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United States District Court, S.D. New York

March 29, 2004.

NIDIA BARCIA, et al., Plaintiffs -against- LOUIS SITKIN, et al., Defendants; MUNICIPAL LABOR COMMITTEE, et al., Plaintiffs -against- LOUIS SITKIN, et al., Defendants

The opinion of the court was delivered by: ROBERT CARTER, Senior District Judge


Defendants seek a stay of the court's order of June 10, 2003 (Barcia v. Sitkin, 2003 WL 21345555 (S.D.N.Y. 2003) (Carter, J.), pursuant to Rules 62(c) and (d), F.R.Civ.P., pending their appeal to the United States Court of Appeals for the Second Circuit.


  This case dates back to 1979 and concerns a 20-year-old consent decree, familiarity with which is assumed. The plaintiff class of unemployment insurance claimants originally brought suit challenging the procedures of defendants, the New York State Unemployment Insurance Appeal Board ("The Board"). The Consent Decree entered into by the parties provided for a list of procedural safeguards to be implemented by the Board.

  The court in Barcia v. Sitkin, 2003 WL 21345555 (S.D.N.Y. June 10, 2003) (Carter, J.) ordered the following relief: 1) the Board was enjoined from sending any reopening notices that failed to provide specific reasons for reopening;*fn1 2) the Board was ordered to turn over to plaintiffs any "draft" checklists or information about changes made to final checklists;*fn2 and 3) the Board was ordered to produce a random sample for Page 2 the 450 cases that were previously (but insufficiently) reviewed.*fn3 The court also made a finding that the Board was not in substantial compliance with the Consent Decree.*fn4 By way of remedy, the court did not order defendants to adopt plaintiffs' proposed amelioration plan because this was a drastic step and defendants had shown recent good faith efforts towards compliance. Instead, the court allowed defendants to come up with their own remedial plan as follows: "Defendants are ordered to produce a report and plan within 90 days, which at the very least should include (1) an analysis of compliance with all provisions of its own former plans; (2) a new plan; (3) a comprehensive system for tracking compliance with the provisions of the new plan; and (4) a system of tracking the level of compliance with the Decree." Barcia, 2003 WL 21345555 at *7. Page 3


  A district court will consider the following factors when determining whether to grant a stay of an injunction pending appeal: (1) whether the movant will suffer irreparable injury absent a stay;*fn5 (2) whether a party will suffer substantial injury if the stay is granted; (3) whether the movant has established a substantial possibility, which need not be a likelihood, of success on appeal; and (4) the public interest. United States v. Private Sanitation Indus. Ass'n of Nassau/Suffolk. Inc., 44 F.3d 1082, 1084 (2d Cir. 1995). The burden of establishing a favorable balance of these factors is a heavy one and more commonly stay requests will be denied for not meeting the standard. 11 Charles A. Wright & Arthur R. Miller, Fed. Prac. & Proc. Civ.2d § 2904.


  Defendants contest the scope of the court's June 10, 2003 Order ("Order"). They argue that requiring the Board to expend resources when relief may be modified or limited on appeal will cause unnecessary and substantial injury to the Board and the public it serves. The Board will need to spend resources on a new computerized or manual system that will identify which cases require reopening, and on preparing notices for each case identified. This, it is argued, will divert "progressively dwindling" Page 4 resources at a time when its caseload is substantially expanding due to recent increased unemployment in the last few years.*fn6 (Defs.' Mem. at 12.) Defendants argue that requiring maintenance of "draft" checklists will require additional programming resources and will increase the time in which current cases are processed. All of this will require substantial assistance from the Labor Department and the Board's computer technology staff, who are currently engaged in a "major modernization project" that might be jeopardized by any diversion of resources.*fn7 (Defs.' Mem. at 14.)

  Defendants, however, do not offer any evidence of the financial, administrative, or personnel burden they claim.*fn8 Even if they had offered such evidence, their brief only purports to show "substantial injury" rather than "irreparable injury." Plaintiffs point out and defendants do not counter that the relief ordered will not divert the attention of hearing and appeal ALJs from processing current cases, because the work required will be performed by Board management and support staff from the New York Department of Labor. Developing adequate notices of reopening will not be burdensome, particularly if the Board utilizes sample notices provided by plaintiffs. Nor should providing plaintiffs Page 5 with "draft" checklists for purposes of tracking any alterations to the checklists be unduly burdensome or hamper the current claims process.*fn9 Defendants kept and provided plaintiffs with such "drafts" for 15 years before computerization, and assured plaintiffs and the court that providing the drafts would continue. (Pls.' Mem. at 9.) Undoubtedly there will be some additional burden and expense imposed by the court-ordered relief. But such additional burden and expense do not normally justify a denial of fundamental due process rights. Fuentes v. Shevin, 407 U.S. 67, 92 n. 22 (1972); Goldberg v. Kelly, 397 U.S. 254, 265-266 (1970); Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 392 (1992) (regarding modification of consent decree). Furthermore, in this case any burden imposed by the court's Order has not been shown to be "irreparable."


  Defendants contend a stay of injunctive relief will not substantially injure the plaintiffs because the Board will continue to comply with all other provisions of the Consent Decree that are not on appeal; and that granting a stay will save resources for both parties.

  However, a stay will substantially injure members of the plaintiff class. After 20 years of litigation the Board is still not in substantial compliance with the Consent Judgment, a fact that belies any claim that there is no ongoing injury to the plaintiff class. See supra note 4. Defendants' own data reveals that the existing plan does not work: for example, from 1991 through 2001 the violation rate remained around 29%; the remedy Page 6 rate was far short of the Board's goal; the 2001 violation and remedy rates were significantly higher than in 1998; and there is no evidence that these rates were appreciably reduced in 2003 or will be absent a new plan. (Pls. Mem. at 10-11.) The Board's recent caseload increases, used by defendants to support their argument with respect to dwindling resources, makes a stronger case for the view that now even more claimants will be denied due process under the current system.


  "[T]ribunals may properly stay their own orders when they have ruled on an admittedly difficult legal question and when the equities of the case suggest that the status quo should be maintained." Goldstein v. Miller, 488 F. Supp. 156, 172 (D.C.Md. 1980). See also Caravel Corp. v. Eisenberg, 1988 WL 120135 at *2 (S.D.N.Y. Oct. 31, 1988).

  Defendants contend that "admittedly difficult legal question[s]" present in this case and ripe for Appellate review are whether New York State National Organization of Women v. Pataki, 261 F.3d 156 (2d Cir. 2001) ("NOW") requires an end to court-ordered monitoring of a state agency by plaintiffs' private law firm; and whether the principles of federalism and comity, newly-strengthened by recent decisions of the U.S. Supreme Court,*fn10 require modification of the Consent Decree.*fn11 Page 7

  However, as the court found in Barcia v. Sitkin, 2003 WL 21345555 at *3 (S.D.N.Y. June 10, 2003), these decisions, which may mark an attitudinal shift in the Supreme Court, do not go so far as to change the law applicable to this case. Furthermore, the NOW decision is distinct from this case and may not be persuasive on appeal. The NOW court concluded that because alternative procedures — in that case Article 78 proceedings — were available to plaintiffs, it could not be said that all remedies had been exhausted, and thus no violation of due process could be found. In this case, "neither Article 78 nor any other proceeding will avail unemployment insurance claimants." (Pls.' Mem. at 6.) Furthermore, whereas NOW was primarily concerned with reducing the huge backlog of cases before the New York State Division of Human Rights, here the fundamental due process rights of present and future claimants before the Board is primarily at issue.*fn12 This is a standard enforcement case that does not involve unique, untested, or complex legal issues. The Board agreed by Consent Decree to provide basic due process during its hearings and the plaintiff class has a right to see it enforced.*fn13 Defendants fail to show a substantial possibility of success on appeal. Page 8


  Defendants assert that a stay is in the public interest because it will conform to the principles of federalism and comity, and because it will halt injunctive relief that will significantly burden a state agency. Principles of federalism and comity, however, are not part of the analysis of whether to modify a consent decree; rather, they come into play only after a court has determined that a modification is warranted. Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 392, n. 14 (1992). Furthermore, as discussed above, defendants did not submit evidence to support their view that the injunctive relief will significantly burden the Board or impact the work of its ALJs. The court, therefore, finds the public interest will be better served by a denial of the stay.


  The motion for a stay is denied, except in so far as the retroactive relief to which plaintiffs have not objected for purposes of this stay is concerned. Defendants have not met their heavy burden of establishing that the balance of the equities tilts in their favor. There is no evidence that the injunctive relief ordered will significantly burden the Board. This is particularly so considering that plaintiffs have dropped an objection they could have made to a stay of retroactive relief, thus substantially reducing the overall burden imposed upon the Board. Even if a significant burden had been shown, there is no proof or even allegation that defendants will suffer "irreparable injury" if a stay is not granted. Page 9 In contrast, a substantial burden upon the plaintiff class is evident from violation rate statistics and the court's previous findings of significant due process violations. At stake here are the due process rights of unemployment insurance claimants. Given the protracted 20-year history of this case and the longstanding failure to substantially comply with the Consent Decree,*fn14 enforcement of the court's Order is the best way to serve the public interest. A substantial possibility of success on appeal has not been shown, and to the extent any possibility of success exists, the other three factors weigh in favor of denying the stay.*fn15

  Defendants have 90 days from the date of this opinion to implement the relief ordered by the court's June 10, 2003 opinion, notwithstanding the above-mentioned retroactive relief which shall be stayed pending appeal. Page 10


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