Opinion
79 Civ. 5831 (RLC), 79 Civ. 5899 (RLC)
March 29, 2004
DAVID RAFF, ROBERT L. BECKER, RAFF BECKER, LLP, New York, NY, for Plaintiffs
JUNE DUFFY STEVEN KOTON LINDA D. JOSEPH, ELIOT SPTIZER, New York, NY, for Defendants
OPINION
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.
BACKGROUND
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; 2) the Board was ordered to turn over to plaintiffs any "draft" checklists or information about changes made to final checklists; and 3) the Board was ordered to produce a random sample for the 450 cases that were previously (but insufficiently) reviewed. The court also made a finding that the Board was not in substantial compliance with the Consent Decree. 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.
The court found the Board's notices to claimants whose cases were to be reopened did not give specific reasons for reopening. As a result claimants had the virtually impossible task of trying to respond to every procedural issue the Board might consider under the checklist scheme set forth in the Decree. Furthermore, in order to cure the inadequate notices of reopening previously sent during the 1990 through 1997 reopening period, the court ordered the Board to send proper notices to those past claimants even though that meant reopening thousands of previously reopened cases at substantial cost to the government. The court found such measures necessary because claimants had a federal constitutional right to more specific notice than that provided by the Board.Barcia, 2003 WL 21345555 at *8.
Pursuant to the Decree, there was a prior history of such "checklists" being provided to the plaintiffs. The checklists are the plaintiffs' way of monitoring the Board's compliance with the Decree. Before checklists were computerized in 1998, the Board used handwritten checklists and any changes to those checklists (such as addition or removal of a violation) were provided to plaintiffs. After computerization, defendants stopped providing plaintiffs with "draft" checklists reflecting such changes. Plaintiffs argued they were entitled to see any changes made to the checklists filled out by appeal Administrative Law Judges ("ALJs"), and that the switch to computerization should not affect that right. For 15 years prior to computerization, the checklists turned over to plaintiffs consisted of the original lists prepared by reviewing ALJs plus later changes.Barcia, 2003 WL 21345555 at *9.
This issue involved defendants' performance of the terms of a 1997 Re-review Stipulation pursuant to which the Board was required to provide plaintiffs with up to 450 re-review cases for their inspection for each monitoring year. "Re-review" cases were those under review a second time due to problems with the Board's first review. Plaintiffs objected to the sample provided by the Board on the ground that it was not randomly selected. Although the 1997 Re-review Stipulation itself did not specify that the sample be "random," the court found that the Consent Decree itself was explicit that "review" cases be random, and that defendants have always been required to provide a random sampling of case files for review purposes. Barcia, 2003 WL 21345555 at *10.
The court concluded that the Board's violation rates today remain about the same as they were in 1992, and that the 1992 level was not acceptable in terms of providing "fair and impartial proceedings that conform to due process of law." The data submitted to the court by the parties revealed that procedural violations still occur in roughly one out of three cases, serious violations occur in roughly one out of four cases, and a remedy is necessary to cure violations in roughly one out of eight cases taken on appeal. Barcia, 2003 WL 21345555 at *7.
DISCUSSION
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; (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.I. IRREPARABLE INJURY TO MOVANT
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" resources at a time when its caseload is substantially expanding due to recent increased unemployment in the last few years. (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. (Defs.' Mem. at 14.)
The Board claims that staff resources are dwindling due to a new United States Department of Labor funding formula, that no increases in staff are expected, and that it does not receive supplemental funding for a substantial portion of the re-review work. (Defs.' Mem. at 13.)
Defendants also claim that the following requirements, which are either directly mandated or implied by the court's Order, are onerous and entail significant cost and administrative burden: production of a random sample of 450 re-review cases; reopening with notice some 4,300 cases from 1990 to 1997; subjecting to re-review between 10,000 and 12,000 cases from 1990 to 1993, as well as several thousand class member cases since 1998. (Defs.' Mem. at 11-15.) However, these arguments are moot for purposes of this stay motion because plaintiffs do not object to a stay of reopening past cases or producing draft checklists with respect to these past cases.
Defendants, however, do not offer any evidence of the financial, administrative, or personnel burden they claim. 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 with "draft" checklists for purposes of tracking any alterations to the checklists be unduly burdensome or hamper the current claims process. 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."
The only evidence proffered is a Declaration by Robert Lorenzo, Chief Administrative Law Judge of the Board, which merely asserts that burdens will be imposed without further documentation to suggest that a serious impact analysis was conducted.
Plaintiffs describe a simple method for saving and identifying "draft" checklists on the computer system. (Pls. Mem. at 9.)
II. SUBSTANTIAL INJURY TO A PARTY
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 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.
III. SUBSTANTIAL POSSIBILITY OF SUCCESS ON APPEAL
"[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, require modification of the Consent Decree.
Citing Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367 (1992); Agostini v. Felton 521 U.S. 203 (1997).
Defendants also argue that the Supreme Court's grant of certiorari in Frazar v. Gilbert 300 F.3d 530 (5th Cir. 2002),cert. granted by Frew v. Hawkins, 123 S.Ct. 1481 (2003) will impact this case. Defendants argue that Frazar indirectly raises the issue of whether a federal court's
42 U.S.C.A. § 1983 jurisdiction may continue over a state official as a result of a consent decree "when there has been no fault adjudicated against the state official, he has admitted no wrongdoing, and the alleged violations of the decree do not necessarily implicate federal rights;" and whether a Court can enforce a consent decree where the plaintiff cannot demonstrate an ongoing violation of a federal right but only a violation of a provision of the consent decree. (Defs.' Mem. at 8.) Frazar, however, is inapposite. Frazar held that the Eleventh Amendment bars enforcement of a consent decree against a state unless the decree seeks to enforce a federal right granted in the Constitution or a federal statute. In this case, die Consent Decree does enforce basic due process rights under the 14th Amendment and the fair hearing provisions of the Social Security Act, 42 U.S.C. § 503(aX3), which grants a private cause of action to enforce those rights.See, e.g., Shaw v. Valdez, 819 F.2d 965, 966 n. 2 (10th Cir. 1987).
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. TheNOW 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. 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. Defendants fail to show a substantial possibility of success on appeal.
Although retroactive relief is part of the court-ordered injunction, plaintiffs do not object to staying retroactive relief pending appeal. (Raff Dec. at 2-3).
The parties also dispute how the 86% of claimants who never file appeals are to be considered by the court. Relying on NOW, defendants argue that such claimants were not denied due process because they did not exhaust all remedies. The court need not address that argument to dispense with this motion, however, because the violation rates, upon which the court relied to determine that the Board had not achieved substantial compliance, were all based upon cases that had been appealed. See Barcia v. Sitkin, 2003 WL 21345555 at *6 (S.D.N.Y. June 10, 2003).
IV. PUBLIC INTEREST
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.
CONCLUSION
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. 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, 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.
In 1994 plaintiffs moved for enforcement and contempt of court for violations of the Consent Decree. The court granted the motions stating: ". . .[d]efendants have consistently ignored their obligations under the Consent Decree, and, in so doing, have sought to nullify the Decree unilaterally. . . . " Barcia v. Sitkin, 865 F. Supp. 1015, 1034 (S.D.N.Y. 1994) (Carter, J.) In 1996 plaintiffs again moved for sanctions, contempt, enforcement, modification, and a wide range of other relief; and defendants failed to file papers in opposition to those motions. The court stopped short of entering default judgment for plaintiffs because "while defendants' failure to respond to the present motion perhaps constitutes an instance of the dilatoriness of which plaintiffs complain, the court will not exact a drastic price for their lapse, since the dereliction could well be the result of apparently wholesale staff turnover in the Attorney General's office." Barcia v. Sitkin, 945 F. Supp. 539, 542 (S.D.N.Y. 1996) (Carter, J.) The court noted that the Board had a "disturbing" rate of Consent Decree violations, but the court declined to enlarge or modify the monitoring process at that time. Instead, the court held a conference and instructed the parties to work out a mutually acceptable response to plaintiffs concerns. Id. at 546. The Board devised a plan, subsequently revised in 1999, to ameliorate the problems. The parties also negotiated a series of detailed Stipulations and Orders entered between February, 1997 and July, 2001. In 2003 the parties were again at an impasse over some of the same issues from 1996, although the court noted that "after years of skirting its obligations, the Board appears to be making a sincere attempt to come to terms with its responsibilities." Barcia v. Sitkin 2003 WL 21345555 at *1 (S.D.N.Y. June 10, 2003) (Carter, J.)
"The necessary `level' or `degree' of possibility of success will vary according to the court's assessment of the other factors."Goldstein v. Miller, 488 F. Supp. 156, 172 (D.C.Md. 1980).
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. IT IS SO ORDERED.