employer, in promoting the efficiency of the public services it performs, outweighs the interest of the employee, as a citizen, in commenting upon matters of public concern.
The defendants also argue that the speech at issue in this case was not constitutionally protected because it was not speech concerning a matter of public concern. Rather, the defendant characterize the speech as limited to the plaintiff's complaints about her personal job evaluation. The Second Amended Complaint, however, alleges that the plaintiff was terminated because she protested that the defendants, allegedly in violation of their responsibilities and at potentially great risk to the City, failed to perform responsibly their duty to assess objectively and professionally the state of the City's finances. These are clearly critical issues of public concern. See Patrick, 953 F.2d at 1247-48; Patteson, 787 F.2d 1245, 1248; C.V. Rao, 905 F. Supp. at 1242-45.
Therefore, the defendants' motion to dismiss the plaintiff's First Amendment claims is denied.
The defendants also move to dismiss the plaintiff's Fourteenth Amendment claims. The defendants argue that Fry has no liberty or property interest in her employment because it was "at-will." Because Fry has no liberty or property interest in her employment, according to the defendants, she can be terminated without being provided with a pre-termination hearing. In response, Fry claims that New York Civil Service Law § 75 provides her with a property interest protected by the Due Process Clause.
"When a government employee is found to have a 'property interest' in continuation of his or her employment, the Due Process Clause of the Fourteenth Amendment forbids discharge unless the employee is afforded a pre-termination hearing." O'Neill v. City of Auburn, 23 F.3d 685, 688 (2d Cir. 1994) (citing Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 84 L. Ed. 2d 494, 105 S. Ct. 1487 (1985) and Board of Regents v. Roth, 408 U.S. 564, 33 L. Ed. 2d 548, 92 S. Ct. 2701 (1972)); See also Dwyer, 777 F.2d at 831. "Property interests in employment are not created by the Constitution, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law . . .." O'Neill, 23 F.3d at 688 (quoting Loudermill, 470 U.S. at 538 and Roth, 408 U.S. at 577) (internal quotation marks omitted).
Fry argues that her property right arises under state law, specifically Civil Service Law § 75-b, which prohibits public employers from retaliating against a public employee because the employee reports wrongdoing to a public agency. See N.Y. Civil Service Law § 75-b. However, Fry has cited no case in which a court found that section 75-b created a property interest recognized by the Fourteenth Amendment.
Section 75-b is not the type of state law that provides employees with a protected property interest. Only those laws which create "an enforceable expectation of continued public employment" create such a property interest. Dwyer, 777 F.2d at 829; see also Wright v. Cayan, 817 F.2d 999, 1002 (2d Cir.), cert. denied, 484 U.S. 853, 98 L. Ed. 2d 112, 108 S. Ct. 157 (1987). For example under Civil Service Law § 75(1)(a) a person holding a position by permanent appointment may not be removed except for incompetency or misconduct. Because this statute alters the usual rule that employment in New York State is at-will, by allowing dismissal only for cause, it provides covered employees with an enforceable property interest. O'Neill, 23 F.3d at 688; Dwyer, 777 F.2d at 829.
In contrast, Civil Service Law § 75-b does not alter the employment relationship for a class of employees, but instead provides all employees with protection from being retaliated against because they report governmental misconduct. Thus, while section 75-b provides a cause of action for an employee improperly fired, it does not provide that employee with a property right, because it does not alter the nature of the employment relationship. Fry was an at-will employee, and therefore has no property interest protectable under the Fourteenth Amendment for which she was entitled to a pre-termination hearing.
Fry argues that even if she has no protected property interest in continued employment, the defendants besmirched her good name and stigmatized her by stating that she was fired because of her inability to get along with her co-workers. Fry argues that this is sufficient to entitle her to a name-clearing hearing.
"It is now commonplace that [a person] may have a liberty interest in [her] good name, and if [her] reputation is besmirched by government action, [she] may be entitled to a name-clearing hearing." Kelly Kare Ltd. v. O'Rourke, 930 F.2d 170, 177 (2d Cir.), cert. denied, 502 U.S. 907, 116 L. Ed. 2d 244, 112 S. Ct. 300 (1991) (citing Wisconsin v. Constantineau, 400 U.S. 433, 437-39, 27 L. Ed. 2d 515, 91 S. Ct. 507 (1971)); see also Roth, 408 U.S. at 571. However, "not every derogatory statement made about an employee who loses [her] job imposes sufficient stigma to implicate the liberty interest and require a name clearing hearing." O'Neill, 23 F.3d at 691. The statements must "'call into question the plaintiff's good name, reputation, honor, or integrity.'" Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 446 (2d Cir. 1980) (quoting Constantineau, 400 U.S. at 437).
In this case, Fry only alleges that the defendants publicly stated, and caused to be published, that she was unable to get along with others in her office. It is statements that strike at the heart of an employee's professional competence that entitle that employee to a name-clearing hearing. See O'Neill, 23 F.3d 685, 692; see also Esposito v. Metro-North Commuter Railroad Company, 856 F. Supp. 799, 804 (S.D.N.Y. 1994). The statement that Fry could not get along with her co-workers does not strike at the heart of her professional competence.
In O'Neill, the Court of Appeals for the Second Circuit held that statements that an employee had poor relationships with other agencies, even when coupled with public allegations that the employee's work was not "up to par" and was "sloppy" did not create sufficient stigma to require a name clearing hearing. O'Neill, 23 F.3d at 692. Therefore, statements that Fry did not get along with her co-workers or superiors, by themselves, are clearly insufficient to require the defendants to provide Fry with a name-clearing hearing.
In regard to Fry's state law claims, the defendants assert that her claims under Civil Service Law § 75-b must be dismissed because causes of action under that provision can only be maintained against the State itself, not individual state employees. Section 75-b allows suits against "public employers" which the statute defines to include:
(i) the state of New York, (ii) a county, city, town, village or any other political subdivision or civil division of the state, (iii) a school district or any governmental entity operating a public school, college or university, (iv) a public improvement or special district, (v) a public authority, commission or public benefit corporation, or (vi) any other public corporation, agency, instrumentality or unit of government which exercises governmental power under the laws of the state.
Thus, on its face, section 75-b only provides a cause of action against government entities, not individuals, because it does not include individuals in its definition of public employer.
The only courts that have considered this question have found that individual employees may not be sued under section 75-b. Kirwin v. New York State Office of Mental Health, 665 F. Supp. 1034, 1039 (E.D.N.Y. 1987); Moore v. County of Rockland, 192 A.D.2d 1021, 1024, 596 N.Y.S.2d 908, 911 (3rd Dep't 1993). The case cited by Fry, in an attempt to demonstrate that there is disagreement between courts on this point, does not support her position. In Cucchi v. New York City Off-Track Betting Corp., 818 F. Supp. 647 (S.D.N.Y. 1993), the Court denied the defendants' motion for summary judgment because it found that a cause of action under section 75-b could be maintained even if the employee's report of misconduct was incorrect. Id. at 656. This decision to deny summary judgment was not based on a determination of whether individuals could properly be sued under section 75-b. Indeed, one of the defendants in Cucchi was a municipal corporation and the other defendants were individuals sued in their official capacities. Id. The court did not consider the issue of claims against state officials in their individual capacities. Id. In this case, the claims against the defendants in their official capacities are barred by the Eleventh Amendment. Only those claims against the defendants in their individual capacities remain. Such claims against officials in their individual capacities cannot be maintained under section 75-b and therefore are dismissed.
The defendants also move to dismiss Fry's defamation claims. "New York does not recognize a cause of action in tort for abusive or wrongful discharge of an employee . . . nor does a cause of action exist for the mere discharge of an employee." Ullmann, v. Norma Kamali, Inc., 207 A.D.2d 691, 693, 616 N.Y.S.2d 583, 584 (1st Dep't 1994) (internal citations omitted). "The mere fact of one's removal from office carries no imputation of dishonesty or lack of professional capacity." Nichols v. Item Publishers, 309 N.Y. 596, 601, 132 N.E.2d 860 (1956). "It is only when the publication contains an insinuation that the dismissal was for some misconduct that it becomes defamatory." Id.
Fry alleges that she was defamed because the defendants publicly stated that there were personal problems between Fry and other employees in her department. If such a statement was sufficient to give rise to a cause of action for defamation, any public statement by an employer about its reasons for firing an employee would constitute defamation. It is hard to imagine a more innocuous stated reason for firing an employee than the one given to Fry. Stating that there were personal problems between Fry and her co-workers casts no more aspersion on Fry than on any of her co-workers or on the defendants themselves. Finding such a statement to be defamatory would be contrary to well-established New York law. Therefore, Fry's causes of action for defamation are dismissed.
Finally, the defendants assert that Fry's causes of action for breach of contract must be dismissed because, unless otherwise provided, employment relationships in New York are at will. As a result, the defendants argue, there is no employment contract in this case that can be breached. In response, Fry asserts that there is an exception to this general right of employers to terminate employment contracts at will when the employer is motivated by a constitutionally impermissible purpose or a reason that violates a statutory proscription. See Murphy v. American Home Products Corp., 58 N.Y.2d 293, 305, 461 N.Y.S.2d 232, 237, 448 N.E.2d 86 (1983); Mulder v. Donaldson, Lufkin & Jenrette, 208 A.D.2d 301, 305, 623 N.Y.S.2d 560, 563 (1st Dep't 1995). Fry asserts that because she was fired in violation of her First Amendment rights and her ethical responsibilities, she has stated a breach of contract claim under New York law.
Employers do not have the right to fire their employees in violation of statutory or constitutional mandates. However, such violations give rise to claims under those laws or constitutional protections themselves, they do not create a separate cause of action for breach of contract under New York law. Were it otherwise, any firing in violation of a statute or constitutional mandate would also give rise to a breach of contract claim.
Fry has not cited any case in which a violation of a statute or a constitutional provision created a breach of contract action under New York law. Fry relies primarily on Wieder v. Skala, 80 N.Y.2d 628, 593 N.Y.S.2d 752, 609 N.E.2d 105 (1992), in which a law firm allegedly fired an attorney for refusing to compromise ethical rules. In Wieder, the Court of Appeals found that specific provisions of the Code of Professional Responsibility bound both the law firm and the discharged associate. Wieder, 80 N.Y.2d at 635-38, 593 N.Y.S.2d at 755-57. It was these explicit, written and codified regulations that created an implied-in-law obligation that was breached by the associate's discharge, not the violation of rights created by a statute or constitution. Id.
Fry is also incorrect in arguing that she has a breach of contract action, based on Wieder, because her firing allegedly violated ethical obligations that bound both herself and the defendants. In Wieder, the court found that a breach of contract action arose because the plaintiff's firing violated ethical standards codified in the Code of Professional Responsibility. The Court of Appeals stressed the "distinctive relationship between a law firm and a lawyer hired as an associate," Wieder, 80 N.Y.2d at 635, 593 N.Y.S.2d at 755, and stressed the "unique characteristics of the legal profession" in respect to the Disciplinary Rules at issue in that case. Wieder, 80 N.Y.2d at 637, 593 N.Y.S.2d at 756. Wieder is distinguishable from a case in which a plaintiff, like Fry, alleges that her firing violated general ethical requirements.
In fact, as the Court of Appeals explained in Wieder, Wieder leaves unchanged the rationale of its earlier decisions in Murphy and Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 514 N.Y.S.2d 209, 506 N.E.2d 919 (1987). Wieder, 80 N.Y.2d at 638, 593 N.Y.S.2d at 757. In Murphy, the plaintiff was allegedly fired for disclosure to top management of alleged accounting improprieties on the part of corporate personnel. Murphy, 58 N.Y.2d at 301, 448 N.E.2d at 89. In Sabetay, the plaintiff alleged that he was fired in violation of his company's internal ethical standards. Sabetay, 69 N.Y.2d at 335, 514 N.Y.S.2d at 212. In both cases, the New York Court of Appeals declined to find a breach of contract action based on the plaintiff's discharge in alleged violation of ethical obligations. Indeed, in Sabetay, the Court of Appeals noted that significant alterations in at-will employment relationships are best left to the Legislature rather than developing breach of contract claims. The court noted that the Legislature had in fact enacted numerous protections for at-will employees such as Civil Service Law § 75-b. Sabetay, 69 N.Y.2d at 337, 514 N.Y.S.2d at 213. The implication was clear that the circumstances giving rise to an alleged violation of such specific statutory protections did not give rise to an implied breach of contract claim.
The disclosure of the alleged improprieties in this case are far closer to the situations in Murphy and Sabetay than to Wieder. In Wieder, the disclosure and discharge was governed by the distinctive Code of Professional Responsibility that bound the law firm and the associate in that case. Here, as in Sabetay and Murphy there is no such distinctive code that can be implied in law as part of an alleged contract with Fry. Thus, Fry has not stated a breach of contract claim.
Finally, the defendants move to strike portions of the Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(f) as immaterial and impertinent. The portions of the pleading the defendants seek to strike provide background information about the political climate at the OSDC and the history of the OSDC and related offices. This motion to strike is premature. "Ordinarily neither a district court nor an appellate court should strike a portion of the complaint on the grounds that the material could not be relevant on the sterile field of the pleadings alone." Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976).
There is no reason to depart from this practice in this case. While it does appear that portions of the complaint may not be relevant and may not be admissible, those final determinations are best left to the development of discovery in this case. The defendants do not explain how they will be prejudiced by leaving the allegations in the complaint at this point. As trial approaches, this Court will be in a better position to determine whether the allegations the defendants seek to strike are material. If the defendants believe any of this material is prejudicial and should not be put before the jury, they can make an appropriate motion at that time. The motion to strike is therefore denied without prejudice.
In summary, (1) the defendants' motion to dismiss claims against McCall, based on his lack of personal involvement is denied; (2) the defendants' motion to dismiss Fry's First Amendment claims, pursuant to 42 U.S.C. § 1983, against the defendants in their individual capacities is denied; (3) the defendants' motion to dismiss Fry's First Amendment claims, pursuant to 42 U.S.C. § 1983, against the defendants in their official capacities is granted except to the extent such claims seek reinstatement; (4) all other claims against the defendants are dismissed; and (5) the defendants' motion to strike portions of the Complaint is denied without prejudice.
Dated: New York, New York
November 13, 1996
John G. Koeltl
United States District Judge