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Tuesday, October 15, 2013

CPLR Article 78 expresses a preference that state courts, rather than federal courts, decide a federal litigant’s “state-law statutory-construction” claim

Carver v. Nassau County Interim Finance, CA2, Docket Nos. 13-0801, 13-0840
James Carver, Gary Learned, and Thomas R. Willdigg, as presidents of the their respective employee organizations representing certain employees in Nassau County police collective bargaining units [Police Union], challenged a wage freeze imposed by the Nassau County Interim Finance Authority [NIFA].* Police Union alleged that the freeze violated the Contracts Clause, Article I, Section 10 of the Constitution of the United States and NIFA’s power to impose a wage freeze pursuant to §3669 of the New York Public Authorities Law had expired.
The district court granted summary judgment to Police Union based solely on the statutory Interpretation of its State law claim. NIFA appealed and the Circuit Court of Appeals held that the district court, in granting summary judgment to Police Union on its state law claim without reaching the constitutional question, abused its discretion in exercising pendent jurisdiction over the statutory construction claim. It vacated the lower court’s ruling and remanded the matter with instructions to the district court to dismiss Police Union’s statutory construction claim..
On January 26, 2011, NIFA imposed a control period. After Nassau County unsuccessfully challenged the imposition of the control period in an Article 78 proceeding, County of Nassau v. Nassau County Interim Finance Authority, 33 Misc. 3d 227, NIFA passed two resolutions freezing wages for all County employees on March 24, 2011.
The wage freeze forced the County to breach the terms of the collective bargaining agreements it had entered into with the various County police unions. On April 1, 2011, Police Union commenced this action in federal court, alleging that the wage freeze violated the Contracts Clause, Article I, Section 10 of the Constitution. Police Union later amended its complaint to add a second claim that NIFA lacked the authority under state law to order a wage freeze after the conclusion of the interim finance period.
The district court did not reach Police Union’s “Constitutional claim,” holding that the statutory question was “most appropriate for summary disposition.”
The Circuit Court, noting that district courts have supplemental jurisdiction over pendent state law claims “that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution,” 28 U.S.C. §1367(a) said that it was reviewing the district court’s decision to assert supplemental jurisdiction over a state law claim under an abuse-of-discretion standard.
As this case “… concededly presents an unresolved question of state law and is also one in which there are exceptional circumstances which provide compelling reasons for declining jurisdiction,” the Circuit Court held that “the construction of the provision of the NIFA Act at issue raises an unresolved issue of state law – the interpretation of a poorly drawn statute – that should be resolved by the New York state courts because the manner in which the statute is construed implicates significant state interests.”
The court explained that as it had previously ruled, “[w]here a pendent state claim turns on novel or unresolved questions of state law, especially where those questions concern the state’s interest in the administration of its government, principles of federalism and comity may dictate that these questions be left for decision by the state courts,” citing Seabrook v. Jacobson, 153 F.3d 70, 72 (2d Cir. 1998).
Although the defendants argued that jurisdiction over this pendent state law claim should be denied because of the special statutory procedure that New York law – CPLR Article 78 – provides for adjudicating claims that a body or officer has acted in a manner not authorized by state law the Circuit Court said that it “need not decide, however, whether Article 78 can, on its own, deprive a federal court of jurisdiction over claims brought under that provision, as some district court cases have held….” For present purposes, said the court, it is sufficient to recognize that Article 78 reflects a state preference for a state mode of procedure that “is designed to facilitate a summary disposition of the issues presented . . . and has been described as a fast and cheap way to implement a right that is as plenary as an action, culminating in a judgment, but is brought on with the ease, speed and inexpensiveness of a mere motion.”
The Circuit Court said that on remand “the district court should dismiss the state-law claim, but retain jurisdiction over [Police Union’s] federal constitutional claim. Should Police Union decide to pursue its state-law statutory-construction or other related claims in state court, the district court may decide, within its discretion, to stay the federal action until the state-court litigation has completed because the state courts’ resolution of the state claim may obviate the need to resolve the federal constitutional question.
* The Nassau Interim Finance Authority is a public benefit corporation created by the New York State Legislature in June 2000 in response to the growing financial crisis facing Nassau County.
The decision is posted on the Internet at:

Reprinted with permission New York Public Personnel Law

Mitchell H. Rubinstein

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