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McKenna v. Dinapoli

United States District Court, E.D. New York

December 15, 2017

THOMAS P. DINAPOLI, individually and in his official capacity as the COMPTROLLER OF THE STATE OF NEW YORK, and as administrative head of the NEW YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM, and THOMAS NITIDO, individually and in his official capacity as DEPUTY COMPTROLLER OF THE STATE OF NEW YORK, Defendants.

          McKenna & Schneier Counsel for Plaintiff Patrick M. McKenna, Esq.

          Michael A. Levy Esq. Counsel for Plaintiff

          Eric T. Schneiderman Attorney General of the State of New York Counsel for Defendants Patricia M. Hingerton, Esq.


          Denis R. Hurley, United States District Judge.

         Plaintiff Patrick M. McKenna (“Plaintiff”) commenced this action pursuant to 42 U.S.C. § 1983 against New York State Comptroller Thomas DiNapoli (“DiNapoli”), Deputy Comptroller Thomas Nitido (“Nitido”) (collectively “Defendants”) and the New York State and Local Employees' Retirement System (“ERS”)[1] alleging violation of his rights under the due process and equal protection clauses of the Fourteenth Amendment. Plaintiff also asserted state law claims for tortious interference with contract and intentional infliction of emotional distress. By Order dated December 22, 2016 (the “2016 Order”), the Court dismissed all claims for monetary relief against DiNapoli and Nitido in their official capacity, as well as the claims for substantive and procedural due process; the equal protections claim was dismissed with leave to re-plead. An amended complaint was filed and Defendants have moved to dismiss it for failure to state a claim. For the reasons set forth below, the motion is granted.


         The following allegations are taken from the amended complaint (“AC”).

         Plaintiff first became a participant in the ERS on May 5, 1987 by virtue of his appointment as a part-time village attorney with the Incorporated Village of Malverne. He resigned from that position in April 1991 and ceased to be an active participant member. (AC ¶ 9.) Following his appointment as a part-time attorney for the Nassau County Bridge Authority (“NCBA”) on August 10, 1999 he again became a participant in the ERS until he retired from that position in January 2013. (Id. at ¶¶ 10, 79-85.) During the period April 2000 to April 2011, Plaintiff also served as part-time village attorney for the Incorporated Village of Valley Stream and was a participant member of the ERS by virtue of that employment. (Id. at ¶ 11.) Plaintiff's employment as part time attorney by the NCBA and the two villages was “processed and certified” by the Nassau County Civil Service Commission (“NCCSC”). (Id. at ¶ 14.) As a result McKenna “was entitled to, and did enroll as a member of the ERS” and “received fractional retirement service credit for each year of his approximately 14 years as a part-time attorney with the NCBA.” (Id. at ¶¶ 15-16.)

         In a letter dated September 14, 2010, the ERS advised Plaintiff that although the NCBA reported him to ERS as an employee, “in fact he was an independent contractor” in that part-time position and would therefore “lose approximately 2.3 years of service at the NCBA going back to 1999, but . . . would continue as a Tier 4 member and his date of membership in the ERS would remain as of May 5, 1987.” (AC ¶ 18.) In accordance with applicable law, Plaintiff requested a “hearing and redetermination.” (Id. at ¶ 19.)

         The hearing was held in 2012 “before a hearing officer exclusively designated and approved by the Defendants.” (AC ¶ 19.) Plaintiff called five witnesses; ERS did not call any witnesses and offered only the September 14, 2010 letter as an exhibit. (Id. ¶ 22.) “[O]n or about October 27, 2012, the hearing officer reported Recommended Findings and Conclusions ex parte to the [D]efendants.” The recommendations were accepted by Defendants who then “made a final determination that [Plaintiff's] service credit from August 10, 1999 to the present [at NCBA] was denied.” Plaintiff was served by certified mail on January 7, 2013 with a copy of the “Final Determination and Decision of the hearing officer.” (Id. at ¶¶ 22-24.)

         On May 3, 2013, Plaintiff commenced an article 78 proceeding which was thereafter transferred to the Supreme Court, Appellate Division, Third Department. (AC ¶ 25.) By correspondence dated August 5, 2014, the respondents in that action informed the court they would not be submitting an opposition brief because “we have concluded that the determination under review in this proceeding is not supported by substantial evidence” and agree “that annulment of the determination would be appropriate.” (Id. at ¶ 27.) By Memorandum and Judgment dated February 11, 2015, the Appellate Division annulled the Determination, stating “respondents now concede that the determination was not supported by substantial evidence. We agree . . . and accordingly annul.” (Id. at ¶ 28 (citing McKenna v. DiNapoli, 125 A.D.3d 1081, 999 N.Y.S.2d 777, 778 (3d Dept. 2015).)

         Plaintiff alleges that he “was deprived of his full monthly pension entitlement” for approximately two years, from November 13, 2013 through the latter part of 2015 when it was fully restored. (AC ¶ 29).

         It is alleged that the actions against Plaintiff were the result of “ a selective and discretionary administrative program” embarked upon by DiNapoli in 2008 under the “guise of correcting fraudulent errors in the record of the retirement system” that was “designed to diminish and impair the pension benefits of targeted part-time professionals holding valid civil service titles by declaring them ‘independent contractors' rather than ‘employees' . . . .” (AC ¶¶ 17, 64.) “Without any legislative changes to the state retirement or civil service laws, and without any changes to the applicable regulations, [DiNapoli] selectively and arbitrarily decided in early 2008 to retroactively purge part-time professionals (primarily attorneys) who were employed by participating public employers, and who held validly approved part-time exempt class civil service titles subject to payroll and withholding. He targeted only select professionals who worked for special districts and school districts. He did not apply the same administrative standards to the myriad other part-time civil servants who were members of the ERS.” To implement this new policy, “defendants developed and utilized a list of 23, mostly subjective, factors (rather than the 11 factors previously used in 1999) purportedly to assist the ERS in determining whether an employer-employee relationship exists.” (Id. ¶ 68.) The use of this new worksheet was “subjective, arbitrary and capricious” as evidenced by Defendants having “never adopted a scoring matrix” and not assigned “relative weights” to each of the 23 factors “so that one could objectively determine what combination of factors were needed in order to establish employee status.” (Id. ¶¶ 69-71.) “[T]he use of the subjective factors with unmeasurable scoring criteria allowed the defendants to arbitrarily adopt any finding they chose in a given case. Two individuals could score identically on each of the 23 factors and one could be declared an employee while the other could be declared an independent contractor. One individual could be deemed an employee based on only one factor, while another individual could score 22 out of 23 as an employee and still be deemed not to be an employee.” (Id. ¶ 103.) “[A]s part of the ‘corrupt political culture in Albany” Defendants “selectively applied different standards to politically connected individuals similarly situated to [Plaintiff], ” including eight named individuals who were part-time attorneys for various municipal entities, consisting mostly of school boards, and who “upon information and belief . . . would have scored identically to the Plaintiff on defendants' retroactively imposed list of 23 factors, yet unlike Plaintiff” never had their retirement service credit entitlements challenged by the Defendants. (Id. ...

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