Summary
noting that newsletter, newspaper articles and other media coverage “of the plaintiff's protected activities ... cannot be defined as hearsay under Rule 801(c) because the plaintiff h not cited them to prove the truth of the statements they contain”
Summary of this case from Adams v. City of N.Y.Opinion
00 Civ. 1122 (LAK)(JCF).
September 15, 2004
REPORT AND RECOMMENDATION
TO THE HONORABLE LEWIS A. KAPLAN, U.S.D.J.:
The plaintiff Housing Works, Inc. ("Housing Works"), a notfor-profit corporation advocating on behalf of homeless persons with HIV and AIDS, has brought these actions under 42 U.S.C. § 1983 against the City of New York (the "City") and several city officials, including, among others, former Mayor Rudolph Giuliani, former Deputy Mayor Randy Mastro, former Chief Contract Procurement Officer ("CCPO") Beth Kaswan, and the former Commissioners of the Human Resources Administration ("HRA"), the HRA's Division of AIDS Service and Income Support ("DASIS"), and the Department of Health ("DOH"). Housing Works alleges that these defendants caused several of its city and state contracts to be terminated in retaliation for its exercise of its First Amendment rights. Housing Works also alleges that the defendants treated it differently from other similarly situated contractors in violation of the Equal Protection Clause.
All defendants have moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, and they have moved to strike certain evidentiary submissions made by the plaintiff. For the reasons discussed below, I recommend that the defendants' summary judgment motion be granted in part and denied in part. I recommend that the defendants' motion to strike be denied.
Background
The facts underlying the plaintiff's actions are set forth in substantial part in an earlier decision by the Honorable Victor Marrero, U.S.D.J., granting in part and denying in part the defendants' motion to dismiss. Housing Works, Inc. v. Turner, 179 F. Supp. 2d 177, 183-93 (S.D.N.Y. 2001). Only the facts most relevant to the instant motions are recited below, and additional facts are discussed as relevant to the analysis of the defendants' motion.
A. The Parties
Housing Works is a not-for-profit organization whose mission is to provide services and advocacy for homeless persons with AIDS and HIV. (Amended Complaint, No. 00 Civ. 3561 ("Giuliani Am. Compl."), ¶ 27). Among the various services provided by Housing Works are: (1) a program to provide independent housing and supportive services in "scattered site" apartments throughout New York City, (2) two residential facilities providing housing and on-site supportive services, (3) intake services providing initial assessment and case management, (4) adult day treatment centers providing AIDS-related health care, and (5) job training and placement programs. (Giuliani Am. Compl., ¶ 36). The plaintiff receives a variety of city, state, and federal contracts to fund these programs.
The defendants are the City of New York and various city officials, all of whom have left the positions they held during the periods relevant to these actions. The individual defendants, grouped into relevant categories, are: (1) Mayor Giuliani, Deputy Mayor Mastro, his former Chief of Staff Lou-Ellen Barkan, and Ms. Kaswan, collectively, "the Mayoral Defendants," (2) HRA Commissioner Lillian Barrios-Paoli, her successor Jason Turner, HRA's Contracting Officer Richard Bonamarte, and HRA's Acting General Counsel Jack McKay, collectively, the "HRA Defendants," (3) DASIS Commissioner (and HRA Deputy Commissioner) Gregory Caldwell and DASIS's Director of Contract Services John Dereszewski, collectively, the "DASIS Defendants," and (4) former DOH Commissioner Neal Cohen, DOH's Contracting Officer Mitchell Netburn, and Mr. Netburn's successor James Capoziello, collectively, the "DOH Defendants."
The defendants have asserted that Mr. McKay is not a party to these actions because he was never served, and that Mr. Netburn was dismissed by a prior ruling of this Court. (Defendants' Memorandum of Law ("Def. Memo.") at 11 nn. 5-6). The docket sheet indicates that an affidavit of service was filed for Mr. McKay, although the plaintiff's submissions on this motion make no mention of this defendant. In the absence of additional evidence, Mr. McKay should remain in the case. With respect to Mr. Netburn, Judge Marrero's ruling on the defendants' motion to dismiss also granted the plaintiff's motion to amend its complaint to add allegations against Mr. Netburn. Housing Works, 179 F. Supp. 2d at 222. As the plaintiff did amend its complaint accordingly (Giuliani Am. Compl., ¶ 162), Mr. Netburn remains a party in these actions.
B. Housing Works' Protected Activities
The plaintiff was a vocal opponent of the City's AIDS-related policies during the entirety of Mayor Giuliani's administration. In 1994-95, Housing Works organized a number of public demonstrations to oppose the administration's plans to dismantle HRA's Division of AIDS Services (or "DAS"), the predecessor to DASIS. (Giuliani Am. Compl., ¶ 40). Many of these protests specifically targeted Mayor Giuliani and his Deputy Mayor for Community Relations, Fran Reiter. (Giuliani Am. Compl., ¶¶ 48-51). On December 1 of every year, Housing Works organized a "World AIDS Day" rally. (Declaration of Charles King dated Nov. 25, 2003 ("King Decl."), attached to Declaration of Matthew D. Brinckerhoff in Opposition to Defendants' Motion for Summary Judgment dated Nov. 25, 2003, ¶¶ 64, 87). Housing Works' protests continued in 1996, focusing on efforts to establish DASIS by law. (King Decl., ¶¶ 102-03). It challenged, in particular, procedures for determining the eligibility for AIDS-related services and the City's alleged violation of the Open Meetings Law. (King Decl., ¶¶ 95, 98).
From March to September 1997, Housing Works did not organize any public demonstrations. (King Decl., ¶ 107). However, as its dispute with the City over contracting intensified, it again protested on October 22 and 29, 1997 against the City's withholding of contract funds. (King Decl., ¶¶ 131, 140; Giuliani Am. Compl., ¶¶ 43, 123-24). In 1998, Housing Works successfully challenged the City's denial of a permit to organize a vigil on World AIDS Day. (King Decl., ¶¶ 182-83). The vigil was held on December 1, 1998. (King Decl., ¶ 183).
Aside from demonstrations, Housing Works also filed a number of lawsuits against the City. (Giuliani Am. Compl., ¶ 47). It filedHenrietta v. Giuliani in February 1995 to challenge the City's cutbacks in HIV and AIDS services. Mixon v. Grinker was filed prior to the Giuliani administration but prosecuted thereafter, and it alleged a failure to provide medically appropriate housing for homeless people with HIV and AIDS. Hernandez v. Barrios-Paoli was filed in August 1997 to challenge eligibility review procedures under Local Law No. 49. Housing Works, Inc. v. Safir was filed in July 1998 to challenge the City's denial of a permit for the plaintiff's World AIDS Day vigil. (King Decl., ¶ 182). The state-court predecessor to one of the instant actions,Housing Works, Inc. v. Giuliani, was filed in November 1997. (Giuliani Am. Compl., ¶ 128).
Finally, Housing Works has published a weekly newsletter entitled "AIDS Issues Update" since 1995 (King Decl., ¶ 67), and it has attended City Council hearings concerning a variety of issues, including DASIS restructuring and eligibility procedures for AIDS-related services. (King Decl., ¶¶ 102-03).
C. Housing Works' Financial Crisis
In 1995-96, Housing Works encountered fiscal difficulties and was unable to make timely rent payments to several of its "scattered site" landlords. (Pl. 56.1(b) Statement, ¶¶ 31-32; Def. 56.1 Statement, ¶¶ 105-07). Upon discovering the problem in 1996, HRA ordered an audit for Fiscal Years 1992-94, and the City's Department of Investigation ("DOI") conducted an audit covering the first half of FY 1996. (Pl. 56.1(b) Statement, ¶¶ 36-37; Def. 56.1 Statement, ¶ 154). The DOI issued a memorandum dated June 24, 1996, recommending a comprehensive audit and possible replacement of Housing Works as a vendor. (Pl. 56.1(b) Statement, ¶ 37; Def. 56.1 Statement, ¶¶ 157, 161). Housing Works proposed a corrective action plan to HRA, under which it would hire an accounting firm to revamp its fiscal tracking and accounting systems. (Pl. 56.1(b) Statement, ¶ 34; Def. 56.1 Statement, ¶ 145).
In January 1997, Mr. Caldwell was appointed as the new Commissioner of DASIS. (Pl. 56.1(b) Statement, ¶ 176; Def. 56.1 Statement, ¶ 195). He and Mr. Dereszewski ordered a second audit of Housing Works for FY 1995-96 and the first half of FY 1997, after which the auditor concluded that Housing Works owed substantial sums to the HRA. (Pl. 56.1(b) Statement, ¶¶ 185, 359; Def. 56.1 Statement, ¶¶ 199, 224). The DOI also conducted a second audit and eventually issued a second memorandum dated March 17, 1998. (Pl. 56.1(b) Statement, ¶¶ 382-83; Def. 56.1 Statement, ¶¶ 326, 345). The 1998 DOI memorandum reported that Housing Works could not account for all of its city funds, and that a full reconstruction of its books would be necessary. (Def. Exh. 125).
D. The Contract Dispute
In June 1997, one of Housing Works' HRA contracts, the "scattered site contract," came to term and was subject to renewal negotiations. (Pl. 56.1(b) Statement, ¶ 236; Def. 56.1 Statement, ¶ 52). In June and July 1997, the plaintiff also negotiated the terms of a new operating contract with HRA for two residential facilities on 9th Street in Manhattan and in East New York. (Pl. 56.1(b) Statement, ¶¶ 282-84; Def. 56.1 Statement, ¶¶ 62-63).
In the spring and summer of 1997, the plaintiff negotiated two new contracts with the DOH: one to provide intake services and another to provide day treatment services under a subcontract with the Medical and Health Research Association ("the MHRA"). (Pl. 56.1(b) Statement, ¶¶ 269, 277; Def. 56.1 Statement, ¶¶ 105-07). The intake contract was executed in August or September 1997. (Pl. 56.1(b) Statement, ¶ 271; Def. 56.1 Statement, ¶ 311).
On October 16, 1997, the plaintiff filed a Notice of Claim with the City, alleging that it had not received reimbursements on its scattered site contract. (Giuliani Am. Compl., ¶ 115). On October 22 and 29, 1997, Housing Works organized public demonstrations to protest the City's withholding of contract funds. (Giuliani Am. Compl., ¶¶ 43, 123-24). On October 22, 1997, the City issued a press release, stating that the "HRA could not renew the Housing Works scattered site contract which expired on June 30, 1997 or enter into new contracts." (Def. Exh. 121). Subsequently, the plaintiff's two DOH contracts were withdrawn from the City Comptroller's office.
In June 1998, the HRA's Contracting Officer, Mr. Bonamarte, issued a finding of "non-responsibility" with respect to Housing Works (Def. Exh. 127), and in July 1998, Mr. Capoziello issued a similar finding on behalf of the DOH (Def. Exh. 132). The appeals of the HRA and DOH findings were decided by HRA's Acting General Counsel, Mr. McKay (Def. Exh. 130), and DOH Commissioner Mr. Cohen (Def. Exh. 134) in September 1998 and February 1999 respectively, and a further appeal was taken to Mayor Giuliani by the plaintiff.
In October 1998, the plaintiff responded to RFP's issued by the New York State Department of Labor ("NYSDOL") and the New York State Department of Health ("NYSDOH") to provide job training services through the state's Welfare-to-Work Initiative. A letter of certification signed by HRA Commissioner Turner was included in the application. (Def. Exh. 136). Subsequently, in February 1999, Commissioner Turner withdrew his letter of certification (Def. Exh. 137), and Housing Works was denied the NYSDOL/NYSDOH contract.
Discussion
A. Motion to Strike
The defendants have moved to strike certain submissions and evidence relied on by the plaintiff — namely, (1) the Declaration of Charles King, Executive Director of Housing Works, (2) Plaintiff's Exhibits 1 and 2, (3) the "Fran Hates Them" memo (Pl. Exh. 12), (4) the testimony of Hector Cruz (Pl. Exh. 78), (5) the plaintiff's Rule 56.1(b) Statement, and (6) a prior ruling of this Court issuing a preliminary injunction in a related action, Housing Works, Inc. v. City of New York, 72 F. Supp. 2d 402 (S.D.N.Y. 1999). These arguments will be considered in turn.
This document reflects the written notes taken by Ms. Barkan, Chief of Staff to Deputy Mayor Mastro, during a conversation with David Klasfeld, who formerly worked for Deputy Mayor Fran Reiter. In her notes, Ms. Barkan wrote, "Housing Works (Fran Hates Them)," directly above a reference to "ACT Up" and "AIDS Advocacy." (Pl. Exh. 12).
The defendants refer to this witness as "Umberto Cruz," while the plaintiff cites the name as "Hector Cruz." A review of the testimony suggests that the plaintiff's reference is correct, as the witness refers to another person named "Umberto Cruz" as having attended a meeting with Commissioner Turner and other state officials. (Pl. Exh. 78 at 287).
Rule 56 of the Federal Rules of Civil Procedures requires that in a summary judgment motion, "[s]upporting and opposing affidavits shall be made on personal knowledge, [and] shall set forth such facts as would be admissible in evidence[.]" Under Rule 802 of the Federal Rules of Evidence, hearsay is inadmissible unless an exception is specified by rule or statute.
The defendants first assert that Mr. King's declaration is not based on personal knowledge, as it describes events at which he was not present, relies on media coverage to prove facts, and attributes motives to others; the defendants also assert that the declaration contains hearsay. (Memorandum of Law in Support of Defendants' Motion to Strike ("Def. Mot. Strike Memo.") at 1-2; Reply Declaration of John P. Woods in Support of Defendants' Motion for Summary Judgment and Motion to Strike dated January 9, 2004 ("Woods Reply Decl."), ¶¶ 8-12). To the extent that the declaration is not based on personal knowledge or contains hearsay, I have disregarded those faulty portions. Accordingly, the defendants' motion should be denied as moot. Zavatsky v. Anderson, No. 00 Civ. 844, 2004 WL 936170, at *5 n. 4 (D. Conn. March 9, 2004).
The defendants next challenge on grounds of hearsay Plaintiff's Exhibits 1 and 2, which contain, respectively, a compilation of Housing Works' weekly newsletter, "AIDS Issues Update," and a collection of newspaper articles and other media coverage of the plaintiff's protected activities. These materials cannot be defined as hearsay under Rule 801(c) because the plaintiff have not cited them to prove the truth of the statements they contain; to the extent they have been cited for that purpose, I have ignored them.
The defendants also contend that these materials cannot be used to show knowledge of the plaintiff's protected activities on the part of individual defendants, and they argue that much of the material submitted is irrelevant because it makes no mention of Housing Works. (Def. Mot. Strike Memo. at 3). As discussed below, however, the plaintiff has supported its contentions as to knowledge with independent evidence, such as the handwritten notes of Ms. Kaswan created the day before the plaintiff's October 22, 1997 demonstration. (Pl. Exhs. 10, 11). To the extent that the "Updates" have been used to demonstrate knowledge of the plaintiff's activities, they have been supported by deposition testimony specifically indicating the defendants' knowledge of them. (Pl. Exh. 55 (Barrios-Paoli Dep.) at 41-42). Finally, these materials are relevant not only on the issue of knowledge, but also in providing background information pertinent to the underlying events in this case. See United States v. Pedroza, 750 F.2d 187 (2d Cir. 1984) (out-of-court statements properly admitted as background, where they are offered "not as proof of the truth of the matters asserted but rather to show the circumstances surrounding the events"). Accordingly, the defendants' motion is denied as to Plaintiff's Exhibits 1 and 2.
Similarly, the "Fran Hates Them" memo written by Ms. Barkan cannot be stricken on grounds of hearsay. The plaintiff has not offered this evidence to prove that former Deputy Mayor Reiter actually hated Housing Works — a contention for which Housing Works has offered other evidence, such as deposition testimony attesting to Ms. Reiter's reaction to Housing Works' protests (Pl. Exh. 49 (Klasfeld Dep.) at 119-21, 122; Pl. Exh. 60 (Johnson Dep.) at 97-99; Pl. Exh. 62 (Fisher Dep.) at 128-30, 132, 134) — but rather to show that Ms. Barkan may have had knowledge of Ms. Reiter's feelings towards Housing Works. In this regard, the memo merely serves as evidence that Ms. Barkan was told by Mr. David Klasfeld, who formerly worked for Ms. Reiter, that Ms. Reiter hated Housing Works. See United States v. Bellomo, 176 F.3d 580, 587 (2d Cir. 1999) (testimony regarding conversation between witness and third party is not hearsay, where witness merely recounted "the communication of words he heard and gestures he saw").
The defendants also seek to strike the prior sworn testimony of Hector Cruz at a November 9, 1999 hearing in a related action.See Housing Works, Inc. v. City of New York, 72 F. Supp. 2d 402, 415 (S.D.N.Y. 1999). The defendants appear to contend that Mr. Cruz's testimony would be inadmissible at trial as deposition testimony under Rule 32(a) or as an exception to hearsay. (Def. Mot. Strike Memo. at 4-5). However, Mr. Cruz's testimony is admissible because he is expected to testify at trial. (Plaintiff's Memorandum of Law in Opposition to Defendants' Motion to Strike ("Pl. Mot. Strike Memo.") at 5). While Rule 56(e) requires that summary judgment materials be supported by "such facts as would be admissible in evidence," the submissions need not be in a "form that would be admissible at trial,"Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (emphasis added). As with affidavits, a prior hearing transcript may not be in a form that is admissible, but the underlying testimony of Mr. Cruz will be admissible and may be considered here. See Azrielli v. Cohen Law Offices, 21 F.3d 512, 517 (2d Cir. 1994) ("In considering a motion for summary judgment, the district court may rely on `any material that would be admissible or usable at trial.'") (quoting 10A Charles Alan Wright Arthur R. Miller, Federal Practice and Procedure § 2721 (2d ed. 1983)).
The defendants challenge Housing Works' submission of two documents pursuant to Local Rule 56.1: its "Counter-Statement Pursuant to Local Rule 56.1(b)" and its "Response to Defendants' Statement Pursuant to Local Rule 56.1(c)." The defendants' principal contention appears to be that the 56.1(b) statement ignores, and therefore fails to refute, many of the defendants' facts, and that the 56.1(c) statement also fails to refute those facts because it merely cites to the 56.1(b) statement. (Def. Mot. Strike Memo. at 5-6). The defendants also suggest that the 56.1 statement "inflate[s] or misrepresent[s]" the evidence. (Def. Mot. Strike Memo. at 7-8).
Local Rule 56.1(b) requires that a party opposing a motion for summary judgment submit a "short and concise statement of the material facts as to which it is contended that there exists a genuine issue to be tried." Local Rule 56.1(c) states that all material facts set forth by the moving party "will be deemed to be admitted" unless controverted by the opposing party's 56.1(b) statement. While the plaintiff was only required to file one statement under Rule 56.1(b), its 56.1(c) statement was obviously intended to ensure that reference was made to each fact set forth by the defendants, and thereby avoid such facts to be "deemed" admitted under Rule 56.1(c). To the extent that the plaintiff's 56.1(b) statement has "ignored," "inflated," or "misrepresented" the defendants' facts, it has been disregarded.
Finally, the defendants argue that a prior ruling issued inHousing Works, Inc. v. City of New York, 72 F. Supp. 2d 402 (S.D.N.Y. 1999), should be disregarded because it merely related to preliminary injunctive relief. However, the plaintiff has not argued, nor has this Court held, that that ruling should have issue-preclusive or estoppel effect on the instant actions. (Pl. Mot. Strike Memo. at 7-8). There is no reason to disregard that ruling as persuasive authority for these cases.
For the foregoing reasons, the defendants' motion to strike should be denied in its entirety.
B. Motion for Summary Judgment
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Marvel Characters, Inc. v. Simon, 310 F.3d 280, 285-86 (2d Cir. 2002); accord Andy Warhol Foundation for the Visual Arts, Inc. v. Federal Insurance Co., 189 F.3d 208, 214 (2d Cir. 1999). The moving party bears the initial burden of demonstrating "the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. Where the moving party meets that burden, the opposing party must come forward with "specific facts showing that there is a genuine issue for trial," Fed.R.Civ.P. 56(e), by "a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322.
In assessing the record to determine whether there is a genuine issue of material fact, the court must resolve all ambiguities and draw all factual inferences in favor of the nonmoving party.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986);Vann v. City of New York, 72 F.3d 1040, 1048-49 (2d Cir. 1995). But the court must inquire whether "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party," Anderson, 477 U.S. at 249 (citation omitted), and grant summary judgment where the nonmovant's evidence is conclusory, speculative, or not significantly probative. Id. at 249-50. "The litigant opposing summary judgment may not rest upon mere conclusory allegations or denials, but must bring forward some affirmative indication that his version of relevant events is not fanciful." Podell v. Citicorp Diners Club, Inc., 112 F.3d 98, 101 (2d Cir. 1997) (internal quotations and citations omitted); accord Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) (a nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts");Goenaga v. March of Dimes Birth Defects Foundation, 51 F.3d 14, 18 (2d Cir. 1995) (nonmovant "may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible"). In sum, if the court determines that "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587 (quoting First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289 (1968)).
The defendants have moved for summary judgment with respect to the plaintiff's claims under the First Amendment and Equal Protection Clause of the United States Constitution. They assert that: (1) the plaintiff's speech did not constitute a "matter of public concern," (2) the defendants' alleged retaliation was not causally related to the plaintiff's speech, (3) even if the plaintiff can show causation, the defendants have an affirmative defense under the Mt. Healthy and Pickering tests, (4) the plaintiff cannot establish that the defendants intentionally treated it differently from other contractors, that the other contractors were similarly situated, or that the defendants acted with illicit motives or without a rational basis, (5) the plaintiff's allegations are insufficient to establish the personal involvement of the individual defendants, (6) the individual defendants are entitled to qualified immunity, (7) the plaintiff cannot establish municipal liability under 42 U.S.C. § 1983, and (8) the plaintiff's damages claims are precluded as a matter of law. (Def. Memo. at 14-74).
The defendants appear to contend that the plaintiff's claims under the New York State Constitution, Art. I, §§ 8, 9, and 11, the New York City Charter, and the Rules of the Procurement Policy Board ("PPB"), have been dismissed. (Def. 56.1 Statement, ¶ 23). However, in his prior ruling, Judge Marrero dismissed the New York Constitution claims only insofar as they sought monetary damages; these claims remain with respect to claims for declaratory or injunctive relief. Housing Works, 179 F. Supp. 2d at 208 n. 33. Judge Marrero did not dismiss the plaintiff's claims under the New York City Charter or the PPB Rules. Id. at 221-22.
During the parties' oral arguments on August 9, 2004, the defendants also asserted as a ground for summary judgment their counterclaim for breach of contract. (Tr. at 3-4). However, they raised this issue only in paragraphs 374-78 at their 852-paragraph Rule 56.1 Statement (Tr. at 25), and it was not mentioned in the defendants' Notice of Motion or Memorandum of Law. The Notice of Motion states only that the defendants will seek an order "dismissing [the plaintiff's] complaints in their entirety." (Notice of Motion for Summary Judgment at 2). Accordingly, this ground will not be considered.
1. First Amendment Claim
To prevail on a claim of retaliation for First Amendment activity, a plaintiff must prove that the conduct at issue was constitutionally protected, and that it was a "substantial or motivating factor" in the adverse action. Board of County Commissioners, Wabaunsee County, Kansas v. Umbehr, 518 U.S. 668, 675 (1996). If the plaintiff discharges that burden, "the government can escape liability by showing that it would have taken the same action even in the absence of the protected conduct."Id. (citing Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 287 (1977)). Moreover, even if the adverse action was taken because of the protected conduct, it may still be justified if "legitimate countervailing government interests are sufficiently strong" to outweigh the plaintiff's interest in engaging in the protected conduct. Id. at 675-76 (citing Pickering v. Board of Education, 391 U.S. 563, 568 (1968)).
a. "Matter of Public Concern"
To be entitled to constitutional protection, the plaintiff must show that its activities related to a "matter of public concern."Umbehr, 518 U.S. at 675; (citing Connick v. Myers, 461 U.S. 138, 145-48 (1983)). Whether an individual's speech is of public concern is determined by the "content, form, and context of a given statement, as revealed by the whole record." Connick, 461 U.S. at 147-48. The Court should focus on the "motive" of the speaker and determine "whether the speech was calculated to redress personal grievances or whether it had a broader public purpose." Lewis v. Cowen, 165 F.3d 154, 163-64 (2d Cir. 1999).
In this case, the defendants contend that the plaintiff's demonstrations on October 22 and 29, 1997 did not relate to a matter of public concern because they "focused exclusively on [the plaintiff's] contractual dispute with the City." (Def. Memo. at 21). The defendants argue that the plaintiff's flyers stated, "Our Money and Our Contracts Now," indicating that the plaintiff's purpose in organizing the protests was to "voice anger and frustration for not being awarded certain contracts." (Def. Memo. at 21-22).
The defendants' argument lacks merit. While it is conceded that a key focus of the October 22 and 29 protests was the City's refusal to renew the plaintiff's contracts (Pl. 56.1(b) Statement, ¶¶ 127, 129), the very purpose of those contracts was to provide housing for homeless people with HIV and AIDS. The significance of the contract dispute to persons other than Housing Works is evidenced by the content of signs that read, "Homeless people with AIDS need housing," "Defend AIDS housing," "We need homes, not SRO's," and "I don't want to be homeless again." (King Decl., ¶ 133). Moreover, the flyer announcing the October 22 protest, aside from stating "We demand our money and our contracts" as noted by the defendants, also read, "Don't let the Giuliani administration drive 180 formerly homeless people with HIV and AIDS and their families out of their homes and back on the streets! . . . March to defend AIDS housing, Wednesday, Oct. 22." (Def. Exh. 151).
Aside from the content of the plaintiff's speech, the context of the plaintiff's advocacy throughout 1994-97 — which related to issues such as the restructuring of DASIS (King Decl., ¶ 48), the City's alleged violations of the Open Meetings Law (King Decl., ¶ 98; Pl. Exh. 1 (6/21/96)), and eligibility verification procedures for the City's assistance to people with HIV and AIDS (King Decl., ¶ 117; Pl. Exh. 1 (8/8/97, 8/15/97)) further supports the inference that the October 1997 protests related to public concerns. Accordingly, this issue should be submitted to the jury.
b. Causation
The plaintiff can demonstrate a causal connection between its protected activities and the defendants' adverse actions either "indirectly by means of circumstantial evidence, . . . or directly by evidence of retaliatory animus." Cobb v. Pozzi, 363 F.3d 89, 108 (2d Cir. 2003) (quoting Morris v. Lindau, 196 F.3d 102, 110 (2d Cir. 1999)); Kantha v. Blue, 262 F. Supp. 2d 90, 103 (S.D.N.Y. 2003). Summary judgment is inappropriate when "questions concerning the employer's motive predominate the inquiry." Morris, 196 F.3d at 110. "Nonetheless, we have held that a plaintiff may not rely on conclusory assertions of retaliatory motive to satisfy the causal link . . . Instead, he must produce `some tangible proof to demonstrate that [his] version of what occurred was not imaginary.'" Cobb, 363 F.3d at 108 (quoting Morris, 196 F.3d at 111)).
A plaintiff's circumstantial evidence of retaliation could include the timing of the defendant's actions, such as when the alleged retaliation closely follows the plaintiff's speech.Morris, 196 F.3d at 110; McCullough v. Wyandanch Union Free School District, 187 F.3d 272, 280 (2d Cir. 1999). The plaintiff can also proffer evidence of unequal treatment, or an ongoing campaign of retaliation. Hampton Bays Connections, Inc. v. Duffy, 127 F. Supp. 2d 364, 374 (E.D.N.Y. 2001); Economic Opportunity Commission of Nassau County, Inc. v. County of Nassau, 106 F. Supp. 2d 433, 437 (E.D.N.Y. 2000) (citing Gagliardi v. Village of Pawling, 18 F.3d 188, 195 (2d Cir. 1994)).
The defendants' arguments with respect to causation will be discussed in relation to each of the adverse actions alleged.
(1) HRA Contracts
The defendants first challenge the most obvious causal connection asserted by the plaintiff, namely, that immediately after Housing Works organized a protest on October 22, 1997, the HRA issued a press release the same day, announcing that it would not renew its contracts with the plaintiff or enter into new ones. The defendants assert that the decision was actually made on September 23, 1997 during a meeting between Ms. Kaswan, the City's Chief Contract Officer, and officials from the City's Department of Investigation ("DOI"); therefore, the October 22 protest could not have motivated the non-renewal decision. (Def. Memo. at 23). The defendants also contend that the plaintiff, by its own admission, did not engage in any demonstrations between March and October 1997, and only organized two demonstrations in 1996. (Def. Memo. at 17). As measured from early 1996, the plaintiff's protected conduct therefore occurred nearly 20 months prior to September 23, 1997, a temporal gap that is too great to support an inference of retaliatory intent. (Def. Memo. at 17-18).
The defendants' arguments with respect to timing have little merit. First, the record reflects a factual dispute as to when the HRA contracts were terminated. The defendants' contention that the decision occurred on September 23, 1997 is contradicted by Ms. Kaswan's own affidavit, in which she states that she decided on that day to "delay the approval of the extension of the scattered site contract until I received the information I needed to approve the award." (Affidavit of Beth Kaswan dated Aug. 1, 2003 ("Kaswan Aff."), ¶ 45) (emphasis added). She also requested at the September 23 meeting that the DOI conduct a second audit of Housing Works (Kaswan Aff., ¶¶ 38-39); this suggests that no final decision would have been made until the results of that audit were received. At least one defendant, DASIS's Contracting Officer Mr. Dereszewski, recalls the date of termination as October 22, 1997. (Pl. Exh. 54 (Dereszewski Dep. 1998) at 76). October 22, of course, is also the date when the HRA issued its press release confirming its termination of the plaintiff's contracts. (Def. Exh. 121).
Moreover, even assuming that the termination decision was made before October 22, 1997, Housing Works has presented facts showing that it engaged in protected activities in late 1997. For instance, while the plaintiff acknowledges that it did not organize demonstrations between March and October 22, 1997 (Pl. 56.1(b) Statement, ¶ 106), it points out that its Hernandez v. Barrios-Paoli lawsuit was filed in August 1997. (Pl. 56.1(b) Statement, ¶ 116; Def. 56.1 Statement, ¶ 442). The plaintiff also continued to litigate the Henrietta v. Giuliani case in 1997, as the depositions of DASIS Commissioner Mr. Caldwell and of Ronald Johnson, former head of the Mayor's Office for AIDS Policy, were taken in June 1997. (Pl. 56.1(b) Statement, ¶¶ 109-10; King Decl., ¶¶ 110-11). On September 18, 1997, the plaintiff held a press conference to criticize the City's refusal to comply with the newly enacted Local Law No. 49, which codified the existence of DASIS. (King Decl., ¶ 124). Finally, the plaintiff continued to disseminate its "AIDS Issues Update" publication, which contained critical pieces concerning the Giuliani administration. (Pl. 56.1(b) Statement, ¶¶ 115-18; Pl. Exh. 1). While it must still be determined whether any of the individual defendants were aware of these various activities,see Nassau, 106 F. Supp. 2d at 437 (retaliation shown where defendants "are aware" of protected conduct and adverse action "closely follows"), the above facts at least present a dispute of fact as to whether such protected conduct occurred in 1997.
In challenging causation on the HRA contract termination claim, the defendants also contend that Ms. Kaswan, the official who they allege made the decision to terminate the scattered site contract, did not have knowledge of protected activities prior to the October 22 demonstration. (Def. Memo. at 23, 26). They further assert that Mayor Giuliani, Deputy Mayor Mastro, Ms. Barkan, HRA Commissioners Barrios-Paoli and Turner, Mr. Bonamarte, DOH Commissioner Cohen, and Mr. Capoziello lacked such knowledge. (Def. Memo. at 26). These defendants will be discussed in relation to the adverse action with which they are charged.
(a) Kaswan
As to the HRA contracts, the defendants' argument with respect to Ms. Kaswan is flawed because, as with the timing issue, it is based on the assumption that she decided to refuse the renewal of the scattered site contract in September, not October, 1997; as discussed above, this fact is in dispute. If the October 22, 1997 date is accepted at trial, the defendants' argument fails because Ms. Kaswan has admitted to having prior knowledge of the plaintiff's October 22 demonstration. (Kaswan Aff., ¶ 54). The plaintiff has also submitted Ms. Kaswan's own notes taken on October 20-21, 1997, indicating that the plaintiff's demonstration was imminent. In one notation, she writes that Mr. Bonamarte reported a "strong rumor that Housing Works will be marching on City Hall tomorrow." (Pl. Exh. 10 at 11).
Moreover, there is some evidence to suggest that Ms. Kaswan knew of the plaintiff's Hernandez v. Barrios-Paoli lawsuit on September 23, 1997, when she allegedly made her non-renewal decision; the Hernandez lawsuit was filed shortly before that date in August 1997. Specifically, Ms. Kaswan inquired whether Housing Works was involved in any litigation, and was told of a lawsuit relating to the "eligibility of a client for services." (Pl. Exh. 46 (Kaswan Dep.) at 45). It can be fairly inferred that this was a reference to the Hernandez lawsuit, which related to the same subject matter.
Based on the foregoing, the plaintiff's theory of causation based on timing can be submitted to the jury with regard to Ms. Kaswan, regardless of whether her decision is construed as having occurred on September 23 or October 22, 1997.
While the plaintiff has presented other theories of causation, including disparate treatment by the defendants and an ongoing campaign of retaliation, these theories need not be addressed in light of the close proximity between the termination of the HRA contracts and the plaintiff's protected conduct. See Clark County School District v. Breeden, 532 U.S. 268, 273 (2001) (evidence of retaliation based on timing is sufficient, standing alone, if temporal proximity between protected conduct and adverse action is "very close").
(b) Mastro and Barkan
Contrary to the defendants' contentions, the issue of which City official made the decision to terminate the HRA contracts is also disputed. In her deposition, Ms. Barkan, Deputy Mayor Mastro's Chief of Staff, stated that the decision to refuse renewal of the plaintiff's scattered site contract was made "jointly" by her and Ms. Kaswan. (Pl. Exh. 56 (Barkan Dep.) at 50). She also affirmed that Deputy Mayor Mastro participated in making that decision. (Pl. Exh. 56 (Barkan Dep.) at 50).While Ms. Barkan does not indicate the date on which she and Ms. Kaswan, with input from Deputy Mayor Mastro, allegedly made their decision, the actions of Ms. Barkan and Mr. Mastro can be assessed at least from October 22, 1997, when the HRA press release was issued. The press release provides documentary evidence that the plaintiff's contracts were terminated on that date, and since the defendants' position is that Ms. Kaswan made the non-renewal decision "without any consultation with, or direction from, [Mr. Mastro and Ms. Barkan]" (Def. Memo. at 23), no alternative date is proffered by the defendants.
With respect to knowledge, there is evidence to suggest that Mr. Mastro and Ms. Barkan knew of the plaintiff's October 22 demonstration. Specifically, Ms. Kaswan's notes from October 20 or 21, 1997 indicate, immediately after noting a "strong rumor" of the Housing Works protest, that Deputy Mayor Mastro had instructed Commissioner Barrios-Paoli to organize a report of everything that Housing Works "did wrong," and that Barrios-Paoli should be "prepared to respond on camera tomorrow." (Pl. Exh. 10 at 11). A fair inference can be drawn from these notes that Deputy Mayor Mastro and Commissioner Barrios-Paoli, aside from announcing the City's termination decision, were preparing to defend themselves against an attack by Housing Works, i.e., through its planned demonstration. As Deputy Mayor Mastro's Chief of Staff, Ms. Barkan can reasonably be said to have shared this knowledge.
Accordingly, the plaintiff's theory of causation based on the close timing of Deputy Mayor Mastro's and Ms. Barkan's actions with the plaintiff's October 22 demonstration should be submitted to the jury.
(c) Barrios-Paoli
In her deposition, HRA Commissioner Barrios-Paoli answered, "yes," when asked, "It was your decision, wasn't it, and no one else's, ultimately, to decide whether or not to pull Housing Works' request for scattered site extension and to state that you were not going to enter into any new contracts with Housing Works?" (Pl. Exh. 55 (Barrios-Paoli Dep.) at 71). As with Mr. Mastro and Ms. Barkan, Commissioner Barrios-Paoli's actions can be assessed as of October 22, 1997, since the HRA press release was issued on that date and the defendants have not proffered any alternative dates. As discussed above, Ms. Kaswan's notes from October 20 or 21 specifically mention Ms. Barrios-Paoli and are suggestive of her knowledge of the plaintiff's October 22 protest. These facts are sufficient to support the plaintiff's theory of causation based on timing.
Additionally, a review of Commissioner Barrios-Paoli's affidavit suggests that her actions were taken in close proximity to other protected conduct by Housing Works in late October 1997. Specifically, she states that until October 16, 1997, HRA had taken a "wait and see" attitude with respect to Housing Works, but that on that date, she received a letter from Mr. King stating that Housing Works would suspend its scattered site program in November 1997 unless the HRA executed a contract with it. (Affidavit of Lilliam Barrios-Paoli dated Aug. 12, 2003 ("Barrios-Paoli Aff."), ¶¶ 29-30). She states that she subsequently held a meeting with her staff, who agreed that she should "send a letter to Housing Works advising it that HRA would not extend the scattered site contract." (Barrios-Paoli Aff., ¶ 30).
These statements strongly suggest that Ms. Barrios-Paoli's decision, at least with respect to the scattered site contract, was made in response to the plaintiff's October 16 letter. A review of that letter indicates that aside from purportedly threatening to suspend its services, Housing Works also notified Commissioner Barrios-Paoli of its Notice of Claim with the City; the letter states: "[We] are writing to advise you that today Housing Works filed the attached notice of claim with the Controller of New York City for damages resulting from HRA's continued refusal to reimburse Housing Works for expenses incurred[.]" (Def. Exh. 118). As the plaintiff's notice of claim would qualify as protected conduct under the First Amendment,see White Plains Towing Corp. v. Patterson, 991 F.2d 1049, 1059 (2d Cir. 1993) (acknowledging a "petition [to] the government for a redress of grievances" as First Amendment activity), the temporal proximity between its letter and Commissioner Barrios-Paoli's termination decision could also constitute circumstantial evidence of retaliation. This issue should be submitted to a jury.
(d) Giuliani
Mayor Giuliani denies both that he was involved in the decision to terminate the plaintiff's contracts, and that he had knowledge of Housing Works' October 22 demonstration. (Affidavit of Rudolph Giuliani dated Aug. 26, 2003 ("Giuliani Aff."), ¶¶ 18, 33-35).
To satisfy the "personal involvement" requirement under § 1983, the plaintiff must show that Mayor Giuliani: "(i) personally participated in the alleged constitutional violation, (ii) was grossly negligent in supervising subordinates who committed the wrongful acts, or (iii) exhibited deliberate indifference to the rights of the plaintiff by failing to act on information indicating that unconstitutional acts were occurring." Provost v. City of Newburgh, 262 F.3d 146, 154 (2d Cir. 2001). A supervisory official may be personally liable if he has "actual or constructive notice of unconstitutional practices and demonstrates gross negligence or deliberate indifference by failing to act." Morris v. Eversley, 282 F. Supp. 2d 196, 203 (S.D.N.Y. 2003) (quoting Meriwether v. Coughlin, 879 F.2d 1037, 1048 (2d Cir. 1989)).
The plaintiff's evidence with respect to Mayor Giuliani's personal participation appears to be based primarily on his affiliation with the officials who testified that they participated in the HRA contract termination. For instance, Deputy Mayor Mastro, Ms. Barkan, and Ms. Kaswan were senior officials in the Giuliani administration. In his affidavit, Mayor Giuliani concedes that Deputy Mayor Mastro was "in regular contact" with him, and that he was advised "at some point" by Deputy Mayor Mastro about the contract issues concerning Housing Works. (Giuliani Aff., ¶ 13). The plaintiff also alleges that Mayor Giuliani held senior staff meetings at 8:00 a.m. daily, and that all deputy mayors attended those meetings. (Pl. 56.1(b) Statement, ¶ 149; Pl. Exh. 61 (Mastro Dep.) at 22).
However, these facts, which merely show that Mayor Giuliani was in contact with the officials who made the contract termination decision, are insufficient to suggest that Mayor Giuliani himself participated in that decision. Mayor Giuliani has denied such involvement, stating that he "generally delegated review of contract matters to others within my Administration." (Giuliani Aff., ¶ 33). The plaintiff fails to refute this statement other than to state in conclusory fashion that the "cast of characters" involved in the contract termination decision included Mayor Giuliani. (Pl. 56.1 Statement, ¶ 199).
The plaintiff's facts, however, may be sufficient on a theory of supervisory liability. Mayor Giuliani acknowledges that he was made aware of Housing Works' contract issues by Deputy Mayor Mastro. (Giuliani Aff., ¶ 13). There is also evidence that he knew of the history of animosity between Housing Works and former Deputy Mayor Reiter. For instance, three City officials testified in their depositions that they witnessed Deputy Mayor Reiter become angry when her face was depicted on Housing Works' posters with the label, "AIDS Criminal." (Pl. Exh. 49 (Klasfeld Dep.) at 119-21, 122; Pl. Exh. 60 (Johnson Dep.) at 97-99; Pl. Exh. 62 (Fisher Dep.) at 128-30, 134). Deputy Mayor Mastro testified that he was "sure" that Mayor Giuliani was made aware of that incident because it involved "security issues about [Reiter's] personal safety." (Pl. Exh. 61 (Mastro Dep.) at 199). There is also evidence that Deputy Mayor Reiter kept in regular contact with Mr. Klasfeld, her former Chief of Staff and later Assistant to Deputy Mayor Mastro, well into 1997 after she left her position in March 1997. (Pl. Exh. 49 (Klasfeld Dep.) at 8, 13-15, 162-63). After leaving her post, Deputy Mayor Reiter went on to become manager of Mayor Giuliani's re-election campaign. (Pl. Exh. 50 (Reiter Dep.) at 5-6).
Based on these facts, a jury could conclude that Mayor Giuliani had prior knowledge of Deputy Mayor Reiter's hostility towards Housing Works, and that he was aware of any continuing contacts between Ms. Reiter and Deputy Mayor Mastro's office. Based on Ms. Reiter's continuing contacts, it could be further inferred that she exerted some influence on the contract termination decision, and that Mayor Giuliani therefore "knew or should have known" that unconstitutional acts were occurring. Provost, 262 F.3d at 156 (no supervisory liability in absence of evidence that supervisor "knew or should have known" of the reasons underlying adverse decision).
With respect to causation, Mayor Giuliani's constructive knowledge of the HRA contract termination means that his failure to act, if in close proximity to the plaintiff's protected conduct, could constitute circumstantial evidence of retaliation. Accordingly, the plaintiff's timing theory based on its October 22 demonstration is applicable if it can show that Mayor Giuliani had prior knowledge of that protest.
While Mayor Giuliani disavows such knowledge in his affidavit (Giuliani Aff., ¶ 18), the record shows that the opposite inference could be drawn. First, Mayor Giuliani's statement that he did not know of any Housing Works protest until the October 29, 1997 demonstration at his re-election campaign headquarters does not appear to be credible. (Giuliani Aff., ¶¶ 18, 21-22). As discussed above, Deputy Mayor Mastro's deposition testimony suggests that Mayor Giuliani knew of protests depicting Ms. Reiter's face on Housing Works posters. (Pl. Exh. 61 (Mastro Dep.) at 199). There is also evidence that other demonstrations most likely occurred in Mayor Giuliani's presence. For instance, on April 28, 1994, Housing Works conducted a demonstration at New York's Business "Power Breakfast," which featured Mayor Giuliani as the guest speaker. (King Decl., ¶ 53). During a World AIDS Day rally on December 1, 1994, Housing Works demonstrators went to Mayor Giuliani's home at 6:00 a.m. and chained themselves to the gates outside his residence. (King Decl., ¶ 64). Second, as shown above, there is strong evidence, namely, Ms. Kaswan's handwritten notes dated October 20-21, 1997, that high-ranking officials close to Mayor Giuliani, including Ms. Kaswan, Deputy Mayor Mastro, and Ms. Barkan, knew of the plaintiff's October 22 protest.
Accordingly, the plaintiff's proof of causation relating to Mayor Giuliani should survive summary judgment based on the theory that he failed to act despite having knowledge of Housing Works' October 22 protest and the HRA contract termination, which immediately ensued.
The defendants have not challenged causation with respect to Mr. Netburn, who is alleged to have terminated the DOH contracts. As noted above, Mr. Netburn remains a defendant in these actions.
(2) Non-Responsibility Findings
(a) Bonamarte, Capoziello, Cohen
Mr. Bonamarte, Mr. Capoziello, and DOH Commissioner Cohen are alleged to have made "non-responsibility findings" with respect to the plaintiff and thereby blocked other sources of funding for Housing Works. (Pl. Memo. at 11, 40; Giuliani Am. Compl., ¶¶ 190, 192, 196). Mr. Bonamarte made his finding on June 3, 1998 (Pl. 56.1(b) Statement, ¶ 398; Def. 56.1 Statement, ¶ 353, Def. Exh. 127), and Mr. Capoziello made the same determination for the DOH on or about July 15, 1998. (Pl. 56.1(b) Statement, ¶ 398 n. 25; Def. 56.1 Statement, ¶ 359; Def. Exh. 132). HRA's Acting General Counsel, Mr. McKay, affirmed Mr. Bonamarte's determination on September 4, 1998 (Def. 56.1 Statement, ¶ 357; Giuliani Am. Compl., ¶ 194; Def. Exh. 130), and DOH Commissioner Cohen affirmed Mr. Capoziello's finding on February 24, 1999. (Pl. 56.1(b) Statement, ¶ 399 n. 26; Def. 56.1 Statement, ¶ 360; Def. Exh. 134).
As noted above, the defendants have asserted that Mr. McKay has not been served and is not a party to these actions. (Def. Memo. at 11 n. 6). However, the docket sheet indicates otherwise. Mr. McKay should remain a defendant until his status can be verified.
With respect to causation, Mr. Bonamarte states in his affidavit that he was unaware of any "protests or demonstrations," or of "any lawsuits" in 1997-98 when he made his non-responsibility determination in June 1998. (Affidavit of Richard Bonamarte dated Aug. 12, 2003 ("Bonamarte Aff."), ¶ 42) (emphasis omitted). However, he states that in making his determination, he "specifically did not consider . . . the potential effect of a ruling in favor of Housing Works in other pending litigation." (Bonamarte Aff., ¶ 29) (emphasis added and emphasis in original omitted). Mr. Bonamarte also states that he was "aware that a ruling against Housing Works would likely lead to me being sued individually by Housing Works." (Bonamarte Aff., ¶ 29) (emphasis omitted). These statements suggest that Mr. Bonamarte was aware of some pending litigation when he made his non-responsibility finding. Based on his statement that he anticipated being sued himself, it can be inferred that the litigation to which he refers is the plaintiff's state court action, which preceded and was replaced by the instant actions.
A similar analysis also applies to Mr. Capoziello and Mr. Cohen. Mr. Capoziello states in his affidavit that he was unaware of the Hernandez v. Barrios-Paoli and Henrietta D. v. Giuliani lawsuits, but he specifically omits mention of the state court action that preceded the instant actions. (Affidavit of James Capoziello dated June 12, 2003 ("Capoziello Aff."), ¶¶ 31-35). He also states, as with Mr. Bonamarte, that "[a]t the time I made my decision, I was aware that a decision against Housing Works would likely lead to my being sued." (Capoziello Aff., ¶ 42). Mr. Cohen states that he "specifically did not consider . . . the potential effect of a ruling in favor of Housing Works in other pending litigation." (Affidavit of Neal L. Cohen dated July 24, 2003 ("Cohen Aff."), ¶ 9). These statements support the inference that Mr. Capoziello and Mr. Cohen had knowledge of the plaintiff's state court action.
It must next be determined whether the filing of the state court action in November 1997 was sufficiently close in time to the actions taken by Mr. Bonamarte, Mr. Capoziello, and Mr. Cohen to constitute circumstantial evidence of retaliation. Mr. Bonamarte and Mr. Capoziello made their non-responsibility determinations in June and July 1998 respectively. While this temporal gap is not as close as with the HRA contract termination, the Second Circuit has held that an eight-month gap is sufficient to support an inference of retaliatory intent.See Grant v. Bethlehem Steel Corp., 622 F.2d 43, 45-46 (2d Cir. 1980); see also Bernhardt v. Interbank of New York, 18 F. Supp. 2d 218, 226 (E.D.N.Y. 1998) (11-month gap sufficient to overcome motion to dismiss).
The opposite conclusion must be drawn, however, with respect to Mr. Cohen. His determination of the DOH non-responsibility appeal was decided in February 1999, well past the November 1997 filing date of the plaintiff's state court action. Moreover, his affidavit does not indicate any contacts with officials who are alleged to have harbored hostilities towards Housing Works. Accordingly, the plaintiff's First Amendment retaliation claim against Mr. Cohen must be dismissed for lack of proof of causation.
(b) Giuliani
Mayor Giuliani is alleged to have delayed in deciding the plaintiff's appeal of the non-responsibility findings by the HRA and DOH, which were appealed to him in September 1998 and February 1999 respectively. (Giuliani Am. Compl., ¶¶ 197-98). In response, Mayor Giuliani states in his affidavit that he delegated responsibility of determining such appeals to his Chief Contract Procurement Officer, or CCPO, pursuant to PPB Rule 2-08(m)(1). (Giuliani Aff., ¶¶ 39-41). Accordingly, Mayor Giuliani states that the Housing Works' appeals "were never before me and I did not intervene in any way in the handling of those appeals." (Giuliani Aff., ¶ 42).
The plaintiff has not submitted any evidence suggesting that Mayor Giuliani in fact handled Housing Works' appeals, or that he knew or should have known of retaliatory actions in connection with those appeals. While there is some evidence that Mayor Giuliani may have developed a hostility towards Housing Works in late 1998 (King Decl., ¶ 185; Pl. 56.1(b) Statement, ¶ 291 n. 17), the existence of animus itself is insufficient to support an inference that Mayor Giuliani intervened to make a decision that he otherwise delegated to his CCPO.
The plaintiff has also submitted as evidence a compilation of CCPO decisions from 1995-2003, which show the average length of time taken for non-responsibility appeals. (Pl. Exh. 27). This evidence, however, appears to support Mayor Giuliani's position, since it is a compilation of appeals decided by the CCPO, not the mayor. There is also no evidence, as with the HRA contract termination, that Deputy Mayor Reiter or others hostile to Housing Works may have influenced the determination of the appeal, or that Mayor Giuliani was aware of such conduct. In fact, even Ms. Kaswan, who apparently would have decided the appeal as the CCPO, had left her position by February 1998, long before the initial non-responsibility findings were made. (Pl. Exh. 46 (Kaswan Dep.) at 5-6). Accordingly, the First Amendment retaliation claim against Mayor Giuliani must be dismissed as it relates to the plaintiff's non-responsibility appeals.
(3) NYSDOL/NYSDOH Contracts
HRA Commissioner Turner is alleged to have interfered with the plaintiff's receipt of the NYSDOL/NYSDOH Welfare-to-Work Contract from the state by withdrawing HRA's certification of Housing Works. (Amended Complaint, No. 00 Civ. 1122, ¶¶ 79, 83-84). The certification was withdrawn by Mr. Turner's letter dated February 23, 1999 to the NYSDOL. (Pl. 56.1 Statement, ¶ 322; Def. 56.1 Statement, ¶ 371; Def. Exh. 137). Housing Works lost the NYSDOL/NYSDOH contract in August 1999. (King Decl., ¶ 213).
In response, Mr. Turner states in his affidavit that he resided in Wisconsin before becoming HRA Commissioner in February 1998, and that he consequently lacked knowledge of the plaintiff's protected activities before that date. (Turner Aff., ¶¶ 27-29). However, he does not deny having knowledge of the plaintiff's state court action, and he states that he was briefed about a November 1998 ruling in that action denying the plaintiff's request for a preliminary injunction. (Turner Aff., ¶ 4). The temporal proximity of Mr. Turner's February 1999 letter to the November 1998 ruling is sufficiently close to submit the causation issue to the jury. See, e.g., Gorman-Bakos v. Cornell Cooperative Extension of Schenectady County, 252 F.3d 545, 555 (2d Cir. 2001) (three-month gap sufficient to survive summary judgment on First Amendment retaliation claim); Stephens v. State University of New York at Buffalo, 11 F. Supp. 2d 242, 250 (W.D.N.Y. 1998) (four to six-month gap sufficient for prima facie Title VII claim).
c. Mt. Healthy Test
In Mt. Healthy, the United States Supreme Court held that even where a plaintiff's protected conduct played a role in an adverse action, the defendant can still prevail if "it would have reached the same decision . . . even in the absence of the protected conduct." 429 U.S. at 287. As this rule is essentially one of "but for" causation," Price Waterhouse, 490 U.S. at 249 (construing Mt. Healthy); Greenwich Citizens Committee, Inc. v. Counties of Warren and Washington Industrial Development Agency, 77 F.3d 26, 32 (2d Cir. 1996) (citation omitted), the defendant must show that "its legitimate reason, standing alone, would have induced it to make the same decision." Price Waterhouse, 490 U.S. at 252.
Not surprisingly, the defendants in this case have presented a voluminous account of what they claim to be the true motivations behind the adverse actions alleged. They contend, in essence, that the severity of the plaintiff's financial crisis justified the termination of its contracts, and that this decision would have resulted irrespective of any retaliatory animus on the part of City officials.
The defendants' contentions are disputed in several key respects that preclude the entry of summary judgment. The first area of dispute concerns the HRA audit of Housing Works in January 1997, which was ordered by Mr. Caldwell after he became the DASIS Commissioner in that month. The plaintiff contends that this audit was unnecessary because the HRA and the DOI had previously conducted audits in 1996, and that by the end of December 1996, the plaintiff had adopted a corrective action plan that was satisfactory to the HRA. (King Decl., ¶¶ 32-34, 40). The plaintiff points to a memo dated December 12, 1996, in which DASIS's Contracting Officer, Mr. Dereszewski, states: "Housing Works has made sufficient progress in recovering from the fiscal crisis it experienced at the beginning of this year" to warrant proceeding with the "awarding and adoption" of the 9th Street operating contract. (Pl. Exh. 4).
The defendants, on the other hand, contend that the January 1997 audit was specifically recommended by the DOI in its June 24, 1996 memo. Mr. Dereszewski states that he did not discover the DOI memo until January 1997, and that the City's CCPO and Comptroller, whose approvals were required for a proposed extension of the scattered site contract, would have made note of the DOI memo in any event and could have "complicate[d] the approval process and, at worst, cause[d] the rejection of the entire proposal." (Affidavit of John A. Dereszewski dated Aug. 11, 2003 ("Dereszewski Aff."), ¶¶ 44, 48-50). Mr. Caldwell reiterates that it was "reasonably foreseeable that [the CCPO] would have refused to approve either an extension of the scattered site contract or the [residential facilities] contracts." (Affidavit of Gregory Caldwell dated Aug. 8, 2003 ("Caldwell Aff."), ¶ 19).
The foregoing demonstrates clear disputes of fact as to whether Mr. Dereszewski had prior knowledge of the 1996 DOI memo, and whether the HRA had approved a corrective action plan that took into account, but discounted, the DOI recommendation that a second audit take place. Moreover, while Mr. Dereszewski and Mr. Caldwell assert that the CCPO and Comptroller "could have" rejected the plaintiff's contracts (Dereszewski Aff., ¶ 49), or that such an outcome was "reasonably foreseeable" (Caldwell Aff., ¶ 19), neither defendant states that he was required to order an audit. Since the negative results of this audit are alleged to have been a central reason for terminating the HRA and DOH contracts, the disputes as to whether the ordering of the audit was inevitable could defeat a Mt. Healthy claim.
A second area of dispute concerns the events following the completion of the January 1997 audit, when the auditor, Jack Hiralall, concluded that Housing Works owed over $1 million to the HRA. The defendants allege that at this point, HRA halted negotiations on the operating contracts for Housing Works' residential facilities and reduced the proposed extension period for the scattered site contract from one year to four months. (Dereszewski Aff., ¶ 61; Caldwell Aff., ¶¶ 26-29; Barrios-Paoli Aff., ¶¶ 18-19). In response, the plaintiff first contends that the HRA continued to approve its corrective action plan in August 1997, pointing to an HRA memo making a finding of "contractor responsibility" with respect to Housing Works (Pl. Exh. 5). The plaintiff also disputes the contention that they failed to cooperate in the HRA audit.
The plaintiff's first piece of evidence, the August 1997 memo from HRA, does not indicate that a remedial plan had been approved as of that date. The memo appears to be an addendum to Ms. Barrios-Paoli's and Mr. Bonamarte's proposal for a four-month extension of Housing Works' scattered site contract, and it indicates that while several concerns raised by the 1996 DOI memo had been addressed, the recommended "comprehensive audit" was "currently being conducted." (Pl. Exh. 5). This evidence is therefore consistent with the defendants' position that the renewal of the scattered site contract had been made contingent on the results of Mr. Hiralall's audit.
However, there are clear disputes of fact as to the defendants' contention that Housing Works failed to cooperate in a "re-audit" attempted by the HRA after July 1997. The crux of the defendants' argument is that after an "exit conference" was conducted with regard to the July 1997 audit results, Housing Works agreed to submit to HRA its "restated books and records," a term defined by the City's accounting expert as records that would be "focused on the general ledger, which is the fundamental focal document in all accounting records" (Def. Exh. 57 (Eccleston Dep.) at 87). The defendants allege that neither the "trial balances" submitted to HRA Commissioner Barrios-Paoli on September 5, 1997 (Def. Exh. 103), nor the "allocation worksheets" and "summary allocation tables" submitted to Mr. Hiralall when he arrived at Housing Works' office to conduct a re-audit on October 1, 1997 (Def. Exhs. 109-11), constituted the promised "restated books and records."
However, Mr. Hiralall acknowledged in his affidavit that a discussion about the method of restating Housing Works' books and records took place at the August 5 exit conference, but that "[w]hen the meeting ended nothing was decided." (Hiralall Aff., ¶ 69). In his deposition, Housing Works' chief financial officer, Lawrence Scanlon, also testified that he took the position at the August 5 meeting that it would take six months to restate Housing Works' books because "we were talking about, for example, regenerating a general ledger, regenerating payroll registers, in effect, completely re-recording all of the transactions for two and-a-half years." (Def. Exh. 49 (Scanlon Dep.) at 85). Moreover, in a letter dated October 10, 1997 and addressed to Commissioner Barrios-Paoli, Housing Works' Executive Director, Mr. King, states that he asked HRA's Contracting Officer, Mr. Bonamarte, to explain "what was meant by restated books and records"; Mr. King was informed that "HRA expected to see new trial balances for every program of Housing Works, utilizing the uniform cost allocation plan for allocating all appropriate costs." (Def. Exh. 117). These facts therefore suggest that the method by which Housing Works was expected to "restate" its books had not been definitively decided by the parties. As this inference would negate the defendants' claim that the termination of Housing Works' contracts resulted from its failure to cooperate, theirMt. Healthy defense fails in this regard.
Finally, the defendants have pointed to the DOI's March 1998 memo as a reason for subsequent decisions made by the defendants, such as the June and July 1998 non-responsibility findings and the February 1999 withdrawal of HRA certification for the NYSDOL/NYSDOH contracts. However, the DOI memo resulted from an audit that was originally requested by Ms. Kaswan (Kaswan Aff., ¶¶ 38-39); to the extent that her actions could be construed as retaliatory, the DOI audit also could have been avoided. Moreover, there is some evidence of direct animus that could preclude a finding that these later decisions were motivated solely by the DOI memo. For instance, Mr. Bonamarte, who issued the HRA non-responsibility finding, worked directly under HRA Commissioner Barrios-Paoli, who, in a March 1997 meeting with Housing Works, allegedly stated that the plaintiff could not expect to receive favorable treatment from the City as long as it continued to "cause trouble." (King Decl., ¶ 108; Affidavit of Pamela S. Brier dated April 2, 1998, attached as Pl. Exh. 16, ¶¶ 3-4). Mr. Capoziello, who issued the DOH non-responsibility finding, stated that he was briefed on the Housing Works situation by Mr. Netburn. (Capoziello Aff., ¶ 10). In a January 1998 conversation with Keith Cylar, former co-Executive Director of Housing Works, Mr. Netburn allegedly stated that "no contract action of any kind" could be taken on the DOH contracts because the City had a "`policy' to not do business with people who have sued the City." (Affidavit of Keith Cylar dated Feb. 18, 1998 ("Cylar Aff."), attached as Pl. Exh. 18, ¶ 8). Finally, Mr. Turner, who withdrew the NYSDOL/NYSDOH certification, met with state officials following his withdrawal. Several state officials have testified that Mr. Turner exhibited an unusual inflexibility in addressing the fiscal issues facing Housing Works. (Pl. Exh. 58 (Papandrea Dep.) at 119, 195-97; Pl. Exh. 78 (Cruz) at 287-92).
Aside from pointing to Housing Works' financial crisis, the defendants have also stated that the plaintiff "ultimately threatened action which could have led to the eviction of hundreds of HRA clients," citing their Exhibit 118. (Def. Memo. at 33). This exhibit, a letter dated October 16, 1997 from Housing Works to HRA Commissioner Barrios-Paoli, includes a statement by Housing Works that "unless a contract is executed . . . by October 31, 1997 Housing Works will have no choice but to suspend operation of the [scattered site] program." However, as discussed earlier, this letter also provided notice to the HRA that Housing Works had filed a "notice of claim with the Controller" for reimbursements allegedly due on the scattered site contract. The letter itself was therefore a form of protected conduct.
In Greenwich, the Second Circuit held that while the "dual-motivation analysis" of Mt. Healthy ordinarily requires a determination of whether the plaintiff's protected conduct played a role in the government's decision, and if so, whether it or "some other conduct" was the "but for" cause, a modified analysis may be needed where the dual causes constitute a "unitary event." 77 F.3d at 32-33. In such cases, the appropriate inquiry is "whether the defendant acted for an impermissible reason, and not merely in response to the plaintiff's conduct." Id. at 33.
As in Greenwich, the defendants here have contended that their actions were motivated by the legitimate goal of preventing the eviction of scattered site clients; however, this goal was a unitary event with the plaintiff's protected conduct of filing a notice of claim with the City. Nevertheless, it cannot be decided as a matter of law that the defendants acted for a permissible reason. The plaintiff, for instance, has submitted circumstantial evidence apart from of the October 16 letter to suggest that the HRA contract decision was retaliatory in nature. Moreover, the defendants have not submitted any facts aside from that letter indicating that Housing Works actually intended to evict its scattered site clients or that it carried out any actions in furtherance of such a purpose. Whether the defendants were justified in their belief that evictions would occur is therefore a question for the jury. For the foregoing reasons, the plaintiff's First Amendment claim cannot be dismissed based on the Mt. Healthy defense.
d. Pickering Test
The defendants also contend that they are entitled to summary judgment under Pickering. In that case, the United States Supreme Court stated that in considering a Pickering defense, the court should "arrive at a balance between the interests of the [plaintiff], as a citizen, in commenting upon matters of public concern and the interest of the State . . . in promoting the efficiency of the public services it performs[.]" 391 U.S. at 568. The Pickering test has been characterized as permitting an adverse action based on a plaintiff's speech or other protected activity if: (1) the defendant's prediction of disruption to government operations is reasonable; (2) the potential disruptiveness is enough to outweigh the value of the speech; and (3) the defendant took the adverse action based on this disruption and not in retaliation for the speech or protected activity. See Jeffries v. Harleston, 52 F.3d 9, 13 (2d Cir. 1995) (citing Waters v. Churchill, 511 U.S. 661, 677-82 (1994)).
Here, the defendants state that Housing Works' conduct was "so coercive and disruptive to the City's ability to rely on Housing Works to perform contractual services" that a termination of the plaintiff's contracts was justified. (Def. Memo. at 34). Specifically, they assert that the City took action in response to the "plaintiff's failure to pay rents, its threat to terminate the [scattered site program] unless the City immediately executed a new contract, and its refusal to address its financial problems." (Def. Memo. at 34). As discussed above, Housing Works' "threat" to terminate scattered site services is a reference to its letter to Commissioner Barrios-Paoli, dated October 16, 1997. (Def. Exh. 118).
The defendants' argument has little merit. For the Pickering defense to apply, the disruption to government operations must result from the plaintiff's speech or other protected activity, not from conduct unrelated to such activity. See Jeffries, 52 F.3d at 13 (defendant must show that "the speech threatened to interfere with government operations"). Here, the defendants contend that a disruption to City functions resulted from the plaintiff's failure to pay rent and address its fiscal problems. This argument is indistinguishable from its Mt. Healthy defense, addressed above, that the City's decision was motivated by Housing Works' financial crisis, not its speech.
With respect to Housing Works' October 16, 1997 "threat," thePickering defense could possibly apply because the letter itself constituted a protected activity. However, this claim is also better analyzed as a "unitary event" claim under Mt. Healthy and Greenwich, since the defendants have not alleged that the plaintiff's speech itself, the notice of claim, caused the disruption. In any event, the analysis above concerning theMt. Healthy claim has shown that factual disputes exist as to whether the defendants' actions were in fact motivated by its proffered, legitimate reason. This finding applies equally in thePickering context. Compare Gorman-Bakos, 252 F.3d at 550-51, 557 (where complaints about youth organization were allegedly lodged in a disruptive manner, factual disputes precluded determination that plaintiffs' membership were terminated because of disruption, not their speech).
2. Equal Protection Claim
The plaintiff has also asserted a so-called "class of one" Equal Protection claim based on Village of Willowbrook v. Olech, 528 U.S. 562 (2000). In an Olech-based claim, the plaintiff must show that it was: "(1) intentionally treated differently from others similarly situated and (2) that there was no rational basis for the difference in treatment." Wantanabe Realty Corp. v. City of New York, 315 F. Supp. 2d 375, 396 (S.D.N.Y. 2003) (quoting Olech, 528 U.S. at 564) (alterations omitted). The acts of which the plaintiff complains must not only be "irrational and wholly arbitrary," but also constitute "intentional disparate treatment." Giordano v. City of New York, 274 F.3d 740, 751 (2d Cir. 2001).
a. Intentional Treatment
The defendants principally challenge the plaintiff's ability to satisfy the intentional treatment requirement under Olech, arguing that high-ranking officials within the Giuliani administration — namely, Mayor Giuliani; Deputy Mayor Mastro; Mr. Mastro's Chief of Staff, Ms. Barkan; Ms. Kaswan; HRA Commissioners Barrios-Paoli and Turner; HRA's Contracting Officer, Mr. Bonamarte; DOH Commissioner Cohen; and DOH's Contracting Officer, Mr. Capoziello — were unaware of the situation of similarly situated contractors, and therefore could not have intentionally treated the plaintiff differently. (Def. Memo. at 36). As to the "lower-level" officials who concede knowledge of other contractors — namely, Mr. Caldwell, HRA's Deputy Commissioner in Charge of DASIS, and DASIS's Contracting Officer Mr. Dereszewski — the defendants argue that these officials did not make the adverse decisions that the plaintiff complains of, and therefore cannot be held liable for any differential treatment. (Def. Memo. at 36).
(1) "High-Ranking" Officials
In Giordano, the Second Circuit recently addressed a similar issue in connection with a New York police officer's equal protection claim that he was discharged for taking medication to prevent blood clotting, while a fellow officer who took the same medication was permitted to continue working. 274 F.3d at 744, 750. The Court noted that no evidence existed indicating that "the defendants whom [the plaintiff] alleges violated his rights . . . had any knowledge of [the fellow officer's] condition, or of the condition of anyone else retained as an NYPD police officer despite an anticoagulant regimen." Id. at 751. In entering summary judgment for the defendants, the Court held that "[a]bsent some evidence of this knowledge, no reasonable juror could infer that the defendants intended to treat [the plaintiff] differently from other NYPD officers." Id.
More recently, a district court in this Circuit followed the holding of Giordano in considering an equal protection claim alleging differential treatment by various social service officials with respect to child visitation; the plaintiff was a lesbian partner of a parent, whose child was the subject of a neglect petition brought by the state. Zavatsky, 2004 WL 936170, at *1-2. Relying on Giordano and LaTrieste Restaurant v. Village of Port Chester, 188 F.3d 65 (2d Cir. 1999), the court entered summary judgment for five of the six defendants, stating that no evidence indicated that those defendants had personal knowledge of the similarly situated "heterosexual `significant others'" identified by the plaintiff. Id. at *6.
In this case, the plaintiff has identified three contractors that it asserts were similarly situated to Housing Works; namely, the Minority Task Force on AIDS ("MTFA"), the Foundation for Research of Sexually Transmitted Diseases ("FROSTD"), and Harlem United. The plaintiff claims that these contractors all encountered similar problems with fiscal management such as commingling of funds and poor recordkeeping practices, but that their contracts with the City were not terminated. (Pl. Memo. at 26-27 nn. 30, 32).
The "high-ranking" officials identified by the defendants have all submitted affidavits denying knowledge of, among others, two of the contractors identified by the plaintiff: MFTA and Harlem United. (Giuliani Aff., ¶ 45; Mastro Aff., ¶ 40; Barkan Aff., ¶ 44; Kaswan Aff., ¶ 63; Barrios-Paoli Aff., ¶ 47; Turner Aff., ¶ 33; Bonamarte Aff., ¶¶ 51-53; Cohen Aff., ¶ 23; Capoziello Aff., ¶ 39). While Mr. Capoziello and DOH Commissioner Cohen acknowledge involvement in issuing non-responsibility findings with respect to Emmanus House (Capoziello Aff., ¶ 40; Cohen Aff., ¶ 24), this organization is specifically alleged by the plaintiff as not being similarly situated to Housing Works, since its internal problems concerned criminal misconduct. (Pl. Memo. at 25).
With the exception of Mr. Bonamarte and Mr. Turner, the plaintiff has not presented any facts refuting the denials referenced above. The plaintiff only asserts that these defendants "knew precisely the status of Housing Works" (Pl. Memo. at 34) (emphasis added), pointing to instances from which direct animus could be inferred. Specifically, the plaintiff makes note of Commissioner Barrios-Paoli's alleged "threat" of retaliation in March 1997; facts indicating contacts between former Deputy Mayor Reiter, who allegedly hated Housing Works, and Ms. Kaswan, Ms. Barkan, and Deputy Mayor Mastro; and Ms. Barkan's memo stating that "Fran Hates [Housing Works]." (Pl. Memo. at 34-35). These facts, however, do not suggest the defendants' knowledge of similarly situated contractors apart from Housing Works. While direct evidence of animus may support the plaintiff's claim of First Amendment retaliation, an Equal Protection claim, by contrast, depends on an assertion that the plaintiff was treated differently from other entities. Absent evidence that the defendants knew of such other entities, a claim of differential treatment fails. See Giordano, 274 F.3d at 751; Zavatsky, 2004 WL 936170, at *7; cf. LaTrieste, 188 F.3d at 70 ("Mere failure to prosecute other offenders is not a basis for a finding of denial of equal protection. Instead, selective prosecution implies that a selection has taken place." (citations omitted).
The fact that these officials did not specifically mention FROSTD, the third contractor identified by the plaintiff, in their affidavits does not change the outcome here. While the defendants, as the moving party, have the initial burden of demonstrating an absence of disputed facts, their burden is satisfied merely by "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325. The moving party does not have the burden of "disproving an essential element of the nonmoving party's case." PepsiCo, Inc. v. The Coca-Cola Company, 114 F. Supp. 2d 243, 247 (S.D.N.Y. 2000). Here, the defendants have pointed to the absence of evidence regarding each defendant's knowledge of similarly situated contractors. This is sufficient to shift the burden to the plaintiff to "come forward with `specific facts showing that there is a genuine issue for trial.'" Pepsico, 114 F. Supp. 2d at 247 (quoting Fed.R.Civ.P. 56(e)).
Accordingly, the plaintiff's Equal Protection claim should be dismissed as to Mayor Giuliani, Deputy Mayor Mastro, Ms. Barkan, Ms. Kaswan, and Commissioner Barrios-Paoli, all of whom are implicated in the decision to terminate the HRA's contracts with Housing Works. The plaintiff's claim should also be dismissed as to Commissioner Cohen and Mr. Capoziello in connection with the DOH's non-responsibility findings.
However, the record reflects independent evidence of knowledge on the part of Mr. Turner and Mr. Bonamarte. First, with regard to Mr. Turner, who withdrew HRA's certification of Housing Works for the state NYSDOL/NYSDOH contracts, the plaintiff has submitted the deposition testimony of Karen Papandrea of NYSDOL, who states that subsequent to the withdrawal of certification, the NYSDOL/NYSDOH Aids Institute requested a meeting with Commissioner Turner to discuss various options by which the state could award the disputed contracts to Housing Works under conditions satisfactory to the City. (Pl. Exh. 58 (Papandrea Dep.) at 112-13). According to Ms. Papandrea, Commissioner Turner rejected all the options presented and made it clear that he would not approve Housing Works as a state contractor under any circumstances. (Pl. Exh. 58 (Papandrea Dep.) at 195-97). Ms. Papandrea testified that "it was the first time [she] had seen Jason [Turner] unwilling to compromise on an issue," and she considered Turner's position to be "unusual." (Pl. Exh. 58 (Papandrea Dep.) at 119). This testimony supports the inference that Mr. Turner may have been involved in prior instances of state contractors that had problems in obtaining the City's certification, but that he had treated them differently from Housing Works.
With regard to Mr. Bonamarte, a review of the documents submitted in connection with MTFA indicates that he may have been involved in resolving financial issues relating to that organization. Specifically, a memorandum dated February 12, 1999 from Mr. Derewzewski to Mr. Bonamarte indicates that an audit was conducted for MTFA and a corrective action plan implemented. (Pl. Exh. 37). In another memorandum dated August 18, 1998 from Mr. Derewzewski to Mr. Caldwell, and in the attached handwritten notes, reference is made to a meeting between the AIDS Institute and Mr. Bonamarte. (Pl. Exh. 33). Mr. Bonamarte states in his affidavit that while he played little role in administering individual contracts, he was informed about "issues with respect to [contractor] performance . . . under certain narrow circumstances," including a renewal or modification of a contract; in such cases, he would be asked to issue a determination with respect to contractor responsibility. (Bonamarte Aff., ¶¶ 47-49). The documents referenced above suggest that MTFA was one contractor about which he was informed. The plaintiff's Equal Protection claim should therefore survive with respect to Mr. Bonamarte.
(2) "Lower-Level" Officials
While it is conceded that as to Mr. Caldwell and Mr. Dereszewski the DASIS defendants had knowledge of similarly situated contractors, liability is contested on the ground that they did not make the ultimate decision to terminate the HRA contracts. However, this fact is immaterial. Unlike its First Amendment claim, the plaintiff's Equal Protection claim is not limited to an allegation that it suffered an adverse action in retaliation for its exercise of First Amendment rights; rather, the plaintiff may assert that it was treated differently in any respect, as long as that treatment caused the injury that is alleged. Therefore, the question of whether Mr. Caldwell's and Mr. Dereszewski's actions ultimately resulted in the HRA contract termination is one of causation, not an issue of whether a finding of "adverse action" could be made.
The defendants have not challenged the plaintiff's First Amendment claim as to Mr. Caldwell or Mr. Dereszewski, aside from their assertion of the Mt. Healthy and Pickering defenses. Accordingly, Mr. Caldwell's and Mr. Dereszewski's actions could also constitute "adverse actions" for purposes of First Amendment liability.
Here, the plaintiff has presented facts showing at least three instances of allegedly discriminatory actions by Mr. Caldwell and Mr. Dereszewski. First, as stated earlier, the plaintiff has shown that Mr. Caldwell ordered the January 1997 audit of Housing Works. Second, the plaintiff has submitted a memorandum dated September 30, 1997, in which Mr. Caldwell recommended a termination of the scattered site contract (Pl. Exh. 13); this confidential memo was circulated to Mr. Klasfeld, assistant to Deputy Mayor Mastro. (Pl. Exh. 51 (Caldwell Dep.) at 239-41). Finally, the plaintiff has shown that Mr. Dereszewski modified the method of administering the new scattered site RFPs in October 1997 to eliminate the advantage that Housing Works would have enjoyed as an existing vendor. (King Decl., ¶¶ 148, 166, 168). Any of these actions could be found to have caused the termination of the HRA contracts, and can therefore form the basis of the plaintiff's Equal Protection claim.
b. Similarly Situated Entities
The defendants contend that two of the three contractors identified by the plaintiff are not similarly situated to Housing Works. Whether two entities are similarly situated is ordinarily a question of fact for the jury, but summary judgment is appropriate where no reasonable jury could find that the legal standard is satisfied. Harlen Associates v. Incorporated Village of Mineola, 273 F.3d 494, 499 n. 2 (2d Cir. 2001). In determining whether certain entities are "similarly situated," a court should consider: (1) whether those entities were subject to the same standards, and (2) whether the conduct for which an adverse action was taken was of comparable seriousness. See Graham v. Long Island Railroad, 230 F.3d 34, 40 (2d Cir. 2000) (citation omitted) (considering employee discipline). It is not necessary that the comparative cases be "identical," only that the resemblance be "reasonably close." Id.
The defendants here contend first, that Harlem United was not a similarly situated contractor because its fiscal problems were less serious than those of Housing Works, and because it cooperated with HRA's remedial actions. (Def. Memo. at 38). In his affidavit, Mr. Dereszewski elaborates that Harlem United's problems lasted for only one fiscal cycle, involved "immaterial instances of noncompliance," and did not involve a failure to account for public funds or nonpayment of rent to landlords. (Dereszewski Aff., ¶¶ 112(c)-(e)). Mr. Dereszewski also notes that the DOI did not recommend replacing Harlem United with another vendor as it did with Housing Works, and that Harlem United identified its own problems and brought them to the attention of HRA. (Dereszewski Aff., ¶¶ 112(a)-(b)).
With respect to Harlem United, the plaintiff has submitted audit reports for at least two fiscal periods, FY 1996 and FY 1997, indicating "material weaknesses" in Harlem United's fiscal management. (Pl. Exh. 38 at 19-20, 33-34). As noted by the defendants' own accounting expert, Brian Eccleston, "a material weakness is generally considered more serious than a reportable condition but neither is desirable." (Eccleston Aff., ¶ 40). Additionally, the problems cited in the FY 1996 audit do appear to relate to public funding, as they include the fact that the "[a]ccounts [p]ayable did not tie into the general ledger" and that there is "[i]nadequate matching of revenue with expenses." (Pl. Exh. 38 at 33-34). As both of these conditions relate generally to proper accounting of monies received and spent, the auditor warns that "[t]he organization must maintain and monitor all funds, especially federal fund[s] from government grants." (Pl. Exh. 38 at 34). Finally, it is disputed that Housing Works did not bring its fiscal crisis to HRA's attention. (King Aff., ¶ 34).
With respect to MTFA, the defendants contend that its financial difficulties surfaced for the first time in August 1998, making this period more comparable to Housing Works' situation in 1995-96. (Def. Memo. at 38; Dereszewski Aff., ¶ 111). They contend that Housing Works failed to remedy its problems when they first came to light, and that the HRA's second intervention in 1997 warranted harsher treatment in the form of contract termination. (Def. Memo. at 38; Dereszewski Aff., ¶ 115). The defendants' argument, however, is belied by its own position that the January 1997 audit ordered by Mr. Caldwell was not redundant as asserted by the plaintiff, but rather an extension of the prior DOI audit conducted in 1996. (Dereszewski Aff., ¶ 52). Moreover, the record shows that MTFA's fiscal crisis, even if first discovered in 1998, extended well beyond that date. For instance, its audits for FY 1998 and FY 1999 continue to report "material weaknesses" in MTFA's internal fiscal controls. (Pl. Exh. 35 at 20; Pl. Exh. 36 at 24). Mr. Dereszewski also concedes that the MTFA situation was serious and required continued monitoring until January 1, 2003, when a three-year renewal contract was finally concluded. (Dereszewski Aff., ¶ 115). These facts are sufficient to preclude summary judgment as to MTFA.
c. Rational Basis or Illicit Motive
To prove an Olech-type equal protection claim, the plaintiff must show that there was "no rational basis" for the differential treatment it suffered. Wantanabe, 315 F. Supp. 2d at 396. The Second Circuit has not decided whether an Olech claim also requires a showing a illicit motive or intent on the part of the defendant. Demuria v. Hawkes, 328 F.3d 704, 707 n. 2 (2d Cir. 2003). Even if it does, the plaintiff's facts are sufficient to preclude summary judgment as to all defendants who have not been dismissed from the Equal Protection claim: Mr. Bonamarte, Mr. Turner, Mr. Caldwell, and Mr. Dereszewski. The defendants have not submitted arguments with respect to Mr. Netburn and Mr. McKay.
As to Mr. Bonamarte and Mr. Turner, the foregoing discussion has identified circumstantial evidence of retaliation based on the proximity of their actions with the plaintiff's protected conduct. Moreover, the plaintiff has submitted facts that could refute the alternative, rational reason for decision proffered by the defendants: the severity of Housing Works' fiscal problems. There is also evidence from several state officials attesting to Mr. Turner's unusual inflexibility with regard to Housing Works. (Pl. Exh. 58 (Papandrea Dep.) at 119, 195-97; Pl. Exh. 78 (Cruz) at 287-92). Based on these facts, and with all inferences drawn in favor of the plaintiff, the jury could conclude that Mr. Bonamarte's and Mr. Turner's actions served no rational purpose or were based on illicit motives.
As to Mr. Caldwell and Mr. Dereszewski, the plaintiff's proof of retaliatory intent focuses on these officials' connections to former Deputy Mayor Reiter, who allegedly disliked Housing Works. For instance, Mr. Caldwell worked closely with Ms. Reiter in 1994-95, when Housing Works publicly opposed the City's plans to restructure the Division of AIDS Services (the predecessor to DASIS). Mr. Caldwell is identified — along with Ms. Reiter; her former Chief of Staff, Mr. Klasfeld; and Ronald Johnson, the former head of the Mayor's Office for AIDS Policy — as an official who shared an animus towards Housing Works. For instance, during a City Council hearing in December 1995, Mr. Caldwell, Deputy Mayor Reiter, Mr. Klasfeld, and Mr. Johnson walked out when a Housing Works representative voiced opposition to the DAS restructuring plan. (King Decl., ¶ 89). Subsequently, in January 1997, Mr. Caldwell was appointed as Deputy Commissioner of HRA in Charge of DASIS, pursuant to Ms. Reiter's recommendation. (Pl. Exh. 51 (Caldwell Dep.) at 242). He continued to consult with Mr. Klasfeld during the 1997 audit of Housing Works (Pl. Exh. 49 (Klasfeld Dep.) at 145-54; Pl. Exh. 51 (Caldwell Dep.) at 37-40), and Mr. Klasfeld, in turn, kept in close contact with Ms. Reiter (Pl. Exh. 49 (Klasfeld Dep.) at 162-64).
These facts are sufficient to support an inference that Mr. Caldwell shared an animus towards Housing Works, and that he acted in conjunction with other officials hostile to the plaintiff during the audit process. As for Mr. Dereszewski, he worked directly under Mr. Caldwell as DASIS's Contracting Officer, and his modification of the scattered site RFP's was specifically mentioned in Mr. Caldwell's September 1997 memo, which Mr. Dereszewski assisted in drafting. (Pl. Exh. 13; Dereszewski Aff., ¶ 68). Based on the foregoing, the plaintiff's facts should be deemed sufficient to support an inference of irrational purpose or illicit motive as to Mr. Caldwell and Mr. Dereszewski.
3. Personal Involvement
Where the individual defendants have not been dismissed for the reasons specified above, their personal involvement in the constitutional violations alleged is sufficiently supported by the plaintiff's facts. This issue is therefore not a further ground for dismissing any of the individual defendants.
In short, Deputy Mayor Mastro, Ms. Barkan, Ms. Kaswan, and Commissioner Barrios-Paoli are implicated as direct participants in the decision to terminate the HRA contracts. Mayor Giuliani is implicated on a theory of supervisory liability.
Mr. Caldwell and Mr. Dereszewski are implicated as direct participants in their actions leading up to the HRA contract termination. Specifically, Mr. Caldwell ordered the January 1997 audit of Housing Works and recommended a termination of HRA's contracts. Mr. Dereszewski modified the RFP's for new scattered site contracts to eliminate Housing Works' advantage as an existing vendor.
Mr. Netburn's personal involvement has not been challenged, but he has testified directly that he made the decision to terminate the DOH contracts. (Pl. Exh. 57 (Netburn Dep.) at 25; Affidavit of Mitchell Netburn dated Sept. 26, 2003 ("Netburn Aff."), ¶¶ 6, 8).
Mr. Bonamarte and Mr. Capoziello are implicated as direct participants in issuing non-responsibility findings on behalf of the HRA and DOH respectively. Mr. McKay's personal involvement has not been challenged, but he personally decided the appeal of the HRA non-responsibility finding.
Finally, Mr. Turner directly participated in the decision to withdraw HRA's certification for the plaintiff's NYSDOL/NYSDOH contracts.
4. Qualified Immunity
"A qualified immunity defense is established if (a) the defendant's action did not violate clearly established law, or (b) it was objectively reasonable for the defendant to believe that his action did not violate such law." Tierney v. Davidson, 133 F.3d 189, 196 (2d Cir. 1998) (citation omitted); accord Moore v. Vega, 371 F.3d 110, 114 (2d Cir. 2004). While the qualified immunity inquiry is generally an objective one, "a defendant's subjective intent is indeed relevant in motive-based constitutional torts. . . . Where a factual issue exists on the issue of motive or intent, a defendant's motion for summary judgment on the basis of qualified immunity must fail." Johnson v. Ganim, 342 F.3d 105, 117 (2d Cir. 2003) (citation omitted);accord Cobb, 363 F.3d at 112 (stating, in Equal Protection context: "[I]t is difficult for us to see how conduct that is irrational (if so found by a jury) could nevertheless be objectively reasonable.").
Here, the defendants concede that clearly established law barred the alleged unlawful conduct of the defendants, but they assert that their actions were objectively reasonable. For the reasons discussed above, there are clear disputes of fact as to the existence of retaliatory intent on the plaintiff's First Amendment claim, and the rationality of the defendants' actions on the Equal Protection claim. Since those issues must be submitted to a jury, a determination of qualified immunity is also precluded.
5. Municipal Liability
The defendants have challenged the City's liability on both the plaintiff's First Amendment and Equal Protection claims. (Def. Memo. at 36, 49-50). A municipality may be liable under § 1983 where "execution of [the City's] policy or custom, whether made by its lawmakers or by those whose edicts or acts may fairly be said to represent official policy, inflicts the injury[.]"Monell v. Department of Social Services, 436 U.S. 658, 694 (1978). A single act by an official with "final policymaking authority" in a particular area of city business can constitute a municipal policy for purposes of § 1983 liability. City of St. Louis v. Praprotnik, 485 U.S. 112, 123 (1988); Pembaur v. City of Cincinnati, 475 U.S. 469, 480-83 (1986). A "persistent and widespread" practice of government officials could also be "so permanent and well settled as to constitute a custom or usage with the force of law." Monell, 436 U.S. at 691 (quotingAdickes v. S.H. Kress Co., 398 U.S. 144, 168 (1970)).
Whether an official has "final policymaking authority" in the particular area of city business at issue is a question of state law. Praprotnik, 485 U.S. at 124; Jeffes v. Barnes, 208 F.3d 49, 57 (2d Cir. 2000). Here, the parties agree that the New York City Charter ("City Charter") and Rules of the Procurement Policy Board ("PPB Rules") provide the relevant framework for determining which City official has "final policymaking authority" in the area of contract procurement. The pertinent provisions of the City Charter and PPB Rules are reviewed below.
Under City Charter § 8, the mayor is empowered to "exercise all the powers vested in the city," including the power to enter into contracts, see New York General City Law, § 20; The Legal Aid Society v. City of New York, 114 F. Supp. 2d 204, 233 (S.D.N.Y. 2000). City Charter § 311 establishes a Procurement Policy Board, which is empowered to "promulgate rules . . . for soliciting bids or proposals and awarding contracts," "the manner in which agencies shall administer contracts and oversee the performance of contracts and contractors," and "standards and procedures to be used in determining whether bidders are responsible." Id., § 311(b)(1)-(3).
The PPB Rules set forth comprehensive rules for the awarding and administration of individual contracts. With regard to the method of awarding contracts, PPB Rule 3-01(b) states a "preference for competitive sealed bidding," under which a contract is awarded to the lowest bidder. See City Charter, § 313. However, an exception is recognized for "special case" contracts, where "it is not practicable or not advantageous to the City to use competitive sealed bidding." PPB Rule 3-01(d). In such cases, the contracting officer of each city agency is granted discretion to select an alternative method for awarding contracts, PPB Rule 3-01(d)(3), but the approval of the mayor is required. See City Charter § 322. Under City Charter § 327, the mayor must certify that the "procedural requisites for the solicitation and award of the contract have been met" before a special case contract can be registered with the City Comptroller. Special case contracts valued at over $2 million require the approval of the mayor or deputy mayor prior to execution. See City Charter § 317(b).
Once an agency decides to award a contract, PPB Rule 2-09 requires that the its contracting officer prepare a "Recommendation for Award" for submission to the City Comptroller. Under City Charter § 328(b), the Comptroller is required to register the contract within 30 days unless city funds are unavailable, a certificate under § 327 for "special case" contracts is lacking, or a contractor has been debarred. PPB Rule 2-12(a) states that "[r]egistration of a contract by the Comptroller shall not constitute an approval of the contract nor an approval of the process by which the contract was awarded."
Under PPB Rule 2-08(g), the agency's contracting officer is required to make a determination of "contractor responsibility," and he must include that determination in the "Recommendation of Award" submitted to the City Comptroller, see PPB Rule 2-09(b)(10). Under PPB Rule 2-08(k), a determination of non-responsibility can be appealed to the head of the city agency, and under PPB Rule 2-08(m), a further appeal can be taken to the mayor. Under PPB Rule 2-08(m)(1), the mayor is permitted to delegate responsibility for determining non-responsibility appeals to the City's Chief Contract Procurement Officer. PPB Rule 2-08(m)(6) states that "[t]he decision by the Mayor or CCPO of a bidder's appeal . . . concerning non-responsibility shall be final."
a. First Amendment Claim
The defendants maintain that only Mayor Giuliani can be considered the final policymaker with respect to four adverse actions alleged in the plaintiff's First Amendment claim: (1) the decision to refuse renewal of the HRA scattered site contract, (2) the decision to withdraw the DOH contracts from the City Comptroller, (3) the decision to declare Housing Works to be a non-responsible contractor, and (4) the decision to withdraw HRA's approval of Housing Works as a vendor for the state's NYSDOL/NYSDOH contracts. (Def. Memo. at 49). These decisions will be addressed in turn.
(1) Scattered Site Contract
Based on the foregoing review of the City's contract procurement rules, both Mayor Giuliani and Deputy Mayor Mastro can be considered the final policymakers with respect to the HRA scattered site contract. While the mayor has the power to enter into contracts under City Charter § 8, this authority is shared with the deputy mayor under City Charter § 317 in the case of "special case" contracts valued at over $2 million. The defendants do not dispute that the scattered site contract was a "special case" contract (Kaswan Aff., ¶¶ 5-6), or that it was valued at over $4 million annually (Def. 56.1 Statement, ¶ 46; Def. Exh. 72; Pl. Exh. 5). Moreover, the mayor and deputy mayor's authority to approve such contracts does not appear to be limited by higher authority: all contracts must be registered with the City Comptroller, but PPB Rule 2-12(a) makes clear that such registration "shall not constitute an approval of the contract." Accordingly, City Charter § 317 appears to be a clear delegation of the mayor's policymaking authority. Compare Pembaur, 475 U.S. at 483-85 (holding that both county sheriff and county prosecutor were policymakers, where sheriff sought legal advice from prosecutor under procedures set forth under state law).
Ms. Kaswan and Deputy Mayor Mastro also make reference in their affidavits to special procedures established by Deputy Mayor Powers, under which special case contracts and contract amendments exceeding $1 million require the approval of the Deputy Mayor of Operations. (Kaswan Aff., ¶ 9; Mastro Aff., ¶ 11). These procedures have not been submitted by the defendants. However, the difference in contract value does not affect the analysis here.
As discussed earlier, the deposition testimony of Ms. Barkan, Deputy Mayor Mastro's Chief of Staff, provides sufficient support for the inference that Mr. Mastro participated in the decision to refuse renewal of the scattered site contract. (Pl. Exh. 56 (Barkan Dep.) at 50). The City's liability could therefore rest on Mr. Mastro's actions.
Alternatively, Mayor Giuliani's personal involvement could also implicate the City. Municipal liability can be found where a plaintiff can "attribute subordinates' conduct to the actions or omissions of higher ranking officials with policymaking authority." Amnesty America v. Town of West Hartford, 361 F.3d 113, 126 (2d Cir. 2004). Since a single act by a final policymaker can constitute a municipal policy, "a single instance of deliberate indifference to subordinates' actions can provide a basis for municipal liability." Id. at 127. In such cases, "there is no need . . . to establish that policymaking officials maintained a consistent `policy' of deliberate indifference." Id. at 129.
As discussed above, Mayor Giuliani's personal involvement, based on a theory of supervisory liability, could be demonstrated by the fact that he was informed by Deputy Mayor Mastro about Housing Works' fiscal issues; that officials in Mr. Mastro's office kept in contact with former Deputy Mayor Reiter, who allegedly loathed Housing Works; and that Ms. Reiter was closely affiliated with Mayor Giuliani as manager of his re-election campaign. These facts could support the further inference that Ms. Reiter exerted some influence on Deputy Mayor Mastro's decision, and that Mayor Giuliani knew about but deliberately ignored Mr. Mastro's retaliatory actions.
(2) DOH Contracts
Unlike the HRA contracts, the DOH contracts only implicate the actions of Mr. Netburn, the contracting officer for DOH. Specifically, one of the DOH contracts, the HIV Intake Contract, was executed in August 1997 and submitted to the City Comptroller, but was later withdrawn from the Comptroller's office. (Pl. 56.1 Statement, ¶¶ 271, 274; Def. 56.1 Statement, ¶¶ 311, 313). Although Ms. Kaswan contacted Mr. Netburn to suggest the withdrawal of these contracts following the issuance of HRA's October 22 press release, Mr. Netburn testified that he made the decision on the DOH contracts on his own. (Pl. Exh. 57 (Netburn Dep.) at 25; Netburn Aff., ¶¶ 6, 8). Mr. Netburn also testified that he rejected another DOH contract, the MHRA Ryan White Contract, prior to its submission to the City Comptroller. (Pl. Exh. 57 (Netburn Dep.) at 25; Netburn Aff., ¶ 8). The DOH contracts, in any event, appear to have been valued at under $2 million and therefore did not require the deputy mayor's approval. (King Decl., ¶ 229).
In his claim of damages, Housing Works' Executive Director, Mr. King, also lists several other contracts from the DOH and other agencies. (King Decl., ¶ 229). None of these contracts appear to be worth over $2 million. However, since no allegations have been made as to how these contracts were lost, both individual and municipal liability as to these contracts will depend on further proof presented at trial. The defendants have not specifically challenged the basis for these additional contracts in their summary judgment motion.
Mr. Netburn cannot be considered a final policymaker with respect to the termination of the DOH contracts. While the PPB Rules grant substantial discretion to an agency's contracting officer to establish alternative bidding procedures for "special case" contracts, see PPB Rule 3-01(d)(3), and to make initial recommendations for the awarding of contracts, see PPB Rule 2-09, such discretion is limited by the mayor's powers. For instance, the mayor must approve the alternative bidding procedures proposed by the contracting officer, see City Charter § 322, and under City Charter § 327, the mayor must submit a certification whenever a "special case" contract is submitted to the Comptroller for registration. Therefore, the mayor's authority to award contracts has not been delegated to each agency's contracting officer. See Praprotnik, 485 U.S. at 127 (no municipal liability where policymakers "retain the authority" to review subordinate's decision).
However, the City's liability on the DOH contracts could be based on a theory of municipal "custom" under Monell. A "persistent and widespread" practice of government officials, even if not approved as a formal or written policy, "could be so permanent and well settled as to constitute a custom or usage with the force of law." Monell, 436 U.S. at 691 (quotingAdickes, 398 U.S. at 168). Where a persistent practice is alleged to exist only among subordinate employees, the subordinates' actions "must be so manifest as to imply the constructive acquiescence of senior policy-making officials."Sorlucco v. New York City Police Department, 971 F.3d 864, 871 (2d Cir. 1992).
Here, the plaintiff has asserted facts suggesting that retaliatory actions extended to all levels of the HRA, as well as the City's Chief Contract Procurement Officer and Deputy Mayor Mastro's office. For instance, the retaliation is alleged to have begun when Mr. Caldwell was appointed, with the help of Mr. Reiter, to his position as HRA's Deputy Commissioner in charge of DASIS. (Pl. Exh. 51 (Caldwell Dep.) at 242). In this capacity, Mr. Caldwell worked with DASIS's Contracting Officer Mr. Dereszewski, as well as HRA Commissioner Barrios-Paoli and HRA's Contracting Officer Mr. Bonamarte, in conducting an audit of Housing Works and processing the HRA contracts. During the audit process, Mr. Caldwell consulted with Mr. Klasfeld, Assistant to Deputy Mayor Mastro (Pl. Exh. 49 (Klasfeld Dep.) at 145-54; Pl. Exh. 51 (Caldwell Dep.) at 37-40); in turn, Mr. Klasfeld kept in contact with the CCPO, Ms. Kaswan (Pl. Exh. 46 (Kaswan Dep.) at 112). In one instance, when Ms. Kaswan informed Mr. Klasfeld about the Housing Works situation, he responded, "We don't even like Housing Works." (Pl. Exh. 46 (Kaswan Dep.) at 112). Ms. Kaswan assumed that by the term, "we," Mr. Klasfeld was referring to himself and Ms. Reiter. (Pl. Exh. 46 (Kaswan Dep.) at 112).
Once the HRA contract termination was officially announced in HRA's October 22, 1997 press release, the record indicates that the DOH's contract termination resulted as a natural consequence. Mr. Netburn, DOH's Contracting Officer, has stated that Ms. Kaswan immediately contacted him after October 22 to suggest that he withdraw the DOH contracts from the City Comptroller's office. (Netburn Aff., ¶¶ 6, 8). Ms. Barkan, Chief of Staff to Deputy Mayor Mastro, also testified that a "due diligence" process existed, by which a vendor facing fiscal integrity issues with one city agency would be subject to an investigation into all its contracts with other city agencies. (Pl. Exh. 56 (Barkan Dep.) at 51-53). Finally, the widespread nature of the City's alleged retaliation against Housing Works is demonstrated by the comments of Mr. Netburn, who allegedly stated to Housing Works' co-Executive Director, Mr. Cylar, that no DOH contracts could be awarded because the City had a "`policy' to not do business with people who have sued the City." (Cylar Aff., ¶ 8). The foregoing facts are therefore sufficient for a jury finding that a widespread custom of retaliation caused the termination of the DOH contracts. See Ward v. New York City Transit Authority, No. 97 Civ. 8550, 1999 WL 446025, at *7 (S.D.N.Y. June 28, 1999) ("involvement of multiple layers of the [government] hierarchy" satisfies showing that senior officials acquiesced in pervasive custom among subordinates).
Moreover, the DOH contract action cannot be deemed a "single act of illegality" precluding a municipal liability claim based on a "pattern of conduct." See Turpin v. Mailet, 619 F.2d 196, 202 (2d Cir. 1980) (municipal policy cannot "ordinarily be inferred from a single incident of illegality"). The central difficulty with the plaintiff's claim is two-fold. First, unlike the ordinary "custom" claim, Housing Works has not alleged that a pervasive practice affected an entire class of individuals, but rather only the plaintiff itself. Second, it has not alleged that it was subject to repeated instances of retaliation prior to its 1997 dispute with the City.
In Turpin, however, the Second Circuit declined to dismiss a claim of municipal liability on either of these grounds. The court stated:
Though Monell was concerned with a general policy enforced against a large class of individuals, it seems reasonable to conclude that its teachings are equally applicable to a specific policy directed at just one individual, as long as the pleaded facts support the inference that unconstitutional action was taken against the individual pursuant to such policy.619 F.2d at 202 n. 7. The court also recognized a "custom" theory of liability premised on a single prior incident of alleged harassment:
Turpin alleged not merely a first unlawful arrest, which might properly be dismissible against the City, but a second arrest . . . claimed to have been caused by a policy of the City to harass Turpin in violation of his constitutional rights. Unlike the "first arrest" cases, which struggle with whether a single episode can suggest a policy, his claims were sufficient to entitle him to a trial.Id. at 202.
Here, the plaintiff's claim regarding the DOH contracts is stronger than that asserted in Turpin. While the plaintiff has asserted a pattern of retaliation directed only at Housing Works, there is a prior conduct asserted here — namely, the HRA contract termination. This conduct also represented more than a single episode of retaliation because, as discussed above, it involved multiple actions by officials at many levels of the City hierarchy. Moreover, unlike Turpin, which ultimately rejected the municipal liability on the ground that senior officials were unaware of any prior animus against the plaintiff, see id. at 202, there is evidence here to suggest that Mayor Giuliani knew of the prior pattern of retaliation at HRA. His inaction in the face of that knowledge could create liability for the City, where the retaliation is shown to have spread to other city agencies.See Turpin, 619 F.2d at 201 ("[W]here senior personnel have knowledge of a pattern of constitutionally offensive acts by their subordinates but fail to take remedial steps, the municipality may be held liable for a subsequent violation[.]") (citing Smith v. Ambrogio, 456 F. Supp. 1130, 1136 (D. Conn. 1978).
(3) Non-Responsibility Findings
As discussed above, the findings of contractor non-responsibility were made by Mr. Bonamarte and Mr. McKay on behalf of the HRA, and Mr. Capoziello and Mr. Cohen on behalf of the DOH. None of these individuals can be considered final policymakers because, as PPB Rule 2-08(m) makes clear, the findings of agency heads and contracting officers can be further appealed to the mayor. Since the plaintiff has also failed to demonstrate Mayor Giuliani's involvement in the non-responsibility appeals, the City's liability cannot be premised on the mayor's actions.
However, municipal liability could be based on the actions of the City's Chief Contract Procurement Officer. Mayor Giuliani has asserted that he delegated his authority to decide non-responsibility appeals to the CCPO, pursuant to PPB Rule 2-08(m)(1). The CCPO's actions could therefore create liability for the City, even if Mayor Giuliani's individual liability is precluded.
Under this theory, the CCPO's who served after September 1998 and February 1999 (but not Ms. Kaswan, who left her post in January 1998 (Kaswan Aff., ¶ 2)), when the HRA and DOH determinations were respectively appealed to the mayor, could implicate the City's liability if their delay in deciding the appeals is deemed to have been motivated by retaliatory animus. While the plaintiff has not named these CCPO's as defendants in these actions, circumstantial evidence of retaliatory motives could be inferred from the compilation of CCPO decisions from 1995-2003. (Pl. Exh. 27). This compilation shows that the appeals of other contractors were decided more quickly than that of Housing Works, and could therefore demonstrate the City's unequal treatment of the plaintiff. See Hampton Bays, 127 F. Supp. 2d at 374 (unequal treatment could be circumstantial evidence of retaliation). While Claude M. Millman and Michael Best, the CCPOs from February 1998 to September 2000, and November 2000 to January 2002 respectively, have submitted affidavits attesting to other reasons for their delay, the determination of their intent is an issue best left to the jury.
Moreover, municipal liability for the non-responsibility findings of Mr. Bonamarte and Mr. Capoziello could be based on a "custom" theory of liability. As discussed above, these actions followed a prior pattern of conduct that Mayor Giuliani may have failed to remedy. Since there is circumstantial evidence, as discussed above, that these officials acted with retaliatory motives, it could be determined that a custom of retaliation originating with the HRA contract termination extended to the non-responsibility findings. However, the claim against Mr. Cohen, who decided the DOH appeal, has been dismissed for lack of causation, and therefore be the basis for municipal liability. The defendants have not submitted arguments with respect to Mr. McKay, who decided the HRA appeal.
(4) NYSDOL/NYSDOH Contracts
Finally, Mr. Turner is alleged to have withdrawn HRA's certification of Housing Works as a vendor for the state's NYSDOL/NYSDOH contracts. The defendants assert only that Mr. Turner was "subject to the same constraints in authority as Kaswan Mastro and Barkan," referring to the City's rules on contract procurement. (Def. Memo. at 50). However, none of the regulations reviewed above would apply to Mr. Turner, since his actions related to contracts procured by the state, not the City.
The plaintiff has stated that the job training RFP issued by the NYSDOL specified only the "Commissioner of the local social services district" — in this case, Mr. Turner, as the Commissioner of HRA — as the official from whom certification was required for the awarding of the NYSDOL/NYSDOH contracts. (Plaintiff's Sur-Reply Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment at 15). There is no indication that approvals from higher City officials were required, or that the state could seek an appeal to such officials if the certification was denied. As the defendants have offered no contrary authority, municipal liability for the denial of the NYSDOL/NYSDOH contracts cannot be dismissed at this stage of litigation.
b. Equal Protection Claim
By contrast, municipal liability on the plaintiff's Equal Protection claim should be dismissed in most respects. As discussed above, the claims against all "higher-ranking officials" have been dismissed for their lack of knowledge concerning similarly situated contractors. These officials include Mayor Giuliani, Deputy Mayor Mastro, Ms. Barkan, Ms. Kaswan, HRA Commissioner Barrios-Paoli, Mr. Capoziello, and DOH Commissioner Cohen. Accordingly, the City cannot be held liable for treating Housing Works differently from other contractors based on the acts of final policymakers, such as Deputy Mayor Mastro or Mayor Giuliani. Moreover, an alternative theory based on municipal "custom" does not apply because Mayor Giuliani cannot be said to have known about his subordinates' conduct concerning contractors he was unaware of, and because the alleged "prior pattern" at the HRA is limited to the conduct of a few select subordinates — namely, Mr. Bonamarte, Mr. Caldwell, and Mr. Dereszewski — not several officials at many levels of city government.
However, municipal liability should not be dismissed with respect to the NYSDOL/NYSDOH contracts and the alleged delay in deciding the non-responsibility appeals. As in the First Amendment context, differential treatment with respect to these actions can be based on the acts of final policymakers. Namely, Mr. Turner was the final policymaker in refusing to certify Housing Works for the state contracts, and the CCPO's who served after September 1998 and February 1999 were the final policymakers with respect to the HRA and DOH non-responsibility appeals.
6. Damages
Summary judgment may be granted on the issue of damages where, as with liability, there is no genuine dispute of material fact.Jewell-Rung Agency, Inc. v. The Haddad Organization, Limited, 814 F. Supp. 337, 339-40 (S.D.N.Y. 1993). The amount of recoverable damages is generally a question of fact, while "the measure of damages upon which the factual computation is based is a question of law." Oscar Gruss Son, Inc. v. Hollander, 337 F.3d 186, 196 (2d Cir. 2003).
Where a violation of constitutional rights is asserted under 42 U.S.C. § 1983, the basic purpose of a damages award is to compensate the plaintiff for injuries caused by such a violation. Carey v. Piphus, 435 U.S. 247, 254 (1978). While common law tort rules may provide a "starting point" for fashioning a § 1983 damage award, such rules may be inadequate where the interests to be protected differ from those addressed by state law. Id. at 258. "In order to further the purpose of § 1983, the rules governing compensation . . . should be tailored to the interests protected by the particular right in question." Id. at 258-59. To that end, compensatory damages under § 1983 may include "not only out-of-pocket loss and other monetary harms, but also such injuries as impairment of reputation . . ., personal humiliation, and mental anguish and suffering." Memphis Community School District v. Stachura, 477 U.S. 299, 307 (1986) (internal quotations and citation omitted).
The defendants challenge the plaintiff's claim of damages on a variety of grounds, contending that: (1) the plaintiff cannot recover the full amount of its lost contracts based on the "mission non-fulfillment" principle or contract law, (2) the plaintiff's claim of "reputational harm" is not supported by admissible expert evidence, (3) lost profits are precluded under the "frustrated bidder" rule, (4) the plaintiff cannot claim out-of-pocket losses for prospective contracts, (5) damages from the "Red and White Market" settlement are precluded by the statute of limitations, (6) and the plaintiff cannot recover punitive damages against the individual defendants. (Def. Memo. at 50-73). These arguments will be addressed in turn.
a. "Mission Non-Fulfillment" Damages
The defendants' principal challenge is to the plaintiff's "mission non-fulfillment" theory of damages, under which the plaintiff asserts it is entitled to recover the full value of the contracts that it lost due to the defendants' alleged wrongdoing. While the defendants offer a host of reasons for opposing this theory, including challenges to the qualifications of the plaintiff's expert and various policy rationales, their arguments appear to boil down to a central observation, namely, that since Housing Works is admittedly a nonprofit organization, it could not have earned any "profits" on the contracts that it sought from the City. Indeed, the contract sums in this case did not exceed the plaintiff's costs, meaning that "from a net financial perspective," the plaintiff actually benefitted by not obtaining the City contracts. (Def. Memo. at 52). The defendants further contend that under basic contract law rules, a damages award for a breach of contract must make deductions for "savings made possible by the breach"; since Housing Works garnered savings by not having to perform the City's contracts, it should therefore deduct its cost savings from the contract amounts. (Def. Memo. at 54). Under either rationale, the defendants appear to contend that the plaintiff's damages would be zero, or at most nominal damages.
The defendants' arguments, while innovative, are subject to a number of disputed factual issues and are inappropriate for resolution on a summary judgment motion. As an initial matter, the rules governing § 1983 damages, as discussed above, are flexible and cannot be reduced to any particular common law rule. Accordingly, it cannot be said as a matter of law that the contract law principle cited here — that deductions must be made for savings made possible by the breach — precludes the plaintiff's damages merely because a loss of certain contracts is alleged to be part of those damages. See Carey, 435 U.S. at 258 ("The purpose of § 1983 would be defeated if injuries caused by the deprivation of constitutional rights went uncompensated simply because the common law does not recognize an analogous cause of action."). Moreover, the alternative principle of "mission non-fulfillment" damages for nonprofit organizations has been upheld in other contexts. See Havens Realty Corporation v. Coleman, 455 U.S. 363, 379 (1982) (upholding standing based on injury under Fair Housing Act, where organization was "frustrated by defendants' racial steering practices in its efforts to assist equal access to housing"); Community Housing Trust v. Department of Consumer and Regulatory Affairs, 257 F. Supp. 2d 208, 220 (D.D.C. 2003) (denying summary judgment in constitutional challenge to zoning law based on frustration of organization's mission). While no case appears to have applied the concept of "mission non-fulfillment" damages to nonprofits alleging a deprivation of public contracts, the issue of whether and how such a principle would apply cannot be determined as a matter of law and without further development of the facts.
Specifically, to substantiate its claim of "mission non-fulfillment" damages, the plaintiff will have to show in part what its mission is, and how its contract losses contributed to the frustration of that mission. The defendants' central argument — namely, that Housing Works' damages amount to nothing because its costs exceeded the value of its contracts — is, in essence, premised on construing the plaintiff's "mission" as seeking to garner profits from its contracts with the City. Indeed, where nonprofits engage in activities intended to create profit, their measure of damages may be indistinguishable from those of for-profit entities. See, e.g., Lakota Girl Scout Council, Inc. v. Havey Fund-Raising Management, Inc., 519 F.2d 634 (8th Cir. 1975) (awarding lost profits to nonprofit agency in breach-of-contract action concerning failed fundraising effort);Start, Inc. v. Baltimore County, Maryland, 295 F. Supp. 2d 569, 581-82 (D. Md. 2003) (approving damages for "lost profits and sunk costs" for nonprofit agency, even though such damages are more akin to those of for-profit business); American Baptist Churches of Metropolitan New York v. Galloway, 271 A.D.2d 92, 97-98 (1st Dep't 2000) (reversing lower court's finding, in action asserting breach of fiduciary duty by officer of nonprofit agency, that "[a]s a not-for-profit corporation, [plaintiff] cannot satisfactorily allege damages, which would otherwise be premised upon lost profits.").
By contrast, where a nonprofit agency alleges losses unrelated to financial gain, its damages could be construed in alternative ways. For instance, in Havens, a nonprofit agency providing counseling and referral services relating to housing discrimination asserted that the defendant's "racial steering" practices had frustrated its mission by forcing it to "devote significant resources to identify and counteract the defendant's . . . practices." 455 U.S. at 379. Therefore, such instances, where a "purportedly illegal action increases the resources the group must devote" to its mission, could constitute one example of "mission non-fulfillment" damages. Fair Housing of Marin v. Combs, 285 F.3d 899, 903 (9th Cir. 2002) (construing Havens).
Conversely, in Community Housing Trust, two nonprofit agencies providing homeless housing asserted that unlawful zoning restrictions imposed by District of Columbia officials caused a frustration of their mission by reducing individual donations to the organizations. 257 F. Supp. 2d at 220. The district court held that the plaintiffs had presented sufficient facts to show "injuries to their respective missions and coffers," id., thereby indicating that, aside from increased expenditures, instances where a nonprofit agency suffers a reduction in income as a result of an illegal action could constitute another form of "mission nonfulfillment" damages.
The plaintiff here has presented sufficient evidence to bring its claim under the rubric of Community Housing Trust. Mr. King states in his affidavit that the mission of Housing Works is to "provid[e] housing and services to persons living with HIV and AIDS." (King Decl., ¶ 2). The services provided by Housing Works include: (1) "The Intake Program," providing initial assessment, case management, and crisis intervention services, (2) "The Supportive Housing Programs," providing independent housing with supportive services, (3) "Adult Day Treatment Centers," providing comprehensive HIV health services, (4) "Residential Facilities," providing housing with on-site supportive services," (5) "The Supportive Services Program," which complements other housing and health programs," and (6) "The Second Life Job Training Program," providing job training with guaranteed employment. (King Decl., ¶ 7).
The plaintiff has also submitted facts — which are largely undisputed by the defendants — showing that the contracts at issue relate specifically to the above-named programs. Namely: (1) the "scattered site contract" was intended to provide independent housing in scattered locations with supportive services (Pl. 56.1(b) Statement, ¶ 13; Def. 56.1 Statement, ¶¶ 29, 46, 47), (2) the "DOH Intake Contract" was to provide intake, assessment, and referral services (Pl. 56.1(b) Statement, ¶ 269; King Decl., ¶ 170), (3) the "MHRA Ryan White Contract" was to provide supportive services and a day treatment program (Pl. 56.1(b) Statement, ¶ 278; King Decl., ¶ 175), (4) the "Operating Contracts" was to manage the plaintiff's residential facilities on 9th Street in Manhattan and in the East New York section of Brooklyn (Pl. 56.1(b) Statement, ¶¶ 282-83; Def. 56.1 Statement, ¶¶ 59, 61), and (5) the NYSDOL/NYSDOH "Welfare-to-Work Initiative" contract was to provide job training to people with HIV and AIDS (Pl. 56.1(b) Statement, ¶ 308; King Decl., ¶ 202).
The plaintiff has also included a number of other contracts in its claim of damages. (King Decl., ¶ 229). While the defendants have not challenged the inclusion of these contracts, the plaintiff will still have to prove at trial the connection between them and the mission of Housing Works. It will also, of course, have to show that the loss of those contracts was caused by the defendants' conduct.
Based on these facts, the plaintiff alleges a direct causal link between the defendants' conduct and its "mission non-fulfillment" injuries, namely, that its mission to provide particular services to people with HIV and AIDS was harmed when the defendants terminated the very contracts that provided funding for those services. This connection is more direct than in Community Trust, where the plaintiff-organizations alleged that their zoning dispute with the defendants caused others to cease making donations to them. 257 F. Supp. 2d at 220. The issue of whether and to what extent the defendants' actions have harmed the plaintiff's mission should be submitted to the jury.
It should be noted, however, that the plaintiff's claim of damages may be subject to other factual disputes at trial. For instance, in Samaritan Inns, Inc. v. District of Columbia, 114 F.3d 1227 (D.C. Cir. 1997), the court approved a damages award for lost contributions to a nonprofit agency, where public officials were alleged to have issued a "stop-work order" in violation of the Fair Housing Act for a housing facility operated for former drug and alcohol abusers. Id. at 1229-30, 1234. However, the court held that since the plaintiff had alleged lost contributions from a fundraising drive of limited duration (designed specifically for the project in question), and not from an annual donation drive, the plaintiff could not explain "why, under the circumstances, [it] could not simply make up the `lost' contributions in later years and still achieve the goals of the campaign." Id. at 1236. In reversing this portion of the damages award, the court distinguished the "lost-volume seller" concept under contract law, stating: "If, for example, a buyer breaches a contract to purchase a car from an automobile dealer, the fact that the dealer is subsequently able to resell the car to a second buyer at the same price does not mean that the dealer has suffered no damage. Had it not been for the first buyer's breach, the dealer would have sold two cars, and earned profit on both." Id. This principle also appears to follow from a party's duty to mitigate damages. See, e.g., Umbehr, 518 U.S. at 685 (where government terminated contracts of for-profit entity in retaliation for First Amendment activity, "evidence of mitigation of [the plaintiff's] loss by means of his subsequent contracts with the cities would be relevant in assessing what remedy is appropriate"). Accordingly, the plaintiff in this case will have to show that the contract revenues it sought from the City could not have been "made up" through other channels. This issue, however, is inappropriate for resolution at this stage of litigation.
Finally, the defendants have challenged the admissibility of Dr. Rikki Abzug's expert testimony concerning mission nonfulfillment damages. (Def. Memo. at 59-62). A witness qualified as an expert will be permitted to testify if his or her testimony "will assist the trier of fact to understand the evidence or to determine a fact in issue." United States v. Lumpkin, 192 F.3d 280, 289 (2d Cir. 1999) (quoting Fed.R.Evid. 702). To be admissible, expert testimony must be both relevant and reliable.Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 589 (1993). A district court has wide discretion in deciding whether to admit evidence. Id. at 595; accord Manley v. Ambase Corp., 337 F.3d 237, 247 (2d Cir. 2003); Parker v. Reda, 327 F.3d 211, 213 (2d Cir. 2003).
Here, Dr. Abzug's trial testimony will assist the jury in determining the nature and amount of damages. As noted earlier, the concept of mission non-fulfillment damages appears to be unique in the context of nonprofit agencies claiming a deprivation of government contracts. However, since the case law provides a sufficient legal basis for submitting this issue to the jury, Dr. Abzug's contribution will be to assist the jury understand precisely how this theory will apply to the facts at hand To that end, she will testify about the manner in which a nonprofit agency would conceptualize its "mission," how such a mission differs from that of for-profit agencies, and how the disputed contracts in these cases would have contributed to the mission of Housing Works. (Pl. Exh. 76 (Abzug Dep.) at 306-07, 428-31). While the defendants are free to offer their own expert testimony as to how injuries to a nonprofit's mission should be measured, this does not render Dr. Abzug's testimony inadmissible. See In re Blech Securities Litigation, No. 94 Civ. 7696, 2003 WL 1610775, at *20 (S.D.N.Y. March 26, 2003) ("When a trial court . . . rules that an expert's testimony is reliable, this does not necessarily mean that contradictory expert testimony is unreliable.") (quoting Fed.R.Evid. 702, Advisory Committee Notes to 2000 Amendments). Accordingly, Dr. Abzug's testimony is relevant and could be helpful to the jury.
Moreover, her testimony is reliable. Dr. Abzug is an Assistant Professor of Nonprofit Management at the Robert J. Milano School of Management and Urban Policy, New School University. (Def. Exh. 58 at 4). Rule 702 makes clear that expert testimony can be based not only on "scientific" knowledge, but also on "technical" or "other specialized knowledge." See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147-49 (1999). The Advisory Committee Notes to the 2000 Amendments offer as examples of qualified experts a drug enforcement agent with knowledge of code words used in drug transaction, handwriting examiners, and design engineers. Dr. Abzug's training and academic position clearly qualify her to testify about the functioning of nonprofit organizations.
b. "Reputational Harm"
The defendants also challenge Housing Works' claim of "reputational harm." An injury to one's reputation is a permissible component of damages under § 1983. Memphis, 477 U.S. at 307. Several courts have recognized claims by nonprofit organizations for lost contributions allegedly due to harms to the agency's reputation. See, e.g., Samaritan Inns, 114 F.3d at 1234; Community Housing Trust, 257 F. Supp. 2d at 220 (construing lost contributions as both mission non-fulfillment and reputational damages). As stated in Samaritan Inns: "It cannot be gainsaid that just as the success of a for-profit business may depend on the goodwill of its customers, many charitable enterprises such as Samaritan Inns depend largely on donations from the public for their continued success . . . [The defendant's actions] adversely affect[ed] Samaritan Inns' image as an efficient and reputable provider of charitable services, and thereby impair[ed] its ability to raise funds." 114 F.3d at 1234.
While the plaintiff's principal claim of damages here is that the defendants directly drained its resources by cutting off City contracts — the claim underlying its mission non-fulfillment theory of damages, discussed above — the plaintiff also asserts that the "Defendants' accusations of financial and accounting irregularities and mishandling of government contracts and fraud by Housing Works," as well as "Defendants' accusations that Housing Works might harm its clients' health and safety," injured its reputation and caused other funders to withhold contributions. (Pl. Memo. at 53). As evidence of this injury, the plaintiff has submitted, through the declaration of its Executive Director Mr. King, a table showing Housing Works' gross operating revenues from the time of its inception in FY 1991 to FY 2002. (King Decl., ¶ 235). The table purportedly shows a "marked drop in gross revenues in [FY 1999], the fiscal year immediately after the City's October [1997] press release." (King Decl., ¶ 235).
The plaintiff has also submitted a report from its expert, Michael Seltzer. (Def. Exh. 58). Mr. Seltzer purports to measure the amount of the plaintiff's reputational injuries by first calculating Housing Works' annual rate of growth, based on Mr. King's table of gross revenues, from 1991 to October 1997; Mr. Seltzer concludes that the lowest annual growth rate during this period was 26 percent. (Def. Exh. 58 at 25-26). Mr. Seltzer then estimates that Housing Works' revenues would have continued to increase at a rate of at least 13 percent, or one-half of 26 percent, during the period 1998 to 2002. (Def. Exh. 58 at 26). By calculating the expected gross revenues based on this 13 percent rate for each year in 1998-2002, then subtracting the actual revenues received, Mr. Seltzer calculated the total loss in revenue experienced by Housing Works during this period. (Def. Exh. 58 at 26-27). From this figure, he subtracted the amount of contract losses claimed by the plaintiff, thereby isolating the amount of lost revenues allegedly attributable to reputational harms. (Def. Exh. 58 at 27).
While the defendants' contentions on this issue focus primarily on the admissibility of Mr. Seltzer's expert testimony, a review of the record suggests that the plaintiff's claim should be dismissed for lack of causation. Quite apart from proving the amount of damages, a plaintiff must show that its injuries were caused by the defendant's alleged conduct. As stated by the court in Samaritan Inns, a nonprofit can recover lost contributions due to reputational harms "if [the government's conduct] was the proximate cause of the loss." 114 F.3d at 1234. Accord Community Housing Trust, 257 F. Supp. 2d at 220 (loss of charitable donations must be "traceable to defendants' conduct");cf. Toltec Fabrics, Inc. v. August Inc., 29 F.3d 778, 781 (2d Cir. 1994) (goodwill damages recoverable if "loss was caused by the opposing party's breach [of contract]").
Here, the plaintiff asserts that it experienced a loss of gross revenues beginning in FY 1999, and it has submitted tabulations and expert testimony purportedly illustrating such declines and measuring shortfalls between expected and actual revenues through FY 2002. However, this evidence of the amount of Housing Works' losses is not proof of causation. Specifically, to the extent that funders are alleged to have withheld donations because they learned of Housing Works' fiscal problems, the plaintiff does not claim that the defendants made any damaging statements directly to those funders. Instead, the claim is that the defendants, through the HRA's October 22, 1997 press release, directed their comments to the media, which then reported on Housing Works' fiscal crisis and its dispute with the City. If those facts became widely known in the media, it also appears to have resulted in significant part from the plaintiff's own efforts to publicize its disputes with the City. See Anderson v. Independent School District, 357 F.3d 806, 811 (8th Cir. 2004) (rejecting loss of reputation damages in defamation action, where "the `buzz around town' was generated by [the plaintiff] himself").
Alternatively, the plaintiff's claim could be construed as alleging that the defendants' conduct of terminating Housing Works' contracts, not their damaging statements, caused the plaintiff's injuries by generating sufficient controversy about Housing Works to affect the behavior of funders. See, e.g., Samaritan Inns, 114 F.3d at 1232 (donor interest was chilled by "cloud of controversy"); Community Housing Trust, 257 F. Supp. 2d at 220 (individuals refused to donate "because of the instant dispute"). But, even under this view, the plaintiff has not submitted a statement from even a single funder confirming that he or she decided to withhold donations because of the City's contract dispute with Housing Works. The only evidence submitted is the vague, inadmissible statement by Mr. King that "[i]n the months after defendants' vindictive press release, . . . [s]ome funders expressed concern about the City's allegations." (King Decl., ¶ 234).
This case is distinguishable from every analogous case cited by the plaintiff. For instance, in Samaritan Inns, the plaintiff-agency claimed that a stop-work order issued on its proposed drug treatment facility chilled the interest of donors, and the president of the agency testified that the conflict became "almost the sole focus of his meetings with the fundraising board," and that "the board members began to evidence a lack of interest in continuing to work with [the plaintiff]." 114 F.3d at 1232. In Community Housing Trust, the Executive Director of the plaintiff-agency testified that "at least ten people told her that they would not donate to the organization because of the instant dispute." 257 F. Supp. 2d at 220. Finally, in Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 265 (2d Cir. 1995), a case concerning goodwill damages for a for-profit corporation, the company's president identified specific customers who stopped dealing with the company because of defamatory statements made by a competitor. Such evidence of causation, however minimal, is necessary before an estimate of the amount of damages can be submitted to a jury. See Samaritan Inns, 114 F.3d at 1235 (lost contributions claim must show fact of injury with "reasonable certainty," even if proof of amount can be based on "reasonable estimate"); cf. Toltec, 29 F.3d at 781 (in loss of goodwill claim, causation "must be demonstrated with certainty") (citations omitted).
In United Yellow Cab Drivers Association, Inc. v. Safir, 98 Civ. 3670, 2002 WL 461595 (S.D.N.Y. March 22, 2002), a Court in this District addressed a similar claim of § 1983 damages asserted by a taxi drivers' association, which claimed that the New York Police Department had prevented it from holding protests against the City. Id. at *1-4. Without presenting a "single witness who withdrew support from Yellow Cab because of the [parties' dispute] or the resulting publicity," the plaintiff claimed that "Yellow Cab's membership and financial support from the taxi industry dwindled to a point where Yellow Cab was no longer viable." Id. at *11. The District Court held that this evidence "does not support the inference that the City's actions precipitated Yellow Cab's demise," and dismissed the plaintiff's claim of lost revenues. Id.
Absent any direct evidence of causation, the plaintiff's claim of reputational harm is based solely on the inferences that can be drawn from the tabulation of revenues submitted by Mr. King. However, several factors militate against drawing the inferences urged by the plaintiff. First, the plaintiff's theory is based on the central observation that its revenues declined immediately after the defendants terminated the plaintiff's contracts and issued its press release on October 22, 1997. However, Mr. King's table shows the very opposite: Housing Works' operating revenues increased from $16,033,515 in FY 1997 (7/1/96-6/30/97) to $20,482,276 in FY 1998 (7/1/97-6/30/98). (King Decl., ¶ 235). Revenues decreased in FY 1999-2000, then began to increase again in FY 2001 (beginning 7/1/00). This pattern does not support the claim that revenues were impacted "immediately after the City's October press release." (King Decl., ¶ 235). Accord Yellow Cab, 2002 WL 461595, at *11 (noting that membership did not drop immediately after key incident, and that later trends did not support plaintiff's theory of reputational harm).
Moreover, even if the trends in gross revenues can be said to support the plaintiff's claim, those revenues cannot reflect the actions of funders, as they include the amounts withheld by the City in terminating Housing Works' contracts. When non-contract revenues are isolated, the impact of the October 22 incident is even less clear: while FY 1997-98 shows a significant drop in contract revenues from $5,310,303 to $1,782,560 (which is understandable in light of the City's actions), non-contract revenues increased in this period from $10,723,212 to $18,699,716. (Def. Exh. 61 at 9). Non-contract revenues then declined for the period FY 1999-2000, and began to increase again in FY 2001.
These numbers are taken from the counter-report submitted by the defendants' expert, Mr. Stanley J. Garstka, and appear to have been calculated simply by subtracting the amount of contracts received for each fiscal year from gross revenues, using Mr. King's figures.
In short, the plaintiff's evidence is insufficient to support the inference that the defendants' actions caused it to lose contributions based on harms to its reputation. There is no evidence that the defendants made efforts to disseminate damaging statements about Housing Works, or that any funder of Housing Works, in any event, changed his or her opinion of the organization and withheld contributions as a result of the instant dispute. Accordingly, the plaintiff's claim of reputational harms should be dismissed.
In light of this disposition, there is no need to address the defendants' challenges to Mr. Seltzer's report underDaubert.
c. "Frustrated Bidder" Rule
The defendants next challenge the plaintiff's damages under the "frustrated bidder" rule. Under New York law, an entity that is not awarded a city contract in violation of the rule that such contracts be awarded to the lowest bidder may institute Article 78 proceedings against the city, but is precluded from recovering lost profits on the contract. See Nu-Life Construction Corp. v. Board of Education of New York, 204 A.D.2d 106, 108, 611 N.Y.S.2d 529, 531 (1st Dep't 1994); Woods Advertising, Inc. v. Koch, 178 A.D.2d 155, 156, 577 N.Y.S.2d 22, 23 (1st Dep't 1991);Allen v. Eberling, 24 A.D.2d 594, 594, 262 N.Y.S.2d 122, 122-23 (2d Dep't 1965). This rule is based on the principle that laws regulating the award of public contracts are enacted for the protection of the public, not for the benefit of individual bidders. Allen, 24 A.D.2d at 594, 262 N.Y.S.2d at 122; Public Contracts: Low Bidder's Monetary Relief Against State or Local Agency for Nonaward of Contract, 65 A.L.R.4th 93, § 4 (2004).
As in the case of "mission non-fulfillment" damages discussed above, this argument attempts to impose a state law contract rule onto the plaintiff's damages claim under § 1983; as was stated inCarey, 435 U.S. at 258, such state law rules may not always provide an appropriate analogy for § 1983 remedies. For instance, in Haughton Elevator Division v. State of Louisiana, 367 So.2d 1161 (La. 1979), the Louisiana Supreme Court held that a contractor alleging due process violations in state bidding procedures could seek monetary damages against the state, notwithstanding the unavailability of such remedies for disappointed bidders under Louisiana law. Id. at 1163, 1169 n. 8; see also Michigan Paytel Joint Venture v. City of Detroit, 287 F.3d 527, 539 (6th Cir. 2002) (recognizing § 1983 claim — and impliedly, § 1983 damages — in action alleging due process violation by low bidder on a public contract). Since the goal of § 1983 damages — namely, compensation of the injured party — differs from the public interests underlying New York's "frustrated bidder" rule, the plaintiff's damages cannot be limited by this state law rule. See Carey, 435 U.S. at 258.
d. Out-of-Pocket Expenses
The defendants also assert that the plaintiff's out-of-pocket damages are precluded because they were incurred in anticipation of contracts that had not been approved by the CCPO or the City Comptroller. (Def. Memo. at 70-71). This issue relates to a roughly four-month period between July and October 1997, when the renewal of the scattered site contract and the initiation of new HRA contracts were being negotiated. Another contract, the DOH intake contract, had already been signed and was awaiting registration with the City Comptroller. The plaintiff began performing under these various contracts until the defendants definitively terminated them in September or October 1997.
The defendants' argument here is again based on common law contract and tort principles that are inapplicable to the plaintiff's § 1983 damages claim. Specifically, the defendants contend that they have no "legal obligation" to pay for the plaintiff's out-of-pocket costs because there was no contract between the parties. They also make reference to the dismissal of the plaintiff's fraud claim by an earlier ruling in these actions; that dismissal was based on the rule that "mere promissory statements of future performance are not actionable for fraud." Housing Works, 179 F. Supp. 2d at 210. The court also held that the plaintiff did not reasonably rely on the statements of lower-level officials, who did not have authority to bind the City to the disputed contracts. Id. at 210-11.
The obvious distinctions between the § 1983 claim made here and a breach-of-contract or fraud action preclude the application of the above rules. The plaintiff does not allege a breach of contract or fraud by the defendants, but rather asserts that the defendants violated its constitutional rights by ordering an unnecessary financial audit in January 1997 and treating Housing Works differently from contractors during the audit process. The plaintiff therefore asserts that the defendants' unconstitutional actions caused its contracts to be rejected, and that were it not for the defendants' conduct, its contracts would have been approved and its out-of-pocket losses avoided. The fact that the lower-level officials, such as Mr. Caldwell and Mr. Dereszewski, could not bind the City is also immaterial because, as discussed earlier, these officials can be held liable for unconstitutional actions that ultimately led to the contract termination. Specifically, Mr. Caldwell is alleged to have ordered the January 1997 audit and recommended a termination of the plaintiff's contracts. Mr. Dereszewski is alleged to have modified the RFP's for new scattered site contracts to prevent Housing Works from receiving an advantage as an existing vendor. Accordingly, the plaintiff's out-of-pocket damages cannot be dismissed.
e. "Red and White Market" Settlement
The defendants also contend that the damages from the "Red and White Market" settlement are barred by the statute of limitations because they were not specifically pled in the Amended Complaint. This settlement was reached between the plaintiff and its former landlord, Red and White Market, Inc. ("Red and White"), after the plaintiff defaulted on a ten-year lease signed on August 26, 1997. (Def. Memo. at 72-73; Def. Exhs. 167, 168). The plaintiff entered into the lease in order to provide housing to its clients at the Red and White premises.
This claim of damages appears to fall into the rubric of "out-of-pocket" losses discussed above. Namely, the plaintiff's theory of damages is that it entered into the lease with Red and White in anticipation of receiving a City contract for supportive housing services, and that were it not for the defendants' unconstitutional actions, the contract would have been approved and its default on the lease avoided. While it is true that a new theory of liability would normally require an amendment of the complaint, the Red and White lease damages are merely a component of the out-of-pocket losses already asserted by the plaintiff.
f. Punitive Damages
Individual defendants may be held liable for punitive damages when their conduct is "intentional, motivated by evil intent, or `when it involves reckless or callous indifference to federally protected rights of others.'" Housing Works, 179 F. Supp. 2d at 210 (quoting Smith v. Wade, 461 U.S. 30, 56 (1983)). The earlier discussions of the plaintiff's First Amendment and Equal Protection claims have shown that substantial disputes exist as to the motives and intent of the individual defendants in this case. These disputes are sufficient to overcome summary judgment as to these defendants' liability for punitive damages.
Conclusion
For the reasons discussed above, I recommend that the defendants' motion to strike be denied, and that the motion for summary judgment be:
1. GRANTED with respect to Mayor Giuliani on the Equal Protection claim, and GRANTED on the First Amendment claim as it relates to the final non-responsibility appeal, but DENIED in all other respects.
2. GRANTED with respect to Deputy Mayor Mastro on the Equal Protection claim, and DENIED in all other respects.
3. GRANTED with respect to Ms. Barkan on the Equal Protection claim, and DENIED in all other respects.
4. GRANTED with respect to Ms. Kaswan on the Equal Protection claim, and DENIED in all other respects.
5. GRANTED with respect to Commissioner Barrios-Paoli on the Equal Protection claim, and DENIED in all other respects.
6. DENIED with respect to Mr. Turner in all respects.
7. DENIED with respect to Mr. Bonamarte in all respects.
8. DENIED with respect to Mr. McKay in all respects.
9. DENIED with respect to Mr. Caldwell in all respects.
10. DENIED with respect to Mr. Dereszewski in all respects.
11. GRANTED with respect to Commissioner Cohen in all respects.
12. GRANTED with respect to Mr. Capoziello on the Equal Protection claim, and DENIED in all other respects.
13. DENIED with respect to Mr. Netburn in all respects.
14. DENIED with respect to the City on the First Amendment claim, and DENIED on the Equal Protection claim as to the final non-responsibility appeal and the NYSDOL/NYSDOH contracts, but GRANTED in all other respects.
* * *
Pursuant to 28 U.S.C. § 636(b)(1) and Rules 72, 6(a), and 6(e) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from this date to file written objections to this Report and Recommendation. Such objections shall be filed with the Clerk of the Court, with extra copies delivered to the chambers of the Honorable Lewis A. Kaplan, Room 1310, and to the chambers of the undersigned, Room 1960, 500 Pearl Street, New York, New York 10007. Failure to file timely objections will preclude appellate review.