Friday, August 18, 2017

Attorneys Jay B. Zucker and Steven J. Kwestel Are Suspended From Practicing Law For Six Months


Matter of Zucker
2017 NY Slip Op 06149
Decided on August 15, 2017
Appellate Division, First Department
Per Curiam.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.


Decided on August 15, 2017 SUPREME COURT, APPELLATE DIVISION First Judicial Department 
John W. Sweeny, Jr.,Justice Presiding, 
Dianne T. Renwick 
Richard T. Andrias 
Ellen Gesmer 
Marcy L. Kahn,Justices.

M-1940 M-1941 

[*1]In the Matter of Jay B. Zucker, an attorney and counselor-at-law: and In the Matter of Steven J. Kwestel (admitted as Steven Jeffrey Kwestel), an attorney and counselor-at-law:


Attorney Grievance Committee for the First Judicial Department, Petitioner, Jay B. Zucker and Steven J. Kwestel, Respondents.
Disciplinary proceedings instituted by the Attorney Grievance Committee for the First Judicial Department. Respondent Jay B. Zucker was admitted to the Bar of the State of New York at a Term of the Appellate Division of the Supreme Court for the First Judicial Department on January 22, 1990. Respondent Steven J. Kwestel was admitted to the Bar of the State of New York at a Term of the Appellate Division of the Supreme Court for the Second Judicial Department on June 19, 1996.



Jorge Dopico, Chief Attorney,
Attorney Grievance Committee, New York
(Orlando Reyes, of counsel), for petitioner.
Michael S. Ross, for respondents.
Motion No. 1940 (April 25, 2017)

PER CURIAM
Respondent Jay B. Zucker was admitted to the practice of law in the State of New York by the First Judicial Department on January 22, 1990. Respondent Steven J. Kwestel was admitted to the practice of law in the State of New York by the Second Judicial Department on June 19, 1996, under the name Steven Jeffrey Kwestel. At all times relevant to this proceeding, both respondents maintained an office for the practice of law within the First Department as partners in a law firm.
In 2016, the Attorney Grievance Committee (Committee) served the respondents with separate petitions containing essentially similar charges of professional misconduct. In their respective answers, respondents admitted the material facts and all the charges. The charges against respondents stem from their admitted failure to properly supervise a former non attorney employee who served as their law firm's bookkeeper, as a result of which the employee misappropriated approximately $2 million from the firm's bank accounts which included client and/or third-party funds.
By joint motions dated March 30, 2017, pursuant to the Rules for Attorney Disciplinary Matters (22 NYCRR) § 1240.8(a)(5), both the Committee and respondents ask this Court to impose discipline based upon the stipulated facts and upon the consent of the parties and that respondents be suspended from the practice of law in New York for six months and until further order of this Court.
22 NYCRR § 1240.8(a)(5) provides that, at any time after the Committee files a petition alleging professional misconduct against an attorney, the parties may file a joint motion requesting the imposition of discipline by consent, which must include a stipulation of facts, the respondent's conditional admission of acts of professional misconduct and specific rules or standards of conduct violated, any relevant aggravating and mitigating factors, and an agreed-upon disciplinary sanction (see 22 NYCRR § 1240.8[a][5][i], [ii]). If the motion is granted, the Court must issue a decision imposing discipline upon the respondent based on the stipulated facts and as agreed upon in the joint motion. If the motion is denied, however, the conditional admissions are deemed withdrawn and may not be used in the pending proceeding (see 22 NYCRR 1240.8 [a][5][iii]).
In this case, both respondents conditionally admit that, at all times relevant herein, they practiced law as partners in a two-partner law firm, Zucker & Kwestel, LLC, which maintained two attorney special accounts, as well as other bank accounts incident to the practice of law. In or about June 2003, respondents hired MT, a non attorney, as the firm's full-time bookkeeper/controller, prior to which respondent Kwestel had primary responsibility for such duties.
After an initial period of training, during which respondents consistently reviewed MT's work, respondents gradually began delegating certain responsibilities to MT which included expediting and/or coordinating the deposit of client and/or third-party funds into the firm's bank accounts and maintaining bank and bookkeeping records for the transactions in the firm's bank accounts. Respondents authorized MT to be a signatory on the firm's escrow accounts out of ignorance of the pertinent disciplinary rules and to execute online transfers of funds from the firm's escrow accounts provided that respondents approved it. MT frequently worked out of the firm's New Jersey office where respondents infrequently conducted business.
Respondents did not, as required, regularly review, audit, and reconcile the firm's escrow accounts, nor did they properly supervise MT's work as bookkeeper/controller which included the work he performed in connection with the firm's escrow accounts. As a result, between 2009 and 2013, MT misappropriated more than $2 million from the firm's bank accounts, including escrow accounts. His defalcations involved approximately 200 client matters, were done without the permission or authority of the rightful owners of the funds at issue, and his actions were carried out without respondents' knowledge or consent.
By letter dated June 21, 2013, the New Jersey Office of Attorney Ethics (OAE) notified [*2]respondents that a check drawn on one of their escrow accounts for $274.47 was dishonored due to insufficient funds. MT intercepted the OAE's letter, did not inform respondents of the dishonored check, and replied to the OAE's letter without respondents' knowledge. In June 2013, the OAE forwarded the overdraft notice and MT's response to the New York Lawyers' Fund for Client Protection which, in turn, forwarded them to the Committee and respondents.
Respondents addressed the matter with MT who informed them that the check had purportedly been dishonored because the funds in the escrow account it was drawn against had been transferred to an escrow account at another bank, but MT purportedly overlooked the fact that the check at issue had not yet been presented for payment when the transfer was made. Prior to receiving any correspondence from the Committee, respondent Zucker, on behalf of the firm, sent a letter to the Committee explaining the purported reason for the dishonored check and that a replacement check had been issued. The Committee notified respondents that they were the subject of a sua sponte investigation and requested that they submit bank and bookkeeping records for the escrow accounts.
In August 2013, MT's criminal attorney contacted respondents and advised them that MT had misappropriated approximately $3 million from the firm's bank accounts, including its escrow accounts, but that MT had arranged for full restitution to be made provided that certain conditions were satisfied. Upon learning of the defalcations, respondents retained their current ethics counsel to assist them in addressing MT's thefts. They also began the process of attempting to reconstruct the ledgers for the firm's escrow accounts based upon the ledgers maintained by MT on the firm's computers via the computer program QuickBooks, account statements and records ordered from the banks, and their client files. MT's employment with the firm reportedly ended in or about August 2013.
In September 2013, respondents' ethics counsel advised the Committee of the theft of funds and that he was communicating with MT's criminal attorney regarding, among other things, restitution of the stolen funds. Respondents subsequently retained civil counsel to negotiate repayment of the misappropriated funds. A forensic accountant ultimately determined the total amount of stolen funds to be $2,761,267 (of which $2,187,445.02 belonged to clients and/or third parties and $573,821.98 belonged to respondents).
In April 2014, MT made full restitution to respondents' firm which was funded by benefactors on his behalf. As a condition of restitution, respondents were required to enter into a non reporting agreement regarding MT's defalcations; however, the agreement did not prohibit them from answering questions from law enforcement should they be contacted.
As required, each respondent has submitted an affidavit in which he conditionally admits the foregoing facts, and that those facts establish that he has engaged in conduct prejudicial to the administration of justice, which conduct also adversely reflects on his fitness as a lawyer, in violation of rule 8.4(d) and (h) of the Rules of Professional Conduct (22 NYCRR 1200.0), respectively. Specifically, respondents admit that they failed to regularly supervise MT, review or audit the firm's bank account records, and thereby failed to take reasonable steps to safeguard client and/or third-party funds in violation of rule 1.15(a); failed to exercise reasonable management or supervisory authority adequate to try to prevent MT's theft of client and/or third-party funds, which if committed by a lawyer would have constituted misappropriation and/or intentional conversion (rules 1.15[a] and 8.4[c]), and, thus, they violated rule 5.3(b)(2); allowed MT to execute online transfers of funds from the firm's escrow accounts, which violated rule 1.15(e) in that such transfers were not disbursements to named payees, and, thus, they violated Rule 5.3(b)(1); designated a non attorney as a signatory on an attorney special account in violation of rule 1.15(e); and based on their overall conduct violated rule 8.4(h).
In addition, respondent Kwestel admitted that, between 2005 and 2009, he deposited approximately between $15,000 and $50,000 in personal funds into one of the firm's two escrow accounts out of ignorance as to the pertinent disciplinary rules and not for any improper purpose (e.g., to avoid tax obligations or creditors) in violation of rule 1.15(b)). Further, each respondent consents to the agreed discipline of a six-month suspension, which consent is given freely and [*3]voluntarily without coercion or duress. Lastly, each respondent states that he is fully aware of the consequences of consenting to such discipline, as he has discussed such consequences with his attorney.
The parties stipulated as to the following mitigation: since the events at issue respondents instituted proper account management and oversight practices; there was every reason to believe that MT would be an honest and capable employee based on professional recommendations, including one from respondent Zucker's sister, a retired attorney; there were no early warning signs of MT's defalcations; respondents came to implicitly trust MT over the years based on, inter alia, his diligence and personal friendship with respondent Zucker; designating MT as a signatory on the firm's escrow accounts was done out of ignorance as to the pertinent disciplinary rules, and respondents mistakenly believed that his disbursement of escrow funds in certain circumstances was administrative in nature; there was some degree of supervision over MT's work and oversight of the firm's escrow accounts, albeit both were admittedly inadequate; in 2009, respondent Zucker's wife became ill which required him to reduce his daily involvement with the firm in order to focus on caring for his wife and their four children, as a result of which respondent Kwestel took on increased responsibilities and supervisory duties; upon learning of MT's thefts respondents took immediate action which included spending hundreds of hours reconstructing and reconciling escrow account records and obtaining reimbursement as a result of which no clients or third-parties were harmed; respondents were also victims of MT's thefts; following discovery of MT's thefts respondents began to wind down the firm's practice which remains in operation only for purposes of completing a small number of pending transactions; and respondents fully cooperated with the Committee, took full responsibility and expressed remorse for their misconduct, had no prior disciplinary history, have an excellent reputation for honesty and integrity, and have been active in their communities by, among other things, doing pro bono legal work.
The parties have also stipulated that respondents' failure to report MT's thefts to law enforcement is an aggravating factor but note that restitution was conditioned upon respondents entering into a non reporting agreement, which did not prohibit them from answering questions from law enforcement if contacted about the thefts. Further, this aggravation is tempered by the mitigating factor that no client or third-party suffered monetary loss.
Since liability has been established via respondents' individual and conditional admissions, the only issue before this Court is the sanction to be imposed. In determining an appropriate measure of discipline to impose, we note that whether, and to what extent, attorneys are subject to discipline for defalcations occasioned by someone under their supervision depends on a number of factors, as follows:
"(1) the subject attorney's partnership status and/or level of experience; (2) the presence (or absence) of 'early warning signs' of financial improprieties, whether such signs were ignored and, if so, for how long; (3) whether the proper authorities were notified of defalcations upon their discovery; (4) the presence (or absence) of monetary loss to clients and the magnitude thereof; and (5) whether the attorney attempted to reimburse client losses caused by another" (Matter of Galasso, 105 AD3d 103, 105 [2d Dept 2013]).
Applying these factors, we find that a six-month suspension stipulated by the parties is an appropriate sanction in view of respondents' admitted misconduct as well as the mitigating factors presented herein. Respondents' misconduct was non-venal and the result of ignorance regarding the pertinent disciplinary rules. While the parties acknowledge respondents' failure to report MT to law enforcement as an aggravating factor, the restitution agreement by which they agreed not to do so, which was negotiated by their civil counsel, did not prohibit them from answering questions from law enforcement regarding the thefts if contacted. Moreover, full restitution was obtained through the agreement and no client suffered monetary loss. Finally, respondents have no prior disciplinary history, have freely admitted their misconduct, and [*4]expressed remorse.
Significantly, a six-month suspension stipulated to by the parties is also supported by prior precedent (see e.g. Matter of Langione (131 AD3d 199 [2d Dept 2015]; Matter of Laudonio (75 AD3d 144 [2d Dept 2010]). For instance, in Matter of Langione, the Court suspended a former law partner of the respondent (Matter of Galassa, 105 AD3d at 103) for six months for failing to properly supervise his firm's bookkeeper and admittedly failing to review the actual bank records for the firm's special accounts which allowed the bookkeeper to steal more than $5 million in client funds. The Court found that the respondent fulfilled his fiduciary obligations he would have been alerted to irregularities in the firm's bank accounts at a time when the ongoing thefts by the bookkeeper could have been prevented or ameliorated (Langone, at 212). The Curt found the attorney's misconduct was mitigated by his attempts to make restitution to his aggrieved clients from his personal funds, independent of, and in addition to, settlement funds obtained and disbursed as the result of litigation.
Accordingly, the parties' joint motions for discipline by consent should be granted, and respondents Jay B. Zucker and Steven J. Kwestel should be suspended from the practice of law in the State of New York for a period of six months and until further order of this Court.
All concur.
Order filed.
[August 15, 2017]
Sweeny, J.P., Renwick, Andrias, Gesmer, Kahn, JJ.
Respondents suspended from the practice of law in the State of New York for a period of six months, effective the date hereof, and until further order of this Court.


Tuesday, August 1, 2017

DOJ Urges Court To Block Rights For LGBT Employees

Unsolicited Opinion: The Department of Justice Files Brief Urging Court to Block Rights for LGBT Employees



Thanks to the Twitter habit of Donald Trump and those on his White House team, the public has been treated to a number of disturbing exchanges in which they spew accusations, threats, and other attacks against one another, as well as on members of the other two branches of government. (After you’ve ensured that no children are looking over your shoulder, you can view the most recent example of this infighting.) But below the radar, the Executive Branch is engaging in the same type of infighting—on issues that matter and have the potential to harm LGB people across the country.

Attorney General Jeff Sessions filed an unsolicited brief in Zarda v. Altitude Express, Inc., a case pending before the U.S. Court of Appeals for the Second Circuit, which raises the question whether Title VII’s ban on sex discrimination encompasses a ban on sexual orientation discrimination. By arguing that Title VII permits employers to discriminate against employees because they love or enter sexual relationships with people of the same sex, the Department of Justice broke with the Equal Employment Opportunity Commission (EEOC), the attorneys general of Connecticut, New York, and Vermont, and dozens of major corporations.

As we argue, here, the DOJ’s position in Zarda is not only morally repugnant but also analytically weak. Moreover, by filing a brief that urges the opposite conclusion of that urged in a separate brief by the EEOC, a federal agency charged with enforcing federal anti-discrimination, the federal government is bizarrely at war with itself, a fight that undermines the authority of the Executive Branch to enforce federal anti-discrimination laws, a harm that will outlast this attorney general.
Zarda v. Altitude Express, Inc.

This case was brought by Donald Zarda, who alleges he was fired from his job as a skydiving instructor because he is gay, in violation of Title VII of the Civil Rights Act of 1964, the nation’s main federal anti-discrimination law.

The firing seems to have arisen from a customer complaint. Rosanna Orellana and her boyfriend David Kengle purchased tandem skydives, in which a customer is tied to an instructor who takes responsibility for deploying the parachute. Zarda was the instructor assigned to help with Rosanna’s jump. He informed her that he was gay and had recently broken up with a boyfriend; he said that he would often reveal his sexual orientation to clients, particularly to women who were accompanied by a husband or boyfriend who might be jealous when another man was tightly strapped to her for the jump.

Kengle only learned later about Zarda’s disclosure to his girlfriend, but, when he did, he called the company to complain about Zarda’s behavior. Zarda was then fired. The parties make different claims about what motivated Zarda’s firing—facts that would get hashed out only if summary judgment is reversed and the case is sent back for trial. The employer claims that summary judgment is appropriate because even if Zarda was fired because of his sexual orientation, that does not violate Title VII.

The trial court granted summary judgment to the employer, Skydive Long Island, on Zarda’s Title VII claim on the theory that the statute does not protect against sexual orientation discrimination. On appeal, a three-judge panel of the Second Circuit was sympathetic to Zarda’s Title VII claim, but held that it was bound by prior opinions in the circuit that could only be overturned by an en banc panel. The Second Circuit did agree to rehear the case en banc, and that is the stage at which both the EEOC and the DOJ filed friend-of-the-court briefs—urging opposite conclusions.
A Recurring Question: Is Sexual Orientation Discrimination Sex Discrimination?

Zarda is certainly not the first case to raise this question. It has been raised periodically for decades, but as the understanding of sex and gender has evolved, many courts have taken a fresh look in recent years.

Title VII prohibits employers with at least fifteen employees from discriminating on the basis of race, color, religion, sex, or national origin. Sexual orientation is not on the list—nor would one to expect it to be specifically identified in a statute drafted when that term was not routinely used. But courts early on were asked to treat claims of sexual orientation discrimination as a form of sex discrimination.

Even in the earliest cases, the argument being made was logical and straightforward: Men should not be discriminated against for being attracted to men, when women are not punished for the same thing, and vice versa. But courts engaged in only the most superficial analysis in these cases and rejected the claim. Sex discrimination occurs when an employer discriminates “against women because they are women and men because they are men,” the Seventh Circuit wrote, simplistically, in Ulane v. Eastern Airlines, Inc. (1984).

Other courts rely on the lack of congressional intent to protect gays and lesbians from employment discrimination at the time Title VII was enacted. That is probably a correct understanding, but Congress probably did not contemplate many of the things we have come to understand as clear examples of sex discrimination, such as charging women more for employer-provided retirement benefits because they are actuarially likely to outlive men or discriminating only against women with preschool age children. Our understanding of sex discrimination has evolved incrementally as courts, especially the Supreme Court, have considered different theories and manifestations of discrimination.

During the decades when federal courts were simply unwilling to interpret Title VII in a way that protected LGBT employees, some stop-gap measures were put in place, including Bill Clinton’s executive order banning sexual orientation discrimination in the civilian federal workforce and Barack Obama’s revocation of the Don’t Ask, Don’t Tell policy that kept gays and lesbians from serving openly in the military. Meanwhile, bills to amend Title VII to add express protection against sexual orientation discrimination were introduced in one congressional session after another, never to become law.

But while Congress was busily not amending Title VII on this point, the Supreme Court was issuing opinions that radically transformed our understanding of sex discrimination. First, in Price Waterhouse v. Hopkins (1989), the Supreme Court ruled that reliance on sex-role stereotyping can be an actionable form of employment discrimination. A woman who was denied partnership in an accounting firm for being insufficiently feminine in her dress and manner of communication suffered sex discrimination. This launched sex stereotyping as an actionable type of sex discrimination. This case was used by effeminate gay men and masculine lesbian women who claimed, often successfully, that the hostility and adversity they experienced was sex, rather than sexual orientation, discrimination.

Second, in Oncale v. Sundowner Services (1998), the Court held that same-sex harassment could be actionable under Title VII as long as the plaintiff had some proof that the conduct was undertaken “because of sex.” Among other ways of satisfying this requirement, a plaintiff can show that the harassment was designed to police gender roles or that it was motivated by homosexual desire. This ruling reinforced the emphasis on stereotyping and supported claims for gender-targeted bullying.

Armed with these instructive precedents, lower federal courts have begun to reconsider their initial reactions to sexual orientation discrimination claims. The re-examination was also propelled by a 2015 EEOC ruling, in which it held, as a matter of agency interpretation, that discrimination against a man because he was gay constituted a form of actionable sex discrimination. The EEOC’s ruling depended on its view that “[d]iscrimination on the basis of sexual orientation is premised on sex-based preferences, assumptions, expectations, stereotypes, or norms.” There is no way to understand this type of discrimination, the ruling reasons, without reference to a person’s sex.

After the EEOC ruling, several federal district courts reached the same conclusion. (Discussion of some of those cases can be found here and here.) Even more notably, the U.S. Court of Appeals for the Seventh Circuit recently issued an en banc ruling, in which it held that sexual orientation discrimination is sex discrimination under Title VII. Chief Judge Diane Wood began with the observation that while a court cannot add a word to a statute (i.e., it cannot make the words “sexual orientation” magically appear in Title VII), it can interpret the words already there, including “sex.” The court also avoided the red-herring arguments that Congress’s attempt to amend the statute proves that it did not already cover sexual orientation discrimination—or that Congress clearly did not want the statute to cover such discrimination. A legislative body’s failure to adopt a law could mean any number of things—including two things that are diametrically opposed. Congress might not have amended Title VII because it thought the coverage already existed, or it might not have amended because it did not want that coverage. There is no way to know which, if either, of these explanations is correct.

Rather than reading tea leaves, a notoriously unsound method of statutory interpretation, the Seventh Circuit focused on the Supreme Court’s rulings in Oncale and Price Waterhouse. In Oncale, Justice Scalia explained that courts are charged with interpreting words in the statute and prohibiting any type of discrimination “that meets the statutory criteria.”

The meaning of “sex” discrimination, the Hively court concluded, clearly applies to sexual orientation discrimination. First, sexual orientation discrimination, at its core, punishes a woman for being attracted to another woman, when it would not punish a man for being attracted to a woman. This “tried-and-true comparative method” shows the significance of the plaintiff’s sex to the employer’s decision. Second, the court drew on Loving v. Virginia, in which the Supreme Court struck down Virginia’s interracial marriage ban and rejected the state’s “equal application” theory of neutrality. Relevant to the question of sexual orientation discrimination, the Hively court cited Loving for the proposition that “[i]t is now accepted that a person who is discriminated against because of the protected characteristic of one with whom she associates is actually being disadvantaged because of her own traits.”
DOJ’s Brief in Zarda v. Atlantic Express

The opinions discussed above should make clear that discrimination against gays, lesbians, and bisexuals in the workplace is a form of sex discrimination. Yet, the Department of Justice took the position that an employee’s sexual orientation is unrelated to his sex. And it did so in a routine case, in which its views were not solicited, and in which the EEOC had already filed a brief arguing to the contrary.

The simple fact that DOJ filed this brief, under these circumstances, is remarkable. Not only does DOJ urge a different conclusion than the EEOC, it argues that the EEOC’s opinion should be ignored and given no deference. This, too, is remarkable in that the EEOC is the agency charged with enforcing federal anti-discrimination laws and has far greater expertise in employment discrimination law than DOJ, which deals only with a narrow slice of such cases. This attack on the EEOC can only undermine its power in future cases. In other words, Attorney General Sessions’s commitment to throwing LGBT individuals under the bus is so strong that he is willing to undermine his own branch’s power in future cases. DOJ’s brief warns that the “EEOC is not speaking for the United States.” If this is how Executive Branch officials treat sister agencies in writing, just imagine what conversations must be like behind closed doors.

Beyond the odd circumstances of the filing, though, is the odd substance of the brief. It recycles a series of bad arguments might have been persuasive to a court in the 1970s, hearing for the first time a claim of “gay rights.” But in 2017, more sophistication is required.

The DOJ brief first argues that Title VII’s ban on sex discrimination is not violated unless an employer treats men and women unequally. This is not untrue, but it doesn’t prove the result for which DOJ argues. A simple hypothetical reveals the Trump Administration’s error. If an employer fires a female worker because she has relationships with other women, that employee is mistreated because of her sex. She would not have been wronged by her employer if her intimate partners were solely men. In other words, sex was the dispositive factor when her employer decided to unjustifiably terminate her employment.

The DOJ brief also argues that Title VII should be read to exclude sexual orientation discrimination because “until recently” that is what courts had held. But given the significance of the recent, game-changing U.S. Supreme Court decisions, the opposite is probably a better argument. The early cases, as discussed above, were uniform in their superficial treatment of the question before them—and their unwillingness to engage with argument about the nature of sexual orientation discrimination. More recent cases dug deeper, took a more nuanced view of sex and gender, took account of highly relevant Supreme Court precedents and drew a well-supported conclusion that sexual orientation discrimination is, by its nature, sex discrimination. DOJ should not be persuaded by those thin, early opinions any more than it should cite the early sexual harassment cases in which courts said that the only way to avoid sexual harassment would be to hire only asexual employees or that rape did not become actionable discrimination just because it occurred in an office rather than a back alley.

The DOJ brief then makes two spectacularly bad arguments about the meaning of congressional action. First, it argues that because Congress has amended Title VII since courts decided that sexual orientation discrimination was not covered, Congress is presumed to have ratified that understanding of the statute. The brief points to the amendments contained in the Pregnancy Discrimination Act (PDA) of 1978 and those contained in the Civil Rights Act (CRA) of 1991. This argument makes no sense given that neither of these acts would reasonably have addressed the issue of sexual orientation discrimination; it is thus inappropriate to draw any inference about Congress’s state of mind. This is especially so when the only rulings were from lower federal courts rather than the Supreme Court. Moreover, when the PDA was enacted, no court had issued a ruling on sexual orientation discrimination yet, a temporal problem that the DOJ brief just glosses over. The 1991 amendments did not touch the provision in which the protected traits are listed.

Second, it argues that Congress’s failure to approve the proposed amendments to add express protection for sexual orientation discrimination proves that Congress did not want to extend such protection. As explained above, though, legislative silence tells us nothing.

Third, it lists the usual arguments about the nature of sex and sexual orientation discrimination. They are just not convincing.
The EEOC and the Seventh Circuit are Right

While the plain reading of Title VII should readily resolve this case, there are other reasons that federal employment anti-discrimination law prohibits sexual orientation bias in the workplace.

In Loving v. Virginia, the Supreme Court rejected Virginia’s argument that anti-miscegenation laws did not discriminate on the basis of race because white and black Virginians were punished equally if they married outside their race. The Supreme Court held that each partner in an interracial relationship was denied the fundamental right to marry solely on the basis of their race. While that was a constitutional case, courts used the same logic to safeguard workers’ rights who were in interracial relationships.

In 1988, a federal appellate court in Atlanta decided that Title VII protects interracial associations. Don Parr, who was white, applied for an insurance salesman position but was rejected after white hiring managers learned about his interracial marriage. Don Parr was not discriminated against because management held animosity towards whites, but the court ruled that just like in Loving he was nevertheless denied employment because of his race.

It is nonsensical to deny these associational employment protections in federal law after the Supreme Court’s decision in Obergefell v. Hodges, which held the right to marry extends to same-sex couples. As Chief Judge Wood explained in Hively, “if it is race discrimination to discriminate against interracial couples, it is sex discrimination to discriminate against same‐sex couples.”

A second theory also supports the position that sexual orientation discrimination is banned under the Civil Rights Act. The sex stereotyping theory recognized in Price Waterhouse means that “gender must be irrelevant to employment decisions” and that “in the specific context of sex stereotyping, an employer who acts on the basis of a belief that a woman cannot be aggressive, or that she must not be, has acted on the basis of gender.” Simply put, this stands for the proposition that Title VII doesn’t permit an employee to be treated adversely because their appearance or conduct fails to conform to stereotypical gender roles.

The animus aimed at gay, lesbian, and bisexual Americans stems from an outmoded societal belief that men should be exclusively attracted to women and women should be exclusively attracted to men. This is a quintessential stereotype—no different from antiquated expectations that women should be feminine and men should be masculine.

The Trump Administration woefully misunderstands the nature of anti-gay animus. The DOJ brief claims that employers’ “moral beliefs” about sexuality could “not be based on views about gender at all” and thus not a form of sex-based discrimination. This claim made on behalf of the United States is disingenuous. Individuals’ beliefs about homosexuality are inherently based on stereotypes and the “proper role” of how men and women should behave. You cannot harbor ill will towards gays, lesbians, and bisexuals unless you also take into account the sex of their intimate partners.
Conclusion: Actions Speak Louder Than Words

The Department of Justice’s position will have dangerous consequences if it prevails. In a small Georgia town, one man faced an excruciatingly painful choice: remain in an unhealthy, corrosive marriage or risk losing his employment. Despite loving his job and coworkers, the man feared his managers deeply disliked gay men and would fire him if they knew his true identity. Because Georgia has no protections against employment discrimination, he stayed in his marriage fearing that if he filed for a divorce and his husband subpoenaed his employment records, he’d lose everything.

There are far too many Americans like that Georgia man who are torn over living their authentic lives at the office or who wonder if they’ll have a job on Monday after getting married the weekend before. The Trump Administration has shamefully asked federal judges to dilute of one of this nation’s greatest civil rights achievements for the sole purpose of keeping LGB persons second class. Judges must reject the invitation.

President Trump made repeated assertions on the campaign trail that his administration would support the rights of lesbian, gay, bisexual, and transgender Americans. If President Trump’s knee-jerk action banning transgender persons from military service (by tweet, no less) was not sufficient to prove otherwise, the Department of Justice has made clear it was a farce.


Joanna L. Grossman, a Justia columnist, is the Ellen K. Solender Endowed Chair in Women and Law at SMU Dedman School of Law. Her most recent book is Nine to Five: How Gender, Sex, and Sexuality Continue to Define the American Workplace (Cambridge University Press 2016). She is the coauthor of Inside the Castle: Law and the Family in 20th Century America (Princeton University Press 2011), co-winner of the 2011 David J. Langum, Sr. Prize for Best Book in American Legal History, and coeditor of several other books. Her columns focus on sex discrimination and family law.

Anthony Michael Kreis is a law professor at Chicago-Kent College of Law where he teaches employment discrimination and researches issues LGBT civil rights law.

Sunday, July 23, 2017

Ricardo Morales, Top Deputy at DCAS, Claims He Was Fired For Complaining About City Hall and de Blasio Campaign Donor

New York City Mayor Bill De Blasio
The name of this game is corruption. Nothing complicated, just pay-to-play under de Blasio. That's what he does.

Betsy Combier
betsy.combier@gmail.com
Editor, NYC Rubber Room Reporter
Editor, Parentadvocates.org
Editor, New York Court Corruption
Editor, National Public Voice
Editor, NYC Public Voice
Editor, Inside 3020-a Teacher Trials

De Blasio says axing city official who lifted deed restriction on NYC nursing home wasn’t his decision

De Blasio official axed over probe says it was to warn others to keep quiet

Top official claims he was axed for complaining about City Hall's ‘inappropriate involvement’ with de Blasio donor
Harendra Singh
A top city deputy commissioner says he was fired because he complained that City Hall inappropriately intervened on behalf of a major campaign donor to Mayor de Blasio who owed nearly $750,000 in back rent on his Queens restaurant, the Daily News has learned.
Ricardo Morales
Ricardo Morales was a top deputy at the Department of Citywide Administrative Services, the agency that was pushing the donor, Harendra Singh, to cough up the loot.

And records show Singh raised $24,000 for de Blasio and held two fund-raisers for the mayor at his Long Island City restaurant, Water’s Edge. He failed to bill de Blasio’s campaign for hosting the fund-raisers, The News found.

Records reviewed by The News also show one of de Blasio’s top aides directly intervened on Singh’s behalf while he was trying to get out of paying what he owed.

Morales was a key figure at the Department of Citywide Administrative Services (DCAS) assigned to deal with Singh, who owed $747,000 in back rent on his restaurant’s lease, records show. The restaurant is on city land.
Water's Edge Restaurant
Morales was fired Feb. 24, hours after de Blasio was interviewed by federal prosecutors in their investigation of the mayor’s fund-raising tactics.

Morales’ attorney, Robert Kraus of Kraus & Zuchlewski, quietly filed a notice of claim in May that he intends to sue the city. “Ricardo Morales was fired for objecting to the pay-to-play culture that surrounded City Hall’s dealings with Harendra Singh,” Kraus said.

“City Hall punished Ricardo in a completely unprecedented manner because he refused to give in to that culture.”

A City Hall spokesman denied any wrongdoing.

“Members of this administration have acted appropriately and there’s never been a credible suggestion or shred of evidence to the contrary,” said spokesman Eric Phillips.

Morales says he was fired “because he reported violations of the NYC Charter’s conflict-of-interest rules as they pertained to City Hall’s inappropriate involvement in negotiating a complex real estate transaction and accompanying litigation” involving Singh and Water’s Edge. He specifically noted that the Water’s Edge owner was a “politically connected donor.”

Morales, then DCAS’ deputy commissioner for asset management, was also involved in the waiver of a deed restriction that allowed a nursing home owner to sell a Lower East Side building to a luxury condo developer.

In his notice of claim, Morales says his firing was also because he “objected to City Hall’s lack of truthfulness regarding the lifting of deed restrictions” on the lot and unspecified violations of City Charter rules.

In March, acting Manhattan U.S. Attorney Joon Kim closed a yearlong investigation of de Blasio without bringing charges, but he made a point of stating that de Blasio and his aides had intervened on behalf of some of his donors. The donors weren’t named, but one of them is Singh, according to sources familiar with that investigation.

In 2014, DCAS officials, including Morales, started going after Singh for back rent. At the time, the restaurateur was well-known to Team de Blasio.

In 2011 and 2013, Singh held two fund-raisers for de Blasio at Water’s Edge — but he didn’t send the campaign a bill. He also bundled more than $24,000 in campaign checks for the mayor. In early 2014, Singh was placed on an elite list of de Blasio donors being considered for political appointments. The list, obtained by The News, shows Singh was up for a slot on the Mayor’s Fund for the City of New York and a committee to lure the Democratic convention to Brooklyn.

The document related to the potential appointments makes clear that even as they considered awarding him these plum assignments, de Blasio’s team was aware there were issues with him. Under “confidential notes,” the document notes Singh had an unspecified “vetting issue.” The document states that city Director of Intergovernmental Affairs Emma Wolfe had listed Singh as a “maybe,” and suggested calling another City Hall employee in another city agency regarding “r/flags” on Singh.

For two years, de Blasio’s campaign hadn’t paid the $2,615 bill owed for the two Water’s Edge fund-raisers.

Then in December 2014, the city Campaign Finance Board began auditing de Blasio’s campaign. It demanded documentation showing that the mayor had paid for the Water’s Edge events.

In a Feb. 19, 2015, email, on the day the documents were due to the Campaign Finance Board, de Blasio campaign staffer Sam Nagourney asked Singh for invoices. Emails show Singh ordered restaurant staffers to “please take care of this today.”

Records show Water’s Edge then provided invoices but it appears they were created long after the events.


De Blasio Ally Didn’t Register as Lobbyist Despite Big Push for a Donor
Neil Kwatra
Frustrated by the pace of negotiations with a city agency over millions of dollars that were in dispute, a restaurateur decided to bring in a hired gun: Neal Kwatra, a political consultant and lobbyist with ties to Mayor Bill de Blasio.

Mr. Kwatra ended up working so closely with top City Hall officials on behalf of the restaurant owner, Harendra Singh, that a city commissioner complained that officials were giving Mr. Kwatra confidential information during delicate negotiations to settle a lawsuit with Mr. Singh.

When one meeting with city officials resulted in an unsatisfactory offer, Mr. Kwatra angrily responded, “I guess you didn’t get the memo from City Hall,” according to the city official in charge of the talks, Ricardo Morales, a former deputy commissioner of the Department of Citywide Administrative Services, known as DCAS.

Yet none of Mr. Kwatra’s efforts on behalf of Mr. Singh, in 2015, were registered as lobbying work, even though Mr. Kwatra and his company, Metropolitan Public Strategies, have registered as lobbyists for other clients, including United for Affordable NYC, a short-lived nonprofit group created by Mr. de Blasio to support his housing policies.



A search of the public record websites of the state’s Joint Commission on Public Ethics and the New York City Clerk’s Lobbying Bureau found no record that Mr. Kwatra or his company had registered as a lobbyist for Mr. Singh or his restaurant, Water’s Edge, in Queens, or any of Mr. Singh’s companies.

Mr. de Blasio pushed city officials to help Mr. Singh, a mayoral campaign donor, and the case became a focus of a federal investigation into what prosecutors viewed as a pattern of mayoral favors to campaign donors.

On Monday, Mr. de Blasio, appearing on “Road to City Hall” on NY1, dismissed the notion that Mr. Singh received special treatment because he was a campaign donor.

“It’s been looked at, and there’s just nothing there,” Mr. de Blasio said.

“I think it’s very clear how we run our government,” he said. “It’s an open and transparent government, where we help people bring forward legitimate issues and try to see them through to conclusion.”

Mr. Kwatra, whose mother, Pam Kwatra, is a donor and fund-raiser for the mayor, played a key role in Mr. Singh’s case, but his involvement was not revealed publicly until The New York Times reported it on Monday.

Austin Shafran, a senior vice president of Metropolitan Public Strategies, said on Monday that Mr. Kwatra’s efforts on behalf of Mr. Singh did not meet the definition of lobbying under state and city law.

”Our firm consulted experienced legal counsel, and was advised that we were not required to register as a lobbyist in this case because our work involved the renegotiation of an existing lease that was the subject of litigation, which is explicitly excluded from the lobbying law,” Mr. Shafran said by email. He would not identify the lawyer who advised his company, and said that Mr. Kwatra was unavailable to speak with a reporter.

A group of city documents and emails reviewed by The Times that describe the talks do not mention renegotiation of the lease. They focus instead on unpaid rent, money that the city said was owed by Mr. Singh to rebuild a pier near the restaurant, and lawsuits deriving from those disputes.

Despite all the problems, Mr. Singh was eager to start negotiations on a new lease for the restaurant that would take effect when his existing lease was to expire in May 2017. And documents indicate that Mr. Kwatra was involved in pressing the case for a new lease with city officials.

Officials at the administrative services agency had told Mr. Singh they could not discuss a new lease while he owed back rent and millions of dollars for the pier reconstruction. They made clear that even though Mr. Singh was already operating the restaurant, a new lease would require public hearings under city land use laws and would need to be offered for competitive bidding. Efforts to influence procurement decisions, including decisions regarding new leases on city properties, are frequently considered to meet the definition of lobbying.

That did not stop Mr. Kwatra and Mr. Singh from continuing to push the issue of a new lease. Their efforts included discussions with Mr. de Blasio’s top political aide, Emma Wolfe, the director of intergovernmental affairs, who began participating in the negotiations in mid-2015.

A new long-term lease would have been very valuable, in part because the city’s Economic Development Corporation was considering ways to use other city-owned parcels near the restaurant for a development project that could have included housing, office and retail space — potentially increasing the value and earning power of Water’s Edge.

Mr. Kwatra and Ms. Wolfe’s office worked so closely that Stacey Cumberbatch, the administrative services commissioner, accused a City Hall official of disclosing confidential information during talks to settle the lawsuits and discussions about Mr. Singh’s interest in negotiating a new lease.

The emails show that city officials had discussed the possibility of moving talks for a new lease out of the administrative services agency to the Economic Development Corporation, known as EDC. That could have benefited Mr. Singh by freeing him from negotiating with staff members at the administrative services agency, which had shown itself to be a tough negotiating partner. In addition, Mr. de Blasio had recently appointed Ms. Kwatra to the corporation’s board.

The emails show that this possibility was being discussed internally among city officials (who ultimately rejected it) and was not intended to be shared with Mr. Singh and his representatives. But Gabriel Schnake-Mahl, an aide to Ms. Wolfe who was working closely with Mr. Kwatra, did just that.

“I am speaking with Kwatra today at 5:30 p.m. for an update on their end,” Mr. Schnake-Mahl wrote in an email to Ms. Cumberbatch and Ms. Wolfe on Sept. 3, 2015. “Anything I can share re: why needs to stay in DCAS for future lease? I floated EDC idea to them in past conversations.”

Ms. Cumberbatch wrote back almost immediately: “It’s a DCAS function. Thought EDC idea was confidential bet. us until all worked out with Maria?” she wrote, referring to Maria Torres-Springer, the president of the development corporation.

Mr. Schnake-Mahl replied: “Apologies if I got out in front.”

Mr. Singh was arrested days later in an unrelated political corruption case on Long Island.

Monday, June 19, 2017

Whistleblower John Tipaldo Wins His Case Against the NYC Department of Transportation, 20 Years After Blowing The Whistle

John Tipaldo

Court rules acting in good faith key to whistleblower protection
NYSSBA
On Board Online • November 16, 2015

After becoming aware of alleged bidding irregularities in the New York City Department of Transportation (DOT), an employee notified his immediate supervisors and the Department’s Inspector General. Should the employee be protected under the state’s Civil Service whistleblower law from adverse job actions, even though he failed to first inform the official “appointing authority” as specified in the law?

Yes, according to the state’s highest court, the Court of Appeals, in Tipaldo v. Lynn.

The reason? The appointing authorities and the alleged wrongdoers were one and the same, and the actions of the employee, John Tipaldo, demonstrated good faith compliance with the law.

Tipaldo worked as DOT’s Acting Assistant Commissioner for Planning and Engineering. He discovered an alleged scheme by his then-superiors (Transportation Commissioner Christopher Lynn and First Deputy Commissioner Richard Malchow) by which a signage contract was to be awarded to Lynn’s acquaintance in violation of the city’s public bidding rules.

After an order was placed for the signs from Lynn’s acquaintance, a meeting was held informing DOT employees, including Tipaldo, that the signs had been purchased. The legality of the process was questioned by Tipaldo and other employees, and the DOT employees who were required to authorize the purchase refused to sign the authorization for the purchase. According to the court, the next day, Lynn and Malchow solicited bids from the public and after the delivery and installment of the signs, the DOT received lower bids as compared to the amount paid to Lynn’s acquaintance. Then Lynn and Malchow allegedly created a backdated memorandum indicating that the need for the signs was “urgent” and that the order must be placed immediately, rather than proceed through bidding.

Tipaldo informed his immediate supervisors about the alleged misconduct and, one or two business days later, reported the alleged improper actions to the DOT Office of the Inspector General. Tipaldo claimed that shortly after that, various retaliatory actions were taken against him by Lynn and Malchow. He was eventually removed from his position and demoted.

Tipaldo commenced a whistleblower action pursuant to Civil Service Law Section 75-b. Pursuant to that law, adverse action must not be taken against a public employee because the employee discloses to a governmental body information which he or she “reasonably believes to be true and reasonably believes constitutes an improper governmental action.” However, prior to the reporting, the employee must make “a good faith effort to provide the appointing authority or his or her designee the information to be disclosed and shall provide the appointing authority or designee a reasonable time to take appropriate action unless there is imminent and serious danger to public health or safety.” This requirement gives the employer the opportunity to end the violations prior to disclosing misconduct to an outside agency.

The defendants sought to dismiss the case, arguing that Tipaldo failed to comply with the statute by not reporting the alleged wrongful actions to the appointing authority (Lynn and Malchow) before contacting the Office of the Inspector General.

A state Supreme Court judge granted defendants motion and dismissed the complaint, but the Appellate Division reversed on appeal. The Appellate Division found that “plaintiff’s good-faith efforts in the manner and timing of his reporting, first informally to his immediate supervisors, and then soon thereafter to the [DOI], satisfactorily met the requirements” of the Civil Service Law.

The Court of Appeals agreed with the Appellate Division. It determined that because the appointing authorities in the specific case were actually Lynn and Malchow, the plaintiff “understandably did not report their alleged misconduct to them.” The court noted, “Lynn and Malchow would not likely have been receptive to plaintiff’s complaints or reported themselves to the Department of Investigation.” The court found that Tipaldo’s actions demonstrated good faith compliance with the Civil Service Law.

Although this case does not involve school district employees, the court’s decision applies to all public employees and thus school districts will be affected by this ruling.

Editor’s Note: A legislative bill (A.7951/S.4628) which passed both houses during the last legislative session would eliminate the requirement for a whistleblower to first report to the appointing authority. NYSSBA opposed the bill because such notification provides school districts and other public employers with the opportunity to make corrections and avoid unnecessary litigation. The bill has not yet been delivered to the governor.


John TIPALDO, Respondent, v. Christopher LYNN, & c., et al., Appellants.

New York court orders reinstatement of whistleblower

By on September 2, 2010Posted in Government Whistleblowers

A New York State appellate court has ordered the New York City Department of Transportation to reinstate whistleblower John Tipaldo. When Tipaldo reported that his superiors violated bidding rules, he was demoted from his position as Acting Assistant Commissioner for Planning. That was in 1996. In 2006, the trial court granted the City summary judgment on grounds that Tipaldo had not made a formal report of the bidding violations to the "appointing authority." The appellate court reversed in 2008 holding that Tipaldo’s report to the Department of Investigations was appropriate when the "appointing authority" was the person engaged in the violations. Tipaldo v. Lynn, 48 AD3d 361. The appellate court held that since there was no dispute about the retaliatory demotion, the case would be remanded only for a determination of damages and remedies. On the second appeal, the court held that Tipaldo was entitled to interest on his back pay, thereby increasing his award from $175,000 to $662,721. The appellate court awarded the interest even though the state’s statute did not make any explicit provision for interest. The state statute has "the goal of remediating adverse employment actions which, if allowed, would undermine an important public policy, that is, encouraging public employees to expose fraud, waste and other squandering of the public fisc." Tipaldo had hired an expert to compute the interest and the City did not. The court also held that Tipaldo was entitled to reinstatement even though he had declined promotions offered after his demotion. The court said that his corroborated fear of retaliation made his decisions reasonable so that he could still receive reinstatement as part of the court’s order. It took Tipaldo 14 years, and two trips to the court of appeals to get justice. This is an example of how public officials, when challenged by the integrity of a whistleblower, will waste unlimited public resources to delay justice. This might be a good time for New York’s legislature to consider improving its whistleblower law to provide for general and punitive damages, interest, expert fees, attorney fees and jury trials. The case is Tipaldo v. Lynn, Thank you to the New York Public Personnel Law blog for alerting me to this decision.

Whistleblower wins more than $1M in lawsuit over demotion

, NY POST, 6/17/17

A whistleblower triumphed in a 20-year battle with City Hall, winning more than $1 million to compensate for a pay cut and demotion he suffered after reporting corruption.
As a Department of Transportation official under Mayor Rudy Giuliani in 1996, John Tipaldo alerted authorities to a plan by his bosses — DOT Commissioner Christopher Lynn and first deputy Richard Malchow — to award a contract to make 100 “Don’t Honk” signs to Lynn’s buddy.
The two officials tried to cover their tracks after awarding the contract by publishing a notice seeking public bids. They also issued a memo claiming an urgent need for the signs required bypassing normal bidding rules, a probe confirmed.
After Tipaldo tipped off the city Department of Investigation, Lynn and Malchow set out to destroy his career, the DOI confirmed.
While Tipaldo was due a promotion to assistant commissioner, the duo bad-mouthed his job performance and demoted him, slashing his salary by $25,000 a year.
Tipaldo sued. While the DOI found him the victim of retaliation, city lawyers argued that the whistleblower law required him to report wrongdoing to his bosses — the same guys engaged in the scam.
“This is an example of how public officials, when challenged by the integrity of a whistleblower, will waste unlimited public resources to delay justice,” the National Whistleblower Center said in 2010, when an appellate court found in Tipaldo’s favor.
The appellate judges ruled Tipaldo deserved a raise, back pay for salary he would have received if he hadn’t fingered Lynn and Malchow — plus 9 percent a year in interest.
But it wasn’t over yet. The city Law Department appealed to the Court of Appeals, the last resort in New York. In 2015, the high court unanimously upheld Tipaldo’s win.
The city finally is paying off its debt to Tipaldo, now a DOT assistant commissioner, in installments.
Last fiscal year, he was NYC’s highest-paid employee, collecting $672,700, including his $176,700 salary, records show.
“It started out by screwing him out of a raise of $25,000 a year. It wound up costing them over $1 million, plus the time and effort of the Law Department for over 20 years,” a source remarked.
“This case has a complicated procedural history, including multiple appeals, that prolonged the litigation,” said Law Department spokesman Nick Paolucci.
Lynn, who insisted his pal “Vinnie” was the only person who could do the sign job, left the DOT in 1997 after the probe concluded he violated procurement rules.
Reached last week, he said he did “nothing illegal or immoral.” and questioned whether Tipaldo deserved the big award.
Tipaldo and his lawyer, Lewis Rosenberg, declined to comment.