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Pondolfino v. New York State and Local Retirement System

October 7, 2010

JOSEPH T. PONDOLFINO, JR., PLAINTIFF,
v.
NEW YORK STATE AND LOCAL RETIREMENT SYSTEM; THOMAS P. DINAPOLI, COMPTROLLER OF THE STATE OF NEW YORK; KEVIN F. MURRAY, DEPUTY COMPTROLLER OF THE STATE OF NEW YORK, DEFENDANTS.



MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Presently before the Court is Plaintiff's motion for a preliminary injunction ("PI") and temporary restraining order (Dkt. No. 5), and Defendants' cross-motion to dismiss the Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(2) (Dkt. No. 6). Plaintiff, formerly an attorney for New York State public school districts and municipal employers, has named in his action the New York State and Local Employees' Retirement System, Thomas D. Dinapoli,Comptroller of the State of New York and Kevin F. Murray, Deputy Comptroller of the State of New York. Id. at 1. The sole claim at issue, brought under § 1983, alleges that Defendants deprived Plaintiff of his Fourteenth Amendment right to due process of law, which, absent injunction relief, will cause him irreparable harm.

II. BACKGROUND

Beginning in July 1989, Plaintiff was appointed and paid an annual salary to act as school attorney by the Oneonta School Board on the behalf of the Oneonta City School District (OCSD). Compl. at 3. The District provided Plaintiff the opportunity to enroll in the New York State Employees' Retirement System ("ERS" or "System"). Id. at 3. Thereafter, Plaintiff worked for the OCSD as a School Attorney through and including the 2003 school year. In 2003, Plaintiff entered retirement and began to draw benefits from ERS in an annual amount of approximately $168.58 per month. Id.

In December 2009, the ERS sent a letter informing Plaintiff of a proposed determination that Plaintiff was an independent contractor, rather than an employee of OCDS, and therefore his enrollment in the ERS was invalid, and Plaintiff was ineligible for a retirement benefit. Compl., Ex. L. This letter states that it reflects only a "proposed determination," and adds that Plaintiff had an opportunity to provide "documentation or information that support a finding that you were an employee." Id. Plaintiff replied to the December 2009 letter from the ERS by sending the ERS three letters, dated December 21, 2009, December 22, 2009, and January 15, 2010. Compl., Ex. M.

The ERS sent a letter to Plaintiff dated March 17, 2010, which stated that the ERS had determined that Plaintiff was an independent contractor for OCSD, and not an employee of the OCSD, and therefore Plaintiff was "receiving pension benefits to which you [the plaintiff] are not entitled." Compl., Ex. N. The letter also stated that the recovery amount that should be returned to ERS was $5,949.22. Id.

The March letter stated that "[t]he above constitutes the Agency's determination in this matter. § 74 of the Retirement and Social Security Law provides you or your counsel may serve a written demand for a hearing and redetermination of this determination." Id. Furthermore, the letter explains that if a written demand was served on the ERS, "we will schedule and hold an administrative hearing before rendering a final determination," and that [n]o action will be taken to remove reported salary and credited service and suspend your benefit until either (1) the expiration of the time to request a hearing, or (2) a final determination has been rendered following a hearing, or (3) you advise in writing that you do not intend to contest this determination." Id. The letter explains that, if a hearing is requested, Plaintiff will bear the burden of proof that he does qualify as an employee. Id. The parties stipulated that the RSSL § 74(d) hearing on this matter would be postponed following the Motion for a temporary restraining order. Dkt. No. 11.

Plaintiff's suit arises from administrative actions taken by Defendants to determine the eligibility of Plaintiff for membership in ERS; these actions culminated when ERS summarily terminated Plaintiff's membership in August 2008. Id. No pre-deprivation hearing was held in relation to this determination. Id. Subsequently, Plaintiff's status as a member and pension beneficiary in the ERS was reinstated in a letter dated September 10, 2009. This action followed a decision in Supreme Court, Albany County declaring the procedure used by the ERS in summarily stripping individuals of their retirement benefits violative of the Fourteenth Amendment of the United States Constitution. D'Agostino v. DiNapoli, 24 Misc.3d 1090 (Sup. Ct. Albany Co. 2009).

Plaintiff alleges that "[t]he Defendants are acting to deprive Plaintiff of pension benefits earned from his employment as school attorney for the Oneonta City School District ("OCSD"), Oneonta, New York, by retroactive application of new regulations and policies impairing his contractual right, without providing pre-deprivation due process, an opportunity for meaningful post-deprivation due process, and by delaying the administrative action sought to be taken against the Plaintiff for such a period of time as to constitute a violation of his due process rights." Compl. at 1. As stated above, the New York Supreme Court found that Defendants' suspension of the retirement benefits of Albert D'Agostino, a similarly situated person, prior to a hearing and failure to provide adequate notice of the basis for that suspension, violated the constitutional guarantee of procedural due process. Plaintiff alleges in his lawsuit that he has suffered, inter alia, irreparable harm as a result of the Defendant's due process and contract clause violations. On this basis, Plaintiff seeks declaratory relief and an injunction preventing the "Defendants from continuing to act to abridge the Plaintiff's constitutionally protected property rights," as well as costs and disbursements, such as attorneys' fees and expenses. Compl. at 19. Plaintiff does not seek damages. Defendants moved the Court to dismiss or stay Plaintiff's action on July 26, 2010, arguing in the main that his claims are unripe, his claims are precluded under the doctrines of res judicata and collateral estoppel, and that his claims are without merit. See generally, Response (Dkt. No. 16).

II. DISCUSSION

1. Ripeness

The primary basis on which Defendants move for dismissal is their contention that Plaintiff's § 1983 claim lacks the requisite ripeness of maturity of facts for judicial resolution at this time. Defendants' argument rests on the doctrine of prudential ripeness. Response at 13. That is, while Plaintiff's claim satisfies the requirement of a "concrete dispute affecting cognizable current concerns of the parties sufficient to satisfy standing and constitutional ripeness," Ehrenfeld v. Mahfouz, 489 F.3d 542, 546 (2d. Cir. 2007), the Court is urged to dismiss or stay Plaintiff's action because its present adjucation would, nevertheless, be premature.*fn1 "Prudential ripeness is, then, a tool that courts may use to enhance the accuracy of their decisions and to avoid becoming embroiled in adjudications that may later turn out to be unnecessary . . ." Simmonds v. INS, 326 F.3d 351, 357 (2d Cir 2003). Both constitutional and prudential ripeness are addressed to this concern of maturity but are not coextensive. Instead, constitutional ripeness "has as its source the Case or Controversy Clause of Article III of the Constitution, and hence goes, in a fundamental way, to the existence of jurisdiction." In contrast, prudential ripeness "is a more flexible doctrine of judicial prudence, and constitutes an important exception to the usual rule that where jurisdiction exists a federal court must exercise it." Id. A court may evaluate "both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration," Abbott Labs. v. Gardner, 387 U.S. 136, overruled on other grounds by Califano v. Sanders, 430 U.S. 99, 105 (1977) in deciding whether, in prudential ripeness grounds, a "case will be better decided later and that the parties will not have constitutional rights undermined by the delay." Simmonds, 326 F.3d at 357 (emphasis in original).

A court's consideration of this manner of ripeness is governed by a two-step inquiry. See N.Y. Civil Liberties Union v. Grandeau, 528 F.3d 122, 131 (2d Cir. 2008). First, there is a fitness analysis to determine "whether the issues sought to be adjudicated are contingent on future events or may never occur." Simmonds, 326 F.3d at 259 (quotations and citation omitted). The second inquiry concerns the possible hardship to the parties resulting from withholding judicial resolution, and thus requires a court to consider "whether the challenged action creates a direct and immediate dilemma for the parties . . ." beyond the "mere possibility of future injury without the prospect of causing "present detriment." Id. at 360 (quotation and citation omitted).

Defendants argue that essential facts are undeveloped at this stage in the process "because (1) Plaintiff's receipt of retirement benefits is the subject of an ongoing review being conducted by the Retirement System, (2) Plaintiff has yet to participate in a hearing pursuant to RSSL § 74(d), (3) the Retirement System has yet to issue a final determination, (4) Plaintiff continues to receive retirement benefits, and (5) Plaintiff will continue to receive retirement benefits at least until he exhausts his administrative remedies." Response at 13. Defendants argue that the Plaintiff's § 1983 claims are not fit for review because the Plaintiff "continues to receive retirement benefits and has not yet suffered any legally cognizable injury." Id. at 17. Additionally, ...


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