terms of a court order). Although proof of willful disobedience is not required for a contempt finding, Local 28, 753 F.2d at 1178, "an unclear order provides insufficient notice to justify a sanction as harsh as contempt." Fonar Corp. v. Deccaid Services, Inc., 983 F.2d 427, 429 (2d Cir.) (citation omitted), cert. denied, 126 L. Ed. 2d 256, 114 S. Ct. 309 (1993).

 In addition, a consent decree may be modified, but there must first be a showing of a significant change of circumstances. Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 112 S. Ct. 748, 760, 116 L. Ed. 2d 867 (1992); New York State Ass'n for Retarded Children v. Carey, 706 F.2d 956, 967 (2d Cir. 1983), cert. denied, 464 U.S. 915, 78 L. Ed. 2d 257, 104 S. Ct. 277 (1983). Once this standard has been met, the court must then decide whether the proposed modification is suitably tailored to the new conditions. Rufo, 112 S. Ct. at 760.

 III.

 A.

 However, it was not until January 22, 1992, that the Board first informed plaintiffs of its belief that the Monitoring Period had expired, and that defendants had "satisfied the spirit as well as the letter of the consent judgment." (Letter from Timothy Coughlin to David Raff of 1/22/1992, at 1). *fn5" In this letter and in a second one, dated June 12, 1992, the Board told plaintiffs that they no longer had the right to review current case files or to participate in the design and presentation of annual training sessions for ALJs. (See Consent J. P 46 & Stip. P 4.) Plaintiffs, who had been continuously monitoring defendants' compliance with the Consent Decree, rejected the Board's attempt to terminate these rights, and sought mediation. The parties being unable to reach an agreement, plaintiffs filed this motion.

 Plaintiffs argue, first, that the Monitoring Period has yet to expire because "during the entire time the Consent Judgment has been in effect, the Appeal Board has not instituted any meaningful internal monitoring system to enable it to know whether it is in compliance and, if it is not, to assist it in achieving compliance" with the Consent Decree. (Pl. Mem. Supp. Mot. Contempt at 17.) Therefore, according to plaintiffs, that condition which was to mark the beginning of the Monitoring Period has not been met. (See Stip. P 1(a) (three year period to begin to run "upon the date defendants have in place the filing and case selection system necessary to afford plaintiffs' counsel proper review under paragraphs 41, 42 and 43 of the Consent Judgment".)

 But the court cannot agree that the Monitoring Period has not yet begun for failure to implement an internal monitoring system. Since the signing of the Consent Judgment in 1983, defendants have had a system enabling plaintiffs' counsel to review up to 600 current case files per year, and a like number of class member case files. It is the court's understanding that this system was designed precisely to enable plaintiffs to monitor defendants' performance, and, given the number of Consent Decree violations that plaintiffs have alleged in their papers, this system appears to be serving its purpose quite adequately.

 Moreover, if plaintiffs' claim is that the Monitoring Period cannot begin until defendants have implemented the computer-based monitoring system proposed by plaintiffs in their papers, *fn6" then the court rejects this claim as well. By necessity, the Consent Decree represented a compromise, an expression of mutual assent given the relative bargaining strengths of the two sides, and not a wish-list for all that one or the other side would like. See Armour & Co., 402 U.S. at 681. Plaintiffs negotiated for and obtained an internal monitoring system that provided for the opportunity to review up to 600 case files per year, and they have failed to persuade the court that the system in place is so deficient or that circumstances have changed such that modification of the Consent Decree is warranted. See New York State Ass'n for Retarded Children, 706 F.2d at 969.

 Alternatively, plaintiffs argue that defendants' refusal to extend the Monitoring Period was unreasonable. They claim that the numerous Consent Decree violations they allege render unreasonable any attempt to terminate the Monitoring Period at this time and also that defendants could not reasonably refuse to extend the Monitoring Period because a final, remedial order has not been issued resolving another litigation, Dunn v. New York State Department of Labor, 474 F. Supp. 269 (S.D.N.Y. 1979) (Duffy, J.), in which plaintiffs had earlier intervened. *fn7" According to plaintiffs, "because of the specific references [in the Stipulation] to the interrelationship between Dunn and [this action], a primary factor in evaluating any request for an extension of monitoring and training participation" is whether the Dunn litigation has been resolved. (Pl. Mem. Supp. Mot. Contempt at 21.)

 The court, however, finds plaintiffs' claim unsupported by the text of the Stipulation. The Stipulation mentions the Dunn litigation three times, in two "Whereas" clauses and in P 7. *fn8" The WHEREAS clauses merely describe the Dunn litigation and plaintiffs' interest in it, but do nothing to link Dunn to any provision of the Consent Decree, let alone to the continuation of the Monitoring Period. Paragraph 7 establishes such a linkage, but only with respect to the time periods provided in Consent Judgment PP 57-60 -- covering review of the checklists themselves -- not to plaintiffs' right to review case files as provided in Consent Judgment P 47.

 Plaintiffs seek to admit parol evidence, but the language of Stipulation P 1(c) is not ambiguous. Therefore, the evidence, even though consisting of statements made by Jules Pagano, defendants' chief Consent Decree negotiator and a former Executive Secretary of the Board, cannot be admitted. See Schurr, 719 F.2d at 575. The text of the Stipulation simply lacks any support for plaintiffs' claim that the continuation of the Dunn litigation in and of itself would affect the Monitoring Period. Plaintiffs explicitly linked the Dunn litigation to the checklist review period, but failed to do so for the Monitoring Period. If both Pagano and Raff had intended to link the Monitoring Period directly to the Dunn litigation, then Stipulation P 1(a) could have been drafted as specifically as was Stipulation P 7.

 B.

 The court must also determine whether plaintiffs have shown that defendants have violated the Consent Decree, and, if so, whether the Monitoring Period should be extended. Before turning to plaintiffs' specific allegations, however, it is important to note that, although denominated a "three year review period," the Monitoring Period was not keyed simply to the passage of time. The Stipulation provided that the Monitoring Period did not automatically terminate at the end of three years, but rather, at such time, the parties were required to "discuss the need for an extension of the review period and the time period of such extension." (Stip. P 1(c).) Accordingly, the parties had an obligation to discuss whether it would be unreasonable not to extend the Monitoring Period for some further period.

 As shown by their January 22 and June 12, 1992 letters, defendants undertook no discussions, and instead simply invited plaintiffs to challenge the views expressed in them. The court is not aware that defendants even invited mediation, let alone initiated discussions, with respect to any of their other obligations co-extensive with the Monitoring Period. Yet, defendants now claim that, since 1988, they have not been required to comply with any of these obligations. In so acting, defendants necessarily bear the risk that their determination was incorrect.

 As discussed below, the court does not believe that defendants could have reasonably refused to extend the Monitoring Period either in 1988 or today. Therefore, at a minimum, defendants cannot avail themselves of the defense that these obligations under the Consent Decree have already expired. Instead, their compliance must be measured continuously, from 1983 through the filing of this motion.

 C.

 Turning now to their specific allegations, plaintiffs' claim that defendants have violated those provisions covering the training of ALJs and Board legal staff members. (See Consent J. PP 44-48 & Stip. PP 3-4.) The Consent Judgment obligated defendants to conduct training programs for newly hired ALJs, legal staff members and other relevant personnel of the Board. Defendants were required to create the Training Advisory Committee (which was to include a representative of plaintiffs) (the "Committee"), which would then establish "a curriculum and training program" designed to teach participants about how "the terms of this consent judgment and how ...


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