Office of the City Clerk v. Metropolitan New York Coordinating Council on Jewish Poverty OATH Index No. 1940/12, mem. dec. (Aug.

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1 Office of the City Clerk v. Metropolitan New York Coordinating Council on Jewish Poverty OATH Index No. 1940/12, mem. dec. (Aug. 30, 2012) Respondent s motion to dismiss for untimeliness denied as the statute of limitations in the CPLR is not applicable and respondent failed to show that it was prejudiced by any delay. Respondent s motion for sanctions denied as there was a basis for petitioner s claims. Petitioner s cross-motion for summary judgment is premature. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of OFFICE OF THE CITY CLERK Petitioner -against- METROPOLITAN NEW YORK COORDINATING COUNCIL ON JEWISH POVERTY Respondent MEMORANDUM DECISION KARA J. MILLER, Administrative Law Judge Petitioner, the Office of the City Clerk, brought this civil penalty proceeding under chapter 2, title 3 of the New York City Administrative Code ( Lobbying Law ) and chapter 1, title 51 of the Rules of the City of New York ( RCNY ). Petitioner alleged that respondent, Metropolitan New York Coordinating Council of Jewish Poverty, a lobbyist as defined in subsection 3-211(a) of the Lobbying Law, failed to timely file its 2008 statement of registration due by July 10, 2008, in violation of subsection of the Lobbying Law, and failed to timely file its 2008 third, fourth, fifth, and sixth periodic reports due on July 15, 2008, September 15, 2008, November 17, 2008, and February 17, 2009, respectively, in violation of subsection 3-216(a)(2) of the Lobbying Law. Petitioner further alleged that respondent failed to pay the late fees for those filings within fourteen days from the date of the notice to cure. The City Clerk commenced this proceeding by serving respondent with a petition on May 24, 2012, seeking late filing fees in the amount of $16,645 and a civil penalty not to exceed $20,000 (ALJ Ex. 1).

2 - 2 - On June 22, 2012, respondent filed a motion to dismiss, arguing that the petition was outside the statute of limitations set forth in section 214 of the Civil Procedure Law and Rules ( CPLR ), barred by the doctrine of laches, and the claim for the civil penalty failed to state a cause of action. Respondent also moved to dismiss the claim for civil penalty, arguing that it failed to state a cause of action, and sought sanctions against petitioner for filing it on the grounds that it was a meritless claim. Petitioner filed an opposition to the motion to dismiss and a cross-motion for summary judgment on June 28, In its opposition, petitioner argued that the CPLR is inapplicable to this proceeding, and that the proceeding was timely under the appropriate statute of limitations identified in the City Administrative Procedure Act ( CAPA ). Petitioner further argued that laches did not apply because respondent (1) failed to show any prejudice by the delay, (2) has been on notice of the claims since 2009, and (3) was itself responsible for some of the delay. Petitioner also withdrew its claim for a civil penalty, but asserted that the claim had not been meritless and therefore a sanction would be inappropriate. For the reasons set forth below, respondent s motion to dismiss and for sanctions are denied. Petitioner s cross-motion for summary judgment is premature at this time. CPLR s Statute of Limitations Section 214(2) of the CPLR gives a three-year timeframe in which a plaintiff must file for an action to recover upon a liability, penalty or forfeiture created or imposed by statute. CPLR 214(2). Respondent argues that as this is a civil action to recover a penalty for a statutory violation, this time period applies and the petition is time barred. Respondent s argument is misplaced. On its face, CPLR 214(2) does not apply as courts have repeatedly stated that administrative proceedings are not actions. See, e.g., Fiedelman v. NYS Dep t of Health, 58 N.Y.2d 80, 82 (1983) ( an administrative proceeding is not an action ); IESI NY Corp. v. Martinez, 8 A.D.3d 667, 669 (2d Dep t 2004) ( An administrative proceeding is not an action, accordingly CPLR did not apply); City of New York v. District Council 37, AFSCME, AFL-CIO, 12 Misc. 3d 1162A (Sup. Ct. N.Y. Co. 2006) (same); NYS Public Employment Relations Bd. v. Martin, 78 Misc. 2d 1072, 1075 (Sup. Ct. Albany Co. 1974) ( since the said order was issued in an administrative proceeding rather than an action, the service provisions of the CPLR were inapplicable).

3 - 3 - Moreover, the application of the CPLR is limited by section 101 which defines its scope. That section states: The civil practice law and rules shall govern the procedure in civil judicial proceedings in all courts of the state and before all judges, except where the procedure is regulated by inconsistent statute. CPLR 101 (Lexis 2012) (emphasis added). Civil judicial proceeding is defined as a prosecution, other than a criminal action, of an independent application to a court for relief. CPLR 105(d) (Lexis 2012) (emphasis added). The Office of Administrative Trials and Hearings ( OATH ), where the current proceeding is being held, is not a court. Section 3 of the New York s Judiciary Law limits the use of the term court to a court of record or a court not of record, duly organized and existing under the laws of the state as a part of the judicial system of the state. Jud. Law 3 (Lexis 2012). The judiciary system of New York is independent from the executive branch of government, and the City s judges in that branch are elected and serve for periods of ten years. See N.Y. Const. Art. VI 1, 15. In contrast, OATH is a mayoral agency, part of the executive branch, and its judges are appointed and serve for a period of five years. See Charter 1048, 1049 (Lexis 2012). Accordingly, the term court cannot be applied to OATH. Thus, while the tribunal often looks to the CPLR for guidance, OATH is not bound by it. Respondent unpersuasively attempted to distinguish the cases in which we have so stated, arguing that OATH has only held that it is not bound by the CPLR in disciplinary proceedings, not proceedings to recover penalty or forfeiture by statute. OATH has made the same finding in several cases seeking penalties. For example, in Taxi and Limousine Commission v. Hussain, OATH Index No. 984/10 at 3-4 (Nov. 12, 2009), adopted, Comm r Dec. (Dec. 2, 2009), a license revocation proceeding in which the Taxi and Limousine Commission also sought a fine of $3,000 for violations of the TLC Rules, Administrative Law Judge ( ALJ ) Ingrid Addison rejected the respondent s defense based on the statute of limitations in section 214 of the CPLR, stating that such a defense was futile as the CPLR does not apply to administrative proceedings. Likewise, in Conflicts of Interest Board v. Katsorhis, OATH Index No. 1531/97, mem. dec. at 3 (June 27, 1997), adopted in part, modified in part, COIB Case No (Sept. 17, 1998), a civil penalty proceeding seeking fines pursuant to the Conflicts of Interest Law, ALJ Suzanne Christen noted that the CPLR did not apply and relied on CAPA to determine that the petition had not been unreasonably delayed. Further, in Commission on Human Rights ex rel. Bryan v. Memorial Sloan-Kettering Cancer Center, OATH Index No. 183/06 at 2-3 (July 25, 2006), adopted, Comm n Dec. & Order (Sept. 29, 2006), an administrative proceeding seeking

4 - 4 - fines for violations of the City s Human Rights Law, ALJ Kevin Casey stated: The CPLR is not binding on this administrative tribunal and only serves as a guide where no other rule is applicable. For the aforementioned reasons, I find that the three-year statute of limitations in section 214 of the CPLR does not apply and decline to dismiss the petition on that basis. The Doctrine of Laches The doctrine of laches is an equitable doctrine which bars the enforcement of a right where there has been an unreasonable and inexcusable delay that results in prejudice to a party. Skrodelis v. Norbergs, 272 A.D.2d 316, 316 (2d Dep t 2000). While generally the doctrine of laches is inapplicable to a government agency s actions when acting in a governmental capacity and the public interest, the Court of Appeals has stated that it does apply where a statute requires a hearing to be held within reasonable time. Cortlandt Nursing Home v. Axelrod, 66 N.Y.2d 169, 177 (1985). For purposes of this hearing, this requirement is found in section 1046(c) of CAPA. Charter 1046(c) (Lexis 2012) ( All parties shall be afforded an opportunity for a hearing within a reasonable time. ). This tribunal has applied CAPA s reasonableness standard to both pre-hearing and pre-commencement delays. See Conflicts of Interest Board v. Katsorhis, OATH Index No. 1531/97, mem. dec. at 6 (June 27, 1997); Dep t of Buildings v. Gelb, OATH Index No. 2155/96 at 1-2 (Mar. 3, 1997). In determining the reasonableness of an administrative delay, the Court of Appeals has instructed that the following factors should be considered: (1) the nature of the private interest allegedly compromised by the delay; (2) the actual prejudice to the private party; (3) the causal connection between the conduct of the parties and the delay; and (4) the underlying public policy advanced by governmental regulation Louis Harris & Assocs., Inc. v. deleon, 84 N.Y.2d 698, (1994); Cortlandt Nursing Home, 66 N.Y.2d at 178. In terms of actual prejudice, the Court of Appeals specified that the question is whether the private party has incurred substantial delay by reason of the delay, and that dismissal is appropriate [w]here administrative delay has significantly and irreparably handicapped a private party in mounting a defense in an adversary administrative proceeding... Cortlandt Nursing Home, 66 N.Y.2d at 180. The charges in the instant petition arise from respondent s submissions in December 2008 and May 2009 of its statement of registration and periodic reports. From May 1, 2009,

5 - 5 - through November 30, 2010, the parties engaged in various communications regarding the late filings and possible late penalties (Affirm. Eckl 9; Affirm. Goldfeder, dated June 20, 2012, 12-13; Affirm. Marcus 14, 16). On December 2, 2010, petitioner sent respondent a notice to cure, informing respondent that it was subject to late fees due to its late filings, demanding payment of those fees within fourteen days, and warning that failure to pay those fees within the given timeframe may subject respondent to a civil penalty up to $20,000 (Affirm. Goldfeder, dated June 20, 2012, Ex. A; Pet. Ex. G). The first petition was filed at OATH on January 11, 2011 (Affirm. Goldfeder, dated June 20, 2012, Ex. B) and a hearing was scheduled for February 9, 2011 (Affirm. Eckl 14). The hearing was adjourned, withdrawn and restored to the OATH calendar on several occasions at the request of both parties, each time on consent from the other. In some cases, even when the hearing was initially delayed by adjournment requests by petitioner, further delay was occasioned due to respondent s unavailability for a hearing. The current petition was filed on May 24, The proceeding is currently scheduled for conference on September 19, Respondent asserts that the delay between its 2008 filings and petitioner s submission of its third petition was unreasonable. Respondent contends that the delay has been prejudicial as Ilene Marcus, respondent s chief of staff, and her colleagues can no longer recall specific dates or specific details regarding its lobbying efforts in 2008, or the events relating to them. Respondent maintains that such evidence is necessary for its case to show mitigating circumstances, and accordingly the petition should be dismissed. New York Courts, however, have rejected assertions of prejudice due to witnesses lack of memory where the party was put on notice of the substance of claims prior to the initiation of a hearing, and failed to take diligent steps to preserve evidence and testimony. See Louis Harris & Associates, Inc., 84 N.Y.2d at 705 (claim of prejudice due to Commission s six year delay in referring a complaint for a hearing was undermined where employer had received complaint two months after the alleged discrimination and failed to preserve evidence and testimony); Bd. of Education v. Donaldson, 41 A.D.3d 1138, (3d Dep t 2007) (complaint from Human Rights Division put employer on notice of claims at which point there was sufficient opportunity to take diligent steps to document and preserve evidence, accordingly a witness s memory lapse due to ten year delay in bringing the hearing was insufficient to demonstrate substantial prejudice); Elmira Business Institute, Inc. v. NYS Dep t of Education, 116 A.D.2d 133, 137 (3d Dep t 1986) (prejudice not shown where preliminary audit reports put petitioner on

6 - 6 - notice of the substance to all objections to its program); Joralemon Realty Co. LLC v. NYS Division of Housing & Community Renewal, 2008 NY Slip Op 52508U at *4 (Sup. Ct. Kings Co. 2008) (delay not shown to create significant prejudice where petitioner was aware, or with due diligence should have been aware, that an administrative review was pending); see also Anonymous v. NYS Dep t of Health, 85 A.D.3d 468, 468 (1st Dep t 2011) (prejudice not shown by witnesses lack of memory where more than half the time prior to the issuance of formal charges was taken up by negotiations between the parties). Here, the parties were engaged in negotiations relating to the late filings from May 2009 through November 2010 and, shortly thereafter, petitioner notified respondent that it was seeking late filing penalties and submitted its first petition with this tribunal. These circumstances put respondent on notice of the substance of the current charges. Accordingly, respondent should have taken diligent steps to preserve evidence and testimony. Moreover, respondent has failed to show substantial prejudice as it has not demonstrated that Ms. Marcus or her colleagues recollections of specific dates and specific details of the 2008 lobbying efforts are material to this dispute. See Giffone v. DeBuono, 263 A.D.2d 713, (3d Dep t 1999) (defendant s claim to prejudice due to destroyed documents unpersuasive as they would have been only minimally helpful to his defense); Moss v. Chassin, 209 A.D.2d 889, 890 (3d Dep t 1994) (lost documents and witness not significant prejudice because they would have had minimal impact on the hearing). At issue in this case is whether or not respondents 2008 statement of registration and third, fourth, fifth, and sixth periodic reports were filed on time. It is undisputed that respondent filed its 2008 statement of registration on December 8, 2008, and its 2008 third, fourth, fifth, and sixth periodic reports on May 1, 2009 (Affirm. Goldfeder, dated June 20, 2012, Exs. C, F). Thus, testimony from Ms. Marcus or her colleagues on this point is unnecessary. While arguably their generalized testimony regarding their filings may be relevant to setting forth mitigation, compare Office of City Clerk v. Constantinople & Vallone Consulting, LLC, OATH Index Nos. 325/12 & 348/12 at 10 (July 9, 2012), adopted, City Clerk Dec. (July 24, 2012) (noting possibility that mitigation could be considered) with Office of the City Clerk v. Urban Justice Ctr., OATH Index No. 873/10 at 4 (Jan. 6, 2010), aff d, 85 A.D.3d 691 (1st Dep t 2011) (finding mitigation not applicable to late fees), specific dates and details on respondent s lobbying efforts would have minimal impact in terms of mitigation. Further, Ms. Marcus affidavit suggests that she has a sufficient recollection of the matter to testify about the causes of respondent s filing delays. See Goldsmith v. DeBuono, 245 A.D.2d

7 , 631 (3d Dep t 1997) (though petitioner could not recall specific dates and details, memory loss not significant enough to show prejudice because petitioner able to testify with fair specificity); Dep t of Correction v. Caligiuri, OATH Index No. 293/89 at 18 (Sept. 29, 1989) (though witnesses recollections were somewhat limited due to the passage of time, substantial prejudice not shown where they had some memory of the event); Dep t of Correction v. Robinson, OATH Index No. 350/88 at 4 (Dec. 29, 1988) (no prejudice where, though respondent was unable to recall specific details, he was able to provide a coherent summary of the events at issue). Any factual issue in this regard would need to be more fully developed at trial, rendering dismissal at this time inappropriate. See Dep t of Buildings v. Sarabella, OATH Index Nos. 2258/00 & 2259/00 at 4 (July 2, 2001) (factual issues relating to the nature of prejudice caused by delay needed to be developed at trial). In addition to its failure to establish substantial prejudice, the fact that respondent was partially responsible for the delays in bringing this proceeding, as indicated above, also weighs against it. See, e.g., Dep t of Correction v. Clayton, OATH Index No. 1067/03 at 2-3 (Dec. 31, 2003) (dismissal on laches grounds inappropriate where delay was partially due to respondent s adjournment requests and respondent did not demonstrate substantial prejudice). Accordingly, respondent s motion to dismiss due to laches is denied. Sanctions Section 1-13 of this tribunal s rules requires attorneys appearing here to conduct themselves in accordance with the canons, ethical considerations and disciplinary rules set forth in the code of professional responsibility. 48 RCNY 1-13(d) (2012). The willful failure to do so may, in the discretion of the administrative law judge, be cause for the imposition of sanctions which can range from admonishment to dismissal of the charges. 48 RCNY 1-13(e). Respondent alleges that petitioner has violated the New York Rules of Professional Conduct by making a meritless claim. Pursuant to rule 3.1 a lawyer may not knowingly advance a claim or defense that is unwarranted under existing law, except that the lawyer may advance such claim or defense if it can be supported by good faith argument for an extension, modification, or reversal of existing law. 22 NYCRR , Rule 3.1(b)(1) (Lexis 2012). 1 1 Respondent relied on Disciplinary Rule 7-102(A)(2) of the New York Code of Professional Responsibility. The New York Code of Professional Responsibility was repealed in 2009, and replaced with the New York Rules of Professional Conduct. Rule 3.1 of the New York Rules of Professional Conduct contains identical language to that in Disciplinary Rule 7-102(A)(2).

8 - 8 - Respondent asserts that petitioner s request for a civil penalty not to exceed $20,000 has no basis in law because such a penalty is only available under the Lobbying Law where a lobbyist fails to make a filing within 14 days of receiving a notice to cure and it is uncontested that respondent filed the reports at issue prior to receiving a notice to cure. Respondent maintains that petitioner was aware its claim for a civil penalty was unwarranted because respondent had pointed out the deficiencies after receiving the first and second petitions. Thus, it argues, petitioner has violated the rules of conduct and should be sanctioned. Petitioner maintains that sanctions are not appropriate because section 3-223(d) of the Lobbying Law permits it to seek a civil penalty. Specifically, rule 1-03(a)(2) states that it is a violation of the Lobbying Law to fail to pay a penalty in a stated period of time. 51 RCNY 1-03(a)(2). Rule 1-03(b)(1)(v) permits the City Clerk to impose a fine not to exceed $20,000 for rule violations not punishable by section 3-223(a), (b), or (c) of the Lobbying Law. Violations of rule 1-03(a)(2) are not punishable under section 3-223(a), (b), or (c) of the Lobbying Law. 51 RCNY 1-03(b)(1)(v). In this case, petitioner sent respondent a notice to cure on December 2, 2010, directing respondent to pay $30,035 in late fees and informing respondent that its failure to do so within 14 days from the date of the notice may result in a civil penalty not to exceed $20,000 (Pet. Ex. G). Thus, because respondent did not pay its late fees within 14 days of the notice to cure, petitioner contends it is subject to the additional civil penalty under the Lobbying Law. As illustrated by petitioner s response, respondent s motion for sanctions appears based on a misunderstanding of what the petition alleges. The petition seeks a civil penalty for respondent s failure to pay fines within 14 days of the notice to cure, not for its failure to file reports within that time period. While I question whether petitioner s demand for payment prior to a hearing complies with due process, there is nonetheless a basis in rule 1-03 for petitioner s claim for a civil penalty due to respondent s failure to pay within the stated period of time. Accordingly, I decline to impose sanctions on petitioner. Summary Judgment Petitioner moved for summary judgment, arguing that there is no evidence respondent could submit that would contradict that respondent was: (1) a lobbyist; (2) exceeded the $2,000 threshold for combined compensation and expenses for lobbying in 2008; (3) was required to file a statement of registration and periodic reports on the statutory mandated filing deadlines; (4)

9 - 9 - failed to file the statement of registration and periodic reports by the filing deadlines; and (5) is subject to a late filing penalty of $10 per day for each day each filing was late prior to December 8, 2008, and $25 per day for each day each filing was late subsequent to December 8, 2008 (Pet. Mem. at 19). Following petitioner s motion, the City Clerk adopted a decision issued by Administrative Law Judge ( ALJ ) Kevin Casey which found that rule 1-03(b)(1)(iv), was ultra vires as the late penalties it establishes do not comply with the schedule established by the New York Temporary State Commission on Lobbying, or any successor thereto as required by section 3-223(c) of the Administrative Code. Office of City Clerk v. Constantinople & Vallone Consulting, LLC, OATH Index Nos. 325/12 & 348/12 (July 9, 2012), adopted, City Clerk Dec. (July 24, 2012). Neither party has addressed this decision in their submissions or submitted a copy of the schedule established by the New York Temporary State Commission on Lobbying. Further, in Constantinople ALJ Casey suggested that it may be appropriate to consider mitigating factors when setting late fees. OATH Index Nos. 325/12 & 348/12 at 10. The parties should have an opportunity to address this issue as well, which may lead to an issue of fact that would preclude summary judgment. Accordingly, I find that petitioner s motion for summary judgment is premature. For the foregoing reasons, respondent s motions to dismiss and for sanctions is denied, and petitioner s cross-motion for summary judgment is premature. Petitioner is granted leave to renew its summary judgment motion. August 30, 2012 Kara J. Miller Administrative Law Judge APPEARANCES: JAMIE LYNN ECKL, ESQ. Attorney for Petitioners STROOK & STROOK & LAVAN, LLP Attorneys for Respondent BY: JERRY H. GOLDFEDER, ESQ.